Travelers Casualty & Surety Company of America v. Thorington Electrical & Construction Company et al

Filing 41

MEMORANDUM OPINION AND ORDER that Travelers' motion for summary judgment isGRANTED. A final judgment will be entered. Signed by Honorable William Keith Watkins on 12/8/2009. (cb, )

IN THE DISTRICT COURT OF THE UNITED STATES F O R THE MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION T R A V E L E R S CASUALTY AND SURETY ) C O M P A N Y OF AMERICA, ) ) P la in tiff, ) ) v. ) ) T H O R IN G T O N ELECTRICAL & ) C O N S T R U C T IO N COMPANY, et al., ) ) D e f e n d a n ts. )

C A S E NO. 2:09-CV-37-WKW

M E M O R A N D U M OPINION AND ORDER P la in tif f Travelers Casualty and Surety Company of America ("Travelers") brings this a c tio n against Thorington Electrical & Construction Company ("Thorington Electrical"), K e lv in Thorington ("Mr. Thorington"), and Diane Thorington ("Mrs. Thorington"), seeking re im b u rs e m e n t of $787,756.34 in losses, costs, and expenses, and $298,730.91 as collateral a g a in s t unliquidated losses, costs, and expenses incurred as a result of issuing bonds on b e h a lf of Thorington Electrical. This cause is before the court on Travelers' motion for s u m m a ry judgment on its claim for exoneration and specific performance. (Docs. # 29, 30.) Defendants did not file a response to Travelers' motion. Upon careful consideration of c o u n s e l's brief, the relevant law, and the record as a whole, the court finds that Travelers' m o tio n for summary judgment is due to be granted. I. FACTS AND PROCEDURAL HISTORY T h e following facts derive from Travelers' verified complaint (Doc. # 1), the affidavit

and supplemental affidavit of Michael F. Burkhardt ("Burkhardt") (Burkhardt Aff. I, Doc. # 31, Ex. 1; Burkhardt Aff. II, Doc. # 40, Ex. I), and the parties' indemnity agreement (Doc. # 31, Ex. 2). At the request of Thorington Electrical, Travelers issued performance and payment b o n d s in favor of the United States of America for two construction projects, known as the N e w Entry Control Facility, Bell Street Gate (FA3300-050C-0015) ("the Gate") and 10 Lane B ow ling Center, Gunter Annex (FA3300-060C-0015) ("The Bowling Alley") at the Maxwell A ir Force Base in Montgomery, Alabama. (Verified Compl. ¶ 5; Burkhardt Aff. I ¶ 2.) P rio r to the issuance of the bonds, Thorington Electrical, Mr. Thorington, and Mrs. T h o rin g to n (collectively "Defendants"), jointly and severally, executed a General Agreement o f Indemnity ("GAI") in favor of Travelers, in which Defendants promised to exonerate, d e f e n d , and hold Travelers harmless from all loss, cost, or expense, as defined in the GAI. (Verified Compl. ¶ 6; Burkhardt Aff I ¶ 3.) Travelers received notice of claims for non-payment from the laborers and material s u p p lie rs of Thorington Electrical on the above-referenced projects. (Verified Compl. ¶ 8; B u rk h a rd t Aff. I ¶ 4.) According to Travelers, one or more of these claims may be m e rito rio u s and it intends to discharge any obligations which it may owe other claimants in a c c o rd a n c e with the requirements of its bonds and applicable law. (Verified Compl. ¶ 8; B u rk h a rd t Aff. I ¶ 4.)

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As of November 20, 2009, Travelers has incurred losses and expenses in the amount o f $748,529.77 in the performance of its obligations under the aforementioned bonds, and $ 3 9 ,2 2 6 .5 7 in legal, consulting, and travel expenses. (Burkhardt Aff. II ¶ 2.) Additionally, b a s e d upon its investigations, Travelers has established a remaining loss and expenses re s e rv e in the amount of $298,730.91 in anticipation of further losses under the bonds. (Burkhardt Aff. II ¶ 2.) Travelers has requested that Defendants, separately and severally, d e p o s it collateral, money, or other security in the amount of its current loss reserve pending f in a l disposition of the claims. Defendants have failed to do so. (Verified Compl. ¶ 10; B u rk h a rd t Aff. I. ¶ 8.) The total amount requested by Travelers equals $1,086,487.25. (Burkhardt Aff. II.) II. STANDARD OF REVIEW S u m m a ry judgment should be granted only "if the pleadings, the discovery and d is c lo s u re materials on file, and any affidavits show that there is no genuine issue as to any m a te ria l fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 5 6 (c ). Under Rule 56, the moving party "always bears the initial responsibility of informing th e district court of the basis for its motion." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1 9 8 6 ). The movant can meet this burden by presenting evidence showing there is no g e n u in e issue of material fact, or by showing that the nonmoving party has failed to present e v id e n c e in support of some element of its case on which it bears the ultimate burden of p ro o f . Id. at 322-23. "[T]he court must view all evidence and make all reasonable inferences

