Dist. Ct. did not err in granting defendant’s motion for summary judgment in plaintiff-surety’s action seeking to invoke doctrine of quia timet to require defendant to deposit $2.5 million in cash as bond collateral and satisfy all bond obligations issued by plaintiff on behalf of defendant under circumstances where certain subcontractors had sued defendant for failure to pay for labor and materials used in construction project covered by said bonds. Record showed that plaintiff had previously settled with defendant with respect to its contractual claim regarding written indemnity agreement calling for defendant to repay plaintiff for claims made against said bonds. As such, plaintiff could not use doctrine of quia timet to force defendant to make good on instant indemnity agreement, since: (1) plaintiff had settled its claim against defendant based on indemnity agreement; and (2) surety cannot use general equitable principles to obtain rights beyond those for which it negotiated in written indemnity agreement.
Federal 7th Circuit Court
Quia Timet Doctrine