Title: American Safety Casualty Insurance Co. v. C.G. Mitchell Construction, Inc.

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
AMERICAN SAFETY CASUALTY 
INSURANCE COMPANY 
 
v.  Record No. 032709  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
September 17, 2004 
C.G. MITCHELL CONSTRUCTION, 
INC., ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
Melvin R. Hughes, Jr., Judge 
 
In this action for breach of contract and recovery on 
a payment bond, the primary issue is whether the circuit 
court erred by entering judgment against a surety in favor 
of a claimant under the payment bond after determining that 
a judgment by default previously entered by the court 
against the principal as a sanction for failing to obey an 
order regarding discovery was binding on the surety.  
Because the surety had notice of the claim against its 
principal, and the right and opportunity to defend the 
principal against the claim, we conclude that the judgment 
by default against the principal was binding on and 
conclusive as to the surety.  Thus, we will affirm the 
circuit court’s judgment. 
RELEVANT FACTS AND PROCEEDINGS 
 
C.G. Mitchell Construction, Inc. (“Mitchell”) entered 
into an agreement with Nations Environmental Services, Inc. 
(“Nations”) to provide labor, equipment and debris removal 
 
2
services in connection with the demolition of the Richmond 
Convention Center Exhibition Hall (the “Project”) in the 
City of Richmond.  Nations was a subcontractor on the 
Project and was required, pursuant to its contract with the 
prime contractor, to procure a “Labor and Material Payment 
Bond” (the “Bond”).1  Nations obtained the Bond from 
American Safety Casualty Insurance Company (“American 
Safety”).  The Bond named the prime contractor as the 
“Obligee,” and Mitchell was a “Claimant” as that term was 
defined in the Bond.2 
 
Nations along with Janet C. Williams and Chijioke Ude, 
president and vice-president, respectively, of Nations, 
also entered into a “General Agreement of Indemnity” (the 
                     
1 Requiring a payment bond by Nations, as a 
subcontractor, is authorized in Code § 2.2-4337(F).  The 
purpose of Code § 2.2-4337 is to protect those who furnish 
supplies, materials, and labor for the construction of 
public improvements, irrespective of whether those items 
were furnished to the prime contractor or a subcontractor.  
See Solite Masonry Units Corp. v. Piland Constr. Co., 217 
Va. 727, 730, 232 S.E.2d 759, 761 (1977) (decided under a 
predecessor to Code § 2.2-4337); Thomas Somerville Co. v. 
Broyhill, 200 Va. 358, 363, 105 S.E.2d 824, 828 (1958) 
(same). 
 
2 In pertinent part, the Bond defined the term 
“Claimant . . . as one having a direct contract with the 
Principal or with a subcontractor of the Principal for 
labor, material, or both, used or reasonably required for 
use in the performance” of the subcontract between Nations 
and the prime contractor. 
 
3
“Indemnity Agreement”) with American Safety.3  As pertinent 
to the issues on appeal, the Indemnity Agreement included 
the following provisions with regard to the rights granted 
to American Safety: 
ASSIGNMENT.  A. The CONTRACTOR [Nations], and the 
INDEMNITORS [Williams and Ude] as their interests may 
appear in the following subsections of this paragraph, 
hereby assign, transfer, pledge and set over to SURETY 
[American Safety] . . . (i) All the rights of the 
CONTRACTOR or INDEMNITORS in, and arising in any 
manner out of any CONTRACT; . . . (iv) All the right, 
title and interest of the CONTRACTOR or INDEMNITORS in 
and to any actions, causes of action, claims or 
demands . . . arising out of or in connection with any 
CONTRACT . . . .  B. SURETY shall have the full and 
exclusive right (but not the obligation), in its name 
or in the name of the CONTRACTOR or INDEMNITORS, to 
prosecute, compromise, release or otherwise resolve 
any of the claims, causes of action or other rights 
assigned to SURETY, upon such terms as SURETY, in its 
sole discretion shall deem appropriate.  C. The 
CONTRACTOR and INDEMNITORS hereby irrevocably 
nominate, constitute, appoint and designate the SURETY 
. . . as their attorney-in-fact with the right, but 
not the obligation, to exercise all of the rights of 
the CONTRACTOR and INDEMNITORS assigned, transferred 
and set over to SURETY in this Agreement, and in the 
name of the CONTRACTOR and INDEMNITORS to make, 
execute, and deliver any and all additional or other 
assignments, documents, papers, . . . or other 
instruments . . . deemed necessary and proper by the 
SURETY in order to give . . . the full protection 
intended to be herein given to the SURETY under all 
other provisions of this Agreement.  The CONTRACTOR 
and INDEMNITORS hereby ratify and confirm all acts and 
actions taken and done by SURETY . . . as such 
attorney-in-fact. 
 
