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Western Surety Co. v. Rock Branch Mechanical, Inc.

United States District Court, S.D. West Virginia, Beckley Division

November 3, 2017

WESTERN SURETY COMPANY, Plaintiff,
v.
ROCK BRANCH MECHANICAL, INC., et al, Defendants.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE.

         The Court has reviewed Western Surety Company's Motion for Partial Summary Judgment (Document 57) and the Memorandum in Support (Document 58), James B. Clark and Sally L. Clark's Response in Opposition to Western Surety Company's Motion for Partial Summary Judgment (Document 63), Western Surety Company's Reply (Document 66), and all attached exhibits. The Court has also reviewed James B. Clark and Sally L. Clark's Motion for Summary Judgment (Document 86) and the Memorandum of Law in Support (Document 87), Western Surety Company's Memorandum in Opposition to James B. Clark and Sally L. Clark's Motion for Summary Judgment (Document 89), the Reply of James B. Clark and Sally L. Clark (Document 90), as well as all attached exhibits. For the reasons stated herein, the Court finds that the Plaintiff's motion for partial summary judgment should be granted, and the Defendants' motion for summary judgment should be denied.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         The Plaintiff, Western Surety Company ("Western Surety"), initiated this suit by filing a complaint in this Court on October 12, 2016. The Plaintiff named as Defendants Rock Branch Mechanical, Inc. ("Rock Branch"), a West Virginia corporation, James Brandon Clark a/k/a Brandon J. Clark, Danielle M. Clark a/k/a Danielle M. Robinson, James B. Clark, and Sally L. Clark.[1] In its complaint, the Plaintiff alleges breach of contract and seeks indemnification and specific performance based on the Defendants' failure to indemnify it under the terms of an indemnification agreement entered into by the parties. The Plaintiff alleges that the indemnitors, specifically James B. Clark, Sally L. Clark, and Danielle M. Clark, are obligated to reimburse and indemnify it for the losses it has incurred from its issuance of payment and performance bonds. According to the Plaintiff, the Defendants' failure to indemnify it for the payments it has made on the bonds it issued constitutes a breach of the indemnification agreement and entitles the Plaintiff to specific performance.

         Rock Branch was hired by the general contractor Radford & Radford ("Radford") as a subcontractor to perform mechanical and HVAC work on construction of the Student Center at the West Virginia School of Osteopathic Medicine in Lewisburg, West Virginia. Because the project was a bonded one, Rock Branch was required to receive bonds as a subcontractor, and it engaged Western Surety to issue the appropriate subcontract performance and payment bonds. The performance bond was issued to insure Rock Branch performed its subcontract obligations under Radford, and the payment bond was issued to insure all persons and entities who supplied labor and materials to Rock Branch were compensated for their work. Each of the bonds was in the amount of $2, 771, 970.00, and refer to Rock Branch as principal, Radford as obligee, and Western Surety as the surety that issued the bonds. (Mot. for Sum. Judg., Ex. 2A and 2B.)

         Western Surety issued the bonds to Rock Branch in reliance on Rock Branch's execution of a General Agreement of Indemnity ("GAI"). The GAI was signed by Rock Branch through Rock Branch's president, Brandon J. Clark.[2] (Plaintiff's Mot. for Sum. Judg., Ex. 1) (Document 57-2.) It was also endorsed by James B. Clark, Sally L. Clark, Brandon J. Clark, and Danielle M. Clark as individual indemnitors. (Id.) James B. Clark was blind at the time he signed the GAI and therefore required his wife Sally L. Clark to sign for him. (Depo. of Sally L. Clark, at 17:24-25.) In the GAI, Rock Branch and the individual indemnitors agreed to "indemnify and save [Western Surety] harmless from and against any loss which [Western Surety] may pay or incur." (Id. at ¶ 3.) The GAI defines "loss" as including "any and every claim, demand, liability, cost, charge, suit, ... on any amounts due the Surety, and expense, including . . . attorney fees and consultant fees incurred by [Western Surety] as the result of issuing or considering the issuance of a Bond." (Id. at ¶ 1.) The GAI also defines "Event of Default" to include, among other things, "(d) Principal's failure, neglect, or refusal to pay for any labor or materials used in the prosecution of any Bonded Contract. . . ." (Id.)

