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Philadelphia Indemnity Insurance Co. v. Fox

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

June 10, 2019

PHILADELPHIA INDEMNITY INSURANCE CO., Plaintiff,
v.
JOSEPH FOX, et al., Defendants.

          KIMBERLY A. JOLSON MAGISTRATE JUDGE

          OPINION AND ORDER

          EDMUND A. SARGUS, JR. CHIEF DNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Philadelphia Indemnity Insurance Co.'s ("Philadelphia") Motion for Summary Judgment. (ECF No. 12.) Defendants Joseph Fox and Rebecca Fox (collectively "Defendants") filed a Response (ECF No. 15) in which they notified the Court "that they do not intend to oppose the relief sought" in Philadelphia's Motion. (Id.) For the reasons set for below, the Court GRANTS Philadelphia's Motion for Summary Judgment. (ECF No. 12.)

         I.

         A. Undisputed Factual Background

         Fox Mechanical Co. ("Fox Mechanical"), which is not a party to this suit, was a construction contracting business that occasionally required surety bonds for its construction contracts. Philadelphia issued surety bonds (the "Bonds") on behalf of Fox Mechanical. As a condition of Philadelphia issuing the Bonds, Fox Mechanical (as the Surety) and Defendants (as the Indemnitors) executed an indemnity agreement (the "Indemnity Agreement") in favor of Philadelphia (as the Principal) on September 19, 2012. Philadelphia, Fox Mechanical, and Defendants executed the Indemnity Agreement in Ohio. (See Pl.'s Mot. for Summ. J., Ex. A ("Skowron Aff."), Ex. 1 at 11, 13.)

         Philadelphia asserts that, by executing the Indemnity Agreement, Defendants: (1) agreed to indemnify Philadelphia for all "Loss"; (2) granted Philadelphia the sole discretion to settle bond claims on the basis of liability, necessity, or expediency; (3) agreed to collateralize Philadelphia relative to any "Loss" associated with any disputed claims; (4) agreed that Philadelphia may recover any payments it makes without deliberate and willful malfeasances; and (5) agreed that a sworn itemization of Philadelphia's payments would constitute prima facie evidence of the fact and extent of the Indemnitors' liability to Philadelphia. (Id. at ¶ 2; see id., Ex. 1, ECF No. 13-1.) Relying on Defendants' execution of the Indemnity Agreement, Philadelphia issued the Bonds on behalf of Fox Mechanical. (Skowron Aff. at ¶ 3.) Defendants never deposited any collateral with Philadelphia related to its potential Loss under the Bonds. (Id. at ¶ 4.)

         After numerous claims were asserted against Philadelphia under the Bonds, however, Philadelphia exercised its right to settle claims and therefore made the following disbursements:

Claim No.

Bond No.

Obligee-Payee

Project Name

"Loss" Paid

1021028

PB11328100003

Local 189 Plumbers & Pipefitters

Wage Bond - Mechanical Contractor

$30, 000.00

1021030

PB11328100004

Local 189 Plumbers & Pipefitters

Fringe Benefit Bond - Light Commercial

$179, 664.18

1024988

PB11328100076

Local 189 Plumbers & Pipefitters

Wage Bond - Mechanical Contractor

$5, 000.00

1024820

PB11328100075

Local 189 Plumbers & Pipefitters

Fringe Benefit Bond - Light Commercial

$1, 443.09

955141

PB11328100058

Summit Construction

Tallmadge Elementary School

$124, 970.60

955141

PB11328100058

Columbus Heating

Tallmadge Elementary School

$110, 948.80

Total

$452, 026.67

         In addition to those disbursements it has already incurred, Philadelphia will soon pay an additional $23, 441.60 to resolve a preference claim Fox Mechanical's bankruptcy trustee has asserted. (Id. at ¶ 5; see Pl.'s Mot. for Summ. J. at 7-8). Philadelphia has also paid $24, 169.41 in attorneys' fees and expenses and has incurred an additional $7, 448.00 in unpaid attorneys' fees. as a result of issuing the Bonds and enforcing the Indemnity Agreement. (Skowron Aff. at ¶ 6). Philadelphia avers it has incurred a total loss of $507, 085.68. (Id. at ¶ 7.) Philadelphia asserts that it paid these claims only after investigating each individually and while exercising the honest belief that liability, necessity, or expedience required these payments. (Id. at ¶ 8.)

         B. Procedural Background

         On August 31, 2018, Philadelphia filed suit against Defendants. (See ECF No. 1.) On November 19, 2018, Philadelphia filed its Amended Complaint (ECF No. 9) against Defendants, requesting Defendants' specific performance of a collateral obligation (Count I), and alleging that Defendants breached the Indemnity Agreement (Count II). In its Motion for Summary Judgment, Philadelphia explains that the parties have settled the specific performance claim and so Philadelphia only moves for summary judgment on its breach of contract claim. (See Pl.'s Mot. for Summ. J. at n.l, ECF No. 12.) Philadelphia avers that summary judgment in its favor on that claim will fully resolve this action. (Id.) As discussed supra, Defendants filed a one-page Response by which they informed the Court that "they do not intend to oppose the relief sought" by Philadelphia. (See ECF No. 15.)

         II.

         Summary judgment is appropriate "if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The Court may therefore grant a motion for summary judgment if the nonmoving party who has the burden of proof at trial fails to make a showing sufficient to establish the existence of an element ...


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