. . . . 
                     
3 Williams and Ude executed the Indemnity Agreement as 
individual indemnitors. 
 
4
REMEDIES UPON DEFAULT.  A. In the event of any 
EVENT OF DEFAULT as described in this Agreement, 
SURETY shall have the right, at its option, and in its 
sole and absolute discretion . . . to take any one or 
more of the following actions: . . . (vii) in its name 
or in the name of the CONTRACTOR or Indemnitors to 
adjust, settle or compromise any . . . suit or 
judgment involving any BOND or to take whatever other 
action it may deem necessary . . . with respect to 
such matter.  SURETY’S determination as to whether any 
such . . . suit . . . should be settled or defended 
shall be binding and conclusive upon the CONTRACTOR 
and INDEMNITORS. 
 
Pursuant to its contract, Mitchell was to supply 
Nations with daily tickets outlining the work performed and 
Nations was to compensate Mitchell for its work on a “time 
and materials” basis.  Mitchell would periodically invoice 
Nations based upon the totals from the daily tickets.  
According to Mitchell, Nations breached the contract by 
refusing to pay Mitchell the sums due on the invoices. 
 
Consequently, Mitchell filed a motion for judgment 
against both Nations and American Safety.  Mitchell alleged 
that Nations had breached the contract between them and was 
indebted to it for the sum of $312,500.09, plus interest.4  
Mitchell also alleged that American Safety was obligated to 
make payment to Mitchell under the Bond for all labor, 
material, and equipment it had supplied to Nations on the 
                     
4 Along with the motion for judgment, Mitchell filed a 
statement of account and affidavit verifying the amount 
owed to it by Nations in accordance with Code § 8.01-28. 
 
5
Project.  Nations and American Safety each filed grounds of 
defense, denying any indebtedness to Mitchell.5 
More than a year after Mitchell filed its action, 
Nations’ attorney moved to withdraw as counsel of record 
for Nations.  The circuit court granted the motion.  No 
attorney has since entered an appearance on behalf of 
Nations.  Nations’ registered agent also resigned, and the 
State Corporation Commission terminated Nations’ corporate 
status in December 2002. 
Pursuant to Rule 4:5(b)(6), Mitchell subsequently gave 
notice that it would take the deposition of a corporate 
designee of Nations.  However, no corporate designee from 
Nations appeared at the scheduled deposition even though  
Mitchell effected proper service.  Consequently, Mitchell 
filed a motion for sanctions and/or to compel a corporate 
designee of Nations to appear for a deposition.  At a 
hearing on the motion, the circuit court learned that 
Williams and Ude had resigned as officers and directors of 
Nations.  American Safety suggested to the court that, 
since Williams and Ude were the only persons with knowledge 
of the matters set out in the deposition notice, Mitchell 
could obtain the needed information by issuing subpoenas to 
                     
5 American Safety also filed a cross-claim against 
Nations and a third-party motion for judgment against 
Williams and Ude. 
 
6
Williams and Ude in their individual capacities and 
deposing them about their personal knowledge.  The circuit 
court granted Mitchell’s motion and directed a corporate 
designee of Nations to appear for a Rule 4:5(b)(6) 
deposition. 
Mitchell subsequently gave notice that it would take 
the deposition of Nations’ corporate designee and effected 
proper service of the notice.  Again, no corporate designee 
appeared for the scheduled deposition.  Consequently, 
Mitchell moved for sanctions, including judgment by 
default, against Nations for its failure to comply with the 
circuit court’s prior order directing a corporate designee 
from Nations to appear for a deposition. 
At a hearing on the motion, American Safety again 
represented to the circuit court that a deposition of a 
corporate designee was not necessary because Williams and 
Ude could be deposed about their personal knowledge.  
American Safety also argued that judgment by default 
against Nations was not appropriate because, other than the 
affidavit attached to the motion for judgment, Mitchell had 
not presented evidence to prove its claimed damages against 
Nations and because genuine issues of material fact existed 
as to the amount that Nations owed Mitchell. 
 
