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Korea Auto}{\fs20\insrsid7816262 , Opinion\tab Page }{\field{\*\fldinst {\fs20\insrsid7816262 PAGE }}{\fldrslt {\fs20\lang1024\langfe1024\noproof\insrsid15496078 10}}}{\fs20\insrsid7816262 of 15 \par }\pard \qj \li0\ri0\sl-19\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\lang1024\langfe1024\noproof\insrsid15496078 {\shp{\*\shpinst\shpleft1440\shptop0\shpright10800\shpbottom19\shpfhdr1\shpbxpage\shpbxignore\shpbypara\shpbyignore\shpwr3\shpwrk0\shpfblwtxt1\shpz0\shplockanchor\shplid2049{\sp{\sn shapeType}{\sv 1}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}} {\sp{\sn fillColor}{\sv 0}}{\sp{\sn fillBackColor}{\sv 0}}{\sp{\sn fFilled}{\sv 1}}{\sp{\sn lineWidth}{\sv 0}}{\sp{\sn fLine}{\sv 0}}{\sp{\sn fShadow}{\sv 0}}{\sp{\sn posrelh}{\sv 1}}{\sp{\sn fLayoutInCell}{\sv 0}}{\sp{\sn fBehindDocument}{\sv 1}} {\sp{\sn fLayoutInCell}{\sv 0}}}{\shprslt{\*\do\dobxpage\dobypara\dodhgt0\dprect\dpx1440\dpy0\dpxsize9360\dpysize19\dpfillfgcr0\dpfillfgcg0\dpfillfgcb0\dpfillbgcr0\dpfillbgcg0\dpfillbgcb0\dpfillpat1\dplinehollow}}}}{\insrsid7816262 \par }\pard \ql \li0\ri0\sl-240\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7816262 \par }}{\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}} {\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 \f37\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\f0\insrsid7816262\charrsid15496078 IN THE SUPREME COURT OF GUAM}{\b\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 MAXIMO V. RONQUILLO and NELLIE P. RONQUILLO,}{\f0\insrsid7816262\charrsid15496078 \par Plaintiffs-Appellees/Counterclaim Defendants-Appellees, \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 vs.}{\f0\insrsid7816262\charrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 KOREA AUTOMOBILE, FIRE, & MARINE INSURANCE \par COMPANY, LTD.,}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 JANICE C. MANSFIELD aka JANICE O}{\b\f0\insrsid6126546\charrsid15496078 '}{\b\f0\insrsid7816262\charrsid15496078 NEILL, and ERNEST A. MURPHY,}{ \f0\insrsid7816262\charrsid15496078 \par Defendants-Appellants/Counterclaim Plaintiffs-Appellants.}{\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 OPINION}{\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 Cite as:}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 2001 Guam 25}{\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 Filed:}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 December 13, 2001}{\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 Supreme Court Case No.: CVA01-004 \par Superior Court Case No.: CV1076-99}{\f0\insrsid15496078 \par }\pard \ql \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 Appeal from the Superior Court of Guam \par Argued and Submitted on September 12, 2001 \par Hag\'e5t\'f1a, Guam \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par }\trowd \irow0\irowband0\lastrow \ts11\trqc\trgaph120\trleft-120\trftsWidth1\trpaddl120\trpaddr120\trpaddfl3\trpaddfr3\tblrsid15496078 \clvertalt\clbrdrt\brdrtbl \clbrdrl\brdrtbl \clbrdrb\brdrtbl \clbrdrr\brdrtbl \cltxlrtb\clftsWidth3\clwWidth4680\clshdrawnil \cellx4560\clvertalt\clbrdrt\brdrtbl \clbrdrl\brdrtbl \clbrdrb\brdrtbl \clbrdrr\brdrtbl \cltxlrtb\clftsWidth3\clwWidth4680\clshdrawnil \cellx9240\pard \ql \li0\ri0\nowidctlpar\intbl\faauto\rin0\lin0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par }{\f0\ul\insrsid7816262\charrsid15496078 Attorney for Plaintiffs-Appellees}{\f0\insrsid7816262\charrsid15496078 : \par Stephanie G. Flores, Esq. \par Phillips & Bordallo, P.C. \par 410 West O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Brien Drive \par Hag\'e5t\'f1a, Guam 96910 \par \cell \par }{\f0\ul\insrsid7816262\charrsid15496078 Attorney for Defendants-Appellants}{\f0\insrsid7816262\charrsid15496078 : \par Thomas C. Sterling, Esq. \par Klemm, Blair, Sterling & Johnson, P.C. \par Suite 1008, Pacific News Building \par 238 Archbishop F.C. Flores Street \par Hag\'e5t\'f1a, Guam 96910\cell }\pard \ql \li0\ri0\widctlpar\intbl\aspalpha\aspnum\faauto\adjustright\rin0\lin0 {\f0\insrsid7816262\charrsid15496078 \trowd \irow0\irowband0\lastrow \ts11\trqc\trgaph120\trleft-120\trftsWidth1\trpaddl120\trpaddr120\trpaddfl3\trpaddfr3\tblrsid15496078 \clvertalt\clbrdrt\brdrtbl \clbrdrl\brdrtbl \clbrdrb\brdrtbl \clbrdrr\brdrtbl \cltxlrtb\clftsWidth3\clwWidth4680\clshdrawnil \cellx4560\clvertalt\clbrdrt \brdrtbl \clbrdrl\brdrtbl \clbrdrb\brdrtbl \clbrdrr\brdrtbl \cltxlrtb\clftsWidth3\clwWidth4680\clshdrawnil \cellx9240\row }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }{\f0\insrsid7816262\charrsid15496078 BEFORE: PETER C. SIGUENZA, JR., Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; BENJAMIN J.F. CRUZ, Justice Pro Tempore. \par \par }{\b\f0\insrsid7816262\charrsid15496078 CARBULLIDO, J.:}{\f0\insrsid7816262\charrsid15496078 \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [1]}{\f0\insrsid7816262\charrsid15496078 \tab Maximo V. and Nellie P. Ronquillo (}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 Ronquillos}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 ) sued Korea Automobile, Fire, and Marine Insurance Company (}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 Surety}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 ) for quie t title and sought to enjoin Surety from foreclosing on a mortgage to certain real property.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The mortgage was issued as security on an indemnity agreement that was issued pursuant to a construction performance bond.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The issue is whether Surety}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s responsibilities under the performance bond were triggered by the contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s defective work or breach of the construction contract.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court found against Surety and thereby quieted title to the disputed property in the Ronquillos.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Surety appeals.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We reverse. \par \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 I.}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [2]}{\f0\insrsid7816262\charrsid15496078 \tab This case arose from a defective construction claim.