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XL Specialty Insurance Co. v. Truland

United States District Court, E.D. Virginia, Alexandria Division

August 21, 2014

XL SPECIALTY INSURANCE COMPANY, et al., Plaintiffs,
v.
ROBERT W. TRULAND, et al., Defendants.

MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

This matter is before the Court on Plaintiffs XL Specialty Insurance Company, XL Reinsurance America, Inc. and Greenwich Insurance Company's Audio-Video Group, LLC's ("XL" or "Plaintiffs") Motion for Temporary Restraining Order and Preliminary Injunction. [Dkts. 6, 7.] For the following reasons, the Court will grant in part Plaintiffs' Motion for a Temporary Restraining Order ("TRO").

I. Background

Plaintiffs XL Specialty Insurance Co., XL Reinsurance America, and Greenwich Insurance Company ("Plaintiffs") have filed this breach of contract action against Defendants claiming they have failed to deposit collateral as required under an indemnification agreement between the parties.

In 2011, Defendants executed a general indemnity agreement ("Indemnity Agreement"), whereby they agreed to indemnify Plaintiffs for liability incurred on several performance bonds issued on behalf of The Truland Group, Inc. ("Truland"), which provides commercial construction services. According to Plaintiffs, Truland recently defaulted on several projects and is facing claims from suppliers and creditors. To date, Plaintiffs have paid over $1.3 million to subcontractors and suppliers on said performance bonds.

On July 25, 2014, Plaintiffs sent a demand letter requesting that Defendants "pay $1, 347, 871.78 to indemnify [Plaintiffs] for payments previously made to subcontractors and suppliers... [along with) collateral security in the amount of $11, 000, 000 to cover the initial reserve set by [Plaintiffs] for presently projected losses and expenses[.]" Plaintiffs further requested that "Defendants provide access to financial records that would be sufficient for [Plaintiffs] to ascertain Defendants' current assets and liabilities, and any transfer of assets which were pledged in trust to [Plaintiffs] under the Indemnity Agreement." Plaintiffs claim that Defendants have refused to fulfill the demand letter although they are contractually obligated to comply under the Indemnity Agreement. Accordingly, Plaintiffs are seeking an order (1) enjoining Defendants from transferring any assets; (2) compelling Defendants to provide collateral in the amount of Plaintiffs' reserve as required under the Indemnity Agreement; (3) compelling Defendants to provide an accounting of all present assets; and (4) permitting access to Defendants' financial records.

II. Standard of Review

"The standard for granting either a TRO or a preliminary injunction is the same." Moore v. Kempthorne, 464 F.Supp.2d 519, 525 (E.D. Va. 2006) (citations omitted). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Counsel, 555 U.S. 7, 20 (2008); see also Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 346 (4th Cir. 2009) (citing Winter, 129 S.Ct. at 374), vacated on other grounds, 130 S.Ct. 2371 (2010), reinstated in relevant part, 607 F.3d 355 (4th Cir. 2010).

III. Analysis

A. Jurisdiction and Venue

As an initial matter, this Court has jurisdiction over this case pursuant to 28 U.S.C. § 1332(a), as the parties are diverse and the amount in controversy exceeds $75, 000.00. Venue is proper under 28 U.S.C. § 1391, as the claims for relief arise from the breach and enforcement of an indemnity contract that was executed in Fairfax County, Virginia.

B. TRO and Preliminary Injunction

1. Likelihood of Success on the Merits

A plaintiff seeking a TRO must first establish that he is likely to succeed on the merits. Here, Plaintiffs brings three claims: (1) breach of the Indemnity Agreement; (2) specific performance; and (3) quia timet and injunctive relief. (Pls.' Mot. for TRO at 12.) Where multiple causes of action are alleged, Plaintiff need only show likelihood of success on one claim to justify injunctive relief. McNeil-PPC v. Granutec, Inc., 919 F. Supp, 198, 201 (E.D. N.C. 1995) (citing ...


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