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Travelers Indemnity Co. v. Ballantine

May 30, 2006


The opinion of the court was delivered by: William W. Caldwell United States District Judge


I. Introduction

The Plaintiff, The Travelers Indemnity Company ("Travelers"), has filed a motion for summary judgment and a motion in limine to preclude parol evidence. The Defendants, Peter and Alison Ballantine and Ben and Patricia Wootton, oppose the motions.

II. Facts*fn1

On January 29, 2004, the Defendants entered into a General Agreement of Indemnity ("GAI") with the Gulf Insurance Company ("Gulf")*fn2 in which they agreed to become indemnitors for certain bid, performance, and payment bonds, issued in connection with a construction contract entered into by Environmental Construction Group ("ECG") for work at the Greater Rochester International Airport. (Doc. 47, Pl. Brief in Support, Ex. B, GAI). The GAI was signed by Matthew Kichman, President of ECG, in his corporate and individual capacities, as well as by Peter Ballantine, in his individual capacity, and Ben Wootton, in his individual capacity. The GAI also bears what are purported to be the signatures of Alison Ballantine and Patricia Wootton in their individual capacities. However, their husbands, Peter and Ben, actually signed the GAI on their behalf. (Doc. 48, Def. Statement of Fact, Ex. 2, Ballantine Dep. p. 19-21; Ex. 3, Wootton Dep. p. 19-20).

During negotiations for the indemnification agreement, Gulf was represented by Brent Headley as its attorney-in-fact. (Id. at Ex. 1). The Defendants contend that in January 2004, Kichman, Headley, and Peter Ballantine meet to discuss the bonding for the Rochester Project. (Id. at Ex. 2, Ballantine Dep. p. 16). Peter Ballantine testified that he specifically told Headley that he and Ben Wootton were only willing to underwrite the bonds up to $300,000. (Id. at pp. 21-2). It was his understanding that any agreement they entered into would be for no more than $300,000. (Id. at p. 23). Ben Wootton testified that about the time of the January 2004, meeting, Headley called him to introduce himself and discuss the meeting he had had with Kichman and Ballantine. (Id. at Ex. 3, Wootton Dep. p. 17). He said that during this conversation, he confirmed with Headley that the bond amount was to be for $300,000. (Id. at pp. 19-20).

Shortly after the January 2004, meeting, Kichman presented the GAI to both Ballantine and Wootton for their signatures. Kichman approached Ballantine in his office and told him that he needed to sign the GAI. (Id. at Ex. 2, Ballantine Dep. p. 18). Ballantine signed the GAI for both himself and his wife but does not recall checking to see if it limited their liability to $300,000. (Id. at pp. 19-20, 22). He testified that he looked through it quickly and that he did not see the complete GAI until almost a year later. (Id. at pp. 20, 22). Wootton was also approached by Kichman to sign the GAI. He testified that at the time he signed, he only saw the signature page. (Id. at Ex. 3, Wootton Dep. p. 20). He confirmed with Kichman that the agreement was for $300,000 and then signed on behalf of himself and his wife. (Id.). He did not read the agreement before he signed it but instead relied on his conversations with Kichman and Headley. (Id. at p. 21). Wootton did not request a copy of the GAI until 2005. (Id. at p. 22).

Headley testified that when he was approached by Kichman regarding bonding for the Rochester Project, Kichman told him that ECG would bid $300,000 for the work it would perform. (Id. at Ex. 1 Headley Dep. p. 15). When he submitted the application for a bid bond to Gulf, it was based on the $300,000 figure, which Gulf approved*fn3 . (Id.). At some point after the issuance of the bid bond, Headley became aware that the bid submitted by ECG on the Rochester Project was actually for $489,856. (Id. at p. 16, 31). Headley informed Kichman that since the bid bond had been approved by Gulf at $300,000, Kichman should have notified him of the increased bid amount prior to submitting the bid. (Id. at p. 29). Despite this, Gulf ultimately issued payment and performance bonds in the amount of $489,856. (Id. at 18, Doc. 47, Pl. Brief in Support, Ex C).

Headley also testified that he does not recall having any conversations regarding indemnity agreements with Kichman, Ballantine, or Wootton. (Doc. 48, Def. Statement of Fact, Ex. 1 Headley Dep. pp. 14-5, 38). Headley did not have any discussion with Ballantine and Wootton regarding the amount that they were willing to indemnify in the GAI and denies any conversation about their willingness to sign the GAI for a $300,000 project bid. (Id. at pp. 19-20). He specifically does not recall the January 2004, meeting to which Ballantine and Wootton testified. (Id. at p. 34). Further, he does not recall discussing the issuance of the performance or payment bonds with them. (Id. at pp. 39-40). Finally, he testified that he never told Ballantine or Wootton that their indemnity obligations would be limited under the GAI or that the GAI would apply only to the bid bond. (Doc. 51, Pl. Reply, Ex. E, pp. 51-2).

Travelers ultimately received claims on the payment and performance bonds issued by Gulf. (Doc. 47, Pl. Brief in Support, Ex. A, Wilson Affidavit, ¶5). These claims totaled 188,923.33. (Id. at ¶ 6). Travelers has also incurred $20,947.12 in attorney's fees, litigation costs and expense in connection with the bonds (Id. at ¶ 7; see also Ex. D). To date, the losses incurred by Travelers with respect to the bonds totals $209,870.45. (Id. at Ex. A, Wilson Affidavit, ¶8). They are seeking $165,291.15 of this amount from the Defendants since $44,579.30 is covered under other agreements. (Id. at ¶¶ 9-11).

III. Standard of Review

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2552, 91 L.Ed. 2d 265, 273 (1986). In reviewing the evidence, facts and inferences must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed. 2d 538, 553 (1986). Summary judgment must be entered in favor of the moving party "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." 475 U.S. at 586-87, 106 S.Ct. at 1356, 89 L.Ed. 2d at 552 (citations omitted). Unsubstantiated arguments made in briefs are not considered evidence of asserted facts. Versarge v. Township of Clinton, 984 F.2d 1359, 1370 (3d Cir. 1993).

IV. Discussion

The Plaintiff contends that the GAI obligates the Defendants to indemnify it for the costs, losses, and expenses it incurred when it made payments in connection with the Performance and Payment bonds issued on behalf of ECG. Travelers maintains that the terms of the GAI are clear and unambiguous. The Defendants raise two arguments in opposition to summary judgment. First, they argue that the doctrine of mutual mistake applies to the notice provision of the GAI. Second, they ...

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