City of L.A. Dept. of Airports v. U.S. Specialty Ins. Co.

BACKGROUND

A. John Russo Industrial Sheetmetal, Inc. contracted to build four airport firefighting trucks for the city. The contract provided

1 that John Russo would pay the city’s attorney fees in the event of litigation involving the trucks. U.S. Specialty and John Russo executed a performance bond in which U.S. Specialty agreed to be liable to the city for any losses if John Russo failed to perform the contract.

The city accepted and paid for two trucks, but it subsequently terminated the contract and refused to pay for the remaining two trucks before they were delivered. Alleging problems with the first two trucks and John Russo’s failure to timely deliver the other two, the city made a claim under the performance bond. Thereafter, the city sued John Russo for breach of contract and sought enforcement of the performance bond against John Russo and U.S. Specialty, demanding the return of the payments it had made for the first two trucks. John Russo likewise sued the city for breach of contract. The two suits were consolidated.

After a jury trial, the city won judgments on all contract claims: the jury found in favor of the city and against John Russo on John Russo’s…