Mountbatten Sur. Co. v. SZABO CONTRACTING
Decision Date | 17 June 2004 |
Docket Number | No. 2-03-0171.,2-03-0171. |
Citation | 285 Ill.Dec. 501,349 Ill.App.3d 857,812 N.E.2d 90 |
Parties | MOUNTBATTEN SURETY COMPANY, INC., Plaintiff-Appellee, v. SZABO CONTRACTING, INC., Szabo Construction, LLC, Frank Szabo, Jr., James C. Szabo, Carla Szabo, and Carl F. Szabo, Defendants-Appellants. |
Court | United States Appellate Court of Illinois |
Thomas J. Keevers, Scott D. Barber, Riffner, Barber & Scott, P.C., Schaumburg, for Carl F. Szabo, Carla Szabo, Frank Szabo, Jr., James C. Szabo, Szabo Construction, LLC and Szabo Contracting Inc.
James P. DeNardo, William S. Piper, Kristin Dvorsky Tauras, Tracy McGonigle, McKenna Storer, Chicago, for Mountbatten Surety Company, Inc. Presiding Justice O'MALLEY delivered the opinion of the court:
Defendants, Szabo Contracting, Inc., Szabo Construction, LLC, Frank Szabo, Jr., James C. Szabo, Carla Szabo, and Carl F. Szabo appeal the order of the circuit court of Du Page County granting summary judgment in favor of plaintiff, the Mountbatten Surety Company, Inc., and awarding plaintiff a judgment totaling $763,544.31. Defendants argue that (1) plaintiff did not properly plead and demonstrate that its right to be indemnified by defendants under a general indemnity agreement (Agreement) had been triggered by a default on an underlying bond, (2) that the attorney fees awarded plaintiff by the trial court were not reasonable, and (3) that the trial court abused its discretion in denying defendants leave to plead over and to file affirmative defenses. We affirm.
The following undisputed facts are taken from the record on appeal. In 1993, Szabo Contracting, Inc. (SCI), began its business as a general contractor and focused on municipal projects. In 1998, defendants executed a general indemnity agreement with plaintiff whereby plaintiff was to provide performance and payment bonds on various projects that SCI undertook for its municipal clients.
Plaintiff is a Pennsylvania insurance company that is authorized to transact insurance and surety business in Illinois. Plaintiff issued a number of performance and payment bonds on behalf of SCI and in favor of various state and municipal entities for public works projects in which SCI was acting as a contractor. These projects included a contract with the Village of South Barrington, four contracts with the Village of Lombard, a contract with Du Page County, two contracts with the City of Aurora, a contract with the Village of Bloomingdale, a contract with the Illinois Department of Natural Resources, and a contract with the Village of Melrose Park. The combined total of the performance and payment bonds issued by plaintiff was over $16 million. On February 16, 1998, all defendants separately and severally executed the Agreement. The Agreement provided:
"The Indemnitors [defendants] hereby jointly and severally covenant, promise and agree to exonerate, indemnify and save harmless the Surety [plaintiff] (and any surety the Surety procures to execute any Bond and any other surety with which Surety may act as co-surety on any Bond or other instrument) from and against any and all liability, loss, cost, damage and expense of whatsoever kind or nature (including but not limited to, interest, court costs and counsel, consulting, accounting and other professional fees) which the Surety may sustain, incur, be put to or to which it may be exposed (1) by reason of having executed any Bond or other instrument or any renewal, modification, continuation, substitution or extension thereof, (2) by reason of the failure of the Principal or any of the other Indemnitors to perform or comply with the promises, covenants and conditions of this Agreement or, (3) in enforcing any of the promises, covenants or conditions of this agreement."
In addition, the Agreement provided:
"The liability of the Indemnitors [defendants] shall extend to and include the amount of all payments, together with interest thereon, from the date of such payments, made by the Surety [plaintiff] in good faith under the Surety's belief that (1) the Surety was or might be liable therefor, or (2) the payments were necessary or advisable to protect any of the Surety's rights or to avoid or lessen the Surety's liability or alleged liability."
Additionally, defendants agreed to collateralize any reserve established by plaintiff in the anticipation of a loss on any of the bonds it issued. If defendants failed to deposit sufficient collateral after plaintiff made a collateral demand, then defendants' failure constituted a default under the Agreement, triggering plaintiff's rights under the Agreement to obtain injunctive relief to compel defendants to deposit sufficient collateral, or to obtain a judgment against defendants for the amount of the collateral demanded plus costs and attorney fees.
Under the Agreement, defendants also agreed to assign, transfer, pledge, and convey to plaintiff as collateral security various rights of defendants in any and all sums due or to become due under any contract; all subcontracts and purchase orders; all interest in any contract, the work, or tools and supplies; and all other personal property. Paragraph 9 of the Agreement provided that the rights defendants assigned to plaintiff could be exercised by plaintiff as follows:
The Agreement further provided that the contract funds were to be treated as trust funds:
Early in 1999, plaintiff became aware of claims submitted by SCI's subcontractors for nonpayment and the Village of South Barrington's complaint regarding SCI's performance. On February 23, 1999, HMS Dreadnought, an entity related to plaintiff, wrote to the Village of South Barrington acknowledging receipt of the Village's complaint and other claims made against the payment bond. HMS Dreadnought "demand[ed], on behalf of the Surety [plaintiff] that [the Village of South Barrington] release no further funds under the above-referenced contract without the in-advance written consent and direction of the Surety or HMS Dreadnought, Inc." HMS Dreadnought made the demand "to protect the Surety's rights of subrogation and to enable the Surety to protect its interests under its Bonds furnished for this project." On March 11, 1999, R.W. Dunteman Company, a subcontractor in the Lombard project, filed suit against SCI for failing to pay it sums due under its contract with SCI. On March 23, 1999, plaintiff sent letters to the other municipalities that had outstanding contracts with SCI, insisting that...
To continue reading
Request your trial-
RLI Ins. Co. v. Nexus Servs. Inc.
...pay them, and that, if they refuse to pay or perform, the surety will become liable."); Mountbatten Sur. Co. v. Szabo Contracting, Inc., 349 Ill.App.3d 857, 285 Ill.Dec. 501, 812 N.E.2d 90, 101 (2004) ("Defendants did not dispute that plaintiff received claims under the bonds. Under the [bo......
-
Rexam Beverage Can Co. v. Bolger
...Pa. Truck Lines, Inc. v. Solar Equity Corp., 882 F.2d 221, 227 (7th Cir.1989); Mountbatten Sur. Co. v. Szabo Contracting, Inc., 349 Ill.App.3d 857, 285 Ill.Dec. 501, 812 N.E.2d 90, 104 (2004); Powers v. Rockford Stop-N-Go, Inc., 326 Ill.App.3d 511, 260 Ill.Dec. 393, 761 N.E.2d 237, 241 (200......
-
In re Estate of Bitoy
... ... In Mountbatten Surety Co. v. Szabo Contracting, Inc., 349 Ill. App.3d 857, 285 Ill.Dec ... ...
-
Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co.
...104, 113, 338 Ill.Dec. 671, 924 N.E.2d 1197, 1206 (2d Dist. 2010) (citing Mountbatten Sur. Co. v. Szabo Contracting, Inc. , 349 Ill.App.3d 857, 873, 285 Ill.Dec. 501, 812 N.E.2d 90, 104 (2d Dist. 2004) ). However, a party may collect fees only on the claims on which it has prevailed. First ......