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Fid. & Deposit Co. of Md. v. Big Town Mech.

Fid. & Deposit Co. of Md. v. Big Town Mech.

United States District Court for the District of Nevada

January 4, 2018, Decided; January 4, 2018, Filed

2:13-cv-00380-JAD-GWF

Opinion

Order Denying Motion for Partial Summary Judgment re: Liquidated Damages

[ECF No. 216]

This surety coverage dispute involves two tiers of contracts, bonds, sureties, and principals, and the consequences that flow when the lower-tier principal defaults. Travelers Casualty and Surety Company of America issued surety bonds for the prime contractor on various Clark County School District (CCSD) construction projects, and Fidelity and Deposit Company of Maryland issued surety bonds for a subcontractor. When the lower-tier principal defaulted, Fidelity attempted to complete the project, but it quickly spun out of control, resulting [*3]  in millions of dollars in cost overruns for CCSD. Travelers paid liquidated damages to CCSD as part of a settlement in a separate suit and now seeks reimbursement from Fidelity.

Fidelity brings this motion for partial summary judgment to chisel away at Travelers' reimbursement claims by eliminating five different theories and arguments. I deny the motion in all respects.

Background 1

In 2010, the Clark County School District (CCSD) contracted with defendant Big Town Mechanical to install HVAC systems at five elementary schools. The contract required Big Town to take out performance-and-labor and material-payment bonds for the installation at each school. Big Town obtained performance and payment bonds from co-defendant Travelers Casualty and Surety Company of America, and Big Town became the principal and CCSD the obligee. In the event that Big Town defaulted on its obligation under the contract, Travelers would complete Big Town's performance. Travelers and Big Town also entered into a General Agreement of Indemnity (GAI) that assigned all of Big Town's rights under the subcontracts to Travelers if Big Town defaulted:

In the event of Default, Indemnitors assign, convey and transfer to [*4]  [TRAVELERS] all of their rights, title and interests in Property . . .

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2018 U.S. Dist. LEXIS 238030 *

Fidelity and Deposit Company of Maryland, Plaintiff v. Big Town Mechanical, LLC; Travelers Casualty and Surety Company of America, Defendants. ALL OTHER CLAIMS/PARTIES

CORE TERMS

liquidated damages, surety, subcontract, defaulted, reimbursement, summary judgment, abandonment, reimbursement claim, performance bond, obligations, contractor, liquidated-damages, damages, rights, bonds, Projects, shoes, takeover, argues, bankruptcy filing, material fact, inefficiencies, genuine, partial, promise