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This construction dispute involved rights and obligations under a performance bond supplied for an office building construction project in Denver, Colorado. Whiting-Turner Contracting Company was the general contractor, and it subcontracted Klempco Construction to construct an anchor system for the project’s underground parking garage. Klempco provided performance and payment bonds for the project from Guarantee Company of North America USA (GCNA). When Klempco fell behind schedule, it stopped paying its sub-subcontractors and directed Whiting-Turner to assume responsibility for its work and sub-subcontractors.
Whiting-Turner then declared Klempco in default, notified GCNA, and requested a meeting with Klempco and GCNA so that GCNA could advise Whiting-turner on how it wanted Whiting-Turner to proceed with Klempco’s work and payment obligations. At the meeting, the three parties agreed to reduce Klempco’s subcontract value, and that Klempco’s shotcrete sub-subcontractor would directly invoice Whiting-Turner for future work. Klempco demobilized from the project two days later, and Whiting-Turner asked GCNA how it should proceed. GCNA did not respond, so Whiting-Turner terminated Klempco’s subcontract and issued multiple demands on GCNA to honor its obligations under the performance bond.