Developers Surety & Indemnity Co v. Cercontec L L C
5:18-cv-01379
W.D. La.Mar 13, 2020Background
- Developers Surety & Indemnity Co. (Developers) and Cercontec, L.L.C. (Cercontec) executed an indemnity agreement on June 17, 2015; Kerry Williams signed individually as indemnitor but was later dismissed from this action.
- Developers issued payment/performance bonds for two City of Shreveport projects (Bill Cockrell Pool House and Airport Park Pool House) for which Cercontec was the contractor.
- Cercontec notified Developers in Aug./Sept. 2016 that it could not complete the contracts and was in default; claims were made against the bonds.
- Developers paid subcontractors/suppliers ($52,206.23 and $94,502.58) and paid Claims Consulting Services $69,561.35 for investigation/consulting; it also incurred $6,296.40 in attorneys’ fees—total claimed $212,566.56 (net of a $10,000 recovery).
- Cercontec’s counsel withdrew, Cercontec failed to obtain new counsel, the court struck its answer, the clerk entered default, and Developers moved for default judgment for breach of the indemnity agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appropriateness of default judgment | Developers: Cercontec failed to respond/enroll counsel; default entered; judgment appropriate. | Cercontec: no responsive argument (failed to defend). | Court granted default judgment; circumstances (no material fact dispute, prejudice, no excusable neglect) weigh in favor. |
| Enforceability of the indemnity agreement under Louisiana law | Developers: Agreement is clear, unambiguous, and requires Cercontec to indemnify for all losses arising from issuing bonds, including counsel and consultant costs. | Cercontec: no contest/defense on contract terms. | Court enforced the indemnity as written; applied causation test (losses incurred because Developers furnished bonds). |
| Damages for payments to claimants, consultants, and attorneys | Developers: produced checks and affidavit establishing payments totaling $212,566.56 (after $10,000 recoupment). | Cercontec: no contest. | Court awarded $212,566.56 (payments to claimants and consultants plus attorneys’ fees), finding documentary evidence sufficient—no evidentiary hearing required. |
| Pre- and post-judgment interest and other costs | Developers: requested interest from payment dates and post-judgment interest; sought unspecified additional costs. | Cercontec: no contest. | Court awarded pre-judgment interest at 12% per annum from payment dates (per contract/Louisiana law) and post-judgment interest under 28 U.S.C. § 1961; declined to award unspecified additional costs for lack of evidence. |
Key Cases Cited
- N.Y. Life Ins. Co. v. Brown, 84 F.3d 137 (5th Cir. 1996) (describing default judgment procedure under Rule 55)
- Nishimatsu Constr. Co., Ltd. v. Houston Nat. Bank, 515 F.2d 1200 (5th Cir. 1975) (default admits well‑pleaded facts but not legal conclusions)
- Gray Ins. Co. v. Terry, [citation="606 F. App'x 188"] (5th Cir. 2015) (indemnity causation test: indemnitor liable for losses incurred because surety furnished a bond)
- Lindsey v. Prive Corp., 161 F.3d 886 (5th Cir. 1998) (factors for determining appropriateness of default judgment)
- James v. Frame, 6 F.3d 307 (5th Cir. 1993) (default-judgment damages normally require a hearing unless sum is liquidated or mathematically determinable)
- Richardson v. Salvation Army, S. Territory, USA, 161 F.3d 7 (5th Cir. 1998) (courts may rely on affidavits and documentary evidence to calculate damages on default)