Cincinnati Insurance Company The v. Kreager Brothers Excavating Inc et al

Filing 30

OPINION AND ORDER granting 27 MOTION for Summary Judgment filed by The Cincinnati Insurance Company. CIC is entitled to recover $175,997.76, plus interest. CIC is ORDERED to file an affidavit within 7 days stating the accrued interest and the amount it is claiming for attorney fees. Judgment will be entered when interest and attorney fees have been calculated. Signed by Magistrate Judge Andrew P Rodovich on 5/7/14. (kjp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
THE CINCINNATI INSURANCE,
COMPANY,
Plaintiff,
v.
KREAGER BROTHERS EXCAVATING,
INC., KREAGER ENTERPRISES, LLC,
KREAGER ENTERPRISES CORP.d/b/a
A.C.A. RECYCLING, JERRY L.
KREAGER, DEEDRA KREAGER
TONY E. KREAGER, DIXIE KREAGER,
Defendants,

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) No. 2:12-CV-470
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OPINION AND ORDER
This matter is before the court on the Motion for Summary Judgment [DE 28] filed by the
plaintiff, The Cincinnati Insurance Company, on January 29, 2014. For the reasons set forth below,
this motion is GRANTED.
Background
The defendant, Kreager Brothers Excavating, Inc., entered into several contracts to
provide construction services for construction projects. Cincinnati Insurance Company (“CIC”),
as surety, issued payment and performance bonds on behalf of Kreager Brothers. In
consideration for the bonds, CIC and Kreager Brothers entered into an Indemnity Agreement in
which Kreager Brothers agreed to indemnify CIC for all liability arising from the bonds. The
agreement also provided CIC with the authority to “pay or compromise” any “claim, demand,
suit, judgment, or expense arising out of such Bond or Bonds.” The agreement stated that CIC’s

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decision to pay or compromise any claim was binding so long as it was reasonable. Under the
agreement, an itemized statement of the costs accrued sworn to by a CIC officer was prima facie
evidence of Kreager Brother’s liability.
CIC and Kreager Brorthers executed the agreement on October 9, 2006. As of July 25,
2011, claims had been made against the bonds totaling $140,000. CIC settled its obligations
under the bonds. Kreager Brothers signed a promissory note in which it agreed to repay CIC
$5,000 on a monthly basis with annual 5% interest.
The note provided that, in the event of default on these payments, Kreager Brothers
would owe the entire debt and accrued interest within fifteen days. Moreover, the note assessed
late fees in the amount of 5% of the total balance if Kreager Brothers failed to pay within fifteen
days. After making six timely payments, Kreager Brothers defaulted on its seventh payment
when its the check did not clear the bank. Dave Springmann, Controller for Kreager Brothers,
sent an email on October 22, 2012 expressing that, “[u]nfortunately, we are not able to send a
check today. I’m hopeful that things will be better this week but I cannot commit at this time.”
No further payments were made in 2012. As specified under the indemnity agreement and note,
CIC claims that Kreager Brothers owe $175, 997.76 in “damages, accounting for all credits, as a
result of claim payments, legal fees, interest, and expenses.” Kreager Brothers did not file a
response to this CIC’s motion for summary judgment.
Discussion
Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is proper only if it
is demonstrated that “there is no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106

