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Travelers Casualty and Insurance Co. of America v. C.R. Calderon Construction, Inc.

United States District Court, D. Maryland

May 22, 2017

TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Plaintiff,
v.
C.R. CALDERON CONSTRUCTION, INC., CALDERON I, LLC, CARLOSLC CALDERON, and ANAP. CALDERON, Defendants.

          MEMORANDUM OPINION

          THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE.

         On January 31, 2017, Plaintiff Travelers Casualty and Surety Company of America ("Travelers") filed this breach of contract action based on the alleged breach of an indemnity agreement by Defendants C.R. Calderon Construction, Inc. ("CRC"), Calderon I, LLC ("Calderon I"), Carlos L. Calderon ("Mr. Calderon",, and Ana P. Calderon ("Ms. Calderon".. Travelers alleges that pursuant to a collateral security provision of that indemnity agreemen,, Defendants were required, but failed, to post a $228, 359.27 security deposit to cover Travelers' potential losses stemming from a judgment issued by the United States District Court for the District of Columbia holding that Defendants and Travelers are jointly and severally liable for unpaid wages. Pending before the Court is Travelers' Motion for a Preliminary Injunction in which Travelers seeks specific performance of the collateral security provision of the indemnity agreemen.. Having reviewed the Complaint and the briefs, the Court finds no hearing necessary. See D. Md. Local R. 105.6 (2016). For the reasons set forth below, the Motion is GRANTED.

         FINDINGS OF FACT

         The underlying facts are not in dispute. In January 2011, CRC entered into a subcontract to install drywall at the H. Carl Moultrie Courthouse in Washington, D.C. That subcontract was "* conditioned on CRC providing a payment bond. Travelers provided the required bond (the "Payment Bond"), which covered, as relevant here, payments to "all persons supplying labor." Compl. Ex. 1 at 2, ECF NO. 1-1. Travelers, in turn, conditioned the Payment Bond on Defendants' execution of an indemnity agreement (the "Indemntty Agreemen"" or "Agreement"). The Indemnity Agreement was executed in Maryland by all four Defendanss on March 14, 2011.

         The Indemnity Agreement extends to "[a]ny and all bonds" executed or procured by Travelers on behalf of any of the indemnitors, and indemnifies Travelers for loss resulting from any bond, with "loss" defined as "[a]ll loss and expense of any kind or nature, including attorneyss and other professional fees, " such as loss and expense incurred in "defending any action in connection with any Bond." Compl. Ex. 2 1 ("Indemntty Agmt"), ECF No. 1-2. The Indemnity Agreement contains a collateral security provision, which states:

Indemnitors agree to deposit with Company, upon demand, an amount as determined by Company sufficient to discharge any Loss or anticipated Loss. . . . Sums deposited with Company pursuant to this paragraph may be used by Company to pay such claim or be held by Company as collateral security against any Loss or unpaid premium on any Bond. . . . Indemnitors agree that Company would suffer irreparable damage and would not have an adequate remedy at law if Indemnitoss fail to comply with the provisions of this paragraph.

Id. 5. In a separate section entitled, "Notice of Rights, " the Indemnity Agreement provides that Travelers is entitled to specific performance of "the terms of this Agreement." id ¶16. Lastly, the Agreement grants Travelers a security interest in Defendants' property, excepting Mr. and Ms. Calderonss residence. In June 2013, Travelers perfected its security interest in Defendants' property.

         In April 2012, 13 construction workers employed by CRC on the courthouse project made a claim against the Payment Bond for unpaid wages. On May 1, 2012, those workers filed suit against CRC, Mr. Calderon, Ms. Calderon, and Travelers, as well as against CRC's subcontractor on the courthouse project, in the United States District Court for the District of Columbia (the "D.C. Litigation".. On December 22, 2016, following a bench trial, the court entered judgment against all defendants, jointly and severally, in the amount of $207, 599.34 for unpaid wages, plus attorneyss fees in an amount to be later determined by the court. Travelers' liability was premised on its role as surety for CRC's Payment Bond.

         On January 12, 2017, pursuant to the Indemnity Agreemen,, Travelers demanded that Defendants deposit with Travelers by January 17, 2017 collateral security in the amount of $228, 359.27, the amount required for Travelers to post a supersedeas bond to stay the judgment in the D.C. Litigation pending appeal. In that demand, Travelers also informed Defendants that its own attorneyss fees for the D.C. Litigation totaled over $80, 000, and that plaintiffs' counsel in the D.C. Litigation would be seeking over $600, 000 in attorneyss fees and costs. On January 13, 2017, Travelers filed its Notice of Appeal in the D.C. Litigation and posted the required $228, 359.27 bond. To date, Travelers has received no collateral security from Defendants.

         DISCUSSION

         Travelers filed suit against Defendants in this Court, asserting a breach of the Indemnity Agreement based on (1) Defendants' failure to reimburse Travelers $82, 167.79 for its legal fees arising from the D.C. Litigation; and (2) Defendants' failure to satisfy Travelers' demand for $228, 359.27 in collateral security. As to the latter claim, Travelers now seeks a preliminary injunction requiring specific performance of Defendants' obligation to post the collateral security. In opposing the Motion, Defendants do not challenge the validity of the Indemnity Agreemen.. Instead, they assert that the Indemnity Agreement does not cover the posting of a supersedeas bond, the collateral security provision does not provide specific performance as a remedy, and their obligations under the Indemnity Agreement can be satisfied by providing Travelers a security interest in Defendants' property.

         I. Legal Standard

         To obtain a preliminary injunction, moving parties must establish that (1) they are likely to succeed on the merits, (2) they are likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in their favor, and (4) an injunction is in the public interest. Winter v. Nat. Res. De!. Council, Inc., 555 U.S. 7, 20 (2008); see Dewhurst v. Century Aluminum Co., 649 F.3d 287, 290 (4th Cir. 2011). A moving party must satisfy each requirement as articulated. Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 347 (4th Cir. 2009), vacated on other grounds, 559 U.S. 1089 (2010). Because a preliminary injunction is "an extraordinary remedy, " it "may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter, 555 U.S. at 22.

         II. Likelihood of ...


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