United States District Court, D. Maryland
FREDERICK MOTZ UNITED STATES DISTRICT JUDGE
Developers Surety and Indemnity Company
("Developers") brings suit against defendants: (I)
Brantly Development Group, Inc. ("Brantly"), (2)
Marshalee Woods Limited Partnership ("Marshalee"),
(3) Brantwood, LLC ("Brantwood"), (4) Bonnielass,
LCC ("Bonnielass"), (5) Hugh F. Cole, Jr.
("Mr. Cole"), and (6) Glen Hannah Cole ("Mrs.
Cole"), seeking indemnification for losses, costs, and
expenses incurred by Developers in connection with the
issuance of several surety bonds. On June 27, 2016,
judgements of default were entered against Brantly,
Marshalee, Brantwood, and Bonnielass. Now pending is
remaining defendants Hugh F. Cole, Jr. and Glen Hannah
Cole's motion for partial summary judgment on claims
asserted against them (ECF No. 40), and Developers'
cross-motion for summary judgment against the Coles. (ECF No.
41). The parties have fully briefed the motions, and no oral
argument is necessary. See Local Rule 105.6. For the
reasons set forth below, the Coles' motion is denied in
part and granted in part, and Developers' cross-motion is
granted in part and denied in part.
parties' dispute arises out of Developers' losses
incurred in connection with issuing nine subdivision surety
bonds to defendants. Developers is a national surety company
engaged in the business of construction and surety bonding.
(ECF No. 1, ¶ 1;see also ECF No. 13,
p. 1; ECF No. 14, p. 1). Mr. and Mrs. Cole ("the
Coles") are husband and wife, and are citizens of the
State of Maryland. (ECF No. 41, p.3; see also ECF
No. 41, Ex. C, 72:8-10). Defendant Hugh F. Cole, Jr. is:
"(1) a shareholder of Defendant Brantly Development
Group, Incorporated, (2) a limited partner in Defendant
Marshalee Woods Limited Partnership, (3) a member of
Defendant Brantwood, LLC, and (4) a member of Defendant
Bonnielass LLC." (ECF No. 20, p. 1). Mrs. Cole is or was
a Vice President of Brantly (ECF No. 41, Ex. D, 33:1 -4), and
collectively the Coles own or owned twenty-two percent (22%)
of Marshalee Woods. (ECF No. 41, Ex. C, 35:22-36-7).
around 1998, Developers started issuing subdivision surety
bonds for several real estate development projects undertaken
by defendants. (ECF No. 1, ¶ 11; see also ECF
No. 41, Exs. J-R). In order to induce Developers to issue
these bonds, defendants executed two indemnity agreements:
(1) Indemnity Agreement No. 13522-01 ("01"), dated
December 7, 1999, and (2) Indemnity Agreement No. 13522-03
("03"), dated November 6, 2003 (collectively the
"Indemnity Agreements"). (ECF No. 1, Exs. A &
B). Under the terms of the Indemnity Agreements, which are
substantively identical, defendants agreed to, inter
alia, be jointly and severally liable,  and to indemnify
[F]rom and against any and all liability, loss, claims,
demands, costs, damages, attorneys' fees, and expenses of
whatever kind or nature, together with interest thereon at
the maximum rate allowed by law, which Surety may sustain or
incur by reason of or in consequence of the execution and
delivery by Surety of any Bond on behalf of Principal,
whether or not Surety shall have paid any amount on account
(ECF No. 1, Ex. A, p. 1 & Ex. B, p. 1). Indemnity
Agreement 01 contains a signature page listing indemnitors
as: (I) "John F. Liparini" (a non-party to this
case), (2) "Hugh F. Cole, Jr., " and (3) Brantly
Development Group, Inc. (ECF No. 1, Ex. A, p. 9). The list of
names is accompanied by signatures: Mr. Liparini signed for
himself individually and on behalf of Brantly as its
President, and Mr. Cole Dated: behalf of himself
individually. Id. Indemnity Agreement 03 similarly
contains a signature page listing five indemnitors including,
inter alia, "Hugh F. Cole, Jr.,
Individually" and "(wife): Individually/' (ECF
No. 1, Ex. B, p. 8). The list of names is accompanied by
signatures, including Mr. Cole's signature above
"Hugh F. Cole, Jr., Individually, " and a signature
resembling "Glen Hannah Cole" above the text:
"(wife); Individually." Id. Both Indemnity
Agreements are followed by a "RESOLUTION - RATIFYING
INDEMNITY" whereby Brantly formally adopted the
Indemnity Agreements. (ECF No. 1, Ex. A, p. 12 & Ex. B,
p. 11). These resolutions contain the text "Given under
my hand the seal of the Company" and are signed by Mr.
