LIBERTY MUTUAL INSURANCE CO. v. DeVere Construction Co., Inc. et al

Filing 120

OPINION AND ORDER Granting Plaintiff's 100 Motion for Summary Judgment and 102 Motion to Strike Affirmative Defenses and Entering Judgment as to Count One. (Status Report due by 5/29/2017.) Signed by District Judge Thomas L. Ludington. (Sian, M)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
LIBERTY MUTUAL INSURANCE CO.,
Plaintiff,
v.

Case No. 16-cv-10423
Honorable Thomas L. Ludington

DEVERE CONSTRUCTION CO., INC., et al.,
Defendants.
_______________________________________/
OPINION AND ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT AND MOTION TO STRIKE AFFIRMATIVE DEFENSES AND
ENTERING JUDGMENT AS TO COUNT ONE
Plaintiff Liberty Mutual Insurance Company (“Liberty Mutual”) provided a number of
payment and completion bonds to Defendants, a variety of construction companies1 with
contracts to complete a number of projects for the State of North Carolina and North Carolina
counties and local municipalities. After Defendants experienced cash-flow problems, Liberty
Mutual received a number of claims from labor and material providers alleging that Defendants
had failed to pay them. On February 5, 2016, Liberty Mutual filed suit against Defendants. ECF
No. 1. In the complaint, Liberty Mutual identifies eleven claims: breach of contract, exoneration
and quia timet, specific performance of the indemnity agreement, breach of trust fund provisions,
breach of statutory trust fund provision, common law conversion, statutory conversion,
fraud/misrepresentation, constructive fraud/misrepresentation, fraudulent conveyance, and
constructive fraudulent conveyance.

1

Although suit was originally brought against both the Defendant companies and the owners of the companies in
their individual capacity, the owners have all sought bankruptcy protection. According, Liberty Mutual is seeking
partial summary judgment against the Defendant companies only.

On March 14, 2016, Liberty Mutual filed a motion for a preliminary injunction to prevent
Defendants from transferring assets and require Defendants to post collateral security. ECF No.
21. That motion was provisionally granted on April 14, 2016. ECF No. 41. After limited
discovery occurred, the Court issued an order that granted Plaintiff’s motion for a preliminary
injunction and ordered Defendants to post collateral in the amount of $12,500,000. ECF No. 56.
After Defendants did not post collateral, the Court issued another order which again directed
Defendants to post collateral and imposed daily sanctions of $2,500 for each day that passed
before collateral was posted. ECF No. 70. Defendants filed a motion for reconsideration of that
order, arguing that they were unable to afford to post the collateral as directed. They further
argued that they did not wish to declare bankruptcy and requested that the Court “supervise the
orderly liquidation” of the Defendants’ assets. ECF No. 72. That motion was denied. ECF No.
85.
Now, Liberty Mutual has filed a motion for partial summary judgment and a motion to
strike Defendants’ amended affirmative defenses. ECF Nos. 100, 102. For the reasons stated
below, those motions will be granted.
I.
Many of the material facts are not disputed by the parties. Plaintiff Liberty Mutual is an
insurance company which, among other things, acts as a surety for significant payment and
completion bonds for government construction contractors.2 Defendants are a number of
construction companies which entered into various contracts for public construction contracts in
North Carolina. This case arises out of a number of payment and completion bonds which
Liberty Mutual provided to Defendants for those projects. See Compl. at 4–7, ECF No. 1.
2

