The opinion of the court was delivered by: VINCENT L. BRODERICK
VINCENT L. BRODERICK, U.S.D.J.
In this Miller Act case (based upon 40 USC 270a et seq), plaintiff seeks to recover from a surety (General Insurance Company of America) and a prime contractor (Meridian Construction Corp.) because a designee of a subcontractor failed to pay plaintiff for materials used in a postal construction job.
The parties have consented to a non-jury trial before United States Magistrate Judge Mark D. Fox, and motions for summary judgment have been filed by the parties mentioned above. The Magistrate Judge in a Report and Recommendation signed December 13, 1991, found the essential facts undisputed and concluded that the designee (Mid-Hudson Mecanix Ltd.) of the subcontractor (Freedom Plumbing and Heating Inc.) was not covered by the prime contractor's bond as necessary for liability of the surety or under the Miller Act.
Plaintiff, while objecting to the Magistrate Judge's Report and Recommendation, concedes that ". . . the Magistrate's recitation of . . . the basic, material facts are accepted as correct." (Objections, p. 2). The core of plaintiff's objections appears to be that the subcontractor's designee was an alter ego of the subcontractor. But the surety was not involved in any effort of the subcontractor or its alter ego to create or avoid what would otherwise have been their rights or obligations. See Restatement of Contracts (Second) § 318(3) (1981); 4 A. Corbin, Contracts § 866 (1951); see also Bier Pension Plan v. Estate of Schneierson, 74 N.Y.2d 312, 545 N.E.2d 1212, 546 N.Y.S.2d 824 (1989).
While one cannot use a change of corporate entities to escape otherwise binding obligations, Lowen v. Tower Asset Management, 829 F.2d 1209 (2d Cir. 1987), aff'g 653 F. Supp. 1542, 1551-56 (S.D.N.Y. 1987), neither can an innocent surety be held liable because a trading partner chooses to do business with an entity not insured by that surety. See generally Haverstraw Associates v. Rendel Tower, Ltd., 1992 U.S. Dist. Lexis 7915 (S.D.N.Y. April 15, 1992).
I adopt the Report and Recommendation of the Magistrate Judge and grant summary judgment to the moving defendants named above as described in the Report and Recommendation and deny summary judgment to plaintiff.
The parties are directed to inform the Magistrate Judge within 20 days of the date of this memorandum order if any aspects of the pleadings not yet disposed of require trial or entry of judgment. If no such action is taken, the case will be automatically dismissed in its entirety (subject to the limitations on the impact of such dismissal outlined above), effective November 2, 1992; that will close this litigation.
The parties receiving copies of this memorandum order are further directed to forward copies of it to counsel for any other parties to the original litigation whose addresses are known.
Dated: White Plains, New York
VINCENT L. BRODERICK, ...