Liberty Mut. Ins. Co. v. Milender White Constr. Co.
| Decision Date | 13 December 2017 |
| Docket Number | Civil Action No. 17-cv-02102-NYW |
| Parties | LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff, v. MILENDER WHITE CONSTRUCTION COMPANY, MW REAL ESTATE, LLC, U.S. FACILITIES MANAGEMENT, LLC, and MW SELFWORK, LLC, Defendants. |
| Court | U.S. District Court — District of Colorado |
This matter comes before the court on the Motion for Summary Judgment Against Third-Party Defendants ("Liberty's Motion for Summary Judgment") [#17], filed by Defendant/Third Party Plaintiff Liberty Mutual Insurance Company ("Liberty"), and the cross motion, titled Third Party Defendants' Motion for Summary Judgment ("MWCC's Motion for Summary Judgment") [#18], filed by Third Party Defendants Milender White Construction Co., MW Real Estate, LLC, U.S. Facilities Management, LLC and MW Selfwork, LLC (collectively, "MWCC"). The Motions are before the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(c) and the Order of Reference dated September 14, 2017 [#35]. After carefully reviewing the Motions and related briefing, the entire case file, and the applicable case law, I DENY IN PART and GRANTIN PART Liberty's Motion for Summary Judgment and DENY IN PART and GRANT IN PART MWCC's Motion for Summary Judgment.
The history of this action is extensive and requires a detailed recitation. On January 9, 2015, Double H. Masonry, Inc. ("Double H. Masonry") sued Liberty and Lockton Companies, LLC in the Western Division of the United States District Court for the District of South Dakota, for breach of payment bond ("South Dakota Action").2 [#1-1]. Jurisdiction was premised on diversity of citizenship pursuant to 28 U.S.C. § 1332. The dispute arose out of a subcontract between Milender White Construction Company ("Milender White") and Double H. Masonry to perform masonry work ("Subcontract"), pursuant to a prime contract between Milender White and the Oglala Sioux Tribe ("Prime Contract"), concerning the Tribe's Pine Ridge Justice Center located near Pine Ridge village, South Dakota To secure the project, Milender White obtained a payment bond signed by its representative and a representative of Liberty, and which listed Lockton Companies, LLC as a surety (the "Payment Bond"). [Id. at 3]. The Payment Bond included the following relevant terms: Liberty was bound in the penal sum of $30,466,297 to any subcontractor that furnished labor, materials, or equipment for use in the performance of the Prime Contract; upon receipt of a written claim, Liberty would respond within sixty days identifying the undisputed amounts of the claim along with the disputed amounts and bases for dispute, and pay or arrange payment of the undisputed amounts; Milender White and the OglalaSioux Tribe would promptly furnish a copy of the Payment Bond upon request of any person who appeared to be a potential beneficiary of the bond; and Liberty would be liable for attorney fees incurred to recover sums found to be due and owing to a claimant. [Id. at 4]. As consideration for Liberty issuing the Bond and other bonds, and for other consideration, MWCC executed a General Agreement of Indemnity ("Indemnity Agreement").
Double H. Masonry ultimately initiated the South Dakota action to recover $848,755.61 it claimed was owed under the Payment Bond as a result of Milender White's failure to pay numerous invoices and failure to pay a damages award entered against it by the Oglala Sioux Tribal Employment Rights Office ("TERO"). [#3]. Liberty filed an Answer. [#1-12]. Milender White concurrently demanded Double H. Masonry participate in arbitration pursuant to terms of the Subcontract to resolve the payment disputes, and Liberty moved the court to stay the South Dakota Action pending the outcome of that arbitration. See [#1-16]. Before the court ruled, Double H. Masonry sought without opposition to amend its Complaint to, among other things, remove Lockton Companies, LLC, and to add claims for Contractual and/or Tortious Bad Faith and for Violation of Unfair Trade Practices Act; the court accepted the First Amended Complaint on May 26, 2015. See [#1-47]. Liberty thereafter moved to dismiss the pleading in part, [#1-51], and filed an Answer to the Amended Complaint. [#1-52]. Then, pursuant to the Parties' request, the court scheduled a settlement conference and held the motion to stay pending arbitration in abeyance to await the outcome of the settlement attempt. Settlement was unsuccessful. Two months later, on October 2, 2015, Double H. Masonry moved to amend its Complaint "to remove and acknowledge satisfaction of its TERO award claim," to omit reference to one of the previously unpaid invoices, and to remove its claim for Violation of Unfair Trade Practices Act.[#1-83; #1-87]. Liberty thereafter filed an Answer, [#1-89], and the Parties asked the court to apply the previously-filed Motion to Dismiss as to the claim for Contractual and/or Tortious Bad Faith.
