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Most indemnity agreements have a collateralization clause requiring indemnitors to post collateral upon the surety’s demand and in the surety’s sole discretion. Florida courts favor upholding such clauses, and will enjoin indemnitors, ordering them to post collateral. See Travelers Cas. and Sur. Co. of Am. v. Industrial Comm. Structures, 2012 WL 4792906 (M.D. Fla. 2012).
Does Florida law allow a payment and performance bond principal to maintain a cause of action against its surety? The scenario where this typically comes up is in an indemnity action (where, at least in Florida, “it is well settled that the only defense to indemnity is bad faith on the part of the surety.” Great American Ins. Co. v. General Contractors & Const. Mgmt., Inc.
Under Florida law, a surety generally has all of the rights and defenses of its principal (the general contractor or subcontractor) and an array of unique surety defenses. Florida courts allow sureties to assert the defenses and claims of its principal because a surety’s liability is typically “coextensive” with that of its principal.
Florida sureties rarely win attorneys’ fees. Up until a few weeks ago, a good strategy to try to make your opponent pay your fees and costs was to quickly send a settlement proposal, citing Fla.Stat. 768.79. There used to be a few old Florida appellate decisions still holding strong for the idea that a litigant could shoot off an early settlement offer and trigger the fee-shifting statute.
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