Filed: Oct. 23, 2015
Latest Update: Oct. 23, 2015
Summary: ORDER ON SUMMARY JUDGMENT AND REQUEST FOR DAMAGES RICHARD G. STEARNS , District Judge . Defendants, as indemnitors and signatories on the General Indemnity Agreement (GIA), are liable to plaintiff Washington International Insurance Company (WIIC) for the losses, costs, and expenses that WIIC incurred in satisfying claims made on its surety bonds underwriting defendants' performance on a construction contract with the City of Newport, Rhode Island for a project known as the Roadway Improveme
Summary: ORDER ON SUMMARY JUDGMENT AND REQUEST FOR DAMAGES RICHARD G. STEARNS , District Judge . Defendants, as indemnitors and signatories on the General Indemnity Agreement (GIA), are liable to plaintiff Washington International Insurance Company (WIIC) for the losses, costs, and expenses that WIIC incurred in satisfying claims made on its surety bonds underwriting defendants' performance on a construction contract with the City of Newport, Rhode Island for a project known as the Roadway Improvemen..
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ORDER ON SUMMARY JUDGMENT AND REQUEST FOR DAMAGES
RICHARD G. STEARNS, District Judge.
Defendants, as indemnitors and signatories on the General Indemnity Agreement (GIA), are liable to plaintiff Washington International Insurance Company (WIIC) for the losses, costs, and expenses that WIIC incurred in satisfying claims made on its surety bonds underwriting defendants' performance on a construction contract with the City of Newport, Rhode Island for a project known as the Roadway Improvement Project — Spring 200-4 under Bid No. 04-0073 (the Project). Karney Aff. ¶ 18. In support of its motion for summary judgment, WIIA offers sworn testimony that it investigated and negotiated a settlement in good faith of a claim made under the GIA (the Keating Claim).1 Karney Aff. ¶ 15; Lynch Dep. at 66. "After engaging in good faith negotiations with Keating, on or about January 25, 2011, with the approval of the Indemnitors, the Surety satisfied the Keating Claim against the Bond by making a payment to Keating in the amount of sixty four thousand 00/100 dollars ($64,000)." Pl.'s Statement of Facts (SOF), citing Karney Aff. ¶ 16; W. Botelho Dep. at 34-35; W. Botelho Dep. Ex. 4; and Lynch Dep. at 69-71.2
In opposition to summary judgment, defendants contend that the parties entered into a settlement agreement — "a substituted contract which superseded the GIA." Def.s' Mem. at 1. Defendants further maintain that counsel accepted the "`final settlement agreement' between the parties [and] LBC began making payments under the terms of the Agreement." Id. at 4. While the parties negotiated a settlement, defendants decided that the "circumstances [had] changed" and that they could not execute the agreement.3 Notwithstanding, defendants in May of 2012, made a partial payment to the Surety of $17,500 to "avoid litigation." Pl.s' Reply — Ex. 8.
While more or less conceding that judgment must enter for WIIA under the GIA, defendants object to the amount WIIA contends it is owed. First they argue that the interest is excessive — that while the GIA requires the payment of interest, because "there is no reference as to the rate of interest . . . plaintiff is only entitled to `reasonable interest.'" Rachel Lynch Suppl. Mem. at 3.
Plaintiff paid $64,000 on or about January 25, 2011. Compounding interest at a rate of 5% for a five year period on a $64,000 payment, from January, 2011 to January 20, 2016, total $13,965, without credit for the $17,500 payments. Even with a 10% interest rate over the five year timeframe and without credit for the $17,500 payments, interest totals $29,702. In its motion, Plaintiff is seeking $35,370. This raises an issue of material fact.
Defendants also complain that WIIC has failed to properly account for its attorneys' fees.
While WIIC originally claimed $35,370.08 in interest, at the summary judgment hearing, WIIC's counsel recalculated the interest owed as $19,385. Deducting the defendants' $17,500 payment from the $64,000 indemnity payment, leaves $46,500, and with the revised interest calculation, WIIC's total demand is for $65,885. As requested at the hearing, as the prevailing party, WIIC will provide the court with a proposed form of final judgment that includes an explanation of its interest calculation. See Saint-Gobain Indus. Ceramics Inc. v. Wellons, Inc., 246 F.3d 64 (1st Cir. 2001), citing Mass. Gen. Laws ch. 231, § 6C (under Massachusetts law, the award of prejudgment interest runs from date of commencement of action where date of breach or demand is not established); see also Sterilite Corp. v. Cont'l Cas. Co., 397 Mass. 837, 841-842 (1986) ("The dates of the payment of the various bills, which are readily ascertainable, determine the points at which Sterilite was obliged to commit sums which it rightfully should not have been obliged to commit. Before those bills were paid, Sterilite was not deprived of the use of its money. No interest is due on sums when Sterilite was not deprived of the use of those sums. Any other rule would result in a windfall for Sterilite, which the Legislature did not intend. Therefore, prejudgment interest under G.L. c. 231, § 6C, should be calculated in this case on the basis of the various dates on which the legal bills were paid by Sterilite.").
Consistent with the court's prior orders and rulings at the motion hearing, plaintiff Washington International Insurance Company's motion for summary judgment is ALLOWED. Within ten (10) days of the date of this Order, WIIC will submit a proposed form of final judgment consistent with this Order, including an explanation of its interest determination of $19,385. The court will review the documentation of WIIC's request for attorney's fees and enter an award in conjunction with the entry of final judgment.
SO ORDERED.
