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Travelers Casualty & Surety Company of America v. Hub Mechanical Contractors, Inc.

United States District Court, S.D. Mississippi, Eastern Division

April 15, 2014

TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA, Plaintiff,
v.
HUB MECHANICAL CONTRACTORS, INC., CARREME B. CURRY, GEORGE C. CURRY, CINDY B. CURRY, MARGIE C. FAILS, PHILIP A. FAILS, AND ARTHUR C. HENDERSON, Defendants.

MEMORANDUM OPINION AND ORDER

KEITH STARRETT, District Judge.

This matter is before the Court on the Plaintiff Travelers Casualty & Surety Company of America's Motion for Default Judgment Against Hub Mechanical Contractors, Inc., Carreme B. Curry and Arthur C. Henderson ("Motion for Default Judgment") [17]. Having considered the motion, the record, and the applicable law, the Court finds that the motion should be granted in part and denied in part.

I. RELEVANT BACKGROUND

On May 15, 2013, Travelers Casualty & Surety Company of America ("Travelers") filed suit against Hub Mechanical Contractors, Inc. ("Hub"), Carreme B. Curry, George C. Curry, Cindy B. Curry, Margie C. Fails, Philip A. Fails, and Arthur C. Henderson in this Court. ( See Compl. [1].) Subject matter jurisdiction is asserted on the basis of diversity of citizenship under Title 28 U.S.C. § 1332. The Complaint indicates that Travelers is a Connecticut corporation, that Hub was a Mississippi corporation before it was administratively dissolved, and that all of the individual Defendants are adult resident citizens of Mississippi. The Complaint requests damages well in excess of $75, 000.

Travelers contends that the Defendants are liable to it as "Indemnitors." The following facts and circumstances alleged in the Complaint underlie this contention. Travelers is a surety company that issues payment and performance bonds on behalf of selected contractors. Hub is or was a contractor performing construction work in Mississippi. Hub sought to obtain payment and performance bonds from Travelers in order to bid on various construction projects in Mississippi. Travelers required an Indemnity Agreement from the Indemnitors in anticipation of the issuance of the bonds. On February 11, 2005, Hub, Carreme Curry, George Curry, and Cindy Curry executed a General Agreement of Indemnity (the "2005 Indemnity Agreement") [1-2] in favor of Travelers. On October 28, 2009, Hub, Carreme Curry, Margie Fails, Philip Fails, and Arthur Henderson executed a General Agreement of Indemnity (the "2009 Indemnity Agreement") [1-3] in favor of Travelers. The 2005 Indemnity Agreement and 2009 Indemnity Agreement both contain the following provision:

Indemnification and Hold Harmless: Indemnitors shall exonerate, indemnify and save Company [Travelers] harmless from and against all Loss. An itemized, sworn statement by an employee of Company, or other evidence of payment, shall be prima facie evidence of the propriety, amount and existence of Indemnitors' liability. Amounts due to Company shall be payable upon demand.

(Doc. Nos. [1-2 at ECF p. 1], [1-3 at ECF p. 1].) "Loss" is defined under the Agreements as:

All loss and expense of any kind or nature, including attorneys' and other professional fees, which Company incurs in connection with any Bond or this Agreement, including but not limited to all loss and expense incurred by reason of Company's: (a) making any investigation in connection with any Bond; (b) prosecuting or defending any action in connection with any Bond; (c) obtaining the release of any Bond; (d) recovering or attempting to recover Property in connection with any Bond or this Agreement; (e) enforcing by litigation or otherwise any of the provisions of this Agreement; and (f) all interest accruing thereon at the maximum legal rate.

(Doc. Nos. [1-2 at ECF p. 1], [1-3 at ECF p. 1].)

Travelers contends that Hub, Carreme Curry, George Curry, and Cindy Curry are jointly and severally liable for Loss in the amount of $857, 611.43, in connection with a Subcontract Performance Bond [1-4] issued by Travelers, as Surety, to Rod Cook Construction ("Rod Cooke"), as Obligee. Travelers asserts that Hub entered into a subcontract agreement with Rod Cooke to complete certain work on a construction project known as Coast Electric Power Association - New Headquarters Facility (the "Rod Cooke Project"). Travelers further alleges that Rod Cooke required Hub to obtain a payment and performance bond in connection with the subcontract, and that it issued Bond No. XXXXXXXXX (the "Rod Cooke Bond") [1-4] in reliance on the 2005 Indemnity Agreement [1-2]. The Rod Cooke Bond is dated July 8, 2009, lists an amount of $1, 319, 500.00, and essentially requires Travelers to cure any default or failure to perform by Hub under its subcontract with Rod Cooke. Travelers alleges that it incurred the Loss of $857, 611.43 subsequent to Rod Cooke advising that Hub was in default under the subcontract.

Travelers also alleges that Hub, Carreme Curry, Margie Fails, Phillip Fails, and Arthur Henderson are jointly and severally liable for Loss in the amount of $599, 379.63, in connection with a Subcontract Performance and Payment Bond [1-5] issued by Travelers, as Surety, to Hanco Corporation ("Hanco"), as Obligee. Travelers asserts that Hub entered into a subcontract agreement with Hanco to complete certain work on a construction project known as Barracks Tornado Replacement, Camp Shelby, Mississippi (the "Hanco Project"). Travelers further alleges that Hanco required Hub to obtain a payment and performance bond in connection with the subcontract, and that it issued Bond No. XXXXXXXXX (the "Hanco Bond") [1-5] in reliance on the 2009 Indemnity Agreement [1-3]. The Hanco Bond is dated October 29, 2009, lists an amount of $1, 313, 000.00, and essentially requires Travelers to cure any default or failure to perform by Hub under its subcontract with Hanco. Travelers alleges that it incurred the Loss of $599, 379.63 subsequent to Hanco advising that Hub was in default under the subcontract.

Travelers further seeks "all attorneys' fees, costs and expenses incurred in connection with this action to enforce the indemnity obligations under the 2005 Indemnity Agreement and the 2009 Indemnity Agreement." (Compl. [1] at ¶ 33.)

The docket reflects the following time line of events pertinent to ...


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