         On May 12, 2016, Western Surety received a letter from Astar Abatement & Insulation ("Astar"). Astar was a subcontractor performing work for Rock Branch on the Osteopathic school project, and in its letter to the Plaintiff, advised that it was filing a claim against Rock Branch's payment bond for work it had done and for which Rock Branch had not made payment. (Decl. of Jarome Gardocky, ¶ 5.) The Plaintiff also received claims against the payment bond from two other subcontractors of Rock Branch and from a union. (Id.) On May 13, 2016, the Plaintiff received a letter from Radford advising that Rock Branch had abandoned the project and that Radford was noticing a formal claim against Rock Branch's performance bond. (Id. at ¶ 6; Pl.'s Mot. for Sum. Judg., Exhibit 3.) On May 17, 2016, Radford sent a notice of default to Rock Branch, and on May 19, 2016, Radford officially terminated Rock Branch as subcontractor as a result of its failure to promptly carry out work on the project and make timely payments to its subcontractors. (Decl. of Jarome Gardocky, ¶ 6; Pl.'s Mot. for Sum. Judg., Exhibit 4.) According to Defendant James B. Clark, the vice president of Rock Branch at the time of these occurrences, Brandon Clark closed Rock Branch around this same time of May 2016. (Depo. of James B. Clark, at 8:3-8.) The Plaintiff investigated these claims and informed the indemnitors of the receipt of claims against the bonds. Mr. and Mrs. Clark did not respond to the notice of the claims, citing a change of address. The Plaintiff also engaged an outside consulting firm to visit the project site and discuss issues with Radford and Rock Branch's subcontractors and to consult with Rock Branch through Brandon Clark, Rock Branch's president. Based on these investigations, Western Surety made payments on the claims against Rock Branch's payment bonds in the amount of $350, 533.66. (Decl. of Jarome Gardocky, ¶ 5; Pl.'s Mot. for Sum. Judg., Exhibit 5-13.) The Plaintiff has also incurred the expense of $62, 940.47 in attorney's fees, consultants' fees, and expenses in investigating the claims and seeking enforcement of the GAI against the Defendants. (Decl. of Jarome Gardocky, ¶ 11.)

         With respect to Radford's claim on Rock Branch's performance bond, the Plaintiff again conducted an investigation and consulted with Rock Branch through Brandon Clark. Together, the Plaintiff and Rock Branch recommended The Dougherty Company as a replacement contractor to complete the work left unfinished by Rock Branch. The Plaintiff and Radford also agreed that Rock Branch's three subcontractors would continue to perform their remaining work and be compensated from the funds remaining in Radford's contract balance from the subcontract with Rock Branch. Radford, Western Surety, the Dougherty Company, and the three subcontractors jointly executed a Tender and Completion Agreement signifying their agreement. (PI. 's Mot. for Sum. Judg., Exhibit 14.) The construction work on the project is complete, and the Plaintiff and Radford are resolving remaining issues. However, as of the date of the Plaintiff's motion, the Defendant indemnitors had failed to meet their alleged indemnification obligations under the GAI.

         STANDARD OF REVIEW

         The well-established standard in consideration of a motion for summary judgment is that "[t]he court shall grant summary judgment 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)-(c); see also Hunt v. Cromartie, 526 U.S. 541, 549 (1999); Celotex Corp. v. Catrett, 477U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477U.S. 242, 247 (1986); Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). A "material fact" is a fact that could affect the outcome of the case. Anderson, 477U.S. at 248; News & Observer Publ'g Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A "genuine issue" concerning a material fact exists when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. FDIC v. Cushion, 720 F.3d 169, 180 (4th Cir. 2013); News & Observer, 597 F.3d at 576.

         The moving party bears the burden of showing that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp., 477U.S. at 322-23. When determining whether summary judgment is appropriate, a court must view all of the factual evidence, and any reasonable inferences to be drawn there from, in the light most favorable to the nonmoving party. Hoschar, 739 F.3d at 169. However, the non-moving party must offer some "concrete evidence from which a reasonable juror could return a verdict in his favor." Anderson, 477U.S. at 256. "At the summary judgment stage, the non-moving party must come forward with more than 'mere speculation or the building of one inference upon another' to resist dismissal of the action." Perry v. Kappos, No. 11-1476, 2012 WL 2130908, at *3 (4th Cir. June 13, 2012) (unpublished decision) (quoting Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985)).

         In considering a motion for summary judgment, the court will not "weigh the evidence and determine the truth of the matter, " Anderson, 477 U.S. at 249, nor will it make determinations of credibility. N Am. Precast, Inc. v. Gen. Cas. Co. of Wis., 2008 WL 906334, *3 (S.D. W.Va. Mar. 31, 2008) (Copenhaver, J.) (citing Sosebee v. Murphy, 797 F.2d 179, 182 (4th Cir. 1986). If disputes over a material fact exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party, " summary judgment is inappropriate. Anderson, 477U.S. at 250. If, however, the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, " then summary judgment should be granted because "a complete failure of proof concerning an essential element . . . necessarily renders all other facts immaterial." Celotex, 477 U.S. at 322-23.

         When presented with motions for summary judgment from both parties, courts apply the same standard of review. Tastee Treats, Inc. v. U.S. Fid. & Guar. Co., 2008 WL 2836701 (S.D. W.Va. July 21, 2008) (Johnston, J.) aff'd 474 Fed.Appx. 101 (4th Cir. 2012). Courts "must review each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law, " resolving factual disputes and drawing inferences for the non-moving party as to each motion. Rossignol v. Voorhaar,316 F.3d 516, 523 (4th Cir. 2003) (internal quotation marks and citations ...


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