Fidelity and Deposit Company of Maryland v. West Infrastructure Construction LLC et al

Filing 48

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT : The Court grants Fidelity's motion for summary judgment because the undisputed facts show that Fidelity has met all the elements for its breach-of-contrac t claim and that it is entitled to judgment as a matter of law. Fidelity 's evidence is undisputed because West did not respond to the summary judgment motion. Even if it had, the evidence still wouldlikely show that Fidelity is entitled to inde mnification by West under the plain language of their contract. Thus, there still would be no genuine dispute as to any material fact, and Fidelity would remain entitled to judgment as a matter of law. Likewise, Fidelity's detailed accounting of its costs, losses, and expenses- which all appear reasonable and necessary- is not disputed by West. West is contractually obligated to indemnify Fidelity for its "losses"under their contract, which include consulting fees and attorneys� 39; fees. Therefore, the Court grants the motion for summary judgment and awards Fidelity $729,883.87, plus prejudgment and post-judgment interest at the rate of 4.19% on any amounts already paid. (Ordered by Judge James Wesley Hendrix on 11/25/2024) (bmh)

UNITED STATES DISTzuCT COURT
NORTHERN DISTRICT OF TEXAS
LUBBOCK DTVISION

FIDELITY AND DEPOSIT COMPANY
OF MARYLAND,
Plaintiff,

No. 5:19-CV-070-H
WEST INFRASTRUCTURE
CONSTRUCTION, LLC, et al.,
Defendants

MEMORANDIJM OPIMON AND ORDER GRANTING THE PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT
This is a straightforward breach-of-contract case. The defendant, West Infrastrucnrre
Construction, is a construction company. The plaintiff, Fidelity and Deposit Company of

Maryland, is a trust company that issues surety bonds to commercial entities. Fidelity
issued payment and performance bonds for West's construction project. Before Fidelify
issued any bonds, West signed a notarized indemnity agreement in which it agreed to

indemnify Fidelity for all liabiliry and loss related to claims on the bonds. West failed to
pay subcontractors, who made claims on the bonds. Fidelity paid out $407,643.89 to West's
subcontractors and suppliers on the bond claims. Fidelity incurred another $322,239.98 in

consulting and attomeys' fees. Despite the parties'valid contract, West has failed to

indemnifr Fidelity. As explained below, the undisputed facts show that Fideliry has met all
the elements of a Texas breach-of-contract claim and is entitled to judgment as a matter of

law. Therefore, the Court grants summary judgment for Fidelity and awards Fideliry
5729 ,883.87 , plus irterest.

l.

Factual Background

At its core, this is a standard breach-of-contract dispute. The defendants are Mike
West, his wife Theresa West, West Materials, LLC, and West Infrastrucnrre Construction,

LLC (collectively "West"). Dkt. No. 6 at l-2. Mike West's companies are both singlemember LLCs that are engaged in the commercial construction business in West Texas. 1d.

at2-3. Tt'.e plaintiff, Fidelity, is a Maryland corporation with its principal place of business
in Illinois that-among other things-issues surety bonds to commercial entities. 1d at l, 3.
The Court has diversiry jurisdiction under 28 U.S.C. $ 1332. Dkt. No. 7.

ln2017, West entered several contracts with Dahlgren Industrial, Inc. related to the
"Roosevelt New Construction" project il Littlefield, Texas. Dkt. No.46-1 at 2-3. The
project was related to the construcrion of a dairy facility and industrial milk-processing

plant. See Continental Dairy Facilities Southwest, Projea Rooserelt, Littlefeld, Texas, Dahlgren
Industrial, perma.cclH6ED-29H8 (last visited Nov. 25, 2024); Phyllis Riley, New Dairy
Facility for Littlefeld Texas, Clift Land Brokers (Nov. 3, 2015), perma.ccl4LX6-YHFP. West

approached Fidelity to obtain payment and performance bonds in connection with the

consrucdon project. Dkt. No. 6 at 3.
On behalf of West Infrastrucrure Construction, LLC, and West Materials, LLC,

Mike West and Theresa West executed an indemnity agreement in favor of Fidelity as
consideration for the issuance of the requested bonds. Dkt. No. 46-1 at 2. The indemnity
agreement is sigrred, notarized, and dated July ll, 2017. Dkt. No. 6-1. In the contract,
West agreed to "exonerate, indemnifu, and hold [Fidelity] harmless from any and all

liability and Loss, sustained or incurred, arising from or related to: (a) any Bond, @) any

2

Claim, (c) fWest] failing to timely and completely perform or comply with this Agreement,
[and] (d) [Fidelity] enforcing this Agreement . . . ." Id. at l.

