Backdating A Bond Doesn't Nullify Govt. Guarantee

Friday, September 04, 2009 06:06 pm

Backdating A Bond Doesn't Nullify Govt. Guarantee

Surety — Bonds
American Contractors Indemnity Company v. United States
United States Court of Appeals for the Federal Circuit 2009 U.S. App. Lexis 13878 (June 29, 2009)

The backdated date of an SBA-guaranteed bond didn't prove a surety had modified the bond before obtaining proper preapproval to do so.

In 2002, DiGiovanni Insulation and Refractory, Inc. (DiGiovanni) applied to a California surety for performance and payment bonds for a construction project in New Orleans. The surety, American Contractors Indemnity Company (ACIC), granted the bonds to DiGiovanni as part of the Small Business Administration (SBA) bond guarantee program. DiGiovanni, a small business, would not have qualified for a traditional surety bond, but the SBA guaranteed to cover 80 percent of ACIC's losses if DiGiovanni defaulted on the project.

ACIC issued bonds to DiGiovanni for $1.8 million in October 2002. On March 24, 2003, DiGiovanni and the project owner executed a written "cha[...]