United States et al v. Travelers Casualty and Surety Company of America et al

Filing 200

ORDER granting 198 Motion to enforce settlement agreement Signed by Honorable David C. Bramlette, III on 3/23/2016 (ECW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
UNITED STATES FOR THE USE AND
BENEFIT OF MID STATE CONSTRUCTION
COMPANY, INC.; and MID STATE
CONSTRUCTION COMPANY, INC.
VS.

PLAINTIFFS

CIVIL ACTION NO. 5:11-cv-169(DCB)(MTP)

TRAVELERS CASUALTY AND
SURETY COMPANY OF AMERICA; U.S.
COATING SPECIALTIES & SUPPLIES,
LLC; and EARL WASHINGTON

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This cause is before the Court on Travelers Casualty & Surety
Company of America’s (“Travelers”) Motion to Enforce Settlement
Agreement

and

Travelers,

for

U.S.

Entry

Coating

of

Agreed

Specialties

Judgment
&

reached

Supplies,

LLC

between
(“U.S.

Coating”), and Earl Washington (“Washington”)(docket entry 198), to
which no response has been filed by U.S. Coating or Washington.
Having

carefully

considered

the

motion

and

the

movant’s

memorandum brief, as well as the facts in this case, the Court
finds as follows:
This civil action relates to a federal construction project
set aside under the United States Small Business Administration’s
8(a) program between the U.S. Army Corps of Engineers (“Corps”), as
owner, and U.S. Coating as general contractor for the Corps
Engineer Research and Development Center ITL Office Building and
Computer Facility in Vicksburg, Mississippi (the “Project”).

As

required by the Miller Act (40 U.S.C. §§ 3131, et seq.), U.S.
Coating

was

required

to

(collectively “bonds”).

post

payment

and

performance

bonds

U.S. Coating did not have the requisite

financial wherewithal to obtain surety credit from Travelers.

As

a result, Mid State Construction Company, Inc. (“Mid State”)
requested that Travelers issue bonds on behalf of U.S. Coating
based on Mid State and its principals’ bonding credit. In order to
have the bonds issued, U.S. Coating and its President, Earl
Washington (“Washington”), and his wife, Alberta Washington (now
deceased), all signed indemnity agreements whereby they indemnified
Travelers from and against all loss. [DE 121-2]. Disputes arose
between U.S. Coating and Mid State, and Mid State initiated
arbitration proceedings against U.S. Coating through which Mid
State obtained an Arbitration Award. [DE 182-1]. Mid State brought
this action to enforce the Arbitration Award and to bring a claim
against Travelers’ payment bond.
against

Mid

State

and

Travelers brought a counterclaim

cross-claims

against

U.S.

Coating

and

Washington for indemnity.
After Mid State initiated this civil action, Travelers brought
its cross-claims against Washington [DE 37] and U.S. Coating [DE
55] to recover at least $3,045,126.45 from U.S. Coating for losses
incurred

under

the

performance

bond,

U.S.

Coating’s

debt

to

numerous payment bond claimants and their subsequent claims upon
Travelers for said amount, and other losses, costs, and expenses.

2

Answers were filed; however, the Court granted Travelers’ Motion to
Strike U.S. Coating’s Answer. [DE 162]. Travelers filed a Motion
for Summary Judgment against U.S. Coating and Washington [DE 121
and 122], and a Motion for Preliminary Injunctive Relief [DE 125
and 126], upon which the Court deferred its ruling [DE 163].

By

Order dated September 6, 2013 [DE 161] (the “Enforcement Order”),
the Court granted Mid State’s Motion for Default Judgment against
U.S. Coating and Earl Washington, and granted Mid State’s Motion
for Summary Judgment against U.S. Coating and Washington.
Enforcement

Order

confirmed

Mid

State’s

Arbitration

The

Award

as

described in the Enforcement Order, and by separate order the Court
entered a final judgment [DE 182] in favor of Mid State against
U.S. Coating and Washington confirming the Arbitration Award.
On

or

about

November

22,

2013,

U.S.

