A prime contractor on a government contract obtained payment and performance bonds from defendant. Thereafter, the parties agreed to terminate the prime contract and defendant agreed to complete the contract. The government ultimately sued the parties on behalf of an unpaid supplier. The district court entered judgment against a surety of a non-performing subcontractor.
Where the prime contractor’s insurer satisfied the contractor’s obligations under the construction contracts, it became a subrogee of the prime contractor and could enforce a performance bond of a subcontractor which remained bound to the subcontract, as there was no material enlargement of performance obligations.
U.S. v. Liberty Mutual Insurance Company (MLW No. 73065/Case No. 18-1455 – 9 pages) (U.S. Court of Appeals, 8th Circuit, Loken, J.) Appealed from U.S. District Court, Southern District of Iowa, Ebinger, J. (Shane C. Mecham for appellant) (Carol Z. Smith for appellee).