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Arch Insurance Co. v. Centerplan Construction Co., LLC

United States District Court, D. Connecticut

February 13, 2019



          Hon. Vanessa L. Bryant United States District Judge.

         This is a suit brought by Arch Insurance Company (“Arch” or "Plaintiff") to enforce certain indemnity agreements issued by Centerplan Construction Company, LLC (“Centerplan”), Center Earth, LLC (“Center Earth”) and certain affiliates (collectively "Defendants"). The indemnity agreements were issued in consideration for Arch's issuance of certain surety bonds. The bonds were issued to assure Defendants' payment and performance obligations as a condition precedent to the award of the contract to Center plan to construct the minor league baseball stadium in Hartford, Connecticut ("Hartford Stadium Project" or “Project”) and other construction projects undertaken by Defendants (collectively, “Bonded Projects”). Upon receiving and paying claims on a number of the bonds, including the Hartford Stadium Project bonds, Arch demanded Defendants honor the indemnity agreements. Arch believes that Defendants have breached their obligations under the indemnity agreements by failing to comply with these demands, while Defendants dispute their and Arch's liability under the bonds and claim that Arch is not entitled to indemnification or collateral security because Arch has acted in bad faith.

         On November 16, 2016, Arch filed a complaint against Defendants seeking contractual indemnification, common law indemnification, contractual collateral security, common law exoneration, quia timet, and disclosure of financial information. See [Dkt. 1 (Compl.)]. Presently pending before this Court are two motions by Arch for summary judgment-a Motion for Summary Judgment on Counts I and II (contractual and common law indemnification) and a second Motion for Summary Judgment on Counts III, IV, V, and VI (contractual collateral security, common law exoneration, quia timet, and disclosure of financial information). Defendants oppose each motion. The Court addresses both of these motions in this opinion and order. For the reasons explained below, this Court finds that Arch is entitled to summary judgment on Counts I, III, and VI.


         Arch is a Missouri corporation with its principal place of business in New Jersey, and it is authorized to write surety bonds in Connecticut. [Dkt. 1 (Compl.) ¶ 3]. The Defendants comprise various companies-Centerplan; Center Earth; Centerplan Development Company, LLC (“Centerplan Development”); RAL Investments, LLC (“RAL Investments”); Walnut Hill Chase, LLC (“Walnut Hill”); Tinker House, LLC (“Tinker House”); GH Development, Inc. (“GH Development”); and Centerplan Communities, LLC (“Centerplan Communities”)-and Robert and Kelly Landino (the “Landinos”). See Id. ¶¶ 4-13. Robert Landino is the owner of all Defendant companies and is the chief executive officer of Centerplan and Centerplan Development. See Id. Kelly Landino is his spouse. Id. ¶ 6.

         Defendants Centerplan and Center Earth engage in the construction business and, as a result, require a surety to bond their construction projects and contracts from time to time. [Dkt. 82-1 (Pl.'s Rule 56(a)(1) Statement) at ¶ 1]. Centerplan and Center Earth called on Arch to issue bonds on their behalf for a number of projects. Id. In consideration for Arch's issuance of the surety bonds, Centerplan and Center Earth, along with each of the additional defendants, executed General Indemnity Agreements in favor of Arch dated July 10, 2010, October 15, 2010, and January 26, 2016 (the “Indemnity Agreements” or “Agreements”). [Dkt. 90 (Defs.' Resp. to Pl.'s Rule 56(a)(1) Statement) at ¶ 2; Dkt. 82-5 (July 2010 Indemnity Agreement); Dkt. 82-6 (Oct. 2010 Indemnity Agreement); Dkt. 82-7 (Jan. 2016 Indemnity Agreement)]. Each defendant is a party to at least one of the three Indemnity Agreements as Principal/Indemnitor.

         Each of the Indemnity Agreements includes a provision obligating the indemnitors to indemnify Arch for any losses and expenses sustained by reason of having executed the bonds. [Dkt. 82-5 at ¶ 1; Dkt. 82-6 at ¶ 1; Dkt. 82-7 at ¶ 3]. The indemnity provisions also establish that the indemnitors will accept vouchers or other evidence of payments by Arch as prima facie evidence of the fact and extent of liability of the indemnitors to Arch. Id. Further, each indemnity agreement has a provision granting Arch the exclusive right to decide how to handle claims asserted under the bonds, including “the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought . . . shall or shall not be paid, compromised, resisted, defended, tried or appealed.” [Dkt. 82-5 at ¶ 5; Dkt. 82-6 at ¶ 5; Dkt. 82-7 at ¶ 8].

