Nissho of California, Inc. v. Bond Safeguard Insurance

Prior to entering into a subdivision improvement agreement (SIA) with the City of Palm Springs (City) for the development of a private residential community called the Avalon Palm Springs Village project (Avalon), Suncal PSV, LLC (Suncal), the owner of the property in a joint venture partnership with Lehman Brothers, obtained a maintenance and warranty bond, several faithful performance (FP) bonds, and seven labor and materials (L&M) bonds from defendant and appellant Bond Safeguard Insurance Company (Safeguard) to insure the project. Suncal and City then entered into an SIA which specifically required landscaping improvements to offsite areas bordering the project, which were owned by City. City required the landscaping for the offsite areas be bonded. Suncal had previously obtained an L&M bond for “Off-Site Landscaping & Traffic” in the amount of $566,200, representing 50 percent of the estimated cost of those improvements.

Suncal entered into three separate contracts with plaintiff and appellant Nissho of California, Inc. (Nissho), for the landscaping of Avalon. One of those contracts, for $1,639,777.19, covered labor and materials for the offsite landscaping required…