Merced

American Motorists Insurance Company (AMIC) appeals from the judgment after court trial in favor of the City of Merced (City) on the City’s claim for enforcement of a performance bond. On appeal AMIC contends the court erred in concluding the City suffered damages and the City did not enter into an illegal assignment of its claim against the bond. AMIC also contends construction of the improvements the bond covered released the bond. As we shall explain, we will affirm the judgment.

FACTUAL AND PROCEDURAL HISTORIES

Sometime prior to 1990, the City adopted the Campus North Specific Plan (Campus North), which encompasses 78 acres in north Merced. Campus North was subdivided into several tracts. The City projected that hundreds of units would be developed in Campus North by various developers.

In September 1991, Grant Homes, Inc. (Grant) entered into a Subdivision Agreement with the City to develop a portion of Campus North referred to as Campus North Unit No. 1 (Unit No. 1), comprised of 66 units. The agreement required Grant to construct certain improvements within one year. Grant also promised to construct future additional improvements, which the agreement called…