## Facts

- National Fuel Gas Distribution Corporation contracted with Iroquois Energy Management, LLC under a service agreement that required Iroquois to make payments to National Fuel.
- Hartford Fire Insurance Company issued a $3.8 million surety bond guaranteeing Iroquois’s payment obligations to National Fuel.
- The bond included a written notice requirement stating that, within five business days after Iroquois was in default (in whole or part) and National Fuel decided to grant an extension of time for payment, National Fuel had to notify Hartford in writing.
- Iroquois defaulted on payments between April and August 2000.
- National Fuel granted Iroquois multiple payment extensions but did not provide Hartford written notice of the defaults and extensions until August 1, 2000.
- Iroquois soon filed for bankruptcy, and National Fuel sought payment from Hartford under the bond.

## Issues

1. Whether the bond’s written notice requirement, introduced as a “provided” clause and listed with other prerequisites to recovery, created an express condition precedent to Hartford’s liability.
2. Whether National Fuel’s failure to give timely written notice, as required by the bond, barred recovery notwithstanding the resulting forfeiture.

## Decision

- The Appellate Division (Fourth Department) modified the trial court’s order.
- The court held the notice requirement was an express condition precedent to Hartford’s obligation and National Fuel’s right to recover under the bond.
- Because express conditions must be literally performed, National Fuel’s untimely notice defeated its claim.
- The court granted Hartford’s cross-motion for summary judgment and dismissed the first and second causes of action of the second amended complaint.
- Hartford’s separate appeal from a discovery order was dismissed as moot in light of the merits disposition.

## Legal Principles

- Contract language introduced by “provided” may signal creation of an express condition precedent, particularly when presented among other stated prerequisites to recovery.
- Under New York law, express conditions precedent must be strictly and literally satisfied; substantial compliance does not suffice.
- Although courts generally prefer interpretations that avoid forfeiture, clear conditional drafting can require enforcement of an express condition even when noncompliance causes forfeiture.

## Conclusion

The court enforced the surety bond’s notice clause as an express condition precedent and held that National Fuel’s failure to provide timely written notice of default and payment extensions relieved Hartford of liability, requiring summary judgment for Hartford and dismissal of the relevant claims.


Nat'l Fuel Gas Distrib. Corp. v. Hartford Fire Ins. Co., 28 A.D.3d 1169, 814 N.Y.S.2d 436 (App. Div. 4th Dep't 2006)