Firm Experience

In Fidelity and Surety Matters,

In North American Specialty Insurance Company v. Arch Concept Construction, Inc., et. al., No. 2:21-cv-00287 (D.N.J. April 27, 2023), we secured a $1,733,421.68 judgment in favor of the Surety under an indemnity agreement for indemnification for payment and performance bond losses and attorney and consultant fees and expenses, against the defendant indemnitors.

At the request of the surety, we negotiated for substitution of the surety bond for a federal project, resulting in the filing of a new surety bond by a successor surety, and securing the release and discharge of the prior surety for the federal project pursuant to FAR 28.106-2.

In  North American Specialty Insurance Company v. Cardinal Contracting Company, LLC, et. al., No. 20-17094 (D.N.J. June 26, 2022), we secured by summary judgment a $664,107.35 judgment in favor of the Surety under an indemnity agreement for indemnification for payment and performance bond losses and attorney and consultant fees and expenses, against the defendant indemnitors .  The Court determined that the Defendant’s disagreement with the amount the Surety paid the completion contractor was not a basis for Defendants’ asserted “bad faith” defense to indemnity.

In Berkley Regional Insurance Company and Berkley Insurance Company v. 40-15 27th Street LLC, et. al., Index No. 651799/2019 (N.Y. Sup. Ct. 2020-2022) we secured multiple judgments under an indemnity agreement for indemnification and exoneration of the Surety for its payment and performance bond losses and attorney and consultant fees and expenses against the defendant indemnitors.

In L.J. Coppola, Inc. v. North American Specialty Insurance Company, No. 21-cv-00746, 2022 WL 1471253 (S.D.N.Y. May 10, 2022), our motion was granted securing dismissal of the complaint by L.J. Coppola, Inc., a prime contractor for a state public works construction project. The complaint asserted a negligence claim against North American Specialty Insurance Company as surety, for its issuance of payment and performance bonds to the general contractor, a separate prime contractor for the project. The Court held that the economic loss rule is inapplicable and North American Specialty Insurance Company did not owe a duty of care, as a surety, to plaintiff L.J. Coppola, Inc., as a prime contractor. See https://www.law.com/newyorklawjournal/almID/1652272460NY21CV0074

In Anthony T. Rinaldi, LLC v. Anchorage Construction Corporation, No. 450691/2016, 2021 WL 143476 (N.Y. Cnty. Jan. 14, 2021), we obtained an Order denying the plaintiff general contractor’s motion pursuant to CPLR §321(a) and CPLR §3211 to dismiss the principal’s counterclaim for payment for work performed based on the principal’s failure to retain counsel. The surety argued that the principal’s counterclaim was asserted by the surety as subrogee and assignee pursuant to the indemnity agreement. The counterclaim should be determined on its merits, and dismissal due to a procedural lapse by the principal not retaining new counsel would be inequitable and would permit plaintiff to avoid payment for work the principal performed. The court held that while a corporation cannot appear without an attorney pursuant to CPLR §321(a), the principal’s claims were assigned to the surety, and prevailing caselaw holds that dismissal of claims pursuant to CPLR §321(a) can be avoided by assignment.

The Board of Managers of the 20 Pine Street Condominium v. MN Pine Street, LLC, et. al., No. 153901/2017, (N.Y. Cnty. Dec. 11, 2020), we obtained a Decision and Order denying the bond principal receiver’s motion seeking to reduce the penal sum of the bond issued by the surety nunc pro tunc, as of the date it was issued, and to pay premium based on the proposed reduced penal sum rather than the original penal sum of the bond. In denying the bond principal’s requested relief, the Court stated that “[a]s correctly noted by the Surety, as of the date that the bond was issued, and on each annual renewal date thereafter, the bond premium was fully earned.” The Court further directed the bond principal receiver to pay the outstanding premium owed to the surety in full based on the original issued bond’s penal sum not a reduced amount.

Lawrence Union Free Sch. Dist. v. North Am. Spec. Ins. Co., No. 603565/2017 (Nassau Cnty. Jan. 16, 2018), we secured a dismissal of the complaint against the surety for a claim under its performance bonds, because the plaintiff school district failed to fulfill the bonds conditions precedent by not providing notice and not paying the surety the balance of the contract price, which precluded the surety from electing its completion option under the bonds, and deprived the surety of the opportunity to mitigate damages.

J Construction Company, LLC, et. al. v. Westchester Fire Ins. Co., Index No. 2016-05244 (2d Dep’t, April 6, 2018), we secured a dismissal of the complaint against the surety for a claim under its payment bonds, because the complaint was time barred under the limitations period in the bond, no tolling agreement was entered into and there could not be an estoppel or waiver where, the surety repeatedly reserved its rights in letter and email correspondence with plaintiff.