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Phil-Guam Builders Corporation (}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 Phil-Guam}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 ) entered into a contract with Janice C. Mansfield, also known as Janice O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill, and Ernest A. Murphy (}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 O}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 Neill and Murphy}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 ) to construct a home in Santa Rita, Guam.} {\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The contract price for the construction of the home was $191,500.00.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In connection with the construction contract, and on behalf of Phil-Guam, a performance bond was issued by Surety.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 By an indemnity agreement, the Ronquillos, principal owners of Phil-Guam, agreed to indemnify Surety for any sums paid by Surety under the bond, and executed a mortgage of real property to Surety to secure the indemnity agreement.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Construction proceeded on the home and an occupancy permit was issued on March 25, 1995. \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [3]}{\f0\insrsid7816262\charrsid15496078 \tab Shortly after O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy moved into the home, the windows began to leak.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy notified Phil-Guam and Surety of the problem by a letter dated June 5, 1995.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 On June 8, 1995, Surety sent a letter to Phil-Guam indicating a potential claim and requesting that Phil-Guam correct the problem. On October 25, 1995, Surety again sent a letter to Phil-Guam requesting its cooperation in remedying the situation. On different occasions, Phil-Guam attempted to correct the problem but was not successful.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 In November 1995, the parties attended a pre-default hearing.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 By February 1996, Surety had retained the services of two different consultants who agreed that the cause of the problem was faulty installation by Phil-Guam.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In July 1996, O}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy, pursuant to the terms of the construction contract, declared Phil-Guam in default.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Surety hired another contractor to install new windows and fix the damage caused by the leakage.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Surety paid $124,779.00 to replace the windows and repair the damages.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Surety sought to foreclose on the mortgage executed by Ronquillo, and in April of 1999, Surety recorded a notice of sale under mortgage of the subject real property at the Department of Land Management.}{ \f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [4]}{\f0\insrsid7816262\charrsid15496078 \tab To stop the sale under mortgage, the Ronquillos filed the underlying complaint to quiet title against Surety, and O}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 Neill and Murphy.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Surety filed an answer and a counterclaim against the Ronquillos and the Bank of Guam for the amount paid for the repairs.}{ \cs15\f0\super\insrsid7816262\charrsid15496078 \chftn {\footnote \pard\plain \qj \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \f37\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\fs20\super\insrsid7816262 1}{\fs20\insrsid7816262 According to the trial court}{\fs20\insrsid6126546 '}{\fs20\insrsid7816262 s Decision and Order, the Bank of Guam held a mortgage on the property foreclosed by Surety. The trial court found that Bank of Guam}{\fs20\insrsid6126546 '}{ \fs20\insrsid7816262 s mortgage was second in time to Surety}{\fs20\insrsid6126546 '}{\fs20\insrsid7816262 s and denied the Bank}{\fs20\insrsid6126546 '}{\fs20\insrsid7816262 s request for a finding that its mortgage had priority over Surety}{ \fs20\insrsid6126546 '}{\fs20\insrsid7816262 s mortgage. The trial court also noted that the Bank}{\fs20\insrsid6126546 '}{\fs20\insrsid7816262 s request was moot because judgment was rendered against Surety. This part of the trial court}{ \fs20\insrsid6126546 '}{\fs20\insrsid7816262 s decision was not made an issue in this appeal.}}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court rendered judgment for the Ronquil los, holding that Surety had not acted in accordance with the contract provisions when stepping in to make the repairs.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court further held that the defective work did not constitute a default under the contract triggering the obligations of Surety under the performance bond.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 This appeal followed.}{ \f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 II.}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [5]}{\f0\insrsid7816262\charrsid15496078 \tab This court has jurisdiction over an appeal from a final judgment.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Title 7 GCA }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 3107(b) (1994). \par \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 III.}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [6]}{\f0\insrsid7816262\charrsid15496078 \tab The primary issue is whether Surety was entitled to foreclose on the mortgage given by the Ronquillos to secure the indemnity agreement.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 In order to make this determination, we must}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 consider whether Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s responsibility was}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 triggered under the terms of the performance bond.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 This requires co nsideration of whether Phil-Guam violated the terms thereof.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 A.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 The Performance Bond}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [7]}{\f0\insrsid7816262\charrsid15496078 \tab We start by determining Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s obligations under the performance bond.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Most important to this case, under sections 6 and 6.1 of the performance bond, Surety is obligated for the correction of Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s defective work and completion of the construction contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In addition, section 1 of the performance bond provides that Surety and Phil-Guam are jointly and severally responsible for performance of the construction contract.