Nova Casualty Co. v. Turner Construction Co.
335 S.W.3d 698
Tex. App.2011Background
- Turner hired to build cargo facility; subcontract with BOCA for baggage handling system worth $415,000.
- BOCA obtained a performance bond from Nova (A-311 type) incorporating the subcontract terms.
- BOCA abandoned the project on December 14, 2004; Turner notified Nova of default on December 15, 2004.
- Nova investigated via Forcon; Turner completed work and incurred substantial costs; damages potentially exceed the bond penal sum.
- Trial court granted partial summary judgment in Turner's favor; final judgment awarded $415,000 plus fees and pre-judgment interest.
- Parties stipulated that Turner did not terminate BOCA to trigger the bond and that damages would exceed the bond if due.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Turner needed to terminate BOCA to trigger the bond | Nova: termination required; bond triggers on termination. | Turner not required to terminate; default notice suffices to trigger bond. | Turner's default notice sufficed; no termination required. |
| Whether Turner provided reasonable notice of default to Nova | Nova failed to timely act; notice insufficient because pre-default actions occurred. | Turner gave notice per bond; Nova delayed investigation instead of mitigating. | Turner provided reasonable notice; bond remedies were available. |
| Whether Turner is entitled to attorneys' fees and pre-judgment interest | Turner entitled to recover fees and pre-judgment interest as prevailing bond claimant. | Challenge to pre-judgment interest on fees paid pre-judgment; may be improper. | Trial court’s award upheld; pre-judgment interest on attorney’s fees within discretion. |
Key Cases Cited
- L & A Contracting Co. v. S. Concrete Servs., Inc., 17 F.3d 106 (5th Cir.1994) (notice/termination principles for default under bonds)
- In re Lyon Fin'l Servs., Inc., 257 S.W.3d 228 (Tex. 2008) (incorporation by reference and contract knowledge in signature/)
- Vastine v. Bank of Dallas, 808 S.W.2d 463 (Tex. 1991) (strict construction of surety contracts)
- Wolf Hollow I, L.P. v. El Paso Mktg., L.P., 329 S.W.3d 628 (Tex. App.—Hou. (14th Dist.) 2010) (doctrine on ambiguity and contract terms)
- L & A Contracting Co. v. S. Concrete Servs., Inc., 17 F.3d 106 (5th Cir.1994) (notice/termination requirements for surety obligations)