Opinion
CIVIL ACTION NO. 03-1023 SECTION "L" (2)
January 5, 2004
ORDER REASONS
Before the Court are the Plaintiffs Motion for Summary Judgment and the Defendant's counterclaim to recover attorney's fees and costs associated with defending against the suit. For the following reasons, the Plaintiffs Motion for Summary Judgment is hereby GRANTED, and the defendant's counterclaim is hereby DISMISSED.
The Court observes that the Defendant in this matter is proceeding pro se.
I. FACTUAL AND PROCEDURAL BACKGROUND
United States Fidelity Guaranty Company (hereinafter "USFG") is a surety company that issues payment and performance bonds and stands as surety for selected contractors. Active Construction Company, Inc. (hereinafter "Active"), as its name suggests, is a construction company. Active sought out bonds from USFG, and USFG agreed to stand as surety and to issue payment and performance bonds for several of Active's construction contracts.
On December 16, 1998, Active entered into a General Agreement of Indemnity (hereinafter the "Agreement") with USFG. Under the Agreement, the signing parties or undersigned agreed to indemnify USFG and hold it harmless from and against all liability, losses, costs, damages, attorneys' fees, disbursements and expenses of every nature which USFG may sustain or incur relating to the issuance of the bonds and in prosecuting or defending any action in connection with the bonds.
Pursuant to the Agreement, USFG issued seven payment or performance bonds related to various construction projects. Active failed to complete work on and/or failed to pay the claims of its subcontractors and/or suppliers on these projects. Accordingly, USFG paid claims on these projects in an amount allegedly totaling $488,497.45. See Plaintiffs Memo, in Sup. of Mtn. for Sum. Jgmnt. (Rec. Doc. No. 8). This amount includes losses, expenses, costs, and attorneys' fees in connection with USFG's investigation and settlement of the claims under the bonds. See id.
On April 10, 2003, USFG filed suit against the Defendant, seeking to enforce the terms of the Agreement and to recover the amounts paid out under the bonds and the attorneys' fees incurred in attempting to enforce the agreement. Plaintiff claims that Defendant is obligated under the Agreement to indemnify USFG and that Defendant has failed to perform her obligations under the Agreement. Defendant admits signing the agreement, but claims that she signed it only as a witness, attesting to the signature of Stanley E. Diggs, and not as — an obligor. Defendant is the wife of Stanley E. Diggs.
A. THE AGREEMENT
Paragraph one of the Agreement states that "[t]his Agreement binds each UNDERSIGNED to SURETY with respect to all BONDS executed or procured for any UNDERSIGNED executing this Agreement[.]" See Memo, in Sup. of Mtn. for Sum. Jgmnt., Tab 1 (Rec. Doc. No. 8). Thus, if one undersigned fails to perform under the Agreement, each undersigned is liable in toto.
The Agreement includes a section for the undersigned to affix their signatures. Id. pgs. 4-7. This section includes spaces for corporate undersigned as well as individuals signing in their personal capacity. Above the spaces provided for signatures on the Agreement are instructions. The instructions provide that a corporate undersigned should include the signature of the officer acting on behalf of the corporation, as well as the signature of the corporate secretary or other corporate officer attesting to the signature of the officer signing on behalf of the corporation. Accordingly, the section in the Agreement for a corporate undersigned designates an area entitled "UNDERSIGNED," under which the undersigned provides the requisite information, and "ATTEST," under which the corporate secretary or other corporate officer affixes his/her signature.
The instructions further provide that the address, and tax identification or social number of each undersigned should be entered into the spaces provided on the form. The section for individuals signing in their personal capacity does not include headings indicating "UNDERSIGNED" and "ATTEST." Rather, this section simply provides spaces for the signature, name, address, and tax identification or social security number of the individual.
The instructions also provide that each signature, whether executed by a corporate undersigned or an individual, should be properly acknowledged by a Notary Public in separate spaces provided for corporate, individual, or partnership acknowledgments. Thus, the Agreement includes a page with separate headings for "Corporate Acknowledgment," "Individual Acknowledgment," and "Partnership Acknowledgment."
In this case, there is no dispute that Stanley E. Diggs signed on behalf of Active and also in his personal capacity. The dispute concerns the proper classification of the Defendant's signature.
