FILED: NEW YORK COUNTY CLERK 03/26/ :28 PM INDEX NO /2016 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 03/26/2018

Transcription

1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No.: /2016 FIDELITY AND GUARANTY INSURANCE COMPANY, -against- Plaintiff, APPLE BUILDERS AND RENOVATORS, INC., JAGANNATHAN KUTTAMBAKKAM, and SAILAJA CHITTA, Interpleader Defendants. PLAINTIFF S MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT DREIFUSS BONACCI & PARKER, PC Five Penn Plaza 23rd Floor New York, New York (212) and- 26 Columbia Turnpike North Entrance Florham Park, New Jersey Of Counsel: Paul H. Mandal, Esq. On the Brief: Eugene Zaydfudim, Esq. 1 of 35

2 TABLE OF CONTENTS PRELIMINARY STATEMENT... 1 PROCEDURAL HISTORY... 1 STATEMENT OF FACTS... 2 LEGAL ARGUMENTS... 6 POINT I... 6 PLAINTIFF HAS MET ITS STANDARD FOR THE GRANTING OF SUMMARY JUDGMENT... 6 POINT II... 9 THIS COURT SHOULD GRANT SUMMARY JUDGMENT TO PLAINTIFF BASED UPON THE TERMS OF THE TERMS OF THE GAI ARE UNAMBIGUOUS AND SHOULD BE DECIDED BY THIS COURT VIA SUMMARY JUDGMENT POINT III PURSUANT TO THE GENERAL AGREEMENT OF INDEMNITY, FIDELITY IS ENTITLED TO RECOVER ALL COSTS INCURRED AS RESULT OF ISSUING BONDS ON BEHALF OF APPLE BUILDERS CONCLUSION i 2 of 35

