Gray Insurance Company, The v. G.G. Connections, Inc. et al
Filing
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MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 3/27/2013.Mailed notice(sct, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THE GRAY INSURANCE COMPANY,
)
)
Plaintiff,
)
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vs.
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G.G. CONNECTIONS, INC., GERMAN E. )
GOMEZ and NORMA L. GOMEZ,
)
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Defendants.
)
12 C 8273
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
Before the Court is Plaintiff The Gray Insurance Company’s (“Gray”) unopposed
motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the
following reasons, Gray’s motion is granted in part and denied in part.
BACKGROUND
According to Northern District of Illinois Local Rule 56.1, “all material facts set
forth in the statement required of the moving party [for summary judgment] will be
deemed to be admitted unless controverted by the statement of the opposing party.”
The Defendants G.G. Connections, Inc. (“G.G. Connections”), German Gomez and
Norma Gomez (collectively “Defendants”) have not opposed Gray’s motion or filed a
response to Gray’s statement of material facts. Therefore, all facts in Gray’s statement
of material facts are deemed to be admitted for the purposes of this motion. L.R. 56.1;
Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir. 2012) (stating “[t]he
obligation set forth in Local Rule 56.1 is not a mere formality,” and that “[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.”).
G.G. Connections performed asphalt paving and other material service work on
an Illinois public construction project for the Northeast Illinois Regional Commuter
Railroad Corporation (“Project”). In compliance with the Illinois Bond Act, 30 ILCS
550/1, et seq., G.G. Connections obtained Bond Number GSM26034 (the “Bond”) from
Gray to guarantee the completion of its work on the Project and the payment of its
laborers and material suppliers. In connection with the issuance of the Bond, on June 3,
2011, the Defendants entered into an Agreement of Indemnity (“Indemnity Agreement”)
which obligated the Defendants to indemnify Gray for all losses incurred for claims
brought against the Bond including costs, expenses, expert fees and attorneys’ fees.
As of October 10, 2012, Gray paid five claims asserted against the Bond and had
incurred losses in connection with the Bond totaling $117, 867.02 plus attorneys’ fees,
costs and expenses. On July 25, 2012 Gray made a written demand to the Defendants
for the reimbursement of the funds that Gray paid out to the five Bond claimants. The
Defendants never responded to Gray’s written demand. On October 15, 2012, Gray
filed a two-count complaint alleging breach of contract against all Defendants (Count
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I); and common law reimbursement against only G.G. Connections (Count II). On
November 15, 2012, German Gomez filed a pro se appearance and answer to Gray’s
Complaint. The handwritten answer contains one sentence and refers to G.G.
Connections’ forfeiture of the Project which would nullify Gray’s need to pay the Bond.
German Gomez’s one sentence answer was the only material submitted to the Court
throughout the course of the suit. Gray moved for summary judgment under Federal
Rule of Civil Procedure 56 on January 29, 2013 on both counts.
LEGAL STANDARD
Summary judgment is appropriate when the pleadings, discovery, disclosures,
and affidavits establish that there is no genuine issue of material fact, such that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Winsley v.
Cook Cnty., 563 F.3d 598, 602-03 (7th Cir. 2009). The moving party bears the initial
burden of showing that no genuine issue of material fact exists. Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the non-moving party to
show through specific evidence that a triable issue of fact remains on issues on which
the non-movant bears the burden of proof at trial. Id. The non-movant may not rest
upon mere allegations in the pleadings or upon conclusory statements in affidavits; it
must go beyond the pleadings and support its contentions with proper documentary
evidence. Id. In considering a motion for summary judgment, a court construes all
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facts and draws all reasonable inferences in favor of the non-moving party. Smith v.
Hope Sch., 560 F.3d 694, 699 (7th Cir. 2009).
DISCUSSION
I. Breach of Contract
A. Choice of Law
Gray argues that the Defendants materially breached the provisions of the June
2011 Indemnity Agreement by failing to reimburse Gray for costs expended settling
claims that were made pursuant to the Bond. As a threshold matter, the Court must
determine whether Louisiana or Illinois law applies. Gray, a Louisiana company, filed
suit against the Defendants, citizens of Illinois, by invoking Diversity Jurisdiction.
28 U.S.C. § 1332. Under the Erie doctrine, state law controls substantive decisions in
diversity cases. Houben v. Telular Corp., 309 F.3d 1028, 1032 (7th Cir. 2002). Gray
does not specify in its complaint or motion for summary judgment which state’s
contract law they seek to utilize to establish their breach of contract claim.
