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B-181471, DEC 26, 1974

B-181471 Dec 26, 1974
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IT IS UNNECESSARY TO DECIDE ENTITLEMENT TO LEGAL FEES AS SURETY HAS POWER OF ATTORNEY TO SIGN CHECKS FOR CONTRACTOR AND THEREFORE CHECK PAYABLE TO CONTRACTOR FOR CONTRACT BALANCE SHOULD BE MAILED TO SURETY. 843.60 WILL REMAIN AS THE CONTRACT BALANCE RETAINED BY THE NAVAL FACILITIES ENGINEERING COMMAND. WE DO NOT BELIEVE IT IS NECESSARY TO CONSIDER THE ISSUE OF THE ENTITLEMENT OF THE SURETY TO REIMBURSEMENT FOR THE LEGAL FEES.

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B-181471, DEC 26, 1974

WHERE CONTRACTOR CANNOT BE LOCATED AND SURETY HAS PRESENTED CLAIM FOR CONTRACT BALANCE BECAUSE OF LEGAL FEES INCURRED IN SETTLING CLAIMS UNDER PAYMENT BOND, IT IS UNNECESSARY TO DECIDE ENTITLEMENT TO LEGAL FEES AS SURETY HAS POWER OF ATTORNEY TO SIGN CHECKS FOR CONTRACTOR AND THEREFORE CHECK PAYABLE TO CONTRACTOR FOR CONTRACT BALANCE SHOULD BE MAILED TO SURETY.

BALBOA INSURANCE COMPANY:

ON JULY 3, 1974, OUR OFFICE ISSUED A DECISION IN THE MATTER OF BALBOA INSURANCE COMPANY (B-181471) AUTHORIZING PAYMENT TO BALBOA OF $13,636.40 AS REIMBURSEMENT FOR LABOR AND MATERIAL CLAIMS PAID BY BALBOA AS SURETY TO H. CLINE CONSTRUCTION COMPANY (CLINE) UNDER CONTRACT NUMBER N62474-72-C- 8345.

AFTER THE DISBURSEMENT OF THE $13,636.40, $1,843.60 WILL REMAIN AS THE CONTRACT BALANCE RETAINED BY THE NAVAL FACILITIES ENGINEERING COMMAND. BALBOA HAS NOW SUBMITTED A CLAIM TO THE NAVY FOR THE CONTRACT BALANCE BASED ON THE EXPENDITURE OF $2,978.48 FOR LEGAL FEES INCURRED IN THE ADJUSTMENT, INVESTIGATION AND LITIGATION OF THE CLAIMS. AS OUR PRIOR DECISION DID NOT CONSIDER THIS ITEM, THE MATTER HAS BEEN SUBMITTED TO OUR OFFICE BY THE NAVY FOR DECISION.

WE DO NOT BELIEVE IT IS NECESSARY TO CONSIDER THE ISSUE OF THE ENTITLEMENT OF THE SURETY TO REIMBURSEMENT FOR THE LEGAL FEES. A REVIEW OF THE GENERAL INDEMNITY AGREEMENT SIGNED BY THE CONTRACTOR PROVIDES IN PARAGRAPH 7, ENTITLED "POWER OF ATTORNEY," AS FOLLOWS:

"THE UNDERSIGNED IRREVOCABLY APPOINT ANY AUTHORIZED REPRESENTATIVE OF SURETY, AS ATTORNEY-IN-FACT, TO TAKE ANY ACTION AUTHORIZED HEREUNDER IN THE NAME OF CONTRACTOR, AND TO ENDORSE THE NAME OF CONTRACTOR OR THE UNDERSIGNED UPON ANY VOUCHER, WARRANT, CHECK, OR RELEASE ISSUED IN PAYMENT OF CONTRACT FUNDS."

SINCE THE CONTRACTOR CANNOT BE LOCATED AND THE AGREEMENT BETWEEN THE SURETY AND THE CONTRACTOR GIVES THE SURETY AUTHORITY TO EXECUTE RELEASES AND ENDORSE CHECKS PAYABLE TO THE CONTRACTOR, A CHECK PAYABLE TO THE CONTRACTOR FOR THE CONTRACT BALANCE SHOULD BE MAILED IN CARE OF THE SURETY.

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