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Surety Can Settle Claims Without Consent Bonds-performance; Indemnification

Tuesday, August 09, 2005 03:00 pm

 

A federal district court has ruled that a performance surety could settle claims against the bond without the consent of the contractor and then be indemnified by the individual shareholders.

HRH Construction, Inc. was the general contractor on a project at 1400 Fifth Avenue in New York City. HRH subcontracted the carpentry and drywall work to Tres, Inc. Tres furnished a performance bond, issued by Fidelity Guaranty Insurance Co. (FGIC), naming HRH as the obligee.

HRH complained that Tres was not staffing the job at adequate levels. After giving proper notice to Tres and FGIC, HRH terminated the subcontract for default. FGIC then investigated the cost [...]

 
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