The Indemnity Agreement does not contain a choice-of-law provision. Federal
courts sitting in diversity apply the choice-of-law rules of the forum state to determine
the applicable substantive law. Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d
868, 873 (7th Cir. 2000). Illinois has adopted the “most significant contacts” test
proffered by the Restatement (Second) of Conflicts § 188 (1971) in determining choice-
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of-law disputes with respect to contractual issues. Ruiz v. Blentech Corp., 89 F.3d 320,
323-24 (7th Cir. 1996). Under this test, “the contacts relevant to the choice-of-law
decision include the place of contracting, negotiation, performance, location of the
subject matter of the contract and the domicile, residence, place of incorporation and
business of the parties.” Wildey v. Springs, 47 F.3d 1475, 1483 (7th Cir. 1995).
The most significant contacts test strongly favors applying Illinois law to this
dispute. The parties entered into the Indemnity Agreement in Illinois. The claims made
on the Bond originated because of G.G. Connections performance on the Project in
Illinois. Moreover, the subject matter of the Indemnity Agreement was located in
Illinois. Gray issued the Bond for a construction project being performed by G.G.
Connections in Illinois. While the Defendants reside in Illinois and Gray in Louisiana,
the domicile factor is neutral. In light of these factors Illinois law controls this case.
B. Breach of Contract Claim
In Illinois, indemnity agreements are construed like any other contract,
necessitating the need for courts to give effect to the intentions of the parties. See
Mountbatten Surety Co. v. Szabo Contracting, Inc., 812 N.E.2d 90, 100 (2nd Dist.
2004). In order to discern the intent of the parties, a court will look to the language in
the contract. See Central Illinois Light Co. v. Home Insurance Co., 821 N.E.2d 206, 213
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(2004). The language in the contract is to be given its plain and ordinary meaning unless
it is deemed ambiguous. Id.
To prove a breach of contract, Gray must establish that: 1) a valid and
enforceable contract existed; 2) Gray performed all required conditions; 3) the
Defendants breached a provision of the contact; and 4) Gray suffered damages as a
result of the Defendants breach. Burrell v. City of Mattoon, 378 F.3d 642, 651 (7th Cir.
2004) (applying Illinois law).
1. Validity of the Contract
On June 3, 2011 the Defendants entered into the Indemnity Agreement with
Gray. The notarized Indemnity Agreement is signed by German Gomez, acting as the
President of G.G. Connections, and Norma Gomez. In the absence of a contested issue
concerning the validity of the contract, the Court finds that the Indemnity Agreement
is a valid contract.
2. Gray’s Performance
The evidence contains numerous instances of Gray’s compliance with the various
provisions of the Indemnity Agreement, mainly evidenced by Gray’s payment of the
five claims made on the Bond. The Court finds that Gray has established that it has
performed under the provisions of the contract.
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3. The Defendants’ Breach
The Indemnity Agreement establishes that the Defendants agreed to indemnify
Gray for all losses incurred under the Bond including costs, expenses, expert fees and
attorney fees. Gray established that they suffered losses after settling the Defendants’
bond claims. Gray paid the five claims on the Bond totaling $117,867.02. The
Indemnity Agreement’s clearly establishes the Defendants’ obligation to repay Gray.
On July 25, 2012, Gray presented the Defendants with a written demand for the
reimbursement of funds. The Defendants never responded to Gray’s demand. The
Defendants have not paid Gray back the funds that were expended pursuant to the
claims made on the Bond.
4. Gray Suffered Damages
The evidence indicates that Gray has incurred losses in connection with the Bond
totaling $117, 867.02 plus attorneys’ fees, costs and expenses. Gray has established that
they suffered damages.
Gray has sufficiently demonstrated that the Defendants have breached the terms
of the Indemnity Agreement and are entitled to judgment in their favor. The normal
remedy for a breach of contract is an award of damages. Miller v. LeSea Broadcasting,
Inc., 87 F.3d 224, 230 (7th Cir. 1996). Accordingly, G.G. Connections, German Gomez
and Norma Gomez are jointly and severally liable to Gray for the sum of $117, 867.02,
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plus attorneys’ fees, costs and expenses. The Court grants summary judgment for Gray
on their breach of contract claim.
II. Common Law Reimbursement
Gray brings a separate common law reimbursement claim solely against G.G.
Connections. Gray contends that they are secondarily liable for any claims made
against the Bond and G.G. Connections, as the party which is primarily liable, owes a
duty to reimburse Gray.
Gray has not provided any legal authority to support its
argument concerning the requirements of a reimbursement claim or the need for
separate reimbursement claim in light of the ruling in Count I. Absent the proper
authority the Court denies summary judgment of Count II.
CONCLUSION
For the aforementioned reasons, Gray’s motion for summary judgment is granted
in part and denied in part.
Charles P. Kocoras
United States District Judge
Dated:
March 27, 2013
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