Minnesota Lawyer
Appellants MinnComm were guarantors of a payment and performance bond securing performance of a contract with respondent City of La Crescent . The city discharged the construction company from the project and made a claim under the performance bond. The surety brought a declaratory-judgment action in federal District Court, asserting, in relevant part, that it was entitled to indemnity from appellants for “losses and costs which [surety] has incurred to date.” MinnComm cross-claimed against the city for breach of contract. The federal District Court held that the city had breached the contract, and it awarded damages, including prejudgment interest, to MinnComm. MinnComm’s request for damages did not include recovery of any losses or costs it might incur by reason of surety’s indemnity claim. The federal District Court did not address the surety’s indemnity claim. The same day that judgment was entered in the federal court action, the surety demanded payment of its attorney fees and costs related to the federal court action from MinnComm. MinnComm paid without any objection to liability or the amount claimed and initiated this action to recover the amounts paid from the city as additional damages arising from the city’s breach of contract, under a “pass-through indemnity” theory. The District Court granted summary judgment to the city, holding that MinnComm’s action is barred by the doctrine of res judicata. The Court of Appeals agreed. Affirmed.
A10-1534 MinnComm Util. Constr. Co., et al. v. City of La Crescent (Houston County)
