Specialized Contracting, Inc. v. St. Paul Fire & Marine Ins.

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Kadrmas, Lee & Jackson, Inc., ("KLJ") appealed a district court judgment awarding the City of Valley City ("City") costs and expenses the City incurred defending itself in the underlying lawsuit and pursuing its indemnity claim against KLJ. The City entered into a contract with KLJ to provide engineering services for a paving and sewer project. The City hired a general contractor for the project. The contract between the City and the contractor required the contractor to furnish all labor, materials, and equipment for the project. The contractor was required to provide a payment bond under the terms of its contract with the City, and St. Paul Fire & Marine Insurance Company ("St. Paul") was the surety under the bond. Specialized Contracting, Inc. ("SCI"), entered into a subcontract with the contractor to complete some of the work on the project. In 2007, SCI sued St. Paul for breach of its duties under the payment bond, seeking compensation for additional work SCI alleged it completed on the project for which the contractor refused to pay. St. Paul served a third-party complaint against the City for breach of contract and indemnity, alleging the concrete repair work was outside the scope of the City's contract with the contractor, the City was liable to the contractor for any additional compensation SCI was claiming against the payment bond if SCI established KLJ's decision to replace the concrete was beyond the scope of the contract, and the City was required to indemnify St. Paul for any judgments against it in favor of SCI arising from decisions made by KLJ. Upon review of the matter, the Supreme Court concluded KLJ did not have a duty to defend the City. The Court reversed the district court's judgment awarding the City costs and expenses, and remanded the case for a determination of whether KLJ was entitled to recover its costs and expenses as a prevailing party. View "Specialized Contracting, Inc. v. St. Paul Fire & Marine Ins." on Justia Law