Hunt Construction Group , Inc. v. National Wrecking Corporation , Et Al .

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 15, 2009 Decided November 27, 2009
No. 08-7059
HUNT CONSTRUCTION G ROUP , I NC.,
APPELLANT
v.
NATIONAL WRECKING CORPORATION , ET AL .,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:05-cv-00165)
David T. Dekker argued the cause for appellant. On the
briefs were Michael S. McNamara and Laura R. Thomson.
Michael C. Zisa argued the cause for appellees. With him
on the brief were Stephen M. Seeger and Leonard A. Sacks.
Edward G. Gallagher filed the brief for amicus curiae in
support of appellees and urging affirmance.
Before: TATEL and BROWN, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.

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WILLIAMS, Senior Circuit Judge: Hunt Construction
Group sought relief in a diversity action against a defaulting
subcontractor and against two sureties on the subcontractor’s
performance bond. The sureties’ defenses included the
ground that Hunt had failed to give timely notice of default,
thereby depriving them of any realistic opportunity to exercise
their rights under the bond to cure the subcontractor’s
defective performance. The district court agreed, granted
summary judgment in their favor, and issued an order under
Rule 54(b) of the Federal Rules of Civil Procedure, enabling
Hunt to file an interlocutory appeal on the issue. Hunt Constr.
Group, Inc. v. Nat’l Wrecking Corp., 542 F. Supp. 2d 87
(D.D.C. 2008). Hunt now appeals, claiming that the bond
does not make such notice a condition of the sureties’ liability.
We affirm.
* * *
Hunt subcontracted excavation work for the construction
of an Embassy Suites Hotel in Washington, D.C., to the
National Wrecking Corporation, which agreed to complete the
work by February 12, 2004. Around the time the performance
was due to be completed, Hunt learned that the work would be
delayed. Hunt complained to National Wrecking and incurred
additional expenses for expediting the work of other
subcontractors to make up for National Wrecking’s delays and
meet the overall project deadline. National Wrecking finally
completed its work on April 6, 2004.
Suing National Wrecking for breach of contract, Hunt in
its second amended complaint added as defendants the two
sureties on a performance bond for National Wrecking—XL
Reinsurance America, Inc., and the United States Surety
Company. Although Hunt admits that it knew by early
February 2004 that National Wrecking’s excavation work

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would be delayed, it did not then—or for five months
thereafter—give the sureties notice of its position that the
delays constituted a default under the subcontract, opting
instead, without consulting the sureties, to use the other
subcontractors to make up for National Wrecking’s
performance. Hunt formally notified the sureties of its
potential claim when it declared National Wrecking to be in
default on July 13, 2004, more than three months after
National Wrecking’s work had been completed.
* * *
The performance bond form at issue in this case—which
Hunt selected—provides as follows:
[A] National Wrecking Corporation . . . as Principal . . .
and United States Surety Company & XL Reinsurance
. . . , as co-sureties . . . are held and firmly bound unto
Hunt Construction Group, Inc. . . . as Obligee . . . in the
amount of . . . $1,960,496 . . . .
[B] NOW, THEREFORE, THE CONDITION OF THIS
OBLIGATION is such that, if Principal shall promptly
and faithfully perform said subcontract, then this
obligation shall be null and void; otherwise it shall
remain in full force and effect.
. . . .
[C] Whenever Principal shall be, and be declared by
Obligee to be in default under the subcontract, the
Obligee having performed Obligee’s obligations
thereunder:
(1) Surety may promptly remedy the default subject to
the provisions of paragraph 3 herein, or;

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(2) Obligee after reasonable notice to Surety may, or
Surety upon demand of Obligee, may arrange for the
performance of Principal’s obligation under the
subcontract subject to the provisions of paragraph 3
herein;
(3) The balance of the subcontract price, as defined
below, shall be credited against the reasonable cost of
completing performance of the subcontract. . . .
J.A. at 130 (bracketed letters added for clarity of reference).
The bond incorporates the language of the American Institute
of Architects (“AIA”) Document A311.
The parties agree that the issue is governed by District of
Columbia law. Hunt urges us to conclude that, if directly
presented with the issue, the District’s courts would adopt the
reasoning of Colorado Structures, Inc. v. Insurance Co. of the
West, 167 P.3d 1125 (Wash. 2007), which held that the AIA
Document A311 bond at issue there did not require notice as a
condition precedent to recovery.
But the provisions of paragraph C are nonsensical without
an understanding that the surety’s duties depend on the
obligee’s declaring the principal to be in default and giving
notice of the declaration to the principal and the surety.
Under Hunt’s contrary reading, paragraph C’s explicit grant to
the surety of a right to remedy the default itself would be
operative only if the obligee chose to give it notice. Such a
view would render that right nearly meaningless. Thus,
construing the A311 bond, the Second Circuit explained in
Elm Haven Construction Ltd. Partnership v. Neri
Construction LLC, 376 F.3d 96 (2d Cir. 2004):
In order to trigger [the surety]’s liability under the
Performance Bond, two conditions had to be met. First,
[the principal] had to be “in default” under the

