Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_16-cv-00070/USCOURTS-caed-1_16-cv-00070-3/pdf.json

Parties Involved:
Darlene Coddington
Cross Defendant
Great American Insurance Company
Plaintiff
Marlene McDevitt
Cross Claimant
Robert McDevitt
Cross Claimant
Randy Morisoli
Cross Defendant
Roadway Electrical Works, Inc
Defendant
Roadway Engineering Works, Inc.
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

GREAT AMERICAN INSURANCE 

COMPANY, an Ohio corporation,

Plaintiff,

v.

ROADWAY ENGINEERING WORKS, 

INC., a California 

corporation, individually and 

doing business as ROADWAY 

ELECTRICAL WORKS, INC.; 

DARLENE CODDINGTON, an 

individual; RANDY MORISOLI, 

an individual; MARLENE 

MCDEVITT, an individual; and 

ROBERT MCDEVITT, an 

individual,

Defendants.

CIV NO.: 1:16-00070 WBS SKO

MEMORANDUM AND ORDER RE: MOTION

FOR SUMMARY JUDGMENT

----oo0oo----

Plaintiff Great American Insurance Company (“Great 

American”) brought this action, alleging that defendants Roadway 

Engineering Works, Inc., doing business as Roadway Electrical 

Works, Inc. (“Roadway”), Darlene Coddington, Randy Morisoli, and 

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Marlene and Robert McDevitt breached two separate indemnity 

agreements.1 The McDevitts are the only remaining defendants in 

this action. Great American now moves for summary judgment

against the McDevitts pursuant to Federal Rule of Civil Procedure 

56 on its claims for breach of the indemnity agreements.

I. Factual and Procedural History

On August 30, 2006, and March 10, 2010, the parties

entered into two separate indemnity agreements (“Indemnity 

Agreements”). (Ballinger Decl. ¶¶ 9-10, Exs. 1-2 (Docket No. 44-

7).) Both Indemnity Agreements begin by stating: “This Agreement 

binds the undersigned . . . jointly, severally and/or 

collectively, to Surety in connection with all Bond(s) heretofore 

or hereafter executed, provided or procured by Surety.” (Id.

Exs. 1-2.)

The Indemnity Agreements require that the Undersigned--

Roadway, Coddington, Morisoli, and the McDevitts--indemnify the 

Surety, Great American, from any liability for bonds that Great 

American issues on behalf of Roadway. (Id.) Coddington, 

Morisoli, and the McDevitts signed both agreements in their 

individual capacity. (Id.) The Indemnity Agreements

specifically contain the following provisions in paragraphs two 

and sixteen: 

The Undersigned, jointly and severally, shall 

exonerate, indemnify, hold harmless and keep the Surety 

indemnified from and against any and all liability for 

losses, costs, and/or expenses of whatsoever kind or 

 

1 Plaintiff’s Complaint also includes claims for 

equitable indemnity, Quia Timet and injunctive relief, specific 

performance, fraud, and breach of fiduciary duty. (First Am. 

Compl. (Docket No. 6).) Such relief is not at issue in the 

instant motion.

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nature (including, but not limited to, interest, court 

costs, consultant or expert fees, and counsel fees) and 

from and against any and all such losses and/or 

expenses which the Surety may sustain and incur: (1) By 

reason of being requested to execute or procure, or 

having executed or procured the execution of the Bonds 

on behalf of any of the Undersigned, (2) By reasons of 

the failure of the Undersigned to perform or comply 

with any of the covenants and conditions of this 

Agreement or (3) In enforcing any of the terms, 

covenants or conditions of this Agreement . . . . In 

the event of any payment of any kind 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 the Surety in good faith in and 

about the matters herein contemplated by the Agreement 

under the belief that the Surety is or was liable for 

the sums and amounts so disbursed, or that it was 

necessary or expedient for the Surety to make such 

disbursements, whether or not such liability, necessity 

or expediency existed; and that the vouchers, invoices, 

an affidavit or other evidence of any such payments 

made by the Surety shall be prima facie evidence of the 

fact and amount of the Undersigned’s liability to the 

Surety. . . .

In the event that Surety shall file suit at law or 

equity to enforce the terms of this Agreement, Surety 

shall be entitled to recover its own attorney’s fees 

and expenses in connection with such suit.

(Id.)

After the execution of each Indemnity Agreement, Great 

American issued several surety bonds that held it secondarily 

liable as the surety for performance or payment by the principal, 

Roadway, in various construction projects. (Id. ¶¶ 9, 11, 13-14, 

Exs. 3A-3C, 4A-4H.)

