On January 15, 2025, the U.S. Court of Appeals for the Second Circuit entered a summary order on the case of E & T Skyline Constr., LLC v. Talisman Cas. Ins. Co., LLC. This case revolves around a dispute over the obligations under a performance bond issued for a condominium project in Manhattan.
E&T Skyline Construction (E&T), a general contractor, had subcontracted NY Renaissance Corp. (NYR) to deliver and install custom windows for the project. To safeguard against potential non-performance by NYR, E&T secured a performance bond from Talisman Casualty Insurance (Talisman). When NYR failed to perform, E&T terminated the subcontract and demanded payment from Talisman. However, Talisman refused, citing E&T's own failure to meet its obligations under the subcontract as a precondition for the bond payment.
After a bench trial, the district court ruled in favor of Talisman. E&T's subsequent motion to alter or amend the judgment was also denied. E&T then appealed.
On appeal E&T argued that the district court erred in considering the terms of a March 8, 2019 revised schedule as part of the subcontract. E&T contended that since the revised schedule was not signed, it should not be enforceable. The district court had found that E&T could have raised this issue earlier in the proceedings but failed to do so, leading to the forfeiture of this argument. Specifically, the court noted that E&T had multiple opportunities to contest the enforceability of the revised schedule but did not. E&T had acknowledged the revised schedule in various communications and legal filings, treating it as binding. Despite these opportunities, E&T only challenged the enforceability of the revised schedule in a post-trial motion. As a result, the district court deemed this argument forfeited.
E&T also argued that even if the revised schedule was enforceable, the district court wrongly concluded that E&T breached the subcontract. The district court, however, determined that E&T's failure to clear debris and obstructions from the construction site made it impossible for NYR to deliver the windows, constituting a breach of the subcontract.
The appellate court affirmed the district court's judgment, agreeing that E&T had forfeited its argument regarding the revised schedule and that E&T's breach of the subcontract justified Talisman's refusal to pay the bond. The appellate court's reasoning underscored the importance of timely raising all relevant arguments during the trial phase, as failing to do so can result in the forfeiture of those arguments on appeal.
This case highlights the critical need to assert all relevant arguments at the appropriate stages of litigation to avoid waiving them. Failing to do so can result in the forfeiture of potentially pivotal legal arguments, as demonstrated in this case.
Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Cuba Business Group. Mr. Aquino focuses his practice on construction law, lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author's law firm or its individual attorneys.
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