Sukut-Coulson, Inc. v. Allied Canon Co.

Three consolidated actions which center on the claim by Sukut-Coulson, Inc. (Sukut) for money due for labor and materials furnished subdivider Allied Canon Company (Allied) in connection with the construction of a public improvement project.

As a condition of development for a Benedict Canyon subdivision, Allied was required by the City of Los Angeles, under Business and Professions Code section 11612, to procure labor and materials bonds for the benefit of contractors, laborers, and materialmen involved with the public improvements in the project. Accordingly, on 27 April 1971 Allied obtained a bond in the penal sum of $890,000 on tract 24862 from the American Insurance Company (American), and on 26 August 1971 a bond in the penal sum of $142,000 on tract 24981 from the Stuyvesant Insurance Company (Stuyvesant).

The city permit for which the surety bonds were issued was for construction only (streets, sewers, sewer drains) and did not include major grading on the tracts. Both bonds provided for payment of reasonable attorneys fees if suit were brought to enforce the surety obligations.

On 14 May 1971 Sukut and Allied contracted for Sukut to do all major grading on the…