3 TABLE OF AUTHORITIES Cases (Janos v. Peck, 21 A.D.2d 529) Bowery Realty Corp. v. Qui Hui Chen, 20 Misc.3d 1103(A), *4 (Sup. Ct. N.Y. Cty. 2008)... 6 Acstar Ins. Co. v. Teton Enterprises. Inc., 248 A.D.2d 654 (2d Dept. 1998) Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986)... 7 American Home Assurance Co. v. Gemma Constr. Co. Inc., 275 A.D.2d 616, (1st Dept. 2000) APF Indus., Inc. v. Mosler Safe Co., 446 N.Y.S.2d 762, 763 (4th Dep t 1981)... 9 Ball v. United Artists Corp., 13 A.D.2d 133 (1st Dept. 1961)... 7 Bank of N.Y. v. Hirschfeld, 399 N.Y.S.2d 329 (3d Dept. 1977) BIB Constr. Co. v. Fireman s Ins. Co. of Newark, NJ, 214 A.D.2d 521, 523 (1st Dept. 1995).. 11 Cabrera v. Ferranti, 89 A.D.2d 546, 547 (1 st Dept. 1982); Caton v. Grand Mach. Exch. Inc., 2010 WL , *4 (Sup. Ct. N.Y. Cty)... 6 Caraballo v. Kinsbridge Apt. Corp., 873 N.Y.S.2d 299 (1st Dept. 2009)... 7 Chimart Associates v. Paul, 66 N.Y.2d 570, 575 (1986)... 7 Estate of Camarda, 425 N.Y.S.2d 1012, 1015 (N.Y.S. Sur. 1980)... 9 Gala Trading, Inc. v. Adrienne, Inc., 571 N.Y.S.2d 255 (1 st Dept. 1991)... 6 General Accident Ins. Co. v. Merrett Meridian Constr. Corp., 975 F.Supp. 511, 516 (S.D.N.Y. 1997) Gray Mfg. Co. v. Pathe Indus., Inc., 33 A.D.2d 739, 739 (1 st Dept. 1969), aff d., 26 N.Y.2d 1045, 1046 (1970)... 7 Hirsch v. S. Berger Imp. & Mfg. Corp., 67 A.D.2d 30 (1st Dept. 1979)... 6 Hirsch v. S. Berger Imp. & Mfg. Corp., 67 A.D.2d 30 (1st Dept. 1979)... 6 Home Indem. Co. v. Wachter, 115 A.D.2d 590 (2d Dept. 1985) International Fid. Ins. Co. v. Spadafina, 192 A.D.2d 637 (2d Dept. 1993) Jakobson Shipyard, Inc. v. Aetna Cas. & Sur. Co., 775 F.Supp. 606 (S.D.N.Y. 1991)... 9 James Talcott, Inc. v. Bloom, 29 A.D.2d ) JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 384 (2005)... 7 Lori-Kay Golf v. Lassner, 61 N.Y.2d, 722, Mallad Constr. Corp. v. County Fed. Sav. & Loan Assn., 32 N.Y.2d 285, 291 (1973) Martine Midland Leasing Corp. v. Chautauqua Airlines, Inc., 572 N.Y.S.2d 573, (4th Dep t. 1991) Matos v. Challenger Equip. Corp., 50 A.D.3d 502 (1st Dept. 2008)... 7 Pirozzolo v. Dimeo, 141 A.D.2d 810, 811 (2d Dept. 1988)... 7 Silverman v. Abraham, 22 Misc. 2d 707 (Sup. Ct. Kings Cty. 1960)... 7 Southbridge Towers, Inc. v. Renda, 21 Misc.3d 1138(A), *2 (N.Y. City Civ. Ct. 2008)... 6 Tantleff v. Truscelli, 493 N.Y.S.2d 979 (2d Dep t. 1985)... 9 Travelers Indem. Co. v. Buffalo Motor & Generator Corp., 58 A.D.2d 978 (4th Dept. 1977) TST/Impresso, Inc. v. Cosmos Forms, Ltd., 202 A.D.2d 493 (2d Dept. 1994)... 7 U.S. Fid. & Guar. Co. v. Green, 64 Misc.2d 1(Sup. Ct. N.Y. Cty. 1969), aff d, 34 A.D.2d 935 (1st Dept. 1970) Vermette v. Kenworth Truck Co., 68 N.Y.2d 714, 717 (1986)... 7 Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980)... 7 ii 3 of 35

4 Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980) (citations omitted)... 6 Other The Law of Suretyship, Fifth Ed., iii 4 of 35

5 PRELIMINARY STATEMENT Plaintiff Fidelity and Guaranty Insurance Company ( Fidelity ) seeks a judgment against Defendants Apple Builders and Renovators, Inc., Jagannathan Kuttambakkam and Sailaja Chitta (hereinafter Apple Builders, Mr. Kuttambakkam and Ms. Chitta, individually, or collectively, Indemnitors or Defendants ) for indemnification based upon the provisions of a General Agreement of Indemnity ( GAI ) which was executed by Indemnitors in consideration for Fidelity issuing surety bonds on behalf of Apple Builders. After the issuance of the surety bonds, Fidelity was sued in a prevailing wage labor matter. Fidelity sustained losses in connection with these bonds, as in order to defend its interests, Fidelity was forced to retain attorneys and forensic accountants. By way of this lawsuit, Fidelity seeks reimbursement for these losses. Additionally, as per the terms of the GAI, Fidelity also seeks reimbursement for the losses that it incurred or will incur in connection with the instant litigation. PROCEDURAL HISTORY Plaintiff filed its complaint in this matter on or about July 25, 2016, against Defendants Apple Builders, Mr. Kuttambakkam and Ms. Chitta 1. See Affirmation of Eugene Zaydfudim ( Zaydfudim Aff. ) at 2. The Defendants filed their Answer on or about September 27, Zaydfudim Aff., 3. Plaintiff s counsel served a Demand for Production of All Documents; a First Notice to Admit and Interrogatories upon Defendants. Zaydfudim Aff., 4. Plaintiff s First Notice to Admit, requested that Defendants admit or deny certain statements within twenty (20) days from service of the Notice to Admit. The Notice to Admit further provided that (E)ach 1 It should be noted that this application was first made in United States District Court for the Eastern District of New York but was subsequently dismissed without prejudice. 1 5 of 35

