business

Plaintiff subcontractor appealed from the Superior

Plaintiff subcontractor appealed from the Superior Court of Los Angeles County (California), which ruled that defendant contractor’s obligation had been altered without defendant insurer’s consent thereby exonerating defendant insurer. Defendant contractor appealed an attorney fees award.

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Overview

Plaintiff subcontractor sought to enforce a stop notice and a stop notice release bond. Plaintiff and defendant contractor entered into a settlement agreement, which defendant contractor later breached. Defendant, the contractor’s insurer, was not a party to the settlement agreement and did not consent to the agreement. Summary judgment was granted in favor of defendant insurer because the release of defendant contractor’s original obligation exonerated it as surety, pursuant to Cal. Civ. Code ยงยง2810 and 2825. Plaintiff fully released defendant contractor from its claim under the bonded obligation and accepted an unbonded obligation instead. This exonerated defendant insurer as surety. The renewed prosecution of the action against defendant insurer was caused by defendant contractor’s breach and arose out of the settlement within the attorney fees clause. Judgments affirmed.

Outcome

Judgment in favor of defendant insurer was affirmed, as release of defendant contractor’s original obligation exonerated defendant insurer and defendant insurer’s liability on principal obligation ceased. Action arose due to defendant contractor’s breach, thus attorney fees award was affirmed.