
In Cell-Crete Corp. v. Fed. Ins. Co., a California court awarded a surety attorneys’ fees and costs that its principal incurred defending the surety against a claim on a public-works payment bond.[1] This is good news for sureties and their principals, who commonly defend sureties against such claims pursuant to a general indemnity agreements (“GIA”).
The payment bond and related litigation
Granite Construction Company (“Granite”) entered into a contract with the County of Riverside to complete a roadway project (“Project”). Granite subcontracted with Cell-Crete Corporation (“Cell-Crete”) for installation of light weight concrete at the Project. Granite obtained a payment bond (the “Bond”) from Federal Insurance Company (“Federal”) pursuant to the California Little Miller Act,[2] which requires payment bonds for any public project in excess of $25,000. As Granite’s surety, Federal required that Granite sign a GIA obligating it to defend, indemnify, and hold Federal harmless against claims made against the Bond.