Travelers Casualty and Surety Company of America v. Belding et al

Filing 29

DECISION & ORDER Travelers' motion for summary judgment against defendants Mary Ellen Belding, Jon R. Belding, and Structural Remediation Services, Inc. 15 is granted. Judgment shall be awarded in favor of Travelers Casualty and Surety Compan y of America against defendants, jointly and severally, in the amount of $465,846.85, and for attorneys' fees in an amount to be determined by this Court upon stipulation of the parties or following further briefing. (See Contents of Decision & Order for further directives.) Signed by Hon. Marian W. Payson on 2/9/2018. (KAH)-CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
_______________________________________
TRAVELERS CASUALTY AND SURETY
COMPANY OF AMERICA,
DECISION & ORDER
Plaintiff,
16-CV-6559P
v.
MARY ELLEN BELDING, et al.,
Defendants.
_______________________________________

PRELIMINARY STATEMENT
On August 9, 2016, plaintiff Travelers Casualty and Surety Company of America
(“Travelers”) commenced this action against defendants Mary Ellen Belding, Jon R. Belding,
and Structural Remediation Services, Inc. (“SRS”) seeking to recover under an indemnity
agreement executed by defendants in favor of Travelers. (Docket # 1). Currently before the
Court is Travelers’ unopposed motion for summary judgment. (Docket # 15). For the following
reasons, the motion is granted.

FACTUAL BACKGROUND
The following facts are undisputed.1 On December 30, 2016, in consideration for
Travelers’ agreement to issue surety bonds on behalf of SRS in connection with certain

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In compliance with Rule 56(a)(1) of the Local Rules of Civil Procedure for the Western District of New
York, Travelers filed a Statement identifying undisputed material facts. (Docket # 15-1). Defendants have not filed
an opposing statement, and the Court thus considers Travelers’ Rule 56 Statement undisputed. See W.D.N.Y. L.R.
Civ. P. 56(a)(2) (“[e]ach numbered paragraph in the moving party’s statement of material facts may be deemed
admitted for the purposes of the motion unless it is specifically controverted by a correspondingly numbered
paragraph in the opposing statement”).

construction projects (“the Bonded Projects”), Mary Ellen Belding, Jon Belding and SRS (by
Mary Ellen Belding) executed a General Agreement of Indemnity (the “Indemnity Agreement”).
(Docket ## 15-1 at ¶ 1; 15-4). The terms of the Indemnity Agreement provide that the
“Indemnitors shall exonerate, indemnify and save [Travelers] harmless from and against all
Loss” and that “[a]n itemized, sworn statement by an employee of [Travelers], or other evidence
of payment, shall be prima facie evidence of the propriety, amount and existence of Indemnitors’
liability.” (Docket ## 15-1 at ¶ 2; 15-4 at ¶ 3). Loss is defined in the Agreement to mean:
All loss and expense of any kind or nature, including attorneys’
and other professional fees, which [Travelers] incurs in connection
with any Bond or this Agreement, including, but not limited to all
loss and expense incurred by reason of [Travelers’]: (a) making
any investigation in connection with any Bond; (b) prosecuting or
defending any action in connection with any Bond; (c) obtaining
the release of any Bond; (d) recovering or attempting to recover
Property in connection with any Bond or this Agreement;
(e) enforcing by litigation or otherwise any of the provisions of this
Agreement; and (f) all interest accruing thereon at the maximum
legal rate.
(Docket ## 15-1 at ¶ 3; 15-4 at ¶ 1). Following defendants’ execution of the Indemnification
Agreement, Travelers issued four surety bonds on behalf of SRS – three public construction
payment bonds and one union benefits bond. (Docket ## 15-1 at ¶¶ 4-5; 15-5).
Travelers has submitted a sworn affidavit of Barbara A. Check, a Bond Claim
Executive employed in Travelers’ Recovery Management Unit, affirming that Travelers paid
bond claims totaling $450,747.63 to various subcontractors, suppliers, and laborers of SRS on
Bonded Projects. (Docket # 15-3 at ¶¶ 1, 15-18, 23-25). Attached to Check’s affidavit is an
itemized statement of the claims paid, which Check has represented is an accurate and complete
list of payments made on the bonds, along with additional records of payment. (Docket ## 15-3
at ¶¶ 16, 23; 15-6; 15-7). According to Check’s affidavit, Travelers also paid $15,099.20 in fees

