[RPPTL-constructionlaw] FW: Bond coverage

[Bruce Partington]

From: Gibbons, Michael [mailto:Michael.Gibbons at lowndes-law.com] 
Sent: Wednesday, April 18, 2012 6:36 PM
To: Bruce Partington
Subject: Bond coverage

 

 

 

  Good question Bruce.  My thoughts:

 

    1.  Take a look at Phoenix Indemnity v. Board of Public Instruction
of Alachua County, 114 So. 2d 478 (Fla. 1st DCA 1959).  The Phoenix
Indemnity court held that the contractor's surety bond was liable for
payment of insurance premiums not paid by contractor despite contractor
having an express contractual obligation to make the premium payments.
Not exactly your claim but close and certainly gets at the obvious issue
that your claim is not for completion of the bricks and mortar (which
every surety lawyer wants to limit the surety bond coverage to).

 

    2.  Is there an issue of who suffered the damage and the operation
of the mutual waiver of subrogation clauses doubtlessly present in the
contracts at issue?  Could not tell in your summary but I believe this
may be an issue.  If the GC had insurance coverage for the claim (which
it sounds like) and would simply like to have the sub's policy be
primary on the loss, then there may be an issue with actual damages
suffered by GC (given the presence of insurance).  Also, if the loss
falls on the carrier, depending on the operation and breadth of the
mutual waiver of subro language, there may not be any subrogation rights
arising out of the loss (especially a property loss).

 

   3.  Is there an issue re operation of a mutual waiver of
consequential damages provision in the incorporated subcontract (either
directly or by reference or incorporation of the prime contract
documents)?  Not clear whether the category of damages being claimed
would fall into the "consequential damages" bucket but it sounds like
that might be the case.

 

   4.  The AIA A 312 bond form is broad in scope and contains some
favorable language for the obligee.  Without knowing all the facts, it
sounds like there may be a colorable claim if some of the above raised
concerns are addressed (as well as others which I have failed to
identify).

 

  Good luck.

 

 

Michael R. Gibbons  (Bio
<http://lowndes-law.com/our-people/michael-r-gibbons> )

Shareholder

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

450 South Orange Avenue, 8th Floor

Orlando, FL 32801

Phone: 407-418-6378

Fax: 407-843-4444

email: michael.gibbons at lowndes-law.com

website: http://www.lowndes-law.com

 

        

 

 

 

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