Seawatch at Marathon Condominium Association, Inc. v. The Guarantee Company of North America, USA
After a condominium association declared its contractor in default on a $5.4 million renovation, the surety elected to take over and complete the work under Paragraph 4.2 of AIA A312 performance bonds, proposing to use the defaulting contractor as its completion contractor. The Third District affirmed a declaratory judgment holding that Paragraph 4.2 imposes no owner-consent restriction on whom the surety hires (including the defaulted principal), that the surety need not hold a Florida contracting license, and that the owner's rejection of the conditional takeover agreement and filing of a declaratory action was not a material breach relieving the surety of its bond obligations.
Key facts
- Seawatch at Marathon Condominium Association hired a contractor for a $5.4 million condominium renovation; the association later declared the contractor in default.
- The surety elected to take over and complete the work under Paragraph 4.2 of the AIA A312 performance bond and proposed using the defaulted contractor as its completion contractor.
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Why it matters
This is the first Florida appellate decision construing the differing owner-consent requirements among the Paragraph 4 options of the standard AIA A312 performance bond, adopting the reasoning of VDE Corp. and Green… — full analysis with a trial
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