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [8]}{\f0\insrsid7816262\charrsid15496078 \tab The act which is alleged to have triggered Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s obligation under the performance bond was the failure of Phil-Guam to properly}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 install the windows in the home.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court made a factual finding that Phil-Guam failed to install the windows in a workmanlike manner, which amounted to defective work.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 71 (Decision and Order, Jan. 30, 2001).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 On appeal, factual findings are reviewed under the clearly erroneous standard.}{ \f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Apana v. Rosario}{\f0\insrsid7816262\charrsid15496078 , 2000 Guam 7, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 9.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In such reviews, much deference is given to the trial court.}{\f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Craftworld Interiors, Inc. v. King Enterprises, Inc}{\f0\insrsid7816262\charrsid15496078 ., 2000 Guam 17, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 8.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [9]}{\f0\insrsid7816262\charrsid15496078 \tab The record contains evidence that supports the trial court}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s factual finding of defective work.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 This evidence consists of letters from a representative of the window manufacturer, a construction contractor, and an architect who independently inspected the windows and concluded that the installation was defective.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, pp. 98, 105, 110.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 These letters were admitted into evidence without objection from the Ronquillos.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Transcript, vol. I, p. 6 (Bench Trial, Jan. 23, 2001).}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Thus, we hold the trial court}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s finding is not clearly erroneous.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We must next determine whether Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s defective work triggered Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s responsibility under the performance bond. \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [10]}{\f0\insrsid7816262\charrsid15496078 \tab Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s responsibility is determined by the performance bond, and as therein directed, to the construction contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Principles of contract interpretation as applied to the facts are reviewed }{ \i\f0\insrsid7816262\charrsid15496078 de novo}{\f0\insrsid7816262\charrsid15496078 .}{\f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Apana v. Rosario}{\f0\insrsid7816262\charrsid15496078 , 2000 Guam 7, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 9.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In interpreting a contract, the language governs if clear and explicit and not involving absurdity.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Title 18 GCA }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 87104 (1992); }{\i\f0\insrsid7816262\charrsid15496078 see Camacho v. Camacho}{\f0\insrsid7816262\charrsid15496078 , 1997 Guam 5, }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 32.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Generally, with a written contract, the intent of the parties is}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 ascertained from the writing alone.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Title 18 GCA }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 87105 (1992), }{\i\f0\insrsid7816262\charrsid15496078 Camacho}{ \f0\insrsid7816262\charrsid15496078 , 1997 Guam 5 at }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 33}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [11]}{\f0\insrsid7816262\charrsid15496078 \tab The performance bond, addresses defective work explicitly:}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 After the Owner has terminated the Contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to complete the Construction contract . . . the Surety is obligated without duplication for . . . [t]he responsibilities of the Contractor for }{\b\f0\insrsid7816262\charrsid15496078 correction of defective work}{ \f0\insrsid7816262\charrsid15496078 and completion of the Construction contract . . . . \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 30 (Performance Bond, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}} {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 6-6.1) (emphasis added).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We find that Surety}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s obligation to correct defective work after the contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to complete the contract has been terminated is clear.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [12]}{\f0\insrsid7816262\charrsid15496078 \tab The trial court distinguished between defective work and contractual default.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court found that although Phil-Guam had performed defective work and thereby breached the terms of the construction contract, this did not constitute a default of the construction contract requiring Surety to take action.}{\f0\insrsid15496078 } {\f0\insrsid7816262\charrsid15496078 We disagree.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Under our interpretation of sections 6 and 6.1 of the performance bond, Surety was expressly liable for Phil-Guam}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s failure to repair defects and no finding of default of the construction contract was necessary.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In any event, sect ion 1 of the performance bond obligates Surety to perform the construction contract, which as is discussed later, explicitly requires Phil-Guam to repair defects after substantial completion.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the failure of Phil-Guam to repair defects also amounted to a default of the construction contract, requiring Surety to step in.