Philadelphia Indemnity Insurance Company v. Manitou Construction, Inc. et al

Filing 28

OPINION AND ORDER GRANTING Plaintiff Philadelphia Indemnity Insurance Company's Motion for Summary Judgment [Doc. No. 27 ]. The Court ORDERS Defendants Manitou Construction Inc. and Thomas A. Nort to pay Plaintiff damages in the amount of $1,262,754.27 and attorney's fees and expenses in the amount of $48,548.55. The Clerk of Court is DIRECTED to enter an appropriate judgment. Signed by Judge Clarence Cooper on 6/25/2015. (tcc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
Plaintiff,
vs.
MANITOU CONSTRUCTION, INC.
and THOMAS A. NORT,
Defendant.

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CIVIL ACTION NO.
1:14-CV-0401-CC

OPINION AND ORDER
This matter is before the Court on Plaintiff Philadelphia Indemnity Insurance
Company’s Motion for Summary Judgment [Doc. No. 27]. Defendants Manitou
Construction, Inc. and Thomas A. Nort (collectively referred to herein as
“Defendants”) have not opposed the Motion for Summary Judgment. For the
foregoing reasons, the Court grants the Motion.
I.

BACKGROUND
Defendant Thomas A. Nort (“Nort”) formed Defendant Manitou

Construction, Inc. (“Manitou”) in 2011 to do work in North Dakota. Manitou
entered into five government contracts, and Plaintiff Philadelphia Indemnity
Insurance Company (“Philadelphia”) issued five sets of payment and performance
bonds.
Nort was the president of Manitou, and Nort and Manitou agreed to
indemnify Philadelphia for all of its losses and costs. The General Indemnity
Agreement (the “Indemnity Agreement”) provides at paragraph 3 that:
Indemnitors agree to indemnify and hold harmless Surety from and
against any Loss sustained or incurred: (a) by reason of having
executed or being requested to execute any and all Bonds; (b) by failure
of Indemnitors or Principals to perform or comply with any of the
covenants or conditions of this Agreement or any other agreement; and
(c) in enforcing any of the covenants or conditions of this Agreement
or any other agreement.... In the event of payments by Surety,

Indemnitors agree to accept vouchers, a sworn itemization, or other
evidence of such payments as prima facie evidence of the fact and
extent of the liability of Indemnitors to Surety in any demand, claim or
suit by Surety against Indemnitors.
(Indemnity Agreement [Doc. No. 27-3] ¶ 3.)
Manitou failed to pay its subcontractors and suppliers, and the subcontractors
and suppliers began making substantial demands on Philadelphia under the
payment bonds. Nort, both individually and on behalf of Manitou, admitted that
Manitou could not pay its subcontractors and suppliers. Nort, on behalf of Manitou,
eventually signed letters stating that the company also did not have the financial
resources to complete projects or pay bills.
Philadelphia began receiving claims from subcontractors and suppliers, and
Philadelphia contacted Nort to get input from him as to whether those claims were
valid. Nort acknowledged during his deposition that Philadelphia had reached out
to him when it received claims and had asked for his input and review. However,
Nort did not respond with any information about the validity of the claims. Nort
testified that he reviewed some of them but eventually realized he did not have any
information to state whether any of the claims were legitimate. Philadelphia did its
best to investigate the claims and to pay no more than what was owed. Nort, on
behalf of Manitou, testified he was not aware of a single claim Philadelphia should
not have paid.
The Indemnity Agreement required Nort to deposit collateral to protect
Philadelphia from losses. When Philadelphia received these claims and before
Philadelphia began paying them, Philadelphia demanded that Nort provide
Philadelphia with collateral as required by the Indemnity Agreement.

Nort

acknowledged that he received the demand for collateral and did not provide any
collateral.
Philadelphia reviewed all of the claims and data that it received from
Manitou’s subcontractors and suppliers. After reviewing these claims, Philadelphia
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paid subcontractors and suppliers $1,253,447,78. Philadelphia had a construction
consultant assist in getting new contractors to complete the unfinished projects.
Philadelphia hired Robert Hillman of Professional Construction Consulting, Inc. to
help arrange for the completion of the projects. Hillman is a professional engineer
who received his degree at the University of North Dakota, and he has significant
experience assisting sureties in arranging for completion of projects. Philadelphia
also hired John V. Burch of the law firm of Bovis, Kyle, Burch & Medlin, LLC to
provide legal advice in connection with claims made and to prosecute this legal
action.
Philadelphia has incurred losses for bond claims and costs totaling
$1,311,302.82. Most of its losses were for claims paid to subcontractors and suppliers
on the payment bonds. However, Philadelphia had to pay contractors to complete
three projects, and it ultimately was paid some contract funds. The accounting for
these losses and recovery is the following:
Paid to subcontractors and suppliers

