The opinion of the court was delivered by: Miriam Goldman Cedarbaum, United States District Judge
Third-party plaintiffs XL Reinsurance America, Inc. ("XL") and Greenwich Insurance Company ("Greenwich") move for summary judgment on their claims for contractual indemnification against third-party defendants Apartment Investment and Management Company ("AIMCO"), Swain & Baldwin Insurance, Inc. ("Swain & Baldwin"), and Ray Baldwin ("Baldwin"). Swain & Baldwin, Baldwin (collectively "the Baldwin Defendants"), and AIMCO each move for summary judgment on all claims asserted against them by Greenwich and XL. For the reasons that follow, the motion of Greenwich and XL is denied, AIMCO's motion is denied in part and granted in part, and the Baldwin Defendants' motion is granted.
The following facts are undisputed, except where specifically noted.
This action was originally commenced by WestRM-West Risk Markets, Ltd. ("WestRM") to enforce the obligations of Greenwich and XL under four surety bonds issued to WestRM as obligee. Greenwich and XL are insurance companies licensed to issue surety bonds. WestRM is a Swiss reinsurance company. On or about December 28, 2001, Greenwich and XL issued two bonds for $6.3 million each to National Program Services ("NPS"). NPS was an insurance agency located in New Jersey, whose principal was Vito Gruppuso. On or about January 31, 2002, Greenwich and XL issued two additional bonds with face amounts of $6.25 million each to AIMCO and NPS. AIMCO is a Maryland corporation that owns and manages residential real estate throughout the United States.
The two January 2002 bonds ("the Bonds") purport to secure the obligations of AIMCO and NPS under a January 2002 Premium Finance Agreement ("the January PFA") with WestRM. The January PFA explains that NPS procured an insurance policy from Drummonds Insurance and that the $12.5 million insurance premium on that policy was paid by WestRM on behalf of NPS as consideration for the agreement of NPS and AIMCO to repay the $12.5 million to WestRM over the course of three years. Greenwich and XL issued the Bonds to secure the obligations of AIMCO and NPS to repay WestRM. By letter dated May 16, 2002, WestRM advised Greenwich and XL that AIMCO and NPS had each defaulted on their payments under the January PFA and demanded payment on the Bonds.
It is undisputed that the name Ray Baldwin is signed on the Bonds. Ray Baldwin is a Texas-based insurance broker and President of Swain & Baldwin, a Texas insurance agency. Although the exact nature of Baldwin's relationship to AIMCO is disputed, Baldwin's June 1996 Consulting Services Agreement with AIMCO states that Baldwin was engaged by AIMCO as an independent contractor to provide consulting services in connection with AIMCO's insurance needs.
AIMCO has proffered an expert report that concludes that Baldwin did not sign the Bonds. Greenwich and XL have not proffered any evidence to the contrary. Greenwich and XL instead argue that perhaps Vito Gruppuso signed Baldwin's name on the Bonds pursuant to Baldwin's authorization. There is not, however, any evidence to support this theory. Baldwin testified at his deposition that "no one authorized by me signed my name to [the Bonds]." Kropf Decl. Ex. Q at 94.
The Bonds are incorporated by reference into the January PFA, on which a signature that looks like that of Ray Baldwin also appears. The signature is on the last page of the PFA, signed on behalf of "Apartment Investment and Management Company." The parties, however, dispute whether Baldwin actually executed the PFA. AIMCO argues that the document was fabricated to make it appear as though Baldwin had executed it. AIMCO proffers an affidavit from Baldwin stating that, although the signature on the January PFA appears to be his, he did not execute the PFA. AIMCO also points out that Baldwin's undated and unnotarized signature appears only on the final page of the purported PFA, which contains no text from the agreement, header, page number, or other information to indicate that the page is actually part of the January PFA. AIMCO further notes that this page has been produced only in copy form with multiple fax lines that are different from the fax lines of the other pages of the PFA.
Summary judgment was entered for WestRM against Greenwich and XL in April 2004, on the ground that a clause in each of the four bonds waived all defenses to enforcement of the bonds. See WestRM-West Risk Markets, Ltd. v. Lumbermens Mut. Cas. Co., 314 F. Supp. 2d 229, 241 (S.D.N.Y. 2004). Greenwich and XL now seek indemnification for their losses on the Bonds from AIMCO and from the Baldwin Defendants pursuant to a 2001 indemnity agreement ("the Indemnity Agreement"). Ray Baldwin's signature appears on the Indemnity Agreement twice on the same page, once on behalf of the "Principals," "Apartment Investment and Management Company/Real Estate Investment Management LLC," and once on behalf of the "Additional Corporate Indemnitor," "Apartment Investment and Management Company."