Later, suppliers, subcontractors, and bond obligees 

alleged that Roadway defaulted or did not perform on several of 

these bonds and filed claims with Great American. (Id. ¶ 16, 

Exs. 5-29.) In total, these parties submitted thirty-three 

claims against the bonds. (See id. Exs. 5-29; Cabal Decl. Ex. B 

(Docket No. 44-5).) Pursuant to the terms of the Indemnity 

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Agreements, Great American requested that defendants reimburse, 

exonerate, and indemnify Great American for these claims. 

(Ballinger Decl. ¶¶ 18-20, Exs. 30-32.) Great American received 

no response from defendants and paid the claimants several months 

later. (Id. ¶ 20.)

Great American has provided an Accrued Interest 

Calculation for each payment it made to claimants that are 

covered by the Indemnity Agreements, detailing the payments made 

and the interest rate of each payment. (Cabal Decl. ¶ 3, Ex. B.) 

As of July 8, 2016, Great American has incurred $2,579,170.90 in 

payments and $166,077.10 in expenses, excluding attorneys’ fees 

and interest. (Ballinger Decl. ¶ 23, Ex. 35.) Under a 

calculation of interest at 10 percent per annum, interest on the 

payments is $131,285.39. (Cabal Decl. Ex. B.) Great American

seeks a total of $2,876,633.39.

Great American initiated this action, alleging 

defendants failed to indemnify Great American as required by the 

Indemnity Agreements. After filing for Chapter 7 bankruptcy, 

defendants Roadway, Morisoli, and Coddington were dismissed from 

this action. (Docket Nos. 40, 43.)

Pursuant to Federal Rule of Civil Procedure 56, Great 

American moves for summary judgment on its two breach of contract 

causes of action against the McDevitts for failure to indemnify

Great American. (Docket No. 44-1.) 

II. Legal Standard

Summary judgment is proper “if the movant shows that 

there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.” Fed. R. Civ. 

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P. 56(a). A material fact is one that could affect the outcome 

of the suit, and a genuine issue is one that could permit a 

reasonable jury to enter a verdict in the non-moving party’s 

favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 

(1986). The party moving for summary judgment bears the initial 

burden of establishing the absence of a genuine issue of material 

fact and can satisfy this burden by presenting evidence that 

negates an essential element of the non-moving party’s case. 

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). 

Alternatively, the moving party can demonstrate that the nonmoving party cannot produce evidence to support an essential 

element upon which it will bear the burden of proof at trial. 

Id.

Once the moving party meets its initial burden, the 

burden shifts to the non-moving party to “designate ‘specific 

facts showing that there is a genuine issue for trial.’” Id. at 

324 (quoting then-Fed. R. Civ. P. 56(e)). The non-moving party 

must “do more than simply show that there is some metaphysical 

doubt as to the material facts.” Matsushita Elec. Indus. Co. v. 

Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The mere 

existence of a scintilla of evidence . . . will be insufficient; 

there must be evidence on which the jury could reasonably find 

for the [non-moving party].” Anderson, 477 U.S. at 252.

In deciding a summary judgment motion, the court must 

view the evidence in the light most favorable to the non-moving 

party and draw all justifiable inferences in its favor. Id. at 

255. “Credibility determinations, the weighing of the evidence, 

and the drawing of legitimate inferences from the facts are jury 

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functions, not those of a judge . . . ruling on a motion for 

summary judgment . . . .” Id. 

III. Discussion

California law has long recognized the right of a 

surety, such as Great American, to receive indemnification under 

the terms of a written indemnity agreement. See, e.g., Fid. & 

Deposit Co. of Md. v. Whitson, 187 Cal. App. 2d 751, 756 (2d 

Dist. 1960). “An indemnity agreement is to be interpreted 

according to the language and contents of the contract as well as 

the intention of the parties as indicated by the contract.” 

Myers Bldg. Indus., Ltd. v. Interface Tech., Inc., 13 Cal. App. 

4th 949, 968 (2d Dist. 1993).

In order to demonstrate a valid claim for breach of an 

indemnity agreement under California law, a plaintiff must 

demonstrate the existence of an indemnity agreement, the 

plaintiff’s performance under the agreement, breach of the 

agreement, and damages. See Reichert v. Gen. Ins. Co. of Am., 68 

Cal. 2d 822, 830 (1968). 

A. Existence of Agreement and Plaintiff’s Performance

It is undisputed that indemnity agreements exist here. 

