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Merchants Bonding Co. v. Us Prefab Incorporated

United States District Court, D. Arizona

July 28, 2014

Merchants Bonding Company (Mutual), Plaintiff,
v.
U.S. Prefab Incorporated, et al., Defendants.

ORDER

JAMES A. TEILBORG, Senior District Judge.

Pending before the Court is Plaintiff Merchants Bonding Company (Mutual)'s Motion to Dismiss Count II of the Complaint (Doc. 44) and Motion for Prejudgment Interest Calculation (Doc. 45). Defendants U.S. Prefab, Inc. and Harry O. Woody Object (Doc. 48) to both Motions and Plaintiff has filed a Reply (Docs. 49-50). The Court now rules on the Motions.

I. BACKGROUND

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. On September 9, 2005, Defendants executed a "General Application and Agreement of Indemnity with Merchants" (the "Contract"). 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 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. In 2008, Plaintiff issued the relevant construction bond (the "Bond") on behalf of U.S. Prefab.
At some point, two of U.S. Prefab, Inc.'s subcontractors asserted claims against the Bond. 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. Plaintiff settled the Bond claims by making payments totaling $149, 525.02. On January 13, 2011, Plaintiff recovered an offsetting amount of $54, 850.18 from a third party.
On April 6, 2011, Plaintiff paid a fee of $150 to First American Title, 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.
On October 31, 2011, Plaintiff's counsel sent Defendants a demand to repay Plaintiff $95, 000.49 in relation to the Contract. Defendants refused and, on March 9, 2012, Plaintiff filed the instant suit alleging breach of contract and fraud.

(Order Granting Partial Summ. J., Doc. 40 at 1-2 (citations omitted)).[1] Plaintiff's suit sought $94, 674.84 for reimbursement of payments made to settle Bond claims against Defendants, as well as other related damages including attorneys' fees. ( See Doc. 1).

Litigation proceeded and, eventually, Plaintiff moved for partial summary judgment on Count I (breach of contract) of the Complaint. In the motion, Plaintiff argued that it had suffered losses of $105, 211.40, including $94, 674.84 for reimbursement of payments made to settle Bond claims against Defendants. (Doc. 40 at 4). "In Response, Defendants accept[ed] most of Plaintiff's proffered facts and conclusions, including that Defendant breached the Contract by failing to reimburse $94, 674.84 to Plaintiffs." ( Id. ). The Court granted partial summary judgment on Count I with respect to the "$94, 674.84..., plus interest, " that Plaintiff undisputedly remitted to third parties in order to settle Bond claims against Defendants. ( Id. at 9).

Since the Court's partial-summary judgment Order, Plaintiff filed a Joint Notice Regarding Availability for Trial (Doc. 42) in which the Parties notified the Court "that a trial will not be necessary" because Plaintiff "intends to dismiss, without prejudice, the remaining claim in this matter" (Count II, alleging fraud) (Doc. 42 at 1). Subsequently, Plaintiff filed the instant Motion to Dismiss Count II of the Complaint (Doc. 44), Motion for Prejudgment Interest Calculation (Doc. 45), and a proposed form of judgment (Doc. 46). Dissatisfied with Plaintiff's filings, Defendant raises objections to both the Motion to Dismiss and the Prejudgment Interest Calculation. (Doc. 48 at 1-3). The Court addresses each in turn.

II. MOTION TO DISMISS

Plaintiff has filed a Motion to Dismiss (Doc. 44) Count II (fraud) of Plaintiff's own Complaint without prejudice. In the Motion, Plaintiff represents that Defendants "have consented to this dismissal." ( Id. at 1). Indeed, the Motion comes on the heels of a Joint Notice, signed by both Parties' attorneys, expressing that Plaintiff "intends to dismiss, without prejudice, [Count II]." (Doc. 42 at 1 (emphasis added)). Nonetheless, Defendants object to dismissal without prejudice and, instead, request the Court to dismiss Count II with prejudice. Defendants, however, provide no argument or reasoning to support a dismissal with prejudice in clear contradiction to the Joint Notice signed by Defendants' attorney.[2] Accordingly, the Court overrules Defendants' objection and grants Plaintiff's Motion to Dismiss Count II without prejudice.

III. PREJUDGMENT INTEREST CALCULATION

Plaintiff has filed a Motion for Prejudgment Interest Calculation. (Doc. 45). In the Motion, Plaintiff asserts that the Court "should calculate prejudgment interest at the rate of 10% per annum beginning on March 9, 2012, the date [Plaintiff] commenced this action." (Doc. 45 at 2). Defendants, ...


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