Opinion ID: 2604080
Heading Depth: 1
Heading Rank: 3

Heading: The Trial Court's Disposition:

Text: Not surprisingly, the trial court found that Nielsen's failure to pay its suppliers and materialmen constituted a material breach of its subcontract with Julien, and imposed liability for all consequent damages. Furthermore, under the contractual decision, Nielsen was also liable to Julien for costs and attorney's fees. Next, the trial court found that Hoiness breached its agreement with Nielsen by failing to provide the payment-bond coverage as ordered, and found that Julien was an intended beneficiary of the contract between Hoiness-LaBar and Nielsen    and the benefit of the bonds was solely for the protection of Julien. Thus, Julien had standing to maintain an action for the breach of the contract between Nielsen and Hoiness. In defense to Julien's claim, Hoiness asserted that Julien and Nielsen had waived any rights they may have had to demand a payment bond by their failure to object to the absence of payment-bond coverage at the time the performance bond was issued. Responding to this defense, the trial court determined that there was no intentional waiver of a known right, and relied upon the course of dealing between Nielsen and Hoiness whereby Nielsen would request a bond, and by that order Hoiness would provide both coverages. This course of dealing excused Nielsen's failure first to discover and then to object to the omitted coverage, and the course-of-dealing rationale also inured to the third-party beneficiary, Julien. Thus, the trial court found that by the third-party beneficiary obligation breach, Hoiness was liable to Julien for resulting contractual damages. On that basis, the court granted judgment to Julien against Hoiness under the contract theory, and denied any award of attorney's fees in the absence of any contractual or statutory provision which would allow recovery. No apparent ruling on the negligence theory was made. With regard to Julien's claim against Allied, the trial court found (1) that all the parties intended that both a performance and a payment bond issue; (2) Nielsen paid for both bonds; and (3) Allied granted Hoiness the authority to issue both bonds. Therefore, the trial court reformed the issued bond to accurately reflect the intentions of all the parties so that payment-bond coverage was provided. Under the reformed dual-coverage bond, the trial court held Allied liable to Julien for the amounts paid by Julien to Nielsen's suppliers, and additionally for costs and attorney's fees. The court found Nielsen liable for any and all amounts Allied may be called to pay based on a written indemnity agreement, and thus granted Allied's cross-claim against Nielsen and denied Nielsen's cross-claim against Allied. Nielsen's cross-claim against Hoiness was denied because the court found that although Hoiness breached its contract with Nielsen, Nielsen had not suffered any damages as a result of the breach because of Nielsen's indemnity obligation to Allied. The court denied Nielsen attorney's fees from Hoiness by reasoning that the statute under which recovery was sought applies only to insurance companies (and sureties), but not insurance brokers (agents). Finally, the trial court considered Allied's and Hoiness' claims against each other and denied both, pointing to the distinct theories under which both parties were separately liable to Julien. In summary, the trial court granted judgment for Julien against Nielsen, Hoiness and Allied, and only imposed liability for Julien's costs and attorney's fees against Nielsen and Allied. [4] The trial court also granted Allied's indemnity claim against Nielsen. All other claims were denied.