Relying on the indemnity agreement, Fidelity issued payment and performance
bonds on behalf of West and in favor of Dahlgren-essentially guaranteeing West would

perform under its construction contract with Dahlgren and pay any subcontractors what
they were owed. Dkt. No. 46-1 at 2-3. Fidelity issued three payment and performance
bonds related to the Roosevelt project. Id. The bonds were for "Site Utilities, " "Asphaltic
Concrete Paving," and "Earthwork," and they were worth over $7 million (West's total
contract price with Dahlgren). 1d.
West did not fuIfi.Il its contractual obligations, and Dahlgren and various
subcontractors of West made claims on the bonds. Id. at3. Dahlgren asserted claims on the
performance bonds. Id. Morsco Supply, RER Plumbing, and Forterra Pipe-all
subcontractors of West-asserted claims on the payment bonds. /d. Fidelity notified West

of the claims and subsequently sent demand letters to West. 1d.
As a result of the payment-bond claims, Fidelity paid out $407,643.89 to West's
subcontractors and suppliers: $256,042.14 to Morsco Supply, $89,100.00 to RER Plumbing,
and $62,501.75 to Forterra Pipe. Id. at 4. Fidelity litigated Dahlgren's performance-bond

claim in state courr and eventually settled. .Id. As a result of that litigation and other legal
matters related to West's refusal to indemnifu, Fidelity has incurred $278,831 .l I in billed

attomeys'fees and $10,552.50 in unbilled or expected attomeys' fees. Id.; Dkt. No. 46-9 at

2-3. Finally, Fidelity has paid $32,856.37 to Nicholson Professional Consulting due to the
bond claims. Dkt. No. 46-l at4. In total, Fidelity seels a damage award of $729,883.87,
plus pre-judgment and post-judgment interest. Dkt. No. 44 at 2.

3

2.

ProceduralBackground
Fidelity filed its first amended complaint in April 2019, asserting a breach-of-contract

claim and seeking to recover its losses, costs, and attomeys' fees under the indemnification
agreement. Dkt. No. 6. The Court found there is diversity jurisdiction under
28 U.S.C. $ 1332. Dkt. No. 7. West answered @kt. No. 12), and the Court issued a

scheduling order @kt. No. l7).

In June 2020, the parties flled a joint motion-which the Court granted-to stay the
case pending the result of state litigation befween Fideliry and Datrlgren. Dkt. Nos. 19; 20.

The Court later concluded that-since Texas law provides that a duty+o-indemnifr question
is justiciable only after the underlying suit has concluded-the case should remain abated

until the state-court action was resolved. Dkt. No. 25. The state case between Fidelity and
Datrlgren was finally tried in February 2023 n the 154th District Court of Lamb County,
Texas; Fidelity and Dahlgren settled in April 2023. Dkl No. 31 at 1. Fidelity and West

notified the Court in September 2023 that they had reached a tentative settlement
agreement. Id.

In January 2024, Fideliry notified the Court that West refused to finalize their
tentative settlement agreement. Dkt. No. 34. Counsel for West stated his belief that a
settlement was still possible and requested two additional weels, which the Court granted.

Dkt. Nos. 36; 37. The parties did not reach a final settlement, and-at Fidelity's requestthe Court lifted the stay and issued a scheduling conference order. Dkt. Nos. 39; 40. The

Court subsequently issued a scheduling order, setting a dispositive-motions deadline of
August 9, 2024. Dkt. No.42 at l. Fidelity timely filed its motion for summary judgment on
August 7, 2024. Dkl Nos. 44-46. West's deadline to respond to Fidelity's motion

4

(August 28, 2024) came and went. SeeLoc. Civ. R. 7.1(e). To date, counsel for West has
not responded to the mofion for summary judgment. After thorouglrly reviewing the

plaintiffs briefing, the relevant and admissible summary judgment evidence, and the
applicable law, the Coun granted the plaintiffs motion for summary judgment on October

15,2024. SeeDkt. No. 47. The Court issues this more detailed Memorandum Opinion and
Order to explain the Court's decision to grant the motion.

3.

Standard of Review
Summary judgment is appropriate when "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). "A genuine dispute of material fact exists if a reasonable jury could
enter a verdict for the non-movin g party ." Doe v. Edgewood Indep. Sch. Dist. , 964 F.3d 35 I ,
358 (5th Cn.2020). The moving parry "bears the initial responsibility of . . .

demonstrat[ing] the absence of a genuine issue of material fac." (Jones v. United States, 936
F.3d 318, 321 (5th Cn. 2019) and "identifring those portions of [the record] which it
believes demonstrate [that] absence" (Celotex Cotp. y. Catrett,477 U.5.317,323 (1986)). In

evaluating a summary judgment motion, the Coun draws all reasonable inferences in the

light most favorable to the nonmoving party . Darden v. City of Fort Worth, 880 F .3d 722, 727
(sth Cir. 2018). The Court must consider materials cited by the parties, but it may also
consider other materials in the record. Fed. R. Civ. P. 56(cX3).

However, "the mere existence of some alleged facrual dispute between the panies

will not defeat an otherwise properly supported motion for summary judgment; the
requkement is that there be no genuine issue of material fac.." Andenon 1). Libeny Inbby, htc.,
477 U.5.242,24748 (1986) (emphasis in original). When the nonmoving parry fails to

5

offer proof conceming an essential element of its case, it "necessarily renders all other facts

immaterial and mandates a finding that no genuine issue of fact exists." Adams v. Trayelers
Indem. Co. of Conn.,465 F.3d 156, 164 (5th Cir. 2006). When the nonmoving party fails to

respond to a summary judgment motion, the court must determine "whether the facts [in
the record] presented by the [movant] create an appropriate basis to enter summary

judgrnent against the [nonmovant]. " .Id. And when that record "could not lead a rational
trier of fact to find for the non-moving party, there is no genuine issue for frial." Matsushita
Elec. Indus. Co. v. Zenith Radio Cotp.,475 U.S. 574, 587 (1986) (cleaned up).

