Western Surety Company v. Mooney Construction, Inc.

Case: 13-13493 Date Filed: 07/28/2014 Page: 1 of 7
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 13-13493
Non-Argument Calendar
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D.C. Docket No. 1:12-cv-01309-WSD
WESTERN SURETY COMPANY,
Plaintiff - Appellee,
versus
MOONEY CONSTRUCTION, INC.,
TIMOTHY W. MOONEY,
DARCY D. MOONEY,
Defendants - Appellants.
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Appeal from the United States District Court
for the Northern District of Georgia
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(July 28, 2014)
Before WILSON, PRYOR and MARTIN, Circuit Judges.
PER CURIAM:
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Appellants Mooney Construction, Timothy W. Mooney, and Darcy D.
Mooney (collectively “Mooney”) appeal the district court’s decision to grant
Western Surety Company’s (Western) motion for summary judgment. On appeal,
Mooney argues that the district court erred because it misapplied basic principles
of Georgia law when it granted Western’s motion for summary judgment.
According to Mooney, Western acted in bad faith when Western asked the district
court to award $1.8 million in collateral security, a figure that Mooney argues, is
arbitrary and capricious. Also according to Mooney, Western provided no prima
facie evidence of the extent of Mooney’s liability for its collateral security. After
review of the parties’ briefs and the record on appeal, we affirm.
I.
On March 17, 2006, Western issued payment and performance bonds
(Bonds) to Mooney to ensure Mooney’s performance on construction projects for
the City of Atlanta, the County of Gwinnett, and the Georgia State Financing and
Investment Commission (GSFIC). The purpose of the Bonds was to make sure
that the owner, for example, the City of Atlanta, received a completed project and
that subcontractors and materialmen were paid for the materials and work they
provided. As consideration for the Bonds, Mooney entered into a general
agreement of indemnity (Indemnity Agreement) with Western. Under the terms of
the Indemnity Agreement, Western could set a reserve for any loss it expected to
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incur should Mooney default on any one of the projects, and could demand of
Mooney and any other indemnitors that they post collateral with Western in the
amount set as the reserve. Specifically, the collateral security provision of the
Indemnity Agreement read:
Payment shall be made to [Western] by the Indemnitors as soon as
liability exists or is asserted against [Western], whether or not
[Western] shall have made any payment therefor. Such payment shall
be either equal to the larger of (a) the amount of any reserve set by
[Western] or (b) such amount as [Western], in its sole judgment, shall
deem sufficient to protect it from loss. [Western] shall have the right
to use the deposit, or any part thereof, in payment or settlement of any
liability, loss or expense for which the Indemnitors would be
obligated to indemnify [Western] under the terms of this Agreement.
If for any reason [Western] shall deem it necessary to increase a
reserve to cover any possible liability or loss, the Indemnitors will
deposit with [Western], immediately upon demand, a sum of money
equal to any increase thereof as collateral security to [Western] for
such liability or loss.
In February 2011, GSFIC notified Western that GSFIC had terminated
Mooney for default on its construction project and that GSFIC had, at its own
expense, completed substantial portions of the project. GSFIC demanded that
Western reimburse GSFIC for its construction-completion expenses, other fees,
costs, and damages. GSFIC subcontractors, material suppliers, and others also
filed claims against Western under the Bonds.
On February 11, 2011, Western demanded that Mooney make certain
collateral payments as required under the Indemnity Agreement. Mooney refused,
and on March 15, 2011, Western made a second demand that Mooney post
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collateral pursuant to the terms of the Indemnity Agreement. Mooney once again
refused. Western made a third demand on December 13, 2011, and for a third time
Mooney declined to post collateral.
Western then filed suit in April 2012, and in January 2013 filed a motion for
summary judgment, which the district court granted. In its motion, Western sought
to be repaid $905,911.30, the amount it had already paid out on the Bonds
(Payments). Western also sought to require Mooney to remit $1,852,628.70 as
collateral (Collateral) as permitted by the terms of the Indemnity agreement.
Western anticipated this amount would be required to complete, investigate, and
ultimately resolve the remaining claims filed against Western. Thus, the total
amount Western sought was $2,803,540.00, the aggregate of (1) the net losses
resulting from claims and expenses incurred, and (2) the Collateral Western was
permitted to demand under the Indemnity Agreement. Mooney appealed, and now
argues that the Collateral award was arbitrary and not based on any evidence in the
records.
