Opinion
Civil Action 22-cv-01879-CNS-MEH
06-27-2023
FAIR AMERICAN INSURANCE AND REINSURANCE COMPANY, Plaintiff, v. ROBERT KEITH BYRNES, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Michael E. Hegarty, United States Magistrate Judge.
Before the Court is Plaintiff's Motion for Partial Summary Judgment. ECF 19. The matter is fully briefed, and the Court finds that oral argument will not materially assist in its adjudication. For the following reasons and based on the submitted record, the Court respectfully recommends granting summary judgment on the breach of contract claim and deferring ruling on an award for Plaintiff.
BACKGROUND
I. Claims for Relief
Plaintiff's Complaint raises three claims: (1) breach of express contract, (2) common law indemnification, and (3) unjust enrichment. ECF 1 at 7-8.
II. Statement of Undisputed Material Facts
1. Defendant Robert Byrnes “dba Koala-Mate” executed Plaintiff Fair American Insurance and Reinsurance Company's General Agreement of Indemnity (“GAI”) on June 7, 2018. ECF 19-2.
2. The GAI identified Plaintiff as “Surety,” and Defendant “dba Koala Mate” as “Indemnitors” and “Principal.” Id. at 1.
3. The GAI states that Indemnitors requested Surety “to execute, procure the execution of such bonds, undertakings, recognizances or instruments of guaranty (all of which are hereafter included within the term ‘Bond or Bonds')” that have been or would “be applied for directly or through an agent, attorney or other representative on behalf of [Indemnitors].” Id.
4. Paragraph 2 of the GAI, titled “Indemnity,” states in relevant part:
The Indemnitors agree and bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, to indemnify and save harmless Surety from and against any and all liability, claims, loss, costs, damages, demands, charges, suits, judgments or expenses of whatever nature or kind and arising out of or in any way connected with such Bonds, including but not limited to fees of attorneys and other expenses, costs and fees of investigation, adjustment of claims, procuring or attempting to procure the discharge of such bonds and attempting to recover indemnification from Indemnitors or recoveries from third parties, whether the Surety shall have paid or incurred same as aforesaid. Payments shall be due upon demand.... The Indemnitors understand and agree that this document is a continuing agreement to indemnify over an indefinite period and that the Bonds issued by the Surety pursuant to this Agreement may vary widely in amounts and nature and that the Indemnitors will be bound by all such Bonds ....Id.
5. Paragraph 2.A. of the GAI states in relevant part:
Surety shall have the right in its sole discretion to determine whether any suits or claims shall be paid, compromised, defended, prosecuted or appealed and to pay out such sums as it deems necessary to accomplish any of those purposes and its determination as to whether such suit or claim should be settled or defended shall be binding and conclusive on Indemnitors. Surety shall have the right to incur such expenses in handling a claim as it shall deem advisable, including but not limited to the expense for investigative, accounting, engineering and legal services....In any claim, demand for indemnity or suit hereunder, an itemized statement of aforesaid loss and expense, sworn to by an officer or agent of Surety, or the vouchers, affidavits or other evidence of disbursement by Surety, shall be prima facie evidence of the fact and extent of the liability hereunder of Indemnitors.Id.
6. Paragraph 2.B. of the GAI states in relevant part, “Surety shall have the right to reimbursement of its expenses, premiums and attorneys' fees hereunder, irrespective of whether any Bond loss payment has been made by Surety.” Id.
7. Paragraph 2.C. of the GAI states in relevant part:
Surety shall have the right, and is hereby authorized, but not required, to defend in the name of Principal, or in the name of Principal to adjust, settle or compromise any claim demand, suit or judgment upon any Bond unless Indemnitors shall, in writing, request Surety to litigate such claim or demand, or to defend such suit, or to appeal from such judgment, or otherwise to resist any such, and shall, as a condition precedent, first deposit with Surety satisfactory collateral sufficient, in the sole discretion of the Surety, to pay on a current basis all expenses of such litigation, defense or appeal, including attorneys' fees, and to pay any judgment or judgments rendered or that may be rendered, plus interests, costs, expenses and attorneys' fees thereon.Id.
8. Paragraph 8 of the GAI, titled “Termination,” provides the GAI “is a continuing obligation of Indemnitors unless terminated by written notice of Surety as hereinafter provided.” Id. at 4.
