Continental Casualty v. Paredes

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 00-10447

CONTINENTAL CASUALTY COMPANY; AMERICAN CASUALTY
CO. OF READING, PENNSYLVANIA,

Plaintiffs-Appellees,

VERSUS

C. BILL PAREDES; ET AL.,

Defendants,

RICHARD F. TOUSSAINT; GARY W. KETTER,

Defendants-Appellants.

Appeal from the United States District Court
For the Northern District of Texas
(3:98-CV-1395-G)
February 20, 2001
Before POLITZ, DeMOSS, and STEWART, Circuit Judges.

PER CURIAM:*

Defendants-Appellants Richard F. Toussaint and Gary W. Ketter

(collectively “appellants”) appeal the district court’s order

granting Plaintiffs-Appellees Continental Casualty Company

*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
(“Continental”) and American Casualty Company of Reading,

Pennsylvania’s (“American”) (collectively “appellees”) motion for

summary judgment seeking enforcement of a written indemnity

agreement to recover from the appellants for losses, costs,

expenses, and fees incurred as a result of having issued certain

surety bonds on behalf of Parsons Systems Engineers, Inc.

(“Parsons”).

Parsons sought surety bonds from the appellees with respect to

various construction projects throughout the United States. In

connection with those bonds, the appellants executed a General

Agreement of Indemnity (“Agreement”) with the appellees, agreeing

to indemnify the appellees in case of default by Parsons.

Subsequently, the appellees issued several bonds naming Parsons as

principal. The obligees of those bonds included the Texas

Utilities Company (“TUC”), the State of Arkansas, Hanson Electric,

the Jacksonville Suburban Utilities Corporation, and the Little

Rock Wastewater Utility District (“LRWU”).

The last bond that the appellees issued for Parsons named the

LRWU as obligee and was connected to the construction of the Little

Rock Wastewater Utility Plant Control and SCADA System in Little

Rock, Arkansas (“Little Rock Project”). The LRWU subsequently

declared Parsons in default on the Little Rock Project, citing,

among other things, Parsons’ failure to follow the project

schedules submitted, its failure to provide materials and equipment

necessary to perform the work, and its failure to pay suppliers and

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others for amounts due. After the LRWU declared Parsons in

default, the LRWU made demand on the performance bond issued by the

appellees. By that time, Parsons had filed for bankruptcy; hence,

a motion to lift the stay with respect to the Little Rock Project

was filed and granted.

In response to the LRWU’s claim on the bond, the appellees

hired Water Technology Associates to assist it in evaluating the

status of completion of the Little Rock Project, to assist in

evaluating payment of bond-type claims, and to prepare re-bid

specifications. Neither Parsons or its successor chose to bid on

completion of the Little Rock Project even though the appellants

had been invited by the appellees to participate in the resolution

of the LRWU’s claims.1 Parsons, however, did ask the appellees for

funding so that it could complete the Little Rock Project, but that

was unacceptable to the appellees due to Parsons’ long-term cash

problems.

The LRWU rejected the appellees’ initial proposals for

resolving the LRWU’s bond claim and demanded that the appellees

complete or arrange for the completion of the Little Rock Project.

Over the course of several months, the appellees were able to

negotiate a settlement with the LRWU, pursuant to which the

appellees paid the LRWU $450,000 and tendered a completion

1
Initially, the LRWU disapproved of Parsons’ continued
performance after its default. But the appellees were apparently
able to convince the LRWU to allow Parsons’ participation if
Parsons’ so chose.

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contract.

The appellees received claims on its surety bonds from the

Little Rock Project and a few other Parsons’ projects, suffering

extensive losses totaling over $750,000. Thereafter, the appellees

sought indemnification from the appellants. After the appellees

moved for summary judgment, the district court found in favor of

the appellees, awarding a $250,000 judgment against each of the

appellants.2 The appellants then filed a motion for new trial and

for reconsideration of the summary judgment order. Thereafter, the

district court issued a second Memorandum Order denying the

appellants’ motion. This appeal followed.

We have thoroughly reviewed the briefs, the record excerpts,

and pertinent portions of the record, in addition to hearing oral

argument, and we are not convinced that there was a genuine issue

of material fact or that the district court committed any error in

its determination. Accordingly, we affirm for substantially the

same reasons as stated by the district court.

AFFIRMED.

2
The Agreement capped each of the appellant’s liability at
$250,000.

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