6 paragraph of the Request for Admission will be deemed admitted if you fail to respond to this Request for Admission within twenty (20) days after service of this Request for Admission. Zaydfudim Aff., 5. Plaintiff s First Notice to Admit requested that the following be admitted or denied: a. Jagannathan Kuttambakkam executed the General Agreement of Indemnity, attached hereto as EXHIBIT A, individually, on or about January 3, b. Sailaja Chitta executed the General Agreement of Indemnity, attached hereto as EXHIBIT A, individually, on or about January 3, c. Jagannathan Kuttambakkam executed the General Agreement of Indemnity, attached hereto as EXHIBIT A, on behalf of Apple Builders and Renovators, Inc., on or about January 3, d. There is no written document that changed the terms of the General Agreement of Indemnity. Zaydfudim Aff., 6. Indemnitors never responded to this Notice to Admit or to any of Plaintiff s discovery demands. As such, it is assumed that they admitted executing the GAI. Zaydfudim Aff., at 7-8. On or about January 30, 2018, Plaintiff filed its Note of Issue. Zaydfudim Aff., 9. STATEMENT OF FACTS In order to enter into and perform various public construction projects, Apple Builders was required by law to arrange for the issuance by a surety company of performance and payment bonds ( Bonds ). Tim Snyder Aff. 2 (hereinafter Snyder Aff.). Upon the request of Defendant Apple Builders, Fidelity and Guaranty Insurance Company ( Fidelity ) issued bonds related to a construction contract entered into by and between Apple Builders and the New York City School Construction Authority ( SCA ) entitled Solicitation Number SCA B Various Schools Queens (the Project ). Snyder Aff at 3. On or about January 3, 2001, as a condition precedent to the issuance by Fidelity of the Bonds, Defendants executed a written General Agreement of Indemnity ( GAI ) the terms and conditions of which are incorporated herein by reference Snyder Aff Pursuant to the GAI, 2 6 of 35

7 the Indemnitors each agreed, jointly and severally, inter alia, to indemnify Fidelity from any losses, costs or expenses arising out of any surety bonds executed or procured by Fidelity on behalf of Apple Builders. Snyder Aff. 6 Paragraph 6 of the GAI provides, in relevant part, that: [T]he UNDERSIGNED will indemnify the SURETY and hold it harmless from and against all liability, losses, costs, damages, attorneys fees, disbursements and expenses of every nature which the SURETY may sustain or incur by reason of, or relating to, having executed or procured execution of any such BOND, or that may be sustained or incurred by reason of making any investigation of any matter, or prosecuting or defending any action in connection with any such BOND, or recovering any salvage or enforcement of any provision of this Agreement. The UNDERSIGNED shall pay to the SURETY all money which the SURETY or its representatives may pay or cause to be paid and shall pay to the SURETY such sum as may be necessary to exonerate and hold it harmless, with respect to any liability which may be asserted against the SURETY as soon as liability exists or is asserted against the SURETY, whether or not the SURETY shall have made any payment therefor. In the event of any payment by the SURETY, the UNDERSIGNED further agree that in any accounting between the SURETY and the UNDERSIGNED, the SURETY shall be entitled to charge for any and all disbursements made by it in good faith that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make sure disbursements, whether or not such liability, necessity or expediency existed. Paragraph 14 of the GAI further provides, in relevant part, that: [I]n any action, suit, or proceeding brought by the SURETY to enforce any of the covenants of this Agreement, the SURETY shall be entitled to receive from the UNDERSIGNED the costs and expenses, including attorneys fees, incurred by the SURETY in connection therewith, and such costs and expenses may be included in any judgment or decree rendered against the UNDERSIGNED. Snyder Aff. 7 After the Bonds were issued, two prevailing wage class actions were asserted against Apple Builders. One was entitled Javier Rodriguez et al. v. Apple Builders & Renovators, Inc. et al., index number /2005 (hereinafter Rodriguez litigation. ). On or about January 9, 2007, the Rodriguez litigation was consolidated with an action entitled Orlando Gonzalez v. Apple Builders, et al, Index No /2005. The consolidated action bore the caption: Javier 3 7 of 35