9. On May 5, 2021, Plaintiff issued bond number BND1006475-00, a “Subcontract Performance Bond” (the “Bond”) with a penal amount of $127,665.00, for subcontractor Koala Mate's “Highway 85 Fencing per 5-3-21 Koala-Mate Estimate” project for prime contractor Castle Rock Construction Company of Colorado, LLC (“Castle Rock”). ECF 19-1; see also ECF 19-4 at 1 ¶ 2; ECF 22 at 2 ¶¶ 2, 3.
The Motion has three citations for this fact, including one identified as “Ex. 2, Discovery Responses of Robert Byrnes, Requests for Admissions, | 6.” ECF 19 at 5 ¶ 1. However, no discovery responses are attached to the Motion. Compare id., with ECF 19-1-19-6.
10. The Bond identifies Castle Rock as the obligee and the subcontractor, Koala-Mate, as the principal. ECF 19-1.
11. Defendant executed the Bond as the owner of Koala-Mate. Id.
12. William Hattings, Surety Vice President for the National Claim Services who handles bonds issued by Plaintiff, submitted an affidavit in support of Plaintiff's Motion. ECF 194.
13. The Bond's terms were never revised. Id. at 1 ¶ 3.
14. On November 2, 2021, Castle Rock sent Plaintiff and Koala-Mate (at Defendant's attention) a “Notice of Default and Termination of Koala-Mate” pursuant to “Bond No. BND1006475-00” (i.e., the Bond) in connection with Koala-Mate's performance on the “US 85” project. ECF 19-3 at 1-2; see also ECF 19-4 at 2 ¶ 5.
15. Castle Rock's November 2, 2021 correspondence sought “Surety's response and plan for completing the work remaining on the project....” ECF 19-3 at 2; see also ECF 19-4 at 2 ¶ 5.
16. Given Castle Rock's notice of default and “performance bond demand to the Surety,” Plaintiff “retained a construction consultant and investigated Castle Rock's claims and [Defendant's] defenses.” ECF 19-4 at 2 ¶ 6; see also ECF 19-5.
17. Plaintiff “paid $2,282.00 in construction consultant costs” in connection with its investigation of the Bond claim. ECF 19-4 at 2 ¶ 11; see also ECF 19-5; ECF 19-6 at 2 ¶ 7.
18. Plaintiff permitted Defendant the opportunity to be involved in its evaluation of Castle Rock's claims and to provide feedback on their merit. ECF 19-5.
19. Plaintiff determined Defendant's sole defense to Castle Rock's claims “had little to no merit.” Id.
20. Ultimately, Plaintiff found “a potential for liability existed for losses and/or fees, costs and expenses relating to Castle Rock's claims.” ECF 19-4 at 2 ¶ 6.
21. Despite repeated demands and Defendant's obligations under the GAI, Defendant failed to collateralize Plaintiff “with sufficient funds or other collateral in an amount sufficient to cover the claims against the Bond and [Plaintiff's] associated losses.” Id. at 2 ¶ 7.
The Motions states, “Fair American made repeated demands on the Indemnitor to collateralize Fair American with sufficient funds or other collateral in an amount sufficient to cover the claims against the Bond and Fair American's associated losses.” ECF 19 at 7 ¶ 7 (emphasis added) (citing Ex. 1 at ¶ 7); see also id. at 3-4. However, the underlying exhibit states, “Castle Rock made repeated demand on Byrnes to collateralize Fair American ....” ECF 19-4 at 2 ¶ 7 (emphasis added).
22. After Defendant's termination, “significant work on the [US 85] Project remained” which Castle Rock was able to substantially complete. ECF 19-5.
23. Given the work Castle Rock completed on Defendant's scope of work, “Castle Rock submitted [a] performance bond claim [to Plaintiff] alleging $95,000 in damages.” Id.
24. Plaintiff evaluated Castle Rock's damages at $85,000, and accordingly settled Castle Rock's claim for that amount on February 24, 2022. Id.; see also ECF 19-4 at 2 ¶ 8; ECF 19-6 at 2 ¶ 7.
25. Plaintiff has paid attorneys' fees and costs in connection with Castle Rock's claims. ECF 19-4 at 2 ¶ 10; see also ECF 19-5; ECF 19-6 at 2 ¶ 8.