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 B.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Completion of the Construction Contract}{ \f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [13]}{\f0\insrsid7816262\charrsid15496078 \tab The Ronquillos argue that the construction contract was completed prior to any breach or default, thus relieving Surety of any obligation under the performance bond.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 However, the construction contract provides that the }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 Contractor shall promptly correct Work rejected by the Architect or failing to conform to the requirements of the Contract Documents, }{\b\f0\insrsid7816262\charrsid15496078 whether observed before or after Substantial Completion}{\f0\insrsid7816262\charrsid15496078 . . . .}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 25 (Construction Contract, Article 18.1) (emphasis added).}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Thus, Phil-Guam remained responsible for correcting defective work even after completion of the construction contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Case law supports this interpretation.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 [A surety}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s] promise that the project would be completed according to the te rms and conditions of the construction contract means that [the surety] would be liable for defective work performed by the general contractor upon the general contractor's default.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Federal Ins. Co. v. Southwest Florida Ret. Ctr., Inc., }{\f0\insrsid7816262\charrsid15496078 707 So.2d 1119, 1121 (Fla. 1998). The surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s liability for the contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s defective work }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 is not dependent upon whether the defect was discovered before or after substantial completion.}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Id.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Thus, even if substantial completion occurred as indicated by}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 the issuance of the occupancy permit, if the work was so defective that it di d not comply with the terms of the construction contract, the breach of the contract would constitute a default under the performance bond.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [14]}{\f0\insrsid7816262\charrsid15496078 \tab The Ronquillos argue that section 2 of the indemnity agreement is evidence of the parties}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 intent that the performance bond only secure performance, which they claim is substantial completion of the contract without regard to workmanship.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 However, under 18 GCA }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 87105, the intent of the parties must be determined from th e performance bond alone, which does not refer to the indemnity agreement.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The performance bond clearly and explicitly evidences the intent that Surety step in to correct defective work and complete the construction contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the language of the p erformance bond controls and this court may not look to the indemnity agreement to ascertain the intent of the parties as it pertains to their obligations under the performance bond.}{\f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 See}{ \f0\insrsid7816262\charrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Camacho}{\f0\insrsid7816262\charrsid15496078 , 1997 Guam 5 at }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt \f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 33 (}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 It is clear from the four sections of Title 18, cited above [18 GCA }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}{\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 87104, 87105, 87110, 87111] that in interpreti ng a clause of a contract to determine the intent of the contracting parties, whenever possible, the express language of the contract should control.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 ).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We find that Surety was required to step in to correct def ective work under the terms of the performance bond, notwithstanding Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s completion of the construction contract, if Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s right to correct the defects was properly terminated. \par }\pard \qj \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 C.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Termination of Contractual Rights}{ \f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [15]}{\f0\insrsid7816262\charrsid15496078 \tab The performance bond provides: }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 If there is no Owner default, the Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s obligation shall arise after . . . [t]he Owner has declared a Contractor Default and formally terminated the Contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to complete the contract.}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 Excerpt of Record, p. 29 (Performance Bond, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}{\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 3, 3.2).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Contractor default is defined by the performance bond as: }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 Failure of the Contractor, which has neither been remedied nor waived, to perform or otherwise comply with the terms of the Construction contract.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 30 (Performance Bond, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 12.3).}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [16]}{\f0\insrsid7816262\charrsid15496078 \tab Turning to the O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy declaration of default, it states: \par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 On November 28, 1995 we had a pre-default hearing to resolve construction problems at our house.