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Circuit Court For Howard County Affirms Performance Bond Obligation To Tydings' Client, First Baptist Church Of Guilford

May 31, 2011

(Ellicott City, Maryland – May 31, 2011) -- In a construction dispute involving the performance bond obligations of Fidelity & Deposit Company, the Circuit Court of Howard County affirmed on May 23 that F&D could not avoid financial liability for a decision by Harbor View Contractors to abandon its construction contract with Tydings’ client, First Baptist Church of Guilford. The Church had entered into a contract with Harbor View for the construction of an extension to its existing worship building. Harbor View abandoned the project in December 2009. F&D filed a declaratory judgment action against the Church and its lender, First Mariner, seeking to be relieved of its obligation to perform in accordance with a performance bond executed by it and Harbor View. The Church and First Mariner responded with their own claims seeking a declaration that F&D had breached its obligations under the performance bond.

At Monday's hearing, F&D had sought reconsideration of a decision by Howard County Circuit Court Judge, Louis A. Becker, from January 2011. In his initial decision, Judge Becker had denied summary judgment to F&D, declaring that the Church had not defaulted on its contractual obligations to Harbor View. He also had granted partial summary judgment to the Church and First Mariner, declaring that Harbor View had defaulted on the construction contract and had no right to walk off the job.

Harbor View had alleged that it was entitled to stop working on the project because the Church had failed to provide satisfactory evidence that financial arrangements had been made to cover approximately $2.2 million in unexecuted and disputed change orders to which Harbor View believed it was entitled. Harbor View had demanded such evidence under a provision that appears in standard-form construction contracts, allowing contractors to require owners to provide reasonable evidence of financial resources to fulfill obligations under the contract.

In January, the Court determined that the evidence the Church provided was adequate. It reaffirmed that decision on Monday by denying reconsideration.

Please contact us if you would like to receive a copy of the Jan. 18, 2011 order, upheld this week. A new order will be published in the coming days.

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