LEGAL STANDARDS
A motion for summary judgment “test[s] whether a trial is required.” Heideman v. S. Salt Lake City, 348 F.3d 1182, 1185 (10th Cir. 2003). A “court shall grant summary judgment if the movant shows that 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). “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A fact is material if it “might affect the outcome of the suit under the governing law.” Id. at 248.
“The movant bears the initial burden of demonstrating the absence of a genuine issue of material fact, but once the moving party has done so, the burden shifts to the non-movant to establish a genuine issue of fact.” Georgelas v. Desert Hill Ventures, Inc., 45 F.4th 1193, 1197 (10th Cir. 2022) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)); see also Wellington v. Daza, No. 21-2052, 2022 WL 3041100, at *5 (10th Cir. Aug. 2, 2022) (“There is ‘no express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar materials negating the opponent's claim.'” (quoting Celotex Corp., 477 U.S. at 323)), cert. denied, 143 S.Ct. 788 (2023). However, “[f]or dispositive issues on which the plaintiff will bear the burden of proof at trial, he must go beyond the pleadings and designate specific facts so as to make a showing sufficient to establish the existence of an element essential to his case in order to survive summary judgment.” Upchurch v. Wastequip, LLC, No. 21-7055, 2022 WL 4099433, at *4 (10th Cir. Sept. 8, 2022) (quoting Cardoso v. Calbone, 490 F.3d 1194, 1197 (10th Cir. 2007)), cert. denied, 143 S.Ct. 814 (2023).
Parties asserting “a fact cannot be or is genuinely disputed must support” their assertions with citations “to particular parts of materials in the record” like affidavits, interrogatory responses, documents, depositions, and admissions or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c) (emphasis added). “At the summary judgment stage, evidence need not be submitted ‘in a form that would be admissible at trial,'” provided “the evidence may ultimately be presented at trial in an admissible form.” Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199 (10th Cir. 2006) (internal citations omitted). “Unsubstantiated allegations carry no probative weight in summary judgment proceedings.” Upchurch, 2022 WL 4099433, at *4 (quoting Cardoso, 490 F.3d at 1197).
Courts review the evidence the parties submit “and draw all reasonable inferences in the light most favorable to [] the non-moving party.” Safeway Stores 46 Inc. v. WY Plaza LC, 65 F.4th 474, 490 (10th Cir. 2023) (internal citation omitted). But they have no duty to search the record on behalf of a litigant to find evidence supporting the litigant's summary judgment interests. See Cross v. The Home Depot, 390 F.3d 1283, 1290 (10th Cir. 2004) (“[I]t is the responding party's burden to ensure that the factual dispute is portrayed with particularity, without . . . depending on the trial court to conduct its own search of the record.”); see also Mitchell v. City of Moore, Okla., 218 F.3d 1190, 1199 (10th Cir. 2000) (“The district court was not obligated to comb the record in order to make [the plaintiff's] arguments for him.”). “The reason for this requirement is obvious: ‘Judges are not like pigs, hunting for truffles buried in briefs.'” McKinzy v. I.R.S., 367 Fed.Appx. 896, 897 (10th Cir. 2010) (quoting Gross v. Burggraf Constr. Co., 53 F.3d 1531, 1546 (10th Cir. 1995)).
If a party fails to comply with Rule 56(c) and “properly support an assertion of fact or fails to properly address another party's assertion of fact,” Rule 56(e) permits courts to (1) allow “an opportunity to properly support or address the fact; (2) consider the fact undisputed for purposes of the motion; (3) grant summary judgment if the motion and supporting materials-including the facts considered undisputed-show that the movant is entitled to it; or (4) issue any other appropriate order.” Cf. Coleman v. Blue Cross Blue Shield of Kan., Inc., 287 Fed.Appx. 631, 635 (10th Cir. 2008) (“Faced with pleadings that did not comply with either the local practice rule or summary judgment practice in general, the district court was correct to admit all facts asserted in Blue Cross's summary judgment motion ‘that are not controverted by a readily identifiable portion of the record.'” (internal citation omitted)). But “[i]f a party who will bear the burden of proof at trial fails to make a sufficient showing to establish an essential element of their case, summary judgment is proper, ‘since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.'” Munoz v. FCA U.S. LLC, No. 22-2077, 2023 WL 3746540, at *3 (10th Cir. June 1, 2023) (quoting Celotex Corp., 477 U.S. at 322-23).