Cole in his capacity as Secretary of Brantly, Id.
Marshalee, Brantwood, and Bonnielass eventually defaulted on
their obligations covered by the bonds by, inter
alia: "(1) failing to complete the work secured by
the Bonds; (2) failing to procure the release of the Bonds;
and (3) failing to pay for all labor, materials, supplies,
and equipment used in the development of the residential
subdivisions secured by the Bonds." (ECF No. 1, ¶
17). Developers filed suit against defendants on November 13,
2015, alleging losses in excess of $308, 987.25. Id.
at ¶ 18. Counts I and II of the complaint alleged breach
of contract regarding Indemnity Agreement 01 and 03,
respectively. Id. at ¶¶ 22-35. Count III
alleged a common law claim for exoneration. Id. at
27, 2016, judgements of default were entered against
defendants Brantly, Marshalee, Brantwood, and Bonnielass
after they failed to file responsive pleadings. (ECF No. 39).
Remaining defendants, the Coles, moved for partial summary
judgment on all claims asserted against Mrs. Cole (Counts II
and III) and against Mr. Cole (Counts I, II, and III). (ECF
No. 40, pp. 26-27). Developers, in turn, filed a cross-motion
for summary judgment against the Coles on all counts. (ECF
56(a) of the Federal Rules of Civil Procedure provides the
"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). The Supreme Court has clarified this does
not mean that any factual dispute will defeat the motion.
"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; the requirement is that there be
no genuine issue of material fact."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986) (emphasis in original). A genuine issue of
material fact exists where, "the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party." Id. at 247. The party seeking summary
judgment bears the initial burden of demonstrating the
absence of a genuine dispute of material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323(1986).
party opposing a properly supported motion for summary
judgment 'may not rest upon the mere allegations or
denials of [his] pleadings, ' but rather must 'set
forth specific facts showing that there is a genuine issue
for trial.'" Bouchat v. Baltimore Ravens
Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003)
(alteration in original) (quoting Fed.R.Civ.P. 56(e)).
Indeed, the party opposing summary judgment must "do
more than simply show that there is some metaphysical doubt
as to the material facts." Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986);
see also In re Apex Express Corp., 190 F.3d 624, 633
(4th Cir. 1999). The court must "view the evidence in
the light most favorable to ... the nonmovant, and draw all
reasonable inferences in her favor without weighing the
evidence or assessing the witnesses' credibility, "
Dennis v. Columbia Colleton Med. Ctr. Inc., 290 F.3d
639, 645 (4th Cir. 2002), but the court also must abide by
the "affirmative obligation of the trial judge to
prevent factually unsupported claims and defenses from
proceeding to trial." Bouchat, 346 F.3d at 526
(internal quotations omitted) (quoting Drewitt v.
Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993), and citing
Celotex Corp. v. Catrett, Ml U.S. 317, 323-24
Coles seek partial summary judgment on each of plaintiff
Developers' three claims. Developers, in response, seeks
summary judgment against the Coles on all claims and also
seeks interest and attorneys' fees. I consider these
claims in turn.
