Granite Computer Leasing Corp. v. Travelers Indem. Co.
| Decision Date | 27 December 1984 |
| Docket Number | D,No. 122,122 |
| Citation | 751 F.2d 543 |
| Parties | GRANITE COMPUTER LEASING CORP., Plaintiff-Appellant, v. The TRAVELERS INDEMNITY COMPANY, Defendant-Appellee. Cal.ocket 84-7387. |
| Court | U.S. Court of Appeals — Second Circuit |
William J. Allingham, New York City (Sage Gray Todd & Sims, Stuart A. Krause and William B. Korman, New York City, of counsel), for plaintiff-appellant.
James H. Reidy, New York City (Hynes, Diamond & Reidy, P.C., New York City, of counsel), for defendant-appellee.
Before VAN GRAAFEILAND and CARDAMONE, Circuit Judges, and MacMAHON, District Judge. *
Granite Computer Leasing Corp. ("Granite") appeals from a summary judgment of the United States District Court for the Southern District of New York (Motley, C.J.). The judgment dismissed Granite's action against The Travelers Indemnity Company ("Travelers") for breach of a surety bond and denied Granite's cross-motion for summary judgment in its favor. See 582 F.Supp. 1279. Because our review of the record satisfies us that neither party was entitled to summary judgment, we vacate the district court's judgment and remand for trial.
Granite is suing as the successor in interest to Community Science Technology, Inc. and Community Science Technology Development Corp. (collectively "Community"). The surety bond in question was issued pursuant to a subcontract dated April 7, 1973, between Community and National Modular Systems Corp. ("National"). Community had entered into a contract with the federal government to install prefabricated modular housing units at certain Air Force bases and had subcontracted with National to produce the units. Travelers' bond required it to indemnify Community against any loss or damage directly arising by reason of National's failure to fully perform this subcontract.
By the middle of 1974, production of the units was significantly behind schedule, due primarily to delays by the Army Corps of Engineers in approving design drawings. As an arguable result of this delay, National found itself in severe financial straits. Although it had claims for relief pending with the Government, National warned Community that, if it did not receive some sort of extraordinary financial assistance, it would discontinue its performance under the contract. On June 21, 1974, one week after the Government rejected one of its claims, National carried out its threat and closed its plant. Upon learning of this, the Government warned Community that, if production was not resumed by July 8, it would deem Community in default under the prime contract. Community then sent National a written notice of breach with fifteen days to cure, as provided in the subcontract. It also requested Travelers to provide the financial help that National needed. Travelers refused.
On July 8, Community and National, with the consent of Travelers, entered into an agreement which provided that Community would withdraw its fifteen-day notice and advance National up to $350,000 (later increased to $2,500,000), and National would resume production. The agreement expressly provided, however, that the parties did not waive or relinquish any of their then-existing rights or remedies.
Although the project was completed in 1976, Community continued to press claims against the Government on behalf of itself and its subcontractors. In 1980, the Government agreed to revise the delivery schedule so that all deliveries were deemed timely and to increase the contract price by approximately $2,800,000. Granite now seeks to recover from Travelers the amount of the funds advanced by Community to National for which Community has not been reimbursed out of the Government's award. This claim should not have been summarily dismissed.
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