Seawatch at Marathon Condominium Association, Inc. v. The Guarantee Company of North America, USA
After a contractor defaulted on a $5.4 million condominium renovation, the surety elected under Paragraph 4.2 of the AIA A312 performance bonds to take over and complete the work using the defaulted contractor as its completion contractor. The Third District affirmed a declaratory judgment holding that Paragraph 4.2 places no restriction on whom the surety may hire (unlike Paragraph 4.1, which requires owner consent), that the surety need not hold a Florida contractor's license, and that the owner did not materially breach the bonds by rejecting a conditional takeover agreement and filing a declaratory action.
Key facts
- Contractor defaulted on a $5.4 million condominium renovation project at Seawatch at Marathon; the surety, Guarantee Company of North America, elected under Paragraph 4.2 of the AIA A312 performance bond to take over and complete the work.
- The condominium association rejected the surety's conditional takeover agreement containing additional unstipulated terms and filed a declaratory judgment action seeking confirmation of its rights under the bonds.
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Why it matters
This is the first Florida appellate decision to construe Paragraph 4.2 of the standard AIA A312 performance bond, adopting the federal consensus (VDE Corp., Green River, Jefferson County) that a takeover surety may… — full analysis with a trial
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