7
The circuit court found that Nations violated the 
prior order when a corporate designee failed to appear at 
the Rule 4:5(b)(6) deposition after receiving proper 
notice.  Thus, the circuit court granted Mitchell’s motion 
for sanctions.  It entered judgment by default in favor of 
Mitchell against Nations in the amount of $312,500.09, plus 
interest and costs. 
Mitchell then filed a motion for summary judgment 
against American Safety.  At a hearing on that motion, 
American Safety argued that the judgment by default should 
not be conclusive against it or even introduced into 
evidence because American Safety did not have the ability 
to make a corporate designee from Nations appear at a Rule 
4:5(b)(6) deposition.  American Safety further argued that 
it had a right to present a defense to Mitchell’s claim. 
In a final order, the circuit court found that 
American Safety had notice of Mitchell’s claim against 
Nations and had the right and opportunity to defend 
Nations.  Accordingly, the circuit court concluded that the 
judgment by default entered against Nations was binding and 
conclusive upon the surety, American Safety.  Thus, the 
court granted Mitchell’s motion for summary judgment and 
entered judgment in favor of Mitchell against American 
Safety in the amount of $312,500.09, plus interest and 
 
8
costs, subject to offsets in the amount of $57,110.86 for 
claims against the Bond by subcontractors and vendors to 
Mitchell that American Safety had already resolved.  This 
appeal followed. 
ANALYSIS 
 
On appeal, American Safety challenges the circuit 
court’s actions granting Mitchell’s motion to compel the 
deposition of a corporate designee of Nations, granting 
Mitchell’s motion for sanctions and judgment by default 
against Nations, and entering summary judgment against 
American Safety.  On brief, American Safety describes the 
primary issue as whether the circuit court could use “a 
default judgment imposed as a discovery sanction against a 
defunct corporation, without more, to impose” liability 
upon a surety.  American Safety’s framing of the issue, 
however, omits two unchallenged findings by the circuit 
court: (1) American Safety had notice of Mitchell’s claim 
against Nations; and (2) American Safety had both the right 
and opportunity to defend Nations.  Thus, the issue, 
properly stated, is whether the judgment by default entered 
against Nations is binding on American Safety when American 
Safety, as the surety, had notice of the claim against its 
principal, Nations, and the right and opportunity to defend 
Nations. 
 
9
Under the terms of the Indemnity Agreement, Nations 
assigned to American Safety its right and interest in any 
cause of action or claim arising out of or in connection 
with any contract.6  Nations also appointed American Safety 
as its “attorney-in-fact with the right, but not the 
obligation, to exercise all of the rights” of Nations 
assigned to American Safety and “in the name of [Nations] 
to make, execute, and deliver any and all additional or 
other assignments, documents, papers, . . . deemed 
necessary and proper by [American Safety] in order to give 
. . . the full protection intended to be herein given to 
[American Safety].”  Finally, under the Indemnity 
Agreement, American Safety had the right, upon any default, 
to take action in its name or in Nations’ name “to adjust, 
settle or compromise any . . . suit or judgment involving 
any BOND or to take whatever other action it may deem 
necessary . . . with respect to such matter.”  As the 
circuit court found, these provisions in the Indemnity 
Agreement provided American Safety with the right to take 
any measures it deemed necessary and proper in order to 
defend Nations in the action brought by Mitchell. 
                     
6 The Indemnity Agreement defines the term “CONTRACT” 
as “an agreement between CONTRACTOR and a third party . . . 
for which SURETY executes . . . a BOND.”  Nations’ 
subcontract with Mitchell is a “CONTRACT” under the 
Indemnity Agreement. 
 
10
Despite this authority and the fact that American 
Safety, as a defendant in the action brought by Mitchell, 
had notice of Mitchell’s claim against Nations, American 
Safety never designated or even attempted to designate a 
corporate representative on behalf of Nations.  In other 
words, it did nothing on Nations’ behalf to comply with the 
circuit court order directing a corporate designee to 
appear at a Rule 4:5(b)(6) deposition.  Nor did American 
Safety argue that it did not have the authority under the 
Indemnity Agreement to do so.  In fact, American Safety did 
not make that argument until the hearing on Mitchell’s 
motion for summary judgment, which was after the circuit 
court had entered judgment by default against Nations.  
However, American Safety appeared at the hearing on 
Mitchell’s motion to compel the appearance of Nations’ 
corporate designee at a deposition as well as the hearing 
on Mitchell’s motion for sanctions. 
Nevertheless, American Safety argues that the circuit 
court erred by treating the judgment by default conclusive 
as to American Safety’s liability on the Bond and thereby 
preventing American Safety from contesting the amount of 
damages claimed by Mitchell.  Relying on this Court’s 
decisions in Munford v. Overseers of the Poor of Nottoway, 
23 Va. (2 Rand.) 313 (1824); Hobson v. Yancey, 43 Va. (2 
 
