January 12, 2004

City Must Reimburse Surety for Funds Released to Contractor

United States Court of Appeals For the Eight Circuit

The City of Pine Bluff settled and released a general contractor it had terminated from an ice storm clean-up project. Prior to the settlement, the surety that provided the performance and payment bond had requested the city not release any funds. The surety paid off on two bond claims and sued the city for reimbursement. An Arkansas district court ruled for the City, but the United State Court of Appeals disagreed, reversing the decision and requiring the City to reimburse the surety.

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