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Clark County School District (CCSD) hired Big Town Mechanical (Big Town) as general contractor to perform HVAC upgrades at five schools. Big Town in turn hired F.A.S.T. Systems (FAST) to complete low-voltage work at the schools. Big Town obtained performance bonds from Travelers Casualty and Surety Company of America (Travelers) and FAST obtained performance bonds from Fidelity & Deposit Company of Maryland (F&D).
Following FAST’s default on its subcontracts, F&D opted to complete FAST’s work and hired a substitute subcontractor, Perini. In May 2012, Perini notified Big Town that it had “substantially completed” all of FAST’s work. After Big Town refused payment, F&D filed suit against Big Town and Travelers in early 2013. In May of 2013, CCSD rejected Big Town’s final payment application, stating that the project was incomplete and claiming there were significant defects in the work. CCSD then sued Travelers seeking specific performance and liquidated damages for delay. Travelers eventually settled CCSD’s suit but through its counterclaim sought reimbursement from F&D for its settlement plus costs expended to complete the project.