North Carolina law requires construction contractors to obtain payment and performance surety bonds in order to
guarantee payment of subcontracts and material providers as well as performance on construction contracts for
North Carolina governmental entities.
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A.
The parties entered into a General Agreement of Indemnity on July 29, 2010. See GAI,
ECF No. 104, Ex. B. The GAI was comprehensive in scope. Several of the most relevant
provisions will be reproduced here. Within the document, the Defendants are identified as the
“Indemnitors,” and “Principals,” while Liberty Mutual is identified as the “Surety.” Id. at 1.
The GAI obligated Defendants to indemnify Liberty Mutual for any losses sustained as a
result of its surety agreement:
The Indemnitors shall exonerate, hold harmless, indemnify, and keep indemnified
the Surety from and against any and all liability for losses, fees, costs, and
expenses of whatsoever kind or nature, including, but not limited to pre- and postjudgment interest at the maximum rate permitted by law accruing from the date of
a breach of this Agreement or a breach of any other written agreements between
or for the benefit of the Surety and the Idemnitor(s) and/or Principal(s), court
costs, counsel fees, accounting, engineering and other outside consulting fees and
from and against any and all such losses, fees, costs and expenses which the
Surety may sustain or incur: (1) by reason of being requested to execute or
procure the execution of any Bond; or (2) by having executed or procured the
execution of any Bond; or (3) by reason of the failure of the Indemnitors or
Principals to perform or comply with any of the covenants and conditions of this
Agreement or Other Agreements; or (4) in enforcing any of the covenants and
conditions of this Agreement or Other Agreements.
Id. at 1, ¶ 2.
Under the agreement, Defendants are required to pay Liberty Mutual collateral security
upon demand:
If Surety determines, in its sole judgment, that potential liability exists for losses
and/or fees, costs, and expenses for which the Indemnitors and Principals will be
obliged to indemnify the Surety, promptly upon demand, a sum of money equal to
an amount determined by the Surety or collateral security of a type and value
satisfactory to the Surety, to cover that liability, whether or not the Surety has: (a)
established or increased any reserve; (b) made any payments; or (c) received any
notice of any claims therefor.
Id.
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The Indemnity provision also provides that:
In the event of any payment by the Surety, the Indemnitors and Principals further
agree that in any accounting between the Surety and the Principals, or between the
Surety and the Indemnitors, or either or both of them, the Surety shall be entitled
to charge for any and all disbursements made by it in good faith in and about the
matters herein contemplated . . . and that the vouchers or other evidence of any
such payments made by the Surety shall be prima facie evidence of the fact and
amount of the liability to the Surety.
Id. (emphasis added).
In the GAI, the Defendants agreed to “assign, transfer, pledge, and convey to the Surety
and agree to use their best efforts to cause the Principals to assign, transfer, pledge, and convey
to the Surety as collateral security for the full performance of the covenants and agreements
herein contained, . . . the following”:
(a) all the right, title and interest of the Indemnitors and/or Principals in, and
growing in any manner out of, all contracts referred to in the Bonds, or in, or
growing in any manner out of the Bonds . . . (d) all actions, causes of actions,
claims and demands whatsoever which the Indemnitors and/or Principals may
have or acquire against any subcontractor, laborer or materialmen, or any person
furnishing or agreeing to furnish or supply labor, material, supplies, machinery,
tools, or other equipment in connection with or on account of any and all
contracts referred to in the Bonds; and against any surety or sureties of any
subcontractor, laborer or materialmen.
Id. at 1, ¶ 3.
In the event of Defendants’ default on one of the bonded contracts, the GAI provided that
Liberty had the right to “takeover” and complete the project at Defendants’ expense:
In the event of the following: breach, default, or termination asserted by the
obligee in any Bond; any Principal’s abandonment of the work or forfeiture of
any contract covered by the Bond, any Principal’s failure to pay obligations
incurred in connection therewith . . . then the Surety shall have the right, at its
option and in its sole discretion and is hereby authorized, with or without
exercising any other right or option conferred upon it by law or under the terms of
this Agreement, to take possession of any part or all of the work under any
contract or contracts covered by the Bonds . . . at the expense of the Indemnitors
and Principals, to complete or arrange for the completion of the same, and the
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Indemnitors and Principals shall promptly, upon demand, pay the Surety for all
losses, fees, costs and expenses so incurred.
Id. at 2, ¶ 5.
The Defendants waived any right to notice of default or execution of any bonds governed
by the agreement. Id. at 3, ¶ 10. The GAI further provided that all of Defendants’ “interest, title
and rights in any contract or undertaking referred to in any Bond” were to be “held as a trust
fund” which “shall inure to the benefit of the Surety for any liability or loss it may have to
sustain under any Bond.” Id. at 3, ¶ 11.
Importantly, the GAI gave Liberty Mutual the right to settle claims in its sole discretion
unless Defendants provided collateral security:
The Surety shall have the right, at its option and sole discretion, to adjust, settle or
compromise any claim, demand, suit or judgment upon any Bond, unless any
Indemnitor or Principal, providing a reasonable legal basis therefor, shall request
the Surety to litigate such claim or demand, or to defend such suit, or to appeal
from such judgment, and shall deposit with the Surety, at the time of such request,
cash or collateral satisfactory to the Surety in kind and amount to be used in
paying any judgment or judgments rendered or that may be rendered, with
interest, costs, expenses and attorneys’ fees, including those of the Surety.
Id. at 3, ¶ 13.
Similarly, the GAI appointed Liberty Mutual as Defendants’ attorney-in-fact “with the
full right and authority, but not the obligation, to exercise all the rights of the Indemnitors and
Principals assigned, transferred, and set over to the Surety in this Agreement, with full power and
authority to execute on behalf of and sign the name of any Indemnitor and/or Principal.” Id. at 3–
4, ¶ 18. That power extended to any document which needed to be executed “in order to give full
effect not only to the intent and meaning of the within assignments, but also to the full protection
intended to be herein given to the Surety under all other provisions of this agreement.” Id.
Further the Defendants agreed to prospectively “ratify and confirm all acts and actions taken and
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done by the surety as such attorney-in-fact and agree to protect and hold harmless the Surety for
acts herein granted as attorney-in-fact.” Id.
B.
While in the process of completing numerous large-scale construction projects for North
Carolina counties and municipalities, Defendants ran into cash flow problems. According to
Defendants, the North Carolina Department of Transportation withheld payment on completed
projects and asserted liquidated damages claims “in hopes of reducing the large payable” which
Defendants had accrued against the North Carolina Department of Transportation. Def. Resp. at
5, ECF No. 110. Regardless of the reason, Liberty Mutual received numerous claims on the
bonds alleging that Defendants were not paying their bills.
On November 24, 2015, Dick Crittenden, owner of one of the Defendants, sent Liberty
Mutual a letter. Crittenden Letter, ECF No. 104, Ex. E. In the letter, Crittenden referenced
Defendants’ unfavorable cash flow situation and requested additional loans from Liberty Mutual.
Id. at 1. Crittenden explained that, barring financial assistance from Liberty Mutual, the
Defendants would “have no choice but to stop work on these projects.” Id. Crittenden stated: “If
in fact Liberty wishes to have DeVere continue to work on these projects, we are happy to
cooperate and will do everything we can do to minimize the cost.” Id. Crittenden informed
Liberty Mutual that Defendants’ only “real asset of value” remaining was twenty-one million
dollars in pending receivables due from the Department of Transportation. Id. at 2. The letter
then provided an estimate of the funds necessary to complete the projects. Id. at 3–4.
In response to Defendants’ financial circumstances, the parties agreed to a
“Memorandum of Understanding” whereby Liberty Mutual would advance money to “finance
Devere’s continued operation to complete the Bonded Projects.” Mem. Understanding, ECF No.
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104 at 6, Ex. F. At the same time the Memorandum of Understanding was executed, Defendants
provided letters which advised that Defendants were defaulting on all their construction projects
with North Carolina governmental entities. See Letters of Default, ECF No. 104, Ex. F.
According to Defendants, Liberty Mutual delayed providing financial assistance for nine
weeks. By that point, subcontractors had demobilized from the projects and began filing payment
bond claims. Defendants further alleged that Liberty Mutual refused to cooperate with
Defendants in prosecuting collection of Defendants’ outstanding accounts receivables.
According to Liberty Mutual, negotiations regarding extension of additional funds were
unsuccessful because Defendants were requesting financing conditions that Liberty Mutual was
unwilling to accept. On January 27, 2016, Liberty Mutual sent a letter formally rejecting
Defendants’ proposed financing terms and providing notice of default on the bonds. Sebastian
Letter, ECF No. 104, Ex. I. In that letter, Liberty Mutual also requested that collateral security in
the amount of $12,500,000.00 be posted. Id. at 7.
To date, Defendants have not indemnified Liberty Mutual nor posted collateral, despite
Liberty Mutual’s entitlement to collateral under the GAI and this Court’s multiple orders
directing Defendants to post collateral. Defendants’ primary objection is that Liberty Mutual
“did not consult with DeVere or staff in the negotiation and settlement process and did not
present settlement proposals for review and input prior to final acceptance of the same.” Def.
Resp. at 9.
II.
A motion for summary judgment should be granted 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.” Fed. R. Civ. P. 56(a). The moving party has the initial burden of identifying where to look
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in the record for evidence “which it believes demonstrate the absence of a genuine issue of
material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the
opposing party who must set out specific facts showing “a genuine issue for trial.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (citation omitted). The Court must view the
evidence and draw all reasonable inferences in favor of the non-movant and determine “whether
the evidence presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Id. at 251–52.
III.
Liberty Mutual requests summary judgment on Count I of its complaint only: breach of
contract by failure to indemnify or provide collateral. Liberty Mutual also requests that
Defendants’ affirmative defenses related to the breach of contract claim be stricken because they
are legally untenable. Those motions will be granted.
A.
The provisions of the GAI unambiguously entitle Liberty Mutual to both indemnification
of losses and the posting of collateral. See GAI at 1, ¶ 2 (“The Indemnitors shall exonerate, hold
harmless, indemnify, and keep indemnified the Surety from and against any and all liability for
losses, fees, costs, and expenses of whatsoever kind of nature . . . If Surety determines, in its sole
judgment, that potential liability exists for losses and/or fees, costs, and expenses for which the
Indemnitors and Principals will be obliged to indemnify the Surety, promptly upon demand, a
sum of money equal to an amount determined by the Surety or collateral security of a type and
value satisfactory to the Surety, to cover that liability.”).
Defendants do not dispute that they have not indemnified Liberty Mutual or posted
collateral. Likewise, Defendants do not dispute that Liberty Mutual has suffered financial losses
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as a result. Rather, Defendants assert only two arguments: that there are material issues of fact
regarding the amount of damages Defendants have suffered and that Liberty Mutual’s claim for
collateral security is premature. Neither argument has merit.
First, Defendants argue that Liberty Mutual has not provided “proper documentation” of
the costs or expenses it has incurred. Def. Resp. at 11. Defendants acknowledge that Liberty
Mutual has provided a declaration from its claims counsel summarizing Liberty Mutual’s losses,
but argue that the declaration is not sufficient to substantiate Liberty Mutual’s request for
damages. In response, Liberty Mutual points to the provision in the GAI which provides that
“vouchers or other evidence of any such payments made by the Surety shall be prima facie
evidence of the fact and amount of the liability to the Surety.” GAI at 1, ¶ 2. Defendants attempt
to sidestep that provision by asserting that “by definition, prima facie evidence is not conclusive
and subject to rebuttal.” Def. Resp. at 11. That is true, but Defendants have not produced any
affirmative evidence which would undermine the prima facie evidence Liberty Mutual has
presented.
“Provisions in indemnity agreements granting to the indemnitor the right to compromise
and settle claims, and providing that vouchers and other evidence of payment shall be prima
facie evidence of the propriety thereof, have been upheld as not against public policy and
enforced by the courts.” Transamerica Ins. Co. v. Bloomfield, 401 F.2d 357, 362 (6th Cir.
1968).3 These provisions are meant to “facilitate the handling of settlements by sureties and
obviate unnecessary and costly litigation.” Id. at 363.
Against this background, Defendants argue that Liberty Mutual had an obligation to
present evidence of its losses beyond the declaration. That is not so. The purpose of allowing a
3

