Insurance Company of the West v. Ollinger Construction, Inc. et al
ORDER granting 26 Motion for Summary Judgment. Judgment will be entered in favor of plaintiff and against defendant in the total amount of $225,231.52. Signed by Chief Judge William H. Steele on 12/20/2012. (mbp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
INSURANCE COMPANY OF THE WEST, )
OLLINGER CONSTRUCTION, INC.,
CIVIL ACTION 11-0575-WS-N
This matter comes before the Court on plaintiff’s Motion for Summary Judgment (doc.
26). The Motion has been briefed and is now ripe for disposition.1
Nature of the Case.
Plaintiff, Insurance Company of the West (“ICW”), brought this action seeking
exoneration of surety against defendant, Ollinger Construction, Inc. (“Ollinger Construction”).
The Complaint alleges that ICW issued certain performance and payment bonds on Ollinger
Construction’s behalf, and that it subsequently received claims from subcontractors, laborers and
materialmen under the payment bond. ICW alleges that it has settled and paid claims in excess
of $150,000 under that bond. In this action, ICW seeks to recover those amounts (plus attorney’s
fees, interest, and costs) from Ollinger Construction on the theory that Ollinger Construction is
The Rule 16(b) Scheduling Order entered on April 17, 2012 provides that “[i]f a
party’s exhibits in support of or in opposition to a motion exceed 50 pages in the aggregate, then
that party must deliver a courtesy hard copy of those exhibits to the Judge’s chambers by mail or
hand delivery.” (Doc. 22, § 13(c).) Neither side complied with this requirement, despite the fact
that defendant filed more than 100 pages of exhibits with its opposition (doc. 31) and plaintiff
submitted another 100+ pages of exhibits with its reply (doc. 34). Also, the parties’ exhibits are
cluttered with multiple identical copies of many exhibits, forcing the Court to sift through
redundant and duplicative materials in order to locate particular items. Nonetheless, the Court in
its discretion will consider these exhibits as submitted.
obliged to indemnify it under the terms of a certain General Indemnity Agreement.2 Ollinger
Construction denies liability to ICW, reasoning that it was not a party to the subject agreement
and that such agreement has been terminated.
The General Indemnity Agreement.
On or about February 6, 2004, a General Indemnity Agreement (the “Agreement” or the
“February 2004 Agreement”) was executed by a construction company called Ollinger/Mostellar
& Associates, Inc. (“Ollinger/Mostellar”), in favor of ICW as surety. (Four individuals also
executed the Agreement as indemnitors bound to the same indemnity obligations as
Ollinger/Mostellar was.)4 In that Agreement, Ollinger/Mostellar agreed to “indemnify and keep
indemnified [ICW] against any and all liability for losses and expenses of whatsoever kind or
nature, including attorney fees and costs, by reason of having executed or procured the execution
of Bonds, or by reason of the failure of [Ollinger/Mostellar] to perform or comply with the
covenants and conditions of this Agreement.” (Fuller Aff. (doc. 29, Exh. 1), ¶ 2 & Exh. A, at §
1.) The Agreement further specified that if ICW “believes it may sustain a loss or expense on a
bond, [ICW] may, from time to time, demand, and … [Ollinger/Mostellar] shall deliver over to
[ICW], cash or collateral acceptable to [ICW] as to amount and form, to cover any contingent
losses or expenses and any subsequent increase thereof.” (Id., § 2.) To the extent that ICW
commenced legal action against Ollinger/Mostellar to enforce the Agreement, “the prevailing
This claim sounds exclusively under Alabama state law. Although no federal
question is joined herein, federal subject-matter jurisdiction was properly invoked by plaintiff
pursuant to 28 U.S.C. § 1332, inasmuch as the well-pleaded allegations of the Complaint
establish that there is complete diversity of citizenship and that the amount in controversy
substantially exceeds the sum of $75,000, exclusive of costs and attorney’s fees.
The Court is mindful of its obligation under Rule 56 to construe the record,
including all evidence and factual inferences, in the light most favorable to the nonmoving party.
See Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). Thus, defendant’s
evidence is taken as true and all justifiable inferences are drawn in its favor.
All told, the signatories to the Agreement were as follows: Wayne B. Mostellar
(as President of Ollinger/Mostellar), Tom P. Ollinger (as CEO & Secretary of Ollinger
Mostellar), Wayne B. Mostellar (in his individual capacity), Virginia M. Mostellar, Tom P.
Ollinger (in his individual capacity), and Lucille Jackson Ollinger.
party in such action shall be entitled to recover from the other party or parties its reasonable
attorney fees and witness fees, and all other costs.” (Id., § 21.)
Four features of the Agreement are particularly relevant to this dispute. First,
Ollinger/Mostellar and the named indemnitors were not simply binding themselves, but
specifically represented that they were acting “for themselves and their heirs, executors,
administrators, successors, and assigns.” (Id. at 1.) Thus, the Agreement was binding not only
on Ollinger/Mostellar, but also on its successors in interest. Second, in a section bearing the
heading “Preservation of Surety’s Rights,” the Agreement specified that Ollinger/Mostellar
“shall continue to be bound under this Agreement even though [ICW] … has accepted or
released or may in the future accept or release, other agreements of indemnity or collateral, from
[Ollinger/Mostellar] or others, in connection with the execution of Bonds.” (Id., § 17.) In other
words, although ICW might choose to enter into or not to enter into indemnity agreements with
anyone else in connection with the issuance of bonds, Ollinger/Mostellar would retain its
indemnity obligations specified in the Agreement. Third, the Agreement provided that ICW’s
“rights and remedies … under this Agreement may not be waived or modified except by written
amendment signed by” ICW. (Id., § 19.) Thus, mere oral assurances or promises by ICW not to
enforce or pursue indemnification remedies under this Agreement would be of no legal force and
effect, under the plain terms of the contract. And fourth, the “Termination” clause specified that
the Agreement “remains in full force and effect until terminated,” that an indemnitor could only
terminate the Agreement upon 30 days’ written notice to ICW, and that any such “notice of
termination shall operate only with respect to those upon whose behalf such notice was given.”