The language of indemnity in the Agreement is as follows: Undersigned agree to indemnify and exonerate Surety from liability and to pay to Surety upon demand all losses, costs and expenses, including reasonable attorney's fees, paid or incurred in good faith by Surety, by reason of having Executed any Bond and/or enforcing this Agreement. Surety shall have the right and sole discretion to determine whether a claim or liability involving any Bond shall be settled, compromised, paid, defended, prosecuted or appealed, and/or take any action it may deem necessary or expedient with respect to such claims. In the event of any payment by Surety, Surety shall be entitled to be indemnified by Undersigned for all disbursements made by Surety in good faith under the belief that it was liable or that it was necessary or expedient to make such payment, whether or not liability, necessity or expediency exists. An itemized statement of loss and expense incurred and paid by Surety, sworn to by an officer of Surety, shall be prima facie evidence of the fact and amount of the liability of Undersigned to Surety. Separate suits may be brought under this Agreement as causes of action accrue, and the pendency or termination of any such suit shall not bar subsequent action by Surety.
Escobar Decl. Ex. 13. "Bonds" are defined in the Agreement as "[a]ny surety bond, undertaking, guaranty or other contractual obligation undertaken by Surety on behalf of or at the request of Principal before or after the date of this Agreement, and any renewal or extension thereof." Id.
The parties dispute whether Baldwin had the authority to execute this Indemnity Agreement on behalf of AIMCO. AIMCO argues that Baldwin was not authorized to execute it and proffers the testimony of AIMCO officer Thomas Toomey, who states that he did not authorize Baldwin to enter into the Indemnity Agreement and that he did not intend his November 2, 2000 letter of authorization to authorize Baldwin to do so. Greenwich and XL argue that Baldwin was authorized to execute the Indemnity Agreement and proffer three separate documents that purport to authorize Baldwin to "negotiate, purchase and finance the insurance programs for AIMCO," or "to negotiate and execute insurance premium finance" agreements for AIMCO. A November 2, 2000 letter from Thomas Toomey states that Baldwin "is authorized to negotiate and execute premium finance contracts and insurance premium/surety contracts on behalf of Apartment Investment and Management Company." Escobar Decl. Ex. 12.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists when the evidence is "such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding whether a genuine issue of fact exists, the court must "examine the evidence in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party." In re Chateaugay Corp., 10 F.3d 944, 957 (2d Cir. 1993). The moving party bears the initial burden of informing the court of the basis for its motion and identifying the matter that it believes demonstrates the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Summary judgment is appropriate if the nonmoving party fails "to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof." Id.
I. Claim for Indemnification Against AIMCO
Both sides move for summary judgment on the claim of Greenwich and XL against AIMCO for contractual indemnification as set forth in Count IX of the Second Amended Complaint. Greenwich and XL argue that AIMCO is liable under the Indemnity Agreement, signed by Baldwin on behalf of AIMCO, for all losses that Greenwich and XL incurred as a result of issuing the Bonds.*fn1
AIMCO responds that the Bonds are void ab initio because Baldwin's signature on the Bonds was forged and argues that void bonds are not "Bonds" within the meaning of the Indemnity Agreement.
Summary judgment, however, cannot be granted for either side because a genuine issue of disputed fact exists as to whether the Bonds are covered by the Indemnity Agreement. The Agreement states that the Principals "agree to indemnify and exonerate Surety from liability and to pay to Surety upon demand all losses, costs and expenses, including reasonable attorney's fees, paid or incurred in good faith by Surety, by reason of having Executed any Bond and/or enforcing this Agreement." "Bond" is defined in the Agreement as "any surety bond, undertaking, guaranty or other contractual obligation undertaken by Surety on behalf of or at the request of Principal before or after the date of this Agreement, and any renewal or extension thereof." Escobar Decl. Ex. 13 (emphasis added). The threshold question is, therefore, whether the Bonds were issued by Greenwich and XL "on behalf of or at the request of" AIMCO.
Greenwich and XL proffer the January PFA, which incorporates the Bonds by reference, as evidence that the Bonds were issued "at the request of" and "on behalf of" AIMCO. Greenwich and XL argue that the signature of Ray Baldwin, AIMCO's alleged agent, on the PFA shows that AIMCO requested the issuance of the Bonds. In addition, Greenwich and XL contend that the terms of the PFA show that the issuance of the Bonds was "on behalf of" or "in the interest of" AIMCO. Greenwich and XL note that, according to the terms of the PFA, AIMCO would have been forced to pay WestRM the full amount of the remaining payments due under the PFA if Greenwich and XL had not issued the Bonds that obligated Greenwich and XL to pay WestRM if AIMCO defaulted. Thus, the Bonds served AIMCO's "interests" by protecting AIMCO from direct liability to WestRM.
Greenwich and XL also proffer evidence that AIMCO received money from Vito Gruppuso following the completion of the WestRM transaction as proof that the issuance of the Bonds was "on behalf of" or "in the interest of" AIMCO. Greenwich and XL argue that AIMCO would not have received this money from Gruppuso were it not for the issuance of the Bonds, because the WestRM transaction that was secured by the Bonds allowed Gruppuso to pay the Drummonds Insurance policy premiums and to obtain the $11 million insurance payout. Greenwich and XL proffer a February 21, 2002 letter from Gruppuso to Drummonds Insurance as evidence that Gruppuso received an $11 million payout under the Drummonds Insurance policy. Greenwich and XL also proffer an internal AIMCO email as evidence that, pursuant ...