Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00407/USCOURTS-azd-2_12-cv-00407-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Hudson Insurance Co., 

Plaintiff,

v.

Simmons Construction, LLC, et al.,

Defendants. 

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No. CV-12-407-PHX-SMM 

MEMORANDUM OF DECISION

AND ORDER

Pending before the Court is Plaintiff Hudson Insurance Company’s (“Hudson”)

motion for summary judgment, supported by its statement of facts and accompanying

exhibits. (Docs. 65, 66.) There is no response. The Court will exercise its discretion, grant

Hudson’s motion, and order judgment.

FACTUAL BACKGROUND

Hudson filed this action seeking the deposit of collateral security and an award of

indemnity from Defendants pursuant to the terms of a written General Indemnity Agreement

(“GIA”). The GIA was issued as partial consideration for, and as a precondition to Hudson’s

issuance of surety bonds on behalf of Defendants. (Doc. 37.) Hudson issued five bonds

relating to five different construction projects that were being undertaken by Defendants.

(Id.) Subsequently, Hudson began to receive claims on the bonds. (Id.) Pursuant to the

“Indemnity to Surety” provision of the GIA, Defendants agreed to indemnify Hudson against

all loss, costs and expenses of whatsoever kind of nature, and to pay to Hudson, upon

demand, a sufficient amount to protect Hudson against any potential loss, cost or expenses.

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(Doc. 66-1 at 8-16.) As a result of the claims, lawsuits, and associated legal expenses,

Hudson anticipated a loss of $3,900,000, and set aside a loss reserve for that amount. (Doc.

37.) 

In this action, Hudson first moved for partial summary judgment requesting an order

of specific performance that would require Defendants to provide it with $3,900,000 in

collateral security to cover Hudson’s exposure under the bonds. (Doc. 26.) The Court

granted Hudson’s motion. (Doc. 37.) However, Defendants failed to deposit any collateral

with Hudson. 

Hudson now moves for summary judgment. (Docs. 65, 66.) In a sworn itemized

statement, Hudson submits that its losses and expenses now total $4,516,191.18. (Doc. 66-1

at 2-6, 18-38.) Under the GIA, Defendants agreed that “[a]n itemized statement of loss and

expense incurred by Surety, sworn by an officer of the Surety, shall be prima facie evidence

of the fact and extent of the liability of [Defendants] to Surety in any claim or suit by Surety

against [Defendants].” (Doc. 66-1 at 9.)

PROCEDURAL BACKGROUND

Initially, each of the Defendants was represented by counsel. However, subsequently,

the Court granted a motion to withdraw filed by Defendants’ attorney. (Doc. 52.) The Court

further directed Simmons Construction, SKS Investments, and the Simmons Trust (the

“Entity Defendants”) to retain new counsel. (Id.) The Entity Defendants did not retain new

counsel and Hudson moved to strike the answer of the Entity Defendants. (Doc. 63.) The

Court held a status hearing and issued a Minute Entry. (Doc. 64.) The Court granted

Hudson’s motion to strike as to Entity Defendants Simmons Construction and SKS

Investments, but withheld a ruling to the Simmons Trust in abeyance, allowing it additional

time to retain counsel. (Id.) The Simmons Trust did not retain new counsel and the extended

deadline to do so expired. The Court then granted Hudson’s motion to strike the answer of

the Simmons Trust. (Doc. 67.) 

DISCUSSION

A federal court sitting in diversity applies state substantive law. See Hambleton Bros.

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Lumber Co. v. Balkin Enterprises, Inc., 397 F.3d 1217, 1227 (9th Cir. 2005). Thus, this Court

applies Arizona law to the interpretation of the contract at issue. See Benevides v. Arizona

Prop. & Cas. Ins. Guar. Fund, 184 Ariz. 610, 613, 911 P.2d 616, 619 (App. 1995). The

Entity Defendants are unrepresented, are in default, and do not have the capacity to respond

to Hudson’s motion. See United States v. High Country Broadcasting Co., 3 F.3d 1244, 1245

(9th Cir. 1993) (artificial entities may only appear in federal court through licensed counsel);

In re Shattuck, 411 B.R. 378 (10th Cir. 2009) (the rule barring artificial entities from

appearing in federal court except through licensed counsel applies equally to trusts). Todd

Simmons, appearing individually and proceeding pro se, has failed to respond to Hudson’s

motion.

The Local Civil Rules for the United States District Court for the District of Arizona,

Rule 7.2(i), provide that a party’s failure to respond to a motion for summary judgment may,

in the Court’s discretion, be deemed a consent to the Court’s granting of judgment in favor

of the movant. On more than one occasion, the Court warned Mr. Simmons about his

responsibilities in proceeding pro se and its consequences if he failed to respond. When the

Court has warned the non-moving party that their failure to respond shall constitute a consent

to the granting of the motion, the Court may properly exercise its discretion to grant the

motion for judgment as a matter of law based on the non-moving party’s construed consent.

See Brydges v. Lewis, 18 F.3d 651, 652 (9th Cir. 1994) (further quotation and citation

omitted). 

Hudson has amply demonstrated that it is entitled to summary judgment for breach

of the express indemnity contract entered into between the parties. An express indemnity

agreement executed between a surety and its indemnitors is to be strictly enforced. See

Commercial Ins. Co. of Newark, N.J. v. Pacficic-Peru Constr. Corp., 558 F.2d 948, 953 (9th

Cir. 1977); see also J.D. Halstead Lumber Co. v. Hartford Accident and Indemnity, 38 Ariz.

228, 237, 298 P. 925, 928 (1931). As noted above, the terms of the GIA are quite extensive

and require the Defendants, jointly and severally, to indemnify and hold harmless Hudson

against “All loss, costs and expenses of whatsoever kind of nature” arising out of Hudson’s

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issuance of the Bonds on behalf of the Defendants. (Doc. 66-1 at 8-9.) As a result of

Simmons’ Construction’s default on the bonded projects and failure to pay its subcontractors

and suppliers, Hudson incurred substantial losses by virtue of having issued the Bonds.

(Doc. 37.) The Court further finds that Hudson has complied with the requirement to provide

a sworn itemized statement of loss and expense. Such itemization show the loss to be in the

amount of $4,516,191.18. (Doc. 66-1 at 2-6, 18-38.) Hudson is entitled to judgment for this

amount. 

In diversity actions, post-judgment interest is governed by federal law. 28 U.S.C. §

1961; Citicorp Real Estate v. Smith, 155 F.3d 1097, 1107 (9th Cir. 1998). Under section

1961, post-judgment interest is calculated from the date of entry of judgment “at a rate equal

to the weekly average 1–year constant maturity Treasury yield, as published by the Board

of Governors of the Federal Reserve System, for the calendar week preceding.” 28 U.S.C.

§ 1961(a).

Accordingly, on the basis of the foregoing,

IT IS HEREBY ORDERED GRANTING Plaintiff’s motion for summary judgment.

(Doc. 65.) 

IT IS FURTHER ORDERED that the Clerk of Court is directed to enter judgment

in favor of Plaintiff and against Defendants, jointly and severally, Simmons Construction

LLC, SKS Investments & Developments LLC, Todd G. Simmons Revocable Trust, and Todd

G. Simmons and Jane Doe Simmons, individually and as husband and wife, in the amount

of $4,516,191.18, which shall earn post-judgment interest at the applicable federal rate from

the date of entry of judgment until paid in full. The Clerk of Court is further directed to

terminate this case.

DATED this 5th day of May, 2014.

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