In Bloomfield, the indemnity provision was substantially identical to the provision in the GAI here: “‘the voucher
or other evidence of such payment shall be prima facie evidence of the propriety thereof and of the Indemnitor’s
liability therefor to the Company.’” Id. at 359 n.1.
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declaration to serve as prima facie evidence is to free sureties from the burden of exhaustively
documenting every aspect of its damages from primary documents. Liberty Mutual has provided
a declaration which, under the unambiguous terms of the GAI, is prima facie evidence of its
losses.4 The burden thus rests with Defendants to rebut that prima facie case by presenting
affirmative evidence of bad faith. See Scott v. Harris, 550 U.S. 372, 380 (2007) (“When the
moving party has carried its burden [at summary judgment], its opponent must do more than
simply show that there is some metaphysical doubt as to the material facts.”) (citations omitted).
Defendants argue that the declaration provided by Liberty Mutual, which asserts
$23,274,628.13 in losses, is contradicted by another spreadsheet provided to Defendants on
November 11, 2016, which reflected that Liberty Mutual has sustained only $19,740,279.29 in
losses. Compare Spreadsheet of Losses, ECF No. 104, Ex. K, with November 2016 Email and
Spreadsheet, ECF No. 110, Ex. B. This argument falls far short of rebutting the prima facie case
of damages that Liberty Mutual has established. The spreadsheet Defendants rely upon as
revealing the contradiction was provided on November 11, 2016. The declaration of losses now
relied upon by Liberty Mutual was filed with its motion for summary judgment on December 9,
2016. The fact that Liberty Mutual’s losses increased over a one month period does not suggest a
contradiction in Liberty Mutual’s numbers. Defendants have not presented any evidence of a
contradiction in Liberty Mutual’s asserted losses, much less evidence of bad faith.
Defendants also attempt to argue that because Liberty Mutual avers that its damages will
increase in the future, there is no conclusive evidence of Liberty Mutual’s current damages. The
fact, however, that more damages will be sustained in the future does not mean that Liberty
Mutual cannot quantify the damages it has already sustained. Defendants assert that Liberty
4

