Prime Contractor Had No Duty to Help Surety Investigate Sub’s Default

We all know what happens when we “ASS-U-ME” something.  So, we should all carefully avoid assuming things unnecessarily.

The prime contractor described below recovered its costs by properly not assuming a duty.  This required a distinction among duties that:

  • must be done;
  • should be done; or
  • need not be done.

On a project for the Florida Department of Transportation, the Prime Contractor terminated its landscaping subcontractor for default after the obligatory 72-hour cure period passed.  The Prime then promptly submitted a performance bond claim to the terminated sub’s surety.  The Prime was obligated to and did wait the 15-day “grace period” for the surety to investigate and respond.  However, when the surety failed to substantively respond, the Prime properly mitigated its damages by engaging a replacement subcontractor.

Upon completion of the replacement subcontractor’s work, the Prime submitted its recoverable costs to the defaulted sub’s surety.  The surety denied payment by arguing the Prime failed to assist with the surety’s investigation of the default.  The Court awarded summary judgment to the Prime finding it had no duty to assist with the surety’s investigation absent an express requirement, which was not included in the bond or subcontract.

The Court agreed that the Prime need not help the surety with the heavy lifting of investigating the sub’s termination for default.

Developers Surety & Indemnity Co. v. Archer Western Contractors, LLC, Case No. 6:16-cv-1875, U.S. Dist. Ct., Mid. Dist. Fl. (May 7, 2018).

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