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Liberty Mutual Insurance Company v. Integrated Pro Services, LLC

United States District Court, E.D. Louisiana

June 9, 2015

LIBERTY MUTUAL INSURANCE COMPANY
v.
INTEGRATED PRO SERVICES, LLC ET AL., SECTION I

ORDER AND REASONS

LANCE M. AFRICK, District Judge.

Before the Court are two motions[1] filed by plaintiff, Liberty Mutual Insurance Company ("Liberty Mutual"), for summary judgment against defendants, Integrated Pro Services, LLC ("IPS"), Gary L. Hess ("Mr. Hess"), and Karla S. Hess ("Mrs. Hess"). Defendants oppose the motions.[2] For the following reasons, such motions are DENIED.

BACKGROUND

IPS is a construction contractor. In order to submit bids and obtain certain construction projects, IPS was required to provide payment and performance surety bonds which it obtained from Liberty Mutual.[3] On October 25, 2010, IPS and Liberty Mutual entered into a broadly worded "General Agreement of Indemnity" ("the Indemnity Agreement") in which IPS agreed to reimburse Liberty Mutual for any payments, losses, or expenses incurred in connection with such bonds.[4] The Indemnity Agreement also allowed Liberty Mutual to demand collateral security to cover any potential liability that it might face.[5]

At the time the Indemnity Agreement was executed, Mr. and Mrs. Hess had an interest in IPS and they signed the Indemnity Agreement as co-indemnitors.[6] However, shortly after executing the Indemnity Agreement, Mr. and Mrs. Hess sold their entire interest in IPS to a third party. They claim to have had no involvement in IPS's operations since then.[7]

On April 16, 2012, Plaquemines Parish awarded IPS an $11 million contract to construct a levee. In connection with that project, Liberty Mutual issued payment and performance surety bonds.[8] On March 7, 2014, Plaquemines Parish put IPS in default under the contract and on March 28, 2014, IPS was terminated from the project.[9] IPS claims that it was not in default and that the contract was wrongfully terminated. IPS is currently litigating its claims against Plaquemines Parish and a subcontractor in state court.[10] Liberty Mutual subsequently entered into a takeover agreement with Plaquemines Parish in which it agreed to complete the levee construction project.[11]

On June 18, 2014, Liberty Mutual filed the above-captioned lawsuit claiming that it is entitled to indemnity pursuant to the Indemnity Agreement for expenses that it incurred as a result of its payment of multiple claims filed in connection with the payment and performance surety bonds and its arranging for work to continue on the project.[12] Liberty Mutual has filed motions for summary judgment against IPS as well as Mr. and Mrs. Hess requesting that the Court enter judgment against defendants in the amount of $1, 554, 836.07 and that the Court require defendants to post $1.5 million worth of collateral security to protect against future losses.[13]

The motions are now ripe for decision. To the extent that any genuine issues of material fact remain to be determined at trial, the parties have agreed to stay and administratively close the above-captioned matter pending resolution of the state court litigation.[14]

STANDARD OF LAW

I. Summary Judgment

Summary judgment is proper when, after reviewing the pleadings, the discovery and disclosure materials on file, and any affidavits, the court determines that there is no genuine issue of material fact. See Fed.R.Civ.P. 56. "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party's case. Id.; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986).

Once the party seeking summary judgment carries its burden pursuant to Rule 56, the nonmoving party must come forward with specific facts showing that there is a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue is not satisfied by creating "some metaphysical doubt as to the material facts, ' by conclusory allegations, ' by unsubstantiated assertions, ' or by only a scintilla' of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue of material fact exists when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The nonmoving party's evidence, however, "is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor." Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).

II. Louisiana Contract Law

"As in any other contract, ... it is the terms of the indemnity agreement that govern the obligations of the parties." 6 La. Civ. L. Treatise, Law of Obligations ยง 11.29 (2d ed.) (citing Meloy v. Conoco, Inc., 504 So.2d 833 (La. 1987)); see also Great Am. Ins. Co. v. McElwee Bros., Inc., 106 F.Appx. 197, 200 (5th Cir. 2004) ("Under Louisiana law, indemnity provisions are construed in accordance with general rules governing contract interpretation."); Berry v. Orleans Parish Sch. Bd., 830 So.2d 283, 285 (La. 2002) ("In interpreting ...


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