Coating

offered

$577,606.18 to Mid State in satisfaction of the Arbitration Award,
a Judgment rendered by the U.S. Bankruptcy Court for the Southern
District of Mississippi and the Judgment of this Court.
Exhibit “A” to Travelers’ Motion.

The same day, U.S. Coating

offered $300,000 to Travelers to settle.
Travelers’ Motion.

See

See Exhibit “B” to

In his letter, Mr. Washington advised that

settlement funds would be available sometime between January and
June 2014.
Mr.

On November 27, 2013, counsel for Travelers accepted

Washington’s

offer

of

$300,000

and

further

advised

that

Travelers had reached a settlement with Mid State (which has since

3

been finalized) whereby Travelers took an assignment of Mid State’s
claims and settlement rights against and/or with U.S. Coating. See
Exhibit “C” to Travelers’ Motion.

To secure the settlement,

Travelers advised that it also required U.S. Coating and Washington
to enter into a settlement agreement and consent judgment in the
event funding for the settlement fell through.

Id.

On December

30, 2013, counsel for Travelers provided a proposed settlement
agreement and judgment to U.S. Coating and Mr. Washington.

See

Exhibit “D” to Travelers’ Motion.
Because Mr. Washington refused to execute the settlement
agreement and judgment, and the settlement funds that were promised
to Travelers by June 2014 were never paid, Travelers filed a Motion
to Re-Open this civil action against U.S. Coating and Washington.
[DE 186 and 187].

After Travelers filed a Motion for Summary

Judgment in mid-February 2015 [DE 193 and 194], U.S. Coating and
Washington began making settlement offers, which resulted in a
settlement agreement that was finally signed by U.S. Coating and
Washington in March 2015.

See Exhibits “E” and “F” to Travelers’

Motion.
According to the terms of the Settlement Agreement, U.S.
Coating and Washington agreed to pay Travelers a total sum of
$877,606.18, payable by monthly payments with a lump sum payment at
the end of two years.

Id.

The first year, U.S. Coating and

Washington were to make payments of $10,000.00 per month beginning

4

April 6, 2015.

Id.

To date, Travelers has received one payment of

$10,000.00 leaving a current deficiency of $90,000.00.

Paragraphs

3 and 4 of the Settlement Agreement secure the settlement by U.S.
Coating and Washington agreeing to an Agreed Judgment, and, should
they fail to make any payment required by the Settlement Agreement,
Travelers is entitled to submit the Agreed Judgment to the Court
for entry, and U.S. Coating and Washington agreed not to oppose the
filing, submission, or presentation of the Agreed Judgment. Though
paragraph 3 provides that U.S. Coating and Washington are not
entitled to written notice of default, Travelers provided their
attorney with a written notice of their default.

See Exhibit “G”

to Travelers’ Motion.
Mississippi law, which applies in this diversity action,
strongly favors “settlement of disputes by agreement of the parties
and, ordinarily, [the court] will enforce the agreement which the
parties have made, absent any fraud, mistake, or overreaching.”
Chantey Music Publishing, Inc. v. Malaco, Inc., 915 So. 2d 1052,
1055 (Miss. 2005).

Settlement agreements are enforced as a matter

of contract law and “Courts will not rewrite them to satisfy the
desires of either party.”

Id. at 1056.

The Fifth Circuit has long held that “‘[c]ompromises of
disputed claims are favored by the courts.’”

Mid-South Towing Co.

v. Har-Win, Inc., 733 F.2d 386, 391 (5th Cir. 1984)(quoting Cia Anon
Venezolana de Navegacion v. Harris, 374 F.2d 33, 35 (5th Cir.

5

1967)); see also Hastings v. Guillot, 825 So. 2d 20, 24 (Miss.
2002).