$1,253,447.78

Paid to completion contractors

$ 587,946.88

Paid for professional consulting

$

25,787.50

Paid for attorney’s fees

$

48,548.55

Total payments

$1,915,730.71

Contract funds paid by owners

$ (604,427.89)

Total loss

$1,311,302.82

The declaration of Philadelphia’s bond claim representative, Kenneth B. Huff, sets
out an itemization of the amounts paid to each subcontractor, supplier,
Philadelphia’s construction consultant and attorney.
Nort admitted, on behalf of Manitou and himself, that he did not know of any
facts to support the affirmative defenses raised in defensive pleadings. Indeed, Nort
acknowledged that he based some of his defenses on speculation.

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II.

STANDARD OF REVIEW
Summary judgment must be granted when the record shows “that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). In seeking summary judgment, the moving
party bears the initial responsibility to demonstrate that there is no genuine issue as
to any material fact and that summary judgment is appropriate. Adickes v. S.H.
Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); Allen v. Bd. of
Public Educ., 495 F.3d 1306, 1313 (11th Cir. 2007). “Only when that burden has been
met does the burden shift to the non-moving party to demonstrate that there is
indeed a material issue of fact that precludes summary judgment.” Clark v. Coats
& Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
When evaluating the merits of a motion for summary judgment, the court
must view all evidence and factual inferences raised by the evidence in the light
most favorable to the non-moving party and resolve all reasonable doubts
concerning the facts in favor of the non-moving party. Burton v. City of Belle Glade,
178 F.3d 1175, 1187 (11th Cir. 1999) (citation omitted). The court is not permitted to
make credibility determinations, weigh conflicting evidence to resolve disputed
facts, or assess the quality of the evidence. Reese v. Herbert, 527 F.3d 1253, 1271
(11th Cir. 2008).
A fact is material if proof of its existence or nonexistence would affect the
outcome of the case under controlling substantive law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 247, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Additionally, an issue
of fact is genuine when the evidence is such that a reasonable jury could return a
verdict in favor of the non-moving party. Id. An issue of fact is not genuine if it is
unsupported by evidence or if it is created by evidence that is “merely colorable”or
“not significantly probative.” Id. at 249-250. “[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be no genuine issue of
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material fact.” Id. at 247-48 (emphasis in original).
Where a party “fails to properly address another party’s assertion of fact as
required by Rule 56(c), the court may: . . . grant summary judgment if the motion
and supporting materials–including the facts considered undisputed–show that the
movant is entitled to it.” Fed. R. Civ. P. 56(e). Even when a summary judgment
motion is entirely unopposed, the district court still must consider the merits of the
motion. See Dunlap v. Transamerica Occidental Life Ins. Co., 858 F.2d 629, 632 (11th
Cir. 1998). Accordingly, the court must review the evidentiary materials submitted
in support of the motion and “determine whether they establish the absence of a
genuine issue of material fact.” U.S. v. One Piece of Real Prop., 363 F.3d 1099, 1102
(11th Cir. 2004) (quoting Jaroma v. Massey, 872 F.2d 17, 20 (1st Cir. 1989)).
III.

ANALYSIS
Philadelphia has brought this action against Defendants to recover losses

incurred on the payment and performance bonds that Philadelphia issued on behalf
of Manitou. Philadelphia presently contends it is entitled to summary judgment
based upon the plain terms of the Indemnity Agreement and the evidence of record.
The Court agrees that summary judgment should be granted.
A.

Validity and Enforceability of the Indemnity Agreement

Georgia courts have “consistently . . . upheld the validity and enforceability
of indemnification agreements executed in connection with the issuance of surety
bonds.” Anderson v. U.S. Fidelity & Guar. Co., 267 Ga. App. 624, 627, 600 S.E.2d 712
(2004) (citations and punctuation omitted); see also Cagle Constr., LLC v. Travelers
Indem. Co., 305 Ga. App. 666, 668-69, 700 S.E.2d 658 (2010). Under Georgia law, the
ordinary rules of contract construction to apply to indemnity agreements.
Anderson, 267 Ga. App. at 627. “No construction is required or even permissible
when the language employed by the parties in the contract is plain, unambiguous
and capable of only one reasonable interpretation.” Id.
In this case, the undisputed facts show that Nort signed, both in his individual
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capacity and as president of Manitou, the Indemnity Agreement with Philadelphia.
According to the plain language of the Indemnity Agreement, Defendants agreed
to indemnify and hold Philadelphia harmless from any loss under the bonds and to
indemnify Philadelphia for all its expenses and costs and fees incurred in enforcing
the Indemnity Agreement. The Court finds that the Indemnity Agreement is
definite and unambiguous and therefore binding and enforceable.
B.