Counts I and II: Breach of Indemnity Agreements 01
Maryland law, "the fundamental principles governing
surety bond and indemnification relationships" are as
A surety bond is a three-party agreement between a principal
obligor, an obligee, and a surety. In a performance bond
context, the surety assures the obligee that if the principal
fails to perform its contractual duties, the surety will
discharge the duties itself, either by performing them or
paying the obligee the excess costs of performance. In a
payment bond, the surety guarantees the principal's duty
to the obligee to pay its (the principal's) laborers,
subcontractors, and suppliers.
. . . The surety is primarily or jointly liable with the
principal and, therefore, is immediately responsible if the
principal fails to perform. Ultimate liability, however, is
with the principal, not the surety. Upon default of the
principal, the surety may pay the money and proceed against
the principal for indemnity. The bond is the measure of the
surety's obligation. In the construction industry, it is
standard practice for surety companies to require contractors
for whom they write bonds to execute indemnity agreements by
which principals and their individual backers agree to
indemnify sureties against any loss they may incur as a
result of writing bonds on behalf of principals.
All. Contracting & Material Co. v. Ulico Cos.
Co., 844 A.2d 460, 468 (Md. 2004) (internal citations
Coles never dispute whether defendants breached the terms of
Indemnity Agreements 01 and 03. (See generally ECF
No. 40 & ECF No. 42) (opting to not dispute
these facts). Rather, the Coles' two primary arguments
are: (I) Mrs. Cole is exempt from all liability because she
did not properly execute Indemnity Agreement 03; and (2) a
majority of Developers' claims are time-barred by
Maryland's three-year statute of limitations on civil
actions. Id Developers, however, contends that: (1)
the Coles are necessarily liable, regardless of any
limitations issues, due to joint and several liability; (2)
the applicable statute of limitations is twelve years and not
three years because the agreements were executed "under
seal"; (3) even if the agreements were not executed
"under seal." all indemnification
agreements related to surety bonds automatically qualify for
a twelve-year limitations period; and (4) in the alternative,
claims are not time-barred because the Coles
"acknowledged" the debt. (ECF No. 41). In order. I
will address: (A) whether Mrs. Cole executed Indemnity
Agreement 03: (B) the limitations-related issues; and (C)
liability and damages.
Cole's Execution of Indemnity Agreement 03
Agreement 03 states: "ALL SIGNATURES MUST BE
ACKNOWLEDGED BY A NOTARY PUBLIC." (ECF No. 1, Ex. B, p.
8). The parties disagree over whether Mrs. Cole's
signature on Indemnity Agreement 03 was properly notarized,
and thus whether she can be held liable for breaching the
agreement. Under Maryland law. "[a] certificate under
the notarial seal of a notary shall be sufficient
evidence of the notary having administered the oath as notary
public." Md. Code Ann., State Gov't § 18-105
(emphasis added). It is undisputed that the original version
of Indemnity Agreement 03 includes a raised or embossed
notarial seal, although this seal is not discernable on
photocopies. (ECF No. 1, Ex. B, p. 10; see also ECF
No. 41, Ex. D, 36:4-37:3) (attesting that the notarial seal
is present on Indemnity Agreement 03). Indemnity
Agreement 03 also contains a signature-"Glen Hannah
Cole"-on the designated signature page, and beneath the
signature the following words appear: "(wife);
Individually." (ECF No. 1, Ex. B, p. 8). This signature
sequentially follows the undisputed signature of Mr, Cole.
Id. The notarial page, which then follows the
signature page, states the following individuals
"PERSONALLY APPEARED: John F. Liparini; [Kathleen
Liparini, redacted in original]; Hugh F. Cole, Jr.;
(wife)." Id. at 10. The sequential order of
"(wife)" after "Hugh F. Cole, Jr." on the
notarial page matches the sequential order of "(wife);
Individually" after "Hugh F. Cole, Jr.;
Individually" on the signature page. Id. at 8,
10. While Developers argues that "(wife)" on the
notarial page refers to Mrs. Cole (ECF No. 41, p. 20), the
Cole's contend that "(wife)" instead refers to
Kathleen Liparini, despite the fact Mrs. Liparini did not
sign the signature page, and despite the fact Mrs.