         In reliance on the Indemnity Agreements, Arch issued a large number of bonds between 2010 and 2016 with Centerplan or Center Earth as principal. [Dkt. 82-1 at ¶¶ 7, 12; Dkt. 90 at ¶ 12 Resp.]. These included a performance bond and a payment bond for the Hartford Stadium Project, as well as bonds for a number of other Bonded Projects, including the Storrs Center Phase 2 project, the Asnuntuk Community College Technology Center project, the Hawleyville Sewer Extension project, the Hammonassett Beach State Park Utility Replacement project, the Orchard Hill Elementary School project, the 39 Front Street - Sitework and Site Improvements project, the Harding High School project, and the Trumbull and Pleasant Streets Realignment project. [Dkt. 82-1 at ¶¶ 9, 13].

         The penal sum of each of the two Hartford Stadium Project bonds (the “Bonds”) was $47, 050, 000. Id. at ¶ 10. The performance bond was conditioned on the faithful performance of Centerplan's Design-Build Agreement (“DBA”), the bonded contract. [Dkt. 90 at ¶ 10 Resp.]. The payment bond was conditioned on the payment of all those who provided labor and materials in furtherance of the DBA and the Hartford Stadium Project. [Dkt. 82-1 at ¶ 10; Dkt. 90 at ¶ 10 Resp.]. A Multiple Obligee Rider was executed and attached to the Hartford Stadium Project Bonds naming the City of Hartford (the “City”) and the Hartford Stadium Authority (“HSA”) as Obligees, in addition to DoNo Hartford, LLC (“DoNo”), the Owner of the bonded contract. [Dkt. 82-1 at ¶ 11; Dkt. 90 at ¶ 10 n.2, ¶ 11 Resp.].

         On February 6, 2015, Centerplan entered into the DBA with DoNo-the developer of the Hartford Stadium Project pursuant to a Development Services Agreement (“DSA”) between it and the City-as Owner, and Centerplan as Design Builder agreeing to construct the Hartford Stadium Project. [Dkt. 82-10 (DBA); Dkt. 82-9 (DSA)]. Under the DBA, Centerplan was obligated to achieve substantial completion of the work no later than March 11, 2016, and was to keep the cost of the Hartford Stadium Project at no more than $53, 550, 000. [Dkt. 82-10 at §§ 3.3, 4.4.3].

         Centerplan, DoNo, and the City entered into the “Direct Agreement” on February 4, 2015, allowing the City to assume DoNo's position under the DBA “but only upon an event that would cause or provide Design Builder with cause to terminate the same or termination of the Development Services Agreement by City for a Developer Default thereunder.” [Dkt. 82-11 (Direct Agreement) at § 8(a)].

         The substantial completion date and cost of the Hartford Stadium Project in the DBA were amended by way of the “Term Sheet” on January 19, 2016. [Dkt. 90 at Add'l Fact ¶ 11]. The substantial completion date was extended to May 17, 2016, and the maximum cost was increased by over $10, 300, 000 to account for a December 2015 change order. Id.

         From fall of 2015 through 2017, Arch received claims on a number of payment bonds it had issued on behalf of Centerplan and Center Earth on various Bonded Projects. [Dkt. 82-1 at ¶ 14]. These included claims from subcontractors and suppliers on the Hartford Stadium Project, the Storrs Center Phase 2 project, the Asnuntuk Community College Technology Center project, the Hawleyville Sewer Extension project, the Hammonassett Beach State Park Utility Replacement project, the Orchard Hill Elementary School project, the 39 Front Street project, the Harding High School project, and the Trumbull and Pleasant Streets Realignment project. Id. at ¶ 15. Additionally, Arch received payment bond claims and union wage and fringe benefit bond claims from labor unions which provided labor on the Bonded Projects. Id. at ¶ 16. As of December 7, 2017, Arch had paid out a total of $20, 500, 963.60 in satisfaction of the payment bond claims. Id. at ¶ 21.