II. Treatment of a Pro Se Litigant's Pleadings
Courts liberally construe pro se litigants' pleadings “and h[o]ld [them] to a less stringent standard than formal pleadings drafted by lawyers.” Upchurch, 2022 WL 4099433, at *5 (quoting Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005)), cert. denied, 143 S.Ct. 814 (2023); see also Yang v. Archuleta, 525 F.3d 925, 927 n.1 (10th Cir. 2008) (“Although we liberally construe pro se filings, we do not ‘assume the role of advocate.'” (quoting Ledbetter v. City of Topeka, Kan., 318 F.3d 1183, 1187-88 (10th Cir. 2003)). Still, the Tenth Circuit “has repeatedly insisted that pro se parties follow the same rules of procedure that govern other litigants.” Upchurch, 2022 WL 4099433, at *5 (quoting Garrett, 425 F.3d at 840); see also Yang, 525 F.3d at 927 n.1 (“Pro se status ‘does not excuse the obligation of any litigant to comply with the fundamental requirements of the Federal Rules of Civil and Appellate Procedure.” (quoting Ogden v. San Juan County, 32 F.3d 452, 455 (10th Cir. 1994)); cf. Handy v. City of Sheridan, 636 Fed.Appx. 737, 737 n.8, 743 n.15 (10th Cir.) (affirming summary judgment against a pro se plaintiff and holding district judge did not err in not considering materials on summary judgment that the pro se plaintiff filed after the entry of summary judgment); McKinzy, 367 Fed.Appx. at 897 (holding pro se plaintiff's “generalized assertion that disputed issues of material fact precluded summary judgment is insufficient to adequately frame and develop an issue to invoke appellate review because of his failure to point to any part of the record on which he relies.” (internal citation omitted)).
ANALYSIS
Plaintiff seeks summary judgment solely on its breach of contract claim. ECF 19 at 1. It also seeks an award “of at least $99,142.55,” including $11,860.55 in attorneys' fees and costs, and states it would file a Fed.R.Civ.P. 59 motion to amend any judgment to include pre-judgment interest. ECF 19 at 1, 16-17. As set forth below, the Court recommends granting the former and deferring a ruling on the latter.
Plaintiff acknowledges its two other claims and states it “will dismiss” them if the Court grants the present Motion. ECF 19 at 1 n.1.
I. Breach of Contract Claim
Plaintiff must prove four elements to obtain summary judgment on its breach of contract claim: “(1) the existence of a contract”; “(2) performance by [P]laintiff or some justification for nonperformance”; (3) Defendant's “failure to perform the contract”; and “(4) resulting damages to [P]laintiff.” W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992) (en banc) (internal citations omitted); see also Bd. of Cnty. Comm'rs of Adams Cnty. v. City & Cnty. of Denver, 511 P.3d 692, 700 (citing W. Distrib. Co., 841 P.2d at 1058), cert. granted, No. 22SC250, 2022 WL 13915362 (Colo. Oct. 24, 2022).
As an initial matter, Defendant's briefs are procedurally improper and lack probative weight. First, Defendant's Response to Plaintiff's Motion does not comply with District Judge Sweeney's practice standards. ECF 22. It lacks the required section styled “Response to Statement of Undisputed Materials Facts” and contains a general denial instead of admitting or denying Plaintiff's asserted material facts “in separate correspondingly numbered paragraphs.” Id.; see also Uniform Civ. Practice Standards 7.1D(b)(4). Nor does it properly support its assertions in compliance with Fed.R.Civ.P. 56(c). ECF 22. Beyond discussing the Bond attached to Plaintiff's Motion, the Response fails to cite to any other materials and notably fails to attach any materials supporting its assertions. Id. Second, Defendant filed a Sur-Reply to Plaintiff's Reply without leave of Court, mistakenly interpreting Plaintiff's Reply as a second motion for summary judgment. ECF 24 (“Defendants [sic] Response to Plaintiff's Second Motion for Summary Judgment.”). Like Defendant's Response, Defendant's Sur-Reply fails to comply with District Judge Sweeney's practice standards and Fed.R.Civ.P. 56(c)'s requirement to support assertions that a fact is genuinely disputed. Because Plaintiff's allegations lack substantiation, they “carry no probative weight in summary judgment proceedings.” Upchurch, 2022 WL 4099433, at *4 (quoting Cardoso, 490 F.3d at 1197).
