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Seawatch at Marathon Condominium Association, Inc. v. The Guarantee Company of North America, USA

Florida Court of Appeals, Third District

October 2, 2019

Seawatch at Marathon Condominium Association, Inc., Appellant/Cross-Appellee,
v.
The Guarantee Company of North America, USA, et al., Appellees/Cross-Appellants.

         Not final until disposition of timely filed motion for rehearing.

          Appeals from the Circuit Court for Monroe County Lower Tribunal No. 17-233-M, Mark H. Jones, Judge.

          Duane Morris LLP, and Joseph A. Battipaglia, and Michael J. Shuman, for appellant/cross-appellee.

          Etcheverry Harrison, LLP, and Edward Etcheverry, and Jeffrey S. Geller (Fort Lauderdale); Fergeson Skipper, P.A., and David S. Maglich, and Douglas R. Bald (Sarasota), for appellees/cross-appellants.

          Before SALTER, MILLER, and GORDO, JJ.

          MILLER, J.

         Appellant, Seawatch at Marathon Condominium Association, Inc. ("Seawatch" or "Owner"), appeals, and Guarantee Company of North America, USA ("Guarantee" or "Surety") and Complete Aluminum General Contractors, Inc. ("CAGC" or "Principal"), cross-appeal, a final declaratory judgment. Following the default of the Principal on a multi-million dollar construction contract, the Surety rendered an election under the terms of the applicable standard performance bonds. The Owner filed suit, seeking a declaration regarding its rights and responsibilities. In the final judgment, the lower tribunal determined that, under the terms of the bonds, the takeover Surety was permitted to utilize the defaulting Principal as its completion contractor. The court further found the Surety was not required to maintain a Florida contracting license, and its election was conditional as it added unstipulated terms. Thus, notwithstanding its reluctant embroilment in litigation, the Surety remained obligated under the bonds. For the reasons explicated below, we discern no error and affirm.

         FACTS AND PROCEDURAL HISTORY

         The relevant facts are undisputed. On October 23, 2014, Seawatch entered into a $5.4 million construction contract, engaging CAGC to serve as the contractor for the renovation of three condominium buildings located in Marathon, Florida. Guarantee executed three standard American Institute of Architects A312 surety bonds to secure CAGC's performance under the construction contract, for the benefit of Seawatch.

         In 2017, after discovering certain defects in the renovations, Seawatch declared CAGC in default and effected a termination of the contract. Thereafter, Seawatch requested Guarantee to "promptly make an election under Paragraph 4" of the performance bonds.

         Following the satisfaction of specified conditions precedent, under Paragraph 4, the Surety was required to promptly, at its own expense, exercise one of the following series of options:

4.1 Arrange for the CONTRACTOR, with consent of the OWNER, to perform and complete the Contract; or
4.2 Undertake to perform and complete the Contract itself, through its agents or through independent contractors; or
4.3 Obtain bids or negotiated proposals from qualified contractors acceptable to the OWNER for a contract for performance and completion of the Contract, arrange for a contract to be prepared for execution by the OWNER and the contractor selected with the OWNER'S concurrence, to be secured with performance and payment bonds executed by a qualified surety equivalent to the Bonds Issued on the Contract, and pay to the OWNER the amount of damages as described in ...

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