Construction Law Insights

Phila. Indem. Ins. Co. v. TCM Constr., LLC, 2021 U.S. Dist. LEXIS 190381, 2021 WL 4527246 (W.D. Va. Oct. 4, 2021)

Philadelphia Indemnity Insurance Company (“PIIC”) filed its Complaint on July 21, 2020. PIIC served TCM Construction, LLC (“TCM”) on July 25, 2020, Ernest Nisser (“Nisser”) on July 25, 2020, and Arthur Brookshire (“Brookshire”) on July 23, 2020. None of the defendants appeared, answered PIIC’s Complaint, or otherwise defended the action. By failing to answer or respond, the defendants admitted the allegations as fact in PIIC’s Complaint, which are accepted as true except for those relating to damages. On August 11, 2017, PIIC, as surety, TCM, as principal and corporate indemnitor, and Nisser and Brookshire, as personal indemnitors, executed a General Indemnity Agreement (the “Agreement”) that required TCM, Nisser, and Brookshire to defend, indemnify, and hold PIIC harmless from damages PIIC might sustain or incur in investigating claims or potential claims, adjustment of claims, procuring or attempting to procure the discharge of Bond, or attempting to recover losses or expenses form Indemnitors or third parties.

Relying on the Agreement, PIIC issued a Payment Bond and a Performance Bond in connection with TCM’s contract with the Virginia Department of Transportation (“VDOT”) for a construction project (the “Project”), which named TCM as the principal and co-obligor and VDOT as the obligee. On July 13, 2018, VDOT issued a Notice of Termination for Cause, terminating TCM’s right to complete the Project. VDOT refused to let PIIC use TCM as its completion contractor, so PIIC executed a Takeover Agreement with VDOT and a Completion Contract with Hancock Fuqua Robertson, Inc. (“Robertson Construction”). On the Performance Bond, PIIC asserted it paid $456,693.24 to Robertson Construction, collected $311,693.24 in remaining contract funds from VDOT, resulting in a net loss of $144,612.13. PIIC further alleged that it incurred $2,934.23 in consultants’ fees, $38,094.58 in costs and expenses, and $29,737.75 in attorney’s fees. PIIC demanded reimbursement from the defendants, but they failed to do so. PIIC’s complaint against the defendants raised a single breach of contract cause of action. The Court held that PIIC’s complaint satisfied the elements of a breach of contract cause of action and granted PIIC’s Motion for Default Judgment.

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