The sufficiency of the declaration is further revealed by the fact that the declaration included a sixteen page
spreadsheet which provides details of every claim made to Liberty Mutual and revealing the total of claims made to
be $23,274,628.13. See Spreadsheet of Losses, ECF No. 104, Ex. K.
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Mutual will settle claims in the future that will decrease its overall damages. But Defendants do
not try to substantiate that argument. Given the substantial amount of claims against Liberty
Mutual, it seems exceedingly likely that Liberty Mutual’s losses in the future will rise, not fall.
Again, and most importantly, Defendants have not presented affirmative evidence to the contrary
and thus have not rebutted Liberty Mutual’s prima facie case.
Third, Defendants argue that the consultant and attorney fees which Liberty Mutual
includes in its damages are excessive and unreasonable.5 However, the GAI clearly provides that
Defendants are liable for all consulting and attorney fees that Liberty Mutual incurs as a result of
a breach of the agreement. GAI at 1, ¶ 2. Thus, the declaration would also provide prima facie
evidence of the validity and good faith of those expenses as well. See id. See also Bloomfield,
401 F.2d at 362 (“The surety was authorized to incur expense for investigating and defending the
claims asserted against it and to employ accountants, attorneys and investigators to perform this
service.”). There is, as Defendants argue, a requirement under Michigan law that attorney fees
awards be reasonable. See Smith v. Khouri, 481 Mich. 519, 528 (2008). However, Defendants
have produced no affirmative evidence of excessiveness or unreasonableness. As already
explained, the contractual provisions whereby declarations constitute prima facie evidence of
losses sustained in good faith have been upheld by courts as consistent with public policy. If
Liberty Mutual were required to specifically document all of its consulting and attorney fees
expenses, the reason for the prima facie provision of the GAI would be undermined. Because
Defendants have not provided any evidence to rebut the prima facie case that the attorney fees
and consulting fees that Liberty Mutual is seeking are reasonable, there is no genuine issue of
fact regarding those fees. See also State Auto. Mut. Ins. Co. v. Reschke, No. 206-CV-15410, 2008
5

