LANCE M. AFRICK, District Judge.
Before the Court are two motions
IPS is a construction contractor. In order to submit bids and obtain certain construction projects, IPS was required to provide payment and performance surety bonds which it obtained from Liberty Mutual.
At the time the Indemnity Agreement was executed, Mr. and Mrs. Hess had an interest in IPS and they signed the Indemnity Agreement as co-indemnitors.
On April 16, 2012, Plaquemines Parish awarded IPS an $11 million contract to construct a levee. In connection with that project, Liberty Mutual issued payment and performance surety bonds.
On June 18, 2014, Liberty Mutual filed the above-captioned lawsuit claiming that it is entitled to indemnity pursuant to the Indemnity Agreement for expenses that it incurred as a result of its payment of multiple claims filed in connection with the payment and performance surety bonds and its arranging for work to continue on the project.
The motions are now ripe for decision. To the extent that any genuine issues of material fact remain to be determined at trial, the parties have agreed to stay and administratively close the above-captioned matter pending resolution of the state court litigation.
Summary judgment is proper when, after reviewing the pleadings, the discovery and disclosure materials on file, and any affidavits, the court determines that there is no genuine issue of material fact. See Fed. R. Civ. P. 56. "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party's case. Id.; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986).
Once the party seeking summary judgment carries its burden pursuant to Rule 56, the nonmoving party must come forward with specific facts showing that there is a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue is not satisfied by creating "`some metaphysical doubt as to the material facts,' by `conclusory allegations,' by `unsubstantiated assertions,' or by only a `scintilla' of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue of material fact exists when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The nonmoving party's evidence, however, "is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor." Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).
"As in any other contract, . . . it is the terms of the indemnity agreement that govern the obligations of the parties." 6 La. Civ. L. Treatise, Law of Obligations § 11.29 (2d ed.) (citing Meloy v. Conoco, Inc., 504 So.2d 833 (La. 1987)); see also Great Am. Ins. Co. v. McElwee Bros., Inc., 106 F. App'x 197, 200 (5th Cir. 2004) ("Under Louisiana law, indemnity provisions are construed in accordance with general rules governing contract interpretation."); Berry v. Orleans Parish Sch. Bd., 830 So.2d 283, 285 (La. 2002) ("In interpreting contracts, including indemnity clauses, we are guided by the general rules contained in articles 2045-2057 of the Louisiana Civil Code.").
"Contracts have the effect of law for the parties and . . . must be performed in good faith." La. Civ. Code. art. 1983. "Under Louisiana law, the interpretation of an unambiguous contract is an issue of law for the court." Amoco Prod. Co. v. Tex. Meridian Res. Exp. Inc., 180 F.3d 664, 668 (5th Cir. 1999) (citing Tex. E. Transmission Corp. v. Amerada Hess Corp., 145 F.3d 737, 741 (5th Cir. 1998)). "The interpretation of a contract is the determination of the common intent of the parties." La. Civ. Code art. 2045. "The words of a contract are to be construed using their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning." Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 181 (5th Cir. 2007). "Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole." La. Civ. Code art. 2050.
"When the words of the contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. Civ. Code art. 2046. "A contract provision is not ambiguous where only one of two competing interpretations is reasonable or merely because one party can create a dispute in hindsight." Amoco Prod., 180 F.3d at 668-69 (quoting Tex. E. Transmission Corp., 145 F.3d at 741) (internal quotation marks omitted). "In the context of contract interpretation, only when there is a choice of reasonable interpretations of the contract is there a material fact issue concerning the parties' intent that would preclude summary judgment." Id. at 669. "Parol or extrinsic evidence is generally inadmissible to vary the terms of a written contract unless the written expression of the common intention of the parties is ambiguous." Campbell v. Melton, 817 So.2d 69, 75 (La. 2002).
The Indemnity Agreement provides that defendants must indemnify Liberty Mutual "from and against any and all liability for losses, fees, costs and expenses of whatsoever kind or nature" that Liberty Mutual "may sustain or incur . . . by reason of being requested to execute or procure the execution of any Bond[] or . . . by having executed or procured the execution of any Bond."
The Indemnity Agreement does not define "good faith," but the Louisiana Procurement Code, La. Rev. Stat. § 39:1551 et seq.,
Liberty Mutual asserts that it has suffered a loss because it paid certain amounts "by reason of having executed the Bonds"
IPS does not contend that the Indemnity Agreement is invalid or unenforceable against it, but IPS asserts that Liberty Mutual has not demonstrated that it is entitled to indemnity for amounts that, according to IPS, Liberty Mutual was not required to pay.
IPS has submitted an internal email between Liberty Mutual employees, dated October 14, 2013, that discusses the levee construction project.
Furthermore, the Court disagrees with Liberty Mutual's position that issues related to the surety bonds are wholly irrelevant to this case. If IPS is correct that Liberty Mutual's surety obligations were not actually triggered and that Liberty Mutual was not required to have paid any amounts under the surety bonds, such fact would not be fatal to Liberty Mutual's claims for indemnity.
Liberty Mutual asserts that it has incurred $1,554,836.07 in net losses, resulting from $3,141,480.11 in claim expenses and $1,586,644.04 in "[p]ayments received and credited toward the Bond claims."
As described above, because Liberty Mutual is only entitled to indemnity for payments it made and losses it incurred in good faith, the Court cannot determine on the present record the extent to which Liberty Mutual is to be indemnified. Furthermore, as noted by IPS, "Liberty Mutual's motion and supporting Affidavit do not identify what payments may currently be pending from [Plaquemines Parish] or whether Liberty Mutual has submitted any change orders or requests for adjustment of the contract price."
The above-described issues that are raised in the motion for summary judgment as to IPS are equally relevant with respect to Liberty Mutual's claims against Mr. and Mrs. Hess. However, Liberty Mutual also contends that it is entitled to summary judgment with respect to Mr. and Mrs. Hess's assertion that "they have no liability under the Indemnity Agreement because co-indemnitor Ryan Hess informed Liberty Mutual that Gary Hess transferred his [that is, Gary Hess's] ownership interest in IPS prior to the execution of the Bonds, thereby[] effectively terminating [Mr. and Mrs. Hess's] liability."
Liberty Mutual's argument proceeds from the faulty premise that paragraph 19 is the sole means of terminating an indemnitor's obligation. To be sure, an indemnitor who unilaterally seeks to terminate his obligations must do so pursuant to paragraph 19. However, paragraph 16 of the Indemnity Agreement states, "The Indemnitors and Principals shall continue to remain bound under the terms of the [Indemnity] Agreement, Other [surety] Agreements, and any other agreements containing indemnity obligations, even though the Surety [that is, Liberty Mutual] may from time to time heretofore or hereafter, with or without notice to or knowledge of the Indemnitors and Principals, accept, release, or reduce any indemnity obligations or collateral of current or future Indemnitors and Principals for any reason."
According to the affidavit by Ryan Hess, Liberty Mutual was advised no later than March 31, 2011, that Mr. and Mrs. Hess were no longer involved with IPS and that they would no longer serve as guarantors of any bonds.
For the foregoing reasons,