Maryland Cas. Co. v. Lambert, 78-1154

• Decision Date: 22 February 1980
• Docket Number: No. 78-1154,78-1154
• Parties: MARYLAND CASUALTY COMPANY, Plaintiff-Appellee, v. Donald G. LAMBERT and Sharon W. Lambert, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 229

612 F.2d 229

MARYLAND CASUALTY COMPANY, Plaintiff-Appellee, v. Donald G. LAMBERT and Sharon W. Lambert, Defendants-Appellants.

No. 78-1154.

United States Court of Appeals, Fifth Circuit.

Feb. 22, 1980.

Henry L. Klein, New Orleans, La., Cecil M. Burglass, New Orleans, La., for defendants-appellants.

Deutsch, Kerrigan & Stiles, Marian M. Berkett, New Orleans, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before MORGAN, REAVLEY and HATCHETT, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge.

Maryland Casualty Company brought this action to recover funds alleged to be due from Donald G. Lambert and Sharon W. Lambert, and for specific performance under the terms of an indemnity agreement between Maryland and the Lamberts. The District Court for the Eastern District of Louisiana granted partial summary judgment for Maryland on two claims, one a promissory note for $152,188, and the other for $1,784,396 in "advancements" made by Maryland to the Lamberts. The demand for specific performance, while not the subject of this appeal, is closely related to the claim for advancements and stems from the same series of business dealings. It is the position of the appellants Donald and Sharon Lambert that the claims for specific performance and money advanced are so interwoven that the partial summary judgment dismembers what is in reality a single cause of action.

Over a period of several years ending in 1975, Maryland issued payment and performance bonds on public works contracts undertaken by Lambert Contractor, Inc. In consideration for these bonds, Lambert Contractor and its sole shareholders, Donald and Sharon Lambert, agreed to indemnify Maryland against all losses on the bonds, and further agreed that should Maryland be required to establish a reserve fund against anticipated losses, they would furnish an equivalent amount of cash collateral.

Beginning in 1974, Lambert Contractor experienced severe financial difficulty. Naturally concerned over its risk exposure on the bonds issued on the Lamberts' projects, Maryland supplied financial aid to the Lamberts by various means, including advances of money totaling $1,784,396 under a letter agreement dated August 20, 1975. The second clause of the agreement stated that the advances would be repaid before January 30, 1976. The infusion of new capital into the company was to no avail, and Lambert Contractor was subsequently adjudged bankrupt. The advances made under the August 20 letter have never been repaid.

Initially, the Lamberts object that they are not personally liable for funds advanced under the letter agreement. This blank assertion is answered by the first paragraph of the letter, which recites that the agreements, including the agreement to repay, are between Maryland Casualty Company and "LAMBERT." The first sentence of the letter defines LAMBERT as including collectively "Donald G. Lambert Contractor, Inc., and its affiliated firms and controlling stockholders, Lambert Industries, Inc. Lambert Construction Company, Inc., Lambert Aviation, Inc., Donald G. Lambert and Sharon W. Lambert . . . ." The letter is signed by Sharon W. Lambert, individually, and by Donald G. Lambert, individually and in his capacity as president of each of the above-mentioned corporations.

The crux of the Lamberts' case, however, is that the advancements are secured by the indemnity agreement which is the subject of the specific...