11
Gratt.) 73 (1845); and United States Fid. & Guar. Co. v. 
Jordan, 107 Va. 347, 58 S.E. 567 (1907), American Safety 
asserts that “a final judgment, entered after a trial on 
the merits against a principal, has served under Virginia 
law as no more than ‘prima facie evidence’ against a 
surety.”  We are not persuaded by American Safety’s 
argument. 
In Munford, a jury found that Munford had been 
appointed and qualified as sheriff but had not been 
appointed by the Overseers of the Poor to collect the poor-
rates, unless a judgment previously entered against him as 
collector was conclusive evidence of that fact.  23 Va. at 
315.  The issue was whether that prior judgment against 
Munford “precluded and estopped the sureties from giving 
any evidence going to contradict” Munford’s appointment.  
Id.  In holding that the judgment against Munford was not 
conclusive evidence against the sureties as to the fact of 
his appointment to collect the poor-rates, the Court stated 
that it would be improper to hold “the sureties 
conclusively bound by a judgment against the principal, 
which they had no opportunity to resist or impeach.”  Id. 
at 320. 
In Hobson, the children and legatees of a decedent 
obtained a decree against the executor of the estate.  43 
 
12
Va. at 75.  Execution was issued on the decree and returned 
“nulla bona.”  Id.  The parties in whose favor the decree 
had been rendered then instituted a suit against the 
sureties of the executor to recover the amount due under 
the decree.  Id.  The sureties argued that they were not 
responsible for certain rents from real estate that had 
been charged to the executor in the prior decree.  Id. at 
77.  This Court concluded that the trial court had not 
properly inquired into the credits that the executor was 
entitled to receive and therefore remanded the suit for 
further proceedings.  Id. at 80.  There, as in Munford, 
there was no indication that the sureties had any notice of 
or the opportunity to defend the executor in the first 
proceeding brought only against the executor. 
Finally, in Jordan, the trial court decided that a 
settlement by a treasurer for moneys due the county was 
conclusive proof against the treasurer’s surety.  107 Va. 
at 352, 58 S.E. at 567.  On appeal, this Court reversed, 
holding that the treasurer’s settlement with the county was 
“not conclusive, but only prima facie evidence of the 
balance in his hands.”  Id. at 356-57, 58 S.E. at 569.  
Treating the settlement as having no higher dignity than a 
judgment, we explained that judgments generally bind only 
parties and privies and are “not conclusive upon other 
 
13
persons, because it would be unjust to bind one by a 
proceeding in which he had no opportunity to make defense, 
and in which he could not appeal if dissatisfied with the 
judgment rendered therein.”  Id. at 355, 58 S.E. at 568.  
The general rule, however, is subject to exceptions such as 
in “cases of contracts of indemnity, or in the nature of 
contracts of indemnity, or in those cases in which a 
person, although not in form a party to the suit, is bound 
to assist in the prosecution or defense, and either does so 
in fact, or, when called upon to prosecute or defend, as 
the case may be, fails to do so.”  Id. at 356, 58 S.E. at 
569.  The bond at issue in Jordan was not a bond of 
indemnity, and as in Munford and Hobson, the surety had no 
opportunity to participate in or defend the treasurer in 
the settlement of funds due the county. 
Unlike American Safety, none of the sureties in those 
cases had notice of the claim against its principal and 
both the right and opportunity to defend the principal 
against the claim.  Thus, Munford, Hobson, and Jordan are 
inapposite.  They are not controlling or persuasive 
authority on the issue before us. 
However, we do find the decision in Drill South, Inc. 
v. International Fid. Ins. Co., 234 F.3d 1232 (11th Cir. 
2000), both persuasive and apposite.  That case involved an 
 