(Id., § 20.)
Ollinger/Mostellar Becomes Ollinger Construction.
In April 2006, the two principals of Ollinger/Mostellar, Tom Ollinger and Wayne
Mostellar, decided to part ways. (Allain Aff. (doc. 31, Exh. F), ¶ 3.) At that time, Tom Ollinger
purchased Wayne Mostellar’s share of Ollinger/Mostellar and changed the name of the company
to Ollinger Construction, Inc. (Id.)5 The following month, an individual named Alexander
Allain purchased Ollinger Construction, Inc. from Tom Ollinger. (Id., ¶ 4.)
This name change is memorialized in a document filed with the Alabama
Secretary of State styled “Articles of Amendment to the Articles of Incorporation of
Shortly after these changes occurred, Wayne and Virginia Mostellar (two of the
indemnitors in the Agreement) invoked the termination provision of the Agreement. In
particular, on July 18, 2006, the Mostellars’ counsel sent a letter to ICW, the body of which read
as follows: “We represent Wayne B. Mostellar and Virginia M. Mostellar. Without implying
that any indemnification is presently in effect, this is formal confirmation of termination pursuant
to paragraph 20 of the General Indemnity Agreement. Should you have any questions, please
contact me. Thank you.” (Doc. 31, Exh. A.)6 The Mostellars’ counsel neither represented nor
purported to represent Ollinger Construction in connection with this termination notice. (Davis
Aff. (doc. 31, Exh. C), ¶ 4.) For their part, neither Ollinger/Mostellar nor Ollinger Construction
furnished written notice of termination to ICW at any time.
Be that as it may, in June 2006, Allain (the new owner of Ollinger Construction) met with
an independent bonding agent named Jim Brashier (who worked for BancorpSouth Insurance
Services)7 to discuss possible ICW bonding coverage for a new project that Ollinger
Construction was undertaking. (Allain Aff., ¶ 5.) At that meeting, Allain informed Brashier that
Ollinger Construction “was under new ownership and management,” and both men orally agreed
that any outstanding agreements between Ollinger/Mostellar and ICW “did not apply to the new
Ollinger Construction, Inc.” (Id., ¶ 7.) Furthermore, Brashier “agreed to evaluate Ollinger
Ollinger/Mostellar Associates, Inc.,” which provides that “The name of the corporation has been
OLLINGER/MOSTELLAR & ASSOCIATES, INC. but effective April 7, 2006, shall
hereafter be changed to be known as “OLLINGER CONSTRUCTION, INC.”” (Fuller Aff., ¶
3 & Exh. B; doc. 29, Exh. 3.). An exhibit to the Articles of Amendment shows that, on April 10,
2006, Ollinger/Mostellar’s shareholders and board of directors unanimously consented in writing
“that the name of the Corporation shall, effective April 7, 2006 hereby be changed from
“Ollinger/Mostellar & Associates, Inc.” to “Ollinger Construction, Inc.”” (Id.)
Above the salutation of the July 18, 2006 letter is the phrase “RE: Principal: The
company formerly known as Ollinger Mostellar & Associates, Inc.” (Id.) Ollinger Construction
now attributes special significance to this notation, as discussed infra.
Although he was not employed by ICW, Brashier was one of a number of agents
designated by ICW as its “true and lawful Attorney(s)-in-Fact with authority to date, execute,
sign, seal and deliver on behalf of [ICW], fidelity and surety bonds, undertakings, and other
similar contracts of suretyship, and any related documents” during the 2005-2007 period. (Doc.
31, Exh. E, at 34.) There is no evidence, however, that Brashier signed any documents
purporting to modify, terminate or waive ICW’s rights under the Agreement.
Construction, Inc. as a new start-up entity under new ownership and management.” (Id., ¶ 8.)
These discussions were not memorialized in any writing executed by ICW.
The Mobile Regional Senior Community Center Project.
Armed with its new name and new ownership, Ollinger Construction obtained a contract
from the City of Mobile to work on the Mobile Regional Senior Community Center (“MRSCC”).
Ollinger Construction obtained bonding coverage from ICW for this project. (Allain Aff., ¶ 10.)
In particular, on or about October 26, 2006, ICW issued Performance Bond No. 2174263 on
Ollinger Construction in the amount of $1,624,213.00 for the “Mobile Senior Regional
Community Center Phase I, Mobile, Alabama Project No. PR-026-02.” (Doc. 31, Exh. E, at 2628.) ICW likewise issued Payment Bond No. 2174263 on Ollinger Construction in the same
amount for the same project. (Id. at 29-31.) On July 6, 2007, ICW and Ollinger Construction
executed a Change Rider that increased the Performance/Payment Bond amount to $4,731,692.
(Id. at 33.)8 To be clear, both bonds and the change rider to the MRSCC project identify the
contractor as “Ollinger Construction, Inc.,” not “Ollinger/Mostellar & Associates, Inc.”