A. There is no genuine dispute as to any material fact.
While Defendant explicitly concedes the issuance of the Bond for Koala-Mate's work on the Highway 85 project for Castle Rock, neither of his filings address Plaintiff's other undisputed material facts. ECFs 22, 24. Defendant does not refute and thus does not dispute the GAI's existence, Plaintiff's performance under the GAI, Defendant's “failure to perform” under the GAI, and the “resulting damages to [P]laintiff.” W. Distrib. Co., 841 P.2d at 1058 (internal citations omitted). Thus, there is no genuine dispute as to any material fact and Defendant concedes all four elements of Plaintiff's breach of contract claim. See Phillips v Calhoun, 956 F.2d 949, 953-54 (10th Cir. 1992) (observing “[a] litigant who fails to press a point by supporting it with pertinent authority, or by showing why it is sound despite a lack of supporting authority or in the face of contrary authority, forfeits the point.” (quoting Pelfresne v. Village of Williams Bay, 917 F.2d 1017, 1023 (7th Cir. 1990)).
B. Plaintiff is entitled to judgment as a matter of law.
The Court also finds Plaintiff is entitled to judgment on the breach of contract claim as a matter of law.
First, the parties entered into a valid and enforceable contract-the GAI. “A contract is formed when an offer is made and accepted, and the agreement is supported by consideration.” Walshe v. Zabors, 178 F.Supp.3d 1071, 1081 (D. Colo. 2016) (citing Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo.App. 2008)); see also Bond Safeguard Ins. Co. v. Cont' l Divs., LLC, No. 12-cv-02026-RPM-KLM, 2012 WL 12942270, at *2 (D. Colo. Nov. 27, 2012) (finding a contract existed where the plaintiff showed “each [d]efendant signed the Agreement”). “Acceptance of an offer is generally defined as words or conduct that, when objectively viewed, manifests an intent to accept an offer.” Marquardt, 200 P.3d at 1129. “[A]n agreement is supported by consideration if ‘the promisee, in return for a promise, does anything legal which he is not bound to do, or refrains from doing anything which he has a right to do, even though there is no actual loss or detriment to him or actual benefit to the promisor.'” Townsend v. Adams 12 Five Star Schs., No. 16-cv-02354-PAB-MEH, 2018 WL 741026, at *4 (D. Colo. Feb. 7, 2018) (quoting Troutman v. Webster, 257 P. 262, 263-64 (Colo. 1927)).
Here, Defendant accepted the terms of Plaintiff's GAI by signing the agreement. ECF 192 at 8. Consideration existed as Defendant agreed “to indemnify and save harmless [Plaintiff] from and against any and all liability, claims, loss, costs, damages, demands, charges, suits, judgments or expenses of whatever nature or kind and arising out of or in any way connected with such Bonds” that Plaintiff issued on behalf of Defendant (doing business as Koala-Mate) at Defendant's request. ECF 19-2 at 1 ¶ 2. The fact that the parties executed the GAI about three years before Plaintiff issued the Bond is irrelevant because the GAI clearly states it “is a continuing agreement to indemnify over an indefinite period” and unambiguously states it is “a continuing obligation of Indemnitors unless terminated by written notice of Surety.” Id. at 1 ¶ 2, 4¶ 8. There is no assertion or evidence that the GAI has been modified or terminated.
Second, Plaintiff performed under the GAI. “Performance” in a breach of contract claim “means ‘substantial' performance.” W. Distrib. Co., 841 P.2d at 1058. “Substantial performance occurs when, ‘although the conditions of the contract have been deviated from in trifling particulars not materially detracting from the benefit the other party would derive from a literal performance, [the defendant] has received substantially the benefit he expected, and is, therefore, bound to pay.'” Id. (quoting Newcomb v. Schaeffler, 131 Colo. 56, 62 (1955)); see also Allstate Ins. Co. v. Cruz, No. 20-cv-03139-NYW-MEH, 2023 WL 3976031, at *7 (D. Colo. Apr. 14, 2023) (explaining Colorado law provides that “[a] party has substantially performed when the other party has substantially received the expected benefit of the contract.” (quoting Stan Clauson Assocs., Inc. v. Coleman Bros. Const., LLC, 297 P.3d 1042, 1045 (Colo.App. 2013))). Under Colorado law, “courts must look to the plain and ordinary meaning of contract provisions.” Allstate Ins. Co., 2023 WL 3976031, at *7 (citing Chacon v. Am. Fam. Mut. Ins. Co., 788 P.2d 748 (Colo. 1990)); see also Sterling Consulting Corp. v. Credit Managers Ass'n of Cal., No. 05-cv-01573-CBS, 2006 WL 3641009, at *4 (D. Colo. Dec. 12, 2006) (“Under well-settled principles of contract interpretation, the words of the contract should be given their plain meaning according to common usage, and strained constructions should be avoided.” (quoting Mgmt. Specialists, Inc. v. Northfield Ins. Co., 117 P.3d 32, 35 (Colo.App. 2004))), aff'd, 252 Fed.Appx. 915 (10th Cir. 2007); Id. at 3 (“An indemnity agreement is to be given such a meaning as would be attached to it by a reasonably intelligent person . . . knowing all the circumstances prior to and contemporaneous with the making of the integration” (quoting Alzado v. Blinder, Robinson & Co., Inc., 752 P.2d 544, 553 (Colo. 1988))).
