United States District Court, D. Connecticut
MEMORANDUM OF DECISION GRANTING PLAINTIFF'S
MOTIONS FOR SUMMARY JUDGMENT [DKT. 81, 82]
Vanessa L. Bryant United States District Judge.
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.
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.
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.
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.
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].
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].
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.].
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].
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 §
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.
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.
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)].
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 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.
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)].
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
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.].
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
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
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.
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.].
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.
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.
now seeks summary judgment on all of its claims against
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).
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).
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
Indemnification (Counts I and II)
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).
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
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.”
2010 indemnity agreements contain the following
Indemnitors agree to indemnify and hold harmless Surety for
any and all Loss sustained or incurred by reason of having
executed any and all Bonds. . . 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.
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].
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].
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].
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.
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
cases cited by Defendants in support of their legal
proposition that the Bonds and other contracts must be
considered are distinguishable.
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.
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.
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.
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 ...