A Wisconsin surety has gone to federal court in Vermont to claw back more than $257,000 it says it paid out after a contractor left subcontractors unpaid.
The lawsuit, filed on May 18, 2026 in the US District Court for the District of Vermont, pits Old Republic Insurance Company against NECCO, Inc., a Grand Isle-based general contractor, along with three individuals named in the case: Paul Sipple, Joan F. Rae, and Scott T. Waite.
At the center of the dispute is a payment bond Old Republic issued for a state construction job - the EAFR 3-172 MEP Parking Improvements project in Colchester, run by the Vermont Department of Military. According to the filing, NECCO signed the underlying construction contract on or around September 30, 2022, and Old Republic stepped in as surety, guaranteeing that the contractor's subcontractors and suppliers would be paid.
That guarantee, the filing says, came with strings attached. Years earlier, on December 23, 2019, NECCO, Sipple, and Rae allegedly signed an indemnity agreement promising to make Old Republic whole if it ever had to pay out on a bond issued on their behalf. The agreement, quoted in the filing, requires them to "fully indemnify and hold harmless Surety from and against any and all claims, demands or legal expenses of any kind or nature which arise by reason of the execution of any bonds issued for and/or on behalf, or at the request of, any and/or all Indemnitors including attorney fees and costs incurred by Surety in enforcing the terms of this Application."
It also gives Old Republic broad authority to "adjust, settle or compromise any claim, demand, suit or judgment" on the bond, and to demand collateral from the principal or indemnitors to cover any exposure.
Things started to unravel, the filing says, in 2025. That is when Old Republic claims it began hearing from subcontractors who had not been paid by NECCO. After investigating, the surety says it ended up covering claims totaling at least $257,632.41 - not counting legal fees - paid out to three companies: LWI Metalworks ($117,858.17), Jericho Roofing Company, LLC ($114,774.24), and Alpha Electric, Inc. ($25,000). More claims, the filing warns, may still be coming.
Old Republic alleges it asked the defendants to reimburse it, as the indemnity agreement requires, and was turned down. It is now pursuing two claims - breach of contract and contractual indemnity - against all of the defendants, and is asking the court for monetary damages, attorneys' fees, costs, and pre- and post-judgment interest.
For surety underwriters and claims professionals, the case is a familiar reminder of how heavily the industry leans on personal indemnity agreements when a corporate principal cannot cover its own losses. Broadly worded hold-harmless clauses and collateral-demand rights remain the surety's main recovery tool when a bonded job goes sideways.
The allegations have not been tested in court. The defendants have not yet filed a response, and no ruling has been issued.
