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Greenwich Insurance Co. v. ICE Contractors

March 31, 2008


The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge


Plaintiff Greenwich Insurance Company ("Greenwich") brings indemnification, breach of contract and fraud claims against Defendants ICE Contractors, Inc., ICE Consultants, Inc., ICE Equipment, Ltd., DNDKNC, Ltd., David Cross Management, LLC, ("Entity Defendants") Diana I. Cross, and David A. Cross ("Individual Defendants")(collectively, "defendants"). Pending before the Court is plaintiff's Motion for Summary Judgment and defendant Diana Cross's Cross-Motion for Summary Judgment. Upon consideration of the motions, the responses and replies thereto, applicable law, and the entire record, the Court grants in part and denies in part plaintiff's Motion for Summary Judgment and denies defendant Diana Cross's Cross-Motion for Summary Judgment.*fn1


The parties agree that this case arises from an Indemnity Agreement executed by defendants in favor of plaintiff. ICE Contractors entered into a number of contracts for construction projects located in Washington, D.C., Virginia, Maryland and Texas, for which Greenwich, as surety, issued several payment and performance bonds. Complaint ("Compl.") ¶¶ 13-14; Answer ¶¶ 15, 16.*fn2 In consideration of, and inducement for, the issuance of these construction surety bonds, the defendants executed a General Indemnity Agreement ("Indemnity Agreement" or "Agreement"), dated June 27, 2002, in favor of Greenwich, as "Surety." Compl. ¶ 16; Answer ¶ 18. Under the terms of the Agreement, in the event of a default by ICE Contractors, the defendants agreed to, amount other things, assign, transfer, and convey their rights, title, and interest in and to "all machinery, vehicles, rolling stock, materials, inventory, leaseholds, fuel, plant, tools, furniture and fixtures" to Greenwich. Compl. ¶ 20; Compl., Ex. A ¶ 6B. ICE Contractors was declared in default by Centrex Construction Company on one of the construction projects bonded by Greenwich. Compl. ¶ 22; Answer ¶ 24. In addition, Greenwich has received a number of claims from subcontractors and suppliers under the various bonds, related to payment for labor and materials, and at least one claimant has filed suit against Greenwich, asserting a claim under the bonds. Compl. ¶ 23; Answer ¶ 25.

In or around October 2003, defendants applied for a line of credit from Valhalla Capital, L.L.C. ("Valhalla") in the amount of $500,000. Compl. ¶ 25; Answer ¶ 27. Apparently at defendants' request, Greenwich agreed to subordinate certain of its lien rights in the Entity Defendants' equipment to Valhalla, in order to enable defendants to secure the loan from Valhalla.*fn3

Greenwich agreed to subordinate its rights, and a Bonded Contract Account Agreement ("Contract") was executed by Greenwich and the Entity Defendants. Compl., Ex. B. Under the terms of the Contract and in consideration of Greenwich's agreement to subordinate its rights, the Entity Defendants agreed to pay certain claims within five days of receiving the loan from Valhalla. Compl., Ex. B, ¶ 2. The Entity Defendants also agreed to open a checking account and deposit an amount equal to the remaining unpaid claims, plus $25,000. Compl., Ex. B, ¶ 3. The funds in the checking account were to be subject to the legal and equitable rights of Greenwich. Compl., Ex. B, ¶ 4. It is undisputed that the Entity Defendants received the $500,000 line of credit from Valhalla and drew down the entire amount. Compl. ¶ 30; Answer ¶ 32. It is also undisputed that the Entity Defendants never established the checking account required by the Contract. Compl. ¶ 31; Answer ¶ 33.

On March 19, 2004, Greenwich sent a letter to the defendants, as "Indemnitors," demanding that the defendants post collateral with Greenwich in the amount $115,000, pursuant to the terms of the Indemnity Agreement. Compl., Ex. D, p. 2. On April 28, 2004, plaintiff filed a six-count complaint in the above-captioned action.


A. Summary Judgment Standard

Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). The party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex, 477 U.S. at 323.

In determining whether a genuine issue of material fact exists, the court must view all facts in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The non-moving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324. Moreover, if the evidence favoring the non-moving party is "merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (internal citations omitted).

B. Analysis

Plaintiff seeks summary judgment on Count II (indemnification), Count V (breach of contract), and Count VI (fraud) of its complaint.*fn4 Plaintiff seeks to hold the defendants jointly and severally liable for losses incurred by Greenwich under the Indemnity Agreement, the Contract, and as a result of the execution of the Subordination Agreement with Valhalla. Plaintiff also seeks punitive damages and other relief. For the following reasons, the Court grants summary judgment as to liability on Count II, the Indemnity Agreement, for the plaintiff and against the defendants. The Court also grants summary judgment for the plaintiff and against the Entity Defendants on Count V, the breach of contract claim. The Court denies plaintiff's motion for summary judgment as to the fraud claim, Count VI. The Court denies defendant Diana Cross's Cross-Motion for ...

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