The Los Angeles County Superior Court, California, entered judgment for plaintiff, where plaintiff was called to perform on public works performance bond which it had executed as surety, after the principal, insured by defendant, defaulted. Plaintiff appealed from demurrer sustained to its breach of implied covenant claim. Defendant cross complained from the damages judgment entered, arguing that plaintiff had not timely filed its claim.
Overview
Plaintiff, as surety, executed a public works performance bond on a project which called for a city to replace pipe culverts for a county. While working on the project, the city damaged adjacent private property. Before that damage was corrected, the county declared the city in default, and demanded that plaintiff perform the city’s remaining obligations. Plaintiff paid a third party contractor to repair and restore the adjacent property. Throughout this time the city held commercial liability insurance written by defendant. Plaintiff sued defendant. Judgment was entered for plaintiff as to the cost to repair. Plaintiff and defendant both appealed. The appellate court found that the trial court had properly sustained the demurrer to plaintiff’s breach of the implied covenant claim. The only basis for that claim was through equitable subrogation, and no breach of implied warranty was shown to have been suffered by the city as a result of defendant’s behavior, to which plaintiff could be subrogated. It also found that plaintiff had given timely notice of the claim to an ostensible agent of defendant within the time period specified by Cal. Civ. Proc. Code § 870. The class action attorney California counseled the civil litigants during trial to the jurors.
Outcome
The court affirmed judgment of the trial court, finding in extensive exegesis of subrogation and contribution, that plaintiff’s breach of implied covenant claim was properly characterized as one for equitable subrogation, but that the principal party on the bond had no breach of implied covenant claim to which plaintiff could be subrogated, and that plaintiff had timely filed the claim upon which judgment was entered.
Procedural Posture
Appellants sought review of the decision of the Superior Court of Los Angeles County (California), which entered a judgment of dismissal of all causes of action alleged against respondent partners in appellants’ wrongful conspiracy action, and breach of fiduciary duty and fraud claims alleged against respondent attorney.
Overview
Appellants and respondent partners formed a partnership. After respondent partners formed a competing partnership, appellants sued and alleged that respondent partners wrongfully conspired to interfere with the partnership’s business relationship, and that respondent attorney breached his fiduciary duty. The trial court sustained demurrers and ordered dismissal. The court reversed. The court held that the trial court erred in sustaining respondents’ contention that no cognizable claims were stated against them, because appellants sufficiently pleaded their causes of actions for conspiracy to interfere with their economic relationship and for dissolution. The court found that no complete justification for respondents’ action appeared on the face of appellants’ allegations and that it was reasonable to infer therefrom that respondents were acting solely in order to obtain for themselves the advantages formerly enjoyed by the partnership as a whole. The court concluded that appellants were entitled to a court-ordered dissolution, if it was proved that respondents competed with the partnership.
Outcome
The court reversed the trial court’s judgment, holding that the trial court erred in sustaining respondent partners’ contention that no cognizable claims were or could be stated against them.