The Hanover Insurance Group v. Singles Roofing Co., Inc. et al

Filing 169

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/14/14Mailed notice(ca, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THE HANOVER INSURANCE GROUP,

)
)
Plaintiff,
)
)
v.
)
)
SINGLES ROOFING CO., INC., an Illinois
)
Corporation, UNITED STATES OF AMERICA )
ROOFING CO., INC., an Illinois Corporation, )
and ROBERT DURCHSLAG, an Illinois
)
citizen,
)
)
Defendants.
)

Case No. 10-cv-611
Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
Plaintiff, the Hanover Insurance Group (“Hanover”), brings this motion for summary
judgment against Defendant Robert Durchslag 1 (“Durchslag”) for breach of contract. Hanover
issued payment and performance bonds on behalf of Durchslag’s construction company, and
Durchslag agreed to indemnify Hanover for any claims made against the bonds. Hanover alleges
it spent over $4 million satisfying claims against the bonds, and Durchslag refused to indemnify
it. For the reasons stated herein, the Court grants Hanover’s motion.
Local Rule 56.1
Motions for summary judgment in the Northern District of Illinois are governed by Local
Rule 56.1. “The obligation set forth in Local Rule 56.1 ‘is not a mere formality.’ Rather, ‘[i]t
follows from the obligation imposed by Fed. R. Civ. P. 56(e) on the party opposing summary
judgment to identify specific facts that establish a genuine issue for trial.’”

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Delapaz v.

Defendants Singles Roofing Co., Inc. (“Singles”) and United States of America Roofing Co., Inc.
(“USARC”) are currently in ongoing bankruptcy proceedings, and thus Plaintiff is proceeding only
against Defendant Durchslag and not against Singles and USARC. (Pl.’s Mem. Supp. Mot. Summ. J. 1
n.1.) None of the Defendants have objected.

Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (citation omitted) (quoting Waldridge v. Am.
Hoechst Corp., 24 F.3d 918, 924 (7th Cir. 1994)). The Seventh Circuit has “routinely held that a
district court may strictly enforce compliance with its local rules regarding summary judgment
motions.” Yancick v. Hanna Steel Corp., 653 F.3d 532, 537 (7th Cir. 2011) (quotation omitted).
Local Rule 56.1(b)(3)(B) requires the nonmovant to file a “concise response to the
movant’s statement that shall contain . . . a response to each numbered paragraph in the moving
party’s statement, including, in the case of any disagreement, specific references to the affidavits,
parts of the record, and other supporting materials relied upon.” See Local Rule 56.1(b)(3)(B).
Local Rule 56.1(b)(3)(C) also “requires specifically that a litigant seeking to oppose a motion for
summary judgment file a response that contains a separate ‘statement . . . of any additional facts
that require the denial of summary judgment.’” Cichon v. Exelon Generation Co., L.L.C., 401
F.3d 803, 809 (7th Cir. 2005) (quoting Local Rule 56.1).
The failure of a nonmoving party to abide by the rule’s requirements carries significant
consequences. “All material facts set forth in the statement required of the moving party will be
deemed to be admitted unless controverted by the statement of the opposing party.” Local Rule
56.1(b)(3); Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003) (“We have consistently held that a
failure to respond by the nonmovant as mandated by the local rules results in an admission.”).
“This rule may be the most important litigation rule outside statutes of limitation because the
consequences of failing to satisfy its requirements are so dire.” Malec v. Sanford, 191 F.R.D.
581, 584 (N.D. Ill. 2000).
The Court set a September 13, 2013, due date for Defendant’s response to Plaintiff’s
motion for summary judgment.