Yonkers Contracting Co. Inc. v. Creative Direction Const and Design LLC, et. al., No. 57030/2017 (Westchester Cnty., Nov.16, 2017), we secured a dismissal of the amended complaint against the surety because the surety had met its prima facie burden of establishing that the time in which to commence the action had expired pursuant to the two-year contractual limitations period in the performance bond, over 22 months before the Plaintiff commenced the action and without a tolling agreement being entered into pursuant to New York General Obligations Law §17-103. The Court further acknowledged that where the surety repeatedly reserved its rights and advised the Plaintiff through the investigation that its actions were “without prejudice” and “with a full reservation of all rights, claims and defenses”, that “the Court merits Westchester Fire’s argument that there cannot be an estoppel or waiver where, as where, Westchester Fire repeatedly reserved its rights in letter and email correspondence with Plaintiff.”

Westchester Fire Insurance Company v. Annex General Contracting, Inc., and Steven J. Saggese, No: 14-cv-5747 (E.D.N.Y July 15, 2016), resulted in a federal court award of $639,574 in favor of the Surety against its Principal and Indemnitors.

In In Re Marc A. Landis, Temporary Guardian, 114 A.D. 3d 458 (2014), representing one of two bonded co-guardians, we secured the unanimous affirmance of a trial court order barring the other co-guardian from using his preferred counsel on conflict of interest grounds.

In Berkley Regional Insurance Company v. Weir Bros., Inc. et al., No. 13-cv-3227, 2013 WL 6020785 (S.D.N.Y. Nov. 6, 2013), we secured a denial of defendants’ motion to dismiss because the surety had a contractual right to commence suit in New York, further determining that defendants’ motion to transfer on the basis that failure to negotiate the terms of an agreement does not void a forum selection clause, and under New York law, the Surety was entitled to prompt indemnification of more than $4.6 million in bond losses and loss adjustment expenses upon proof of payment.

In Sunbelt Rentals Inc. v. Tempest Windows, et. al. 94 A.D. 3d 1088 (2012), we secured the unanimous reversal of a trial court decision holding that a Surety which bonded one of two contracts between its Principal and the project Owner was liable for losses on both contracts where the Owner had the right to offset losses on one contract against proceeds due the Principal on the other contract. In reversing, the appellate court granted the third-party defendant Surety’s motion to dismiss. In an ensuing first party action arising out of the same facts, The J Construction Companies v. Westchester Fire Ins. Co., (Supreme Court Kings Co. 2016) the trial court granted the Surety’s cross motion to dismiss on limitations grounds and the plaintiff’s failure to re-institute suit within six months of the prior dismissal.

In Danica Plumbing & Heating, LLC n/k/a Danica Group, LLC v. Brender Hecht Associates, et al., Index No. 17214/06 (N.Y. Bronx Sup. Ct. Feb. 22, 2012), the Court grants Surety right to settle with Plaintiff despite the Principal’s objections under the plain terms of the indemnity agreement and principal’s failure to collateralize the Surety.

Atlantic Mutual Ins. Co. v. M.H. Kane Construction, 100 A.D.3d 564 (1st Dept. 2012). This appeal concerned the venue of an indemnity action. Defendants argued venue of the action should be in the county where the non-party witnesses lived and could testify to an alleged breach of the contract between the Obligor and the Principal. The Appellate Division unanimously reversed because “defendants failed to demonstrate that the proposed testimony of the nonparty witnesses, concerning defendants’ claim that the County of Suffolk wrongfully declared defendant M.H. Kane Construction Corp. in default under a construction contract, would be material in the instant case in which plaintiff, a surety on performance bonds issued in connection with the construction project, seeks to recover pursuant to an indemnity agreement executed by defendants.”

O'Connell v. DeMartino (In re Thomas A. DeMartino), 484 B.R. 550 (E.D.N.Y. Bankr. 2012). This was debtor’s motion for relief from the order granting the surety and Chapter 7 Trustee summary judgment objecting to discharge of the debtor who had made false statements under oath and failed to maintain records. The motion for relief was premised on alleged excusable neglect by debtor’s prior counsel, who had failed to file a factual statement pursuant to local rule in connection with the prior summary judgment motion. The review focused on Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380 (1993) standard for excusable neglect. The court held that debtor had failed to set forth excusable neglect because prior counsel had failed to comply with a clear and unambiguous rule. O'Connell v. DeMartino (In re Thomas A. DeMartino), 448 B.R. 122 (E.D.N.Y. Bankr. 2011). This was a motion to set by surety and Chapter 7 trustee objecting to discharge of debtor/indemnitor on the grounds that debtor had made false oaths and had failed to maintain records. Debtor, pre-petition, had filed a series of mechanic’s liens against property owned by the surety but did not schedule the mechanic’s liens as assets. After the commencement of the bankruptcy proceeding debtor, through a company he owed and controlled, filed a lien for the same period in the name of the company. Debtor also failed to list all pending lawsuits against him and had not maintained any records.

