Am. Bonding Co. v. Am. Contractors Indem. Co.
| Decision Date | 10 April 2015 |
| Docket Number | Case No. 2:10-cv-441 |
| Parties | AMERICAN BONDING COMPANY, INC., Plaintiff, v. AMERICAN CONTRACTORS INDEMNITY COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This case is before the Court on Defendant American Contractors Indemnity Company's ("ACIC") Motion for Summary Judgment (ECF No. 165.) ACIC also renews two arguments from its previously filed summary judgment motions. (ECF Nos. 79 & 80.) For the reasons that follow, the Court DENIES ACIC's motion for summary judgment (ECF No. 165) and its renewed arguments from its prior summary judgment motions (ECF Nos. 79 & 80).
This bail-bond dispute involves three different actors, two of which are parties here. Plaintiff American Bonding Company ("ABC") is a bail bond agency and defendant ACIC is an insurance company. (Am. Compl. ¶¶ 12, 30; ECF No. 71.) Roche Surety Inc. ("Roche")—the non-party in this lawsuit—connects bail bond agents with insurance companies. (Id. ¶ 21.) This connection is necessary for non-insurance bail bond companies like ABC because Ohio requires a bondsman to be a licensed Ohio insurance company and obtain a "surety bail bond license."(Opn. & Order at 1; ECF No. 144.) ABC entered into an Agency Agreement with Roche. (Id. ¶¶ 24-25.) Roche, in turn, connected ABC with ACIC, the surety insurance company.
To protect from losses caused by forfeitures of bail bonds, sureties establish trust accounts that contain "build-up funds" to pay off forfeiture judgments. (Opn. & Order at 2; ECF No. 144.) According to ABC, the Agency Agreement provided for such an account:
[T]he agent build-up trust fund which must be created in accordance with § 3905.91 of the Ohio Revised Code, would be created under the trust option of § 3905.91 of the Ohio Revised Code . . . ABC insisted that Roche would not administer the trust or have access to the trust fund monies. In accordance with this concession, Roche's name appears nowhere on the trust account and Roche has no interest in the trust fund monies.
(Am. Compl. ¶ 25.) The parties refer to this as the "BUF account." The account was held in trust by ACIC for ABC as the beneficiary. (Opn. & Order at 2; ECF No. 144.) The Agency Agreement required ABC to deposit a percentage of the face value of each bond it wrote in the BUF account. (Opn. & Order at 2; ECF No. 144.) According to that agreement, ACIC could draw funds from that account "at the time and in the amount of any losses as defined herein." (Agency Agreement ¶ 20(d); ECF No. 172-2.)
In July 2005, Roche terminated the Agency Agreement and sued ABC in Florida state court, alleging that ABC breached the agreement by failing to remit all premium amounts owed. ABC removed the case to the U.S. District Court for the Middle District of Florida and asserted several counterclaims, including an alleged breach of the Agency Agreement by "fail[ing] to return [ABC's] funds held by [Roche] in build up fund deposits." (Counterclaim ¶ 37; ECF No. 79-5.) After summary judgment whittled away some of ABC's counterclaims, the parties settled ABC's remaining allegations, including the breach of contract issue and the Florida District Court dismissed the case with prejudice. (ECF Nos. 79-4 & 79-7.)
Separately, ABC sued ACIC for breach of trust under Ohio Rev. Code subchapter 5810, alleging that ACIC failed to perform its fiduciary duties as trustee by "unlawfully converting, embezzling and or misappropriating trust fund moneys" and that it improperly paid BUF account funds to Roche. (See Am. Compl. at 19 & 33; ECF No. 71.) According to ABC, ACIC used BUF account funds to make bond forfeiture payments. Then, the Cuyahoga Common Pleas Court wrongly forwarded approximately $100,000 in remission payments to ACIC pursuant to ACIC's instructions when that money should have gone back into the BUF account. (Crain Aff. ¶¶ 21-22; ECF No. 135-1; Request; ECF No. 135-3; Ltr.; ECF No. 135-4.) Similarly, ABC asserts that other bond payments were made from its BUF account but it cannot determine if any remissions from these payments were properly paid back because ACIC did not provide a proper accounting of this money. (Resp. at 10; ECF No. 135.) Last, ABC presses that ACIC failed to return the balance of the BUF account funds within six months of termination of the Agency Agreement as required by Ohio Rev. Code § 3905.91. (See Am. Compl. ¶¶ 94, 134-135.)