Despite Plaintiff’s filing of a “Notice to Pro Se Litigant

Opposing Motion for Summary Judgment,” Defendant has not filed any response to Plaintiff’s

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motion for summary judgment. 2 Because Defendant has failed to controvert the facts set forth
by the Plaintiff, all material facts set forth in Plaintiff’s Local Rule 56.1(a)(3) statement
supported by the record are deemed admitted for the purposes of this motion. See Local Rule
56.1(b)(3).
Factual Background
Hanover is a company that issues surety bonds on behalf of construction contractors in
order to secure the contractor’s performance of a bonded contract or to secure the contractor’s
payment of vendors. (Pl.’s LR 56.1(a)(3) ¶ 1.) Hanover issued both performance bonds and
payment bonds on behalf of Singles Roofing Company, Inc. (“Singles”) in connection with
Singles’ performance of roofing construction services for several different projects throughout
the United States. (Id. ¶¶ 7-9.)
On behalf of Singles, Hanover extended credit and issued payment and performance
surety bonds (the “Bonds”) with potential liability to Hanover in the amount of $20.1 million.
(Id. ¶ 9.) The bonds secured the obligations of Singles to perform the construction projects and
to pay for the labor and materials required for completion of the projects. (Id. ¶ 10.)
In exchange for Hanover issuing the Bonds on behalf of Singles, Durchslag signed an
Agreement of Indemnity for Contractors (“Indemnity Agreement”) on or about November 18,
2008. (Id. ¶¶ 11-12.) The Indemnity Agreement requires Durchslag to indemnify and hold
Hanover harmless:
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Because Durchslag is pro se, Local Rule 56.2 requires Plaintiff to “serve and file as a separate
document, together with the papers in support of the motion, a ‘Notice to Pro Se Litigant Opposing
Motion for Summary Judgment[.]’” On the same day Plaintiff moved for summary judgment, Plaintiff
filed a “Notice to Pro Se Litigant Opposing Motion for Summary Judgment” together with the papers in
support of the motion. Durchslag is under indictment in a criminal case pending in this district entitled
United States v. Robert Durchslag, 12 CR 637, and is currently incarcerated. While Durchslag’s
attorneys have withdrawn, his attorneys continue to accept service of filings in this matter and forward
such filings to Durchslag pursuant to Court order. (Dkt. 146.)

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from and against every claim, demand, liability, cost, charge, suit, judgment
and expense which [Hanover] may pay or incur, including but not limited to,
loss, interest, court costs and consultant and attorney fees:
(a) by having executed or procured the execution of the bonds; or
(b) in making an independent investigation of any claim, demand, or suit;
or
(c) in defending any suit, action, mediation, arbitration or any other
proceeding to obtain release from liability . . . ; or
(d) in enforcing any of the covenants, terms and conditions of this
Agreement.
(Id. ¶ 13.)
After the Indemnity Agreement was executed and Hanover issued the Bonds, Hanover
received over $5 million in performance and payment claims from vendors of Singles who
alleged that they were not paid and property owners who alleged that Singles was in default of its
work contracts.

(Id. ¶¶ 14-16.)

In response to the claims and lawsuits, Hanover hired

construction consultants and legal counsel to investigate the claims, settle the claims, and enforce
the terms of the Indemnity Agreement.

(Id. ¶¶ 17-19.)

Hanover also hired construction

professionals to finish the incomplete projects. (Id. ¶ 17.)
To resolve the claims, Hanover paid $4,529,024.82. (Id. ¶ 23.) Hanover also incurred
$959,587.17 in fees, expenses, and costs related to work performed by consultants and attorneys
in investigating the claims, resolving the claims and lawsuits, completing incomplete projects,
and enforcing the terms of the Indemnity Agreement against Durchslag. (Id. ¶ 24.) Hanover was
able to recover $1,258,983.62 in contract funds and salvage, and Hanover’s net recoverable loss
under the Indemnity Agreement is $4,229,628.37. (Id. ¶¶ 25-26.) Despite Hanover’s demands,
however, Durchslag has failed to indemnify and hold Hanover harmless from the bond claims,
lawsuits, damages, losses, costs, expenses, and fees in accordance with the terms of the
Indemnity Agreement. (Id. ¶¶ 27-28.)
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Discussion
Summary judgment is proper for cases in which “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).
The movant bears the initial burden of establishing that there is no genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Once the movant has sufficiently