In Receivership Matters,

As counsel for Steven Weinberg, Esq. in his capacity as receiver for the following receivership entities: (i) Horizon Global Advisors, Ltd.; (ii) Horizon Global Advisors, LLC; (iii) Diversified Global Investments (BVI), L.P. f/k/a Horizon Global Investments, L.P.; (iv) The Master Global Fund, L.P.; (v) Fiduciary Select Income Fund, L.P. f/k/a Pangea Bridge Investment, L.P.; (vi) Horizon Millennium Investments, L.P., and; (vii) Pangea Offshore High Yield Portfolio, LLC, appointed as Receiver in Securities and Exchange Commission v. Brian Raymond Callahan, et. al., No. 12-CV-1065 (E.D.N.Y), we assisted the Receiver in recovering receivership assets from real property, investor profits, and hedge fund, bank and securities investments, resulting in each approved claimant recovering 75.554% of their approved claimed amount invested into the receivership entities.

As local counsel for the United States Small Business Administration as Receiver for Penny Lane Partners, L.P., appointed as Receiver in United States of America v. Penny Lane Partners, L.P., No. 06-1894 (D.N.J. 2006), we secured and enforced judgments for unfunded capital commitments from former Limited Partners for a Small Business Investment Company.

As local counsel for the United States Small Business Administration as Receiver for Manhattan Central Capital Corporation, appointed as Receiver in United States of America v. Manhattan Central Capital Corporation, No. 94 CIV. 5573 (S.D.N.Y. 2000), we secured and enforced judgments for unjust enrichment and monies had and received for the payment of SBIC funds to investors of an unrelated corporate entity operated by the same corporate officer, specifically the Court determined the Receiver successfully proved that MCCC's President David Choi had improperly used MCCC's funds to repay investments that three people had made in David Choi's other corporation.  All three defendants were ordered to divest or disgorge themselves of funds "...that, in equity and good conscience, should be returned to the receivership estate".

As local counsel for the United States Small Business Administration as Receiver for First Wall Street SBIC, LLP, appointed as Receiver in United States of America v. First Wall Street SBIC, L.P., CV-00-5356 (E.D.N.Y. April 15, 1997), we secured and enforced a judgment against a defendant who sold non-existent errors and omissions policies for real estate appraisers and operated an unlicensed non-authorized insurance company and claim department.

