Insurance Company of the West v. Triangle Maintenance Service, LLC et al

Filing 43

MEMORANDUM OPINION re 42 Order on Motion for Summary Judgment. Signed by Neal B. Biggers on 9/27/2012. (llw)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
INSURANCE COMPANY OF THE WEST
V.

PLAINTIFF
CIVIL ACTION NO. 1:11CV190-B-S

TRIANGLE MAINTENANCE SERVICE, LLC,
TRIANGLE HOLDINGS, LLC,
SCOTT C. HANNON, AND
AMANDA P. HANNON

DEFENDANTS

MEMORANDUM OPINION
Presently before the court is the plaintiff’s motion for summary judgment. Upon due
consideration of the motion, response, exhibits, and supporting and opposing authority, the court
is ready to rule.
Factual and Procedural Background
The plaintiff, Insurance Company of the West (“ICW”), is a surety company that issues
payment and performance bonds and stands as surety for construction contractors. The
defendant Triangle Maintenance Service, LLC, a construction contractor, required a payment
and performance bond in order to enter into a contract with the Mississippi Department of
Transportation (“MDOT”), to perform construction on a median barrier project on U.S. Highway
49 in Harrison County, Mississippi. In obtaining the required bond from ICW, Triangle
Maintenance, defendant Triangle Holdings, LLC, and individual indemnitors, defendants Scott
and Amanda Hannon, executed a General Indemnity Agreement with ICW on March 24, 2009.
Under the agreement, the indemnitors agreed to, inter alia, the following terms:
1.

INDEMNITY. The Undersigned shall exonerate and keep indemnified
the Surety against any and all liability for losses and expenses of
whatsoever kind or nature, including attorneys fees and costs, by reason of
the failure

of the Principal or Indemnitors to perform or comply with the covenants
and conditions of this Agreement.
The Surety may pay or compromise any claim, demand, suit, judgment, or
expense arising out of the Bonds, and any such payment or compromise
made by the Surety in the reasonable belief that it was liable for the
amount paid or that it was expedient under all the circumstances to make
such payment or compromise, shall be binding upon the Undersigned as a
loss or expense covered by this indemnity, whether or not such liability
actually existed. An itemized statement of the payment or compromise,
sworn to by an officer of the Surety, or the voucher or vouchers or other
evidence of the payment or compromise, shall be prima facie evidence of
the fact and the amount of the liability of the Undersigned under this
Agreement.
***
2.

COLLATERAL. If for any reason the Surety believes it may sustain a
loss or expense on a bond, Surety may, from time to time, demand, and
upon Surety’s demand, the Undersigned shall deliver over to Surety, cash
or collateral acceptable to Surety as to amount and form, to cover any
contingent losses or expenses and any subsequent increase thereof . . . .

After execution of this indemnity agreement, Triangle Maintenance entered into a construction
contract with MDOT on October 29, 2009. The bond obtained from ICW named Triangle
Maintenance as principal and MDOT as obligee.
ICW subsequently received a claim on the bond from Webster Electric Co., Inc.
(“Webster”), an unpaid subcontractor to Triangle Maintenance on the Highway 49 project, in the
amount of $63,288.10. After investigation, ICW paid Webster’s claim. ICW then demanded
that the indemnitors post collateral in connection with the claim. The indemnitors failed to do
so.
On June 23, 2011, ICW was served with a complaint filed by Bayou Concrete, LLC
(“Bayou”), alleging that it was owed the sum of $85,103.50 for materials supplied to Triangle
Maintenance on the project plus interest, attorney’s fees, and penalties. ICW settled with Bayou
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for $103,823.87, with notice provided to the indemnitors, who did not dispute that Bayou was
owed the amount.
ICW also asserts that, pursuant to the indemnity agreement, it is entitled to attorney’s
fees and expenses incurred with its investigation and settlement of the claims on the project, in
connection with enforcing the indemnity agreement, and in connection with defending the
lawsuit filed by Bayou. ICW asserts that it will continue to incur additional attorney’s fees in
this action but has, to date, incurred a total of $12,341.00.
ICW filed this action on September 2, 2011, seeking, inter alia, specific performance,
contractual indemnity, and reimbursement. ICW subsequently moved for summary judgment as
to the liability of Triangle Holdings and Scott and Amanda Hannon, not seeking summary
judgment as to Triangle Maintenance because it filed bankruptcy after the instigation of this
action. Further, after the filing of the present motion, Triangle Holdings filed bankruptcy,
leaving the motion for summary judgment directed only against Scott and Amanda Hannon.
Standard of Review
A party is entitled to summary judgment “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). On a motion for summary judgment, the movant has the initial
burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986). If the movant makes such a showing, the burden then shifts to the nonmovant to “go beyond the pleadings and by . . . affidavits, or by the ‘depositions, answers to
interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine

