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M.E.S., Inc. v. Safeco Insurance Company of America

United States Court of Appeals, Second Circuit

December 14, 2018

M.E.S., INC., M.C.E.S., INC., and GEORGE MAKHOUL, Plaintiffs-Appellants,
v.
SAFECO INSURANCE COMPANY OF AMERICA, LIBERTY MUTUAL INSURANCE COMPANY, S.A. COMUNALE CO. INC., RONALD GOETSCH, DAVID PIKULIN, and CARYN MOHAN-MAXFIELD, Defendants-Appellees. [*]

          Argued: December 10, 2018

          On Appeal from the United States District Court For the Eastern District of New York

         Appeal from a judgment of the United States District Court for the Eastern District of New York (Chen, J.), granting summary judgment and dismissing all claims in the Second Amended Complaint against defendants- appellees. On appeal, plaintiffs-appellants argue that the district court erred in holding that they failed to demonstrate the existence of a triable issue of fact as to their claims that defendants-appellees breached their contractual obligations and engaged in bad faith and tortious conduct.

          Michael Confusione, Hegge & Confusione, LLC, Mullica Hill, New Jersey, for Plaintiffs-Appellants.

          Vivian Katsantonis, Watt, Tieder, Hoffar & Fitzgerald, L.L.P., McLean, Virginia, for Defendants-Appellees Safeco Insurance Company of America, Ronald Goetsch, David Pikulin, and Caryn Mohan-Maxfield.

          Jonathan Bondy (Stephen A. Wieder, Beth J. Rotenberg, on the brief), Chiesa Shahinian & Giantomasi PC, West Orange, New Jersey, for Defendant-Appellee Liberty Mutual Insurance Company.

          James A. Kassis, Schenck, Price, Smith & King, LLP, Florham Park, New Jersey, for Defendant-Appellee S.A. Comunale Co. Inc.

          Before: Sack, Parker, and Chin, Circuit Judges.

          PER CURIAM.

         Plaintiffs-appellants M.E.S., Inc. ("MES"), M.C.E.S., Inc., and George Makhoul (collectively, "Plaintiffs") appeal the district court's August 25, 2017 judgment dismissing all claims in the Second Amended Complaint against defendants-appellees Safeco Insurance Company of America, Ronald Goetsch, David Pikulin, and Caryn Mohan-Maxfield (collectively, "Safeco"); Liberty Mutual Insurance Company ("Liberty Mutual"); and S.A. Comunale Co. Inc. ("Comunale"). We assume the parties' familiarity with the underlying facts, procedural history, and issues on appeal.

         This case arises from three construction projects undertaken by the United States Army Corps of Engineers (the "Corps") between 2003 and 2006. The Corps hired MES as the general contractor on two of the projects and Hirani/MES, JV (the "Joint Venture") as the general contractor on the third.[1] At MES's request, Safeco issued performance and payment bonds for all three projects, and MES agreed to indemnify Safeco for any losses resulting from its issuance of the bonds for two of the projects. The Joint Venture is identified as the "Principal" in an identical indemnity agreement with Safeco for the third project, which was executed by the Joint Venture, Hirani Engineering & Land Surveying, P.C., and MES. Thereafter, MES executed a subcontract with Comunale to perform fire protection work on two of the projects. Liberty Mutual issued performance and payment bonds for these subcontracts.

         In 2008, the Corps issued Cure Notices for each project, notifying MES and the Joint Venture of their respective failures and requiring them to cure all failures within 14 days. The Corps subsequently terminated each contract for default and made a bond demand on Safeco to complete the remaining work for each project. Safeco incurred losses in responding to the Corp's bond demands and performing its attendant obligations.

         Safeco and MES brought separate actions in the United States District Court for the Eastern District of New York related to the three construction projects. In its June 16, 2015 Minute Order, the district court dismissed Plaintiffs' claims based on the third project for lack of standing, reasoning that MES had not shown that it was a third-party beneficiary of the contract in question. On September 3, 2015, the district court granted the parties leave to file cross summary-judgment motions in both cases. The district court decided these motions in a detailed 76-page memorandum and order under captions for both cases, and entered separate judgments for each case. This appeal concerns only the action initiated by MES.[2]

         The district court dismissed Plaintiffs' claims arising from the third project for lack of standing. We have some doubt as to whether this decision was correct, [3] but we need not decide the question for MES's claims based on the third project are essentially identical to its claims based on the other two projects. We conclude that MES's claims fail on the merits, substantially for the reasons given by the district court in its memorandum and order of March 30, 2017. Indeed, after nine years of litigation, including five years of discovery, MES fails to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The claim that Safeco acted inappropriately by attending the cure meetings is particularly frivolous, as the record shows that, in its Cure Notices, the Corps "required" the "presence of [MES's] bonding company" at the meetings. J. App. at 4042, 4045; see also J. App. at 4079, 4110. MES has failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that ...


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