Morrison Knudsen Corp. v. Ground Improvement Techniques, Inc.
532 F.3d 1063 | Court of Appeals for the Tenth Circuit | 2008
What This Case Means for Subcontractors
Morrison Knudsen terminated subcontractor Ground Improvement Techniques for alleged default. A jury found the termination was wrongful and awarded GIT $5.6 million in damages. On appeal, the court affirmed that the termination was wrongful but remanded the case for recalculation of damages. The court also ruled that a supersedeas bond (a bond posted during appeal) remains enforceable and the surety's liability is capped at the bond's stated amount. This matters to subcontractors because it shows courts will enforce wrongful termination claims and that appeal bonds have real limits.
Key Takeaways
- •Document everything about your performance and the contractor's reasons for termination—a jury may find termination wrongful even if the contractor claims default
- •Understand that supersedeas bonds used during appeals have a maximum liability cap; the surety won't pay more than the bond's face amount regardless of actual damages
- •If terminated, pursue your appeal aggressively; failing to prosecute an appeal weakens your position and may result in bond enforcement against you
The Supersedeas Bond is still enforceable because MK failed to prosecute its appeal to effect.
Frequently Asked Question
If I'm terminated and post a supersedeas bond during my appeal, how much can the contractor collect from that bond?
The contractor can collect only up to the bond's stated penal sum (face amount), even if your actual damages are higher. The surety's liability is capped at that amount. This protects you from unlimited exposure, but you must actively prosecute your appeal to keep the bond enforceable.
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