There is no evidence that ICW ever had Ollinger Construction or its new principal
(Allain) execute a separate General Indemnity Agreement in connection with the multimilliondollar payment and performance bonds that ICW issued as to the MRSCC project. The reasons
for this omission are not germane to the Rule 56 Motion, and will not be examined here.9
Before Ollinger Construction obtained this additional coverage from ICW, Allain
met with bonding agents Troy Wagener (a BancorpSouth Insurance Services employee) and Ford
Mosby (an ICW employee) to discuss the project in February 2007. (Allain Aff., ¶ 11.) At that
time, Wagener, Mosby and Allain orally “agreed that any agreements that BancorpSouth
Insurance Services, Inc. or Insurance Company of the West may have had with Ollinger/
Mostellar & Associates, Inc. did not apply to the new Ollinger Construction, Inc.” (Id., ¶ 13.)
Once again, no writing was executed to confirm this purported understanding, to terminate the
February 2004 Agreement, or otherwise to waive or cut off ICW’s indemnity rights under that
Ollinger Construction’s summary judgment brief portrays ICW as incompetent,
careless, “dropping the ball,” out of step with sound industry practice, and failing to follow
through on its own stated objectives. (Doc. 31, at 3, 9-12.) To support this view (and no doubt
embarrass ICW), Ollinger Construction points to internal e-mail chains that could reasonably be
perceived as exhibiting a pattern of carelessness and overall lack of attentiveness to the Ollinger
Construction matter by ICW personnel. Ultimately, however, it does not matter why ICW did
not have Ollinger Construction and Allain sign a new General Indemnity Agreement. What
matters is whether the February 2004 General Indemnity Agreement remained in full force and
Claims on the MRSCC Payment Bond.
Unfortunately for both parties, ICW received multiple claims under the payment bond it
issued for Ollinger Construction in the MRSCC project.10 On January 27, 2011, ICW sent a
letter to Tom P. Ollinger (both individually and as purported representative of Ollinger
Construction and Ollinger/Mostellar) and Lucille Jackson Ollinger (in her purported role as
representative of Ollinger Construction) documenting the claims received by ICW on the bond.
(Doc. 29, Exh. 4.) In particular, the letter identified claims by B&E Equipment Company, Inc. in
the amount of $90,000; by Floyd Lanier in the amount of $12,500; by Persons Service Co., Inc.
in the amount of $33,000; and attorneys’ fees and expenses exceeding $16,048. (Id.) On that
basis, ICW called upon the addressees -- in fulfillment of their obligations in the February 2004
General Indemnity Agreement -- “to deposit with the company cash collateral in the amount not
less than $200,000.” (Id.) Ollinger Construction did not deposit the requested collateral, and
never otherwise reimbursed ICW for the outstanding claims. (Fuller Aff., ¶ 4.) ICW ultimately
settled and paid claims under the payment bond totaling $157,411.00, and tallies its total losses
under the Ollinger Construction bond program, inclusive of attorney’s fees and expenses, as
$225,231.52. (Id.) ICW brought this exoneration of surety action against Ollinger Construction
effect against Ollinger Construction with respect to payments ICW made on bonds issued in the
MRSCC project. Similarly unhelpful are defendant’s gratuitous accusations that ICW “has made
misrepresentations of material facts and attempted to deceive this Honorable Court and
especially Allain’s Ollinger Construction to cover up ICW’s failure to have Allain and Ollinger
Construction, Inc. execute an indemnification agreement.” (Doc. 31, at 12.) The Court finds no
evidence of deception or a “cover-up” by plaintiff or its counsel in this matter. To the contrary,
defendant’s own exhibits confirm that plaintiff’s counsel was forthright in accurately explaining
ICW’s difficulties in locating the requisite underwriting file. (Doc. 31, Exhs. L, M.) Viewed in
context, defendant’s inflammatory, hyperbolic rhetoric accusing ICW of “deception and
misrepresentations” in discovery appears unfounded, and serves only to obfuscate the real legal
and factual issues joined herein.
By Ollinger Construction’s reckoning, the blame for the delays that plagued the
MRSCC project lies with the architect, non-party Knodel Associate Architects A.I.A., P.A. In
particular, defendant ascribes fault to “errors, omissions and ambiguities in the plans and
specifications prepared by Knodel.” (Doc. 31, at 1-2.) Of course, the reason(s) why claims were
made on the MRSCC payment bond are not material to the critical question of whether Ollinger
Construction must indemnify ICW for its losses in settling those claims.
seeking reimbursement of these expenditures and enforcement of the indemnification provisions
of the February 2004 General Indemnity Agreement.11
Summary Judgment Standard.
Summary judgment should be granted only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule
56(a), Fed.R.Civ.P. The party seeking summary judgment bears “the initial burden to show the
district court, by reference to materials on file, that there are no genuine issues of material fact
that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
Once the moving party has satisfied its responsibility, the burden shifts to the non-movant to
show the existence of a genuine issue of material fact. Id. “If the nonmoving party fails to make
'a sufficient showing on an essential element of her case with respect to which she has the burden
of proof,' the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)) (footnote omitted). “In reviewing whether the nonmoving party
has met its burden, the court must stop short of weighing the evidence and making credibility
determinations of the truth of the matter. Instead, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBHSiegen, 965 F.2d 994, 999 (11th Cir. 1992) (internal citations and quotations omitted).
“Summary judgment is justified only for those cases devoid of any need for factual
determinations.” Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir. 1987)
Governing Legal Principles.
