All Pro Brace, LLC v. U.S. Dep't of Health & Human Servs.

Docket Number1:21-cv-00896
Decision Date31 October 2023
CourtU.S. District Court — Northern District of Ohio


This matter is before the Court upon Defendant/Counter-Plaintiff/Third-Party Plaintiff Merchants Bonding Company's (“MBC”) Motion for Summary Judgment on its Counterclaim against Plaintiff/Counter-Defendant All Pro Brace, LLC (All Pro Brace) as well as its Third-Party Complaint against Third-Party Defendants Michael Voll and Libby Voll (collectively, the “Volls”; together with All Pro Brace, the “Indemnitors”).[1](Doc. No. 52.) No party has filed a brief in opposition to MBC's Motion. Accordingly, MBC's Motion for Summary Judgment is ripe for a decision.

For the following reasons, MBC's Motion for Summary Judgment is GRANTED. (Doc. No. 52.)

I. Factual Background

All Pro Brace procured three separate bid surety bonds from MBC bearing bond numbers OH5171599, OH5171598, and OH5171597 (“the Bonds”).[2](Doc. No. 52-1 at pp. 2, 4, 6.) Each bond was worth $50,000.00, had an effective date of August 5 2019, and named All Pro Brace as principal, MBC as surety, and the Center for Medicare and Medicaid Services (“CMS”) as obligee. (Id.) In September 2019, All Pro Brace submitted three competitive bids under the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) Competitive Bidding Program. (Id.) By submitting its bids, All Pro Brace sought to become a designated DMEPOS supplier for three of CMS' Competitive Bidding Areas (“CBAs”): Toledo, Akron, and Cleveland-Elyria. (Id.)

According to the Affidavit of MBC Claims Examiner Amy Baker, as consideration for MBC's agreement to act as surety for All Pro Brace's bids, MBC required All Pro Brace and the Volls to execute an Indemnity Agreement.[3](Baker Aff. (Doc. No. 52-4) at ¶ 4.) The Indemnity Agreement[4]provides in relevant part:

The undersigned . . . agrees to indemnify and save harmless [MBC], in connection with any bond executed on behalf of the person or entity named as applicant, for, from and against any and all losses, costs, damages and expenses of any nature whatsoever, including counsel fees and expenses[] ....
If [MBC] shall set up a reserve to cover any claim, suit or judgment under any such bonds, the undersigned will, immediately upon demand, deposit with [MBC] a sum of money equal to such reserve, such sum to be held by [MBC] as collateral security on such bonds[] ....

(Doc. No. 52-2.) Ms. Baker avers that, in reliance upon the Indemnitors' execution of the Indemnity Agreement, MBC executed the three Bonds in conjunction with All Pro Brace's bids. (Baker Aff. at ¶ 5.)

On February 2, 2021, CMS, through its agent Palmetto GBA, informed MBC that CMS had forfeited each of the Bonds pursuant to 42 C.F.R. § 414.412(g)(3)(i) and sought payment of the penal sums of the Bonds, which totaled $150,000.00. (Baker Aff. at ¶ 6; Doc. No. 1-2 at pp. 2, 3). See also 42 C.F.R. § 414.412(g)(3)(i). All Pro Brace thereafter filed its initial Complaint for Declaratory Judgment on April 29, 2021, naming as Defendants Xavier Becerra, Secretary, United States Department of Health and Human Services; Chiquita Brooks-LaSure,[5]Administrator, CMS; and Palmetto GBA (collectively, “Federal Defendants), as well as MBC. (Doc. No. 1.) All Pro Brace sought a declaration that the Bonds were not subject to forfeiture by CMS. (Id. at pp. 5-6.) On July 8, 2022, this Court dismissed All Pro Brace's claims for lack of subject matter jurisdiction. (Doc. No. 42.)

On January 25, 2023, MBC sent a letter to the Indemnitors informing them that MBC had received notice from CMS of All Pro Brace's forfeiture of the Bonds and subsequently “established reserves totaling $150,000.” (Baker Aff. at ¶ 9; Doc. No. 52-4 at p. 10.) MBC demanded that, pursuant to the Indemnity Agreement, the Indemnitors place funds in collateral “for the full amount of its reserves.” (Doc. No. 52-4 at p. 10.) MBC also informed the Indemnitors that it had expended $11,188.90 in attorney's fees and demanded that the Indemnitors reimburse it for these expenses as agreed to in the Indemnity Agreement. (Id.) According to Ms. Baker, as of August 8, 2023, the Indemnitors have not provided the collateral or reimbursed MBC for its damages. (Baker Aff. at ¶ 9.)