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issue for trial.’” Id. at 324 (quoting Fed. R. Civ. P. 56(c), (e)). Before finding that no genuine
issue for trial exists, the court must first be satisfied that no rational trier of fact could find for the
non-movant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“[T]he issue of fact must be ‘genuine.’ When the moving party has carried its burden
under Rule 56(c), its opponent must do more than simply show that there is some metaphysical
doubt as to the material facts.” Id. at 586. “Unsubstantiated assertions, improbable inferences,
and unsupported speculation are not sufficient to defeat a motion for summary judgment.”
Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003). Further, self-serving
“affidavit or deposition testimony setting forth ultimate or conclusory facts and conclusions of
law are insufficient to defeat a motion for summary judgment.” Clark v. America’s Favorite
Chicken Co., 110 F.3d 295, 297 (5th Cir. 1997).
The court must render summary judgment in favor of the moving party if “there is no
legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.”
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 135 (2000). The Supreme Court
has cautioned, however, that the ruling court must not encroach upon the functions of the jury.
The Court stated in Reeves as follows:
[T]he court must review all of the evidence in the record, drawing all reasonable
inferences in favor of the nonmoving party, but making no credibility
determinations or weighing any evidence. The latter functions, along with the
drawing of legitimate inferences from the facts, are for the jury, not the court.
Thus, although the court should review the record as a whole, it must disregard all
evidence favorable to the moving party that the jury is not required to believe.
Id. (citations omitted). “Summary judgment, although a useful device, must be employed
cautiously because it is a final adjudication on the merits.” Jackson v. Cain, 864 F.2d 1235,
1241 (5th Cir. 1989).
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Analysis
The indemnity agreement provides: “An itemized statement of the payment or
compromise, sworn to by an officer of the Surety, or the voucher or vouchers or other evidence
of the payment or compromise, shall be prima facie evidence of the fact and the amount of the
liability of the indemnitors.” The plaintiff has made the appropriate submissions in this regard in
the form of the affidavit of Ray Barrios, Surety Claims Consultant for ICW, accompanied by
copies of the checks drawn on ICW’s account and made payable to claimants Webster and
Bayou.
In response to the plaintiff’s motion, the defendants assert that summary judgment is
premature and that discovery should be conducted pursuant to Rule 56(d) of the Federal Rules of
Civil Procedure. Defendant Amanda Hannon further asserts that she signed the indemnity
agreement under duress and as a result of the undue influence of her husband, defendant Scott
Hannon, and that she signed based on an alleged “unilateral mistake.”
Rule 56(d)1
Under Rule 56(d), a party may move the court to defer consideration of an opposing
party’s motion for summary judgment or move the court for additional time to obtain affidavits
and declarations or to take discovery if the party “shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its opposition” to the motion. Fed.
R. Civ. P. 56(d). The party, however, “may not simply rely on vague assertions that additional
discovery will produce needed, but unspecified, facts.” Raby v. Livingston, 600 F.3d 552, 561
1

The defendants have not complied with this court’s local rules in bringing this motion. Local
Uniform Civil Rule 7(b)(3)(C) provides: “A response to a motion may not include a counter-motion in
the same document. Any motion must be an item docketed separately from a response.” The court will,
however, address the merits of the motion in this instance.

