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Curtiss-Manes-Schulte, Inc. v. Safeco Insurance Co. of America

United States District Court, W.D. Missouri, Central Division

May 4, 2015

CURTISS-MANES-SCHULTE, INC., Plaintiff,
v.
SAFECO INSURANCE COMPANY OF AMERICA, Defendant.

ORDER

NANETTE K. LAUGHREY, District Judge.

Plaintiff Curtiss-Manes-Schulte (CMS), a general contractor, filed this lawsuit against Defendant Safeco Insurance Company of America, a surety, alleging breach of contract and vexatious refusal. The lawsuit arises out of Safeco's denial of a claim filed by CMS under a performance bond issued by Safeco to one of CMS's subcontractors, Balkenbush Mechanical, Inc. In October 2014, Safeco filed a Motion for Summary Judgment, and argued that it was entitled to summary judgment on CMS's claims because CMS did not provide notice of Balkenbush's default sufficient to trigger Safeco's duties under the performance bond. [Doc. 19]. The Court denied this Motion, concluding that neither the subcontract between CMS and Balkenbush nor the performance bond issued by Safeco required CMS to provide notice to Safeco of Balkenbush's default or CMS's intention to hire replacement contractors. [Doc. 39]. Before the Court is Safeco's Motion for Reconsideration of this Court's Order denying Safeco's Motion for Summary Judgment, [Doc. 40]. The Motion for Reconsideration is granted. The Order denying Safeco's Motion for Summary Judgment is vacated. Safeco's Motion for Summary Judgment, [Doc. 19], is granted.

I. Undisputed Material Facts

Plaintiff, CMS, was the general contractor for a renovation project located at Fort Leonard Wood, Missouri. On October 19, 2010, it entered into a $1.5 million[1] subcontract with Balkenbush Mechanical to replace an air conditioning system for the Fort Leonard Wood project. [Doc. 20-3]. The subcontract between CMS and Balkenbush required Balkenbush to secure a performance bond for the work. Id. at 1. On October 26, 2010, Defendant Safeco, as the surety for Balkenbush, issued a performance bond with CMS as the obligee and Balkenbush as the principal. [Doc. 20-4].

The subcontract between CMS and Balkenbush outlines what remedies are available to CMS should Balkenbush render unsatisfactory performance. [Doc. 20-3]. The subcontract between CMS and Balkenbush states:

FAILURE OF PERFORMANCE
Should Sub-Contractor fail to satisfy contractual deficiencies or to commence and continue satisfactory correction of the default with diligence or promptness within three (3) working days from receipt of Curtiss-Manes-Schulte, Inc. written notice, then Curtiss-Manes-Schulte, Inc., without prejudice to any right or remedies, shall have the right to take whatever steps it deems necessary to correct deficiencies and charge the cost thereof to Sub-Contractor, who shall be liable for such payment, including reasonable overhead, profit and attorneys' fees.

Id. at p. 2. Likewise, the performance bond issued by Safeco lists what remedies are available should Balkenbush default on its obligations under the subcontract and at what point Safeco is obligated to provide those remedies. [Doc. 20-4]. Article 4 of the performance bond states:

4. PRINCIPAL DEFAULT. Whenever the Principal [Balkenbush] shall be, and is declared by the Obligee [CMS] to be in default under the Subcontract, with the Obligee having performed its obligations in the Subcontract, the Surety [Safeco] may promptly remedy the default, or shall promptly:
4.1 COMPLETE SUBCONTRACT....
4.2 OBTAIN NEW CONTRACTORS....
4.3 PAY OBLIGEE....
4.4 DENY LIABILITY....

Id. at p. 2]. The performance bond incorporates the subcontract by ...


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