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Haywood County Consolidated School System v. United States Fidelity & Guaranty Co.

Filed: September 18, 1979.

HAYWOOD COUNTY CONSOLIDATED SCHOOL SYSTEM
v.
UNITED STATES FIDELITY & GUARANTY COMPANY



Appeal by defendant from Thornburg, Judge. Judgment entered 19 September 1978 in Superior Court, Haywood County. Heard in the Court of Appeals 30 August 1979.

Arnold, Judge. Judges Hedrick and Vaughn concur.

Arnold

The sole issue on this appeal is whether defendant is required under the performance bond to pay for later damages to

property caused by Contractor's improper performance under the contract. In answering this question, we must construe the bond and the construction contract together to determine the intent of the parties. Realty Co. v. Batson, 256 N.C. 298, 123 S.E.2d 744 (1962); Ideal Brick Co. v. Gentry, 191 N.C. 636, 132 S.E. 800 (1926).

By the terms of the performance bond defendant is obligated if Contractor does not "well and truly perform and fulfill all the undertakings, covenants, terms, conditions and agreements of [the] contract." The contract refers to plaintiff as Owner. Subsection 4.18.1 provides in pertinent prt: "The Contractor shall indemnify . . . the Owner . . . against all . . . damages, losses and expenses . . . arising out of or resulting from the performance of the Work, provided that any such . . . damage, loss or expense (1) is attributable . . . to injury to or destruction of tangible property (other than the Work itself) . . . , and (2) is caused in whole or in part by any negligent act or omission of the Contractor." (Emphasis added.) Defendant admits that this language "may seem to cover the consequential damages which the plaintiff is seeking," but argues that it is not liable under this section because the contract by subsection 11.1.1 requires the Contractor to carry liability insurance against "claims for damages because of injury to or destruction of tangible property." We are unpersuaded. Contractor's responsibility to carry liability insurance did not remove his liability under 4.18.1. And Contractor's liability is the measure of defendant's liability. State v. Guarantee Co., 207 N.C. 725, 178 S.E.2d 550 (1935). As Contractor is liable for damages resulting from his negligent performance of the work, so is defendant. It is undisputed that the damage to the gym floor resulted from Contractor's negligent performance. The trial court ruled correctly.

Affirmed.

Disposition

Affirmed.

19790918

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