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Colonial Surety Co. v. A&R Capital Associates

United States District Court, E.D. New York

March 31, 2017

COLONIAL SURETY COMPANY, Plaintiff,
v.
A&R CAPITAL ASSOCIATES, A&R DEVELOPERS CORP., and REZA SHAIBANI, Defendants.

          MEMORANDUM OF DECISION AND ORDER

          LaSHANN DeARCY HALL, United States District Judge

         Plaintiff Colonial Surety Company brings this action to enforce an indemnity agreement executed between Plaintiff and Defendants A&R Capital Associates, A&R Developers Corp., and Reza Shaibani. Plaintiff also seeks indemnification under the common law. Plaintiff moves pursuant to Federal Rule of Civil Procedure 56 for summary judgment.

         UNDISPUTED FACTS[1]

         On or about November 10, 2010, Defendants, as indemnitors, executed and delivered a General Indemnity Agreement (the “Indemnity Agreement”) in favor of Plaintiff, as indemnitee. (Defs.' 56.1 Statement ¶ 1, ECF No. 27-15; Nunziata Aff. Ex. A, at 1, ECF No. 27-3.) Pursuant to the terms of the Indemnity Agreement, Defendants agreed to indemnify and hold harmless Plaintiff from and against all losses, costs, and expenses, including attorney's fees, incurred in connection with (a) Plaintiff's issuance of bonds on behalf of Defendant A&R Capital, and/or (b) Plaintiff's enforcement of the Indemnity Agreement. (Defs.' 56.1 Statement ¶ 2.)

         Following the parties' execution of the Indemnity Agreement, the New York State Office of Parks (the “NYSOP”) awarded a contract (the “Sylvan Road Contract”) to Defendant A&R Capital in connection with a project known as “Calcium Chloride Concrete Repairs on Sylvan Road Phase 2” (the “Sylvan Road Project”). (Id. ¶ 3.) On or about May 23, 2012, Plaintiff, as surety, on behalf of Defendant A&R Capital, as principal, issued a performance bond and payment bond (collectively, the “Sylvan Road Bond”) in favor of the NYSOP, as obligee, in connection with the Sylvan Road Contract. (Id. ¶ 4.)

         Following the execution of the Indemnity Agreement, the Village of Valley Stream (“Valley Stream”) awarded a contract (the “Valley Stream Contract”) to Defendant A&R Capital in connection with a project known as the “2011 Nassau County Environmental Bond Act Storm Water Quality Improvements at Hendrickson Park Pond and Village Green” (the “Valley Stream Project”). (Id. ¶ 5.) In connection with the Valley Stream Contract, on or about May 29, 2012, Plaintiff, as surety on behalf of Defendant A&R Capital, as principal, issued a performance bond and a payment bond (collectively, the “Valley Stream Bond”) in favor of Valley Stream, as obligee. (Id. ¶ 6.)

         On or about February 18, 2013, LandSite Development/Westbury Fence Co. (“LandSite”) submitted a claim against the Valley Stream Bond in the amount of $109, 909.10, seeking compensation for work performed and/or materials allegedly supplied to the Valley Stream Project. (Id. ¶ 7.) LandSite then proceeded to file, on or about April 12, 2013, a Notice under Mechanic's Lien Law for Account of Public Improvements in the amount of $259, 827.96 (the “LandSite Lien”) in connection with the Valley Stream Project. (Id. ¶ 8.) At the request of Defendants, on or about July 9, 2013, Plaintiff, as surety, on behalf of Defendant A&R Capital, as principal, issued a $285, 810.76 lien discharge bond (the “LandSite Lien Bond”) in connection with the LandSite Lien. (Id. ¶ 9.) Plaintiff also received additional claims under the Sylvan Road Bond and Valley Stream Bond (collectively, the “Bonds”) from some of Defendant A&R Capital's subcontractors and/or suppliers. (Id. ¶ 10.)