ACIC moved for summary judgment, arguing that ABC consented to ACIC's debiting of the BUF account to cover its losses incurred from ABC's breach of contract that was litigated in Florida. Also, ACIC pressed that the Florida action barred the claims here under the doctrine of res judicata and that it reasonably relied on the terms of the trust. This Court granted ACIC's motion, holding that ABC consented to ACIC's debiting of the BUF account to cover its losses from ABC's breach of contract with Roche. (See generally Opn. & Order; ECF No. 140.) ABC appealed, and the U.S. Court of Appeals for the Sixth Circuit reversed this Court's decision, finding that "there remains a genuine issue of material fact as to whether ACIC in fact used the funds in the build-up account for the purpose permitted by the Agreement—offsetting losses stemming from forfeitures." (See Opn. & Order at 8; ECF No. 144.) That Court left "to thedistrict court to resolve in the first instance whether claim preclusion bars ABC's claim" and whether ACIC acted "in reasonable reliance on the terms of the trust," thus shielding it from liability under Ohio Rev. Code § 5810.06. Now on remand, ACIC renews its motion for summary judgment on these issues. It also raises a new argument that ABC's claims are barred by Ohio's statute of limitations. (See Mot. Summ. J. at 2; ECF No. 165.)
Summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In reviewing ACIC's motion for summary judgment, this Court must "view all facts and any inferences in the light most favorable" to ABC, the nonmoving party. See Risch v. Royal Oak Police Dep't, 581 F.3d 383, 390 (6th Cir. 2009); see also Matushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A motion for summary judgment should be denied if "there is a genuine need for trial," which turns on "whether the evidence is such that a reasonable jury could return a verdict for the plaintiff." Weigel v. Baptist Hosp. of E. Tenn., 302 F.3d 367, 375 (6th Cir. 2002).
Once "a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading." Viergutz v. Lucent Technologies, Inc., 375 F. App'x. 482, 485 (6th Cir. 2010). Instead, the party opposing summary judgment "must—by affidavits or as otherwise provided in this rule—set out specific facts showing a genuine need for trial." Id.
ACIC asserts that Ohio Rev. Code § 5810.05(c)'s four-year statute of limitations bars ABC's breach of trust claims. That statute provides that "a judicial proceeding by a beneficiaryagainst a trustee for a breach of trust must be commenced within four years after . . . [t]he termination of the trust." Ohio Rev. Code § 5810.05(c)(3). According to ACIC, the trust was terminated on July 19, 2005—when Roche wrote to ABC terminating the Agency Agreement—and thus ABC's May 2010 complaint was untimely. (See Ltr.; ECF No. 172-1.)
But the July 19, 2005 letter appears to terminate only the relationship between ABC and Roche. Specifically, it states that Roche (Ltr; ECF No. 172-1 (emphasis added).) The letter nowhere mentions terminating the trust. And, ABC argues that ACIC—not Roche—established and administrated the trust, pointing to an email from ACIC to U.S. Bank explaining that "[t]he [BUF] account should read American Contractors Indemnity [C]ompany in trust for . . ." (Email; ECF No. 167-1.) Similarly, bank statements reflect that ACIC held the BUF account in trust for ABC. (Crain Aff. ¶¶ 13-14; ECF No. 135-1; Statements; ECF No. 11-2.)
Attempting to link the Agency Agreement to the trust, ACIC asserts that a claim under Ohio Rev. Code § 5810.10(C) "is a breach of trust claim rooted and based in 'contract'" and that "the Agency Agreement . . . between Roche and American Bonding is the trust document for which American Bonding is suing under R.C. 5810." (Reply at 7; ECF No. 172.) But ABC appears to bring its claims under the remaining provisions of that statute that provide for claims based "on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust." Id. (emphasis added). (See Am. Compl. ¶ 79; ECF No. 71 () (emphasis added)); see also Resp. at 16; ECF No. 132; Reply at 8; ECF No. 135.)1
Nevertheless, ACIC asserts that ABC admitted that the trust terminated with the Agency Agreement, pointing to statements in ABC's summary judgment briefing—made before the Sixth Circuit's remand and ACIC's raising of the statute of limitations issue—that (Resp. at 8; ECF No. 132.) The Court has discretion to consider a statement made in a brief to be a judicial admission. See United States v. Burns, 109 F. App'x 52, 58 (6th Cir. 2004)....
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