Liparini's name was redacted on the notarial page.
Id. at 8.
Cole counters that she has "no recollection" of
executing Indemnity Agreement 03, and she does "not
believe that [she] ever executed this document." (ECF
No. 40, pp. 1-2; ECF No. 26-5, ¶ 5). She further argues
she could not have signed the document on January 6, 2004,
the date of the notary public certification of signatures,
because she was "very ill with influenza" at the
time, and her health did not allow her to leave the house
between January 1, 2004, and January 9, 2004. Id.
This is supposedly supported by the declarations of Mr. Cole
and Mr. Liparini, who claim that they have "never
witnessed Glen Hannah Cole execute the Indemnity Agreement
." (ECF No. 26-3, ¶ 5; ECF No. 26-4, ¶ 6).
However, Mr. Cole's statements to this effect were, in
part, based upon a review of his wife's diary to prepare
his answers to interrogatories. (ECF No. 41. Ex. C, p.
111:09-l 12:10). And evidently, Mrs. Cole is no longer in
possession of any diary. (ECF No. 41, Ex. D, 50:16-19)
("I don't have [a diary anymore] .. . [i]t's all
H. Maxen ("Maxen"), the notary who notarized
Indemnity Agreement 03, also expresses some doubt that Mrs.
Cole executed the agreement because "[Mrs. Cole's]
name does not appear anywhere on the notary public
certification page." (ECF No. 40, Ex. Q, ¶ 6).
Maxen further states her "notary public seal does not
appear to be affixed to [Indemnity Agreement 03], " (ECF
No. 40, Ex. Q, ¶ 6), but this is misleading: indeed,
Maxen made this statement while viewing a photocopy where the
seal was not discernable. (ECF No. 41, p. 21; see
also ECF No. 41, Ex. D, 36:4-37:3 (attesting that the
notarial seal is present on Indemnity Agreement 03)). The
Coles also highlight that the "execution date"
stated on the first page of Indemnity Agreement 03 is
November 6, 2003, but the notary public certification page is
dated January 6, 2004. (ECF No. 40, pp. 2-3). They further
offer Maxen's statement that she "would not have
notarized a document that was signed outside of [her]
presence two months before.'' (ECF No. 40-19, Ex. Q,
¶ 10; ECF No. 40, p. 3).
all of the Coles' arguments, however, it is undisputed
that Maxen's seal is present on Indemnity
Agreement 03. (ECF No. 1, Ex. B. p. 10; see also ECF
No. 41, Ex. D, 36:4-37:3 (attesting that the notarial seal is
present on Indemnity Agreement 03)). And no reasonable
factfinder could conclude that ("wife") on the
notarial page refers to Mrs. Liparini instead of Mrs. Cole
given Mrs. Liparini did not sign the agreement while Mrs.
Cole did, Mrs. Liparini's name was redacted from the
notarial page, and the sequential order of "(wife)"
after Mr. Cole's name on the signature page matches the
notarial page. Nothing the Coles have presented overcomes
these facts. Therefore, 1 find no "genuine dispute of
material fact" regarding Mrs. Cole's signature on
Indemnity Agreement 03, Liberty Lobby, 477 U.S. at
247-48, and because "[a] certificate under the notarial
seal of a notary shall be sufficient evidence of the
notary having administered the oath as notary public, "
Md. Code Ann., State Gov't § 18-105, 1 find Mrs.
Cole properly executed Indemnity Agreement 03.
Applicable Limitations Period
next asserts various arguments to overcome the default
three-year statute of limitations baron civil actions in
Maryland. Md. Code Ann., Cts. & Jud. Proc. § 5-101.
These arguments are predominantly unsuccessful, and I assess
them in turn.
