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. Continue Reading California Court Confirms Surety’s Right to Recover Attorney Fees and Costs Incurred by Its Principal

The Supreme Court on May 23, 2022, in its decision in Morgan v. Sundance, Inc., rejected the “arbitration specific waiver rule demanding a showing of prejudice” to the party opposing the petition to enforce the arbitration agreement. That rule had been followed for decades by nine Circuits.[1] Post Morgan, the analysis reverts to the standard contract waiver analysis “focus[ing] on the actions of the person who held the right; … [rather than] the effects of those actions on the opposing party.”[2] Although the case is an employment matter, the new rule applies whenever a party seeks to stay litigation and send the matter to arbitration under Sections 3 and 4 of the Federal Arbitration Act in essentially all commercial litigation contexts.
Continue Reading Supreme Court Rejects Prejudice Element of Waiver Analysis When Enforcing Agreements to Arbitrate

This webinar provides a practical review of the impacts of COVID-19 on public and private construction contracts. Coverage includes the clauses covering delay, impact, acceleration, suspension of the work, changes and termination, whether express or constructive. The program focuses on the practical aspects of how best to manage the current situation, notice requirements, documenting claims,

The economic loss doctrine is widely misunderstood and often misapplied. The premise of the economic loss doctrine is that a party cannot recover purely economic losses in a tort action. To understand the rationale behind the economic loss doctrine, attorneys must simply recall that joyous moment when they first set their eyes upon Hadley v. Baxendale.[1] The Hadley decision stands for the proposition that, in a breach of contract action, a party may only recover the damages that naturally flow from the breach, or that were of the type within the reasonable contemplation of the parties at the time of contracting. In other words, economic losses such as lost profits, diminished bonding capacity, and loss of use are not recoverable in a breach of contract action unless such damages were contemplated by the parties at the time of contracting. 
Continue Reading Understanding the Economic Loss Doctrine is Critical for Construction Professionals