The Supreme Court of California holds that an obligee may not recover in tort for a surety’s breach of covenant of good faith and fair dealing implied in a performance bond.

Cates Constr., Inc. v. Talbot Partners et al.,
1999 Cal. LEXIS 4847 (Co. July 29, 1999)

In 1989, defendant Talbot Partners (“Talbot”) hired plaintiff Cates Construction, Inc. (“Cates”) to build a condominium project in Malibu, California. The construction contract required Cates to have the project ready for occupancy in eight months. The contract also required Cates to furnish a performance bond and a labor and materials bond, both of which were subsequently issued by Transamerica Insurance Company (“Transamerica”). Continue reading “The Supreme Court of California holds that an obligee may not recover in tort for a surety’s breach of covenant of good faith and fair dealing implied in a performance bond.”