8 Rodriguez, Alberto Garcia, Santos Mayorquin, Orlando Gonzalez, Jr. individually and on behalf of all other persons similarly situated who were employed by Apple Builders & Renovators Inc., and/or any other entities affiliated with or controlled by Apple Builders & Renovators Inc., with respect to certain Public Works Projects awarded by The New York City School Construction Authority, The City of New York, The New York City Transit Authority, and Other Government Entities vs. Apple Builders & Renovators, Inc., Centennial Insurance Company (hereinafter Centennial ), K.R. Jagannath, Fidelity & Guaranty Insurance Company, and Greenwich Insurance Company (hereinafter Greenwich ), (this litigation hereinafter to be known as underlying litigation ) Index: /2005. Snyder Aff. 8 Since Fidelity was a defendant in the underlying litigation, Fidelity was obligated to retain counsel to represent its interests. Snyder Aff. 9. Moreover, as the plaintiffs claims in the underlying litigation centered around alleged underpayment of wages for hours worked on various construction project, Fidelity and co-defendants Centennial and Greenwich engaged the forensic accounting of Nihill and Reidley ( Nihill ) to provide an analysis of Apple Builders payroll records and other records which may be obtained in order to determine or estimate Apple Builder s prevailing wage obligations relative to the projects at issue in the underlying litigation. Snyder Aff. 10. On June 12, 2014, Judge Edmead executed a Final Order Approving Settlement wherein Apple Builders agreed to pay remaining settlement funds totaling $15,000 to certain claimants and was obligated to pay counsel for the Plaintiff in the amount of $120,000. Snyder Aff. 12. Fidelity was not a signatory to the settlement. Snyder Aff. 13. Fidelity attempted to determine as to whether Apple Builders ever made settlement payments set forth in the Final Order Approving Settlement, however, Apple Builders failed to provide this documentation. Snyder Aff. 14. Upon 4 8 of 35

9 information and belief, at one point, counsel for the class action Plaintiffs filed an application based upon Apple Builders failure to comply with the settlement entered between the class action Plaintiffs and Apple Builders. While it appears that the parties entered into an agreement to settle the alleged breach, it is unclear whether Apple Builders ever complied with the terms thereof. Zaydfudim Aff., 5 Fidelity has incurred significant losses as a result of issuing the bonds on behalf of Apple Builders as a result of being forced to pay both its counsel and its accounting consultant, Nihill. Snyder Aff. 15. To date, Fidelity has incurred $69, in legal fees both in defending its interests in the underlying litigation as well as seeking indemnification in the instant matter under the GAI. Snyder Aff. 16. Fidelity expects to incur additional legal fees in pursuing its indemnification rights in the instant litigation. Snyder Aff. 16. Moreover, Fidelity has incurred $51, in accounting fees. Snyder Aff of 35

