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Surety Had Absolute Discretion To Pay Bond Claims

Sunday, April 01, 2012 02:16 am



American Contr. Indemnity Co. v. Lights & Signals, Inc., 20102 U.S. Dist. Lexis 24091 (N.D. Ind. Feb. 24, 2012)

The terms of a contractor-surety indemnity agreement did not require that the surety consult any authority but its own before settling subcontractors' bond claims.

American Contractors Indemnity Company (ACIC) issued payment bonds to contractor Lights & Signals, Inc. (L&S) for multiple construction projects in Indiana. After L&S failed to pay some of its subcontractors, those subs submitted bond claims, which ACIC settled. ACIC then sued L&S to enforce the parties' indemnity agreement and recover $136,500.

In the parties' indemnity agreement, L&S agreed "to indemnify and hold [ACIC] harmless from and against any and all demands, liabilities, losses [...]

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