In 120 Greenwich Dev Assocs, LLC v. Reliance Ins. Co., (S.D.NY June 7, 2004) the surety argued that the obligee made performance by the surety under the bond impossible because the obligee took over the principal's work under the contract without telling the surety.
The court held that if the obligee/owner failed to notify the surety of the principal's default and surreptitiously took over its work, that conduct would be active interference with the surety's right to elect from its possible completion options under the bond.
Summary judgment was denied in 120 Greenwich because there were conflicting affidavits as to whether or not the principal's work was secretly performed by the obligee. Id.