United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
HENRY WILHOIT, Jr., District Judge.
This matter is before the Court upon Defendant Barbara Cox's Motion for Summary Judgment [Docket No. 49] and Plaintiffs Motion for Partial Summary Judgment [Docket No. 50]. The motions have been fully briefed [Docket Nos. 53 54, 55 and 56]. For the reasons stated herein, the Court finds that factual issues preclude summary judgment.
This case arises from Plaintiff The Ohio Casualty Company's (hereinafter "Ohio Casualty") role as surety for a sole proprietorship, David Cox d/b/a DBR Engineering.
On January 31, 2007, David Cox requested bonding from Ohio Casualty through David Henry at Griffith Catlett & Hampton Insurance (hereinafter "GCH") for a potential DBR Engineering job in the range of $2.25 to 2.5 million. [Bid Request, Docket No. 49-3]. This request was denied by Ohio Casualty.
On February 5, 2007, Mr. Henry sent Ohio Casualty an email advising the following: "I didn't know at the time, but [DBR] actually had 2 requests we were to be looking at. The first was obviously the large job we turned down. The second is a performance/payment request for the attached job." [Docket No. 49-4].
On February 20, 2007, Ohio Casualty approved DBR's request for $314, 099 bonding on this second DBR Engineering job and sent a letter to Mr. Henry forwarding an Indemnity Agreement for execution. [Docket No. 49-5].
The Indemnity Agreement (hereinafter "Agreement") provides, in pertinent part:
Second: That we, the contractor (and the indemnitors, if any) will at all times indemnify and save the surety harmless from and against any and all loss, cost, claim, demand, liability and expenses of whatever kind or nature which it shall at any time sustain, incur, or be put to, for by reason, or in consequence of such bonds which have been or may hereinafter be executed or procured on behalf of the contractor, including all costs, counsel fees and expenses incurred in investigating any claims made under or concerning such bonds, or in collecting any premiums due or losses sustained on such bonds, or in prosecuting or defending any actions, suits, or other proceedings which may be commenced or prosecuted against the contractor, or against the surety, upon such bonds, or in anyway relating thereto; we the contractor (and the indemnitors, if any) further agreeing, that in any accounting which may be had between the surety and contractor, or between the surety and the indemnitors, or either or both of them, the surety shall be entitled to charge for any and all disbursements made by it in good faith in and about the matters herein contemplated by this Agreement of Indemnity, 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 our liability to the surety.
[Docket No. 49-2].
On its first page, the Agreement states that is "made and entered into this 1 day of February, 207." [ Id ]. Pages three and four bear the signatures of David Cox and his wife, Barbara Cox, as well as that of Jerry Catlett, as a witness. [Id]. On the last page, there are three acknowledgments by David Henry, as Notary Public, for DBR, David Cox and Barbara Cox, all dated February 1, 2007.
Barbara Cox denies signing the Agreement.
When Ohio Casualty initially approved a final bond in the amount of $314, 099.00 on February 20, 2007, it did so on the condition that DBR, David Cox and Barbara Cox execute the Agreement and commit to obtaining a CPA prepared financial statement as of December 31, 2006. [Affidavit of Paul Chapman, Docket No. 53-1, ¶3]. However, the latter was not provided. [ Id. , ¶5]. After issuance of the $314, 099.00 bond, Ohio Casualty received no further communication from GCH concerning DBR. As a result, its underwriter Paul Chapman, sent an email to GCH on July 21, 2007, requesting the status of Principal and the December 31, 2006, financial statement. [ Id. ¶4]. Chapman received no response to his inquiry. Thereafter, on September 19, 2008, Chapman received a new submission on DBR from another agent, Smith-Manus. The submission included updated financial information, work-in-process information, and bank line of credit information. Based on the updated financial information, Chapman approved the requested bond in the approximate amount of $400, 000.00, on the condition that DBR obtain a current year-end CPA prepared financial statement. [ Id. ¶5]. Subsequently, on February 20, 2009, Chapman's office received a phone call from Henry of GCH wanting to know why Chapman had agreed to write a bond for DBR and was considering further bonds for DBR. He was told that Smith-Manus was being given the same opportunity given to provide a CPA prepared financial statement as of December 31, 2008. [Id.]. Smith-Manus obtained the December 31, 2008, CPA prepared financial statement for DBR and presented it to Chapman for consideration. [ Id. ¶7]. Ohio Casualty, as surety, executed various other performance and payment bonds for DBR, including, but not limited to, work related to the University of Kentucky Additions and Renovations to Livestock Disease Diagnostic Center ("UK Livestock Project") on May 6, 2009, in the amount of $1, 929, 000.00, and work related to the University of Kentucky College of Pharmacy ("UK Pharmacy Project") on September 27, 2010, in the amount of $2, 394, 000.00.
DBR Engineering defaulted in its performance and payment obligations under its bonded contracts and Ohio Casualty received notice of various claims thereunder. In performance of its bonded obligations for DBR, Ohio Casualty has currently paid $759, 997.44 in claims and incurred $44, 386.74 expenses, for a ...