International Fidelity Insurance Company v. Oxbow Solar Professionals, Inc.

Background

International Fidelity Insurance Company (IFIC) entered into a written indemnity agreement with Oxbow Solar Professionals, Inc., Morgan Charles Thomas Southard, and Dianne Marie Southard. Under the agreement, IFIC would act as a surety by issuing construction performance and payment bonds for Oxbow. The agreement required the defendants to protect IFIC from losses and expenses related to those bonds and, when IFIC demanded it, to provide money or collateral sufficient to protect IFIC from loss.

Oxbow’s contractor, Borrego Solar Systems, Inc., along with other subcontractors and material suppliers, made claims against the bonds. After investigating the claims, IFIC paid $1,451,713.92 to settle Oxbow’s debts. IFIC notified the defendants and demanded reimbursement, indemnification, and cash or collateral. The defendants did not reimburse IFIC, provide collateral, or indemnify IFIC.

IFIC sued on six claims, including breach of contract and contractual indemnity. It moved for partial summary judgment on those two claims, seeking $1,451,713.92 in contract damages and $28,500 in attorneys’ fees and costs. The defendants did not respond to the motion.

Court’s analysis

Summary judgment is appropriate when there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. Applying Minnesota contract law, the court explained that indemnity agreements are interpreted under the same general rules as other contracts.

For the breach-of-contract claim, the court found that the parties formed the indemnity agreement, IFIC performed its obligations by issuing the surety bonds and making payments on Oxbow’s behalf, and the defendants failed to perform their obligations after IFIC’s demand. The court therefore held that the defendants breached the agreement and that IFIC was entitled to partial summary judgment on its breach-of-contract claim.

For the contractual-indemnity claim, the court found that the agreement clearly required the defendants to indemnify IFIC for liability related to the surety bonds. Because the defendants had not indemnified IFIC after its demand, the court granted IFIC’s motion for partial summary judgment on that claim as well.

The court also considered IFIC’s request for $28,500 in attorneys’ fees and costs. It concluded that the agreement authorized recovery of those expenses because they resulted from the defendants’ failure to comply with the agreement and IFIC’s enforcement of it. Using the lodestar method, which evaluates reasonable hours multiplied by a reasonable hourly rate, the court found the billing rates and 88.4 hours of work reasonable and necessary.

Disposition

Judge Wilhelmina M. Wright granted IFIC’s motion for partial summary judgment as to its breach-of-contract and contractual-indemnity claims. The order required the defendants to pay IFIC $1,451,713.92 in contract damages and $28,500 in attorneys’ fees and costs, for a total judgment of $1,480,213.92. It also ordered the defendants to indemnify IFIC under the indemnity agreement.