An Ohio court just cut a surety's six-figure bond bill - because a supplier missed one required notice.
On August 6, 2026, the Court of Appeals of Ohio, Eighth District, held that Hudson Insurance Company (Hudson) remained liable as surety on two road projects but not on a third. The ruling reduced the payment-bond exposure a trial court had placed on Hudson and returned the case for the damages to be recalculated.
The dispute began when materials supplier The Shelly Company (Shelly) sued to collect unpaid invoices for asphalt it supplied to roadway jobs. Shelly had contracted with paving contractor Perk Company on several projects, then pursued Hudson, which had issued payment bonds on some of that work.
A trial court found Hudson liable on the bond for $357,492.49 plus interest. On appeal, the result split by project. For the Union Avenue and U.S. 322 jobs, the court found Shelly had dealt directly with Perk as the principal contractor. That direct contract relationship - privity - meant Shelly did not have to serve a "notice of furnishing" to keep its bond claim alive, so Hudson's liability on those two jobs held up.
Auburn broke the other way. The court found Shelly had not shown that Perk agreed to take over that contract from another company, N.E.S. Corp. With no direct contract, Shelly had to serve a notice of furnishing on Perk as principal contractor - and never did. The court called that miss "fatal to any claim against Hudson on the Auburn project" and vacated Hudson's liability there.
For surety underwriters and bond-claim handlers, the lesson lands fast: whether a supplier protected its own rights can decide whether the surety pays at all. The court relied on a state statute that waives the notice-of-furnishing step only when the claimant has a direct contract with the principal contractor.
The court affirmed Hudson's bond liability on the two projects, vacated it on the third, and remanded to recalculate what Hudson owes. It also vacated a separate unjust-enrichment award against Perk and a judgment that had reached the personal assets of Perk's majority shareholder, along with an attorney-fee award, sending those parts back for further proceedings.