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Nine months has expired since our pre-default meeting, and the contractor has communicated through his lack of response and lack of action that he has no interest in conscientiously correcting the construction problems. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 This letter will serve to inform you that we are formally declaring Phil-Guam Builders Corporation in }{ \b\f0\insrsid7816262\charrsid15496078 DEFAULT}{\f0\insrsid7816262\charrsid15496078 due to failure to repair the leaking windows and cracking walls.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We hereby request}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 the Surety to take the necessary action to permanently repair our home as expeditiously as possible. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 118 (O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy Default Declaration).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The trial court found that this declaration did not formally terminate Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to complete the contract.}{\f0\insrsid15496078 We disagree.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [17]}{\f0\insrsid7816262\charrsid15496078 \tab It was Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right and obligation under article 18 of the construction contract to correct defective work even after substantial completion of the contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 While the default letter did not state explicitly that Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s rig ht to repair the defects was terminated, the letter did state that Phil-Guam failed to repair the defects and had no interest in correcting the problems.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the declaration indicates that O}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy, at the very least, considered the contract abandoned by Phil-Guam and that Surety was to proceed with the necessary repairs.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 The declaration also explicitly declared a default.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 With regard to such default declarations, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 it is vital that the declaration b e made in terms sufficiently clear, direct, and unequivocal to inform the surety that the principal has defaulted on its obligations and the surety must immediately commence performing under the terms of its bond.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 L & A Contracting Co. v. S. Concrete Services, Inc., }{\f0\insrsid7816262\charrsid15496078 17 F.3d 106, 111 (5th Cir. 1994).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We find that the O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy default declaration meets this standard and that it terminated Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to correct the defective work.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 The court canno t ignore the undisputed evidence that the owners and Surety repeatedly contacted Phil-Guam to repair the defects, that Phil-Guam made numerous unsuccessful repair attempts, and that default was declared aft}{\f0\insrsid15496078 er Phil-Guam failed to respond.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [18]}{\f0\insrsid7816262\charrsid15496078 \tab We note that the trial court found that O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy were not the correct parties to declare a default under the performance bond because the bond named Guam Savings & Loan as owner, and under section 3.2 of the bond, the }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 owner}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 must declare a contractor default and formally terminate the contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s right to complete the contract.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 We disagree. \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [19]}{\f0\insrsid7816262\charrsid15496078 \tab While the performance bond identifies only Guam Savings & Loan as owner, we find there is ambiguity as to the actual owner.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 The performance bond defines the construction contract as: }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 [t]he agreement between the Owner and the Contractor identified on the signature page, including all contract documents and changes thereto.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt \f36\fs24}}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellant}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s Excerpts of Record, p.30 (Performance Bond, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 12.2).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Turning to the construction contract, the owners are listed a s Jan Mansfield (O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill) and Ernest Murphy.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellant}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s Excerpts of Record, pp. 20, 27 (Construction Contract).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The construction contract was signed by Mansfield and Murphy, not by Guam Savings & Loan.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the language within the performance bond in part recognizes that the owners were Mansfield and Murphy.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [20]}{\f0\insrsid7816262\charrsid15496078 \tab Furthermore, the purpose of the performance bond, as set forth in the request for bonding, was }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 [f]or the construction of a three s tory two bedroom residence to be located on Lot no. 13 Block no. 16, Santa Rita, Guam and belonging to Janice C. Mansfield and Ernest A. Murphy.}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt \f36\fs24}}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellees}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Supplemental Excerpts of Record, index 1 (Request for Bonding).}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 The performance bond was intended to guarantee construction of a home pursuant to the terms of the construction contract so that Murphy and O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill could receive the object of that contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the performance bond was meant to benefit O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill and Murphy.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Guam law provides third party beneficiaries the right to enforce a contract made for their benefit.