         On May 19, 2016, Howard Rifkin, Corporation Counsel for the City of Hartford, notified DoNo, Centerplan, and Jeffrey M. Donofrio, Esq., on behalf of the City and HSA, that DoNo failed to meet the substantial completion deadline and that DoNo was in default pursuant to the DSA and the Term Sheet Agreement from January 19, 2016. [Dkt. 70 (PJR Hr'g Pl. Ex. 9, Default Letter) at 1]. The letter indicated the City and HSA were entitled to immediate payment of $50, 000 and $15, 000 per day for each day thereafter until the Project reached substantial completion. Id. Arch was copied to the letter. Id. at 2. On the same day, the City declared DoNo to be in default of the DSA citing its failure to meet the extended May 17, 2016, substantial completion deadline and demanded payment of liquidated delay damages from DoNo and Centerplan. [Dkt. 82-1 at ¶¶ 28, 29; Dkt. 90 at ¶ 28 Resp.]. Soon after, by letter dated May 27, 2016, the City and HSA provided Arch with “formal notice that [its] principal under the Performance Bond . . ., [Centerplan] is in default of its Design Build Agreement for the Minor League Ballpark, ” citing Centerplan's failure to reach substantial completion by May 17, 2016, failure to pay liquidated damages, failure to post a letter of credit regarding said liquidated damages, and numerous construction deficiencies and code violations on the Project. [Dkt. 89-7 (May 27, 2016 Letter)].

         Thereafter, on May 31, 2016, Arch attended a meeting at the City's office to discuss the default. See [Dkt. 89-7; Dkt. 117 (11.6.2017 PJR Hr'g[1] Tr.) at 112:7-113:23]. Joel Beach, Arch's Assistant Vice President in the surety bond claim department, testified that representatives of DoNo, the City, and Centerplan were in attendance. Id. The City requested that Arch become involved in the Project, to which Centerplan objected. [Dkt. 117 at 120:4-7]. Mr. Beach responded that Centerplan was the contractor of record, remained the contractor of record, and that Arch was not going to retain a consultant to oversee Centerplan's work on the job. Id. at 122:6-11. Mr. Beach testified that he did not tell anyone that the City had to terminate Centerplan. Id. at 122:12-15.

         By letter dated June 6, 2016, the City terminated the DBA claiming “continued defaults” by Centerplan. [Dkt. 82-1 at ¶ 30; Dkt. 90 at ¶ 30 Resp.; Dkt. 82-15 (June 6, 2016 City DBA Termination Letter)]. By letter dated June 9, 2016, the City made formal demand on the Hartford Stadium Project performance bond to Arch. [Dkt. 82-16 (June 9, 2016 City Demand Letter)].

         Immediately after Centerplan's termination, Arch began an investigation into the Hartford Stadium Project regarding the allegations of default, which lasted from June through September. [Dkt. 134 (1.29.2018 PJR Hr'g Tr.) at 152:20-158:23; Dkt. 89-12 (Arch Rog. Resps.) at Rog. 14 Resp.]. Arch employed construction consultant Cashin, Spinelli and Ferretti, LLC (“CSF”) to assist in its investigation of the claims. [Dkt. 82-1 at ¶¶ 32-34; Dkt. 89-12 at Rog. 7 Resp.; Dkt. 90 at ¶¶ 32-34]. In addition to CSF, Arch retained Attorney Matthew Horowitz to advise it on legal matters. [Dkt. 89-12 at Rog. 9 Resp.].

         As a general matter, CSF was charged with investigating and assessing the claims, including reviewing the status of work (i.e., whether the work was performed in compliance with contract documents, what it would cost to finish, and how long it would take to finish). [Dkt. 134 at 152:20-158:23; Dkt. 89-12 at Rog. 7 Resp.]. CSF's investigation was extensive. See [Dkt. 134 at 152:20-158:23; 187:7-23]. They did numerous walk-throughs of the Project site, evaluating room by room what work Centerplan had completed and what it had not. See [Dkt. 134 at 155:5-15, 182:16-184:15]. CSF held meetings with representatives of the City, DoNo, and Centerplan both at the stadium and off-site. See Id. at 158:24-163:1, 164:9-167:8. They also inspected voluminous documents throughout the course of the investigation, including plans, specifications, requisitions, change orders, change directives, subcontracts, accounts payable, and correspondence. Id. at 152:20-158:23, 163:2-187:22; see also [Dkt. 89-12 at Rog. 13 Resp.].