The Agreements contain clauses that indemnify Great American 

“from and against any and all such losses and/or expenses which 

[Great American] may sustain and incur [b]y reason of having 

executed or procured the execution of Bonds on behalf of any of 

the Undersigned . . . .” (Ballinger Decl. Exs. 1-2.) Great 

American performed under the Indemnity Agreements by issuing 

payment and performance bonds on behalf of Roadway, an 

Undersigned.

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B. Breach of Indemnity Agreement

When a surety presents evidence of its payments 

pursuant to a prima facie evidence clause, such as that provided 

in the two Indemnity Agreements,2 the burden shifts to the 

indemnitors to prove that the surety cannot recover the fees. 

Travelers Cas. & Surety Co. of Am. v. Dunmore, No. Civ. 2:07-2493 

LKK DAD, 2009 WL 1586936, at *10 (E.D. Cal. June 5, 2009) (citing 

Fallon Elec. Co. v. Cincinnati Ins. Co., 121 F.3d 125, 128 (3d 

Cir. 1997)); see also First Nat’l Ins. Co. of Am. v. Hunt, No. 

Civ. 2:10-1339 WBS GGH, 2011 WL 2173765, at *3 (E.D. Cal. June 2, 

2011). “Provisions in indemnity agreements . . . providing that 

vouchers and other evidence of payment shall be prima facie 

evidence of the propriety thereof, have been upheld as not 

against public policy and enforced by the courts.” Transamerica 

Ins. Co. v. Bloomfield, 401 F.2d 357, 362 (6th Cir. 1968). 

A defendant does not need to indemnify a plaintiff if 

the plaintiff breaches the contractual duty of good faith and 

fair dealing. See Arntz Contracting Co. v. St. Paul Fire & 

Marine Ins. Co., 47 Cal. App. 4th 464, 482 (1st Dist. 

 

2 Paragraph Two of the Indemnity Agreements contain the 

prima facie evidence clause: 

In the event of any payment of any kind by [Great 

American], the [defendants] further agree that in any 

accounting between [Great American] and the 

[defendants], [Great American] shall be entitled to 

charge for any and all disbursements made by [Great 

American] in good faith . . . and that the vouchers, 

invoices, an affidavit or other evidence of any such 

payments made by [Great American[ shall be prima facie 

evidence of the fact and amount of the [defendant]’s 

liability to [Great American]. 

(Ballinger Decl. Exs. 1-2 (emphasis added).)

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1996)(citing Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., 

Inc., 2 Cal. 4th 342, 371 (1992)); see Fid. & Deposit Co. of Md. 

v. Bristol Steel & Iron Works, Inc., 722 F.2d 1160, 1163 (4th

Cir. 1983) (“The only exception . . . arises when the payment has 

been made ‘through fraud or lack of good faith’ on the part of 

the surety . . . .” (quoting Engbrock v. Fed. Ins. Co., 370 F.2d 

784, 786 (5th Cir. 1967))). Since Great American provided 

evidence of the bonds and payments of claims under the prima 

facie evidence clause, the burden thus shifts to the McDevitts to 

prove that Great American either acted fraudulently or did not 

act in good faith. See Fallon, 121 F.3d at 129. 

A plaintiff does not act in good faith if the plaintiff 

attempts to recover for claims that are not properly covered by 

the indemnity agreement. See Arntz, 47 Cal. App. 4th at 482. 

But “absent an affirmative showing of fraud or bad faith, the 

good faith of the plaintiff-surety [is] presumed.” Mountbatten 

Surety Co. v. Szabo Contracting, Inc., 812 N.E.2d 90, 103 (Ill. 

Ct. App. 2004) (citing U.S. Fid. & Guar. Co. v. Klein Corp., 558 

N.E.2d 1047, 1047 (Ill. Ct. App. 1989)). 

Under California law, “[a] bond shall be in writing 

signed by the sureties under oath . . . .” Cal. Civ. Proc. Code 

§ 995.320(a). According to defendants, they are not obligated to 

indemnify Great American because the bonds were not signed under 

oath and thus are not valid under § 995.320(a).

3 Great American 

 

3 Defendants also object to the court’s consideration of 

Exhibits 3A through 3C and 4A through 4H in the Ballinger 

Declaration, the bonds issued by Great American on Roadway’s 

behalf, on the grounds of insufficient foundation, lack of 

authentication, and hearsay. “An affidavit or declaration used 

to support or oppose a motion must be made on personal knowledge, 

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argues that defendants are precluded from this argument because

of admissions in their answer.

“Statements made in a pleading may be admitted against 

the pleader as evidence in the form of judicial admissions . . . 