14
action on a payment bond in a federal construction project.  
Id. at 1234.  In response to a motion for default judgment 
against the principal, the surety “stated that it took no 
position on a default judgment against its principal . . . 
provided that the default judgment was not deemed binding 
on [the surety].”  Id.  After the trial court entered 
default judgment against the principal, the court concluded 
that the surety was bound by that judgment.  Id. at 1235.  
On appeal, the surety argued that “default judgments 
against a bond principal are not binding on a co-defendant 
surety actively defending in the same action.”  Id.  The 
court disagreed, explaining “the general rule that has 
emerged is that a surety is bound by any judgment against 
its principal, default or otherwise, when the surety had 
full knowledge of the action against the principal and an 
opportunity to defend.”  Id.; accord Frederick v. United 
States, 386 F.2d 481, 485 n.6 (5th Cir. 1967); Lake County 
v. Massachusetts Bonding & Ins. Co., 75 F.2d 6, 8 (5th 
1935); Massachusetts Bonding & Ins. Co. v. Central Finance 
Corp., 237 P.2d 1079, 1081 (Colo. 1951); Von Engineering 
Co. v. R.W. Roberts Constr. Co., 457 So.2d 1080, 1082 (Fla. 
Dist. Ct. App. 1984); First Mobile Home Corp. v. Little, 
298 So.2d 676, 682-83 (Miss. 1974); contra United States ex 
rel. Fidelity Nat’l Bank v. Rundle, 107 F. 227, 229 (9th 
 
15
Cir. 1901); United States ex rel. Vigilanti v. Pfeiffer-
Neumeyer Constr. Corp., 25 F. Supp. 403, 405 (E.D.N.Y. 
1938); Gearhart v. Pierce Enters., Inc., 779 P.2d 93, 95 
(Nev. 1989). 
Applying that rule, the court in Drill South found 
that the surety had full knowledge of the potential default 
judgment against its principal and numerous opportunities 
to defend the principal against the merits of the claim and 
the extent of liability.  234 F.3d at 1235-36.  The court 
further found that the surety had the legal right to step 
in and defend its principal at every stage of the 
proceedings pursuant to an indemnity agreement with its 
principal.  Id. at 1236.  Under that agreement, the 
principal had designated the surety as its “attorney-in-
fact,” which gave the surety the “ ‘right to adjust, 
settle, or compromise any claim, demand, suit or judgment 
upon the [payment bond].’ ”  Id.  Thus, the court affirmed 
the judgment against the surety.  Id. at 1240.  In doing 
so, the court rejected the surety’s argument that it was 
not obligated to defend the action against its principal.  
Id. at 1236.  The issue, according to the court, was not 
whether the surety had an obligation to defend under the 
terms of the indemnity agreement but whether it had the 
right to do so.  Id. 
 
16
Turning to the present case, we conclude that American 
Safety is bound by the judgment by default entered against 
Nations.  Like the surety in Drill South, American Safety 
had notice of Mitchell’s claim against Nations and the 
opportunity to defend Nations.  It also clearly had the 
right to do so under the terms of the Indemnity Agreement.  
In our view, it does not matter that the judgment by 
default was entered as a discovery sanction or that the 
circuit court accepted Mitchell’s affidavit as evidence of 
the amount of Nations’ indebtedness.  “The law requires 
only that a surety have notice and an opportunity to defend 
before it is bound by a judgment against its principal.”  
Id.  Thus, the circuit court did not err in granting 
Mitchell’s motion for summary judgment and entering 
judgment against American Safety. 
American Safety also challenges the circuit court’s 
order directing a corporate designee of Nations to appear 
at a deposition and the order entering judgment by default 
against Nations as a discovery sanction.  In both 
instances, the circuit court was dealing with discovery 
issues and abuses.  A trial court generally exercises 
“broad discretion” in resolving such matters.  Woodbury v. 
Courtney, 239 Va. 651, 654, 391 S.E.2d 293, 295 (1990).  On 
appeal, we accord deference to a trial court’s decision 
 
17
regarding discovery disputes and will set aside that 
decision only if the court abused its discretion.  See 
Walsh v. Bennett, 260 Va. 171, 175, 530 S.E.2d 904, 907 
(2000).  Here, we cannot say that the circuit court abused 
its discretion in entering either of those orders. 
As to the order requiring a corporate designee of 
Nations to appear at a deposition, American Safety argues 
that the circuit court abused its discretion in compelling 
an act by a defunct corporation when Mitchell could have 
obtained the information it needed by deposing Williams and 
Ude in their individual capacities.  However, the 
termination of Nations’ corporate status did not impair 
Mitchell’s remedy against Nations.  Under Code § 13.1-755, 
“[t]he termination of corporate existence shall not take 
away or impair any remedy available to or against the 
corporation, its directors, officers or shareholders, for 
any right or claim existing or any liability incurred, 
prior to such termination.”  This statutory provision, 
which partially changed the common law, see Harris v. T.I., 
Inc., 243 Va. 63, 68, 413 S.E.2d 605, 608 (1992), further 
provides that “[a]ny such action . . . by or against the 
corporation may be prosecuted or defended by the 
corporation in its corporate name,” and “[t]he 
shareholders, directors and officers shall have power to 
 