         Near the end, but before completing its investigation and submitting its report to Arch, CSF asked DoNo and Centerplan for their input. Both refused to assist CSF assess the claims on the Bonds made by the City and Project subcontractors. [Dkt. 134 at 187:9-22]. Although they were present during parts of the investigation, with one exception, neither DoNo or Centerplan challenged the claims. Centerplan objected to Arch paying a payment bond claim, arguing the “pay if paid” provision precluded it; Arch looked into the applicability and determined the “pay if paid” clause did not provide a defense for Arch. Id. at 79:17-83:11, 85:13-87:19. With the exception of this one instance, there is no evidence that Centerplan or DoNo asked Arch not to pay, compromise, resist, defend, litigate or otherwise challenge the claims; nor is there any evidence that Centerplan or DoNo posted collateral to secure any amount which may be due if Arch unsuccessfully challenged any claim.

         CSF also conducted a careful review of the state of the Project financials, including the value of work completed and payments made by the City for that work. Id. The DBA and DSA established that Centerplan would submit monthly Applications for Payment, or Requisitions, to DoNo for review and approval, and ultimately submission in the form of a Draw Request to the City. [Dkt. 82-10 (DBA) at § 5.1; Dkt. 82-9 (DSA) at 7-8, § 3(e)(1)]. Upon submission, HSA and the City would review and approve the Draw Request and pay DoNo the approved amount. [Dkt. 82-9 at 7, § 3(e)(1)]. DoNo would then pay Centerplan usually within 30 days of submission of the Requisition. See [Dkt. 82-10 at § 5.1.3].

         The parties agree, and the evidence shows, that Requisition 16, encompassing work done on the Project in April, as well as all prior requisitions submitted, were paid for by the City. See [Dkt. 134 at 64:13-21, 67:7-15, 188:7-18; Dkt. 117 at 138:9-17; Dkt. 118 at 65:2-4]. The parties further agree that Requisition 17, for work done in May, was not submitted to DoNo or the City. Id.; [Dkt. 118 at 65:2-4]. The only version of Requisition 17 that Arch knew of during the investigation in 2016 was an unsigned, unsubmitted draft. See [Dkt. 134 at 100:18-20, 101:22-25, 220:13-16]. All the information and documentation available to Arch at the time, and in the record before the Court, establish the City paid all requisitions submitted, and thus amounts due on the Project; and there is no evidence the City received and failed to pay any requisition.

         On October 17, 2016, Arch entered into the “Takeover Agreement” with the City and HSA, agreeing to the complete construction of the Hartford Stadium Project. [Dkt. 82-17 (Oct. 17, 2016 Takeover Agreement)]. As of December 7, 2017, Arch had made $16, 269, 435.81 in payments to complete work on the Hartford Stadium Project. [Dkt. 82-1 at ¶ 37; Dkt. 90 at ¶ 37 Resp.]. Arch provided copies of the vouchers and other evidence of these payments to Defendants. [Dkt. 82-1 at ¶ 40-42; Dkt. 90 at ¶ 41 Resp.].

         In multiple letters dated August 5, 2016, Arch gave notice to Defendants of the claims on the Bonds and made demand upon Defendants to procure Arch's discharge from the Bonds issued on the Bonded Projects and hold harmless and indemnify Arch for its losses incurred and to be incurred as a result of having issued the Bonds. [Dkt. 81-22 (Aug. 5, 2016 Arch Demand Letters)]. Additionally, in multiple letters dated August 19, 2016, Arch demanded collateral security in the amount of $18, 807, 737.47-Arch's estimated pending exposure under the Bonds issued to secure payment and performance on Bonded Projects-from Defendants under the Indemnity Agreements. [Dkt. 81-23 (Aug. 19, 2016 Arch Demand Letters)]. Arch updated the demand on Defendants for collateral security-with Arch's pending exposure under the Bonds then estimated at $38, 313, 100.82-by letter dated October 13, 2017. [Dkt. 81-24 (Oct. 13, 2017 Arch Demand Letter)]. Defendants argue that Arch has not incurred losses as a result of having issued the Bonds because Arch volunteered to settle claims and perform work for which they were not liable. Defendants have not provided collateral security or indemnified Arch as demanded.

         Arch filed its complaint against Defendants on November 16, 2016, seeking contractual indemnification (Count I), common law indemnification (Count II), contractual collateral security (Count III), common law exoneration (Count IV), quia timet (Count V), and disclosure of Defendants' financials under the Indemnity Agreements (Count VI). See [Dkt. 1 (Compl.)]. Defendants claim multiple defenses to Arch's demands for indemnification and collateral security, and brought counterclaims against Arch alleging breach of contract, breach of the implied covenant of good faith and fair dealing, surety bad faith, tortious interference with contractual relations, and a violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a, et seq. [Dkt. 77 (Second Am. Answer)].

