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 defaulting contractor as its completion contractor. The Third District affirmed, holding that Paragraph 4.2 contains no owner-consent restriction on who the surety may use to complete the project (unlike Paragraphs 4.1 and 4.3), that the surety need not hold a Florida contracting license, and that the owner's filing of a declaratory judgment action over a genuine interpretive disagreement was not a material or anticipatory breach of the bond.
Key facts
- Contractor defaulted on a $5.4 million condominium renovation project, and the surety on the performance bond elected to take over and complete the work under Paragraph 4.2 of the AIA A312 bond.
- The owner filed a declaratory judgment action disputing the surety's right to use the defaulting contractor as its completion contractor and challenging the surety's election as conditioned on the owner signing an unstipulated takeover agreement.
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Why it matters
This is the first Florida appellate decision to construe the election options in the widely used AIA A312 performance bond, adopting the federal consensus (VDE Corp., Green River, Jefferson County) that Paragraph 4.2… — full analysis with a trial
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