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Argonaut Insurance Co. v. Lynchburg Steel & Specialty Co.

United States District Court, District of Columbia

April 5, 2018

ARGONAUT INSURANCE COMPANY, Plaintiff,
v.
LYNCHBURG STEEL & SPECIALTY COMPANY, et al., Defendants.

          MEMORANDUM OPINION

          Amit P. Mehta United States District Judge

         I. INTRODUCTION

         Plaintiff Argonaut Insurance Company filed this action against Lynchburg Steel & Specialty Company, Anderson Enterprises, LLC, Douglas B. Anderson, and Geraldine K. Anderson (collectively, “Defendants”), seeking recovery of losses and attorneys' fees and costs incurred as a result of Defendants' alleged breach of an indemnity agreement.

         Although properly served, Defendants failed to respond to the Complaint, and the Clerk of the Court entered default on December 1, 2017. Plaintiff then moved for default judgment, seeking the relief requested in the Complaint. For the reasons discussed below, the court grants Plaintiff's Motion for Default Judgment.

         II. BACKGROUND

         This action arises from a General Indemnity Agreement that Defendants Douglas Anderson and Geraldine Anderson executed on November 15, 2010, for the benefit of Argonaut, in their individual capacities and official capacities as President and CEO of Lynchburg Steel & Specialty Company and as members of Anderson Enterprises, LLC. Compl., ECF No. 1 ¶¶ 9-19; Compl., Ex. A, ECF No. 1-6 [hereinafter Indemnity Agreement]. Under the terms of the Indemnity Agreement, Defendants are jointly and severally obligated to indemnify Argonaut “from and against any and all Losses, as well as any other reasonable expense that [Argonaut] may incur or sustain as a result of or in connection with the furnishing, execution, renewal, continuation, or substitution of any Bond(s).” Indemnity Agreement ¶ 2. “Losses” are defined in the Indemnity Agreement to mean:

any and all (a.) sums paid by Surety to claimants under the Bonds, (b.) sums required to be paid to claimants by Surety but not yet, in fact, paid by Surety, by reason of execution of such Bonds, (c.) all costs and expenses incurred in connection with investigating, paying or litigating any claim under the Bonds, including but not limited to legal fees and expenses, technical and expert witness fees and expenses, (d.) all costs and expenses incurred in connection with enforcing the obligations of the Indemnitors under this [Indemnity] Agreement, including, but not limited to interest, legal fees and expenses . . . .

         Indemnity Agreement at 1. “Expenses” are defined to “include, but are not limited to”:

(a) the cost incurred by reason of making an independent investigation in connection with any Bond(s) or this [Indemnity] Agreement; (b) the cost of procuring or attempting to procure the Surety's release from liability or settlement under any Bond(s) upon or in anticipation of Losses, including the defense of any action brought in connection therewith; and (c) the cost incurred in bringing suit to enforce this [Indemnity] Agreement against any of the Indemnitors.

Id.. The Indemnity Agreement further provides that the contract “shall be interpreted under the substantive law of the State of Texas.” Id. ¶ 23.

         In reliance on the Indemnity Agreement, Argonaut-as surety-issued a Performance Bond and Payment Bond on July 9, 2015, naming Lynchburg Steel & Specialty Company as principal in connection with a construction project known as “MCN Job No. 01-014012-00; Rocketship DC Washington DC.” Compl. ¶¶ 20-21; Compl., Ex. B, ECF No. 1-7 [hereinafter Bonds]. By letter dated June 6, 2017, Williams Steel Erection Co., Inc., a subcontractor to Lynchburg Steel in connection with the construction project, asserted a claim against the Payment Bond, demanding payment from Argonaut in the amount of $82, 248.00 for labor and materials that Williams Steel had supplied but were not paid by Lynchburg Steel. Compl. ¶ 22. When Argonaut notified Defendants of the claim and inquired about the propriety of the claim, Lynchburg Steel and Mr. Anderson advised Argonaut that they were unable to pay Williams Steel the amount demanded due to cash flow problems. Id. ¶¶ 23-24. Argonaut thereafter paid Williams Steel $82, 248.00 on June 8, 2017. Id. ¶ 25. On that same date, Argonaut wrote to Lynchburg Steel memorializing its full payment of the bond claim to Williams Steel and proposing a six-month payment plan for reimbursement. Id. ¶ 26. Lynchburg Steel and Mr. Anderson informed Argonaut that the proposed payment plan was acceptable via letter dated June 12, 2017, but failed to execute the proposed promissory note. Id. ¶¶ 27-28.

         Argonaut filed this action on September 6, 2017. See Compl. Defendants were each timely served with a summons and complaint on October 6, 2017. See Affs. of Service, ECF Nos. 5-8. Plaintiff filed the executed Summonses with this court on November 28, 2017. Id. Defendants' responses to the Complaint were due on October 27, 2017, but Defendants failed to respond. See Fed. R. Civ. P. 12(a)(1)(A)(i). Upon Argonaut's filing of an Affidavit for Default, the Clerk of the Court entered default against Defendants on December 1, 2017. Entry of Default, ECF No. 11. Plaintiff thereafter filed the instant motion. Mot. for Default J., ECF No. 12. Defendants have yet to answer or respond to the Complaint or respond to the Motion.

         Plaintiff seeks a total of $92, 694.50, which includes $82, 248.00 in damages, $8, 714.50 in attorneys' fees and costs incurred and paid by Argonaut as of November 2017, and $1, 732.00 in attorneys' fees and costs incurred by Argonaut and due and owing as of November 2017.

         III. ...


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