Illinois Union Insurance Company v. Singer

Background

Illinois Union Insurance Company (IUIC) issued a $973,087.50 surety bond for Bond Downtown Phoenix LLC in connection with a commercial lease. A surety bond is an agreement under which the surety pays an obligee if the principal defaults, subject to the bond’s terms. Downtown and several affiliates, along with Baruch Singer, agreed to indemnify IUIC for losses and expenses arising from the bond. Shlomo Silber later joined the indemnity agreement as an indemnitor.

After Downtown allegedly failed to meet its lease obligations, USPO Phoenix asserted a claim under the bond. IUIC paid USPO Phoenix $169,082.69 and later paid another $750,000 under a settlement agreement. IUIC stated that its total direct loss was $919,082.69. It also sought $391,490.51 in attorneys’ fees and other expenses, less $575,000 that it said it had already recovered, for a requested remaining amount of at least $735,573.20.

The parties later entered into forbearance and repayment agreements. Silber signed a promissory note for $1,134,101.69 and agreed to make scheduled payments. IUIC alleged that Silber failed to make the second and third payments and that the other indemnitors failed to reimburse IUIC. IUIC asserted claims for contractual indemnification, common-law indemnification, subrogation, assignment, breach of the indemnity agreement, breach of the promissory note, breach of the indemnitors’ forbearance agreement, and breach of the Silber repayment agreement.

IUIC moved for summary judgment on its contractual indemnification, common-law indemnification, subrogation, promissory-note, and contract claims. The defendants did not oppose the motion. The court nevertheless reviewed IUIC’s evidence and legal arguments rather than granting the motion automatically.

Rulings

The court granted summary judgment on IUIC’s First Cause of Action for contractual indemnification. The indemnity agreement required the indemnitors to reimburse IUIC for losses, costs, and attorneys’ fees connected with IUIC’s execution of the bond. IUIC provided evidence of its payments and the indemnity agreement. The defendants provided no evidence that IUIC acted in bad faith or that its payments were unreasonable, and the record disclosed no such evidence.

The court denied summary judgment on the Second and Third Causes of Action, for common-law indemnification and subrogation. IUIC told the court that it did not wish to pursue those claims if it prevailed on its contractual-indemnification claim. Because the court granted summary judgment on that claim, it denied IUIC’s motion as to the common-law indemnification and subrogation claims.

The court granted summary judgment on the Sixth Cause of Action against Silber for breach of the promissory note. IUIC showed that the note existed, was signed by Silber, contained an unconditional promise to pay, and had not been paid according to its terms. Silber presented no evidence creating a factual dispute or supporting a valid defense.

The court also granted summary judgment on the Fourth, Seventh, and Eighth Causes of Action. The Fourth Cause of Action concerned breach of the indemnity agreement’s collateral-security requirement. The Seventh concerned breach of the indemnitors’ forbearance agreement, and the Eighth concerned breach of the Silber repayment agreement. The court found that the agreements were valid, IUIC performed its obligations, the defendants failed to provide required collateral or payments, and IUIC suffered resulting monetary damages.

Damages and remaining claim

The court found that IUIC adequately supported its claimed $919,082.69 in direct losses from payments to USPO Phoenix. It did not yet determine the proper amount of the requested $391,490.51 in attorneys’ fees and expenses. IUIC’s submissions identified invoices and total amounts but did not provide enough detail about the services, time spent, attorneys’ hourly rates, or the connection between each expense and the bond. The court therefore referred the fees-and-expenses portion of the damages request to Magistrate Judge Katharine H. Parker for an inquest, meaning a later fact-finding process to determine the appropriate amount.

The court stated that it would enter judgment after the fees and expenses were determined. It directed IUIC to provide current interest figures within two weeks after that determination. It also required IUIC to file a letter by July 14, 2025, stating whether it intended to proceed with the Fifth Cause of Action for assignment and, if so, proposing next steps. The opinion closed Docket Number 151.