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Title 18 GCA }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 85204 (1992).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We find that O}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 Neill and Murphy were the correct parties to declare a default under the terms of the performance bond.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 D.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Contractual Limitations Period}{ \f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [21]}{\f0\insrsid7816262\charrsid15496078 \tab The trial court found that Surety did not act in good faith when it sought to reco ver costs incurred in repairing damages from the leaky windows after the expiration of the contractual one year limitations period.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We disagree.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Article 18.1 of the construction contract provides in relevant part:}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 The Contractor shall promptly correct Wo rk rejected by the Architect or failing to conform to the requirements of the Contract Documents, whether observed before or after Substantial Completion and whether or not fabricated, installed or completed, and shall correct any Work found to be not in accordance with the requirements of the Contract Documents within a period of one year from the date of Substantial Completion of the Contract . . . . \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 25 (Construction Contract, Article 18.1).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Article 18.2 provides: \par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 Nothing contained in this Article 18 shall be construed to establish a period of limitation with respect to other obligations which the Contractor might have under the contract Documents.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Establishment of the time period of one year as described in Paragr aph 18.1 relates only to the specific obligation of the Contractor to correct the Work, and has no relationship to the time within which the obligation to comply with the Contract Documents may be sought to be enforced, nor to the time within which procee dings may be commenced to establish the Contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s liability with respect to the Contractor}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s obligations other than specifically to correct the Work. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Appellant}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s Excerpts of Record, p. 25 (Construction Contract, Article 18.2).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Article 18.2 clarifies the one year period and expressly provides that it is an obligation upon the contractor and does not affect the time within which obligations of the contractor may be enforced or proceedings commenced to establish the contractor}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s liability.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, article 18 is actually a warranty requiring Phil-Guam to correct defective work even after substantial completion. \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [22]}{\f0\insrsid7816262\charrsid15496078 \tab Case law on such warranty provisions supports this position.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 [A]n express warranty against defects for a limited period of time does not act as a limitation upon the obligation to perform the contract in a workmanlike manner.}{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Tonkin v. Bob Eldridge Const. Co.,}{ \f0\insrsid7816262\charrsid15496078 808 S.W.2d 849, 853 (Mo.App. 1991).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 [T]he twelve-month guarantee should not be interpreted as a limitation upon the contractor's liability for defective work . . .}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 a provision requiring corrections of defects appearing within a year is actually }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 62 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 an added guarantee, inserted in the contract to extend rather than limit the contractor's liability for faulty construction. As such, it does not prescribe the owner's exclusive remedy, and it in no way impa irs the contractor's general obligation to perform his contract in a proper, workmanlike manner.}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt \f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 Norair Eng}{\i\f0\insrsid6126546\charrsid15496078 '}{\i\f0\insrsid7816262\charrsid15496078 g Corp. v. Saint Joseph's Hosp. Inc}{\f0\insrsid7816262\charrsid15496078 ., 249 S.E.2d 642, 647 (Ga.App. 1978) (quoting }{\i\f0\insrsid7816262\charrsid15496078 Burton-Dixie Corp. v. Timothy McCarthy Const. Co.}{\f0\insrsid7816262\charrsid15496078 , 436 F.2d 405, 410-11 (5th Cir.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 1971)).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In the instant case, we find that article 18 is not a contractual time limitations period to bring an action against Phil-Guam. \par }{\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [23]}{\f0\insrsid7816262\charrsid15496078 \tab Under the undisputed facts, Phil-Guam was notified of the leaky windows on June 5, 1995.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The occupancy permit was issued less than three months prior, on March 25, 1995.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, the defect was discovered and Phil-Guam was notified well within the twelve month limit set forth in article 18.1.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Phil-Guam had the responsibility and the right to make the repairs within twelve months of substantial completion, which in this case was signified by issuance of the occupancy permit.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Article 18 prescribes Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s duty to make the repairs for defective workmanship detected within twelve months of substantial completion.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 It does not limit the time in which Phil-Guam faces liability for failing to make the repairs within the twelve months.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We note that the performance bond does contain a limitations period, which the Ronquillos argue bars the claim against them.