The basic principles of contract and surety law governing this action are uncontroversial.
Under Alabama law,12 sureties are afforded certain special protections, and indemnity
Tom Ollinger and Lucille Ollinger were initially also named as defendants in this
action. On February 10, 2012, however, Mr. and Ms. Ollinger and ICW filed a Stipulation for
Partial Dismissal without Prejudice (doc. 15). Based on that Stipulation (which set forth no
explanation for the signatories’ decision so to stipulate), the undersigned entered an Order (doc.
16) on February 13, 2012, dismissing without prejudice ICW’s claims against Mr. and Ms.
Ollinger (but not Ollinger Construction).
No party has suggested that the law of any state other than Alabama governs
interpretation and enforcement of the February 2004 Agreement, which was executed in
agreements like the February 2004 Agreement are deemed enforceable in accordance with their
terms. See, e.g., SouthTrust Bank of Alabama, N.A. v. Webb–Stiles Co., 931 So.2d 706 (Ala.
2005) (“When a surety satisfies the principal’s obligation, it is entitled to reimbursement or
restitution from the principal....”).13 Indeed, it is well settled that “a surety in Alabama has the
right to stand on its contract and to exact compliance with its stipulations, which may not be
extended by construction or implication beyond the precise terms of the agreement.” Hightower
and Co. v. U.S. Fidelity and Guar. Co., 527 So.2d 698, 703 n.1 (Ala. 1988). More generally,
Alabama law provides that “the general principles of contract interpretation apply” to payment/
performance bond contracts. Bank of Brewton, Inc. v. International Fidelity Ins. Co., 827 So.2d
747, 752 (Ala. 2002); see also Hightower, 527 So.2d at 703 n.1 (“The contract of a surety ... is to
be construed according to the intent of the parties and the implied condition of good faith,” such
that any attempt by either party to broaden or exceed the contract terms would breach the duty of
good faith); Fidelity & Deposit Co. of Maryland v. Jefferson County Com’n, 756 F. Supp.2d
1329, 1335 (N.D. Ala. 2010) (“general principles of contract interpretation apply with equal
force to surety contracts”). The same is true of indemnity agreements related to those surety
Relevant tenets of contract interpretation under Alabama law include the following: “The
issue whether a contract is ambiguous or unambiguous is a question of law for a court to decide.
… If the terms within a contract are plain and unambiguous, the construction of the contract and
Alabama by an Alabama corporation and Alabama residents concerning indemnity arrangements
for performance and payment bonds issued predominantly (if not exclusively) for construction
projects in Alabama. Nor does any party assert that Ollinger Construction’s obligations to the
surety are fixed by the law of a state other than Alabama. Under the circumstances (and in the
absence of objection or argument to the contrary), application of Alabama law is appropriate.
See also Doster v. Continental Cas. Co., 268 Ala. 123, 105 So.2d 83, 85
(Ala.1958) (“A surety’s right of exoneration is established by our decisions....”); Guarantee Co.
North America USA v. Gadcon, Inc., 2010 WL 1382343, *2 (S.D. Ala. Apr. 2, 2010) (“Under
Alabama law, sureties are granted legal protections, and indemnity agreements like the one at
issue here are enforceable.”); Travelers Cas. and Sur. Co. of America v. Thorington Elec. &
Const. Co., 2009 WL 4758729, *2 (M.D. Ala. Dec. 8, 2009) (“According to Alabama law, a
surety is entitled to reimbursement from a principal for claims made pursuant to a valid
indemnity agreement, so long as the payments were made in good faith.”).
its legal effect become questions of law for the court.” Nationwide Ins. Co. v. Rhodes, 870 So.2d
695, 696-97 (Ala. 2003) (citation omitted); see also Mega Life and Health Ins. Co. v. Pieniozek,
516 F.3d 985, 991 (11th Cir. 2008) (under Alabama law, whether contract is ambiguous or not is
a question of law for the court). “General contract law requires a court to enforce, as it is
written, an unambiguous and lawful contract.” Drummond Co. v. Walter Industries, Inc., 962
So.2d 753, 780 (Ala. 2006). Moreover, “[i]n determining whether the language of a contract is
ambiguous, courts construe the words according to the interpretation ordinary men would place
on the language used therein.... The words are given the meaning that persons with a usual and
ordinary understanding would place on the words.” Progressive Specialty Ins. Co. v. Naramore,
950 So.2d 1138, 1141 (Ala. 2006) (citations and internal quotations omitted); see also Public
Bldg. Authority of City of Huntsville v. St. Paul Fire and Marine Ins. Co., 80 So.3d 171, 180
(Ala. 2010) (“When interpreting a contract, a court should give the terms of the agreement their
clear and plain meaning and should presume that the parties intended what the terms of the
agreement clearly state.”) (citations omitted). “If the trial court finds the contract to be
ambiguous, it must employ established rules of contract construction to resolve the ambiguity,”
and may only submit the ambiguity to the jury if application of these canons of construction does
not resolve it. Pieniozek, 516 F.3d at 992 (internal quotations and citations omitted); see also
New Gourmet Concepts, Inc. v. Siedo Investments Co., 988 So.2d 961, 967 (Ala. 2007) (“When
we find an agreement to be ambiguous, we must employ established rules of contract
construction to resolve the ambiguity found in the inartfully drafted document.”) (citation
Whether the February 2004 Agreement Reaches Ollinger Construction.