         Arch now seeks summary judgment on all of its claims against Defendants.

         Legal Standard

         Summary judgment should be granted “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). The moving party bears the burden of proving that no genuine factual disputes exist. See Vivenzio v. City of Syracuse, 611 F.3d 98, 106 (2d Cir. 2010). “In determining whether that burden has been met, the court is required to resolve all ambiguities and credit all factual inferences that could be drawn in favor of the party against whom summary judgment is sought.” Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). This means that “although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000); see Welch-Rubin v. Sandals Corp., No. 3:03-cv-00481, 2004 WL 2472280, at *14 (D. Conn. Oct. 20, 2004) (“At the summary judgment stage of the proceeding, [the moving party is] required to present admissible evidence in support of their allegations; allegations alone, without evidence to back them up, are not sufficient.”) (citing Gottlieb v. Cnty of Orange, 84 F.3d 511, 518 (2d Cir. 1996)); Martinez v. Conn. State Library, 817 F.Supp.2d 28, 37 (D. Conn. 2011). Put another way, “[i]f there is any evidence in the record that could reasonably support a jury's verdict for the nonmoving party, summary judgment must be denied.” Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315-16 (2d Cir. 2006) (internal quotation marks and citation omitted).

         However, a party who opposes summary judgment “cannot defeat the motion by relying on the allegations in his pleading, . . . or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible.” Gottlieb, 84 F.3d at 518 (citations omitted). Nor will “conclusory statements, conjecture, or speculation by the party resisting the motion” defeat summary judgment. Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996). Where there is no evidence upon which a jury could properly proceed to find a verdict for the party producing it and upon whom the onus of proof is imposed, such as where the evidence offered consists of conclusory assertions without further support in the record, summary judgment may lie. Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 726-27 (2d Cir. 2010).

         Furthermore, summary judgment is an appropriate method of resolving disputes concerning indemnification agreements. Gundle Lining Constr. Corp. v. Adams Cnty. Asphalt, Inc., 85 F.3d 201 (5th Cir.1996); Commercial Ins. Co. of Newark v. Pacific-Peru Constr. Corp., 558 F.2d 948 (9th Cir.1977); Cont'l Cas. Co. v. Am. Sec. Corp., 443 F.2d 649 (D.C.Cir.1970).


         I. Indemnification (Counts I and II)

         “[A]n action for indemnification is one in which one party seeks reimbursement from another party for losses incurred in connection with the first party's liability to a third party.” Amoco Oil Co. v. Liberty Auto and Elec. Co., 262 Conn. 142, 148, 810 A.2d 259, 263 (2002); see Danbury Bldgs., Inc. v. Union Carbide Corp., 963 F.Supp.2d 96, 103 (D. Conn. 2013).

         Arch's Count II is a claim for common law indemnification. In the absence of a contract to indemnify, a party is entitled to indemnification “only upon proving that the party against whom indemnification is sought either dishonored a contractual provision or engaged in some tortious conduct.” Burkert v. Petrol Plus of Naugatuck, Inc., 216 Conn. 65, 74, 579 A.2d 26, 31 (1990) (citing Kaplan v. Merberg Wrecking Corp., 152 Conn. 405, 411, 207 A.2d 732 (1965)). If a claim of indemnification is grounded in tort, “reimbursement is warranted only upon proof that the injury resulted from the ‘active or primary negligence' of the party against whom reimbursement is sought.” Id. (quoting Kaplan, at 415). Plaintiff makes no arguments in its motion for summary judgment regarding its entitlement to judgment on its common law indemnification claim. See [Dkt. 82-2 (arguing for judgment only based on its right to contractual indemnification)]. Thus, Arch's motion for summary judgment on Count II is DENIED. However, as discussed extensively below, the Court holds that Arch is entitled to summary judgment on Count I for contractual indemnification. Because Count II is an alternative theory of liability to Count I and seeks the same relief the Court grants Plaintiff via Count I, Count II is DISMISSED. See Wickham Contracting Co., Inc. v. Bd. of Educ. of City of New York, 715 F.2d 21, 28 (2d Cir. 1983) (a party seeking recovery under multiple theories of liability may only recover once).

