825 F. Supp. 2d 1276
S.D. Fla.2011Background
- Hartford seeks declaratory relief on Area 3 bond scope and Area 7 change; Area 7 Change Order increased bonded scope without Hartford bonding; Marathon terminated Intrastate for cause—centered on Hartford’s refusal to bond Area 7; Area 7 project had separate plans and cost increase; dispute involves cardinal change doctrine and Florida bonding law; undisputed facts show Area 7 was cardinal change and not covered by Area 3 bond.
- Area 3 Performance Bond incorporated underlying contract change provisions; Area 7 Change Order altered project scope dramatically and cost; Hartford argues bond not extend to Area 7 due to cardinal change; Marathon and Intrastate argue bond auto-extends per contract language; Florida statute requires competitive bidding for public projects.
- Hartford filed suit August 9, 2010 seeking declaration that Area 7 Change Order was void ab initio and not covered by any Hartford bond; Marathon counterclaims for breach of the Area 3 Performance Bond due to Hartford’s alleged failure to bond Area 7; motions for summary judgment were briefed and argued; bench trial scheduled; court resolves on cross motions.
- Court analyzes Florida law on performance bonds (private surety liability); area 7 change was outside scope and a cardinal change; Area 3 bond language does not unconditionally extend to Area 7; Marathon terminated Intrastate for insufficient cause; Hartford not liable for Area 3 completion after termination.
- Court grants Hartford summary judgment on declaratory relief, holding Area 7 Change Order void and not bonded; Marathon’s breach of contract counterclaim denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Area 7 Change Order constitutes a cardinal change. | Hartford: cardinal change relieves liability. | Marathon: Area 7 was within contemplated changes. | Yes; Area 7 is cardinal change. |
| Does Area 3 Performance Bond extend to the Area 7 Change Order? | Bond language and contract imply extension. | Bond does not automatically extend to Area 7. | No; Area 3 bond does not extend to Area 7. |
| Did Hartford’s refusal to bond Area 7 breach the Area 3 Bond or terminate Hartford’s obligations? | Hartford did not breach; Area 7 was void/uncharted. | Bond obligation extended; termination breached. | Hartford not liable; no breach. |
| Was Hartford bound by Hartford’s attorney-in-fact actions to bond Area 7? | May bind via agency. | No valid bond document; May 14, 2010 letter insufficient. | Insufficient to bind Hartford to Area 7. |
Key Cases Cited
- Gibbs v. Hartford Acc. & Indent. Co., 62 So. 2d 599 (Fla. 1953) (material change must injure the surety to relieve liability)
- Larkin Gen. Hosp., Ltd. v. American Bankers Ins. Co., 593 So. 2d 195 (Fla. 1992) (surety liability coextensive with principal; injury required for relief)
- Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F. Supp. 2d 1248 (M.D. Fla. 2002) (contractual interpretation of bond terms and changes)
- Becho, Inc. v. United States, 47 Fed. Cl. 595 (Fed. Cl. 2000) (cardinal change factors and need for case-specific facts)
- Wunderlich Contracting Co. v. United States, 351 F.2d 956 (Ct. Cl. 1965) (change order cost thresholds and cardinal change concept)
- Peter Kiewit Sons' Co. v. Summit Const. Co., 422 F.2d 242 (8th Cir. 1969) (extent of cost increase as indicator of cardinal change)
- Gibbs v. City of Prichard (cited as Gibbs, 62 So.2d), 661 F.2d 1206 (11th Cir. 1981) (precedent on how pre-1981 opinions treat cardinal change)