4.

Analysis

A.

The Court grants Fidelity's summary judgment motion because ttre
undisputed facts show Fidelity has met all the elements of its breach-ofcontract claim and is entitled to judgment as a matter of law.

This case is not a close call. West breached its indemnity agreement with Fidelity.
As a result, Fidelity suffered damages. Following the state-court litigation over one of the
bonds, West apparently backed out of a tentarive settlement agreement with Fidelity,

resulting in this motion for summary judgment. West has neither frled a response to the

motion nor presented any evidence in its defense. As Fidelity noted when it requested to
reopen the case following West's refusal to consummate the settlement, "[t]his is a simple

indemnity case and . . . it can be adjudicated on summary judgment." Dkt. No. 34 at 2.
The Court grana Fidelity's motion for summary judgment for the following reasons.

i.

The facts are undisputed ilue to West's failure to respond to
Fidelity's summary judgment motiol.

The Court construes all of Fidelity's evidence and factual assertions as undisputed
because West did not respond to the motion for summary judgment.

6

When the nonmoving party fails to file a timely response to a proper motion for
summary judgment, he cannot satisfy his burden to "designate specific facts showing that
there is a genuine issue for tial." See Stults v. Conoco, lnc.,76F.3d651,656 (sttr Cir. 1996).

"Rule 56 does not impose upon the district court a dury to sift through the record in search
of evidence to support a party's opposition to summary judgnent." Ragas v. Tenn. Gas
Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (quoting Skotak v. Tenneco Resins, 953 F .2d

909,915 n.7 (5th Cn. 1992).

Although a court may not enter a "default" summary judgment when the
nonmoving party fails to respond to a motion for summary judgment, the nonmoving party
is relegated to his unswom pleadings, which do not constitute summary judgment evidence
See Evedey v. MBank Dall., 843 F .2d 172, 174 (sth Ck. 1988); Bookman v. Shubzda,945 F .

Supp. 999, 1002 (N.D. Tex. 1996). In that situation, the court may accept the moving

party's evidence as undisputed. Fed. R. Civ. P.56(eX2); Evetsley,843 F .2d at 174. Thus,

"[a] motion for summary judgment cannot be granted simply because there is no
opposition," but "a court may grant an unopposed summary judgment motion if the
undisputed facts show that the movant is entitled to judgment as a matter of law."
Franciscan All., Inc. r Azar,414 F. Supp. 3d928,941n.4 (N.D. Tex. 2019) (quonng Day v.
I|'ells Fargo Bank Nat Ass'n,768 F.3d 435,435 (5th Cir. 2014).

In other words, the Court must conduct a basic Rule-56 analysis even though
Fidelity's motion for summary judgment is unopposed. See Hibenia Nat'l Bank v.
Administrucion Cent. 5.A.,77 6 F .2d 1277 , 1279 (5th Cir. 1985). The Court is free to "grant

an unopposed summary judgment motion if the undisputed facts show that the movant is

entitled to judgment as a matter of law." Day,768 F.3dat435; see also Eversley,843 F.2d at

7

174. },J/Itd, when the nonmoving party fails to respond, the Court may tleat the moving
party's facs as "undisputed for purposes of the motion." Fed. R. Civ. P. 56(eX2); Erersley,
843 F .2d at 174.

Local Rule 7.1(e) states that "[a] response and brief to an opposed motion must be
fi.led within 2l days from the date the motion is fi.led." Fidelity timely filed its motion on

August 7. See Dkrt. No. 44. West had until August 28 to file its response. It failed to do so,
making Fidelity's motion unopposed. Therefore, the Court accepts Fidelity's facts-as
presented in its brief and supported by the evidence in is appendix in support of its morion

(Dkt. Nos. 4546)-as undisputed. See Bookman,945 F. Supp. at 1002. Because West did
not respond to the motion-nor present any other facts or eyidence in the record-it is
relegated to its answer (Dkt. No. l2), which does not constitute competent summary

judgment evidence. Booktrwn,945 F. Supp. at 1002; see also Wallace v. Terus Tech Univ.,80

F.3d 1042, 1047 (sth Cir. 1996) ("plleadings are not summary judgment evidence.").
Regardless, West's answer contails only generic denials and the invocation of bad

faith, waiver, and justification as affirmative defenses. .lee Dkt. No. 12 passim. Even if this
bare invocation of affirmative defenses constituted summary judgment evidence, West has

made no showing sufficient to establish a genuine dispute of material fact surrounding those

affirmative defenses. See Celotex,477 U.S. at 322-23. Because West bears the burden of
proof for any affirmative defenses, its failure to offer proof conceming them "mandates a
finding that no genuine issue of fact exists." Adams,465F.3dat 164.