10 LEGAL ARGUMENTS POINT I PLAINTIFF HAS MET ITS STANDARD FOR THE GRANTING OF SUMMARY JUDGMENT It is well-settled that to obtain summary judgment pursuant to CPLR 3212, the movant must establish his cause of action or defense sufficiently to warrant the court, as a matter of law, to direct judgment in his favor, and he must do so by tender of evidentiary proof in admissible form. On the other hand, to defeat a motion for summary judgment, the opposing party must show facts sufficient to require trial of any issue of fact. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980) (citations omitted). Caselaw is clear, however, that an issue of fact requiring denial of the motion must be genuine. The Court, when deciding a motion for summary judgment is to search the proof, if any, as proffered by affidavits or otherwise, to ascertain whether it discloses a real issue, rather than a formal, perfunctory, or shadowy one. Hirsch v. S. Berger Imp. & Mfg. Corp., 67 A.D.2d 30 (1st Dept. 1979). It is incumbent upon a [party] who opposes a motion for summary judgment to assemble, lay bare and reveal his proofs, in order to show that the matters set up in his answer are real and are capable of being established upon a trial. Cabrera v. Ferranti, 89 A.D.2d 546, 547 (1 st Dept. 1982); Caton v. Grand Mach. Exch. Inc., 2010 WL , *4 (Sup. Ct. N.Y. Cty); Southbridge Towers, Inc. v. Renda, 21 Misc.3d 1138(A), *2 (N.Y. City Civ. Ct. 2008); 81 Bowery Realty Corp. v. Qui Hui Chen, 20 Misc.3d 1103(A), *4 (Sup. Ct. N.Y. Cty. 2008) (where the rule was essentially the same). Sham affirmative defenses will not defeat a motion for summary judgment. Gala Trading, Inc. v. Adrienne, Inc., 571 N.Y.S.2d 255 (1 st Dept. 1991). Feigned facts will also not suffice to withstand the motion. Hirsch v. S. Berger Imp. & Mfg. Corp., 67 A.D.2d 30 (1st Dept. 1979) (genuine, not feigned, issues required to defeat summary judgment motion); TST/Impresso, Inc. v. Cosmos Forms, Ltd., of 35

11 A.D.2d 493 (2d Dept. 1994). Only bona fide issues of fact will withstand a motion for summary judgment. Silverman v. Abraham, 22 Misc. 2d 707 (Sup. Ct. Kings Cty. 1960); Ball v. United Artists Corp., 13 A.D.2d 133 (1st Dept. 1961); Pirozzolo v. Dimeo, 141 A.D.2d 810, 811 (2d Dept. 1988) ( [D]efendants' allegations that the plaintiff knowingly took advantage of the defendant Dimeo's poor health in negotiating the contract are legally insufficient to establish the defenses of duress and undue influence ). A party opposing summary judgment motion must produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action. Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986); Matos v. Challenger Equip. Corp., 50 A.D.3d 502 (1st Dept. 2008). It is settled, of course, that a motion for summary judgment may not be defeated by arguments and contentions based upon surmise, conjecture and suspicion. Gray Mfg. Co. v. Pathe Indus., Inc., 33 A.D.2d 739, 739 (1 st Dept. 1969), aff d., 26 N.Y.2d 1045, 1046 (1970); see Caraballo v. Kinsbridge Apt. Corp., 873 N.Y.S.2d 299 (1st Dept. 2009). [M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient to defeat a summary judgment motion. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980); see Chimart Associates v. Paul, 66 N.Y.2d 570, 575 (1986) (opponent on summary judgment motion was required and failed to come forward with something more than his own conclusory assertion that mistake existed ). Conclusory affidavits are insufficient as a matter of law on a motion for summary judgment. JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 384 (2005); Vermette v. Kenworth Truck Co., 68 N.Y.2d 714, 717 (1986) ( Plaintiff's attorney's affidavit, which merely alleges in conclusory form that such proof exists but fails to tender it in opposition to the motion or to offer an excuse for such failure, was patently insufficient... ) 7 11 of 35