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(5th Cir. 2010). “[A] request to stay summary judgment under Rule 56[(d)] must set forth a
plausible basis for believing that specified facts, susceptible of collection within a reasonable
time frame, probably exist and indicate how the emergent facts, if adduced, will influence the
outcome of the pending summary judgment motion.” Id. The court may grant summary
judgment “[i]f it appears that further discovery will not provide evidence creating a genuine
issue of material fact.” Id.
The defendants in the present case have not met this burden. Instead, they simply make
general, conclusory assertions that the plaintiff’s motion is premature and that discovery should
be taken. Further, this argument appears to be moot, as the discovery deadline has now passed in
this case, and the defendants have not moved to amend their response to the plaintiff’s motion or
to supplement their own Rule 56(d) motion. The court thus presumes that no information was
revealed during the discovery process which would alter the complexion of this case. The
defendants’ Rule 56(d) argument is therefore without merit.
Duress and Undue Influence
Amanda Hannon contends that her husband, Scott Hannon, presented her with the
signature page of the indemnity agreement and told her to sign it or their company would lose a
construction contract. She asserts that because she entered into the agreement under duress and
undue influence, the contract is not enforceable against her.
Duress and undue influence are affirmative defenses, and the defendant bears the burden
of proof to establish them. See Mullins v. TestAmerica, Inc., 564 F.3d 386 (5th Cir. 2009). “An
affirmative defense allows the defendant to introduce evidence to establish an independent
reason why the plaintiff should not prevail . . . .” Id. at 411. “[R]ecognized affirmative defenses

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to breach of contract such as . . . duress either admit or do not engage the plaintiff’s allegations
of breach but assert other, independent facts as a basis for negating liability that the defendant
must plead and prove.” Id. “Duress and undue influence are difficult defenses to establish.”
Lee v. Hunt, 631 F.2d 1171, 1178 (5th Cir. 1980).
In the present case, Amanda Hannon’s argument of duress and undue influence is
premised on the conduct of her husband, not on ICW’s actions. It is uncontested that ICW did
not attempt to subject Mrs. Hannon to duress or exert undue influence over her. Assuming
arguendo that Mrs. Hannon could prove that she was the victim of her husband’s alleged duress
and undue influence in signing the document, ICW acted in good faith and should be allowed to
enforce the contract since it materially relied upon the fully-executed and notarized agreement
and took no part in and had no knowledge of Mr. Hannon’s alleged conduct. “If a party’s
manifestation of assent is induced by one who is not a party to the transaction, the contract is
voidable by the victim unless the other party to the transaction in good faith and without reason
to know of the duress either gives value or relies materially on the transaction.” Restatement
(Second) of Contracts § 175 (1981). Although Mr. Hannon, the person accused of inducing “the
victim,” Mrs. Hannon, to assent, is a “party to the transaction,” the logic set forth by the
Restatement is nonetheless applicable here – the crucial point being that ICW was the “other
party” who acted “in good faith and without reason to know of the [alleged] duress” and who
gave value and materially relied on the contract. For these reasons, the court finds no merit to
the defendants’ argument.

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Unilateral Mistake
Amanda Hannon also asserts that the indemnity agreement should not be enforced based
on unilateral mistake. This argument is simply an extension of the previous argument; that is,
Mrs. Hannon contends that in exerting duress and undue influence over her, Scott Hannon
presented her with only the signature page of the indemnity agreement and misadvised her about
the contents thereof. Mrs. Hannon contends that she was unaware that she was entering into a
contract to indemnify ICW.
“It is well settled under Mississippi law that a contracting party is under a legal
obligation to read a contract before signing it.” McKenzie Check Advance of Mississippi, LLC v.
Hardy, 866 So. 2d 446, 455 (Miss. 2004). A contracting party who does not read a contract
before executing it “will not as a general rule be heard to complain of an oral misrepresentation
the error of which would have been disclosed by reading the contract.” Godfrey, Bassett &
Kuykendall Architects, Ltd., v. Huntington Lumber & Supply Co., Inc., 584 So. 2d 1254, 1257
(Miss. 1991). Further, as the plaintiff notes, the fact that Mrs. Hannon’s husband told her that
her signature was necessary for their business operations and “that if [she] did not sign the paper,
the business would lose a project,”2 coupled with the fact that her signature was notarized belies
Mrs. Hannon’s assertion that she was unaware of the import of the document. The court is
unpersuaded by the defendants’ argument.

2

Amanda P. Hannon Aff. ¶ 5.

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Conclusion
For the foregoing reasons, the court finds that the plaintiff’s motion for summary
judgment is well taken and shall be granted. A separate judgment in accord with this opinion
shall issue this day in the amount of $179,452.97 which represents the legitimate claims, plus
attorney’s fees and costs, the plaintiff has proven it has paid in accordance with the terms of the
Indemnity Agreement which this court finds fully enforceable.
This, the 27th day of September, 2012.

/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE

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