Joint and Several Liability
first argues the Coles are necessarily liable, regardless of
any limitations issues, by virtue of joint and several
liability. Although both Indemnity Agreements clearly state
"[t]he obligations of Principal and Indemnitor... are
joint and several;'' and "[s]urety may
bring separate suits hereunder against any or all of
the undersigned as causes of action may accrue, " (ECF
No. 1, Ex. A, p. 7 & Ex. B, p. 6) (emphasis added),
Developers' argument is incorrect. While it is true that,
under Maryland law, "the words 'joint and
several' are oft used and seemingly well understood"
and have never "been interpreted so as to bar the
liability of either obligor." President &
Directors of Georgetown Coll. v. Madden, 505 F.Supp.
557, 598 (D. Md. 1980), affd in part, appeal dismissed in
part, 660F.2d 91 (4th Cir. 1981), the Coles are not
automatically liable simply because a default judgment has
been issued against Brantly, Bonnielass. Marshalee, and
Brantwood. (See ECF No. 41, p. 27). First, the
default judgment entered against those co-parties is not
final, but rather interlocutory in nature. "[A] final
judgment cannot be entered on the default until the issue as
to the other defendants is successfully disposed of."
U.S. for Use of Hudson v. Peerless Ins. Co., 374
F.2d 942, 945 (4th Cir. 1967) (citing 49 C.J.S. Judgments
§ 191b(2), at 329 (1947)). More importantly, although
the Westfield case cited by Developers stands for
the proposition that defendants and indemnitors can be held
jointly and severally liable when one party breaches an
indemnity agreement, no party raised any defenses in that
case. See Westfield Ins. Co. v. Site Maim., Inc.,
No. PWG-12-3145, 2013 WL 5964505, at *4 (D. Md. Nov. 6,
2013). Accordingly, the Coles are entitled to raise defenses
not raised by defaulting co-parties, such as a statute of
limitations defenses, and are not necessarily liable merely
because the two indemnity agreements contain joint and
several liability clauses.
next argues the Indemnity Agreements are contracts
"under seal" and are therefore subject to the
twelve-year limitations period applicable to specialties. Md.
Code Ann., Cts. & Jud. Proc. § 5- 102(a). The Coles,
however, argue that contracts were not executed "under
seal" and thus the standard three-year period of
limitations for civil actions applies. Id. at §
5-101. Accordingly, the applicable limitations period depends
on whether Indemnity Agreements 01 and 03 were executed
sufficient to constitute a seal under Maryland law depends on
whether the signor is an individual or a corporation. See
Mayor & Council of Federalsburg v. Allied Contractors,
Inc., 338 A.2d 275, 279 (Md. 1975) (highlighting the
difference between what constitutes a seal in the corporate
and individual context). Indeed, when contracts are executed
by individuals, the presence of the word "seal" on
the signature page of the contract, or the presence of a seal
itself. may be sufficient in and of itself to render the
contract "under seal" for purposes of the special
limitations period. Id.; see also Warfield v.
Bait. Gas & Elec. Co., 512 A.2d 1044, 1044 (Md.
1986) (holding "that the inclusion of the word
'seal' in a pre-printed form executed by an
individual is sufficient to make the instrument one under
seal."). For such a contract, a "recital of the
sealing or of the delivery of a written promise is not
essential to its validity as a sealed contract."
Federalsburg, 338 A.2d at 279 (citing Gen.
Petroleum Corp. v. Seaboard Terminals Corp., 23 F.Supp.
137, 140 (D. Md. 1938)).
comparison, when the signor is signing on behalf of a
corporation, it "requires more than the mere affixing of
the corporate seal to transform a would-be simple contract
into one under seal." Id. Such an agreement
remains a simple contract "unless either the body of the
contract itself indicates that the parties intended to
establish an agreement under seal, or sufficient extrinsic
evidence, in the nature of 'how and when and under what
circumstances the corporate seal was affixed' establishes
that the parties desired to create a specialty."
