Safeco Insurance Co. of America v. Hirani/MES, JV
480 F. App'x 606
2d Cir.2012Background
- Parties include Safeco Insurance Company of America (plaintiff) and Hirani/MES, JV et al. (Hirani Defendants) and M.E.S., Inc. et al. (MES Defendants).
- Two district court orders granted in part Safeco’s motion for partial summary judgment and required Defendants to post collateral security to cover Safeco’s anticipated costs.
- The indemnity agreements, under New York law, required collateral security to discharge claims and cover exposure under the bonds.
- Safeco sought collateral as a remedy tied to potential losses under the bonds; defendants did not challenge the contract validity or substance of collateral provisions.
- District Court found Defendants obligated to provide collateral and considered reasonable the anticipated costs and attorneys’ fees in determining the collateral amount.
- Appellate review affirms the district court’s orders, including the amount and the availability of specific performance to obtain collateral.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether collateral security may be awarded despite equitable defenses | Safeco argues the collateral provisions are unambiguous and enforceable. | Hirani/MES and MES Defendants contend equitable defenses preclude enforcement. | Affirmed: collateral right enforceable; defenses relate to indemnification, not collateral. |
| Whether the collateral amount was properly determined | Safeco’s costs and expenses, including anticipated fees, should be included. | Defendants contend amounts disputed or uncertain should reduce collateral. | Affirmed: court did not abuse discretion; anticipated costs including attorneys’ fees included. |
Key Cases Cited
- City of New York v. Grp. Health Inc., 649 F.3d 151 (2d Cir. 2011) (de novo standard for summary judgment; unambiguous contract language possible remedy)
- Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63 (2d Cir. 2008) (summary judgment when contract language is wholly unambiguous)
- Lucente v. Intl. Bus. Machs. Corp., 310 F.3d 243 (2d Cir. 2002) (specific performance when legal remedies are inadequate)
- Am. Motorists Ins. Co. v. United Furnace Co., 876 F.2d 293 (2d Cir. 1989) (injury to surety may be irreparable if collateral not provided)
- Borey v. National Union Fire Insurance Co., 934 F.2d 30 (2d Cir. 1991) (distinguishes collateral security from indemnification rights)
- Am. Motorists Ins. Co. v. United Furnace Co., 876 F.2d 293 (2d Cir. 1989) (reiterates irreparable injury concept in collateral context)