City of Wolfe City v. Am. Safety Cas. Ins. Co., 557 S.W.3d 699

Wolfe City contracted with McKinney & McMillen, LLC (M&M) to install an enhanced water distribution system including a fixed-base automatic meter-reading (AMR) system; total contract value after change orders was $839,665.30.
American Safety issued a performance bond incorporating the Contract and guaranteeing M&M's performance.
M&M subcontracted meter/MIU supply/installation to HD Supply/Datamatic; by substantial completion many MIUs were not installed and later a material portion of MIUs/register heads malfunctioned.
City’s engineer issued a certificate of substantial completion (March 27, 2013) with a punch list requiring the AMR system be brought to full functional status within 30 days; significant AMR failures emerged after that date.
City demanded bond performance (Nov. 4, 2013) and sued American Safety and others (Mar. 20, 2014); after discovery American Safety moved for no-evidence and traditional summary judgment on City’s contract claims.
Trial court granted both motions; appellate court reversed both grants and remanded, finding genuine fact issues on M&M’s breach and surety liability under the bond.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether City produced any evidence that M&M breached the Contract (no-evidence SJ)	City presented admissions, depositions, expert report, and contract terms showing MIU failures, that M&M supervised subcontractors, and M&M abandoned work — more than a scintilla of evidence of breach	American Safety argued City lacked evidence that the AMR problems were not caused by a design/specification defect required by the Contract (thus no breach by M&M)	Reversed: evidence raised more than a scintilla that M&M breached by failing to supervise/inspect subcontractor work, deliver a fully functional AMR, and to repair defects within one year of substantial completion.
Whether certificate of substantial completion or City’s admissions discharged surety liability (traditional SJ)	City argued Contract provisions and bond required contractor/surety to correct defects for one year after substantial completion; certificate does not release obligations	American Safety argued it could rely on engineer’s certificate and City’s acknowledgments that project was substantially complete, ending bond obligations	Reversed: Contract unambiguously preserved contractor’s duty to correct defects post-substantial completion and the bond incorporated those provisions, so certificate did not absolve surety.

Great Am. Ins. Co. v. N. Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415 (Tex. 1995) (contractor remains liable for subcontractor work despite certain design-approval language)
Am. Empl'rs' Ins. Co. v. Huddleston, 70 S.W.2d 696 (Tex. Comm'n App. 1934) (certificate/payment do not relieve contractor/surety of post-acceptance warranty obligations)
TransAmerica Ins. Co. v. Housing Auth. of City of Victoria, 669 S.W.2d 818 (Tex. App.-Corpus Christi 1984) (bond liability depends on underlying contract terms; final-completion date and remedy obligations affect limitations analysis)
Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502 (Tex. 2002) (standard for reviewing no-evidence summary judgment parallels directed verdict review)
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) (summary-judgment grants are reviewed de novo)