Will H. Hall & Son, Inc.v. Capitol Indemnity Corporation

677 N.W.2d 51 (2003)

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Nature of the Case

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Facts

P was the general contractor for a government Job Corps construction project, and Ace (D) was a subcontractor providing cement and masonry work on the project. Ace (D) furnished a performance bond issued by Capitol (D). A dispute arose between P and Ace (D) concerning the masonry work, and the project was not fully completed. P sued Ds alleged breach of contract, fraud, and misrepresentation with respect to Ace (D) and a claim against Capitol (D) seeking recovery on the performance bond. Capitol's (D) motion for directed verdict was granted in regard to the performance bond claim. P requested and obtained a brief recess to discuss a possible settlement with Ace (D). P and Ace (D) stipulated the release and dismissal of any claims the parties had against each other. P then appealed the ruling in favor of Capitol (D). The appeals court reversed the trial court's order granting the directed verdict. On remand, Capitol (D) filed a motion for summary disposition, arguing that, in light of P's decision to dismiss the action against Ace (D), an action on the performance bond could no longer be maintained. On remand, Capitol (D) filed a motion for summary disposition, arguing that, in light of P's decision to dismiss the action against Ace (D), an action on the performance bond could no longer be maintained. Capitol (D) claimed that the release of the principal, Ace (D), by P, the obligee, acted as a discharge of Capitol (D), the surety. The trial court granted the motion for summary disposition and dismissed the action. P appealed.