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Merchants Bonding Co. v. U.S. Prefab, Inc.

United States District Court, D. Arizona

March 25, 2014

MERCHANTS BONDING COMPANY (MUTUAL), an Iowa corporation, Plaintiffs,
U.S. PREFAB, INC., an Arizona corporation; and HARRY O. WOODY, an unmarried man, Defendants.


JAMES A. TEILBORG, Senior District Judge.

Pending before the Court is Plaintiff Merchant Bonding Company (Mutual)'s Motion for Partial Summary Judgment. (Doc. 32). Defendants U.S. Prefab, Inc. and Harry O. Woody filed a Response (Doc. 35) and Plaintiff filed a Reply (Doc. 38). The Court now rules on the motion.


For purposes of the Court's resolution of the pending summary judgment motion, the Court considers the relevant facts and background to be as follows.[1]

Sometime in 2005, Defendant U.S. Prefab, Inc., an Arizona general contractor, and its President, Defendant Harry O. Woody ("Woody") approached Plaintiff Merchants Bonding Company (Mutual) seeking a construction bond. ( See Plaintiff Merchants Bonding Company (Mutual)'s Separate Statement of Facts in Support of Motion for Partial Summary Judgment ("PSOF"), Doc. 33 ¶¶ 1-2; Defendants' Separate Statement of Facts in Support of Opposition to Motion for Partial Summary Judgment ("CSOF"), Doc. 36 ¶ 1). On September 9, 2005, Defendants executed a "General Application and Agreement of Indemnity with Merchants" (the "Contract"). (PSOF ¶ 2; CSOF ¶ 1). Woody executed the Contract in both his official capacity as President of U.S. Prefab, Inc., and his personal capacity as a guarantor. (The Contract, Doc. 34, Ex. A). The Contract obligated Defendants to reimburse and indemnify Plaintiff for liabilities and losses that Plaintiff incurs arising out of claims made against any bonds issued by Plaintiff on behalf of U.S. Prefab, Inc. (PSOF ¶ 3; CSOF ¶ 1). In 2008, Plaintiff issued the relevant construction bond (the "Bond") on behalf of U.S. Prefab. (Doc. 34, Ex. E).

At some point, two of U.S. Prefab, Inc.'s subcontractors asserted claims against the Bond. (PSOF ¶ 8; CSOF ¶ 2). Plaintiff notified Defendants of the Bond claims, but Defendants neither paid the claims directly nor deposited sufficient funds or assets with Plaintiff to cover the claims as provided for in the Contract. (PSOF ¶¶ 9-10; CSOF ¶ 3). Plaintiff settled the Bond claims by making payments totaling $149, 525.02. (PSOF ¶ 11; DOSF ¶ 4). On January 13, 2011, Plaintiff recovered an offsetting amount of $54, 850.18 from a third party. (PSOF ¶ 16).

On April 6, 2011, Plaintiff paid a fee of $150 to First American Title (PSOF ¶ 15), presumably to verify the title to Woody's residence. Subsequently, Plaintiff executed a Deed of Trust and Assignment of Rents dated April 29, 2011 (the "Deed of Trust") against Woody's personal residence in the amount of $94, 674.84. (Doc. 34-1 at 28-34).

On October 31, 2011, Plaintiff's counsel sent Defendants a demand to repay Plaintiff $95, 000.49 in relation to the Contract. (PSOF ¶ 14; DOSF ¶ 14; Doc. 34, Ex. E). Defendants refused and, on March 9, 2012, Plaintiff filed the instant suit alleging breach of contract and fraud. (Doc. 1). During the pendency of Plaintiff's suit, Defendants moved to amend their Answer to Plaintiff's Complaint to add a counterclaim alleging that Plaintiff falsely executed the Deed of Trust against Woody's homestead in violation of Arizona Revised Statute § 33-420(c). (Doc. 22). Subsequently, Plaintiff voluntarily filed a Deed of Release and Full Reconveyance (the "Release") on February 8, 2013 releasing the Deed of Trust and mooting Defendants' proposed counterclaim. (Docs. 25, 30-31).

Plaintiff filed the instant motion for partial summary judgment (Doc. 32) on Count I (Breach of Contract) of the Complaint (Doc. 1 at 4-5), on which the Court now rules.


Summary judgment is appropriate when "the movant shows that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Fed.R.Civ.P. 56(a). A party asserting that a fact cannot be or is genuinely disputed must support that assertion by "citing to particular parts of materials in the record, " including depositions, affidavits, interrogatory answers or other materials, or by "showing that materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Id. at 56(c)(1). Thus, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Initially, the movant bears the burden of pointing out to the Court the basis for the motion and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the non-movant to establish the existence of material fact. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts" by "com[ing] forward with specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586B87 (1986) (quoting Fed.R.Civ.P. 56(e) (1963) (amended 2010)). A dispute about a fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247B48. Further, because "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, ... [t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor" at the summary judgment stage. Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)); Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th Cir. 1999) ("Issues of credibility, including questions of intent, should be left to the jury.") (internal citations omitted).


Plaintiff moves (Doc. 32) for partial summary judgment on Count I (Breach of Contract) of the Complaint (Doc. 1 at 4-5). Plaintiff presents evidence (PSOF; Doc. 34) and argues (Doc. 32 at 5-9) that there is no genuine dispute of material fact that Defendants breached the Contract between the Parties and are obligated to indemnify and reimburse Plaintiff in full for Plaintiff's losses. Specifically, Plaintiff argue that that it is beyond dispute that as of June 14, 2013, Plaintiff has suffered losses totaling $105, 211.40 (excluding interest). (Doc. 32 at 8-9; PSOF ¶¶ 16-17). Plaintiff's alleged $105, 211.40 loss has three components: (1) $94, 674.84 for reimbursement of payments made to settle Bond claims against Defendants, (2) $10, ...

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