Liability and Damages

The Court further finds that Philadelphia has established its prima facie case
for indemnification. The Indemnity Agreement provides: “In the event of payments
by the Surety, Indemnitors agree to accept vouchers, a sworn itemization, or other
evidence of such payments as prima facie evidence of the fact and extent of the
liability of Indemnitors to the Surety in any demand, claim or suit by Surety against
Indemnitors. (Indemnity Agreement ¶ 3.) Both state and federal courts in Georgia
have found similar language to be clear and unambiguous and have held
indemnitors liable for damages based on affidavits and attached summaries
supplied to establish the fact and amount of damages. See, e.g., Travelers Cas. &
Sur. Co. of Am. v. Winmark, 518 F. App’x 899, 903 (11th Cir. 2013); Reliance Ins. Co.
v. Romine, 707 F. Supp. 550, 552 (S.D. Ga. 1989); Cagle Constr., 305 Ga. App. at 66869; Anderson, 267 Ga. App. at 627-28.
Here, the undisputed evidence of record, including the declaration of
Philadelphia’s bond claim representative and the documents attached thereto,
reflects that Manitou entered into five construction contracts bonded by
Philadelphia. Manitou failed to pay what it owed to its subcontractors and suppliers
on the contracts and failed to complete three of the projects. Moreover, upon
demand by the subcontractors and suppliers for payment, Philadelphia has paid
$1,253,447.78 to these subcontractors and suppliers. Further, Philadelphia has paid
$613,734.38 for professional consulting services and to complete the projects that
Manitou failed to complete. Nort has agreed that there were no payments made to
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anyone that were not owed, that Manitou is insolvent, that Manitou voluntarily
defaulted on the projects, and that Manitou could not complete bonded work.
Insofar as Defendants have not indemnified Philadelphia as promised, Philadelphia
is entitled to summary judgment in the amount of the losses and expenses
referenced above.
C.

Attorney’s Fees

Defendants also are liable for Philadelphia’s attorney’s fees and other
expenses incurred as a result of having issued bonds on behalf of Manitou and
having had to enforce the covenants of the Indemnity Agreement. “Generally an
award of attorney fees is not available unless supported by statute or contract.”
Abrams v. Putney, 304 Ga. App. 626, 629, 697 S.E.2d 269 (2010) (quoting Padilla v.
Padilla, 282 Ga. 273, 274, 646 S.E.2d 672 (2007)). When provided for in the
indemnification agreements, Georgia courts have specifically upheld provisions
requiring the indemnitor to reimburse the surety for attorney’s fees. See, e.g.,
Anderson, 267 Ga. App. at 628; M-Pax, Inc. v. Dependable Ins. Co., 176 Ga. App. 93,
94-95, 335 S.E.2d 591 (1995); United Rental Sys., Inc. v. Safeco Ins. Co., 156 Ga. App.
63, 67-68, 273 S.E.2d 868 (1980); Morrison v. Fidelity & Deposit Co. of Md., 150 Ga.
54, 102 S.E. 354 (1920).
With respect to attorney’s fees, the agreement between Philadelphia and
Defendants provides that the surety is entitled to recover any losses sustained or
incurred in enforcing any of the covenants or conditions of the Indemnity
Agreement. Philadelphia has attached to the Declaration of Kenneth B. Huff a
summary of payments made to Bovis, Kyle, Burch & Medlin, LLC totaling
$48,548.55. Having introduced prima facie evidence of payment of these attorney’s
fees and expenses, which Defendants have not rebutted, Philadelphia is entitled to
recover this amount of attorney’s fees and expenses under the Indemnity
Agreement. See Winmark Homes, Inc., 518 F. App’x at 903 (affirming award of
attorney’s fees to surety because surety presented prima facie evidence of its loss
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and because the indemnitors did not rebut the evidence).
IV.

CONCLUSION
Based on the foregoing, the Court hereby GRANTS Plaintiff Philadelphia

Indemnity Insurance Company’s Motion for Summary Judgment [Doc. No. 27].
The Court ORDERS Defendants Manitou Construction Inc. and Thomas A.
Nort to pay Plaintiff damages in the amount of $1,262,754.27 and attorney’s fees and
expenses in the amount of $48,548.55.
The Clerk of Court is DIRECTED to enter an appropriate judgment.
SO ORDERED this 25th day of June, 2015.

s/ CLARENCE COOPER
CLARENCE COOPER
SENIOR UNITED STATES DISTRICT JUDGE

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