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to a surety claims construction consulting firm, Loewke & Brill Consulting Group, retained by
Travelers to assist in the investigation of claims on the bonds, and $20,511.20 in fees to its
attorneys in this lawsuit. (Docket # 15-3 at ¶¶ 19-23). Records reflecting payments made to the
consulting firm and to Travelers’ attorneys are attached to Check’s affidavit. (See Docket
## 15-8; 15-9). Defendants have not reimbursed Travelers for any of these payments or fees.
(Docket ## 15-3 at ¶¶ 24-25; 15-1 at ¶¶ 7-12; 1 at ¶¶ 17, 26; 7 at ¶¶ 17, 26).
On August 9, 2016, Travelers filed the pending Complaint seeking reimbursement
of bond payments, fees and expenses from SRS as principal on the bonds and from all
defendants as Indemnitors pursuant to the terms of the Indemnity Agreement. (Docket # 1). On
March 8, 2017, Travelers filed the instant motion for summary judgment seeking judgment
against the defendants on its claim that they breached the Indemnity Agreement. (See Docket
# 15-2 at 4). Travelers seeks judgment in the amount of $465,846.85, consisting of $450,747.63
in claim payments and $15,099.20 in consulting fee payments. (Docket # 15). It also seeks
judgment for attorneys’ fees, the amount to be determined at an inquest. (Id.).
Despite the issuance of scheduling orders setting deadlines for defendants to
respond to Travelers’ summary judgment motion (Docket ## 16, 23), defendants have not
opposed the motion. Indeed, counsel for defendants represented in a letter to this Court dated
July 31, 2017, that defendants “have not submitted opposing paper nor do they intend to contest
Travelers’ motion.” (Docket # 27). Two days later, counsel for Travelers submitted a proposed
Order and Judgment that was reviewed and consented to by counsel for defendants. (Docket
# 28).

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DISCUSSION
Summary judgment is appropriate “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). In reaching this determination, the court must assess whether there are any
disputed material facts and, in so doing, must resolve all ambiguities and draw all reasonable
inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49
(1986); Coach Leatherware Co., Inc. v. AnnTaylor, Inc., 933 F.2d 162, 166-67 (2d Cir. 1991). A
fact is “material” only if it has some effect on the outcome of the suit. Anderson v. Liberty
Lobby, Inc., 477 U.S. at 248; Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 97 (2d Cir.
2000). A dispute regarding a material fact is genuine “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248; see also
Konikoff v. Prudential Ins. Co. of Am., 234 F.3d at 97.
The moving party bears the initial burden of demonstrating the absence of a
genuine issue of material fact, after which the non-moving party must come forward with
sufficient evidence to support a jury verdict in its favor; the motion will not be defeated based
upon conjecture, surmise or the existence of “metaphysical doubt” concerning the facts. Bryant
v. Maffucci, 923 F.2d 979, 982 (2d Cir.) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986)), cert. denied, 502 U.S. 849 (1991). The party seeking to avoid
summary judgment “must do more than make broad factual allegations and invoke the
appropriate statute. The [party] must also show, by affidavits or as otherwise provided in
Rule 56 . . . , that there are specific factual issues that can only be resolved at trial.” Colon v.
Coughlin, 58 F.3d 865, 872 (2d Cir. 1995); see also Driscoll v. Townsend, 60 F. Supp. 2d 78, 80
(W.D.N.Y. 1999).

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As the Second Circuit has explained:
[T]he trial court’s task at the summary judgment motion stage of
the litigation is carefully limited to discerning whether there are
any genuine issues of material fact to be tried, not to deciding
them. Its duty, in short, is confined at this point to issue-finding; it
does not extend to issue-resolution. . . . [I]t must be kept in mind
that only by reference to the substantive law can it be determined
whether a disputed fact is material to the resolution of the dispute.
Gallo v. Prudential Residential Serv., Ltd. P’ship, 22 F.3d 1219, 1224 (2d Cir. 1994).
A party’s failure to oppose a summary judgment motion, standing alone, is not
sufficient to warrant granting the motion; rather, the court must “still assess whether the moving
party has fulfilled its burden of demonstrating that there is no genuine issue of material fact and
its entitlement to judgment as a matter of law.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373
F.3d 241, 244 (2d Cir. 2004). Thus, in evaluating a motion for summary judgment, the court
“must review the motion, even if unopposed, and determine from what it has before it whether
the moving party is entitled to summary judgment as a matter of law.” Id. at 246 (internal
quotations omitted).
Under New York law,2 an indemnity agreement is valid and enforceable. N. Am.
Specialty Ins. Co. v. Montco Constr. Co., 2003 WL 21383231, *5 (W.D.N.Y. 2003). Indeed, “a
surety’s right to indemnification for its losses and expenses under a bond has been consistently
upheld in New York.” Fidelity & Deposit Co. of Md. v. Refine Constr. Co., 1984 WL 536, *3

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The law is well-settled that in cases arising under diversity jurisdiction, the court must apply federal
procedural law and the substantive law of the state in which it sits. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
Thus, in this matter, the Court must apply New York’s choice of law rules. Stuart v. Am. Cyanamid Co., 158 F.3d
622, 626 (2d Cir. 1998) (citing Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108-09 (1945) and Klaxon Co.
v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)), cert. denied, 526 U.S. 1065 (1999). Travelers relies upon New
York law in its motion (Docket # 15-2 at 9-10), and defendants, who have not opposed the motion, do not contest its
applicability. On this record, this Court will apply New York law.