Although the Court has no duty to sift through the record in search ofevidence
favorable to West, it has done so anyway and finds none. See Ragas, 136 F.3d at 458. The

8

record is devoid of any facts or evidence disputing the allegation that West breached the

indemnity agreement and is liable for damages.
To sum up, when the nonmovant has not responded, "the [C]oun may not enter a

'default' summary judgment, [but] it may accept the evidence submitted by [the movant] as

undisputed." WUMLifeIns.Co.v. Iang,227F.Supp.2d609,614(N.D.Tex.2002)(citing
Bookman,945 F. Supp. at 1002). The Court does so here. Because the Court construes the
facts and evidence presented by Fidelity as undisputed, it therefore finds there is no genuine

dispute as to any material fact. See Fed. R. Civ. P. 56(a).

ii.

The undisputed facts show tlat Fidelity has met all ttre elemetrts of
its Texas breach-of-contract claim.

Even after it finds there is no genuine dispute as to any material fact, the Court still
must complete the Rule-56 analysis by ensuring that the undisputed evidence supports each
element of a Texas breach-of-contract claim. Here, the Court concludes that it does.

Fidelity has met every element of its claim and is entided to judgment as a matter of law.
When deciding an issue of Texas law, federal courts follow the lead of Texas courts.

Mymv. Crestone Intem., LLC,l21 F. App'x 25,28(5d1Cir.2005). Specifically, in contract
disputes, federal courts "apply Texas law to interpret the contract."r Phila. Indem. Ins. Co. v.
Reytech Servs., ZIC, No. 20-11274,2021WL4142390, at *2 (5th Cir. Sept. 10, 2021) (citing

Amerisure Ins. Co. r,. Navigaton Ins. Co.,611F.3d299,309-10 (5th Cir. 2010).

I Fidelity assumes that Texas law applies. Because there is no choice-oflaw clause in the contract,

the Court agrees. A federal court must follow the choice-of-law rules of the state in which it sits.
Goosehead Ins. Agency v. Williams Ins. & Consuhing, lnc.,533 F. Supp. 3d 367,381-82 (N.D. Tex.
2020) (ating Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487 , 496 ( 1941)). When there is no choice-oflaw clause in a contract, Texas courts apply the Restatement (Second) of Conflict ofLaws $ 188's
"most signif,rcant relationship test." See id. Here, the Court finds that Texas has the most significant
relationship to the substantive issue in this case because the contract was made here, the contract
concerns a construction project here, most ofthe parties to the contract are domiciled here, and the
bonds were issued to Texas residents. See id. at 382-83.

9

Under Texas law, courts "must give [a contract's] words their plain meaning,

without inserting additional provisions into the contract. " Id. (quoting Liberty Mut. Ins. Co.
v. Hisaw & Assocs. Gm. Contraaors, Inc.,5l4 F. App'x 407, 411 (sth Cir. 2013) (quoting NarT

(Jnion Fire Ins. Co. of Pittsburg, Pa. v. Crocker,246 S.W.3d 603, 606 (Tex. 2008))). Couru

"must also strive to 'ascertain and give effect to the intent ofthe parties as that intent is
expressed in the contract."' Liberty Mut. Ins., 514 F. App'x at 41 1 (citing Seagull Energ E &
P, Inc. v. Eland Energt, (nc.,207 S.W.3d 342, 345 (Tex. 2006)).

"Indemniry agreements are read as any other contract under Texas law." Phila.
Indem. Ins.,202l WL 4142390, at *2 (citing lssociated Indem. Corp. v. CAT Cofltracting, Inc.,
964 S.W.2d 276,284 (Tex. 1998)). An indemnity agreement is simply "a contractual

promise to 'hold the indemnitee harmless against either existing andlor future loss

liability."' Merclts. BondingCo. v. Bumside, No.4:22-CV-3651,2023WL4140455, at"2-3
(S.D. Tex. June 21, 2023) (quotng Dresser Indus. Inc. r Page Petroleum lnc.,853 S.W.2d 505,
508 (Tex. 1993)). It is an enforceable contract and should be construed under the normal

rules of contract interpretation. 1d. Therefore, a surety's claim for breach of an indemniry
agreement is a variation of a claim for breach of contract . Id . at *3 .

Broadly speaking, in Texas, "[t]he essential elements in a suit for breach ofcontract
are (1) the existence of a valid contract; (2) the plaintiff performed or tendered perfornance;

(3) the defendant breached the contract; and (4) the plaintiffwas damaged as a result of the

breach." Id. (quoting lss ociated Auto. Inc. r Acceptance Indem. Ins.Co.,705 F.Supp.2d714,
723 (5.D. Tex. 2010)); see also Arch Ins. Co. v. W.M Masten & Assoa.,Iac., No. 3:12-CY-2092'

M, 2013 WL 145502, at *4 (N.D. Tex. Jan. 14,2013).

l0

More specifically, under Texas law, to prevail on a breach-of-indemnity-agreement
claim, the plaintiff must establish five elements: "(1) a contractual indemnity agreement
existed between the [parties]; (2) the agreement obligated [defendant] to indemnifr

[plaintiff] in the event claims were made on the bonds issued . . .; (3) claims were made on
the bonds issued . . .; (4) all conditions precedent for recovery had occurred, been

performed, waived, or excused; and (5) [plaintiff] has been damaged." Arch Ins. Co.,2013

WL 145502, at *4 (quoting Transamerica Ins. Co. v. Avenell,66 F.3d 715,719 (5th Cir. 1995).
As with contracts generally in Texas, the Texas Supreme Court requires that indemnity
agreements be strictly construed to give effect to the panies' intent, as expressed ir the

agreement. Id. (cittng Associated Indem. Cotp., 964 S.W.2d at 284).