Here, the GAI gave Plaintiff “the right in its sole discretion to determine whether any suits or claims shall be paid, compromised, defended, prosecuted or appealed and to pay out such sums as it deems necessary to accomplish any of those purposes ” ECF 19-2 at 1 ¶ 2.A. (emphasis added). The GAI also gave Plaintiff the authorization and right “in the name of Principal to adjust, settle or compromise any claim demand, suit or judgment upon any Bond unless Indemnitors shall, in writing, request Surety to litigate such claim or demand, or to defend such suit, or to appeal from such judgment, or otherwise resist any such....” Id. at 1 ¶ 2.C. When Plaintiff received Castle Rock's notice of Koala-Mate's default on the Highway 85 project and demand of performance under the Bond, Plaintiff investigated Castle Rock's claims and Defendant's potential defenses. ECF 19-4 at 2 ¶ 6; see also ECF 19-5. Though not required under the GAI, Plaintiff allowed Defendant to be involved in the evaluation of Castle Rock's claims. ECF 19-5. There is no evidence or assertion that Defendant provided a written request that Plaintiff resist the claims. Using its discretion, Plaintiff thus determined Defendant's sole defense to be meritless, found potential liability in connection with Castle Rock's claims, and settled by paying Castle Rock the amount Plaintiff deemed it had been damaged. Id.; ECF 19-4 at 2 ¶¶ 6, 8; ECF 19-6 at 2 ¶ 7.
To the extent Defendant argues Castle Rock's claims were meritless (albeit without appropriate support), that argument is immaterial. The GAI does not qualify that “any claim” must be valid or proper; the determination of whether to defend or pay a claim is in Plaintiff's “sole discretion.” ECF 19-2 at 1 ¶ 2.A.; cf. Liberty Mut. Ins. Co. v. Aventura Eng'g & Const. Corp., 534 F.Supp.2d 1290, 1310 (S.D. Fla. 2008) (“Liberty and Aventura executed an Indemnity Agreement giving Liberty the right to seek collateral in order to be exonerated and to be indemnified for all costs associated with the issued bonds Therefore, whether Goodwill's claim is ultimately found to have been ‘proper' or ‘valid' is immaterial. The Indemnity Agreement simply does not provide that Liberty must receive a valid claim before it can exercise its rights.”).
Moreover, the GAI established Plaintiff's “right to incur such expenses in handling a claim as it shall deem advisable, including but not limited to the expense for investigative, accounting, engineering and legal services.” ECF 19-2 at 1 ¶ 2.A. (emphasis added). As part of its investigation, Plaintiff “retained a construction consultant” and incurred costs for that consultant. ECF 19-4 at 2 ¶¶ 6, 11; see also ECF 19-5; ECF 19-6 at 2 ¶ 7. Plaintiff similarly incurred related attorneys' fees and costs. ECF 19-4 at 2 ¶ 10; see also ECF 19-5; ECF 19-6 at 2 ¶ 8. These expenses were within Plaintiff's discretion under the GAI and thus any argument against such costs given Castle Rock's purportedly meritless claims is also immaterial. In sum, Plaintiff substantially performed under the GAI.