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(S.D.N.Y. 1984) (collecting cases). Where the terms of an indemnity agreement are
unambiguous,
the Court must give effect to the express rights and obligations of
the parties contained therein and such interpretation is an issue of
law that may be determined on a motion for summary judgment.
N. Am. Specialty Ins. Co. v. Montco Constr. Co., 2003 WL 21383231 at *5.
The record before the Court establishes that defendants executed the Indemnity
Agreement in favor of Travelers in consideration for Travelers’ issuance of surety bonds on
behalf of SRS. (Docket ## 1 at ¶¶ 8-11; 7 at ¶¶ 8-11; 15-1 at ¶¶ 1-5; 15-4; 15-5). The terms of
the Indemnity Agreement clearly and unambiguously obligate defendants to repay Travelers for
any “Loss” it sustains under the surety bonds. (Docket ## 15-1 at ¶ 2; 15-4). Specifically,
paragraph 3 of the Agreement provides, “Indemnitors shall exonerate, indemnify and save
[Travelers] harmless from and against all Loss.” (Id.). “Loss” is broadly, but unambiguously,
defined in the Agreement to include the payments for which Travelers seeks reimbursement on
this motion – payments to subcontractors, suppliers and laborers on Bonded Projects and fees
paid to investigate and litigate claims on the bonds. (Docket ## 15-1 at ¶ 3; 15-4 at ¶ 1). The
record further demonstrates that Travelers has the right “in its sole discretion” to determine
whether to pay any claim under the bonds (Docket # 15-4 at ¶ 4) and did pay claims on the bonds
and incur covered losses, which defendants have not repaid. (Docket ## 15-3 at ¶¶ 15-25; 15-6;
15-7; 15-8; 15-9; 1 at ¶ 17; 7 at ¶ 17). Travelers has demonstrated that no material dispute exists
that defendants are liable to it under the Indemnity Agreement. See N. Am. Specialty Ins. Co.,
2003 WL 21383231 at *7 (granting summary judgment to surety where court “finds that
[defendant] breached . . . the Indemnity Agreement by failing to post collateral or otherwise
exonerate and indemnify [surety] for its losses incurred as a result of issuing [b]ond “); Fidelity

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& Deposit Co. of Md. v. Refine Constr. Co., 1984 WL 536 at *4 (“there is . . . no issue of fact as
to the liability of the defendants under the [indemnity] [a]greement[;] [a]ccordingly, summary
judgment will be granted on the issue of liability”).
The Indemnity Agreement further provides that “[a]n itemized, sworn statement
by an employee of [Travelers], or other evidence of payment, shall be prima facie evidence of
the propriety, amount and existence of Indemnitors’ liability.” (Docket ## 15-1; 15-4 at ¶ 3).
“Such clauses [which specify that certain evidence or payments will be considered prima facie
proof of losses] have been upheld as valid under both federal and New York law.” Fidelity &
Deposit Co. of Md., 1984 WL 536 at *2 (citing Transamerica Ins. Co. v. Bloomfield, 401 F.2d
357, 362 (6th Cir. 1968); Standard Accident Ins. Co. v. Higgins, 170 N.Y.S.2d 73, 75 (N.Y. Sup.
Ct. 1957)). Travelers has complied with the terms of the Indemnity Agreement by submitting a
sworn statement by one of its Bond Claim Executives attesting to the type and amount of losses
sustained by Travelers in connection with the surety bonds issued on behalf of SRS and by
submitting an itemized statement of claims paid and claim payment reports and records. (Docket
## 15-3; 15-6; 15-7; 15-8; 15-9). That evidence is adequate to establish that defendants are
liable to Travelers, jointly and severally, for the sum of $465,846.85, comprised of bond
payments totaling $450,747.63 and consultant fees of $15,099.20. Indeed, defendants reviewed
and consented to a proposed order and judgment submitted by Travelers in that same amount.
(Docket # 28). Defendants are also liable for attorneys’ fees in an amount to be subsequently
determined, either by stipulation between the parties or further Order of this Court. If no
stipulation has been filed prior to March 9, 2018, Travelers shall file on or before March 9,
2018, affidavits establishing its calculation of attorneys’ fees to be reimbursed by defendants;
defendants shall respond thereto on or before March 21, 2018.

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CONCLUSION
For the foregoing reasons, Travelers’ motion for summary judgment against
defendants Mary Ellen Belding, Jon R. Belding, and Structural Remediation Services, Inc.
(Docket # 15) is GRANTED. Judgment shall be awarded in favor of Travelers Casualty and
Surety Company of America against defendants, jointly and severally, in the amount of
$465,846.85, and for attorneys’ fees in an amount to be determined by this Court upon
stipulation of the parties or following further briefing.
IT IS SO ORDERED.

s/Marian W. Payson
MARIAN W. PAYSON
United States Magistrate Judge
Dated: Rochester, New York
February 9, 2018

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