Court Opinion

ID: 997565
Source: CourtListenerOpinion
Date Created: 2013-07-04 16:58:31.903684+00
Date Added: 2024-06-11T15:37:17.347060
License: Public Domain

Filed:   January 13, 1999

                    UNITED STATES COURT OF APPEALS

                        FOR THE FOURTH CIRCUIT

                             No. 98-1035
                            (CA-97-798-H)

Builder Marts of America, Incorporated,

                                                 Plaintiff - Appellee,

           versus

Mountbatten Surety Company, Incorporated,
                                               Defendant - Appellant.

                              O R D E R

     The court amends its opinion filed December 17, 1998, as

follows:
     On the cover sheet, section 3, line 4 -- the district court

number is corrected to read "CA-97- 798-H."

                                       For the Court - By Direction

                                          /s/ Patricia S. Connor
                                                   Clerk
UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BUILDER MARTS OF AMERICA,
INCORPORATED,
Plaintiff-Appellee,

v.

                                                                    No. 98-1035
MOUNTBATTEN SURETY COMPANY,
INCORPORATED,
Defendant-Appellant,

RUSSELL TYLDESLEY,
Movant.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Alexander Harvey II, Senior District Judge.
(CA-97-798-H)

Argued: October 29, 1998

Decided: December 17, 1998

Before MICHAEL and MOTZ, Circuit Judges, and
STAMP, Chief United States District Judge
for the Northern District of West Virginia,
sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Andrew J. Ruck, DUANE, MORRIS & HECKSCHER,
L.L.P., Philadelphia, Pennsylvania, for Appellant. Anthony Joseph
Breschi, TYDINGS & ROSENBERG, L.L.P., Baltimore, Maryland,
for Appellee. ON BRIEF: Joel D. Beach, DUANE, MORRIS &
HECKSCHER, L.L.P., Philadelphia, Pennsylvania, for Appellant.
Alan M. Grochal, TYDINGS & ROSENBERG, L.L.P., Baltimore,
Maryland, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Mountbatten Surety Company, Inc. appeals the district court's
grant of summary judgment in favor of Builder Marts of America,
Inc., on a breach of contract claim arising from Mountbatten's failure
to pay Builder Marts under a payment bond. Finding no error, we
affirm.

I.

On February 21, 1996, Mountbatten Surety Company, Inc.
("Mountbatten") executed a payment bond in which Ridge Lumber
Company ("Ridge") was the named principal, or principal obligor,
Builder Marts of America, Inc. ("Builder Marts") was the named obli-
gee, and Mountbatten was the named surety. The bond had a six-
month coverage period and contained the following provision:

          1. In the event of any default on the part of the Principal,
          a written statement of the particular facts showing the date
          and nature of such default shall be given by the Obligee to
          the Surety as promptly as possible after such default has
          become known to the Obligee.

Mountbatten and Ridge also entered into a General Indemnity Agree-
ment on February 21, 1996 that conferred on Mountbatten the right

                    2
to take certain actions to protect itself in relation to any bond that
Mountbatten issued on behalf of Ridge.*

Ridge failed to pay Builder Marts' invoices soon after the payment
bond was executed. In fact, Ridge was actually about $262,000 past
due in its payments to Builder Marts as of January 29, 1996, which
date was prior to the execution of the payment bond. Nevertheless,
Builder Marts permitted Ridge to purchase supplies on credit until
May 13, 1996, and then, on June 26, 1996, placed Ridge on a "cash-
in-advance" basis.

On September 20, 1996, Ridge filed a bankruptcy petition under
Chapter 11 of the Bankruptcy Code. On September 24, 1996, Builder
Marts notified Mountbatten of Ridge's defaults and claimed that its
unpaid invoices totaled $148,563.67. In the district court, Builder
Marts sought to recover that amount plus interest.

II.

