Fidelity And Deposit Company Of Maryland V Frank Sinito Et Al

Key Facts

Transaction Type

Issues

• Whether Fidelity and Deposit Company of Maryland is entitled to specific performance of Defendants' duty to provide access to their books, records, and accounts under the Indemnity Agreement, given that there is no adequate remedy at law and Defendants waived opposition to this claim
• Whether Defendants materially breached the Indemnity Agreement by failing to indemnify Fidelity and Deposit Company of Maryland for the $368,153.00 Loss incurred by settling the ShepCo Payment Bond Claim in good faith, and whether they failed to deposit collateral as required under the agreement despite multiple demands

Holdings

Remedies

• The Court enters a money judgment in favor of Plaintiff Fidelity and Deposit Company of Maryland (F&D) and against Defendants Frank Sinito, et al., jointly and severally, in the amount of $368,153.00. This judgment is based on the breach of the Indemnity Agreement where Defendants failed to indemnify F&D for the Loss incurred by F&D's settlement of the ShepCo Payment Bond Claim.
• The Court grants summary judgment in favor of Plaintiff Fidelity and Deposit Company of Maryland (F&D) and against Defendants Frank Sinito and others on both Count I (Breach of the Indemnity Agreement - Damages) and Count II (Specific Performance/Access to Books and Records). The Court enters a money judgment in favor of F&D and against Defendants, jointly and severally, in the amount of $368,153.00. Additionally, the Court orders Defendants and any entity under their control to provide F&D with access to their books, records, and accounts in accordance with the Indemnity Agreement.
• The Court orders Defendants and any 'entity under control' of Defendants to provide F&D with access to their books, records, and accounts in accordance with the Indemnity Agreement. This specific performance remedy is granted because F&D lacks an adequate remedy at law for the breach of the books and records provision of the indemnity agreement.

Contract Value

Monetary Damages

Legal Principles

• The Indemnity Agreement grants the Surety the 'absolute and unconditional' right to settle any 'Claim' against Defendants. Claims settled in 'Good Faith' are defined as acts, exercises of discretion, or omissions by the Surety with 'an absence of dishonesty, evil intent and actual malice toward Principal and [Defendants].' The Court found that F&D's settlement of the ShepCo Payment Bond Claim was made in Good Faith based on sworn declarations that the settlement was necessary and expedient under the circumstances.
• Under Federal Rule of Civil Procedure 56, the moving party bears the burden of showing that no genuine issues of material fact exist. Once satisfied, the burden shifts to the non-moving party to produce evidence demonstrating a genuine dispute of material fact for trial. The Court views facts and draws reasonable inferences in favor of the non-moving party.
• Defendants materially breached the Indemnity Agreement by failing to indemnify F&D for the $368,153.00 'Loss' incurred by its good faith settlement of the ShepCo Payment Bond Claim. The Court found no material issue of fact that Defendants failed to promptly discharge the bonded claim or deposit sufficient collateral after multiple demands under the agreement terms.

Precedent Name

• Lewis-Smith v. W. Ky. Univ.
• Int'l Fid. Ins. Co. v. Vimas Painting Co. Inc.
• Great Am. Ins. Co. v. DJR, Inc.
• Humphrey v. United States Att'y Gen.'s Office
• Old Republic Sur. Co. v. T&A Constr., Inc.
• Colonial Sur. Co. v. A&R Cap. Assocs.
• JPMorgan Chase Bank, N.A. v. Winget

Key Disputed Contract Clauses

• The Indemnity Agreement requires Defendants to promptly, upon demand, procure the full and complete discharge of F&D from all Bonds and, if unable to obtain discharge within the time demanded, promptly deposit money to collateralize outstanding bonded obligations. Defendants failed to respond to multiple demands from F&D.
• The Indemnity Agreement grants F&D the 'absolute and unconditional' right to settle any Claim and requires indemnification for Claims settled in 'Good Faith,' defined as acts or exercises of discretion with 'an absence of dishonesty, evil intent and actual malice toward Principal and [Defendants].' F&D's settlement was deemed made in Good Faith.
• The Indemnity Agreement requires Defendants to promptly deposit with F&D an amount of money sufficient to collateralize or pay any outstanding bonded obligations if unable to obtain discharge of Bonds within the time demanded. Defendants failed to deposit collateral after multiple demands from F&D.
• The Indemnity Agreement requires Defendants to indemnify F&D from all liability and Loss arising from Bonds, Claims, or F&D enforcing the Agreement. Defendants failed to indemnify F&D for the $368,153.00 Loss incurred by F&D's settlement of the ShepCo Payment Bond Claim, which constitutes a 'Loss' under the agreement terms.
• Paragraph 11 of the Indemnity Agreement grants F&D the right to promptly access, examine, and copy the books, records, and accounts of Indemnitors and any entity under their control. Defendants failed to provide this access despite F&D's demands, and the Court found no adequate remedy at law, warranting specific performance.

Cited Statute

Judge Name

Passage Text

• Because Defendants failed to respond to or oppose F&D's arguments on this issue, Defendants have waived any opposition or argument against granting summary judgment in F&D's favor on Count II. As F&D asserts, courts have routinely granted summary judgment and ordered specific performance in order to enforce similar provisions in indemnity agreements that provide a surety with the right to access an indemnitor's books and records. Thus, specific performance is an appropriate remedy in this case.
• The Court finds that there is no issue of material fact that Defendants materially breached the Indemnity Agreement. The parties do not dispute, and the evidence establishes, that: (i) F&D and Defendant executed the Indemnity Agreement; (ii) in accordance with the Indemnity Agreement, F&D executed the Payment Bond for the Construction Contract; (iii) ShepCo asserted the ShepCo Payment Bond Claim against the Payment Bond for an amount in excess of $346,911.94; (iv) F&D settled the ShepCo Payment Bond Claim for $330,000 in September 2023; and (v) Defendants have not indemnified F&D for the loss it incurred in settling the ShepCo Payment Bond Claim.
• For the reasons discussed below, Plaintiff's motion for summary judgment is GRANTED. The Court GRANTS summary judgment in F&D's favor as to Count I. Accordingly, the Court GRANTS summary judgment in F&D's favor as to Count II and ORDERS Defendants and any 'entity under control' of Defendants to provide F&D with access to their books, records, and accounts in accordance with the Indemnity Agreement.

Damages / Relief Type

• Court entered a money judgment in favor of Plaintiff F&D against Defendants, jointly and severally, in the amount of $368,153.00 for breach of the Indemnity Agreement.
• Court ordered Defendants and any 'entity under control' of Defendants to provide F&D with access to their books, records, and accounts in accordance with the Indemnity Agreement.