         On September 9, 2013, Valley Stream terminated Defendant A&R Capital on the Valley Stream Project and demanded that Plaintiff complete the Valley Stream Contract pursuant to the terms of the Valley Stream Bond. (Id. ¶ 11.) In May 2014, PSL Industries (“PSL”) provided Plaintiff with a proposal to complete the Valley Stream Project for $636, 557.50. (Pl.'s Reply 56.1 Statement ¶ 1, ECF No. 25; Shaibani Aff. Ex. 1, at 1, ECF No. 27-17.) PSL never completed the project, however. (Pl.'s Reply 56.1 Statement ¶ 2.) In fulfillment of its obligations under the Valley Stream Bond, Plaintiff entered into a Tender Agreement with Valley Stream and AGL Contracting (“AGL”) on or about December 22, 2015, pursuant to which (a) AGL was retained as contractor to complete the Valley Stream Project for $841, 445.88, and (b) Plaintiff paid to Valley Stream the sum of $481, 416.78 under the Valley Stream Bond. (Defs.' 56.1 Statement ¶ 12; Pl.'s Reply 56.1 Statement ¶ 3; Shaibani Aff. Ex. 2, at 10, ECF No. 27-18.) Plaintiff is also a defendant in a state action brought by LandSite, wherein LandSite seeks to foreclose on the LandSite Lien and recover under the LandSite Lien Bond. (Defs.' 56.1 Statement ¶ 13.)

         Plaintiff claims, though Defendants dispute, that Plaintiff has incurred losses, costs, and expenses in an amount not less than $650, 025.86, in connection with the Bonds, the LandSite Lien Bond, and Plaintiff's enforcement of the Indemnity Agreement.[2] (Id. ¶ 14.) Defendants do not dispute that they have failed to indemnify and reimburse Plaintiff for its purported losses, costs, and expenses. (Id. ¶ 15.) Defendants also do not dispute that despite demand, they have failed to deposit collateral security with Plaintiff in the sum of $259, 827.96 in connection with the LandSite Lien. (Id. ¶ 17.)

         STANDARD OF REVIEW

         Summary judgment must be granted when 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); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. At summary judgment, the movant bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Feingold v. New York, 366 F.3d 138, 148 (2d Cir. 2004). Where the non-movants bear the burden of proof at trial, the movant's initial burden at summary judgment can be met by pointing to a lack of evidence supporting the non-movants' claim. Celotex Corp., 477 U.S. at 325.

         Once the movant meets that burden, the non-movants may defeat summary judgment only by producing evidence of specific facts that raise a genuine issue for trial. See Fed. R. Civ. P. 56(c); Anderson, 477 U.S. at 248; Davis v. New York, 316 F.3d 93, 100 (2d Cir. 2002). The court is to view all such facts in the light most favorable to the non-movants, drawing all reasonable inferences in their favor. Anderson, 477 U.S. at 255. To survive summary judgment, non-movants must present concrete evidence and rely on more than conclusory or speculative claims. Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980) (“The litigant opposing summary judgment . . . ‘may not rest upon mere conclusory allegations or denials' as a vehicle for obtaining a trial.”).

         Summary judgment is appropriate on contract claims when the “contractual language is ‘plain and unambiguous.'” Zurich Am. Ins. Co. v. ABM Indus., 397 F.3d 158, 164 (2d Cir. 2005). “Ambiguity exists when a contract is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” Id. (citation and quotation marks omitted). “The determination of whether a contract term is ambiguous is a threshold question of law for the court.” Walk-In Medical Centers, Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987).

         DISCUSSION

         I. Contractual Indemnification for Plaintiff's Losses, Costs, and Expenses

         Pursuant to the terms of the Indemnity Agreement, Defendants agreed to indemnify and hold harmless Plaintiff from and against all losses, costs, and expenses incurred in connection with (a) Plaintiff's issuance of bonds on behalf of Defendant A&R Capital, and/or (b) Plaintiff's enforcement of the Indemnity Agreement. (Defs.' 56.1 ...


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