The firm has obtained significant other rulings in surety and fidelity matters. See for example, Bullard-Lindsay Contr. Co. v. Universal Bonding Ins. Co. (1st Dept. 2003) (bond premiums are fully earned despite termination for convenience because the risk of loss attached at inception of coverage). INA v. Bear Stearns and Metropolitan Bank (verdict for surety against two financial institutions, through which defalcating principal improperly diverted pension funds); PCL v. United States of America – Fed.Cl.-(2001) (plaintiff-contractor cannot implead subcontractor’s surety on government’s counterclaim); First Jeffersonian Assocs. v. Aetna Fire Underwriters Ins. Co., 276 A.D.2d 741 (2000) (affirmance of trial court’s dismissal of $3,000,000.00 performance bond claim for obligee’s failure to actively prosecute same); Citibank N.A. v. Patrick DeSouza Walker (Bronx Co. 2001) (vacated default judgment against surety on administrator’s bond because plaintiff failed to comply with Surrogate’s Court Procedure Act); Seaboard Surety Company v. Crane Co. (SDNY) (Enforcement of indemnity agreement against parent Co. for after acquired subsidiary and collection of $3,300,000.00 miscellaneous bond loss); Banque Nationale de Paris v. Insurance Co. of North America, 896 F.Supp. 163 (S.D.N.Y. 1995) (settlements by a surety are presumed to be both correct as to amount and made in good faith); Fidelity New York, FSB v. Aetna Insurance Company, 234 A.D.2d 261 (2d Dept. 1996) (judgment in excess of performance bond penalty and in excess of bonded contractor’s liability reduced on appeal by over $45,000,000.00; firm acted as co-counsel on appeal); Lynbrook Glass v. Elite Associates, Inc., 225 A.D.2d 525 (2d Dept. 1996) and 215 A.D.2d 453 (2d Dept. 1995) (Summary judgment for surety: payment bond claimant failed to comply with bond’s 90 day notice requirement); Hempstead Concrete Corp. v. Elite Associates, Inc., 203 A.D.2d 521 (2d Dept. 1994) (Lien foreclosure action dismissed because there were no funds due or to become due the contractor); Olympia & York v. INA v. FEI, Ltd., WL 63052 (S.D.N.Y.) (Directed verdict for surety after jury trial in $11,000,000 federal court performance bond suit – material alteration of the contract); IINA v. Levine, 168 A.D.2d 323 (Surety prevailed on $2,600,000 action against indemnitors); Burdick Associates Owners Corp. v. Indemnity Ins. Co. of N.A., 166 A.D.2d 402 (Claim on performance bond dismissed where principal prevailed against obligee in arbitration for a lesser amount); Dimacopoulos v. Consort Development, 158 A.D.2d 658 (Res Judicata and Collateral Estoppel in favor of surety based on finding for principal as to quality of workmanship in arbitration against owner); IINA v. Robinson, 1991 WL 173115 (S.D.N.Y.) (Summary judgment in favor of interpleading bail bond surety and dismissal of fraud claim against surety); Krugman & Fox v. Elite Associates, Inc., 167 A.D.2d 514 (2d Dept. 1990) lv. denied 77 N.Y.2d 806 (Dismissal of subcontractor’s action on payment bond for failure to comply with limitations provision); Cogifer v. INA (E.D.Va) (Verdict for surety after trial of Miller Act performance bond suit – repair or replacement and delivery of contract drawings will not toll the limitations period); IINA v. Chemical Bank, (Sup. Ct. N.Y. Co.) (Summary judgment on lieu of complaint on assignment to surety of collateral held by defendant bank); Local 631 v. INA, (Sup. Ct. Rockland Co.) (A surety bond is not an instrument for the payment of money only); Silver v. Great American Insurance Company, 29 N.Y.2d 356 (Landmark decision dismissing action on ground of forum non conveniens although one party was a New York resident.); Insurance Company of North America v. Bear Stearns & Co., Inc. and Metropolitan Savings Bank, (Supreme Court, New York County) (Verdict for surety asserting subrogation rights under UCC and common law against financial institutions through which defalcating principal passed obligee’s pension funds).

 The firm has also obtained significant liability rulings. See for example, Flagship Int. Corp. v. Dennelisse Corp., 38 A.D. 3d 307 (the mere fact that a permit was not obtained for the work does not bespeak actionable negligence); Grivas v. Port Authority 227 A.D.2d 105 (Paternity order based on testimony of mother and putative paternal grandmother not a sufficient predicate for wrongful death action to benefit putative father’s post mortem child); Vieira v. Tishman Const. 255 A.D.2d 235 (rebar mesh was integral part of floor precluding recovery under Labor Law 241(6) by laborer who tripped); Stamboulis v. Stefatos 256 A.D.2d 328 (Homeowner’s storage at home of ladders used in third party’s contracting business does not waive homeowner’s exemption from liability under Labor Law 240 for worker who fell from ladder); Grivas v. Port Authority 229 A.D.2d 301 (Where New York resident employed by New York bridge painter accessed interstate bridge from New York and then fell to his death landing on ground in New Jersey, all claims under New York Labor Law dismissed under conflicts analysis); Ibarra v. Morbark, (Sup. Nassau) (Defendant’s jury verdict in products liability action where plaintiff’s arm was caught in the in-feed roller mechanism of a commercial woodchipper); Olin v. INA, Great American, 743 F.Supp. 1044 aff’d 929 F.2d 62 (dismissed for late notice and under pollution exclusion clause); N.Y.S. Urban Development Corp. v. VSL Corp., 563 F. Supp. 187 aff’d 738 F.2d 61 (Based on language of insurance contract, insurer can participate in selection of independent counsel to represent insured with respect to covered and not covered claims); Estate of Vigliotti v. HRC, Inc., WCB No. 086-53494 (Plaintiff’s failure to obtain compensation carrier’s consent to settlement waives right to future benefits); Nitis v. City of New York, (Sup. Ct., Kings Co.) (Summary judgment on cross-claim for indemnification for subcontractor who was a third-party beneficiary on contractor’s promise to owner to purchase insurance coverage for subcontractors).