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The provision states in part: \par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 Any proceeding, legal or equitable, under this Bond may be instituted in any court of competent jurisdiction . . . shall be instituted within one year after C ontractor default or within one year after the Contractor ceased working or within one year after the surety refuses or fails to perform its obligation under this Bond, which ever occurs first. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Excerpts of Record, p. 30 (Performance Bond, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}} }{\f0\insrsid7816262\charrsid15496078 9).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 As it relates to the facts of this case, section 9 provides that the owner was required to bring legal action against Surety within a year from when the contractor defaulted or ceased working, whichever occurred first, if Surety refused to perform.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 In this case, Surety performed after default was declared and the owners had no need to bring action against Surety.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Moreover, Surety}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s counter-claim against Phil-Guam was based upon the indemnity agreement.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, section 9 is irrelevant to this case. \par }\pard \qj \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 E.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Statute of Limitations}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [24]}{\f0\insrsid7816262\charrsid15496078 \tab The trial court found that 5 GCA }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid7816262\charrsid15496078 32501(d) limited Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s responsibility to a period of one year following issuance of the occupancy permit.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 We disagree.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 This section states:}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 No bonding company which is bonding a contractor constructing a new home shall be responsible for any of the warranties set out in this section for breaches which occur more than one (1) year after the date the certi ficate of occupancy is issued for the home by the Department. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 \par Title 5 GCA }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 32501(d) (1996).}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Section 32501 sets out certain statutory implied warranties which are to be distinguished from expressed contractual warranties.}{\cs15\f0\super\insrsid7816262\charrsid15496078 \chftn {\footnote \pard\plain \qj \fi720\li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 \f37\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\fs20\super\insrsid7816262 2}{\fs20\insrsid7816262 Section 32501 provides in pertinent part: \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 (a) A new home has the following implied warranties: \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \fi720\li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 (1) That the home was built in a workmanlike manner of suitable new materials of at least aver age quality, and that any exceptions thereto were communicated to the purchaser thereof in a separate writing signed by the purchaser before he occupied the home. Compliance with this subsection (1) shall not excuse compliance with any other warranty. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \fi720\li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 (2) That the home was built according to plans and specifications filed with Department of Public Works (the "Department"), and that the home fully complies with all laws, the Building Code and all rules and regulations relating thereto. The failure of a bui lding inspection to detect noncompliance with plans, laws, or rules and regulations, the Building Code, or specifications shall not be a defense to a claim under this warranty. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \fi720\li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 (3) If the home was purchased from a developer who supplied both the lot and th e home to the purchaser and did not build on a lot supplied by the purchaser, there is a warranty that the home will not flood for a period of five (5) years, in the absence of any negligence by the homeowner. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \fi720\li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 (4) In addition to the foregoing warranties, the home is warranted against all defects of construction, materials, and workmanship for eighteen (18) months. \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par }\pard \qj \li720\ri0\nowidctlpar\faauto\rin0\lin720\itap0 {\fs20\insrsid7816262 . . . . \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid7816262 \par 5 GCA }{\fs20\insrsid7816262 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 10}{\fldrslt\f36\fs20}}}{\fs20\insrsid7816262 32501(a). \par \par }\pard \qj \fi-720\li1440\ri0\nowidctlpar\tx-1440\faauto\rin0\lin1440\itap0 {\fs20\insrsid7816262 }{\fs20\super\insrsid7816262 \tab \par }}}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The one year limit in section 32501(d) pertains to breaches of the implied warranties and is not a statute of limitations restricting the time within which a suit is required to be filed.}{ \f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [25]}{\f0\insrsid7816262\charrsid15496078 \tab Moreover, we interpret a breach of an implied warranty under section 32501(d) to include the discovery of a defect in construction.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 If the defect or breach occurs one year after substantial completion, the bonding company faces no responsibility.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 To find as the trial court suggests would mean that a contractor cou ld be notified of a defect immediately after substantial completion but continue ineffective repair work for a year, thus relieving itself and the bonding company of any liability and leaving the owner with no protection.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [26]}{\f0\insrsid7816262\charrsid15496078 \tab In this case , the record shows substantial completion on March 25, 1995, upon the issuance of the occupancy permit, and that Phil-Guam was notified of the defective windows in June 1995.