“Federal

courts

have

held

under

a

great

variety

of

circumstances that a settlement agreement once entered into cannot
be repudiated by either party and will be summarily enforced.” Cia
Anon, 374 F.2d at 35.

Consistent with these guiding principles

under federal common law, “‘a district court has inherent power to
recognize,

encourage,

and

when

necessary

enforce

settlement

agreements reached by the parties.’” Del Bosque v. AT&T Adver.,
L.P.,

441

F.

App’x

258,

260

(5th

Cir.

2011)(quoting

Bell

v.

Schexnayder, 36 F.3d 447, 449 (5th Cir. 1994)).
The Court finds that a settlement agreement was reached by the
parties.

After the parties appeared at the February 10, 2015

Settlement Conference, they memorialized their agreement through
the attached Agreement. See Exhibit “E” to Travelers’ Motion.
Consistent with the terms of the Agreement, the U.S. Coating and
Washington made the first payment the date the Defendants signed
the Agreement.
To secure the Agreement and as a part thereof, the parties
negotiated, revised, and agreed to the Agreed Judgment attached to
Travelers’ motion as Exhibit “E.”

Paragraph 3 of the Settlement

Agreement clearly provides, “Indemnitors agree that, in the event
they fail to make payment as provided in paragraph 1, they will be
in breach of this Agreement and the Surety shall be entitled to
present and have the Court enter the Agreed Judgment as provided in

6

paragraph 4.”

See Exhibit “E” to Travelers’ Motion.

Paragraph 4

provides that U.S. Coating and Washington would execute the Agreed
Judgment in the form attached as Exhibit “A” to the Agreement, and
“[i]n the event any Indemnitor fails to make any payment as
provided in paragraph 1, Surety shall be entitled to submit the
Agreed Judgment and pursue said Agreed Judgment, and Indemnitors
shall not oppose the filing, submission or presentation of the
Agreed Judgment.”

See Exhibit “E.”

There is no legitimate dispute concerning U.S. Coating or
Washington’s failure to pay the amounts due under the Settlement
Agreement.

Because U.S. Coating and Washington have breached the

Agreement, Travelers is entitled to entry of the Agreed Judgment
attached to its motion.
Paragraph 10 of the Settlement Agreement provides, “In the
event of a dispute under this Agreement, Surety shall be entitled
to recover its counsel fees and other costs and expenses incurred
in enforcing the terms of this Agreement and/or the GAI.”
Exhibit “E” to Travelers’ Motion.

See

Because there is no arguable or

legitimate basis for the failure or refusal of U.S. Coating or
Washington to make the payments called for by the Agreement, the
Court shall order them to pay Travelers a reasonable attorney’s fee
for having to prepare and file its motion.

Federal courts have

inherent authority to award attorneys’ fees.

In re Case, 937 F.2d

1014, 1023 (5th Cir. 1991)(citing Chambers v. NASCO, Inc., 501 U.S.

7

32 (1991)).
The Court finds that U.S. Coating and Washington have breached
the terms of the Settlement Agreement with Travelers, and that
Travelers is entitled to entry of the Agreed Judgment.
The Court further finds that U.S. Coating and Washington are
to pay Travelers its reasonable attorney’s fees and expenses for
the preparation and filing of the present motion.
Accordingly,
IT IS HEREBY ORDERED that Travelers Casualty & Surety Company
of America’s Motion to Enforce Settlement Agreement and for Entry
of

Agreed

Judgment

reached

between

Travelers,

U.S.

Coating

Specialties & Supplies, LLC, and Earl Washington (docket entry 198)
is GRANTED;
FURTHER ORDERED that Travelers furnish the Court with the
parties’ Agreed Judgment for filing;
FURTHER ORDERED that Travelers furnish the Court with its bill
of costs and proposed Judgment awarding reasonable attorney’s fees
and expenses.
SO ORDERED, this the 23rd day of March, 2016.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

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