Third, Defendant failed to perform under the GAI. By executing the GAI, Defendant agreed “to indemnify and save harmless” Plaintiff:
from and against any and all liability, claims, loss, costs, damages, demands, charges, suits, judgments or expenses of whatever nature or kind and arising out of or in any way connected with such Bonds, including but not limited to fees of attorneys and other expenses, costs and fees of investigation, adjustment of claims, procuring or attempting to procure the discharge of such bonds and attempting to recover indemnification from Indemnitors or recoveries from third parties, whether the Surety shall have paid or incurred same as aforesaid.ECF 19-2 at 1 ¶ 2 (emphasis added). And Defendant agreed to pay Plaintiff “upon demand.” Id. The GAI further specifies Plaintiff's “right to reimbursement of its expenses, premiums and attorneys' fees hereunder, irrespective of whether any Bond loss payment has been made by [Plaintiff].” Id. at 1 ¶ 2.B. Thus, Defendant agreed to indemnify and reimburse Plaintiff “upon demand” for its costs and attorneys' fees in connection Castle Rock's bond claim, including Plaintiff's investigation, evaluation, and ultimate settlement of such claim. Yet despite receiving repeated demands for payment, Defendant failed to pay Plaintiff to cover the bond claim and Plaintiff's losses. ECF 19-4 at 2 ¶ 7.
Despite the discrepancy in Plaintiff's materials as to which entity demanded payment of Defendant, see supra n.2., Plaintiff established Defendant received payment demands and failed to pay. At bottom, this shows noncompliance with the GAI's requirement that “[p]ayment shall be due upon demand.” ECF 19-2 at 1 ¶ 2.
Notably, Defendant has no defense against liability to Plaintiff. The GAI clearly states, “[i]n any claim, demand for indemnity or suit hereunder, an itemized statement of aforesaid loss and expense, sworn to by an officer or agent of Surety, or the vouchers, affidavits or other evidence of disbursement by Surety, shall be prima facie evidence of the fact and extent of the liability hereunder of Indemnitors.” ECF 19-2 at 1 ¶ 2.A. Plaintiff attached such an affidavit to its Motion. ECF 19-4 (affidavit of William Hattings, Surety Vice President for the National Claim Services who handles bonds issued by Fair American Insurance and Reinsurance Company). In short, Defendant failed to perform under the GAI.
Finally, Plaintiff has “resulting damages.” W. Distrib. Co., 841 P.2d at 1058 (internal citations omitted). Plaintiff must establish “the existence and the cause of damages.” Nat'l Am. Ins. Co. v. J.R. Misken Ins. Servs., Inc., 161 Fed.Appx. 737, 740 (10th Cir. 2005) (quoting City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 477 (Colo. Ct. App. 2003), cert. granted, No. 03SC712, 2004 WL 2504512 (Colo. Nov. 8, 2004)). It must also show “the damages [it] seeks are traceable to and are the direct result of the wrong sought to be redressed.” Id. (quoting Husband v Colo. Mountain Cellars, Inc., 867 P.2d 57, 59-60 (Colo. Ct. App. 1993)). Plaintiff has shown that (1) it has incurred consultant costs and attorneys' fees and costs in connection with Castle Rock's bond claim and (2) Defendant failed to reimburse Plaintiff as required under the GAI. See supra § I.B. Accordingly, Defendant's failure to perform under the GAI has caused Plaintiff to incur losses.
In sum, Plaintiff has provided sufficient evidence of all four elements of its breach of contract claim and Defendant has not disputed any element. Because there is no genuine dispute of any material fact and Plaintiff is entitled to judgment as a matter of law, the Court respectfully recommends granting summary judgment on Plaintiff's breach of contract claim.
II. Plaintiff's Award
Plaintiff requests an award “of at least $99,142.55” inclusive of attorneys' fees and costs. ECF 19 at 1, 13-17. But a ruling on Plaintiff's damages and attorneys' fees and costs at this time is premature.