In sum, a valid indemnity agreement is a normal contract in Texas, and to claim a
breach of one is to make a breach-of-contract claim. Based on the agreement's text and the
undisputed evidence, the Court concludes that Fidelity has met all five elements of its claim.

a.

Fidelity has met the first and second elements of its claim.

The Court begins with the plain language of the contract. The Court must give the
contract's words their plain meaning and strictly construe the contract without attempting to
insert any additional provisions. Phila. Indem. Ins. Co., 2021 WL 4142390, at *2; Arch Ins.
Co.,2013 WL 145502, at *4.

Although " [i]ndemnity agreements are read as any other contract under Texas law,"
there are a few specific-yet basic-requirements regarding indemnity ageemerfis. Phila.
Indem. Ins. Co.,2021WL 4142390, at*2. "In the Fifth Circuit, an indemnitee may recover

indemnity if he is able to demonstrate that . . . the indemnitee's claim is based upon a
written contract of insurance or indemnification." Hartford Fire Ins. Co. v. 3i Constr., LLC,

ll

No.3:16-CV-992-M,2017WL3209522, at*3 (N.D. Tex. May 18,2017)(cit;ngExxonCory.
v. St. Paul Fire & Maine Ins. Co.,l29 F.3d 781, 785 (5th Cn. 1997)). To be enforceable, the

indemnity agreement also must provide fair notice and be conspicuous. XL Speciahy Ins. t
Kiewit Ofthore Sens., 336 F. Snpp.2d 673,67+-75 (5.D. Tex. 2004) (cittng Dresser Indus.,853
S.W.2d at 509). Conspicuousness requfes that something must appear on the face of the
conEact to attract the attention of a reasonable person to the indemnity provisions. 1d. at
675.

Here, there is a written contract that is valid and unambiguous. It is labeled

"General Indemnity Agreement" in bold print. Dkt. No. 6-l at 1. It identifies West
Infrastructure Construction, West Materials, Mike West, and Teresa West as

"Indemnitors." Id It identifies Fidelity as "Surety." Id. Paragraph 2 is labelled

"INDEMNITY" in bold pirr:,lt. Id. The contract is signed by the defendants in multiple
places, and it is notarized. Id. at 6-8. The indemnity agreement is a written contracr that

provides fair notice and conspicuously identifies itselfas an indemnity agreement. Id.atl.
Paragraph 2 is the critical porrion of the agreement. It provides the following:

Indemnitors shall exonerate, indemnifu, and hold Surety harmless from any
and all liability and Loss, sustained or incurred, arising from or related to:
(a) any Bond, (b) any Claim, (c) an Indemnitor failing to timely and completely
perform or comply with this Agreement, (d) Surery enforcing this Agreement,
or (e) any act of Surety to protect or procure any of Surety's rights, protect or
preserve any of Surery's interests, or to avoid, or lessen Surery's liability or
alleged liability.
1d at 1. Also important, paragraph 30 of the agreement de|rnes "Loss" as:
[A]11 premiums due to Surefy and any and all liability, loss, Claims, damages,

couft costs and expenses, attomeys' fees (including those of Surety),
consultant fees, and all other costs and expenses, including but not limited to
any additional or extra-contractual damages arising from Surety's Settlement
of any Claim. Pre-judgment and post-judgment interest shall accnre from the

t2

date of any payment made by Surery with respect to any of the foregoing at the
maximum default rate permitted by law.

Id. at 5.
Based on the plain language ofthe contract and the provisions within its four

comers, the Court concludes that "a contracnral indemnity agreement existed between

[Fidelity and West]" and that "the agreement obligated [West] to indemni$ [Fidelity] in the
event claims were made on the bonfu issued." Arch Ins. Co.,2013WL 145502, at*4

(quoting Transamerica Ins. Co., 66 F .3d at 719).

b.

Fidelity has met the ttrird element of i15 6laim.

Fidelity's undisputed evidence shows that "claims were made on the bonds issued."
Id.; see Dkl Nos. 46-1 at 2-4 (affidavit of James Hammel, claims counsel for Fidelity); 46-3;

464;46-5 (payment and performance bonds). It is undisputed that Dahlgren, Morsco
Supply, RER Plumbing, and Forterra Pipe made claims on the bonds and that Fidelity paid

out $407,643.89 on those bonds. Dkt. No. 46-l at 4. Accordingly, the Court concludes that

Fidelity has met this element of its claim.

c.

Fidelity has met the fourth element of its claim.

