PRISMATIC DEVELOPMENT CORPORATION v. INTERNATIONAL FIDELITY INSURANCE COMPANY (2023)

Order, Supreme Court, New York County (Joel M. Cohen, J.), entered March 1, 2022, which to the extent appealed from as limited by the briefs, granted defendant International Fidelity Insurance Company's (IFIC) motion to dismiss plaintiff's first cause of action for breach of the performance bond, unanimously affirmed, without costs.

Plaintiff seeks to require defendant IFIC to defend and indemnify it against a suit brought by a subcontractor, EIC Associates, Inc., who alleges, in part, that another subcontractor, Nacirema Environmental Services Company, Inc., performed its work deficiently, causing EIC to incur substantial costs in performing its work out of sequence.  Defendant submitted documentary evidence demonstrating that plaintiff did not comply with the conditions precedent contained in paragraph 3 of the AIA Document A312 performance bond issued by defendant, warranting dismissal (see Granger Constr. Co. v. TJ, LLC, 134 A.D.3d 1329, 1331, 21 N.Y.S.3d 491 [3d Dept. 2015];  Archstone v. Tocci Bldg. Corp. of N.J., Inc., 119 A.D.3d 497, 498, 990 N.Y.S.2d 44 [2d Dept. 2014], lv dismissed 24 N.Y.3d 1037, 998 N.Y.S.2d 161, 22 N.E.3d 1029 [2014]).  Strict compliance with these conditions precedent is required because a failure to comply with such preconditions deprives the surety of its options (see Independent Temperature Control Servs., Inc. v. Parsons Brinckerhoff, Inc., 159 A.D.3d 636, 637, 70 N.Y.S.3d 847 [1st Dept. 2018];  Tishman Westwide Constr. LLC v. ASF Glass, Inc., 33 A.D.3d 539, 540, 823 N.Y.S.2d 71 [1st Dept. 2006]).

In opposition, plaintiff argued that strict compliance was not required in the circumstances of this case, because Nacirema already had substantially completed its work and had been paid before EIC raised complaints about its work.  However, the language of the bond unambiguously requires compliance with the conditions before IFIC's obligations are triggered, regardless of when the subcontractor's breach was discovered (see Archstone, 119 A.D.3d at 498, 990 N.Y.S.2d 44).  The conditions precedent unambiguously apply to all of IFIC's obligations, including its obligation to defend and indemnify plaintiff, which is set forth in the subcontract that is incorporated by reference into the bond (see Independent Temperature Control Services, Inc. v. Parsons Brinckerhoff, Inc., 2017 WL 318654, *4 [Sup. Ct., N.Y. County 2017], affd 159 A.D.3d 636, 70 N.Y.S.3d 847 [1st Dept. 2018]).

We have considered plaintiff's remaining arguments and find them unavailing.