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S. Ct. 2548 , 91 L. Ed. 2d 265 (1986); Kidwell v. Eisenhauer, 679 F.3d 957, 964 (7th Cir. 2012);
Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009). The burden is upon the moving party
to establish that no material facts are in genuine dispute, and any doubt as to the existence of a
genuine issue must be resolved against the moving party. Adickes v. S.H. Kress & Company,
398 U.S. 144, 160, 90 S. Ct. 1598, 1610, 26 L. Ed.2d 142, 155 (1970); Stephens, 569 F.3d at
786. A fact is material if it is outcome determinative under applicable law. There must be
evidence on which the jury could reasonably find for the nonmoving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L.Ed.2d 202, 212 (1986); Stephens,
569 F.3d at 786; Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). However, summary
judgment may be entered against the non-moving party if it is unable to “establish the existence
of an essential element to [the party’s] case, and on which [that party] will bear the burden of
proof at trial . . .”. Kidwell, 679 F.3d at 964 (citing Benuzzi v. Bd. of Educ., 647 F.3d 652, 662
(7th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d
265 (1986)).
In deciding a motion for summary judgment, the trial court must determine whether the
evidence presented by the party opposed to the summary judgment is such that a reasonable jury
might find in favor of that party after a trial.
The inquiry performed is the threshold inquiry of determining
whether there is the need for a trial--whether, in other words, there
are any genuine factual issues that properly can be resolved only by
a finder of fact because they may reasonably be resolved in favor of
either party.
[T]his standard mirrors the standard for a directed verdict under
Federal Rule of Civil Procedure 50(a), which is that the trial judge
must direct a verdict if, under the governing law, there can be but one
reasonable conclusion as to the verdict.
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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505,
2511, 91 L.Ed.2d 202, 212 (1986).
See also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149-51, 120 S.Ct. 2097, 2109,
147 L. Ed.2d 105, 120-22 (2000) (setting out the standard for a directed verdict); Celotex Corp., 477
U.S. at 322-23, 106 S. Ct. at 2553; Stephens, 569 F.3d at 786; Argyropoulos v. City of Alton, 539
F.3d 724, 732 (7th Cir. 2008)(stating that a genuine issue is one on which a reasonable fact finder
could find for the nonmoving party); Springer v. Durflinger, 518 F.3d 479, 483 (7th Cir.
2008)(stating that a genuine issue exists and summary judgment is inappropriate if there is sufficient
evidence for a jury to return a verdict for the nonmoving party).
Indemnity agreements involve a promise by one party to reimburse another for its loss,
damage, or liability. Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 756 (Ind. App. 2002).
They are subjected to the same rules as contracts. The parties’ intent in an unambiguous contract
is determined by the plain and ordinary terms within the four corners of the contract. Schmidt v.
Schmidt, 812 N.E.2d 1074, 1080 (Ind. App. 2004); Dempsey v. Carter, 797 N.E.2d 268, 273 (Ind.
App. 2003), trans. denied, 812 N.E.2d 803 (Ind. 2004). In order to sustain an action for breach of
contract, the plaintiff must show the existence of the contract, breach thereof by the defendant, and
damages flowing from the breach. Wilson v. Lincoln Federal Savings Bank, 790 N.E.2d 1042,
1048 (Ind. App. 2003); Gatto v. St. Richard School, Inc., 774 N.E.2d 914, 920 (Ind. App. 2002).
It is undisputed that the defendants signed and entered the indemnity agreement with CIC.
The defendants do not dispute that the indemnity agreement is clear that they were to indemnify and
hold CIC harmless for all liability CIC incurred under the bonds. It further is undisputed that CIC
incurred liability under the bonds and that the defendants did not reimburse CIC for their expenses.

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For this reason, the defendants failed to comply with their obligations under the agreement.
The Kraeger Brothers also issued a promissory note after CIC paid the claims asserted under
the bonds. “A promissory note is a written promise by one person to pay another person, absolutely
and unconditionally, a certain sum of money at a specific time.” Flexcel, Inc. v. COS 404, Inc., 458
F.Supp.2d 935, 940 (S.D. Ind. 2006). An unconditional promissory note is a negotiable instrument
rather than a contract. Flexcel, 458 F.Supp.2d at 940. To enforce a negotiable instrument, the
plaintiff must show that the instrument was endorsed and delivered. Ind. Code § 26-1-3.1-201.
Again, the undisputed evidence shows that the defendants signed and delivered the note in the
amount of $140,000, bearing interest at 5% per annum. The defendants admit that the note required
payments of principal and interest in the amount of $5,000 per month, that they failed to make
timely payments, and that they breached their duties under the note. Because the defendants
breached their duties under the indemnity agreement and the note, CIC is entitled to judgment in its
favor and damages.
Under the terms of the indemnity agreement and the note, the defendants agreed to reimburse
CIC for all of its losses, damages, expenses, and attorneys’ fees incurred, plus interest and late fees.
The defendants further agreed that an itemized statement sworn to by any CIC representative would
serve as prima facie evidence of the amount of liability. See Reliance Ins. Co. v. Zeigler, 938 F.2d
781 (7th Cir. 1991) (explaining that prima facie evidence provisions are valid and enforceable). CIC
submitted such a sworn statement and the defendants do not object to the amount due. For this
reason, the court GRANTS CIC’s motion for summary judgment. CIC is entitled to recover
$175,997.76, plus interest. CIC is ORDERED to file an affidavit within 7 days stating the accrued
interest and the amount it is claiming for attorney fees. Judgment will be entered when interest and

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attorney fees have been calculated.
ENTERED this 7th day of May, 2014
/s/ Andrew P. Rodovich
United States Magistrate Judge

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