*Pursuant to Local Rule 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 96-50570

 

MARSHALL CONTRACTORS, INC.,

Plaintiff-Appellant,

versus

AMWEST SURETY INSURANCE COMPANY,

Defendant-Appellee.

 

Appeal from the United States District Court

For the Western District of Texas, Austin Division

(A-95-CV-145)

 

April 24, 1997

Before REYNALDO G. GARZA, HIGGINBOTHAM, and JONES, Circuit Judges.

PER CURIAM:*

This case presents the remnants of a dispute over construction

at the University of Texas’s Balcones Research Center. Marshall

Contractors was the general contractor for the construction of a

high-tech “clean room” for scientific research. Marshall

subcontracted work on “high-purity piping” to Integrated Gas

Systems. It paid monthly requisitions as requested by IGS from the

spring of 1992 until the end of the year, and IGS used these funds
2

to pay its suppliers. But in January of 1993, IGS refused to pay

a $76,674.60 bill to one of its suppliers, SnyderGeneral, because

of Snyder’s inadequate work. Marshall initially told IGS that it

was going to pay Snyder directly and deduct the amount from the

next month’s requisition payment to IGS. But then Marshall decided

to withhold the entire $259,224 in IGS’s February requisition and

to demand that IGS settle its dispute with Snyder. IGS never

resolved its dispute, never received the February requisition from

Marshall, abandoned the project on February 25, and eventually went

out of business. Marshall signed up a new subcontractor and

finished the project.

IGS sued Marshall and Marshall’s surety, Aetna. Marshall

counterclaimed and brought in IGS’s surety, Amwest, as a thirdparty defendant. The jury found that IGS breached the Marshall-IGS

contract and that Marshall did not breach it. But it also found

that IGS’s breach caused no damages to Marshall. The district

court entered a take-nothing judgment against IGS.

This case between Marshall and Amwest remains because the

district court severed it from the original lawsuit when Marshall

tried to amend its complaint to add bad-faith and tortiousinterference claims against Amwest. Amwest issued a performance

bond and a payment bond in August of 1992 to guarantee that IGS

would pay its subcontractors and suppliers and generally perform

its obligations to Marshall. The contract between Marshall and IGS
3

included a provision — paragraph 8.4 — that Marshall claims created

a duty of good faith on the part of Amwest:

In the event that any action, suit, proceeding, claim

or demand is made against the Contractor, its surety,

officers, directors, agents, representatives,

employees, successors or assigns against which the

Subcontractor has herein agreed to indemnify the

Contractor, then the Contractor may withhold from any

payment due or hereafter to become due to the

Subcontractor hereunder, an amount sufficient in its

sole judgement [sic] to protect and indemnify it from

such action, suit, proceeding, claim or demand,

together with legal fees and disbursements. . . . The

Contractor will release any payments due to the

Subcontractor upon receipt of written acknowledgment of

the action, suit, proceeding, claim or demand from the

Subcontractor’s Surety stating its intention to

indemnify the Contractor and protect the Contractor as

set forth above.

According to Marshall, it learned in February of 1993 that IGS had

failed to pay several suppliers. It notified Amwest, which

acknowledged IGS’s outstanding debts. Amwest did not provide

assurances of payment to Marshall, so Marshall refused to pay IGS.

After IGS abandoned the project, Marshall requested Amwest to

arrange for substitute performance, but Amwest refused. Instead,

Amwest helped contest Marshall’s suit by paying IGS’s attorneys’

fees. The district court granted summary judgment to Amwest on both

the bad-faith and the tortious-interference claims.

We agree with the district court that Marshall has not created

a genuine issue of material fact on its bad-faith claim. In Great

American Ins. Co. v. North Austin Mun. Utility Dist. #1, 908 S.W.2d

415, 418-20 (Tex. 1995), the Texas Supreme Court established the

general rule that sureties do not owe a duty of good faith and fair
4

dealing to their bond obligees. The Great American court rested

much of its reasoning on the existence of Tex. Bus. & Com. Code

§ 34.02, which permits sureties to require an obligee to sue on the

contract before claiming payment from the surety. This feature of

a suretyship relationship makes it different from the relationship

between insurer and insured. “The derivative nature of a surety’s

liability and its right to rely upon the defenses of its principal

compel the conclusion that a surety, like its principal, should be

entitled to test the merits of an obligee’s claim without the

imposition of extracontractual duties to the bond obligee.” 908

S.W.2d at 420. We followed the Great American rule in Tacon

Mechanical Contractors v. Aetna Cas. & Sur. Co., 65 F.3d 486, 488

(5th Cir. 1995). In the absence of a contractual relationship

creating a duty of good faith and fair dealing, these cases control

the outcome here.

Marshall attempts to distinguish this case from Great American

by arguing that paragraph 8.4 of the Marshall-IGS contract,

incorporated into the suretyship agreement, imposes special duties

on Amwest. But the language in paragraph 8.4, as modified by the

Marshall-IGS subcontract, imposes a duty on Marshall, not on

Amwest. It states that Marshall must release payments to IGS if

Amwest declares that it will indemnify Marshall. It does not

require Amwest to make such a declaration.

Marshall states repeatedly that there is something “predatory”

about the fact that Amwest funded IGS’s suit against Marshall. In
5

the absence of a duty of good faith and fair dealing, however, we

cannot say that Amwest did anything wrong. Although unsuccessful,

IGS’s suit survived summary judgment. And Amwest, as it turns out,

had good reason not to pay Marshall: the jury found that Marshall

had no damages from IGS’s breach of contract. The suretyship

agreement gave Amwest the obligation to pay on IGS’s behalf once

Marshall established liability. Under Texas law, it did not

prevent Amwest from supporting litigation that could — and did —

establish that IGS was not liable after all. Cf. L&A Contracting

Co. v. Southern Concrete Services, 17 F.3d 106, 111 (5th Cir. 1994)

(Florida law) (“After a declaration of default, the relationship

changes dramatically, and the surety owes immediate duties to the

obligee.”).

Marshall’s claim for tortious interference with the MarshallIGS subcontract fares no better than its claim for bad faith. In

Tacon Mechanical, we held that, after Great American, bond obligees

may not sue their sureties for tortious interference when the claim

“merely reiterates the bad faith claim.” 65 F.3d at 488. We also

noted that “there is no Texas authority applying a tortious

interference claim in a surety context.” Id. Marshall’s theory is

different from the theory in Tacon Mechanical because Amwest

allegedly helped fund IGS’s litigation with Marshall.

Nevertheless, the tortious-interference claim is really nothing

more than a recapitulation of the good-faith claim in a different

key, and Tacon Mechanical understands Texas law to forbid that.
6

Furthermore, because Great American establishes a contract theory

as the only way a bond obligee can recover from a surety that fails

to pay, Marshall must look beyond the contract to find a tort duty

on which to ground its tort theory. Texas law does not impose an

abstract tort duty not to harm one party in litigation by

contributing money to its opponent.

AFFIRMED.