12 Here it is undisputed that: (1) as a condition precedent to the issuance of surety bonds on behalf of Apple Builders, the Indemnitors agreed, jointly and severally, to indemnify Fidelity for any and all losses, costs and/or expenses associated with the issuance of the bonds; (2) that Fidelity issued bonds on behalf of Apple Builders relating to a construction contract entered into by and between Apple Builders and the New York City School Construction Authority ( SCA ) entitled Solicitation Number SCA B Various Schools Queens (the Project ); (3) that a wage and hour class action suit was commenced in New York Supreme Court, New York County, naming Fidelity and Apple Builders as defendants; (4) that Fidelity incurred significant legal fees and expenses as a result of the class-action suit; (5) that Fidelity s expenditures in the defense of the class-action suit constitutes an indemnifiable loss under the terms of the GAI; (6) Fidelity incurred further significant legal expenses (which are currently ongoing) in enforcing the covenants and conditions of the GAI itself; and (7) despite demand for payment, the Defendants had not reimbursed Fidelity for losses and expenses it has incurred under the bonds issued to Apple Builders. As there is no genuine issue of material fact that Apple Builders, Mr. Kuttambakkam and Ms. Chitta signed a GAI indemnifying Plaintiff from any losses in relation to bonds issued on behalf of Apple Builders for the Project (in fact, they admitted same by not denying the requests made in Plaintiff s Notice to Admit), and Fidelity incurred significant expense in defending a class action suit in which it was named as a defendant for wrongs that Apple Builders committed under the Project, it is respectfully submitted that Fidelity s motion for summary judgment as to liability should be granted of 35

13 POINT II THIS COURT SHOULD GRANT SUMMARY JUDGMENT TO PLAINTIFF BASED UPON THE TERMS OF THE TERMS OF THE GAI ARE UNAMBIGUOUS AND SHOULD BE DECIDED BY THIS COURT VIA SUMMARY JUDGMENT. This action arises out of losses in connection with construction surety bonds. Sureties are often confused with insurers. However, the surety relationship is quite different from insurance, and is more similar to a guarantee: Suretyship may be defined as a contractual relationship whereby one person engages to be answerable for the debt or default of another (Stearns, The Law of Suretyship, Fifth Ed., 1951, page 1). Every Suretyship involves three parties: 1. Principal, whose debt or default is the subject of the transaction; 2. Obligee, one to whom the debt or obligation runs; 3. Surety, one that undertakes to perform the debt or obligation if the principal does not. Estate of Camarda, 425 N.Y.S.2d 1012, 1015 (N.Y.S. Sur. 1980). Under New York substantive law, when the sole question presented to the Court is the interpretation of a clear and unambiguous written agreement, the issue is one of law and may be decided upon a motion for summary judgment. Tantleff v. Truscelli, 493 N.Y.S.2d 979 (2d Dep t. 1985); Jakobson Shipyard, Inc. v. Aetna Cas. & Sur. Co., 775 F.Supp. 606 (S.D.N.Y. 1991). In other words, where the interpretation of contractual language is at issue, summary judgment is appropriate. As the Appellate Division, Fourth Department, has held: In New York: It is the responsibility of the court to interpret written agreements to determine the intent of the parties as derived from the language employed. Where a question of intent is determinable by written agreement, the question is one of law, appropriately decided on a motion for summary judgment. APF Indus., Inc. v. Mosler Safe Co., 446 N.Y.S.2d 762, 763 (4th Dep t 1981) (citations omitted). The primary objective in contract interpretation is to ascertain the intent of the parties from the language employed. Clear and unambiguous terms should be understood by their plain, ordinary, popular and nontechnical sense. Additionally, the rule is well settled that the construction of a plain and unambiguous contract is 9 13 of 35

