In Century Insurance Co., Ltd. v. Guerrero Brothers Inc., 2010 MP 4, 8 N. Mar. I. 389 , CDA brought an appeal from the same underlying civil action before us now as a third-party beneficiary to the PSS-GBI settlement agreement.
CDA acknowledged that its right to the remaining contract funds was through GBI because it was GBI's creditor, and thus, entitled to the remaining contract proceeds.
The Court held that under no circumstances was GBI or CDA entitled to earned progress payments because when a contractor defaults it forfeits any right it has to those payments. Id.
The Court further held that neither GBI nor CDA suffered harm from the breach of the settlement agreement 12 because as a matter of law the doctrine of equitable subrogation mandated that CIC, as the surety, was the only entity with any claim to the funds. Id.
Even though the settlement agreement gives GBI a right to have the funds interpleaded, CIC's equitable subrogation rights trump GBI's rights under the terms of the settlement agreement. Id.