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Assignments of Judgments: Another Tool in the Surety Toolbox

January 19, 2022
Client Alert
Assignment rights have historically been a useful tool of the surety in recouping losses. Most standard indemnity agreements provide that certain rights of the principal are assigned to the surety under certain circumstances. Sureties typically ask payment bond claimants to sign acknowledgments and assignments. But what if your bond principal has suffered a judgment? Is it too late to use this tool? The Pennsylvania Superior Court recently affirmed that it is not too late.

In Crespo v. Hughes (Pa. Super. Dec. 10, 2021, No. 2184 EDA 2020), a recent matter argued by Patrick R. Kingsley in which Stradley Ronon was victorious, the surety satisfied a judgment after an appeal bond principal lost its appeal. The bond claimant then assigned the judgment to the surety, who then sought to enforce it. The principal argued that by paying off the judgment, which was the subject of the appeal bond, the surety actually satisfied that judgment. In other words, the principal argued that there was nothing left to assign. The Superior Court rejected this argument entirely, explaining that “payment by a third party of a debtor’s obligation is not a discharge of the debt, but a purchase of it.” In other words, the surety could simultaneously satisfy its bond obligations to the obligee and acquire that obligee’s judgment by assignment. Even at the judgment stage, it is not too late to use an assignment to mitigate losses.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2021 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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