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International Fidelity Insurance Co. v. Americaribe-Moriarty JV

United States Court of Appeals, Eleventh Circuit

October 26, 2018

INTERNATIONAL FIDELITY INSURANCE COMPANY, a foreign corporation, ALLEGHENY CASUALTY COMPANY, a foreign corporation, Plaintiffs-Appellees,
v.
AMERICARIBE-MORIARTY JV, a joint venture, Defendant-Appellant.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:15-cv-24183-MGC

          Before ROSENBAUM, HULL and JULIE CARNES, Circuit Judges.

          HULL, CIRCUIT JUDGE

         Americaribe-Moriarty JV ("Americaribe"), a general contractor, appeals the district court's award of $154, 536 in attorney's fees to International Fidelity Insurance Company and Allegheny Casualty Company (together, "Fidelity"), the surety on a performance bond issued for a construction subcontract between Americaribe and the subcontractor Certified Pool Mechanics 1, Inc. ("CPM"). In this lawsuit, Fidelity sought a declaratory judgment that Americaribe was not entitled to assert a claim against Fidelity's performance bond. Int'l Fidelity Ins. Co. v. Americaribe-Moriarty JV, 681 Fed.Appx. 771, 775-77 (11th Cir. 2017) (unpublished). In the first appeal, we affirmed the district court's grant of summary judgment to Fidelity, holding Fidelity had no liability under its performance bond. Id. Subsequently, the district court awarded attorney's fees to Fidelity against Americaribe.

         In this second appeal, Americaribe argues that Fidelity is not entitled to recover the attorney's fees it incurred in this litigation because neither the performance bond nor the subcontract provides for such an award of prevailing party attorney's fees. After careful review of the record, and with the benefit of oral argument, we agree and reverse the award of attorney's fees.

         I. FACTUAL BACKGROUND

         A. The Construction Subcontract

         Americaribe, as general contractor, and CPM, as subcontractor, entered into a written subcontract agreement for CPM to perform certain pool work at the construction project commonly known as the Brickell CityCentre Super Structure in Miami, Florida. Id. The subcontract included a termination provision, which provided that, if CPM defaulted on its work, Americaribe was required to give CPM three-days' notice before it could act to complete CPM's work:

12.2(a) Termination for Cause. If [CPM] at any time . . . fails to cure the default after the three (3) day notice in Article 11.2(a), [Americaribe] shall be at liberty to terminate this Subcontract Agreement upon an additional three (3) day written notice mailed or delivered to [CPM] and take possession of all materials on site and employ others to complete the Work. . . . If the expense incurred by [Americaribe] in finishing the Work plus damages suffered by [Americaribe] exceed the unpaid balance to be paid under this Subcontract Agreement then [CPM] shall pay the difference to [Americaribe].

         Notably, the subcontract did not include a separate general attorney's fees provision allowing for the award of attorney's fees to Americaribe or CPM when either party was required to take action to enforce the subcontract. However, the subcontract did contain the following general indemnity provision in Section 9.5:

Indemnification. To the fullest extent permitted by law, [CPM] shall indemnify and hold harmless [Americaribe], its officers, directors or employees and the Owner, from and against all claims, damage, los[s]es and expenses (including, but not limited to attorneys fees) arising out of, in connection with or resulting from the performance of Work under this Subcontract Agreement, including if caused in whole or in part by any act, omission, default or contract performance or non-performance by [Americaribe] or its officers, directors, agents or employees when any such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) including the loss of use resulting there from. Such indemnification shall not include claims of, or damages resulting from, gross negligence, or willful, wanton or intentional misconduct of [Americaribe] or its officers, directors, agents or employees. The parties mutually acknowledge that the amount of indemnity provided hereunder bears a reasonable commercial relationship to this Subcontract Agreement and is equal to the limits of aggregate insurance provided by [CPM] under this Subcontract Agreement or $1 million, whichever is greater, and that the requirements of §725.06, Fla. Stat. have been fulfilled and apply to this Article 9.5.

         B. The Performance Bond

         Fidelity, as the surety, issued a performance bond on behalf of subcontractor CPM, with Americaribe as the obligee. Id. at 772. Section 1 of the bond expressly incorporated the subcontract. Section 3 set forth three steps that Americaribe was required to take to trigger Fidelity's obligation under the bond:

§ 3 If there is no Owner Default under the Construction Contract, [Fidelity's] obligation under this Bond shall arise after
.1 [Americaribe] first provides notice to [CPM] and [Fidelity] that [Americaribe] is considering declaring a Contractor Default. Such notice shall indicate whether [Americaribe] is requesting a conference among [Americaribe], [CPM] and [Fidelity] to discuss [CPM's] performance . . .;
.2 [Americaribe] declares a Contractor Default, terminates the Construction Contract and notifies [Fidelity]; and
.3 [Americaribe] has agreed to pay the Balance of the Contract Price in accordance with the terms of the Construction Contract to [Fidelity] or to a contractor selected to perform the Construction Contract.

         Section 5 then provided Fidelity with four options for completing CPM's work if the subcontract was terminated:

§ 5 When [Americaribe] has satisfied the conditions of Section 3, [Fidelity] shall promptly and at [Fidelity's] expense take one of the following actions:
§ 5.1 Arrange for [CPM], with the consent of [Americaribe], to perform and complete the Construction Contract;
ยง 5.2 Undertake to perform and complete the Construction Contract itself, through its agents or ...

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