14 for the court to pass on, and that circumstances extrinsic to the agreement will not be considered when the intention of the parties can be gathered from the instrument itself. Martine Midland Leasing Corp. v. Chautauqua Airlines, Inc., 572 N.Y.S.2d 573, (4th Dep t. 1991) (citations and quotations omitted); See also, Mallad Constr. Corp. v. County Fed. Sav. & Loan Assn., 32 N.Y.2d 285, 291 (1973) (where a question of intent is determinable by a written agreement, the question is one of law, appropriately decided on a motion for summary judgment). The terms of the GAI entered into between Fidelity and the Indemnitors are clear and unambiguous and it is respectfully submitted that the Court enforce the terms thereof. As set forth above, pursuant to Paragraph 6 of the GAI, the Indemnitors agreed to indemnify Fidelity for all liability, losses, costs, damages, attorneys fees, disbursements and any other expenses that Travelers may incur by reason of issuing bonds on behalf of Apple Builders. Additionally, pursuant to Paragraph 14 of the GAI, Fidelity is entitled to indemnification from Indemnitors for the costs and expenses, including attorneys fees, incurred by Fidelity in connection with this litigation. Fidelity incurred expenses as a result of being sued in connection with a bond that is issued on behalf of Apple Builders. Pursuant to the GAI, the Indemnitors agreed to indemnify Fidelity for any such losses. Fidelity respectfully requests that the Court enforce the unambiguous terms of the GAI in the instant matter and grant Summary Judgment to Fidelity of 35

15 POINT III PURSUANT TO THE GENERAL AGREEMENT OF INDEMNITY, FIDELITY IS ENTITLED TO RECOVER ALL COSTS INCURRED AS RESULT OF ISSUING BONDS ON BEHALF OF APPLE BUILDERS New York Courts have consistently upheld the validity of and enforceability of indemnity agreements. The law is well settled that a surety may secure its right to indemnity by a written contract with the principal or another who promises to make good for the loss. Acstar Ins. Co. v. Teton Enterprises. Inc., 248 A.D.2d 654 (2d Dept. 1998); International Fid. Ins. Co. v. Spadafina, 192 A.D.2d 637 (2d Dept. 1993); Home Indem. Co. v. Wachter, 115 A.D.2d 590 (2d Dept. 1985). The obligations of the indemnitor to indemnify the surety are governed by the terms set forth in the indemnity agreement. BIB Constr. Co. v. Fireman s Ins. Co. of Newark, NJ, 214 A.D.2d 521, 523 (1st Dept. 1995); General Accident Ins. Co. v. Merrett Meridian Constr. Corp., 975 F.Supp. 511, 516 (S.D.N.Y. 1997). If the obligations and intent of the parties are defined in the written indemnity agreement, and the Indemnitors do not dispute that they executed the Indemnity Agreement, a trial is unnecessary to determine the legal effect of said agreement and summary judgment should be awarded to the surety for the amount of losses it sustained on the bonds. American Home Assurance Co. v. Gemma Constr. Co. Inc., 275 A.D.2d 616, (1st Dept. 2000); Travelers Indem. Co. v. Buffalo Motor & Generator Corp., 58 A.D.2d 978 (4th Dept. 1977). In U.S. Fid. & Guar. Co. v. Green, 64 Misc.2d 1(Sup. Ct. N.Y. Cty. 1969), aff d, 34 A.D.2d 935 (1st Dept. 1970), the Court granted summary judgment to the surety where the indemnity agreements were entered in express contemplation of the plaintiff thereafter assuming suretyship on bonds on behalf of the principal, Green Inc. The Court found that: The (indemnity) guarantee is clear and unambiguous in the its language and precisely defines the obligations each of the parties to the other. (James Talcott, Inc. v. Bloom, 29 A.D.2d ). Where the intention of the parties can be gathered from the indemnity agreements themselves, a trial is not necessary to of 35

