LITON GEN. ENG'G CON., INC. v. United Pac. Ins.

United Pacific Insurance (UPI) appeals from a judgment of the Contra Costa County Superior Court, ordering UPI as surety to pay attorney fees incurred by respondent subcontractor Liton General Engineering Contractor, Inc. (Liton), in its action against UPI on a public works payment bond, where the bulk of fees were incurred in arbitration of Liton's contractual dispute with the general contractor, Bay Cities Paving & Grading, Inc. (Bay Cities). UPI contends the fee award must be reversed claiming: (1) The statutory right to attorney fees applies only to actions on the bond to which the surety is a party and the arbitration proceeding satisfied neither requirement; (2) because UPI was not a party to the arbitration, it was denied due process by the fee award; (3) full payment of the arbitration award by Bay Pacific exonerated UPI; (4) Liton waived its right to a fee award in its arbitration agreement with Bay Cities.

We conclude that the strong policy of this state favoring mechanics, laborers and materialmen, as reflected in statutes mandating the award of attorney fees to the prevailing party in an action on a public works payment bond, requires award of…