18
take such corporate or other action as shall be appropriate 
to protect such remedy, right or claim.”  Code § 13.1-755.  
In addition, upon the involuntary termination of a 
corporation’s existence, “the properties and affairs of the 
corporation shall pass automatically to its directors as 
trustees in liquidation.”  Code § 13.1-753; see also Code 
§ 13.1-752.  Given these statutory provisions, the circuit 
court did not abuse its discretion by compelling Nations to 
designate a corporate representative to appear at a Rule 
4:5(b)(6) deposition. 
 
Contrary to American Safety’s argument, deposing 
Williams and Ude in their individual capacities would not 
have had the same legal effect as deposing one or both of 
them as Nations’ corporate designee.  In accord with Rule 
4:5(b)(6), Mitchell “designate[d] with reasonable 
particularity the matters on which examination [was] 
requested” in its notice of deposition.  Nations was then 
required to designate one or more officers or other persons 
to testify on its behalf, and it could have set forth the 
matters on which each designated person would testify.  Id.  
The person designated by a corporation to testify on its 
behalf must “testify as to matters known or reasonably 
available to the organization.”  Id.  Thus, the designated 
person gives testimony about the knowledge and memory of 
 
19
the corporation, not his or her personal knowledge.  See 
United States v. Taylor, 166 F.R.D. 356, 361 (M.D.N.C. 
1996) (decided under F.R.C.P 30(b)(6), which is in all 
pertinent respects identical to Rule 4:5(b)(6)); accord The 
Paul Revere Life Ins. Co. v. Jafari, 206 F.R.D. 126, 127 
(D. Md. 2002)(same); see also Black Horse Lane Assoc., L.P. 
v. Dow Chemical Corp., 228 F.3d 275, 303 (3d Cir. 
2000)(same). 
 
Finally, with regard to the circuit court’s order 
entering judgment by default against Nations as a discovery 
sanction, American Safety contends that, absent a showing 
of prejudice by Mitchell, the court’s choice of sanction 
was too severe.  American Safety also contends that 
Mitchell seized upon Nations’ defunct status to give notice 
of a Rule 4:5(b)(6) deposition knowing that Nations could 
not designate someone to testify on its behalf at a 
deposition, thereby setting in motion events that allowed 
it to obtain the judgment against Nations without ever 
having to present evidence in a trial.  However, one of the 
sanctions authorized under Rule 4:12(b)(2)(C) when a party 
fails to obey an order to provide discovery is “judgment by 
default against the disobedient party.”  Mitchell sought 
through a Rule 4:5(b)(6) deposition to explore, among other 
things, the basis of Nations’ denials in its grounds of 
 
20
defense and its answers to interrogatories.  Mitchell was 
deprived of that opportunity.  Thus, we cannot say that the 
circuit court abused its discretion in choosing to enter 
judgment by default against the disobedient party, Nations.  
See Woodbury, 239 Va. at 654, 391 S.E.2d at 295 (trial 
court did not abuse its discretion in granting partial 
summary judgment for defendant when plaintiff failed to 
timely identify expert witnesses).  Given the circumstances 
of this case, it is doubtful that any lesser sanction would 
have remedied the problem posed by Nations’ failure to obey 
the circuit court’s order compelling the appearance of its 
corporate designee at a deposition. 
We also point out that American Safety had notice of 
every step in the proceedings that led to the entry of 
those two orders.  In fact, counsel for Mitchell wrote 
American Safety’s counsel in order to obtain available 
dates before scheduling both the first and the second 
deposition of Nations’ corporate designee.  But, as 
previously stated, American Safety never attempted to 
designate a corporate representative to appear at a 
deposition on behalf of Nations.  It was not until the 
hearing on Mitchell’s motion for summary judgment that 
American Safety even argued that it did not have the 
 
21
authority under the Indemnity Agreement to make that 
designation. 
CONCLUSION 
We hold that a surety is bound by a judgment by 
default entered against its principal when the surety had 
notice of the claim against the principal and the 
opportunity and right to defend the principal.  Since 
American Safety was such a surety, we will affirm the 
judgment of the circuit court.7 
Affirmed. 
                     
7 In light of our decision, we do not consider American 
Safety’s argument concerning collateral estoppel because 
that principle was not the basis of the circuit court’s 
decision to enter summary judgment against American Safety.