While there is no dispute that Plaintiff has indeed been damaged by Defendant's nonperformance, there appears to be a dispute as to the amount of damages for which Plaintiff is entitled because the parties disagree on the Bond's scope. Defendant argues that the Bond was for “a new work order” to cover the remaining portion of the project, distinct from the initial contract which covered the rest of Koala-Mate's work on the project. ECF 22 at 2 ¶ 2. Plaintiff has not substantively addressed this argument, and no party has filed Defendant's subcontract(s) with Castle Rock or any other material potentially clarifying this issue. ECFs 19, 22-24. Instead, the record consists of some potential support for Defendant's assertion. The Castle Rock correspondence provides some support for a potential, separate contract vehicle for fencing work. Compare ECF 22 at 2 ¶ 2 (identifying the Bond's project description as “Highway [85] Fencing . . . ” and claiming “[t]he bond was to create a new work order for the remaining work on the project and not be an add-on to the original contract.”), with ECF 19-3 at 4 (Castle Rock correspondence to Koala-Mate stating in relevant part, “you mentioned a change order that is outstanding for Deer Fence. The only change order that we are aware of for Deer Fence from CDOT would be for resetting a portion of what has already been set. I will follow up with the project team about this, but please proceed with your contract work for now and leave this extra work for last.”). The Bond refers to the project as “Highway 85 Fencing” whereas Castle Rock's deficiency correspondence consistently refers to the project as “US 85 Widening and Reconstruction,” further suggesting a potential distinction in scope. Compare ECF 19-1, with ECF 19-3. And Plaintiff's Motion shows that the Bond was issued after Plaintiff started performing on the subcontract and incurring performance complaints from Castle Rock, suggesting the Bond may not have covered all of Plaintiff's work on the Highway 85 project. Compare ECF 19 at 2 (“On or around July 13, 2020, Byrnes doing business as Koala-Mate entered into a subcontract with the general contractor for the Project ....”) and ECF 19-3 at 14 (Apr. 9, 2021 correspondence from Castle Rock to KoalaMate regarding performance deficiencies), with ECF 19-1 (May 5, 2021 Bond). Thus, the Court respectfully recommends supplemental briefing on the scope of Plaintiff's damages if the Motion as to Plaintiff's breach of contract claim is granted.
Next, Plaintiff's claimed attorneys' fees and costs further support deferring a ruling beyond judgment on the breach of contract claim. Under Fed.R.Civ.P. 54(d), prevailing parties are generally permitted to move for costs and attorneys' fees. Plaintiff's request for attorneys' fees and costs are thus premature as the Court has not yet entered judgment. Additionally, more briefing is needed on this issue. Plaintiff claims attorneys' fees and costs in its Motion only through January 16, 2023. ECF 19 at 15; see also ECF 19-5; ECF 19-6 at 2 ¶ 8, 3 ¶ 14. Yet, these fees and costs continued. ECF 23 (filed Mar. 22, 2023); ECF 19 at 4 (Plaintiff “continues to incur attorney's fees and costs to enforce the GAI, meaning it is being realistically exposed to over $100,000 in damages due to the Byrnes's actions and inactions.”); ECF 19-5 (Plaintiff “continues to accrue losses as part of its efforts to enforce the FAI.”). In the interest of judicial economy, the Court respectfully recommends deferring a ruling on this issue pending the outcome of the ruling on Plaintiff's Motion as to its breach of contract claim and, should Plaintiff prevail, additional briefing establishing a complete record of Plaintiff's attorneys' fees and costs.
CONCLUSION
The Court respectfully recommends granting in part Plaintiff's Partial Motion for Summary Judgment [filed February 6, 2023; ECF 19]. Because the Court finds no disputed issue of material fact exists regarding Plaintiff's breach of contract claim and Plaintiff is entitled to judgment on the claim as a matter of law, the Court recommends granting summary judgment on the breach of contract claim. The Court also recommends deferring a ruling on Plaintiff's requested award, including attorneys' fees and costs, pending the entry of a judgment in Plaintiff's favor, if any, and additional briefing as detailed above.
Be advised that all parties shall have fourteen (14) days after service hereof to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. Fed.R.Civ.P. 72. The party filing objections must specifically identify those findings or recommendations to which the objections are being made. The District Court need not consider frivolous, conclusive, or general objections. A party's failure to file such written objections to proposed findings and recommendations contained in this report may bar the party from a de novo determination by the District Judge of the proposed findings and recommendations. United States v. Raddatz, 447 U.S. 667, 676-83 (1980); 28 U.S.C. § 636(b)(1). Additionally, the failure to file written objections to the proposed findings and recommendations within fourteen (14) days after being served with a copy may bar the aggrieved party from appealing the factual findings and legal conclusions of the Magistrate Judge that are accepted or adopted by the District Court. Duffield v. Jackson, 545 F.3d 1234, 1237 (10th Cir. 2008) (quoting Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991)).
Respectfully submitted this 27th day of June, 2023, at Denver, Colorado.