On November 4, 2015, the court granted Liberty's motion to stay pending resolution of the arbitration proceeding between Double H. Masonry and Milender White. [#1-198]. Six months later, on April 14, 2016, Double H. Masonry moved the court to lift the stay, advising that the arbitrator had awarded it $320,778.57 and awarded Milender White $29,147.24, and that it intended to pursue attorney fees as to Liberty under the Payment Bond. The court granted the motion and lifted the stay, and Double H. Masonry subsequently filed a motion for attorney fees and costs. [#1-209]. On April 28, 2016, Double H. Masonry filed a motion for summary judgment on its claim for breach of payment bond. [#1-217]. Liberty thereafter filed a motion for reconsideration of the order lifting the stay, which the court granted and thereby reinstated the stay pending the completion of the arbitration proceedings, which included allocation of costs and fees. See [#1-240].
On August 1, 2016, Liberty filed a motion for leave to file a third party complaint against MWCC to assert a breach of the Indemnity Agreement, contending that Double H. Masonry's claims against Liberty "implicate [MWCC's] duty to defend and indemnify Liberty pursuant to the Agreement," and also implicate Milender White's common law duties to Liberty. On August 5, 2016, Double H. Masonry filed a motion for amended attorney fees. [#1-254]. Five days later, the court granted Liberty's motion, and accepted the Third Party Complaint. [#1-279]. The Third Party Complaint is the operative pleading in the action between the Parties before this court, and is referenced hereafter as the Complaint. See [#12].
Liberty's Complaint asserts the following claims: (1) Breach of Express Contract against All Indemnitors; (2) Common Law Indemnification against Milender White; (3) Injunctive Relief - Specific Performance Against All Indemnitors; (4) Injunctive Relief - Quia Timet Rights Against Milender White and All Indemnitors; and (5) Unjust Enrichment - Equitable Liens. [#12]. Liberty seeks the following relief: judgment for costs and fees incurred by it as a result of it issuing the Payment Bond; specific performance of the Agreement of Indemnity; injunctive relief requiring MWCC to place Liberty in sufficient funds to cover any possible liability for which MWCC will be obligated to indemnify Liberty per the terms of the Agreement of Indemnity; for an equitable lien in the amount of $235,000 placed in favor of Liberty on real property located in Arvada, Colorado owned by MWCC; and for a security interest in favor of Liberty on rights, title, and interest of assets belonging to MWCC. [Id. at 11]. On October 4, 2016, MWCC filed its Answer to the Complaint. [#1-314; #13].
In an order dated September 30, 2016, the District of South Dakota granted in part and denied in part Liberty's motion to dismiss. In a matter of first impression, the South Dakota court allowed Double H. Masonry's claim for tortious bad faith to proceed but dismissed Double H. Masonry's claim for contractual bad faith. [#1-312]. On October 13, 2016, Liberty filed a motion for summary judgment arguing essentially that Double H. Masonry sued Liberty prematurely, Double H. Masonry has been reimbursed for all damages it could have recovered under the Payment Bond, and there was in fact a good faith dispute between Double H. Masonry and Milender White. [#1-315; #1-370]. Double H. Masonry thereafter filed an unopposed motion asking the court to lift the stay, for permission to hold a Rule 26(f) conference, and that the court enter a scheduling order. The court granted the motion and lifted the stay, and MWCCmoved to join in Liberty's motion for summary judgment as to Double H. Masonry. [#1-337]. Thereafter, pursuant to the Parties' request, the court set a settlement conference to occur December 8, 2016. [#1-365]. On that date, Liberty and Double H. Masonry reached an agreement to settle their dispute.
On February 6, 2017, Liberty filed this instant Motion for Summary Judgment against MWCC. See [1-373; #17]. Liberty moves for partial summary judgment as to its first claim for Breach of Contract on the basis that claims were made against Liberty by reason of Liberty having executed the Payment Bond. Liberty states that while it and MWCC had "justifiably disputed Double H's claim, losses were incurred," e.g., "Milender forced Double H to arbitrate its claims, and Milender lost." [#17 at 3]. Liberty argues that during its litigation against Double H. Masonry, it "made repeated demands on Milender and the Indemnitors for defense and indemnification for all of Liberty's losses"; "Milender and the Indemnitors failed and refused to make Liberty whole, as required by the plain language of the [I]ndemnity [A]greement"; and, "[a]s a matter of law, they are required to do so." [Id.] Liberty asserts that it incurred losses of at least $320,197 as a result of the alleged breach.
On February 27, 2017, MWCC filed its own pending Motion for Summary...
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