First National Insurance Company of America v. Hunt et al
Filing
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ORDER signed by Judge William B. Shubb on 6/2/11 GRANTING 20 Motion for Summary Judgment on its claim for breach of indemnity agreement in the amount of $446,164.04. (Donati, J)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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NO. CIV. 2:10-1449 WBS GGH
FIRST NATIONAL INSURANCE
COMPANY OF AMERICA,
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MEMORANDUM AND ORDER RE:
MOTION FOR SUMMARY JUDGMENT
Plaintiff,
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v.
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GREGORY L. HUNT, individually
and doing business as Hunt’s
Excavating; CECILIA HUNT, an
individual, and ACTION
CONSTRUCTION CO., a Nevada
corporation.
Defendants.
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Plaintiff First National Insurance Company of America
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(“First National”) brought this action, alleging that defendants
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Gregory L. Hunt, individually and doing business as Hunt’s
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Excavating, Cecilia Hunt, and Action Construction Co. breached an
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indemnity agreement.
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judgment pursuant to Federal Rule of Civil Procedure 56 on its
First National now moves for summary
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claim for breach of indemnity agreement.1
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file an opposition or statement of non-opposition to the motion,
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as required by Local Rule 230(c), or a response to plaintiff’s
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statement of undisputed facts, as required by Local Rule 260(b).
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I.
Defendants failed to
Standard
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Summary judgment is proper “if the movant shows that
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there is no genuine dispute as to any material fact and the
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movant is entitled to judgment as a matter of law.”
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P. 56(a).
Fed. R. Civ.
A material fact is one that could affect the outcome
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of the suit, and a genuine issue is one that could permit a
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reasonable jury to enter a verdict in the non-moving party’s
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favor.
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(1986).
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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
Where the moving party bears the burden of proof at
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trial, it must come forward with evidence which would entitle it
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to a directed verdict if the evidence were uncontroverted at
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trial.
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Once the moving party meets its initial burden, the burden shifts
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to the non-moving party to “designate ‘specific facts showing
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that there is a genuine issue for trial.’”
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Catrett, 477 U.S. 317, 324 (1986) (quoting then-Fed. R. Civ. P.
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56(e)).
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than simply show that there is some metaphysical doubt as to the
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material facts.”
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Corp., 475 U.S. 574, 586 (1986).
Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992).
Celotex Corp. v.
To carry this burden, the non-moving party must “do more
Matsushita Elec. Indus. Co. v. Zenith Radio
“The mere existence of a
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Plaintiff’s Complaint also includes claims for specific
performance, injunctive relief, and Quia Timet. (Docket No. 2.)
Such relief is not sought in the instant motion.
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scintilla of evidence . . . will be insufficient; there must be
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evidence on which the jury could reasonably find for the
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[non-moving party].”
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Anderson, 477 U.S. at 252.
A party opposing summary judgment who “fail[s]
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specifically to challenge the facts identified in the [moving
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party’s] statement of undisputed facts . . . is deemed to have
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admitted the validity of [those] facts . . . .”
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548 U.S. 521, 527 (2006).
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II.
Beard v. Banks,
Relevant Facts
Because defendants failed to respond to plaintiff’s
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motion, the court takes the facts as presented by plaintiff as
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undisputed.
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General Agreement of Indemnity for Contractors (“Indemnity
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Agreement”).
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Indemnity Agreement begins by stating:
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On September 11, 2008, the parties entered into a
(Wilcox Decl. ¶ 6, Ex. 1 (Docket No. 23).)
The
THIS AGREEMENT is made by the Undersigned in favor of the
Safeco
Insurance
Companies
for
the
purpose
of
indemnifying them from all loss and expense in connection
with any Bonds for which any Safeco Insurance Company now
is or hereafter becomes Surety for any of the following
as Principal (hereinafter referred to as Contractor):
Action Construction Co.; Hunt’s Excavating (Gregory L.
Hunt, Owner).2
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(Id. Ex. 1.)
The agreement is signed by Gregory L. Hunt and
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Cecilia Hunt individually and by Gregory L. Hunt as President of
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Action Construction Co.
(Id.)
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As relevant to this motion, the Indemnity Agreement
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contains the following provisions:
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INDEMNITY TO SURETY: Undersigned agree to pay to Surety
upon demand:
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First National is one of the Safeco Insurance Companies
listed as “Surety.” (Wilcox Decl. Ex. 1 (Docket No. 23).)
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1. All loss, costs, and expenses of whatsoever kind and
nature, including court costs, reasonable attorney fees
(whether Surety at its sole option elects to employ its
own attorney, or permits or requires Undersigned to make
arrangements
for
Surety’s
legal
representation),
consultant fees, investigative costs and any other
losses, costs or expenses incurred by Surety by reason of
having executed any Bond, or incurred by it on account of
any Default under this agreement by any of the
Undersigned, or by reason of the refusal to execute any
Bond. In addition the Undersigned agree to pay to Surety
interest on all disbursements made by Surety in
connection with such loss, costs and expenses incurred by
Surety at the maximum rate permitted by law calculated
from the date of each disbursement;
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. . .
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With respect to claims against Surety:
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1. Surety shall have the exclusive right for itself and
the Undersigned to determine in its sole and absolute
discretion whether any claim or suit upon any Bond shall,
on the basis of belief of liability, expediency or
otherwise, be paid, compromised, defended or appealed.
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2. Surety may incur such expenses, including reasonable
attorneys’ fees, as deemed necessary or advisable in the
investigation, defense and payment of such claims and
completion of any Contract with respect to which Surety
has issued any Bond.