The evidence shows that "all conditions precedent for recovery had occuned, been
performed, waived, or excused. " Arch Ins. Co., 2013 WL 145502, at *4 (quoting
Transamerica Ins. Co. , 66 F .3d at 7 19). Fidelity asserts in its First Amended Complaint that

"[a]ll conditions precedent to Surety's entitlement to assert the above claims and causes of
action have occurred or have been satisfied, waived, or excused." Dkt. No. 6 at 8. West
denies that assertion based solely on is lack of krowledge sufficient to admit or deny it.

Dkt. No. 12 at 5. But neither Fidetry's complaint nor West's answer is summary judgment
evidence. See Wallace,80 F.3d at 1047 .

13

More importantly, there are no conditions precedent outlined in the agreement. Dkt.
No. 6-1. On the contrary, the agreement requires West to "promptly, upon demand, make
payment to [Fidelity] as soon as liability or Loss exists, whether or not [Fidelity] has made
any payment." Id. atl. T\e agleement also requires West to "promptly, upon demand,
procure the ful1 and complete discharge of [Fidelity] from all Bonds and all liability in

connection with such Bonds." Id. And Fidelity did make valid demands of West under the

contract. Fidelity sent demand letters to West's attomeys in both October and December
2018. Dkt. Nos.46-6; 46-7. Those letters are signed by Fidelity's counsel and contain
sufficient detail to provide West with fair notice of its obligations under the contract. Id.

Fidelity has been patient. It sent demand letters and attempted to negotiate for
several months before filing its federal lawsuit. Sea Dkt. No. 1 (original complaint filed

April 12, 2019). Then Fidelity had to litigate one of the bond claims in state court before
being able to re-engage in negotiations with West regarding ildemnification. After West
backed out of their settlement agreement, Fidelity twice had to request this Court to reopen
t}te case. See Dkt. Nos. 34; 39. Fidelity has done more than is required of it to be

indemnified under the agreement; the Court concludes that there are no conditions
precedent barring immediate indemnification.2

2

Funher, under paragraph 16 ofthe contract, Fidelity is entitled to immediate specific performance
and injunctive relief upon non-payment. Dkt.No.6-1 at 3 ("Surety shall be entitled to injunctive
reliefand/or specific performance, and Indemnitors waive any claims or defenses to the contrary.").
FederaI courts in Texas appear willing to grant specific performance and preliminary injunctions to
sureties and force indemnitors to pay in these types of cases. See, e.g., Hartfonl Fire Ins. Co.,2017 WL
3209522, at*5; Merchs. Bonding Co., 2023 WL 4140455, at *6.

t4

d.

Fidelity has met the fiftt element of its claim.

Finally, Fidelity's undisputed evidence demonstrates that it has been damaged
because of West's breach. See, e.g.,Dkl No. 46-l at 4. Fidelity paid out over $407,000 in

bond claims and almost $312,000 in attomeys'and consultants' fees. Id. Fidelity is merely
seeking what it is entitled to under the indemnity agreement-to recoup its costs and be

made whole. While the amount and reasonableness of Fidelity's losses are addressed

below, the Court concludes as a preliminary matter that Fidelity has suffered some financial

loss-and therefore been damaged-due to West's breach of the agreement.

In sum, the Court concludes that the undisputed evidence shows Fidelity has met
every element of its claim for breach of an indemnity agreement under Texas law.

Therefore, the Court concludes that Fidelity is entitled to judgrnent as a matter of law and to
damages.

B.

The Court awards Fidelity $729,883.87 in d.mages because Fidelity is
entitled to it under the indemnity agreement, atrd Fidelity's evidence of its
financial losses is detailed and undisputed.

The Court awards Fidelity 5729,883.87 in damages, plus pre-judgment and postjudgment interest as permiued by law. See Post Judgmettt lfltelest Raras, United States District
Court for the Northem District of Texas (Nov. 25, 2024 09:00 AM), perma.cc /B2JW -8LA7
(listing post-judgment interest rate as 4.19o/o on the date of the Court's Order-October 15,
2024). The undisputed facts establish that Fidelity paid out $407,643.89 on the payment
bonds: $256,042.14 to Morsco Supply, $89,100.00 to RER Plumbing, and $62,501.75 to

Fortena Pipe. Dkt. No. 46-l at 4. They also show that Fidelity paid an additional
$32,856.37 in reasonable and necessary costs to Nicholson Professional Consulting for

l5

"construction consulting services" because of West's breach. Id. Finally, the facts show
that Fidelity has already paid $278,831. I I ir billed attomeys' fees and costs related to this

acion. Id. In addition to the $278,831.11 in attomeys' fees already paid out, Fidelity has
incurred $7,552.50 in unbilled attomeys' fees, and it reasonably anticipates incurring
another $3,000 in attomeys' fees related to its motion for summary judgment. Dkt. No. 45

at7:Dkt. No.46-9 at 2-3. This brings the total loss due to attomeys'fees and expenses to
$289,383.61. Therefore, the total loss incuned by Fidelity is the sum of: $407,643.89 (three
bond payments) + $32,856.37 (consulting fees) + $289,383.61 @illed and unbilled attomeys'
fees) = 5729,33r.tr.

i.