         Under Connecticut law, a party may seek indemnification based on the terms of an indemnity agreement and the express or implied contractual right to indemnification. See Danbury Bldgs., 963 F.Supp.2d at 103 (citing DeCarlo & Doll, Inc. v. Town of Chester, No. CV075003058, 2008 WL 4416073, at *2 (Conn. Super. Ct. Sept. 17, 2008)). When a party seeks to enforce an indemnity agreement, the court is to apply Connecticut's “well established principles of contract interpretation.” PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 838 A.2d 135, 144 (Conn. 2004). This means that the contract “must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction.” Id. at 145 (quoting Poole v. Waterbury, 831 A.2d 211, 223-24 (Conn. 2003)). The court must discern the parties' intent “by a fair and reasonable construction of the written words” and it must give the language “its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract.” Id. “Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.” Id. While the question of the parties' intent is typically a question of fact, “[w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.” Id.

         The 2010 indemnity agreements contain the following indemnification provision:

Indemnitors agree to indemnify and hold harmless Surety for any and all Loss[2] sustained or incurred by reason of having executed any and all Bonds[3]. . . In the event of payments by Surety, Indemnitors agree to accept the voucher or other evidence of such payments as prima facie evidence of the fact and extent of the liability of Indemnitors to Surety in any demand, claim or suit by Surety against Indemnitors. . .”

[Dkt. 82-5 at ¶ 1; Dkt. 82-6 at ¶ 1]. The January 2016 indemnity agreement has a slightly different indemnity provision. It states:

The Indemnitors shall exonerate, Indemnify, and keep indemnified the Surety from and against any and all liability for losses and/or expenses of whatsoever kind or nature (including, but not limited to, pre- and post-judgment interest, court costs and counsel fees, and accounting, engineering and consulting fees, and from and against any and all such losses and/or expenses which the Surety may sustain and incur: (1) By reason of having executed or procured the execution of the Bonds, whether such Bond or Bonds were issued prior to or after the date of this Agreement (2) By reason of the failure of the Indemnitors to perform or comply with the covenants and conditions of this Agreement or (3) In enforcing any of the covenants and conditions of this Agreement or Other Agreements. In the event of any payment by the Surety the Indemnitors further agree that in any accounting between the Surety and the Indemnitors, the Surety shall be entitled to charge for any and all disbursements made by it in good faith in and about the matters herein contemplated by this Agreement under the belief that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make such disbursements, whether or not such liability, necessity or expediency existed; and that the vouchers or other evidence of any such payments made by the Surety shall be prima facie evidence of the fact and amount of the liability to the Surety. As used in this paragraph, “good faith” means honesty in fact and the absence of malice or fraud.

[Dkt. 82-7 at ¶ 4]. Further, the 2010 Indemnity Agreements contain the following provision regarding the Surety's rights to settle claims:

Surety shall have the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought against Surety on any Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed, and Surety's decision thereon shall be final and binding upon the Indemnitors. . . . [I]f Principal or Indemnitors desire that the Surety litigate such claim or demand, or defend such suit or appeal from such judgment, they shall deposit with the Surety, at the time of such request, cash or collateral satisfactory to the Surety in kind and amount to be used in paying any judgment or judgments rendered, or which might be rendered, against the Surety, together with interest, costs and attorneys [sic] fees.

[Dkt. 82-5 at 3; Dkt. 82-6 at 3]. The 2016 Indemnity Agreement includes the exact same provision, except it specifies that only the surety has the right to decide how to handle claims. [Dkt. 82-7 at 5 (“Surety shall have the sole and exclusive right . . .”) (emphasis added)]. The 2016 Indemnity Agreement was entered into around the time the DBA was amended by the “Term Sheet” to extend the substantial completion date and increase the cost of the Hartford Stadium Project beyond the date and amount originally agreed.

         Based on these provisions, Arch argues that it is entitled, as a matter of law, to indemnification for any and all disbursements made in good faith regardless of the actual liability of Arch or the principal, and that the evidence it has provided proves the fact and amount of Defendants' liability under the express terms of the 2016 Indemnity Agreement. [Dkt. 82-2 (Mem. to Mot. Summ. J. Counts I & II) at 20].

         Defendants do not argue that the contractual provisions are ambiguous. Rather, they argue that the Indemnity Agreements must be construed in connection with the Bonds (and any incorporated contracts) to which they relate. See [Dkt. 89 (Opp'n Mot. Summ. J. Counts I & II) at 11]. Defendants contend that Arch must be held to the terms of the Bonds it issued, and further argue that the Bonds incorporate the DBA such that the terms of the DBA are at play as well. Id. at 12-13. They suggest that the interplay of the Bonds, the Indemnity Agreements, and the DBA created a complex and contradictory set of rights and obligations which, had Arch bothered to look, would show that the City and certain subcontractors were not entitled to make claims on the Bonds, and therefore, Arch should not have made payments or performed on the Bonds. [Dkt. 89 at 13-15].