On June 2, 2023, CMS, through Palmetto GBA, sent a revised letter to MBC, acknowledging this Court's dismissal of All Pro Brace's lawsuit. (Doc. No. 52-4 at p. 6.) CMS re-affirmed that CMS had forfeited the Bonds and again demanded full payment from MBC of the penal sum of the Bonds. (Id.; see also Baker Aff. at ¶ 7). On June 28, 2023, MBC issued three checks to CMS, each in the amount of $50,000.00 and in satisfaction of CMS' claims against the Bonds. (Baker Aff. at ¶ 10; Doc. No. 52-4 at pp. 22-24.)

II. Procedural History

On July 13, 2021, MBC filed an Answer to All Pro Brace's Complaint as well as a Counterclaim. (Doc. No. 17.) In the Counterclaim, MBC alleges claims against All Pro Brace for Contractual Indemnity (Count I) and Common Law Indemnification (Count II). (Id.) Specifically, in Count I, MBC alleges that All Pro Brace breached the Indemnity Agreement by failing to hold MBC harmless and indemnify it from and against any losses it incurred in connection with the Bonds. (Doc. No. 17 at ¶¶ 7-10.) In Count II, MBC contends that All Pro Brace has a common law duty to indemnify MBC for all losses related to MBC's role in issuing the Bonds. (Id. at ¶¶ 13-14.)

Also on July 13, 2021, MBC filed a Third-Party Complaint against the Volls,[6]alleging a single count for Contractual Indemnification. (Doc. No. 18.) Therein, MBC alleges, in relevant part, that the Volls breached the Indemnity Agreement by failing to save harmless MBC and indemnify it from any losses that it has suffered and may continue to suffer because MBC executed the Bonds. (Doc. No. 18 at ¶¶ 15, 18.)

On August 3, 2021, All Pro Brace filed an Answer to MBC's Counterclaim, and the Volls filed an Answer to MBC's Third-Party Complaint. (Doc. Nos. 25, 26.) As noted above, on July 8, 2022, this Court dismissed All Pro Brace's claims, leaving pending the instant Counterclaim and Third-Party Complaint. (Doc. No. 42.)

On August 12, 2022, counsel for All Pro Brace withdrew and indicated that All Pro Brace was “in the process of retaining new counsel and/or considering whether to retain new counsel.” (Doc. No. 43 at p. 2; Non-Document Order, Aug. 12, 2022.) The Court expressly warned All Pro Brace of the need to obtain legal representation to appear in this case. (Non-Document Order, Aug. 12, 2022.) The docket reflects that All Pro Brace has failed to retain counsel.

On August 15, 2023, MBC filed the instant Motion for Summary Judgment against All Pro Brace and the Volls. (Doc. No. 52.) Neither All Pro Brace nor the Volls have filed a brief in opposition to MBC's Motion.

III. Standard of Review

Summary judgment is proper “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). “A dispute is ‘genuine' only if based on evidence upon which a reasonable jury could return a verdict in favor of the non-moving party.” Henderson v. Walled Lake Consol. Sch., 469 F.3d 479, 487 (6th Cir. 2006). “Thus, ‘the mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.' Cox v. Ky. Dep't of Transp., 53 F.3d 146, 150 (6th Cir. 1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). A fact is “material . . . only if its resolution might affect the outcome of the suit under the governing substantive law.” Henderson, 469 F.3d at 487.

At the summary judgment stage, [a] court should view the facts and draw all reasonable inferences in favor of the non-moving party.” Pittman v. Experian Info. Sols., Inc., 901 F.3d 619, 628 (6th Cir. 2018). In addition, “the moving party bears the initial burden of showing that there is no genuine dispute of material fact.” Ask Chems., LP v. Comput. Packages, Inc., 593 Fed.Appx. 506, 508 (6th Cir. 2014). The moving party may satisfy this initial burden by “identifying those parts of the record which demonstrate the absence of any genuine issue of material fact.” Lindsey v. Whirlpool Corp., 295 Fed.Appx. 758, 764 (6th Cir. 2008). [I]f the moving party seeks summary judgment on an issue for which it does not bear the burden of proof at trial, the moving party may [also] meet its initial burden by showing that ‘there is an absence of evidence to support the nonmoving party's case.' Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). Once the moving party satisfies its burden, “the burden shifts to the non-moving party who must then point to evidence that demonstrates that there is a genuine dispute of material fact for trial.” Ask Chems., 593 Fed.Appx. at 508-09.

[T]he nonmoving party may not simply rely on its pleading, but must ‘produce evidence that results in a conflict of material fact to be solved by a jury.' MISC Berhad v. Advanced Polymer Coatings, Inc., 101 F.Supp.3d 731, 736 (N.D. Ohio 2015) (quoting Cox, 53 F.3d at 150).

When a motion for summary judgment is unopposed, [t]he facts presented and designated by the moving party [are] the facts at hand to be dealt with by the trial court.” Guarino v. Brookfield Twp. Trs., 980 F.2d 399, 404 (6th Cir. 1992). “A district court is not required to search the entire record to establish that it is bereft of a genuine issue of material fact.” Chi. Title Ins Corp. v. Magnuson, 487 F.3d 985, 995 (6th...

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