Fidelity is entifled to reimbursement for aII its losses and
expenses under the indemnity agreement.

The Court awards $729,883.87 in damages because the plain language of the contract
states Fidelity is entitled to it. First, the contract requires West to indemniff Fidelity for all

liability and loss arising from any bond, claim, or action Fidelity is forced to take to enforce
the agreement and protect its rights. Dkt. No. 6-l at 1. Fidelity's undisputed evidence
shows that Fideliry paid out on three separate payment and performance bonds. Dkt. Nos.

46-3;464;46-5. Fideliry has included the bonds in the appendices to its motion for
summary judgment; they plainly qualifu as "any [b]ond" under the indemnity agreement,

just as the claims made on them by the subcontractors West neglected to pay qualiff as "any

[c]laim." Dkt. No.6-1 at 1.
Second, all of Fidelity's fees and expenses also qualifu as "losses" under the plain

language of the indemnity agreement. Dkt. No. 6-l at 5. Under the agreement, "loss"
includes "court costs and expenses, attomeys' fees (including those of Bidelity]), [and]

t6

consultant fees." Id. And, of course, "loss" includes "loss, [c]laims, [and] damages "
resulting from payment on the bonds. Id.

Third-even if Fidelity's evidence were disputed-the indemnity agreement clearly
states that "[a]n itemized statement of Loss, swom to by any officer of [Fidelity], or the

voucher or other evidence ofany payment, shalTbe pimafacre evidence of the fact, amount,
and extent of the liability of Indemnitors for such Loss." 1d. at I (emphasis in original).

Fidelity has provided almost 400 pages ofreceipts and invoices detailing the consulting and
attomeys'fees it paid. Dkt. Nos. 46-8;46-10. Fidelity has also provided affidavis from
James Hamel, in-house counsel for Fideliry, and Ryan Delaune, outside counsel with

Clark Hill for Fidelity, attesting to the amount and reasonableness of those fees. Dkt. Nos.

46-1;46-9. In short, Fidelity has met the requirements for listing its losses under the
indemniry agreement. Even if West had responded to Fidelity's motion (thus making

Fidelity's evidence disputed), Fidelity has provided the prima facie evidence required under
the contract. The amount of Fidelity's costs is not disputed. Based on is detailed and
undisputed evidence, Fidelity is entitled to the $729,883.87 in damages that it requests. Sea

Dkt. Nos. 46-1 through 46-10.

ii.

Fidelity's attorneys'fees and expenses were reasonable.

Even if West were not liable for Fidelity's attomeys' fees on a contracnral basis and
the Court had to calculate the lodestar to conduct a reasonableness analysis, the Court still

would award the amount sought. See generally Hensley v. Eckerhart, 461 U.S. 424,429,433
(1983) (discussing when a prevailing party should recover its attomeys' fees and the analysis

to determine their reasonableness); Jimenez r. IY'ood County,62l F.3d 372,379-80 (5th Cir.
2010) (explaining that courts are required to calculate the lodestar-the "number of hours

17

reasonably expended multiplied by the prevailing hourly rate in the community for similar

work"-to determine if an attomey's fee is reasonable).
Here, an exhaustive reasonableness analysis is unnecessary because West is

contractually obligated to reimburse Fidelity's attomeys' fees. Dkt. No. 6-1 at 1. The Court
awards attomeys'fees to Fidelity as covered "losses" based on the plain language of the

indemnity agreement. See id. at 5; cf. Phila. Indem. Ins. Co. , 2021 WL 4142390, at * 14
(affirming district court's grant of summary judgment "in view of the plain meaning" of an
indemnity agreement requiring indemnification for "claims in excess of $2,000,000 plus
interest and attomeys' fees on the Bonds").

Fidelity's attomeys' fees are, however, quite reasonable. First-due to West's failure
to indemnifr Fideliry according to the agreement-Fideliry had to engage Clark Hill PLC
for legal services on this matter for over six years. See Dkt. No. 46-9. This legal work
included an entirely separate negotiation and trial process with Dahlgren Industrial in Texas
state courts over payment of the performance bond on behalf of West. In short, this case
has likely ilvolved significant time and effort from Fidelity's attomeys. Second, the hourly

rates paid by Fidelity to its aftomeys were more than reasonable. The hourly rates varied

between $100 per hour and $300 per hour. .Sea, e.g., Dkt. No.46-10 at4 (listing rates of $100
per hour, $225 per hour, and $300 per hour). Clark Hill is an Amlaw-200 firm with over 25

offices and 750 attomeys, including dozens of attomeys at its Dallas office. Clark Hill,
perma.cc/ 4YXT-2NRD (last visited Nov.25,2024). Ryan Delaune, partner at Clark Hill,
has been a licensed attomey since 2010. Dkt.No.46-9atl. His hourly rate is recorded as

$300 on several of the invoices submitted by Fidelity. See, e.g., Dkt. No. 46-10 passim. For

an experienced attomey at a law firm of this size, $300 per hour is more than reasonable.