demonstrated the absence of a genuine issue of material fact, the nonmovant must then set forth
specific facts demonstrating that there are disputed material facts that must be decided at trial.
Id. at 321-22.
Under Illinois law, “[a]n indemnity contract or contract provision is construed like any
other contract.” Higgins v. Kleronomos, 459 N.E.2d 1048, 1051 (Ill. App. Ct. 1984) (internal
citation omitted). To prevail on a claim for breach of contract under Illinois law, the plaintiff
must establish: (1) an offer and acceptance; (2) consideration; (3) the terms of the contract; (4)
plaintiff’s performance of all required contractual conditions; (5) defendant’s breach of the terms
of the contract; and (6) damages resulting from the breach. Penzell v. Taylor, 579 N.E.2d 956,
961 (Ill. App. Ct. 1991). The Court holds that Hanover is entitled to judgment on its breach of
contract claim as a matter of law.
Hanover has provided the Indemnity Agreement signed by Durchslag.

(Pl.’s LR

56.1(a)(3) ¶ 11.) The agreement between the parties signed and dated by Durchslag constitutes
an offer and acceptance between the parties. (Id. ¶ 12.) In consideration for Hanover providing
the Bonds for Singles’ construction contracts, Durchslag agreed to indemnify Hanover for all
claims, liability, and expenses Hanover incurred as a result of satisfying claims against the
Bonds. (Id. ¶¶ 11-13.) The terms of the contract required: (1) Hanover to issue the Bonds on

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Singles’ behalf which secured Singles’ obligations to perform the required work and pay for
labor and materials required to complete the projects; (2) Hanover at its sole discretion to adjust,
settle, or compromise any claim or suit arising out of the Bonds; and (3) Durchslag, as the
indemnitor, to pay Hanover for any claim, demand, liability, cost, charge, suit, judgment, or
expense asserted against or incurred by Hanover as soon as liability exists or is asserted against
Hanover. (Id. ¶¶ 8, 10, 13.)
Hanover has provided uncontroverted evidence that it has performed all required
contractual conditions including issuing the Bonds, expending resources to pay and settle the
claims and lawsuits related to the Bonds, and making a demand on Durchslag for reimbursement.
(Id. ¶¶ 8, 22-24, 27.)

It is undisputed that Durchslag breached the contract by failing to

indemnify Hanover as required by the Indemnification Agreement. (Id. ¶¶ 27-28.) As a result of
Durchslag’s breach, Hanover suffered $4,229,628.37 in damages. 3 (Id. ¶¶ 20-25.) Thus, the
uncontroverted facts demonstrate that Hanover is entitled to judgment as a matter of law on its
breach of contract claim against Durchslag.
Conclusion
For the reasons stated herein, the Court grants Plaintiff’s motion for summary judgment
[161]. Judgment is entered against the Defendant Durchslag in the amount of $4,229,628.37.

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Hanover provides a sworn affidavit from its Bond Claim Counsel detailing its damages and the
calculations used to arrive at the damages. (McDevitt Aff., Ex. 1 to Pl.’s LR 56.1(a)(3) Statement.) The
Indemnification Agreement provides that Durchslag will indemnify Hanover “against every claim,
demand, liability, cost, charge, suit, judgment and expense which [Hanover] may pay or incur, including
but not limited to, loss, interest, court costs and consultant and attorney fees” related to the execution,
enforcement, or defense of the Bonds or Indemnification Agreement. (Pl.’s LR 56.1(a)(3) Statement ¶
13.) The affidavit incorporates claims and expenses allowed by the Indemnification Agreement.

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SO ORDERED

ENTER: 3/14/14

____________________________________
JOHN Z. LEE
United States District Judge

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