Stellar J Corp. v. Unison Solutions, Inc.

In Stellar J Corp. v. Unison Solutions, Inc., 2013 WL 1499151 (W.D.Wash. April 11, 2013) the obligee, an assignee of the prime contractor on a public project, sued an equipment provider and the equipment provider’s surety alleging that the equipment provider breached its agreement and the surety acted in bad faith in denying the bond claim.  The court rejected the surety’s argument that the public owner and original prime contractor were indispensable parties.  The surety argued that the bond was a supply bond subject to Article 2 of the UCC and the claimant failed to allege an element of a UCC claim – that the goods were rejected.  The court thought that the type of bond involved was a factual question but that the complaint adequately alleged a breach of contract. The court denied the principal and surety’s motion to dismiss.  The court also granted the claimant’s motion to amend the complaint to state a claim against the surety pursuant to the Washington Insurance Fair Conduct Act (IFCA).  The court rejected the surety’s argument that the claimant had to plead compliance with IFCA’s 20 day notice requirement.  The record showed that the claimant in fact complied with the notice requirement, and there was no requirement also to include compliance as an allegation of the complaint.  The surety argued that IFCA vested exclusive jurisdiction in the Washington Superior Court and so the federal court did not have diversity jurisdiction over the IFCA claim.  The court noted that numerous IFCA claims had been litigated in federal court and “there is no legal or logical support for this novel claim.”