As an initial matter, Ollinger Construction argues that the February 2004 Agreement does
not apply to it at all. Certainly, defendant is correct that the named parties bound by that
Agreement were Ollinger/Mostellar, Mr. and Ms. Ollinger, and Mr. and Ms. Mostellar. Ollinger
Construction itself did not execute the February 2004 Agreement; indeed, there was no entity
called Ollinger Construction until April 2006. Likewise, ICW never obtained an indemnity
agreement from Allain, the new owner of Ollinger Construction as of May 2006. These facts
lend superficial appeal to defendant’s position that it is not required to indemnify ICW for the
MRSCC claims because neither Ollinger Construction nor its principal ever executed a general
indemnity agreement as to the bonds that ICW as surety issued for Ollinger Construction’s
benefit on the MRSCC project.
The fundamental defect in defendant’s contention that it need not repay ICW because it
never executed a general indemnity agreement is that it ignores the plain language of the
February 2004 Agreement. Recall that, in signing that Agreement, Ollinger/Mostellar
acknowledged that it was covenanting and agreeing for itself and its “heirs, executors,
administrators, successors, and assigns.” (Doc. 34, Exh. 2, at 1.) There is no dispute that
Ollinger Construction is, indeed, a successor of Ollinger/Mostellar (or, perhaps more accurately,
the very same company, just with a different name). The record is pellucidly clear on this point.
In April 2006, Ollinger/Mostellar prepared and filed articles of amendment to its articles of
incorporation, confirming that “the name of the Corporation shall, effective April 7, 2006 hereby
be changed from “Ollinger/Mostellar & Associates, Inc.” to “Ollinger Construction, Inc.””
(Fuller Aff., ¶ 3 & Exh. B; doc. 29, Exh. 3.) Under any reasonable reading of these facts,
Ollinger Construction was either the very same entity or, at a minimum, a “successor” of
Ollinger/Mostellar under the common, ordinary meaning of the term. See, e.g., Black’s Law
Dictionary (9th ed. 2009), at 1569 (defining “successor” as “[a] corporation that, through
amalgamation, consolidation, or other assumption of interests, is vested with the rights and duties
of an earlier corporation”).14 Defendant does not credibly argue otherwise.
As successor-in-interest to the named principal (Ollinger/Mostellar), Ollinger
Construction was bound by the clear terms of the February 2004 Agreement just as if it had
executed the document itself. Accordingly, defendant cannot avert summary judgment simply
See also City of New York v. Turnpike Dev. Corp., 233 N.Y.S.2d 887, 890 (N.Y.
Sup. 1962) (“In the case of corporations, the term ‘successor in interest’ ordinarily indicates
statutory succession … as, for instance, when the corporation changes its name but retains the
same property.”); see generally In re ReadyOne Industries, Inc., 294 S.W.3d 764, 770-71
(Tex.App. – El Paso 2009) (“[u]nder ordinary legal principles, a contracting party that has
merely changed its name is still a contracting party,” such that “a corporate name change does
not affect the contractual obligations of parties existing prior to the name change”) (citations
omitted); Pro Source Roofing, Inc. v. Boucher, 822 So.2d 881, 884 (La.App. 2 Cir. 2002) (“The
mere change in a corporation’s name generally does not create a new entity, nor does it affect the
corporation’s property, rights or liabilities.”); Engineering Associates of New England, Inc. v. B
& L Liquidating Corp., 345 A.2d 900, 903 (N.H. 1975) (“The fact that the defendant has
changed its corporate name does not relieve it of any liability it may have incurred under its
contract with the plaintiff.”).
by pointing out that Ollinger Construction itself did not sign a general indemnity agreement in
Whether the February 2004 Agreement Was Terminated.
Next, Ollinger Construction trots out a series of arguments that the February 2004
Agreement was terminated before ICW received claims for the payment bond issued for Ollinger
Construction in the MRSCC project. None of these contentions are persuasive.
The centerpiece of defendant’s termination argument is the July 18, 2006 letter that
Wayne and Virginia Mostellar’s counsel sent to ICW. In defendant’s words, “the Mostellar
letter undoubtedly terminated the General Indemnity Agreement as to the Principal,
Ollinger/Mostellar & Associates, Inc., and Indemnitors, Wayne B. Mostellar and Virginia
Mostellar.” (Doc. 31, at 7.) Even after drawing all reasonable inferences from the record in
defendant’s favor, the Court finds that this contention is demonstrably incorrect and devoid of
factual or legal support. The inconvenient truth is that the July 18, 2006 letter did not purport to
be a global termination of the February 2004 Agreement on behalf of all indemnitors and the
principal. The law firm that wrote that letter did not represent Ollinger/Mostellar, Ollinger
Construction, Allain, or Mr. and Ms. Ollinger; rather, that firm solely represented Mr. and Ms.
Mostellar (who were indemnitors in their individual capacities in the February 2004 Agreement).
On that front, the letter is unambiguous: “We represent Wayne B. Mostellar and Virginia M.
