Los Angeles Unified Sch. Dist. v. Great Am. Ins. Co., 163 Cal. App. 4th 944 (2008)
In this case, the District had contracted with a construction company to build a new elementary school for approximately $10.1 million. Unsatisfied with the work, the District adopted a declaration of emergency under Public Contract Code § 20113, allowing the District to enter into a completion contract without inviting bids. Defendant Hayward Construction Company was awarded the contract and Great American Insurance Company issued a performance bond for $4.5 million. In the completion agreement, Hayward guaranteed that the maximum amount payable by the District for the cost of the work plus the contractor’s fee would not exceed $4.5 million. Hayward’s scope of work included items listed on two “pre-punch lists,” identifying the remaining work to be completed or corrected.
Hayward subsequently informed the District that unforeseen circumstances concerning work that was not included in either of the pre-punch lists required an increase of the contract price beyond the contract maximum. Payment was made to Hayward under a separate agreement preserving the District’s right to recover the money from all responsible parties, including Hayward and its surety. When Hayward and its surety refused the District’s demand for return of more than $1 million, the District filed a complaint for breach of contract, breach of performance bond and declaratory relief. Hayward cross-claimed for breach of contract, rescission and declaratory relief. Read More