18

The Court need not calculate the lodestar or conduct the typical reasonableness
analysis to award attomeys' fees because West is already contracnrally obligated to pay

Fidelity's attomeys' fees under the agreement. SeeDkt. No. 6-1 at l, 5. In any case, as
demonstrated by the briefanalysis above, the Court nevertheless concludes that Fidelity's

attomeys' fees were reasonable.

iii.

Fidclity is also entifled to pre-judgment and post-judgment interest.

Fidelity is also entitled to the pre-judgment interest and post-judgment interest it
requests. See Dkt No. 6 at 8; Dkt. No. 45 at 8 (requesting "the maximum rate allowed by

law"). The indemnity agreement states that " [p]reiiudgment and post-judgrnent interest
shall accnre from the date of any payment made by [Fidelity] with respect to any of the
foregoing at the maximum default rate permitted by law." Dk. 6-l at 5. "[T]he foregoing"
includes all payments for "loss, [c]laims, damages, court costs and expenses, attomeys' fees

(including those of [Fideliry]), [and] consultant fees." Id. So, Fidelity is contractually
entitled to pre-judgment and post-judgment interest on its entire damage award of
$729,883.87-except for any amount of the approximately $10,552.50 in attomeys'fees it
has not yet paid. Dkt. No. 45 at 7. And both pre-judgment and post-judgment interest are
necessary to equitably reimburse Fideliry for its losses.

The Court awards post-judgment interest at the rate of 4.19%. See Post Judgment
Interest Rates, United States District Court for the Northem District of Texas (Nov. 25, 2024
09:00 AM), perma.cclB2JW-8lA7 (listing post-judgment interest rate on October 15,2024
as 4.19%). This is the post-judgment interest rate-based on 28 U.S.C. $ 1961(a) and

specified by the Northem District of Texas-that was in effect at the time the Court granted

Fidelity's motion for summary judgment (Dkt. No. 47). See id.

t9

The Court awards pre-judgment interest at the same rate of 4.19o/o. See id. "State law
govems the award of prejudgment interest in diversity cases." Meaux Surfece Prot., Inc.

t

Fogleman,607 F.3d 16l,l72 (5th Cir. 2010).3 Therefore, here, the Court look to Texas law

to set the pre-judgment interest rate. Under Texas law, when the rate is not specified in the
contract, "prejudgment interest in a breach of contract case is calculated as simple interest
and is based on the posdudgment interest rate applicable at the time of judgment." Siam v.

Mountain Vista Builder,5,t4 S.W.3d 504, 514 (Tex. App.-El Paso 2018, no pet.); see abo
Tex. Fin. Code. $ 304.103 ("The prejudgment interest rate is equal to the postjudgment
interest rate applicable at the time of the judgment."). Because 4.19o/o was the post-

judgment interest rate in the Northem District of Texas when the Court granted the
summary judgment motion @kt. No. 47), the Court follows Texas law and orders pre-

judgment interest at the same rate of 4.19%.

In sum, the Coun awards Fidelity $729,883.87 in damages-plus pre-judgment and
post-judgment interest at the rate of 4.19o/o on any amounts already paid-because Fidelity
is entitled to that amount under the plain language of the indemnity agreement, and the

evidence of its costs, expenses, and losses is detailed and undisputed.

I In most cases, granting pre-judgment interest should be "almost automatic." Triton Marine Fuels,
Ltd. t. M/ V Pacific Chukotka,67l F. Supp. 2d 753,7e (D. Md. 2009). To deny pre-judgment
interest, a court generally "must find circumstances that would make it inequitable for the losing
party to pay." ING Bank, N.Y. v. M/V Charana Naree,446 F. Supp.3d163,176 n.8(W.D. La.2020)
(citrng Firsr Bank & Tr. v. Knachel,999 F .2d 107, 108 (5th Cn. i993). Such circumstances include
unwarranted delay in bring suit, a genuine dispute regarding liability, and a bad faith claim. Id.
None ofthese circumstances is present here. Therefore, even if this were not a diversiry case, the
Court would have "broad discretion" in the pre-judgment interest rate it sets and still would look "to
state law, or to other reasonable guideposts indicating a fair level of compensation ." Id. at l7l .

20

5,

Conclusion
The Court grants Fidelity's motion for summary judgment because the undisputed

facts show that Fidelity has met all the elements for its breach-of-contract claim and that it is

entitled to judgment as a matter of law. Fidelity's evidence is undisputed because West did
not respond to the summary judgment motion. Even if it had, the evidence still would

likely show that Fidelity is entitled to indemnification by West under the plain language of
their contract. Thus, there still would be no genuine dispute as to any material fact, and

Fidelity would remain entitled to judgment as a matter of law. Likewise, Fidelity's detailed
accounting of its costs, losses, and expenses-which all appear reasonable and necessary-is
not disputed by West. West is contractually obligated to indemnifu Fidelity for its "losses"
under their confract, which include consulting fees and attomeys' fees. Therefore, the Court
grants the motion for summary judgment and awards Fidelity $729,883.87, plus pre-

judgment and post-judgment interest at the rate of 4.19o/o on any amounts already paid.
So ordered onNoue ber

Z{j:024.
JAMES WESL
HENDRIX
UNITED TATES DISTRICT JUDGE

2l