Nor does Ollinger Construction advance its cause by suggesting that ICW had
intended to require it to execute a general indemnity agreement, that ICW “dropped the ball” in
that regard, and that best practices in the industry dictate that ICW should have had Ollinger
Construction sign an indemnity document of its own. The question presented here is not whether
ICW might have done something more to lock down Ollinger Construction’s indemnity
obligations. Rather, the question is whether the steps that ICW did take (i.e., having
Ollinger/Mostellar sign the February 2004 Agreement containing successor language) were
sufficient to bind Ollinger Construction. The Court answers that question in the affirmative, as a
matter of law. Whether ICW had intended to do something more, or whether sound bonding
practice called for it to do something more, is immaterial. It is neither necessary nor appropriate
for the Court to grade ICW’s business practices and attention to detail; therefore, the undersigned
declines to do so. The February 2004 Agreement is clear that ICW’s future acceptance or release
of other indemnity agreements as to Ollinger/Mostellar (or its successors) would not alter that
entity’s status as being bound by the terms of the February 2004 Agreement. (Doc. 34, Exh. 2, at
§ 17.) Accordingly, defendant cannot parlay ICW’s failure to act to obtain new or additional
indemnity agreements into a release of Ollinger Construction’s preexisting indemnity obligations
under the February 2004 Agreement.
Mostellar.” (Doc. 31, Exh. A.) The letter went on to state that “this is formal confirmation of
termination pursuant to paragraph 20 of the General Indemnity Agreement.” (Id.) Because the
letter was written solely on behalf of Mr. and Ms. Mostellar, the termination notice could only
have been on their behalf. No reasonable factfinder could conclude otherwise.16
The importance of this determination is underscored by the February 2004 Agreement’s
termination clause, which provided that any indemnitor could terminate the Agreement on 30
days’ written notice to ICW, but that any such “notice of termination shall operate only with
respect to those upon whose behalf such notice was given.” (Doc. 34, Exh. 2, at § 20 (emphasis
added).) Because the July 18, 2006 letter gave notice of termination only as to the Mostellars, it
did not and could not have the effect of terminating the Agreement as to Ollinger Construction.17
With respect to Ollinger Construction, the Agreement by its terms was to “remain in full force
and effect until terminated” (id.), which never happened.
In challenging the point, defendant ascribes talismanic significance to the “RE:”
line of the letter, which states “RE: Principal: The company formerly known as Ollinger
Mostellar & Associates, Inc.” (Doc. 31, Exh. A.) According to defendant, that statement implies
that the July 18, 2006 letter was sent on behalf of both Ollinger/Mostellar and Mr. and Ms.
Mostellar, such that it was intended to terminate the February 2004 Agreement for all of them.
Such a construction of this exhibit is bereft of factual support. The letter could not be any clearer
that it was sent solely on behalf of the Mostellars. Counsel did not write, “We represent
Ollinger/Mostellar & Associates, Inc., as well as Mr. and Ms. Mostellar.” To the contrary, he
wrote, “We represent Wayne B. Mostellar and Virginia M. Mostellar.” Thus, the notice of
termination contained therein could only have been on behalf of Mr. and Ms. Mostellar. Given
that the author of the letter did not represent Ollinger/Mostellar or its successor Ollinger
Construction, it follows that he was not authorized to terminate the Agreement on their behalf.
The statement in the “RE:” section creates no ambiguity as to who counsel’s client was, or who
was terminating the Agreement; rather, it simply aids in identification of the subject indemnity
agreement. Although defendant is emphatic that the letter (and specifically the “RE:” section)
creates genuine issues of material fact as to whether Ollinger/Mostellar terminated the February
2004 Agreement, the Court cannot endorse such a strained construction of the exhibit. Simply
put, no reasonable finder of fact could view the July 18, 2006 letter as terminating the February
2004 Agreement on behalf of anyone other than the Mostellars.
Defendant’s brief imputes nefarious motive to ICW’s apparently delayed
production of the July 18, 2006 letter during discovery. (Doc. 31, at 5.) No such inference of
malfeasance or bad faith is warranted, for the simple reason that the exhibit in question is in no
way deleterious to the claims ICW asserts herein against Ollinger Construction. The letter does
no harm to plaintiff’s claims; therefore, plaintiff had nothing to gain from the alleged
withholding of the document during the discovery process. Besides, any remedy to defendant for
such a discovery violation would not materially impact the Rule 56 analysis in this matter.
Not to be discouraged, defendant attempts to bolster its termination argument by
contending that a series of contractual defaults by Ollinger/Mostellar and/or Ollinger
Construction operated to invalidate the Agreement. In this regard, defendant’s evidence shows
that Ollinger Construction (or Ollinger/Mostellar) defaulted on the February 2004 Agreement in
at least three different ways, by (i) changing the company’s beneficial ownership when Mr.
Ollinger bought out Mr. Mostellar’s interest in the business; (ii) renaming the company in April
2006; and (iii) selling the company to Allain in May 2006. (Doc. 31, at 8.) Defendant suggests
that these defaults rendered the Agreement invalid and unenforceable; however, such a
conclusion is not supported by the contract language. The “Effect of Default” provision does not
specify that the Agreement is negated by an Ollinger/Mostellar default; rather, it states that such
a default confers on ICW rights to take possession of certain funds, property and rights; to
prosecute and settle claims belonging to Ollinger/Mostellar; and to sell property assigned to it by
virtue of the default. (Doc. 34, Exh. 2, at § 6.) There is simply no legal or contractual basis to
support defendant’s assertion that Ollinger/Mostellar’s admitted default of the February 2004
Agreement stripped ICW of indemnity rights under that Agreement by rendering the contract
invalid and unenforceable.
