Arntz Contracting Co. v. St. Paul Fire & Marine Insurance

A general contractor was terminated from a public works construction project by the property owner who complained of deficient workmanship, and the surety that had issued performance and labor and material bonds on the project took over the project and completed construction using substitute contractors. In a lawsuit between the original general contractor and the surety, the surety recovered most of its completion costs and assorted expenses under the parties’ indemnification agreements executed in connection with the bonds.

However, the contractor recovered against the surety upon claims of breach of contract in the surety’s failure to honor a promise to bond future projects, and interference with prospective economic relations because the surety’s termination of bonding and other acts frustrated the contractor’s ability to secure bonding from other sureties. The surety’s recovery on the indemnity agreements, after substantial offsets, was about $813,000. The contractor’s recovery on its contract and tort actions was $16.5 million in compensatory damages, plus prejudgment interest and attorney fees and costs totaling about $8.4 million. The contractor was also awarded…