Crabtree v. Aetna Cas. and Sur. Co., AO-202

• Decision Date: 09 September 1983
• Docket Number: No. AO-202,AO-202
• Citation: 438 So.2d 102
• Parties: A.M. CRABTREE, Jr. and Harriett S. Crabtree, Appellants, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 102

438 So.2d 102

A.M. CRABTREE, Jr. and Harriett S. Crabtree, Appellants, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.

No. AO-202.

District Court of Appeal of Florida First District.

Sept. 9, 1983.

Rehearing Denied Oct. 13, 1983.

Ellis E. Neder, Jr., P.A., Jacksonville, for appellants.

Charles T. Wells, of Wells, Gattis, Hallowes & Holbrook, P.A., Orlando, for appellee.

ERVIN, Chief Judge.

A.M. Crabtree, Jr. and Harriet Crabtree (the Crabtrees) appeal a final judgment of the trial court in favor of Aetna Casualty & Surety Company (Aetna) in an action to recover damages from Aetna as surety on a performance and payment bond. This cause was previously before this court, and we remanded by an opinion, gratuitously including language, admittedly imprecise or unclear, concerning damages, upon which the trial court later relied in entering the final judgment appealed. Since the final judgment erroneously relied on dicta in our earlier opinion, we reverse.

In 1971, the Crabtrees, interested in constructing an office building on a tract of land they owned in fee simple in Jacksonville, executed an agreement for architectural services, as well as for a mortgage commitment in the amount of $2,650,000 to finance the construction. Thereafter, A.M. Crabtree, Jr. became a member of a partnership known as Blackstone Developers, and subsequently leased the tract of land to Blackstone for the period of time required for the partnership to construct an office building on the Crabtrees' property, plus an additional term of 99 years. As owner, Blackstone Developers then entered into an agreement with a contractor for the construction of a ten-story office building at a cost of $1,680,015. A performance and payment bond was issued by Aetna, as surety, to Blackstone Developers and the lender, as obligees, to secure performance under the construction agreement of the contractor, principal or obligor under the bond, in the amount of $1,680,015.

In 1975, the partners of Blackstone Developers (including A.M. Crabtree, Jr.), individually and doing business as Blackstone Developers, brought suit against Aetna to recover damages under the performance and payment bond resulting from the contractor's failure to complete construction on schedule. The suit was terminated by a final judgment for $130,000, entered against Aetna pursuant to the plaintiffs' acceptance of Aetna's offer of judgment. The Crabtrees individually filed suit against Aetna in 1977, also seeking damages under the performance and payment bond for delay in completion of the building. A final judgment upon a jury verdict was entered, awarding $200,000 damages to the Crabtrees, from which Aetna appealed to this court in Aetna Casualty & Surety Co. v. Crabtree, 383 So.2d 657 (Fla. 1st DCA 1980). We reversed upon finding that the trial court erred in striking Aetna's evidence of the 1975 litigation which we determined should have been admitted as proof of its defense of discharge. We remanded for reconsideration of Aetna's motion for directed verdict in light of the evidence of the 1975 litigation, stating that in the event the trial court denied Aetna's motion for directed verdict, a new trial would be required. In Aetna, we went on to state that "in the event there is a new trial, we note appellee's damages, if any, are derivative ...and] [t]hederivative nature of those damages precludes recovery for loss of the rentals over the life of the lease and the reversionary interest in the fee." Id. at 659 (e.s.). On remand, Aetna's motion for directed verdict was denied and a new trial was ordered by the trial court. Upon observing that all damages claimed by the Crabtrees were "direct" rather than "derivative," the trial court entered a final judgment without a trial, concluding that our statement in Aetna that "the ... [Crabtree's] damages, if any, are derivative", precluded the Crabtrees from recovering any of the damages alleged. We do not agree that the trial court's conclusion was necessarily required by our statement, which was dicta in Aetna, and therefore reverse and remand for a new trial.

Initially, we respect as the law of the case, ¹ based on our rulings in Aetna, that the Crabtrees are not owners-obligees under the surety bond, but are rather the intended third party beneficiaries of the contract. It is necessary, first, to focus upon the respective rights and obligations of the Crabtrees and the surety.

A general principle of suretyship is that the liability of the surety is ordinarily measured by, and coextensive with, the liability of the principal or obligor, 28 Fla.Jur.2d, Guaranty and Suretyship s. 42, p. 274 (1981). Consequently, Aetna's liability should be measured by the liability of the contractor who is the principal or obligor under the bond. The contractor's liability is defined by the construction contract entered into with Blackstone Developers, providing for construction within 240 days of a ten-story office building at a cost of $1,680,015.

A bond is a contract subject to the general law of contracts. A surety on a bond does not undertake to do more than that expressed in the bond, and has the right to stand upon the strict terms of the...