II.
We first address the issue of jurisdiction. To be appealable, an order must
either be final or fall into a specific class of interlocutory orders that are made
appealable by statute or jurisprudential exception. 28 USC §§ 1291, 1292; CSX
Transp., Inc. v. City of Garden City, 235 F.3d 1325, 1327 (11th Cir. 2000). “A
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final decision is one which ends the litigation on the merits and leaves nothing for
the court to do but execute the judgment.” CSX Transp., Inc., 235 F.3d at 1327
(internal quotation marks omitted). An order that adjudicates fewer than all claims
against all the parties is not final and appealable absent certification by the district
court under Federal Rule of Civil Procedure 54(b). Supreme Fuels Trading FZE v.
Sargeant, 689 F.3d 1244, 1246 (11th Cir. 2012) (per curiam).
Here, the district court’s July 1, 2013 order granted Western summary
judgment and entered judgment against Mooney for $2,803,540, the full amount
sought in Western’s summary judgment motion. This amount reflected the
$950,911.30 in losses and expenses sustained by Western in connection with the
bonds and the agreement, which included $132,554.92 in legal fees. The court
awarded Western its litigation expenses and attorneys’ fees under the Indemnity
Agreement. Accordingly, since the order resolved all claims in the action and left
nothing for the court to do but execute the judgment, it is final and appealable. See
28 U.S.C. § 1291, CSX Transp., Inc., 235 F.3d at 1327.
We have diversity jurisdiction “over a controversy between citizens of
different states.” McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002)
(per curiam) (citing 28 U.S.C. § 1332(a)). A corporation is deemed a citizen of
every state in which it is incorporated and the state where it has its principal place
of business. 28 U.S.C. § 1332(c)(1). Diversity jurisdiction exists here because, as
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the record evidences, Western is a citizen of South Dakota and Illinois while
Mooney is a citizen of Georgia. See 28 U.S.C. § 1332(c)(1); McCormick, 293 F.3d
at 1257. In addition, the amount in controversy exceeds $75,000. See 28 U.S.C. §
1332 (a). Accordingly, we have jurisdiction to hear this appeal.
III.
Turning to the merits, we review de novo the district court’s decision to
grant of summary judgment. Mann v. Taser Int’l, Inc., 588 F.3d 1291, 1303 (11th
Cir. 2009). Mooney disputes only the court’s grant of summary judgment,
approving Western’s demand of the Collateral. Mooney does not dispute that is
must reimburse Western for the Payments of $950,911.30. Mooney argues that the
district court erred in awarding the Collateral to Western because there is no
evidence in the record, nor did Western even establish satisfactory prima facie
evidence, to justify this figure.
Western argues that the Indemnity Agreement does not require Western to
provide its indemnitors with justifications for or explanations of its Collateral
requests. Rather, the Indemnity Agreement vests in Western the right, in its sole
judgment, to set a collateral amount and demand that amount from its indemnitors.
Under Georgia law, the ordinary rules of construction of a contract apply to
surety agreements. Anderson v. U.S. Fidelity & Guar. Co., 600 S.E.2d 712, 715
(Ga. Ct. App. 2004). “[W]here a decision is left to the discretion of a designated
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entity, the question is not whether it was in fact erroneous, but whether it was in
bad faith, arbitrary or capricious so as to amount to an abuse of discretion.”
Reliance Ins. Co. v. Romine, 707 F. Supp. 550, 552 (S.D. Ga. 1989) (internal
quotation marks omitted) aff’d, 888 F.2d 1344 (11th Cir. 1989) (per curiam). Also
pursuant to Georgia law, a court “will not nullify the validity of these provisions
[in the Indemnity Agreement] in the absence of bad faith or an abuse of discretion
on the part of plaintiff in the settlement of the claims at issue.” Id.
Here, Mooney offers no evidence that Western determined the Collateral
amount in bad faith or that the figure is arbitrary and capricious. Mooney instead
offers conclusory allegations that Western failed to provide calculations as to how
it arrived at the Collateral, something Western was not contractually obligated to
do. Per the terms of the Indemnity Agreement, Western would determine the
amount of collateral in its discretion. Evidence that Western did not wish to
disclose its formulas for assessing risk and the need for collateral is insufficient, by
itself, to support a reasonable inference of bad faith. Accordingly, summary
judgment was proper, and we affirm the district court’s decision.
AFFIRMED.
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