Defendants assert that Liberty Mutual is seeking $628,122.97 for work provided by Boyle Consulting Group, Inc.,
$1,132,119.47 for work provided by Meridian Consulting Group, and $792,239.42 for work provided by Watt,
Tieder, Hoffar & Fitzgerald, LLP, law firm.
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WL 4937971, at *5 (E.D. Mich. Nov. 14, 2008) (rejecting the argument that professional and
consulting fees were excessive because the defendant had not provided evidence “from which a
rational jury could find for the defendant”).
Finally, Defendants argue that Liberty Mutual’s claim for the posting of collateral
security is premature. In support, Defendants cite Safeco Ins. Co. of Am. v. Oakland Excavating
Co. for the proposition that “[d]emand by the surety of collateral is a condition precedent to
suit.” No. 208-CV-10546, 2009 WL 1658404, at *4 (E.D. Mich. June 12, 2009). That is true, but
Defendants cannot reasonably argue that no collateral demand was made. On January 27, 2016, a
representative of Liberty Mutual sent a letter demanding collateral. Sebastian Letter, ECF No.
104, Ex. I. Defendants admit that the letter was sent, but argue that it was only received by
former counsel of Defendants, not the principals themselves. Liberty Mutual has provided FedEx
receipts which demonstrate that each individual Defendant received a copy of the letter. See ECF
No. 114, Ex. 1. More importantly, this Court has twice ordered Defendants to produce collateral.
Defendants’ argument that they have not received notice of a collateral demand is without merit.
In short, the terms of the GAI unambiguously entitle Liberty Mutual to the damages it
seeks. Under the GAI provisions, Liberty Mutual has provided prima facie evidence of its
damages. Defendants have not produced affirmative evidence to rebut that prima facie case.
Thus, summary judgment is appropriate.
B.
In its motion to strike affirmative defenses, Liberty Mutual argues that Defendants’
affirmative defenses to Liberty Mutual’s breach of contract claim are not legally cognizable and
should be stricken. In response to the motion, Defendants argue that it should be denied because
it is untimely. But Defendants do not argue that the affirmative defenses have legal merit.
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Certainly, Defendants have not raised these affirmative defenses in opposition to Liberty
Mutual’s motion for summary judgment on the breach of contract claim. Thus, it is ultimately
irrelevant whether those affirmative defenses might have been meritorious: they were not raised
in opposition to the motion for summary judgment.6 To the extent Defendants raised these
affirmative defenses in opposition to the motion for summary judgment, they have been rejected.
To the extent these arguments were not raised, they are now moot. In either circumstance, the
affirmative defenses are deficient as a matter of law. They will be stricken.
C.
Having concluded that Liberty Mutual has conclusively demonstrated its entitlement to
damages under the GAI, the only remaining question is whether judgment in the amount of the
established damages will be entered now. Liberty Mutual requests that judgment be entered in
the amount of the currently substantiated damages and that it be given leave to file a motion for
an amended judgment once the final amount of its damages is known. In support of this request,
Liberty Mutual cites Travelers Cas. & Sur. Co. of Am. v. J.O.A. Const. Co., No. 07-13189, 2009
WL 928848, at *4 (E.D. Mich. Mar. 31, 2009), aff’d, 479 F. App’x 684 (6th Cir. 2012), and
aff’d, 479 F. App’x 684 (6th Cir. 2012). In Travelers, the court granted the plaintiff’s request to
“file a motion for an amended judgment for any additional claims received or any additional
losses, costs, expenses, or fees incurred by the Plaintiff after June 30, 2008 that are related to the
Agreement.” Id. Identical relief was provided in Reschke, 2008 WL 4937971, at *7. Defendants
6