16 determine the legal effect thereof. (Janos v. Peck, 21 A.D.2d 529). In this case, the meaning of the agreements is not even in dispute; hence liability is fixed. Id. at 4; see, e.g., Lori-Kay Golf v. Lassner, 61 N.Y.2d, 722, 723; Bank of N.Y. v. Hirschfeld, 399 N.Y.S.2d 329 (3d Dept. 1977) (surety permitted to recover attorney s fees and costs pursuant to indemnity agreement). In the instant case, the GAI executed by Apple Builders, Mr. Kuttambakkam and Ms. Chitta could not be clearer, and expressly allows for the recovery of Fidelity s losses incurred in connection with said bonds and in seeking indemnification for same. As set forth above, Paragraphs 6 and 14 specifically state, inter alia, that the signators, Apple Builders, Mr. Kuttambakkam and Ms. Chitta, agree to indemnify and hold the Surety harmless from and against all liability including losses, costs, damages, attorneys fees, disbursements and expenses of any nature for prosecuting or defending any action in connection with the Bonds. Additionally, the Indemnitors are liable to the Surety for any expenses incurred by Fidelity in their efforts to collect such monies. Apple Builders was a defendant in a prevailing wage class action suit related to the Project for which Fidelity issued bonds. Fidelity, by virtue of issuing a bond on the Project on behalf of Apple Builders, was also named a Defendant in the class action suit. As a result, Fidelity expended significant legal fees and expenses on the class action suit. Fidelity may incur further liabilities in the class-action suit since Apple Builders failed to comply with the terms and conditions of the settlement agreement. When demand was made upon the Indemnitors for such amount, the Indemnitors refused to pay. Thus, Fidelity was required to institute this action and incurred further attorney fees and expenses. Pursuant to the GAI, the Indemnitors, must indemnify Fidelity for any legal expenses for the prosecution of this action of 35

17 Additionally, the common law imposes obligations on the indemnitor to indemnify the surety for any losses arising out of the suretyship relationship. Lori-Kay Gulf, Inc. v. Lassner, 472 N.Y.S.2d 612, 613 (1984); Northern Nation. Ins. Co. v. Alberts, 822 F. Supp. 1078, 1081 (S.D.N.Y. 1993). As such, the courts of New York invariably support a surety s right to seek indemnification for claims that are made under the bonds it issues. See e.g., Hutton Constr. Co. v. County of Rockland, 52 F.3d 1191, 1192 (2d Cir. 1995) (a principal s failure to make the demanded indemnity payments constituted a breach of the principal s obligations to the surety). A surety therefore recovers from an indemnitor when it demonstrates that it acted pursuant to a reasonable determination that the principal was liable. Gen. Accident, supra, 975 F. Supp. at 517 Thus, pursuant to both case law, common law and the express and unambiguous terms of the GAI which governs the relationship between Fidelity and Indemnitors, Fidelity is entitled to indemnification from the Indemnitors for losses and expenses incurred by Fidelity in connection with any bonds issued by Fidelity on behalf of Apple Builders. Additionally, Fidelity should also be entitled to indemnification for legal fees incurred in addressing the various claims and in pursuing this indemnity action. Lori-Kay Golf, supra. 61 N.Y.2d at 723; Bank of N.Y. v. Hirschfeld, 399 N.Y.S.2d 329 (3d Dept. 1977). Here, Fidelity established the amount of losses and expenses paid through the Affidavit of Timothy Snyder and appended exhibits to the Affidavit. To date, Fidelity has incurred $69, in legal fees both in defending its interests in the class-action suit and the instant action seeking indemnification. Mr. Snyder further averred to the fact that Fidelity may incur further legal fees pursuing its indemnification rights. Additionally, Fidelity incurred $51, in accounting fees. (Snyder Aff ) of 35

18 For the reasons set forth above, it is respectfully submitted that this Court grant Summary Judgment to the Plaintiff in this matter. CONCLUSION For all the foregoing reasons, it is respectfully submitted that summary judgment be entered in Fidelity s favor against Indemnitors Apple Builders, Jagannathan Kuttambakkam and Sailaja Chitta to indemnify Fidelity against any liabilities it had or will have incurred as a result of the class action suit, and legal fees incurred in the prosecution of the instant action. Fidelity respectfully requests that it be permitted to submit a declaration of services as to attorneys fees and costs subsequent to the entry of judgment and that it be permitted to amend the judgment to include and any subsequent fees and costs. Respectfully submitted, Dated: March 26, 2018 /Eugene Zaydfudim EUGENE ZAYDFUDIM, ESQ of 35

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