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, under 5 GCA }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 32501(d), Surety}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s potential liability attached because the defect was discovered within a year of substantial completion. \par }\pard \qj \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 F.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Salvage Value}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [27]}{\f0\insrsid7816262\charrsid15496078 \tab In the event this court were to hold for Surety, the Ronquillos requested that this court offset the salvage value of the rep laced windows from the costs incurred in the repairs.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 However, aside from the testimony of O}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill: }{ \f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 I think it was $30,000.00 }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 66 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 thirty-some thousand dollars,}{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Transcript vol. II, p. 32 (Bench Trial, Jan. 24, 2001), there was no evidence presented by the Ronquillos as to the actual salvage value of the replaced windows.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 The Ronquillos failed to call any witnesses or provide evidence to contest the reasonableness of the amount spent by Surety on the repairs.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Aside from noting O }{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Neill}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s testimony, the trial court made no factual finding as to the salvage value of the windows.}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Thus, we are unable to make any offset of the value of the windows from the amounts claimed by Surety.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 At argument in this appeal, Surety waived its claim to the $320 inspection fee charged to the Ronquillos.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 This amount shall be deducted from the total claimed by Surety.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 G.}{\b\f0\insrsid15496078 }{\b\f0\insrsid7816262\charrsid15496078 Attorney}{\b\f0\insrsid6126546\charrsid15496078 '}{ \b\f0\insrsid7816262\charrsid15496078 s Fees}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [28]}{\f0\insrsid7816262\charrsid15496078 \tab Surety requests attorney}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s fees pursuant to section 3 of the indemnity agreement. Section 3 expressly provides that the Ronquillos pay attorney}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s fees in connection with any legal action brought against them under the indemnity agreement.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Appellants}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 Exce rpts of Record, p. 16 (Indemnity Agreement, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 3).}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 Because we hold in favor of Surety on its counter-claim, which was based upon the indemnity agreement, we find that Surety is entitled to attorney}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s fees including fees incurred in prosecuting this appeal.}{\f0\insrsid15496078 }{\i\f0\insrsid7816262\charrsid15496078 See Citizen}{\i\f0\insrsid6126546\charrsid15496078 '}{\i\f0\insrsid7816262\charrsid15496078 s Sec. Bank (Guam), Inc., v. Bidaure}{\f0\insrsid7816262\charrsid15496078 , 1997 Guam 3, }{\f0\insrsid7816262\charrsid15496078 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}{\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\f0\insrsid7816262\charrsid15496078 22-23 (finding attorneys fees justified by the express language in a guaranty and including attorney}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid15496078 s fees on appeal).}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid7816262\charrsid15496078 IV.}{\f0\insrsid7816262\charrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\b\f0\insrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [29]}{\f0\insrsid7816262\charrsid15496078 \tab Phil-Guam breached the terms of the construction contract by not building a residence of workmanlike quality.}{\f0\insrsid15496078 }{ \f0\insrsid7816262\charrsid15496078 This breach amounted to a default of the construction contract.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Under the performance bond, Surety}{\f0\insrsid6126546\charrsid15496078 '}{ \f0\insrsid7816262\charrsid15496078 s responsibility extended to correction of defective work of the contractor.}{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We find that the requirements of the performance bond were met in the declaration of default by the owners and the assumption by Surety of Phil-Guam}{\f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid7816262\charrsid15496078 s duty to repair the defects.} {\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 We hold that Surety is entitled to judgment in the amount claimed, less $320 for the unjustified inspection fee, plus pre-judgment interest as allowed by the indemnity agreement, and attorney}{ \f0\insrsid6126546\charrsid15496078 '}{\f0\insrsid15496078 s fees.}{\f0\insrsid7816262 \par }{\f0\insrsid15496078\charrsid15496078 \par }{\b\f0\insrsid7816262\charrsid15496078 [30]}{\f0\insrsid7816262\charrsid15496078 \tab The judgment of the trial court in favor of the Ronquillos is }{\b\f0\insrsid7816262\charrsid15496078 REVERSED}{\f0\insrsid7816262\charrsid15496078 .}{ \f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 The case is }{\b\f0\insrsid7816262\charrsid15496078 REMANDED}{\f0\insrsid7816262\charrsid15496078 to the trial court for entry of judgment in favor of Surety, calculation of damages and attorneys fees, and for further proceedings on the foreclosure of the mortgage consistent with this opinion.}{\f0\insrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 BENJAMIN J. F. CRUZ\tab \tab \tab }{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 F. PHILIP CARBULLIDO \par Justice }{\i\f0\insrsid7816262\charrsid15496078 Pro Tempore}{\f0\insrsid7816262\charrsid15496078 \tab \tab \tab \tab }{\f0\insrsid15496078 }{\f0\insrsid7816262\charrsid15496078 Associate Justice}{\f0\insrsid15496078 \par }\pard \qj \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid15496078 \par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid15496078 {\f0\insrsid7816262\charrsid15496078 PETER C. SIGUENZA, JR. \par Chief Justice \par }}