In yet another attempt to wriggle free of its indemnification duties, Ollinger Construction
maintains that on several occasions ICW agents told Allain that ICW’s agreements with
Ollinger/Mostellar did not apply to Ollinger Construction, and that ICW would treat Ollinger
Construction as a new start-up entity. (Doc. 31, at 8-12.) Accepting these facts as true for Rule
56 purposes, defendant remains bound by the February 2004 Agreement. In a section labeled
“Modification,” the Agreement stated that “[t]he rights and remedies of the Surety may not be
waived or modified except by written amendment signed by the Surety.” (Doc. 34, Exh. 2, at §
19 (emphasis added).) Ollinger Construction does not present a written amendment to the
February 2004 Agreement in which ICW agreed to waive its contractual rights to indemnity.
Whatever oral assurances ICW agents may have given to Allain lacked legal force and effect,
because the contract itself left no doubt that waiver or modification of ICW’s rights must be in
writing signed by ICW. Absent such a document, ICW retained the full panoply of enforcement
remedies from the February 2004 Agreement at its disposal, irrespective of what Allain may or
may not have been told by purported ICW agents.18
For all of these reasons, the Court finds that the February 2004 Agreement was not
terminated as to Ollinger Construction, and that it remained in effect with respect to Ollinger
Construction’s indemnity obligations during the relevant time period.19
Whether the February 2004 Agreement Applies to Payments Made by ICW on
the MRSCC Project.
Having determined that the February 2004 Agreement applied to Ollinger Construction
and had neither been terminated nor invalidated, the Court now examines the requirements of
that Agreement. By the plain contract terms, Ollinger Construction promised to “indemnify and
keep indemnified [ICW] against any and all liability for losses and expenses of whatsoever kind
or nature, including attorney fees, and costs, by reason of having executed or procured the
For that reason, the Court need not reach plaintiff’s Motions to Strike the
affidavits of Allain, Brashier and Wagener, nor need it address plaintiff’s objections that one or
more of its purported “agents” were not authorized to speak for ICW. Even if defendant’s
affidavits are accepted uncritically, the inescapable fact remains that there was no written
termination, modification or waiver of the February 2004 Agreement as to Ollinger
Construction; therefore, that agreement by its plain terms remains in full force and effect against
defendant, no matter what else may have been said or intended. See generally Marriott Int’l, Inc.
v. deCelle, 722 So.2d 760, 762 (Ala. 1998) (“The general rule of contract law provides that if a
written contract exists, the rights of the parties are controlled by that contract and parol evidence
is not admissible to contradict, vary, add to, or subtract from its terms.”).
In so concluding, the Court notes ICW’s evidence that a state-court judge reached
the same result concerning this same agreement in pending state-court litigation. Specifically,
the record shows that on September 10, 2012, Mobile County Circuit Judge John Lockett entered
an Order in litigation styled Ollinger Construction, Inc. v. Knodel Associate Architects, A.I.A.,
P.A., concluding that “the General Indemnity Agreement of February 2004 … is valid and has
not been terminated. The Agreement is binding on Ollinger Construction, Inc. as successor-ininterest to Ollinger/Mostellar & Associates, Inc.” (Doc. 34, Exh. 1.) ICW has not argued in this
case that Judge Lockett’s conclusions must be adopted under the doctrine of collateral estoppel
or otherwise, nor has it provided any legal framework within which this state-court ruling can be
placed. Accordingly, the undersigned declines sua sponte to explore whether the state-court
ruling must be followed on grounds of issue preclusion. See generally Delgado v. Florida Dep’t
of Corrections, 659 F.3d 1311, 1330 n.17 (11th Cir. 2011) (“Collateral estoppel, or, in modern
usage, issue preclusion, means simply that when an issue of ultimate fact has once been
determined by a valid and final judgment, that issue cannot again be litigated between the same
parties in any future lawsuit.”) (citations and internal quotation marks omitted). This Order is
independent of, and not reliant on, the state court’s ruling in the Knodel case.
execution of Bonds, or by reason of the failure of [Ollinger Construction] to perform or comply
with the covenants and conditions of this Agreement.” (Doc. 34, Exh. 2, at § 1.) It is undisputed
that ICW issued payment and performance bonds for Ollinger Construction in connection with
the MRSCC project in October 2006, and that it increased the bond amount to $4.7 million in
July 2007. It is likewise undisputed that ICW received multiple claims on the payment bond,
that Ollinger Construction failed and refused to provide collateral to ICW to cover those claims,
and that ICW ultimately incurred considerable losses in settling and paying those claims, plus
related attorney’s fees and expenses. These facts unequivocally establish Ollinger
Construction’s liability to ICW as surety under the terms of the February 2004 Agreement and
Alabama Code § 8-3-5.20
Notwithstanding the foregoing, defendant protests that the February 2004 Agreement
does not apply to the payment/performance bonds issued for the MRSCC project because “ICW
knew that Ollinger Construction, Inc. was a new entity to be treated as a new start-up company
and issued a new indemnity agreement.” (Doc. 31, at 11.) This argument is a non-starter. For
the reasons already stated, any reasonable factfinder must conclude on this record that Ollinger
Construction was covered by the February 2004 Agreement, regardless of whether in anyone’s
estimation ICW could or should have had Ollinger Construction and Allain execute a separate
general indemnity agreement under some normative standard. Equally unavailing is defendant’s
argument that ICW “admitted that the General Indemnity Agreement … does not govern the
2007 bond when it voluntarily dismissed as defendants Mr. and Mrs. Ollinger.” (Doc. 31, at 11.)