.” Janich Bros., Inc. v. Am. Distilling Co., 570 F.2d 848, 860 

(9th Cir. 1977); see also Brooks v. Great Atlantic & Pac. Tea 

Co., 92 F.2d 794, 796 (9th Cir. 1937) (“[A]dmissions in the 

answer have the force of evidence . . . .”). Parties cannot 

later “controvert these previously admitted facts,” including at 

summary judgment. Yamaha Corp. of Am. v. ABC Int’l Traders, 

Corp., 703 F. Supp. 1398, 1402 (C.D. Cal. 1988) (concluding

plaintiff’s admissions in a complaint could not later be 

 

set out facts that would be admissible in evidence, and show that 

the affiant or declarant is competent to testify on the matters 

stated.” Fed. R. Civ. P. 56(c)(4). Mr. Ballinger is a bond 

claims representative who received, assembled, developed, and 

analyzed the documents and claims related to the bonds that Great 

American executed for Roadway. (Ballinger Decl. ¶ 4.) As the 

assigned representative on these bonds, Mr. Ballinger has 

personal knowledge about the bonds, laid the proper foundation 

for knowledge of the bonds, and properly authenticated the bonds. 

Further, the McDevitts’ Answer conceded that the bonds at issue 

were, in fact, valid. (McDevitt Answer ¶¶ 10, 12 (Docket No. 

28).) Even if the non-moving party’s evidence is presented in a 

form that is currently inadmissible, such evidence may be 

evaluated on a motion for summary judgment so long as the moving 

party’s objections could be cured at trial. See Burch v. Regents 

of the Univ. of Cal., 433 F. Supp. 2d 1110, 1119–20 (E.D. Cal. 

2006). Here, the exhibits fall within the exception to hearsay 

for records of a regularly conducted business activity. Fed. R. 

Evid. 803(6). Therefore, these objections are overruled.

The McDevitts also raise fourteen other objections to 

evidence Great American submitted in support of its motion for 

summary judgment. (See Docket No. 47.) Because the court does 

not rely on any of the evidence objected to in the McDevitts’ 

remaining objections, the court overrules those objections as 

moot.

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controverted when attempting to defeat defendant’s motion for 

summary judgment). Previously admitted facts are “conclusively 

binding on the party who made them.” Am. Title Ins. Co. v. 

Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988).

In the First Amended Complaint, Great American alleges,

“In consideration of Defendants . . . executing Agreement 1, 

[Great American] agreed to issue certain payment and performance 

bonds on behalf of Roadway Electrical Works, Inc. as principal . 

. . .” (First Am. Compl. ¶ 10 (Docket No. 6).) Great American

alleges the same for the second indemnity agreement. (Id. ¶ 12.) 

In their answer, defendants admit “that [Great American] issued 

the payment and performance bonds identified in paragraph 10(a) –

(c) of the Complaint” and “that [Great American] issued the 

payment and performance bonds identified in paragraph 12(a) – (h) 

of the Complaint.” (McDevitt Answer ¶¶ 10, 12 (Docket No. 28).) 

The copies of the bonds referred and attached to the First 

Amended Complaint are the same bonds attached to the Ballinger 

Declaration. (Compare First Am. Compl. Ex. C, with Ballinger 

Decl. Exs. 3A-3C, 4A-4H.) The admission in the answer prevents 

the McDevitts from contesting the issuance of the bonds, but not 

the validity of the bonds under § 995.320.

It is undisputed that “[Great American] agreed to issue 

certain payment and performance bonds on behalf of Roadway . . . 

.” (First Am. Compl. ¶¶ 10, 12; see McDevitt Answer ¶¶ 10, 12.) 

It is also undisputed that Great American issued these bonds as 

early as November 2009, (Ballinger Decl. Ex. 3A); however, Great 

American did not receive the first claim on these bonds until 

July 2015, (id. Ex. 5.) The time span between the issuance of 

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the bonds and the claims on those bonds supports the veracity of 

the bonds because it indicates that the principal, Roadway, was 

performing in reliance on the bonds for some period of time. For 

example, the obligee on the November 2009 bond submitted a claim

only once Roadway defaulted on its subcontractor obligations in 

October 2015--five years and eleven months after Great American 

issued the bond. (Id.)

The parties have not provided, and the court is not 

aware of, any California case law that holds a bond is invalid if

the surety does not sign it under oath. Section 995.320 of the 

California Civil Procedure Code exists to protect the surety by 

ensuring that a surety is not liable for a bond or the 

principal’s actions unless the surety signed the bond under oath.

