Revenue Markets, Inc. v. Amwest Surety Ins. Co.
| Decision Date | 09 November 1998 |
| Docket Number | No. 97-276-CIV.,97-276-CIV. |
| Citation | 35 F.Supp.2d 899 |
| Parties | THE REVENUE MARKETS, INC., Plaintiff, v. AMWEST SURETY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Paul M. Woodson, James E. Glass Associates, Miami, FL, for plaintiff.
Bruce Charles King, Carlton Fields, Miami, FL, for defendant.
THIS CAUSE came before the Court upon Defendant/Counterclaim Plaintiff Amwest Surety Insurance Company's Motion for Final Summary Judgment (DE # 80, filed September 9, 1998). The Motion is ripe.
In July 1993, Plaintiff/Counterclaim Defendant The Revenue Markets, Inc. ("TRMI") entered into a contract with Dade County, Florida, wherein TRMI agreed to furnish labor, material, and equipment for the construction of a highway toll collection system. The construction contract called for TRMI to obtain a payment and performance bond from a surety guaranteeing TRMI's performance under the contract. Pursuant to that obligation, TRMI, as well as Counterclaim Defendants Robert and Eleanor Rosakranse (collectively "the Rosakranses"),1 entered into a general indemnity agreement ("the Indemnity Agreement") with Defendant/Counterclaim Plaintiff Amwest Surety Insurance Company ("Amwest").
Under the terms of the Indemnity Agreement, Amwest as surety issued a payment and performance bond in the amount of $3.5 million, guaranteeing the performance of TRMI as principal under the construction contract. In consideration, TRMI and the Rosakranses as individuals agreed to indemnify Amwest for any losses, demands, or costs accruing to Amwest as a result of its issuance of the payment and performance bond.2 In addition, TRMI executed a $300,000 letter of credit as collateral security in favor of Amwest.
On June 16, 1995, Dade County declared TRMI to be in default on its construction contract, and terminated TRMI as contractor. In response, TRMI filed suit against Dade County ("the TRMI-Dade County litigation") on June 23, 1995. Having declared TRMI to be in default, Dade County called upon Amwest as surety to complete TRMI's obligations under the construction contract. In addition, there were apparently $700,000 in payment bond claims against TRMI from various unpaid suppliers and subcontractors. Amwest retained Guardian Group, Inc. ("Guardian") to act as consultant on behalf of Amwest in reviewing the situation between Dade County and TRMI. During this review, Amwest asked TRMI to provide certain confidential information to Guardian to aid it in its investigations into the dispute. In an agreement between TRMI and Guardian ("the Nondisclosure Agreement"), TRMI agreed to supply confidential information to Guardian in return for Guardian's promise not to disclose the information. Amwest was not party to this Nondisclosure Agreement.
While the TRMI-Dade County litigation was pending, Amwest attempted to have TRMI and Dade County reach a workout or settlement. During the process, Amwest incurred approximately $330,000 in claims-related expenses, as well as a $75,000 payout on behalf of TRMI under the construction contract.
In February 1996, Dade County advised Amwest that it would not permit TRMI to complete its construction contract. At this point, the TRMI-Dade County litigation was still pending. Faced with possible liabilities in excess of $3.5 million, and believing TRMI to be in default, Amwest negotiated a settlement with Dade County in August 1996 ("the Bond Cancellation Agreement"), wherein Amwest agreed to pay Dade County up to $1 million for the cost of utilizing a substitute contractor in place of TRMI, and in return, Dade County promised to terminate Amwest's obligations and liabilities to Dade County under Amwest's payment and performance bond. In addition, the Bond Cancellation Agreement called for Amwest to provide information and other assistance to Dade County in the TRMI-Dade County litigation. Finally, the Bond Cancellation Agreement provided for Amwest to share in 25% of any monies recovered by Dade County from TRMI.
In the spring of 1996, Amwest requested that TRMI return certain construction equipment to Dade County, even though Dade County had not yet paid for it. TRMI handed the equipment over, but in return, Amwest provided a $250,000 letter of credit to TRMI to cover any potential indemnity claims that Amwest might bring against TRMI.
In October of 1996, Amwest liquidated the $300,000 letter of credit put up by TRMI as collateral security under the Indemnity Agreement. At the time it did so, Amwest had not paid any monies over to Dade County.
In December 1996, the TRMI-Dade County litigation came to a close, and TRMI was awarded approximately $3.5 million in damages. TRMI subsequently filed suit against Amwest in January 1997. In its suit, later amended in October 1997, TRMI brings claims for breach of contract and bad faith against Amwest, alleging that: (1) Amwest provided confidential information about TRMI to Dade County during the TRMI-Dade County litigation; (2) Amwest cooperated with and benefitted from Dade County during the TRMI-Dade County litigation; and (3) Amway liquidated the $300,000 letter of credit against TRMI even though Amway had not performed under the Indemnity Agreement. In response, Amwest filed a countersuit in April 1998, alleging that: (1) TRMI should, under the Indemnity Agreement of April 1990, indemnify Amwest for all losses and expenses incurred by Amwest; and (2) TRMI should, under the equitable doctrines of exoneration and quia timet, secure Amwest for any future losses and expenses arising out of Amwest's issuance of its payment and performance bond.
Under Rule 56(c) of the Federal Rules of Civil Procedure:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(c). Summary judgment may be entered only where there is no genuine issue of material fact. See Twiss v. Kury, 25 F.3d 1551 (11th Cir.1994). The moving party has the burden of meeting this exacting standard. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). In applying this standard, the district court must view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion. Id. at 157.
However, the non-moving party "[m]ay not rest upon the mere allegations and denials of [its] pleading, but [its] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact,
the plain language of Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial and requires the court to grant the motion for summary judgment. Id.
TRMI's Complaint alleges breach of contract and breach of an attendant implied duty of good faith by Amwest in the following violations: (1) Amwest shared confidential information about TRMI with Dade County; (2) Amwest liquidated TRMI's $300,000 letter of credit; (3) Amwest cooperated with Dade County in the TRMI-Dade County litigation, by providing witnesses and other aid; (4) Amwest did not disclose to TRMI its negotiations with Dade County regarding the Bond Settlement Agreement; and (5) in the Bond Settlement Agreement, Amwest is to share in any recovery by Dade County against TRMI.
The Court finds that there is no genuine issue of material fact as to whether Amwest breached any contract — specifically the Indemnity Agreement signed by Amwest as surety and TRMI and the Rosakranses as guarantors/principals. The terms of the Indemnity Agreement are very clear on Amwest's rights as surety.3 TRMI was in "default," and Amwest's rights under the Agreement were triggered, as soon as Dade County declared TRMI to be in default.4 At that point, not only did Amwest's subsequent actions not violate any of the terms of the Indemnity Agreement, but such conduct was explicitly authorized by the Agreement.
The first alleged breach of the Indemnity Agreement is Amwest's sharing of confidential information about TRMI with Dade County. TRMI claims that this occurred through Guardian, the company hired by Amwest in its investigation of the underlying TRMI-Dade County dispute. While it is true that Guardian was not to divulge any confidential information that it received from TRMI under the Nondisclosure Agreement, it is also true that the Nondisclosure Agreement specifically states that it is "by and between Guardian Group, Inc.... and The Revenue Markets, Inc." — nowhere is Amwest named or implicated as a party to the Nondisclosure Agreement. TRMI does not advance any argument for why Guardian's duty of confidentiality...
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