Allegheny Casualty Co. v. River City Roofing, LLC

          MEMORANDUM OPINION

          IVAN D. DAVIS UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on Plaintiffs Motion for Summary Judgment. For the reasons stated below, the Court has granted Plaintiffs Motion.

         I. STANDARD OF REVIEW

         Pursuant to Federal Rule of Civil Procedure 56(a), a party may move the court for summary judgment on any claim or defense, and the court shall grant the motion and enter judgment as a matter of law where the moving party has demonstrated that "there is no genuine dispute as to any material fact" in the case. Fed.R.Civ.P. 56(a); Celotex Corp. v. CatretL 477 U.S. 317, 330 (1986). A "genuine" issue concerning a "material'* fact only arises when the evidence, viewed in the light most favorable to the non-moving party, sufficiently allows a reasonable jury to return a verdict in that party's favor. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). The governing substantive law will determine which facts are material, and a fact will be material if a dispute as to that fact affects the outcome of the suit. Id.

         To defeat an otherwise properly supported motion for summary judgment, the non- moving party must rely on more than conclusory allegations, "mere speculation, " the "building of one inference upon another, " the "mere existence of a scintilla of evidence, " or the appearance of some "metaphysical doubt" concerning a material fact. Anderson, 477 U.S. at 248; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985); Lewis v. City of Va. Beach Sheriffs Office, 409 F.Supp.2d 696, 704 (E.D. Va. 2006).

         II. PROCEDURAL HISTORY

         On October 3, 2017, Allegheny Casualty Company filed its Complaint against River City Roofing, LLC, Rodney G. Young, Karen R. Young, and Sterling Young to enforce the general indemnity agreement between the parties. (Dkt. No. 1.) Defendants filed their answer on October 31, 2017. (Dkt. No. 4.) On January 24, 2018, the Honorable Liam O'Grady ordered that this case be reassigned to the undersigned Magistrate Judge per the parties' request. (Dkt. No. 16.) Although discovery in this matter closes on May 11, 2018, Plaintiff filed its Motion for Summary Judgment on January 11, 2018. (Dkt. No. 7.) This Court granted Defendants' Consent Motion for Extension of Time to File a Response on January 24, 2018. (Dkt. No. 15.) Pursuant to that Order, Defendants filed their Response to Plaintiffs Motion on January 29, 2018, (Dkt. No. 17), and Plaintiff filed its Reply on February 5, 2018. (Dkt. No. 18.) This Court held a hearing on Plaintiffs Motion on February 9, 2018. (Dkt. No. 20.) After hearing argument from each party, the undersigned took this matter under advisement. (Id.)

         III. UNCONTESTED FACTS

         The following facts are undisputed by the parties based on a reading of the pleadings and the briefs in support of and in opposition to Plaintiffs Motion for Summary Judgment. In 2014, Plaintiff issued performance and payment bonds on behalf of River City Roofing, LLC ("RCR"), as principal, for three construction projects that Defendants subcontracted with Branch & Associates, Inc. ("Branch") to perform.^[1] (Dkt. No. 8 at 2.) In November 2014, the parties entered into a general indemnity agreement ("GIA") in which Defendants agreed to be jointly and severally liable to Plaintiff in the event of any loss on the bonds. (Id.) Rodney G. Young, Karen R. Young, and Sterling Young (collectively, the "individual Defendants") executed the GIA as individual indemnitors. (Id. at 3.) Rodney G. Young also executed the GIA on behalf of RCR in his capacity as a managing member. (Id.)

         The GIA provides that if Plaintiff makes a payment in "good faith" on Defendants' behalf under the belief that Plaintiff is liable for the payment, then Plaintiff is "entitled to charge" Defendants for that payment regardless of whether liability existed.^[2] (Dkt. No. 8-2 at 2.) Additionally, the GIA requires Defendants to deposit sufficient collateral with Plaintiff "as soon as liability exists or is asserted" against Plaintiff, regardless of whether Plaintiff has made a payment on Defendants' behalf. (Dkt. No. 8 at 3.)

         In February 2017, Plaintiff received a payment bond claim from American Builders & Contractors Supply Co. ("ABC Supply"), which is one of RCR's suppliers. (Dkt. No. 8 at 4.) Although ABC Supply demanded $27, 312.01, Plaintiff paid $16, 440.17 to ABC Supply. (Id.) In May 2017, Plaintiff received a performance bond claim from Branch for a sum of $105, 333.47, which Plaintiff investigated using a consulting agency. (Id. at 5.) Plaintiff expended $13, 388.94 conducting the Branch claim investigation. (Id. at 6.) In September 2017, Plaintiff received a payment bond claim from Brock Associates, LLC ("Brock"), another RCR supplier. (Id. at 4.) Brock claims it is owed $5, 189.40; however, Plaintiff has not made any payment to Brock. (Id.) Plaintiff has demanded that Defendants post collateral sufficient to protect Plaintiff. (Id. at 6.)

         IV. DISCUSSION

         A. Applicable Law

         The parties do not dispute that Virginia law governs the interpretation of the GIA. See Klaxon Co. v. Stentor Elec. Mfg. Co.,313 U.S. 487, 496 (1941) (a federal court sitting in a diversity jurisdiction case must apply choice of law rules of the forum state). Under Virginia law, unambiguous terms of an express indemnity agreement between a surety and a subcontractor are given their plain meaning, and the "surety is entitled to stand upon the letter of his contract." Fidelity & Deposit Co. of Maryland v. Bristol Steel & Iron Works,722 F.2d 1160, 1163 (4th Cir. 1983); Bell BCI Co. v. Old Dominion Demolition Corp.,294 F.Supp.2d 807, 812 (E.D. Va. 2003). In other words, an express indemnification contract controls the relationship between surety and subcontractor rather than applying implied indemnity principles. See Fidelity, 722 F.2d at 1163. And ...