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in favor of the party opposing summary judgment." Haves v. City of Miami, 52 F.3d 918, 9 2 1 (11th Cir. 1995). Once the moving party has met its burden, "an opposing party may not rely merely on a lle g a tio n s or denials in its own pleading; rather, its response must ­ by affidavits or as o t h e r w i s e provided in this rule ­ set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). To avoid summary judgment, the nonmoving party "must do more th a n simply show that there is some metaphysical doubt as to the material facts." Matsushita E le c . Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). A genuine factual dispute e x is ts if "a reasonable jury could return a verdict for the non-moving party." Damon v. F le m in g Supermarkets, Inc., 196 F.3d 1354, 1358 (11th Cir. 1999) (internal quotation marks a n d citation omitted). "[T]he district court cannot base the entry of summary judgment on the mere fact that th e motion was unopposed, but, rather, must consider the merits of the motion." United S ta te s v. One Piece of Real Prop., 5800 S.W. 4th Ave., Miami, Fla., 363 F.3d 1099, 1101 (1 1 th Cir. 2004). The court, however, "need not sua sponte review all of the evidentiary m a te ria ls on file at the time the motion is granted, but must ensure that the motion itself is s u p p o rte d by evidentiary materials." Id. III. DISCUSSION A c c o rd in g to Alabama law, a surety is entitled to reimbursement from a principal for c la im s made pursuant to a valid indemnity agreement, so long as the payments were made

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in good faith. Frontier Ins. Co. v. Int'l, Inc., 124 F. Supp. 2d 1211, 1213 (N.D. Ala. 2000) (c itin g Doster v. Cont'l Cas. Co., 105 So. 2d 83 (Ala. 1958)); see also Employers Ins. of W a u s a u v. Able Green, Inc., 749 F. Supp. 1100, 1103 (S.D. Fla. 1990) ("[A] surety is entitled to reimbursement pursuant to an indemnity contract for any payments made by it in a good f a ith belief that it was required to pay, regardless of whether any liability actually existed." (e m p h a s is removed)). In addition to a surety's contractual rights under a valid indemnity a g re e m e n t, Alabama creates a statutory right to reimbursement. Alabama Code § 8-3-5 p ro v id e s , in relevant part, as follows: "Payment by a surety . . . of a debt past due entitles him to proceed immediately against his principal for the sum paid, with interest thereon, and all le g a l costs to which he may have been subjected by the default of the principal." Defendants, having failed to respond to Travelers' motion for summary judgment, do n o t contest the validity of the GAI and do not contend that Travelers acted in bad faith in m a k in g the payments. Thus, the court need only determine whether the motion for summary ju d g m e n t is supported by the evidence submitted. See One Piece of Real Prop., 5800 S.W. 4 th Ave., Miami, Fla., 363 F.3d at 1101. The indemnity agreement in this case, the GAI, states that the "Indemnitors shall e x o n e ra te , indemnify and save Company harmless from and against all Loss."1 (GAI ¶ 3.) " L o s s " is defined in the GAI as [a]ll loss and expense of any kind or nature, including attorneys' . . . fees, w h ic h Company incurs in connection with any Bond or this Agreement,
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"Indemnitors" refers to Defendants, and "Company" refers to Travelers. (See GAI ¶ 1.)

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including but not limited to all loss and expense incurred by reason of C o m p a n y' s : (a) making any investigation in connection with any Bond; (b) p ro s e c u tin g or defending any action in connection with any Bond; (c) o b ta in in g the release of any Bond; (d) recovering or attempting to recover P ro p e rty in connection with any Bond or this Agreement; (e) enforcing by litig a tio n or otherwise any of the provisions of this Agreement; and (f) all in te re s t accruing thereon at the maximum legal rate. (GAI ¶ 1.) With regard to the amount of Defendant's liability, the GAI provides that "[a]n ite m iz e d , sworn statement by an employee of Company, or other evidence of payment, shall b e prima facie evidence of the propriety, amount and existence of Indemnitors' liability." (GAI ¶ 3.) Burkhardt, an Associate Claim Counsel with Travelers, testified in his supplemental a f f id a v it that as of November 20, 2009, "Travelers has paid claims and expenses under the T E C C bond program totaling $748,539.77[,]" and "has incurred legal, consulting and travel e x p e n s e s as a result of the issuance of bonds[,]" in the amount of $39,226.57. (Burkhardt A f f . II ¶ 2.) Thus, in accordance with the express terms of the GAI and Alabama Code § 8 -3 -5 , Travelers is entitled to reimbursement of losses, including attorney's fees, totaling $ 7 8 7 ,7 5 6 .3 4 . (See Burkhardt Aff. II ¶ 2.) Travelers also seeks $298,730.91 as collateral against unliquidated losses, costs, and e x p e n s e s . (Burkhardt Aff. II ¶ 2.) As a basis for this request, Travelers points, once again, to the express terms of the GAI, which requires Defendants to deposit with Company, upon demand, an amount as determined by Company s u f f ic ie n t to discharge any Loss or anticipated Loss. . . . Sums deposited with C o m p a n y pursuant to this paragraph may be used by Company to pay such

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claim or be held by Company as collateral security against any Loss or unpaid p r e m iu m on any Bond. (G A I ¶ 5 (emphasis added).) The express terms of the GAI support Travelers' uncontested arguments that it is e n title d to reimbursement and exoneration in this case. Further, the uncontroverted evidence, in the form of a verified complaint and two affidavits, establishes the amount owed T ra v e le rs. IV. CONCLUSION B a se d on the foregoing, the court finds that there is no genuine issue of material fact a s to (1) Defendants' liability under the contract and (2) the amount of Defendants' liability. The undisputed evidence shows that Travelers in entitled to recover $1,086,487.25 from D e f e n d a n ts . Accordingly, it is ORDERED that Travelers' motion for summary judgment is G R A N T E D . A final judgment will be entered. DONE this 8th day of December, 2009. /s/ W. Keith Watkins UNITED STATES DISTRICT JUDGE

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