Wm. R. Clarke Corporation v. Safeco Ins. Co. Of America

15 Cal.4th 882 (1997)

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Nature of the Case

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Facts

An owner entered into a contract with Keller Construction Co., Ltd. (Keller), as general contractor, for rehabilitation work. Keller, in turn, entered into subcontracts for this project with, among others, P. Each subcontract contained a pay if paid provision. At the owner's insistence, Keller obtained a labor and material payment bond from D to protect the owner from mechanic's lien claims by subcontractors and material suppliers. Keller was the principal, and Safeco was the surety. After substantial work had been completed on the project, the owner stopped making payments to Keller, because of the owner's insolvency. Keller then declined to pay the subcontractors, which recorded mechanic's liens and filed separate actions against D seeking recovery under the payment bond. The actions were deemed related and were assigned to the same judge for all purposes. In each action, the trial court granted judgment for the sub-contractors and against D. D appealed from each judgment.