No such admission appears in the record. To be sure, ICW did voluntarily dismiss its claims
against the Ollingers without prejudice. But nothing in the record sheds any light on the reason
for that stipulation. There may be a host of reasons completely unrelated to the merits of the
claims why ICW may have elected to take such a dismissal. This Court may not speculate as to
the reason, and neither may Ollinger Construction. See, e.g., Cordoba v. Dillard’s, Inc., 419
F.3d 1169, 1185 (11th Cir. 2005) (“Speculation does not create a genuine issue of fact; instead, it
creates a false issue, the demolition of which is a primary goal of summary judgment.”) (citation
That section reads in its entirety as follows: “Payment by a surety or endorser of a
debt past due entitles him to proceed immediately against his principal for the sum paid, with
interest thereon, and all legal costs to which he may have been subjected by the default of the
principal.” Ala. Code. § 8-3-5.
omitted). In short, plaintiff admitted nothing by stipulating to the dismissal without prejudice of
its claims against the Ollingers, and such a stipulation cannot reasonably be deemed an
admission that the February 2004 Agreement is invalid.21
The foregoing discussion conclusively demonstrates that the February 2004 Agreement is
binding on, and enforceable against, Ollinger Construction. It also shows that ICW is entitled to
recover from Ollinger Construction all losses and expenses of whatsoever kind or nature,
including attorney’s fees and costs, by reason of executing the MRSCC bonds. As proof of
damages, ICW proffers the Affidavit of Russell Fuller, its Senior Surety Claims Counsel, who
avers based on personal knowledge that ICW settled and paid the claims under the MRSCC
payment bond for the total amount of $157,411.00, and that “ICW’s losses and expenses under
the Ollinger Construction bond program, inclusive of attorney’s fees and expenses, total
$225,231.52.” (Fuller Aff., ¶¶ 4-5.) On that basis, ICW seeks entry of summary judgment in its
favor in the total amount of $225,231.52. (Doc. 26, at 1.)
Defendant proffers three counterarguments, none of which have merit. First, defendant
maintains that “there is a material issue of fact pertaining to the amounts allegedly owed insofar
as ICW has never made demand on Ollinger Construction, Inc.; rather, the only demand made
was to Tom P. Ollinger and Lucille J. Ollinger on January 27, 2011.” (Doc. 31, at 13.)
Defendant is correct that ICW’s January 2011 demand letter to Ollinger Construction was
mistakenly sent to Mr. and Ms. Ollinger, long after they had relinquished any role, involvement,
or ownership interest in the business. But so what? Defendant identifies no provision of the
February 2004 Agreement or applicable law that would require such a demand letter to be sent to
the correct entity as a condition precedent to recovering damages. The fact that ICW sent a
The same goes for defendant’s unexplained assertion that if the February 2004
Agreement is to be enforced, it “must be enforced against all parties, including the remaining
indemnitors, Tom P. Ollinger and Lucille J. Ollinger.” (Doc. 31, at 15.) Defendant identifies no
“all-or-nothing” contractual language or legal principle that would force ICW to pursue
contractual indemnity claims against all indemnitors or none of them.
demand letter to the wrong people may be symptomatic of error or inattentiveness, but it does
not wipe out plaintiff’s damages claims.22
Second, defendant makes the bald statement that ICW cannot recover its attorney’s fees
that “accrued before a demand was ever properly made to Ollinger Construction, Inc.” (Doc. 31,
at 14.) Defendant cites no provision of contract, law or equity that would mandate (or even
support) such a conclusion, and the Court is aware of none.
Third, defendant protests that “there is a material issue of fact pertaining to the amounts
allegedly owed” because “[t]here has been no discovery conducted to verify the authenticity of
the amounts allegedly owed by Ollinger Construction, Inc.” (Doc. 31, at 14.) The time for
discovery has long since expired. The applicable Scheduling Order (doc. 22) issued by
Magistrate Judge Nelson on April 17, 2012 provided that “[a]ll discovery is to be completed on
or before September 5, 2012.” (Doc. 22, ¶ 3.) Had defendant wished to pursue discovery on
damages, it had a nearly five-month window in which to do so. Defendant’s failure to conduct
such discovery, and its concomitant lack of preparedness to dispute plaintiff’s damages
allegations, does not give rise to a “material issue of disputed fact” that might preclude entry of
summary judgment at this time in the full amount requested.
In short, ICW has made an uncontroverted showing that its recoverable losses incurred by
virtue of Ollinger Construction’s breach of its indemnity obligations under the applicable
Agreement total $225,231.52. Defendant having shown no genuine disputes of material fact as
to the propriety of that amount or the recoverability of those losses, summary judgment will be
entered in plaintiff’s favor in the full amount requested.
For all of the foregoing reasons, plaintiff’s Motion for Summary Judgment (doc. 26) is
granted. Judgment will be entered in favor of plaintiff, Insurance Company of the West, and
against defendant, Ollinger Construction, Inc., in the total amount of $225,231.52.
At any rate, the record is crystal clear that ICW sent multiple demand letters to
Ollinger Construction via the latter’s former and present counsel at various times in early 2012,
and that Ollinger Construction consistently failed and refused to honor those demands for
collateral. (See Selden Aff. (doc. 34, Exh. 9), ¶ 3 & Exhs. A-C.) So any omission with respect
to the January 2011 demand letter was since corrected by ICW’s transmission and Ollinger
Construction’s rejection of repeated demands that it provide collateral in the first quarter of
Because this Order and the accompanying Judgment resolve all remaining triable issues
as to all remaining parties herein, the Clerk’s Office is directed to close this file for statistical
and administrative purposes.
DONE and ORDERED this 20th day of December, 2012.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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