         In particular, Defendants invoke the Multiple Obligee Rider, which was executed and attached to the Bonds on February 4, 2015, and which states: “there shall be no liability on the part of the Principal or Surety under this Bond to the Obligees . . . unless the Obligees . . . shall make payments . . . and shall perform all the other obligations required to be performed under said Contract at the time and in the manner therein set forth.” [Dkt. 82-12 (Hartford Stadium Performance and Payment Bonds and Dual Obligee Rider) at 8]. Defendants argue that the City failed to pay Centerplan for work completed in May 2016 as required by the DBA, or at least failed to assure Defendants that it would be able to pay, and, as a result, neither Centerplan nor Arch were liable to the City under the Multiple Obligee Rider. [Dkt. 89 at 14].

         But the terms of the Bonds do not govern Arch's right to indemnification; the Indemnity Agreements do, and specifically the latest Indemnity Agreement. This is because the parties entered into express contracts with clear and unambiguous terms governing indemnification, with the latest being executed on February 1, 2016. “[W]hen the parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed, that the whole engagement of the parties, and the extent and manner of their understanding, was reduced to writing.” Tallmadge Bros. v. Iroquois Gas Transmission Sys., L.P., 746 A.2d 1277, 1290 (Conn. 2000) (quoting Tie Commc'ns, Inc. v. Kopp, 589 A.2d 329, 333 (Conn. 1991)). None of the Indemnity Agreements, including the 2016 Agreement, incorporate the terms of the Bonds, nor do they incorporate the terms of the DBA or DSA. As such, Arch's right to indemnification under the Agreements is unaffected by the terms of the Bonds, the DBA, and the DSA.

         Even if the Bonds, along with the attached Multiple Obligee Rider, had been incorporated into the 2010 Indemnity Agreements, the 2016 Indemnity Agreement supersedes the terms of the Multiple Obligee Rider. See Ryder v. Washington Mut. Bank, F.A., 501 F.Supp.2d 311, 318-19 (D. Conn. 2007) (explaining that, under Connecticut law, the test for whether a later agreement substitutes an earlier contract “looks to the terms of the second contract[;] [i]f it contains terms inconsistent with the former contract, so that the two cannot stand together it [exhibits] characteristics indicating a substitute contract”) (quoting Bushnell Plaza Dev. Corp. v. Fazzano, 460 A.2d 1311, 1314 (Conn. Super. Ct. 1983)) (internal quotations and brackets omitted). The 2016 Indemnity Agreement was executed after the Multiple Obligee Rider, evidencing the parties' latest intentions with respect to Arch's right to indemnification. The clear terms of the 2016 Agreement grant Arch the right to indemnification for payments made “in good faith . . . under the belief that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make such disbursements, whether or not such liability, necessity or expediency existed.” [Dkt. 82-7 at 3 (emphasis added)]. Any conflicting terms in the earlier Multiple Obligee Rider are of no consequence here. See Ryder, 501 F.Supp.2d at 1314-15.

         The two cases cited by Defendants in support of their legal proposition that the Bonds and other contracts must be considered are distinguishable.

         In General Insurance Co. of America v. K. Capolino Construction Corp. (hereinafter “K. Capolino”), the court held that material issues of fact as to whether the owner was in default under the bonded contract and whether the surety completed the bonded contract in good faith precluded summary judgment on the surety's claim of contractual indemnification under New York law. 903 F.Supp. 623, 627-28 (S.D.N.Y. 1995). In the initial opinion, which Defendants do not cite, the court explained that New York law prohibits recovery if a party was not obligated to pay or perform and therefore acted as a volunteer. Id. at 626. Accordingly, the court reasoned that the surety “may not recover from Capolino unless, under the terms of the performance bonds that [the surety] issued on Capolino's behalf, [the surety] was obligated to complete the . . . projects.” Id.

