Opinion ID: 2604080
Heading Depth: 1
Heading Rank: 10

Heading: The Nature of the Default:

Text: It is apparent from trial exhibits that the project was substantially completed by Nielsen as mechanical subcontractor. The Julien back-charge claim, which is the basis of its money prayer and ultimate award, was $156,649 for unpaid subcontractors or suppliers to Nielsen and only $1,940 as finishing costs. Of the 18 creditors included in the $156,649 payment, at least 17 had received identical denial letters from Allied based on nonissuance of a payment bond as written in July of 1985. Contractor takeover and completion costs were nominal, essentially including punch-list type final work. It should also be noted that without regard for the absence of a litigant's argument or briefing here, this amount of $1,940 was unquestionably due from Allied to Julien as covered specifically and directly by the performance bond. Properly at issue were only the $156,649 unpaid subcontractor bills as a payment obligation. It should also be noted that the written subcontract form used by Julien did not include a customary lien-claim indemnity or bill-paid covenant provision. Actually, these requirements were substantially to have been accomplished by virtue of the subcontractor's execution as principal of the payment bond for which Allied, by additionally signing, became surety. The subcontract agreement provided that the subcontractor:    will furnish all materials and labor   .          indemnify and save harmless the Contractor from any and all manner of claims or suits for infringement of patents   . It was a trial argument of Hoiness, now continued on appeal, that the covenant to furnish a 100 percent payment and performance bond meant that the issuance of the performance bond insured issuance also of a payment bond by virtue of the nonperformance-of-the-contract provision. The default terminology, If Subcontractor fails to comply with this provision, the Contractor, at its option, may declare this contract in default and may hold Subcontractor liable for all additional expenses incurred by Contractor as a result of Subcontractor's default, does not necessarily support the convoluted performance-bond liability arising from neglect to furnish the payment bond which inures as a liability to the issuer of the payment bond who was not aware of the dual bond order given to the issuing agent or the specific premium-payment purpose.