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Westfield Insurance Co. v. Rainey Contracting, LLC

United States District Court, E.D. Tennessee, Greeneville

June 8, 2017

WESTFIELD INSURANCE COMPANY, Plaintiff,
v.
RAINEY CONTRACTING, LLC, et al., Defendants,

          MEMORANDUM OPINION AND ORDER

          J. RONNIE GREER UNITED STATES DISTRICT JUDGE

         This matter is before the Court to address plaintiff Westfield Insurance Company's (“Westfield”) motion for summary judgment, [Doc. 110]. Defendants Seth Kincaid and Skin, LLC (“Kincaid defendants”) responded, [Doc. 121], to which Westfield replied, [Doc. 127]. Pro se defendants Rainey Contracting, LLC and Rainey, LLC failed to respond to the plaintiff's motion. According to the Local Rules, “failure to respond to a motion may be deemed a waiver of any opposition to the relief sought.” E.D. Tenn. L.R. 7.2. The matter is ripe for review.

         I. Background

         Westfield is a surety bond company that issued two performance and payment bonds on behalf of Rainey Contracting, LLC for the construction of two projects in eastern Tennessee, the Senior Center and Northeast State Community College (“NSCC”). In connection to the issuance of the bonds, the interested parties signed an indemnity agreement agreeing to indemnify Westfield for losses related to a breach of the bonds by Rainey Contracting, LLC. On July 24, 2013, defendants Skin, LLC, Rainey Contracting, LLC, and Rainey, LLC signed the indemnity agreement. Seth Kincaid signed as managing member of Skin, LLC and on behalf of Rainey Contracting, LLC. Skin, LLC is a member of Rainey Contracting, LLC. Defendant Scott Rainey signed as managing member of Rainey, LLC and on behalf of Rainey Contracting, LLC. Rainey, LLC is a member of Rainey Contracting, LLC.

         The indemnity agreement required the defendants to exonerate and indemnify Westfield against liability and any losses actually incurred by Westfield because of a breach by Rainey Contracting, LLC in performance of the construction projects. The agreement requires the defendants to prevent Westfield from sustaining any liability from losses in the first place and to reimburse Westfield for any losses it actually sustains.

The Indemnitors shall exonerate and indemnify the Surety from and against any and all liability for losses and/or expenses of whatever kind (including, but not limited to, interest, court costs, and counsel fees) and from and against any and all such losses and/or expenses which the surety may sustain; (1) by reason of having executed or procured the execution of the Bonds; (2) by reason of the failure of the indemnitors to perform or comply with the covenants and conditions of this Agreement; or (3) in enforcing any of the covenants and conditions of this agreement. . . . In the event of any payment by the Surety, . . . the Surety shall be entitled to charge for any disbursement made by it regarding the matters herein contemplated under the belief that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make such disbursements, whether or not such liability, necessity or expediency existed; and that the vouchers or other evidence of any such payments made by the Surety shall be prima facie evidence of the fact and amount of the liability to the Surety.

         [Indemnity Agreement, Doc. 112-1 at 1].

         The Kincaid defendants do not dispute that they executed the indemnity agreement or that Westfield made payments to subcontractors pursuant to the bonds. According to Westfield, following Rainey Contracting, LLC's failure to perform on both projects, Westfield retained Landmark Corporation (“Landmark”) to provide construction-consulting services and Landmard eventually took possession of and completed the two projects. [Truman Affidavit, Doc. 113 ¶¶ 5-6]. On the two projects that Westfield issued surety bonds for Rainey Contracting, LLC, Westfield has sustained actual losses of $1, 539, 201.51 in payments to subcontractors and vendors in order to complete the two construction projects on Rainey Contracting, LLC's behalf. [Id. at ¶ 7]. Westfield further avers that it sustained additional losses in the amount of $96, 873.67 by reason of having to execute the bonds and enforcing the bonds. [Id. at ¶ 8]. Westfield submits, through the affidavit of Kathryn Truman, a total loss of $2, 543, 977.10. [Id. at 9]. An amount of $876, 190.76 was recouped under the two bonds. [Id. at 11]. Westfield expects an additional $100, 244.13 will be recouped as well. [Id.]. Westfield submits evidence that its net loss totals $1, 567, 542.21 by reason of having executed the bonds, the defendants' failure to perform under the contracts and indemnity agreements, and/or in enforcing the indemnity agreements. [Id. at 12].

         II. Standard of Review

         Summary judgment is proper where the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Nat'l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

         The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Id. at 322. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252; McClain v. Ontario, Ltd., 244 F.3d 797, 800 (6th Cir. 2000). This Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 248-49; Nat'l Satellite Sports, 253 F.3d at 907. If the non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323. If this Court concludes that a fair-minded jury could not return a verdict in favor of the non-moving party based on the evidence presented, it may enter a summary judgment. Anderson, 477 U.S. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).

         The party opposing a Rule 56 motion may not simply rest on the mere allegations or denials contained in the party's pleadings. Anderson, 477 U.S. at 256. Instead, an opposing party must affirmatively present competent evidence sufficient to establish a genuine issue of material fact necessitating the trial of that issue. Id. Merely alleging that a factual dispute exists cannot defeat a properly supported motion for summary judgment. Id. A genuine issue for trial is not established by evidence that is merely colorable, or by factual disputes that are irrelevant or unnecessary. Id. at 248-52.

         III. Analysis

         Westfield moves this Court for summary judgment in its favor arguing that there are no material issues of fact relating to the defendants' breach of the indemnity agreement or the amounted owed to Westfield to recover under that agreement. The Kincaid defendants make two arguments in opposition to summary judgment relating to the indemnity agreements and the amount Westfield is seeking in damages. First, the Kincaid defendants argue that a dispute of material fact exists as to the amount of damages by arguing that one payment made to a subcontractor was not related to work on either project and that Westfield failed to mitigate damages. Second, the Kincaid ...


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