Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
American Safety Casualty Insurance Co. v. Happy Acres Enterprises Co., Inc.
United States District Court, W.D. Washington, Seattle
January 26, 2017
AMERICAN SAFETY CASUALTY INSURANCE COMPANY, Plaintiff,
HAPPY ACRES ENTERPRISES CO., INC., a Washington corporation, et al., Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE
matter comes before the Court on Plaintiff's Motion for
Partial Summary Judgment. Dkt. #18. Plaintiff seeks judgment
in its favor on its breach of contract and declaratory
judgment claims, and asks the Court to enter judgment against
Defendants in excess of $285, 000. Id. at
15. Plaintiff further requests an Order declaring
that Defendants are obligated to indemnify it for its losses
and that Plaintiff has exclusive right and title to certain
funds currently being held in the registry of the San Juan
County Superior Court. Id. Defendants argue that
because there are genuine issues of material fact related to
the actions taken by American Safety prior to, during and
after the arbitration in the underlying matter, summary
judgment is not appropriate. Dkt. #27. For the reasons
discussed herein, the Court disagrees with Defendants and
GRANTS Plaintiff's motion.
matter arises out of an underlying construction contract
dispute. The parties appear to agree to the following facts:
1. American Safety Casualty Insurance Company
(“American”) issued Performance Bond No.
OKC607701 (“Bond”) on Happy Acres Enterprises
Co., Inc.'s (Happy Acres”) behalf. Dkts. #27 at 2
and #19 at ¶ 1, Ex. A. Under the Bond, Doe Bay Water
Users Association, Inc. (“Doe Bay”) was named as
the obligee, and Happy Acres as principal. Dkt. #19, Ex. A.
The penal sum of the Bond was $664, 632.86 and was issued as
to the contract dated November 15, 2010, between Doe Bay and
Happy Acres for the construction of the Slow Sand Filter
Facility located in Doe Bay, Washington. Id.
2. Prior to the issuance of the Bond, Happy Acres executed a
General Agreement of Indemnity (“GAI”) as partial
consideration for American's issuance of the bonds on
Happy Acres' behalf. Dkt. #19 at ¶ 2, Ex. B.
3. The GAI provides in part:
II. INDEMNITY AND HOLD HARMLESS
A. The PRINCIPAL and INDEMNITORS, jointly and severally,
shall exonerate, hold harmless, indemnify and keep
indemnified the SURETY from and against any and all claims,
demands, liability, losses, costs, and expenses of whatsoever
kind or nature, including court costs, attorneys' fees,
adjusting costs and investigative costs, and from and against
any and all other such losses and expenses which the SURETY
may sustain, suffer or incur: (i) By reason of having
executed or procured the execution of BONDS; (ii) By reason
of the failure of the PRINCIPAL or INDEMNITOR to perform or
comply with any of the covenants or conditions of this
Agreement, including but not limited to the payment of all
premiums due for BONDS; (iii) In enforcing any of the
covenants, obligations or conditions of this Agreement; . . .
(v) In prosecuting or defending any action or claim in
connection with any BOND, whether SURETY at its sole option
elects to employ its own counsel or permits or requires
PRINCIPAL and INDEMNITORS to make arrangements for the
SURETY's legal representation; . . . (viii) As a result
of liability incurred or expenses paid in connection with
claims, suits or judgments relating to an obligation,
CONTRACT, or a BOND, including, without limitation,
attorney's fees and all legal expenses, including
in-house attorney's fees, adjusting fees or investigative
fees, and all fees and costs for investigation, accounting,
adjusting, engineering or other professional services related
to the adjustment of claims and losses deemed necessary or
appropriate in the sole discretion of the SURETY.
B. Payment shall be made to the SURETY by the PRINCIPAL and
INDEMNITORS as soon as liability exists or is asserted
against the SURETY, or upon the demand of SURETY, whether or
not the SURETY shall have made any payment therefore. . . .
C. In the event of any payment by the SURETY, the PRINCIPAL
and INDEMNITORS further agree that in any account between the
SURETY and the PRINCIPAL, or between the SURETY and the
INDEMNITORS, or either or both of them, the SURETY shall be
entitled to reimbursement for any and all disbursements made
by it in good faith in and about the matters contemplated by
this Agreement under the belief that it is or was liable for
the sums and amounts so disbursed, or that it was necessary
or expedient to make such disbursements, whether or not such
liability, necessity, or expediency existed; and, that the
vouchers or other evidence of any such payments made by the
SURETY shall be prima facie evidence of the fact and amount
of the liability of PRINCIPAL and INDEMNITORS to the SURETY.
In addition to the payments to be made to SURETY as set forth
above, PRINCIPAL and INDEMNITORS agree to pay to SURETY
interest on all disbursements made by SURETY at the maximum
rate permitted by law calculated from the date of each
Dkt. #19, Ex. B at II. A., B. and C. (bold in original).
4. The GAI also included an assignment clause as follows:
A. The PRINCIPAL, and the INDEMNITORS as their interests may
appear in the following subsections of this paragraph, hereby
assign, transfer, pledge and set over to SURETY effective as
of the effective date of each BOND executed by SURETY, the
rights and property described hereafter, as collateral, to
secure any and all obligations in this Agreement and any
other indebtedness or liabilities of the PRINCIPAL or
INDEMNITORS to the SURETY, whether heretofore or hereafter
incurred: (i) All the rights of the PRINCIPAL or INDEMNITORS
in, and arising in any manner out of any
CONTRACT;…(iv) All the right, title and interest of
the PRINCIPAL or INDEMNITORS in and to any actions, causes of
action, claims or demands whatsoever which the PRINCIPAL or
INDEMNITORS may have or acquire against any party to any
CONTRACT, or actions, causes of action, claims or demands
arising out of or in connection with any CONTRACT including
but not limited to those against obliges [sic] on bonds,
design professionals, general contractors, subcontractors,
laborers or materialmen or any person furnishing or agreeing
to furnish or supply labor, material, supplies, machinery,
tools, inventory or other equipment in connection with or on
account of any CONTRACT and against any surety or sureties of
any obligee, general PRINCIPAL, subcontractor, laborer, or
materialmen; (v) All monies retained and any and all monies
that may be due or which hereafter become due on account of
any CONTRACT, bonded or unbonded, or on any promissory note
or account receivable;
. . . . ….
Dkt. #19, Ex. B at ¶ III. A. (bold in original).
5. In approximately March 2013, Happy Acres filed an
arbitration demand against Doe Bay relating to the sand
filter contract with the American Arbitration Association
(“Arbitration”). Dkts. #22 at ¶ 5 and #19 at
¶ 3. Doe Bay brought a counterclaim against Happy Acres
regarding Happy Acres' alleged deficiencies in ...
Buy This Entire Record For