Curtiss-Manes-Schulte, Inc. v. Safeco Insurance Company, 2015 U.S. Dist. LEXIS 10032 (W.D. Mo. 2015)
NOTE: THIS DECISION WAS VACATED ON REHEARING AND THE DECISION ON REHEARING WILL BE THE SUBJECT OF A POST TO BE PRESENTED SHORTLY IN CONSTRUCTLAW.
This dispute between a general contractor and its subcontractor’s performance bond surety arose out of a renovation project at Fort Leonard Wood in Missouri. On October 19, 2010, the general contractor, Curtiss-Manes-Schulte, Inc. (“CMS”), entered into a subcontract with Balkenbush Mechanical, Inc. to replace the air conditioning system on the project. A week later, Balkenbush obtained the required performance bond from Safeco Insurance Company of American.
By October 2011, CMS knew that Balkenbush was behind schedule. In July 2012, CMS responded to a Contract Bond Status Inquiry and informed Safeco that the contract was not complete, that Balkenbush’s work was not progressing satisfactorily, that the project was nine months late, and that liquidated damages would be assessed. Around the same time, Safeco hired consultants and a law firm to investigate, defend and resolve claims made against four performance bonds Safeco issued to Balkenbush on other projects. In December 2012, Safeco filed a lawsuit against Balkenbush to recover its losses resulting from the claims on the four other performance bonds. One month later, in January 2013, Balkenbush filed a bankruptcy petition and Safeco’s counsel entered their appearance in that proceeding.