It should be further noted that the provisions of the GAI, quoted above, unambiguously provide Liberty Mutual
with the right to settle the affirmative claims without needing to provide notice to or cooperate with Defendants. If
Defendants had presented evidence indicating that Liberty Mutual had settled claims in bad faith, summary
judgment might not be appropriate. But as already explained, Defendants have not presented any such evidence.
Further, the fact that Defendants have not posted collateral after having been ordered to undermines any argument
regarding bad faith they might make. See Great Am. Ins. Co. v. E.L. Bailey & Co., Inc., 841 F.3d 439, 448 (6th Cir.
2016) (holding that the defendant’s failure to post collateral undermined its arguments regarding bad faith). See also
Liberty Mut. Ins. Co. v. Aventura Eng'g & Const. Corp., 534 F. Supp. 2d 1290, 1316 (S.D. Fla. 2008) (explaining
that “several courts have held that a principal's failure to post collateral defeats the defense of bad faith” and
collecting cases).
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have not addressed this request by Liberty Mutual except to argue that because Liberty Mutual’s
damages will rise, the amount of its current loss is undeterminable. Given Liberty Mutual’s clear
entitlement to damages under the GAI, however, it would be inequitable to require it to wait until
it has resolved all pending claims against it before entering judgment against Defendants. The
bonds in this case cover a wide variety of complex construction projects. The claims process is
intricate and time-consuming. Because Liberty Mutual has adequately demonstrated its damages
as of December 9, 2016, judgment will be entered in that amount. Because Liberty Mutual will
also be entitled to damages in the as-yet undetermined amount of its final losses, it will be
granted leave to file a motion for an amended judgment. Liberty Mutual shall be ordered to file a
status report once every three months updating the Court and Defendants on the progress of its
attempts to resolve all remaining claims, including an updated spreadsheet listing its current
damages.
IV.
Accordingly, it is ORDERED that Liberty Mutual’s motion for partial summary
judgment, ECF No. 100, is GRANTED.
It is further ORDERED that Liberty Mutual’s motion to strike affirmative defenses, ECF
No. 102, is GRANTED.
It is further ORDERED that Defendants’ affirmative defenses of Mitigation of Damages,
Unreasonable/Unrecoverable Costs, Bad Faith, No Liability for Payments, and Release are
STRICKEN to the extent they are advanced against Liberty Mutual’s claim for breach of
contract.
It is further ORDERED that, in accordance with Federal Rules of Civil Procedure 54, 55,
and 58, on Count One of Liberty Mutual’s Complaint against Defendants, judgment on Count
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One of Liberty Mutual’s Complaint is entered in favor of Plaintiff Liberty Mutual and against the
company Defendants in the amount of $23,274,628.13.
It is further ORDERED that Liberty Mutual is DIRECTED to submit a status report on
or before May 29, 2017, indicating the progress made towards full resolution of all remaining
claims and including an updated spreadsheet.

Dated: February 28, 2017

s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge

PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on February 28, 2017.
s/Michael A. Sian
MICHAEL A. SIAN, Case Manager

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