Opinion ID: 1318239
Heading Depth: 2
Heading Rank: 5

Heading: Fireman's Fund's Liability for the Repair Costs

Text: Fireman's Fund argues that even if McGee is found liable for the costs of repair because he was negligent, it is not jointly liable because repair costs are not within the coverage of the bond. We agree. The superior court erred in holding Fireman's Fund liable for repair costs, and therefore we reverse summary judgment on this issue. A Miller Act bond covers repair for incidental damages and ordinary wear and tear. Continental Casualty, 140 F.2d at 116. We distinguish incidental damage costs, which are within the bond coverage, from non-protected expenditures by looking to the degree of expected consumption of the items on the particular job for which they were furnished. United States ex rel. J.P. Byrne & Co. v. Fire Association of Philadelphia, 260 F.2d 541, 544 (2d Cir.1958). In J.P. Byrne, the cost of replacing truck tires was considered within the coverage of the bond because there was a reasonable expectation that the tires would be substantially used on the bonded project. [12] Id. The question in this case is whether damage to the crane caused by any negligence of McGee [13] can be considered an expected consumption of the equipment on the job. We conclude that a subcontractor's negligent damage to a major piece of equipment was not an expense which Fireman's Fund should have expected. Therefore it is not liable for these repair costs. McDonald argues that McGee was responsible for any required repairs under the provisions of the contract. It contends that case law imposes liability on Fireman's Fund because Fireman's Fund undertook the risk contemplated by McGee's contract. See United States ex rel. Llewellyn Machinery v. National Surety Corp., 268 F.2d 610, 611 (5th Cir.), cert. denied, 361 U.S. 914, 80 S.Ct. 259, 4 L.Ed.2d 184 (1959). In Llewellyn, however, the court found the surety liable for the cost of lost equipment because it issued a bond on a general contract which had a provision for such a loss. Id. at 610. Here, Fireman's Fund could not have reasonably anticipated that its bond would cover the terms of a subcontractor's rental agreement. To hold it liable for repairs would unduly enlarge the scope of contemplated coverage. [14] Summary judgment was proper only as to the determination that a lease existed with a three month guaranteed rental period. The grant of summary judgment is AFFIRMED in part, REVERSED and REMANDED in part for proceedings consistent with this opinion.