Id. at 279 (quoting Gen. Petroleum Corp.,
23 F.Supp. at 139).
Agreement 01 contains a signature page listing indemnitors
as: (1) "John F. Liparini" (a non-party), (2)
"Hugh F. Cole, Jr., " and (3) Brantly Development
Group, Inc. (ECF No. I, Ex. A, p. 9). The list is accompanied
by signatures: Mr. Liparini signed for himself individually
and on behalf of Brantly as its President, and Mr. Cole
signed on behalf of himself individually. Id. Mrs.
Cole did not sign Indemnity Agreement 01. Id. The
only signature containing the text "(Seal)" next to
it was Mr. Liparini's on behalf of Brantly. Id.
Notably, the signatures of Mr. Liparini and Mr. Cole,
individually, are devoid of the "(Seal)" text.
Id. Furthermore, there is no explicit language, such
as "witness my hand and seal" or "signed and
sealed, " in the text of Indemnity Agreement 03 to
suggest this is a contract under seal. See, e.g.,
President & Directors of Georgetown Coll. v. Madden,
660 F.2d 91, 96 (4th Cir. 1981) (finding that a contract was
not under seal, despite having the word "(Seal)" in
two places and containing corporate seals because it did not
contain familiar phrases indicating the contract was under
seal to suggest the parties "intended to make the
contract a sealed instrument").
this. Developers stresses Indemnity Agreement 01 is followed
by a "RESOLUTION - RATIFYING INDEMNITY" whereby
Brantly formally adopted the Indemnity Agreement. (ECF No. 1,
Ex. A, p. 13). This Resolution, signed on the same day as
Indemnity Agreement 01, contains the text: "Given under
my hand the seal of the Company, " and is signed by Mr.
Cole in his capacity as Secretary of Brantly. Id.
Here, Mr. Cole's signature is accompanied by the text:
"(Seal)." Id. The parties disagree over
whether this ratification renders Indemnity Agreement 01
"under seal." But even if the ratification rises to
the level of "extrinsic evidence" that would render
Indemnity Agreement 01 under seal, see Federalsburg,
338 A.2d at 279, it would only be under seal with respect to
Brantly, and not to the Coles. Indeed, "when a seal is
attached to the signature of one of the parties but not to
that of the other party, the contract as to the latter is a
simple contract while as to the former it is a contract under
seal." Id. at 279. Accordingly, even if the
resolution ratifying indemnity renders Indemnity Agreement 01
under seal, an issue I do not decide here, it would have no
bearing on whether the document is under seal with respect to
Agreement 03, like Indemnity Agreement 01, also contains a
signature page and lists five indemnitors, including
"Hugh F. Cole, Jr., Individually" and "(wife);
Individually." (ECF No. 1, Ex. B, p. 8). These
signatures are not accompanied by any seal, nor are they
accompanied by the text: "(Seal)." Id.
Again, there is no explicit language, such as "witness
my hand and seal" or "signed and sealed, " in
the text of Indemnity Agreement 03 to suggest this is a
contract under seal. Although the next page in the agreement
contains the notarial seal of Maxen, acknowledging under her
"hand and official seal" that the following persons
"PERSONALLY APPEARED" and signed the indemnity
agreement: "John F. Liparini; [Redacted: Kathleen
Liparini]; Hugh F. Cole, Jr.; (wife), " id. at
10, this does not render the document "under seal"
with respect to the Coles. Rather, Maxen's notarial seal
merely confirms the specified individuals were present and
signed the agreement.
Indemnity Agreement 01, Indemnity Agreement 03 is also
followed by a "RESOLUTION - RATIFYING INDEMNITY":
this resolution also contains the text "Given under my
hand the seal of the Company, " and is signed by Hugh F.
Cole, Jr., as "(Secretary)" of Brantly.
Id. at 11. As discussed, supra, even this
ratification rises to the level of "extrinsic
evidence" that would render Indemnity Agreement 03 under
seal, Federalsburg, 338 A.2d at 279, it would only
be under seal with respect to Brantly, and not to the Coles.
I find neither Indemnity Agreement is a contract "under
seal" and therefore the claims are subject to the
standard three-year limitations ...