A court decision by the High Court of Oklahoma has given our industry a win. In Flintco LLC v. Total Installation Management Specialists, Inc., 2025 OK 35 (May 28, 2025), the Oklahoma Supreme Court addressed a controversy that had arisen over the obligations of surety companies under standardized performance bonds, more specifically the AIA A 311 bond form. The Court’s ruling reversed earlier judgments in paying of supplemental work costs. The opinion underscores the essential role of condition precedent notice requirements in surety contracts. This decision carries significant implications for the surety industry, reaffirming procedural protections under bond forms and signaling the necessity for both contractors (as in the extant case) and obligees to strictly adhere to notice requirements before pursuing performance bond claims.

Case Context

Flintco, LLC (“Flintco”) entered into a prime contract with Oklahoma State University in 2013 to construct a student housing comples. Flintco subcontracted the flooring portion to Total Installation Management Specialists, Inc. (“Total”), requiring Total to secure a performance bond in favor of Flintco, issued by Oklahoma Surety Company (“surety”) on the AIA A 311 bond form. Pursuant to the agreement, Flintco could, following notice to surety, declare Total in default and either supplement Total’s workforce or arrange for tender a replacement contractor. In the latter scenario, surety would be liable to reimburse costs for such performance methods.

In early 2025, Total fell behind schedule, prompting Flintco to supplement Total’s work. Flintco eventually notified surety of this action, five weeks after assuming control. Flintco sought recovery for its supplementation costs under the performance bond. The Tulsa County District Court ruled in favor of Flintco, awarding over $800,000 (including attorney fees and interest), finding that surety had breached the bond by its conduct. Surety appealed. The Oklahoma Court of Civil Appeals reversed, holding that Flintco’s failure to give OSC timely notice as required by bond Paragraph C, was a mandatory ‘condition precedent’. The Supreme Court granted certiorari.

Oklahoma Supreme Court’s Decision

Justice Darby delivered the unanimous opinion. The Court framed the core issue as follows:

“We hold that the performance bond’s notice requirement constituted a mandatory condition precedent, and the contractor’s failure to provide timely notice to the surety so it could exercise its performance options under the bond relieved the surety from liability.”

That core reasoning was presented in ¶0:

¶0 The Contractor in a large construction project brought action against the flooring subcontractor and its surety, arguing that the subcontractor breached the subcontract and that the surety was liable under the AIA-A311 performance bond. … We hold that the performance bond’s notice requirement constituted a mandatory condition precedent, and the contractor’s failure to provide timely notice … relieved the surety from liability.

This crystal clear statement distilled the ruling, that notice is not ancillary. It is an essential contractual requirement that must be fulfilled to render the surety liable.

Contract Interpretation

The Court employed elementary contract interpretation. The bond terms must be honored according to their plain meaning, and notice requirements deemed conditions precedent are strictly enforced under Oklahoma law. Though subject to liberal construction in favor of obligees, the bond must not exceed the contractual clear terms agreed upon by the parties. Drawing from its precedent in U.S. Fidelity & Guaranty Co. v. Gray (1925 OK 144), the Court emphasized that unconditional notice requirements must be met before liability arises. The bond language was clear.

Jurisprudential Views

The Court acknowledged divided authority across jurisdictions interpreting AIA bonds. It paralleled Hunt Construction Group v. National Wrecking, holding notice is a permissive right of the surety, not solely remedial. It refused to adopt minority views, such as Colorado Structures, that treat notice only as a remedy-triggering clause rather than a condition to liability. The Court reconciled subcontract-derived rights that permitted general contractors to supplement work, with bond-derived duties requiring notice. While Flintco could supplement, doing so without timely notice deprived surety of its opportunity to act, nullifying surety’s liability.

The Court held that Flintco’s failure to provide notice delivered demonstrable prejudice to the surety. It was deprived of its contractual “performance options”, ie., assuming completion unilaterally or tendering replacements. This effectively voided its bond obligations.

Flintco decision carries multifaceted consequences for bond issuers, construction obligees, and the wider surety market:

A. Upholding Procedural Protections

Sureties rely on express notice requirements as crucial safeguards. The Court’s ruling affirms that obligees cannot circumvent these protections in pursuit of supplemental recovery, reinforcing bond form integrity and preserving surety’s rights to manage principal default events.

B. Heightened Obligee Awareness

General contractors must strictly enforce bond conditions, ensuring early declarations of default and prompt notice prior to any supplementing of subcontractor work. Delay in notification risks a complete bar to liability avoidance, not just partial damage reduction.

C. Contract Drafting Clarity

The decision underscores the importance of precise manuscripting. Parties relying on performance bonds must ensure that notice requirements and associated time-frames are explicit and unambiguous. Vagueness in bond language could lead to contested litigation or unintended liability shifts.

D. National Jurisdictional Trends

By aligning with decisions like Hunt and rejecting those from Colorado Structures, the Flintco case affirms a growing consensus that strict notice compliance is a necessary bond condition precedent. Its influence will likely ripple across jurisdictions in which AIA bonds are the preferred forms. This will encourage a national lean favoring procedural viability and minimize surety prejudice risk.

E. Changed Risk Calculations

Contractors must integrate the cost of supplementing work and costs associated with adhering to bond notice requirements into their risk models. Delays in notice may make efforts to protect project completion unrecoverable, altering dispute dynamics between sureties and contractors.

Flintco LLC v. Total Installation Management Specialists, Inc. marks an important moment in construction-surety jurisprudence. It enshrines the principle that surety notice provisions are not optional or secondary. They are mandatory procedural controls that protect sureties’ rights and ensure balanced risk management. The decision emphasizes contractual fidelity and fortifies surety safeguards against unilateral obligee actions taken without appropriate and adequate notice. It confirms that performance bond obligations be preceded by procedural compliance, or face nullification.

For sureties, contractors, and obligees across Oklahoma and beyond, this ruling emphasizes the importance of early, explicit, and adequate communication in compliance with performance bond provisions. It underscores that in the tripartite bond relationship, procedural form is NOT a formality but rather substantive.

~ C. Constantin Poindexter, MA, JD, CPCU, AFSB, ASLI, ARe

Refs.

Flintco LLC v. Total Installation Management Specialists, Inc., 2025 OK 35, No. 120,100 (Okla. May 28, 2025).

U.S. Fid. & Guar. Co. v. Gray, 1925 OK 144, 240 P. 802 (Okla. 1925).

Hunt Constr. Grp., Inc. v. Nat’l Wrecking Co., 587 F.3d 1119 (D.C. Cir. 2009).

Colorado Structures, Inc. v. Ins. Co. of the West, 161 P.3d 247 (Wash. 2007).

American Institute of Architects, AIA Document A312 – Performance Bond (2010 ed.).

Michael F. Pipkin & Sarah E. Welk King, The Evolution of the AIA A312 Performance Bond: Procedural Traps and Trends in the Courts, 43 Construction Lawyer 5 (2023).

Thomas J. Hall, Surety’s Right to Notice and Opportunity to Perform: Courts Enforce Conditions Precedent in Construction Bond Claims, Construction Briefings No. 2022 10 (Oct. 2022).

William Schwartzkopf & Richard E. Tasker, Practical Guide to Construction Contract Surety Claims § 7:5 (Aspen Publishers, 3d ed. 2020).

Vincent R. Turchi, Notice and Default: The Surety’s Right to Step In, 28 Surety & Fidelity Law Journal 89 (2017).

Restatement (Second) of Contracts § 224 (Am. Law Inst. 1981).