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Sheehan Schiavoni
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Order | Filed: April 22, 2024 | Entered: April 22, 2024 Berkley Insurance Company v. GTC Construction Management Co. et al
Contract: Other | Massachusetts
Order on Motion for Summary Judgment
Judge Denise J. Casper: ELECTRONIC ORDER entered re: 31 Motion for Summary Judgment. The Court initially denied Defendants' Rule 56(d) motion seeking discovery because Defendants did not submit an affidavit in support of the motion and their discovery requests lacked specificity. D. 38. Defendants have since submitted an affidavit by Jonathan Keevers ("Jonathan") in response to the motion of Berkley Insurance Company ("Berkley") for summary judgment, D. 42-1. Jonathan asserts four categories of issues as to the itemized statement of bond payments submitted by Berkley in support of its motion for summary judgment; in the affidavit, Jonathan color-codes challenged payments on the itemized statement by category. See id. at ¶ 12 and pp. 11–23. Jonathan also asserts that some payments were made for incomplete or defective work or were not explained in enough detail. See id. ¶ 13.The Court is aware of Berkley's broad right to settle claims under the General Agreement of Indemnity ("Indemnity Agreement") between Berkley and Defendants. D. 15-1 at 6 (Section 2.01). That said, governing New York law allows Defendants to rebut Berkley's "presumption of propriety" with evidence showing "bad faith or unreasonableness in the amount paid." Liberty Mut. Ins. Co. v. Biltmore Gen. Contractors, Inc., No. 21-CV-5130 (RPK) (RER), 2023 WL 5350813, at *4 (E.D.N.Y. Aug. 21, 2023) (quoting Frontier Ins. Co. v. Renewal Arts Contracting Corp., 12 A.D.3d 891, 892 (N.Y. App. Div. 2004) and The Travelers Indem. Co. v. Harrison Const. Grp. Corp., No. 06-CV-4011 (FB) (RML), 2008 WL 4725970, at *4 (E.D.N.Y. Oct. 22, 2008)). Berkley is correct, however, that New York courts appear to focus on "bad faith" in assessing reasonableness. See, e.g., Reid v. Telentos Const. Corp., No. 15-CV-2358-SJB, 2020 WL 6152494, at *7 (E.D.N.Y. Oct. 20, 2020) (holding that "absent bad faith, a naked assertion of unreasonableness cannot defeat [the surety’s] entitlement to expense reimbursement"). "[I]n the surety-indemnification context, New York courts have equated 'bad faith' with 'fraud or collusion.'" The Travelers Indem. Co., 2008 WL 4725970, at *5 (quoting Peerless Ins. Co. v. Talia Const. Co., 272 A.D.2d 919, 919 (N.Y. App. Div. 2000)); see Gen. Accident Ins. Co. of Am. v. Merritt-Meridian Const. Corp., 975 F. Supp. 511, 516 (S.D.N.Y. 1997). This high bar for indemnitors serves to "preclude[ ] litigation over questions of whether the [surety was] actually liable for the payments claimed," First Nat'l Ins. Co. of Am. v. Joseph R. Wunderlich, 144 Fed. App’x 125, 127 (2d Cir. 2005) (internal quotation marks and citation omitted), and reflects both "the important function [sureties] serve in the construction industry" and the notion that "the economic incentives motivating them are a sufficient safeguard against payment of invalid claims." Gen. Accident Ins. Co. of Am., 975 F. Supp. at 516. Although Defendants are not entitled to the broad discovery they initially requested, D. 36 at 2–3, the Court will allow written discovery as to two categories of payments identified in Jonathan’s affidavit, which at least offer some argument that they may bear upon an allegation of bad faith: (1) $364,932.67 of payments to subcontractors that allegedly did not work on the bonded projects (color-coded blue) and, therefore, allegedly would not be subject to the Indemnity Agreement, D. 42-1 ¶ 12.c, and (2) $1,781,689.54 of payments from a source of funds belonging to Defendant GTC Construction Management Co. (color-coded magenta) such that amount should be credited to Defendants as they contend, id. ¶ 12.d. As to the categories of payments color-coded yellow (the "unallocated" expenses for which Jonathan was unable to determine corresponding projects, id. ¶ 12.a) and green (overpayments that allegedly did not reflect "back-charges," id. ¶ 12.b.), these either amount to speculation or resemble the sort of challenges that fall short of bad faith. See, e.g., Gen. Accident Ins. Co. of Am., 975 F. Supp. at 519. Similarly, Jonathan’s additional challenges to Berkley’s payments made for incomplete or defective work, or otherwise question the need for Berkley to pay such expenditures on certain projects, see D. 42-1 ¶ 13, do not plausibly suggest bad faith so as to warrant discovery. In light of this ruling allowing limited discovery, the Court DENIES Berkley's motion for summary judgment, without prejudice. ... (truncated)
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Minutes | Filed: April 18, 2024 | Entered: April 19, 2024 Berkley Insurance Company v. GTC Construction Management Co. et al
Contract: Other | Massachusetts
Motion Hearing Order on Motion for Summary Judgment
Electronic Clerk's Notes for proceedings held before Judge Denise J. Casper: Motion Hearing held on 4/18/2024 re 31 MOTION for Summary Judgment filed by Berkley Insurance Company. The Court further inquired of counsel as to discovery outlined in the Court's ECF D. 38 and defendant's affidavit at D. 42-1. Arguments. Court takes under advisement 31 Motion for Summary Judgment. (Court Reporter: Debra Joyce at joycedebra@gmail.com.)(Attorneys present: Peter Netburn for the plaintiff. Michael Feinman for the defendants.) (Hourihan, Lisa)
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Response | Filed: March 22, 2024 | Entered: March 22, 2024 Berkley Insurance Company v. GTC Construction Management Co. et al
Contract: Other | Massachusetts
Opposition to Motion
Opposition re 31 MOTION for Summary Judgment and Request for Oral Argument filed by Jonathan D. Keevers, Shawna Keevers. (Attachments: # 1 Affidavit of Jonathan Keevers)(Feinman, Michael)
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