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subcontract agreement, and second, [the obligee] had to
“declare[] [the principal] to be in default under the”
subcontract agreement. Such a declaration of default had
to be made to [the surety] in precise terms.
Id. at 100; see also L&A Contracting Co. v. S. Concrete
Servs., Inc., 17 F.3d 106, 111 (5th Cir. 1994) (“A declaration
of default sufficient to invoke the surety’s obligations under
the [A311] bond must be made in clear, direct, and
unequivocal language. The declaration must inform the surety
that the principal has committed a material breach or series of
material breaches of the subcontract, that the obligee regards
the subcontract as terminated, and that the surety must
immediately commence performing under the terms of its
bond.”).
Even if Hunt had declared a default in a timely fashion,
the bond makes clear that the obligee may arrange to complete
unfinished work only “after reasonable notice to Surety.” J.A.
at 130 (emphasis added). In other words, even after declaring
a default, Hunt could proceed to remedy the default on its own
only after it gave “reasonable notice” to the sureties that it
intended to do so. It gave no such notice.
Colorado Structures, on which Hunt primarily stakes its
claim, reads the default and notice requirements out of the
A311 bond form by reasoning that paragraph A, by itself,
creates the surety’s liability to the obligee and that paragraph
B subjects that liability to “one—and only one—express
condition subsequent,” namely, that the principal has not fully
and faithfully performed the contract. 167 P.3d at 1131-32.
Colorado Structures read paragraph C as merely providing
that certain remedies would be available when the conditions
contained in that paragraph (that the principal has defaulted,
the obligee has declared the default, and the obligee has
performed its obligations) were met. Otherwise, the common

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law would provide for remedies and the measure of damages.
Id. at 1132.
Contrary to the Colorado Structures court, we do not
attach talismanic significance to the fact that paragraph B
“us[ed] the word ‘condition’ in its singular form,” id., even in
the singular preceded by the word “the.” In reading contract
provisions we take the contract’s entirety into account,
seeking to give all its provisions effect. Steele Founds., Inc. v.
Clark Constr. Group, Inc., 937 A.2d 148, 154 (D.C. 2007).
Hunt points us to no case in the District of Columbia
suggesting that a contract’s labeling a particular provision as a
“condition,” in the singular, gives rise to an inference that no
other provisions of the contract can also be conditions
precedent. And in the context of the bond form before us,
such an inference would gut rights specifically afforded the
surety.
Citing International Fidelity Insurance Co. v. County of
Rockland, 98 F. Supp. 2d 400, 435 (S.D.N.Y. 2000), and
Walter Concrete Construction Corp. v. Lederle Laboratories,
788 N.E.2d 609, 610 (N.Y. 2003), Hunt also argues that
because the contract could have imposed a condition
precedent in clearer language than it did, we should construe
the bond not to include such a condition. With the benefit of
hindsight, of course, the parties in nearly every case of
contract interpretation could have made their contract more
clear, at least in a way suited to the problem which in fact
arose—though possibly making it less clear with reference to
other problems. The relevant question is not whether the
contract uses the most precise language a court can imagine
ex post but how best to read the contract as actually written.
See Mamo v. Skvirsky, 960 A.2d 595, 599 (D.C. 2008).
Finally, Hunt contends that even if the bond form requires
notice of some kind, the requirement is merely an independent

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promise for which the sureties may recover damages, not a
condition precedent to their liability under the bond. See
generally 13 Williston on Contracts § 38:5, at 382 (4th ed.
2005). But “[i]n the District of Columbia, ‘[n]otice provisions
in insurance contracts are of the essence of the contract.’”
Travelers Indem. Co. v. United Food & Commercial Workers
Int’l Union, 770 A.2d 978, 991 (D.C. 2001) (quoting
Graycoat Hanover F St. Ltd. P’ship v. Liberty Mut. Ins. Co.,
657 A.2d 764, 768 (D.C. 1995)); see also U.S. Shipping Bd.
Merchant Fleet Corp. v. Aetna Cas. & Sur. Co., 98 F.2d 238,
242 (D.C. Cir. 1938) (“By almost universal custom fidelity
bonds as now written require notice of default within a limited
period of time, and that provision the courts enforce according
to its strict terms. And in such a case it is immaterial whether
the surety is able to show it was prejudiced by failure to
receive notice . . . .”). In context, the requirements listed in
the first clause of paragraph C are properly read as true
conditions precedent, in the absence of which the surety has
no liability on the bond. Sureties who require notice of
default so that they can themselves take remedial action
presumably are unwilling to submit to the vagaries of
litigation a calculation of the exact impact of being denied
notice.
Hunt primarily invokes Conesco Industries, Ltd. v.
Conforti & Eisele, Inc., 627 F.2d 312, 316 (D.C. Cir. 1980),
for the proposition that proof of prejudice is required, but we
so stated only after finding that the particular bond before the
court did not make notice “a condition precedent to liability
under the bond.” In light of our contrary interpretation of the
bond form here, Conesco’s view does not apply.
The judgment of the district court is therefore
Affirmed.

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