The defendants do not dispute the issuance of the bonds, do not 

dispute the validity of the Indemnity Agreements, and have had 

copies of these bonds since the commencement of this action. 

Defendants presumably did not question the validity of the bonds 

when Roadway performed work and paid subcontractors under them. 

Now--years after plaintiff issued the bonds--it is disingenuous 

for defendants to claim they are not valid only because plaintiff 

did not sign them under oath.

Defendants failed to show plaintiff acted in bad faith. 

Because it is undisputed that plaintiff issued bonds under which 

defendants agreed to indemnify plaintiff and defendants have not 

cited any authority suggesting the bonds are invalid because 

plaintiff did not sign them under oath, defendants have failed to 

create a triable issue of fact with respect to their duty to 

indemnify plaintiff. Accordingly, the court must grant 

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plaintiff’s motion for summary judgment on its breach of contract 

claims.

C. Damages

The amount of damage is undisputed. The Indemnity 

Agreements note that Great American can recover any losses, 

interest, expenses, and attorneys’ fees incurred as a result of 

an indemnity action under the Indemnity Agreements. (Id. Exs. 1-

2.) Great American has paid $2,579,170.90 in losses and 

$166,077.10 in expenses. (Id. ¶ 23, Ex. 35.) These amounts are 

supported by “vouchers, invoices, an affidavit or other 

evidence,” namely the exhibits to the Ballinger Declaration. 

(Id.)

“Provisions in indemnity agreements granting to the 

indemnitor the right to compromise and settle claims . . . have 

been upheld as not against public policy and enforced by the 

courts.” Transamerica, 401 F.2d at 362. Great American’s 

decision to settle the claims was within its purview under the 

Indemnity Agreements, which grant Great American broad discretion 

to review, evaluate, and pay claims. (Ballinger Decl. Exs. 1-2.) 

Because the McDevitts have not presented any triable 

issue of material fact on amount of damages, the statement of 

losses and expenses provided by Great American is sufficient 

evidence of the damages it incurred.

The Indemnity Agreements also provide that Great 

American is entitled to interest on the payment of claims. 

(Ballinger Decl. Exs. 1-2.) No interest rate was specified in 

either Indemnity Agreement. Great American is thus entitled to 

the statutory rate of 10 percent per annum. See Cal. Civ. Code § 

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3289 (“If a contract entered into after January 1, 1986, does not 

stipulate a legal rate of interest, the obligation shall bear 

interest at a rate of 10 percent per annum after a breach.”). 

The accrued interest on the payments of the claims is 

$131,285.39. (Cabal Decl. Ex. B.)

D. Defense to Indemnity Agreement

“The language of a contract is to govern its 

interpretation, if the language is clear and explicit . . . .” 

Cal. Civ. Code § 1638. The McDevitts argue in a short, onesentence paragraph at the end of their opposition to Great 

American’s motion that they are not liable to Great American

because its suit against the individual indemnitors “is 

effectively seeking to make the individual indemnitors liable 

where they otherwise would not have had any liability by virtue 

of the corporate veil.” (Docket No. 45.) 

The McDevitts signed the Indemnity Agreements in their 

individual capacities, and the Indemnity Agreements individually 

list them as “Undersigned” who agree to “exonerate, indemnify, 

hold harmless and keep [Great American] indemnified from . . . 

all liability . . . .” (Ballinger Decl. Exs. 1-2.) At the end 

of the agreements, Robert McDevitt signed on a line that states 

“Robert McDevitt, Individually” and Marlene McDevitt signed on a 

line that states “Marlene McDevitt, Individually.” Id.

Furthermore, Marlene McDevitt and Coddington signed the Indemnity 

Agreements in their official capacities as officers of Roadway 

and in their individual capacities, indicating the individual 

defendants intended to be individually liable under the Indemnity 

Agreements. (See Ballinger Decl. Exs. 1-2.)

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The Indemnity Agreements are clear and explicit, the 

McDevitts signed in their individual capacities. See Sebastian 

Int’l Inc. v. Peck, 195 Cal. App. 3d 803, 808-09 (2d Dist. 1987) 

(holding corporate officer individually liable for a contract in 

which he signed his own name, notwithstanding addition of 

corporate title to personal signature line). The McDevitts are 

individually liable under the Indemnity Agreements.

IT IS THEREFORE ORDERED that plaintiff’s motion for 

summary judgment on its claims for breach of indemnity agreements 

in the amount of $2,876,633.39 be, and the same hereby is, 

GRANTED.

Dated: September 20, 2016

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