         The issues at bar are not governed by New York law and there is no Connecticut law that requires the Court to look outside the express terms of the Indemnity Agreements. On the contrary, the Connecticut Supreme Court has explained that “under an indemnity agreement, it is not essential that a principal be liable for the claims upon which the surety seeks to be indemnified, ” PSE Consulting, 838 A.2d at 157 n.15, further confirming the inapplicability of the Bond terms here. So too have numerous other courts concluded that actual liability is not a precursor to indemnification under an indemnity agreement. See e.g., Fid. & Deposit Co. v. Bristol Steel, 722 F.2d 1161, 1163 (6th Cir. 1985) (under the letter of the contract, surety had the right to reimbursement for payments made in good faith, whether or not the principal had defaulted and liability existed); Pacific-Peru, 558 F.2d at 952 (ruling that the argument that surety suffered no actual liability under its bond is no defense to indemnification under express language of surety agreement); Frontier Ins. Co. v. Int'l Inc., 124 F.Supp.2d 1211, 1215 (N.D. Ala. 2000) (holding that a principal's actual liability is not a prerequisite to surety's right to reimbursement under indemnity contract); United States Fid. & Guar. Co. v. Feibus, 15 F.Supp.2d 579, 583 (M.D. Pa. 1998) (holding that the terms of the indemnity agreement governed and its language “does not require that payments be made only in the face of actual liability under the bonds”); Gen. Acc. Ins. Co. of Am. v. Merritt-Meridian Constr. Corp., 975 F.Supp. 511, 517 n.4 (S.D.N.Y. 1997) (concluding surety had right to indemnification for claims it reasonably determined it was liable for, regardless of actual liability); Emp'rs Ins. Wausau v. Able Green, Inc., 749 F.Supp. 1100, 1102-03 (S.D. Fla. 1990) (explaining “this case involves interpretation of language contained within a General Indemnity Agreement” and finding surety entitled to reimbursement for payments made in good faith, regardless of whether any liability actually existed); Fireman's Fund Ins. Co. v. Nizdil, 709 F.Supp. 975, 976-77 (D. Or. 1989) (“Any claim asserted against the surety, regardless if it is valid or outside the scope of the bond triggers the obligation to indemnify the surety.”); U.S. Use Int'l Bhd. Elec. Workers v. United Pac. Ins. Co., 697 F.Supp. 378, 381 (D. Id. 1988) (holding that, “upon the express terms of the Agreement, the Indemnitors are liable to indemnify [Surety] no matter what the legal defenses or other avenues of resolution may have been”). Because actual liability is not required under the Indemnity Agreements, any “volunteer” argument by Defendants fails.

         Defendants, though, focus on the K. Capolino Court's decision on the motion to reconsider, in which the court “[held] the surety to the terms of both of the agreements it negotiated.” 908 F.Supp. 197, 200 (S.D.N.Y. 1995). The court distinguished its finding from those of many other courts declining to consider the terms of related bonds based on the fact that the other decisions “consider only the issue of contractor default . . . They do not address allegations of owner default.” Id. at 199. This Court does not discern a difference between evidence of owner/obligee default versus contractor/principal default such that a departure from the express terms of the Indemnity Agreements, as well as from case law, is warranted based on the distinguishable facts here. Either way, Defendants executed express Indemnity Agreements in favor of Arch obligating them to provide indemnification when Arch settled claims in good faith. In the beginning of 2016, when it was becoming clear that Centerplan would not meet the terms of the DBA, as evidenced by the need for the Term Sheet, Arch had seven of the Indemnitor Defendants execute the 2016 Indemnity Agreement with even stronger and more clear language as to Arch's right to indemnification. That there is an argument as to potential owner/obligee default on the bonded contract does not impact Defendants' obligations, or Arch's rights, under the Indemnity Agreements.[4]

         The Court does not find Lumbermens Mutual Casualty Insurance v. Dinow, No. 06-cv-3881, 2012 WL 4498827 (Sept. 28, 2012 E.D.N.Y.), persuasive either. In that case, also governed by New York law, the court found that there were outstanding issues of fact surrounding the settlement of the obligees' lawsuits against the surety, including whether the obligee had satisfied the conditions of the dual obligee rider and whether the surety settled the claims in good faith. Id. at *6. In a follow-up opinion on a motion to reconsider, the Dinow Court distinguished the facts from precedent because “in those cases, the surety did not make statements in another proceeding that, if true, amount to a defense, as indeed they were so used in the state court proceeding.” No. 06-cv-3881, 2014 U.S. Dist. LEXIS 28459, at *3-4 (E.D.N.Y. Feb. 27, 2014). In light of the surety's claims in its statement of undisputed material facts in the earlier lawsuits, the court concluded that reasonable minds could differ as to whether the surety should have settled the lawsuit and whether doing so was in bad faith. Id. at 4. In this case, there is no evidence in the record that the City did not satisfy conditions precedent and that Arch therefore was ...

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