BMD CONTRACTORS v. Fidelity and Deposit Co. of Md.

SYKES, Circuit Judge.

This case requires us to decide an increasingly important question in complex multi-tiered construction contracts — if the property owner becomes insolvent or otherwise defaults in payment, preventing a contractor from paying a subcontractor, which contractor bears the risk of loss? There is an additional wrinkle here because the question arises in a suit on a payment bond.

BMD Contractors, Inc. (“BMD”) was a subcontractor for Industrial Power Systems, Inc. (“Industrial Power”), which was itself a subcontractor for Walbridge Aldinger Company (“Walbridge”), the general…