The Cretex Companies, Inc. v. Construction Leaders, Inc.
Supreme Court of Minnesota
342 N.W.2d 135 (1984)
Northland hired Construction Leaders, Inc. (Construction) (defendant), a general contractor, to perform utilities work on Northland’s property. As a guarantee for the work, Northland entered into a surety agreement with Travelers (defendant). The surety agreement provided a performance bond to Northland. Under the performance bond, Travelers agreed to complete performance of the utility work in the event Construction defaulted on its performance obligations. Construction hired The Cretex Companies, Inc. (Cretex) (plaintiff) as a subcontractor on its contract with Northland. Construction later defaulted and failed to complete performance of the utilities contract. Consequently, Construction failed to pay Cretex for the work performed under the subcontract. Cretex brought suit against Construction and Travelers in Minnesota state court. In its suit against Travelers, Cretex argued that it was an intended third party beneficiary of the surety agreement between Travelers and Northland and thus had enforceable rights under the agreement. The trial court agreed and entered judgment for Cretex. Travelers appealed.
Rule of Law
Holding and Reasoning (Simonett, J.)
Dissent (Yetra, J.)