City of Los Angeles v. Amwest Surety Ins. Co.

In this case we are called on to resolve the issue of whether and under what circumstances a developer’s failure to commence construction of subdivision improvements will relieve a surety of its obligation to pay for such improvements under a performance bond. We conclude that where the local governing authority does not revoke the final subdivision map or cause the parcel to revert to acreage and development of the property is proceeding in accordance with the final map, the surety’s obligation remains in full force and effect.

Background

In February of 1990, the City of Los Angeles (the City) entered into a subdivision improvement agreement with Dale Leibert to create three parcels at 9755 Shoup Avenue, Chatsworth, California. “For, and in consideration of the approval of the final map of that certain division of land,” Leibert agreed to construct and install “all public improvements required in and adjoining and covered by the final map which are shown on plans, profiles and specifications, previously supplied to the City Engineer . . . .” The estimated cost of completion of public improvements was $126,000. The work was to be finished within 24 months of the date…