Mountbatten raises three claims on appeal. Mountbatten argues that
the district court erred by finding (1) that it was required to produce
evidence of prejudice resulting from Builder Marts' failure to provide
it with timely notice of Ridge's default, (2) that Mountbatten, in fact,
failed to present evidence of such prejudice, and (3) that facts from
_________________________________________________________________
*The indemnity agreement provided, in part:

          2. APPLICABILITY. This instrument is intended to apply to
          any and all Bonds executed . . . by one or more of the under-
          signed.

...

          6. AUTHORIZATION. If any such Bond be issued in con-
          nection with a contract, the Surety in its sole discretion is hereby
          authorized, but is not required,

...

          c) in the event of any default in the performance of the
          contract alleged by the bond obligee . . . the Surety shall
          have the right . . . to take any other action which the Surety,
          in its sole discretion, may deem appropriate.

                     3
two other cases in which Mountbatten defended claims on bonds it
issued on behalf on Ridge were relevant to the issue of prejudice.

Mountbatten first asserts that Maryland law does not require that,
in order to avoid liability on a payment bond, a surety must present
evidence of prejudice when an obligee fails to comply with a bond
provision requiring written notice of a principal obligor's default.
Mountbatten acknowledged in the district court, however, that it bore
a burden to present such evidence. Before this Court, Mountbatten
contends that it was mistaken as to the law. This Court finds that, by
failing to raise the issue in the district court, Mountbatten has waived
this argument.

Mountbatten next claims that, even if it was required to show prej-
udice flowing from Builder Marts' failure to give timely notice, it, in
fact, provided the court with such evidence. Mountbatten asserts, for
example, that it was unable to exercise its rights under the General
Indemnity Agreement until it received notice from Builder Marts of
Ridge's default. Also, Mountbatten argues that, if it had received ear-
lier notice of Ridge's default, it would have been able to file U.C.C.
financing statements, which would have given it a priority over other
Ridge creditors in bankruptcy.

Mountbatten's claims of prejudice are no different here than they
were before the district court. That court found that Mountbatten pro-
vided only conclusory statements as to its claims of prejudice and
offered no evidence, in the form of affidavits or otherwise, to support
its assertions. Thus, in recognizing its obligation in the summary
judgment context, to "prevent `factually unsupported claims and
defenses' from proceeding to trial," Felty v. Graves-Humphreys Co.,
818 F.2d 1126, 1128 (4th Cir. 1987) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)), the district court determined that
Mountbatten failed to establish prejudice. We agree.

Finally, Mountbatten challenges the district court's reference to
Delmarva Sash & Door Co. v. Mountbatten Surety Co. , Civil No.
H-96-2413, and Shoffner Indus. v. Mountbatten Surety Co, Civil No.
H-96-3740, two actions that Mountbatten defended and that arose
from claims made on bonds in which Ridge was the principal obligor.
The district court decided these cases on summary judgment motions

                    4
on September 11, 1997. According to Mountbatten, the court inferred
that, because Mountbatten did not take immediate action when noti-
fied of Ridge's payment defaults in those cases, it would not have
taken action with respect to the bond at issue here and, thus, was not
prejudiced by a failure to receive earlier notice from Builder Marts.

In view of our conclusion that Mountbatten did not produce evi-
dence of prejudice, Mountbatten's claim that the district court erred
when it referred in its opinion to Delmarva and Shoffner is without
merit. As noted above, the district court specifically found that
Mountbatten failed to show its alleged prejudice in this case. Thus,
we also reject this challenge to the district court's decision.

III.

For the reasons stated above and those in the district court's opin-
ion (see Builder Marts of America, Inc. v. Mountbatten Surety
Company, Civil No. H-97-798 (December 4, 1997)), we conclude that
the district court did not err in finding that Mountbatten was required
to present evidence of prejudice resulting from a failure to give timely
notice of default and that, in fact, Mountbatten presented no such evi-
dence. Accordingly, we affirm the district court's grant of summary
judgment to Builder Marts.

AFFIRMED

                    5