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3. Surety’s determination in its sole and absolute
discretion of the foregoing shall be final and conclusive
upon the Undersigned.
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4. An itemized statement of loss and expense incurred by
Surety, sworn to by an officer of Surety, shall be prima
facie evidence of the fact and extent of the liability of
Undersigned to Surety in any claim or suit by Surety
against Undersigned.
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. . .
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(Id.)
Following the execution of the Indemnity Agreement,
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Hunt’s Excavating entered into two public works contracts
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(“Projects”), which required that Hunt’s Excavating furnish the
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respective project owners with a performance bond or a labor and
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materials payment bond.
(Id. ¶ 9.)
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First National issued
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certain performance and payment bonds on behalf of Hunt’s
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Excavating (“Bonds”).
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suppliers, and “materialmen” providing labor and materials on the
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Projects alleged that Hunt’s Excavating defaulted on certain
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payment obligations and made claims against the Bonds.
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11.)
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claim against the contract funds due from the Truckee Donner
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Utility District, the obligee of the Bonds.
(Id. ¶ 10.)
Several subcontractors,
(Id. ¶
The Division of Labor Standards Enforcement also asserted a
(Id. ¶ 12.)
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Plaintiff then requested, orally and in writing, that
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defendants protect, exonerate, and indemnify plaintiff from the
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expenses associated with the Bonds.
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failed, and continue to fail, to protect, exonerate, and
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indemnify plaintiff, as required by the Indemnity Agreement.
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(Id. ¶ 27.)
(Id. ¶ 26.)
Defendants
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Plaintiff has provided a Claims Payment History Report
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detailing the payments made, including payments for claims under
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the Bonds, attorney’s fees and expenses associated with
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investigating those claims, and attorney’s fees associated with
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the instant action.
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payments made by or on behalf of First National totaled
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$402,237.51, exclusive of interest.
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calculation of interest at 10 percent per annum, interest on the
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payments totals $43,926.53.
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by First National is $446,164.04.
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IV.
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(Id. Ex. 2.)
As of April 30, 2011, the
(Id. ¶ 13, Ex. 2.)
(Id. ¶ 30, Ex. 2.)
Under a
The total sought
(Id. ¶ 31, Ex. 2.)
Discussion
California law has long recognized the right of a
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surety, such as First National, to be indemnified under the terms
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a written indemnity agreement.
See, e.g., Fid. & Deposit Co. of
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Md. v. Whitson, 187 Cal. App. 2d 751, 756 (2d Dist. 1960).
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In order to demonstrate a valid claim for breach of an
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indemnity agreement under California law, a plaintiff must
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demonstrate the existence of an indemnity agreement, the
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plaintiff’s performance under the agreement, breach of the
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agreement, and damages.
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Cal. 2d 822, 830 (1968); Four Star Elec., Inc. v. F & H Constr.,
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7 Cal. App. 4th 1375, 1380 (3d Dist. 1992).
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agreement is to be interpreted according to the language and
See Reichert v. Gen. Ins. Co. of Am., 68
“An indemnity
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contents of the contract as well as the intention of the parties
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as indicated by the contract.”
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Interface Tech., Inc., 13 Cal. App. 4th 949, 968 (2d Dist. 1993).
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Here, the terms of the Indemnity Agreement at issue are
Myers Bldg. Indus., Ltd. v.
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clear.
Defendants expressly agreed to indemnify First National
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on demand for any losses, costs, and expenses, including court
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costs, reasonable attorney’s fees, consultant fees, investigative
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costs, and any other losses, costs, or expenses incurred by
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reason of having executed any Bond, or incurred on account of
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defendants’ default under the Agreement.3
It is undisputed that all of the necessary elements of
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a claim for breach of indemnity agreement are met.
An indemnity
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agreement exists, plaintiff has performed under the agreement,
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defendants failed to indemnify plaintiff for claims already paid,
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and plaintiff has suffered damage as a result.
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This includes plaintiff’s attorney’s fees in bringing
the instant action. See Safeco Ins. Co. of Am. v. Chiang, No. C04-1977, 2007 WL 460844, at *2 (N.D. Cal. Feb. 7, 2007)
(interpreting similar contractual language as providing recovery
of attorney’s fees incurred in enforcing the agreement).
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The amount of damage is similarly undisputed.
When a
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surety presents evidence of its payments pursuant to a prima
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facie evidence clause such as that provided in the Indemnity
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Agreement, the burden shifts to the indemnitors to prove that the
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fees may not be recovered.
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Dunmore, No. CIV S-07-2493 LKK DAD, 2009 WL 1586936, at *10 (E.D.
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Cal. Jun. 5, 2009) (citing Fallon Elec. Co. v. Cincinnati Ins.
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Co., 121 F.3d 125, 128 (3d Cir. 1997)).
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not presented any genuine issue of material fact, the statement
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of losses and expenses provided by First National is sufficient
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evidence of the damages it incurred.
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Travelers Cas. & Sur. Co. of Am. v.
Because defendants have
The Indemnity Agreement also provides that First
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National is entitled to prejudgment interest.
Because no
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interest rate was specified, plaintiff is entitled to the
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statutory rate of 10 percent per annum.
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3289(b).
See Cal. Civ. Code §
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Because there is no genuine issue as to any material
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fact on plaintiff’s claim for breach of indemnity agreement or
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the damages arising from the breach, the court will grant
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plaintiff’s motion for summary judgment as to that claim.
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IT IS THEREFORE ORDERED that plaintiff’s motion for
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summary judgment on its claim for breach of indemnity agreement
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in the amount of $446,164.04 be, and the same hereby is, GRANTED.
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DATED:
June 2, 2011
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