Nashville Ford Tractor v. Great American Insurance Company

This appeal involves a dispute over the payment for leased construction equipment used on two sewer projects for the City of Gallatin. The general contractor was required to take over and complete the work after a subcontractor and sub-subcontractor defaulted. Thereafter, the company that had leased three pieces of construction equipment to the subcontractor and sub-subcontractor submitted claims for payment to the general contractor and the contractor's bonding company. The general contractor declined to pay for the equipment and filed suit for breach of contract against the subcontractor in the Circuit Court for Sumner County. The contractor also sought a declaratory judgment regarding its rights, as well as those of its bonding company, the subcontractor, and the City, under the construction contract, the subcontracts, and the payment bond. Following a two-day bench trial, the trial court awarded the equipment leasing company a $38,399 judgment against the bonding company and the sub-subcontractor and a $29,232 judgment against the subcontractor. The court also denied the equipment leasing company's request for pre-judgment interest because it had intentionally falsified documents during the collection process. The bonding company appealed. We have determined that the trial court erred by failing to dismiss all of the equipment leasing company's claims against the payment bond after expressly finding that the leasing company had committed fraud during the claims process. Accordingly, we reverse the judgment against the contractor's surety.