The Defendant, along with Active and Stanley E. Diggs, is listed as an "undersigned" on page one of the Agreement. Thereafter, the signature pages of the Agreement contain the signature of Stanley E. Diggs, both on behalf of the corporation and in his personal capacity, and the signature of the Defendant in her personal capacity. See Plaintiffs Memo, in Sup. of Mtn. for Sum. Jgmnt, Tab 1I," pgs. 4-5. (Rec. Doc. No. 8).
Plaintiff claims that the Agreement is unambiguous and obligates the Defendant to indemnify the Plaintiff. Defendant claims that she was merely attesting to the signature of Stanley E. Diggs and did not sign in her personal capacity.
II. LAW AND ANALYSIS
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To oppose a motion for summary judgment, the non — movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586(1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is. when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
In this case, the Defendant does not dispute that USFG issued the seven bonds pursuant to the Agreement, that the "undersigned" are liable for all of USFG's costs and damages under the Agreement, or that USFG properly paid Active's debts under the bonds when Active failed to complete the contracts. Rather, the Defendant argues that she was not a party to the Agreement, but signed the contract as a witness. As such, she argues that she is not responsible for USFG's damages under the surety bonds.
Under Louisiana law, courts interpret contracts according to the intent of the parties, and, when a contract is clear and explicit, a court is bound to find that the language of the contract expresses the intent of the parties. La. Civ. Code arts. 2045 2046. A plain reading of the Indemnity Agreement in this case clearly supports the Plaintiffs contention that the Defendant was a party to the contract. The Defendant is listed as an "undersigned" on the contract's first page, the contract on the same page binds all "undersigned" parties to liability under the bonds, and the Defendant signed the agreement, which was duly notarized. While the signature pages contain spaces for witnesses' signatures under the heading "Attest[,]" this section pertains to corporate undersigned, not individuals. Further, the Defendant's signature does not appear under an "Attest" heading. Furthermore and importantly, the Defendant did not simply sign her name as a witness, but she provided her address and social security number as the instructions explain are required of all undersigned/obligors. Accordingly, the Court finds that the contract is unambiguous. As such, under Louisiana law, no further interpretation may be made in search of the parties' intent unless the matter falls within an exception to the general rule. La. Civ. Code art. 2046,
One exception to this general proposition of contract interpretation allows the Court to look beyond the four coiners of the document to ascertain the parties' intent when an otherwise valid contract suffers from a vice of consent. See La. Civ. Code arts. 1948 3079. That is, a party may avoid liability under a contract if that party's consent was obtained through error, fraud, or duress. La. Civ. Code art. 1948. The Defendant does not allege fraud or duress in this case, but seems to argue that she did not know that she was signing in her personal capacity or that she did not intend to so sign. Her argument suggests that error, her mistaken belief that she was only a witness, may have led her to sign the agreement.
A plain reading of the contract contradicts this position; as stated earlier, the Agreement is unambiguous and clear. If the Defendant failed to read the contract before she signed it, the failure to read the contract is negligence, not error, and cannot provide grounds to rescind a contract. See Watson v. Planters' Bank, 22 La. Ann. 14 (La. 1870); Cottonport Bank v. Reason. 801 So.2d 1236, 1238 (La.App. 3 Cir. 2001); Guaranty Bank Trust Co. v. Jones, 489 So.2d 368, 371 (La.App. 5 Cir. 1986); McTee Co. v. Brown Funeral Home. 183 So. 558, 558-59 (La.App. 1 Cir. 1938). See also Scott v. Bank of Coushatta, 512 So.2d 356, 362 (La. 1987) ("Solemn agreements between contracting parties should not be upset when the error at issue is unilateral, easily detectable, and could have been rectified with a minimal amount of care"); Hartford Accident Indemnity Co. v. Louisiana Minority, Inc., 522 So.2d 1154, 1156 (La.App. 4 Cir. 1988) (finding signer of agreement personally liable when no language in the contract limited his liability as a board member).
Even if a third — party had misrepresented the purpose and consequences of signing the Agreement, misrepresentation does not vitiate consent when the Defendant could have ascertained the truth without difficulty, inconvenience, or special skill. Hartford Accident and Indem. Co., 522 So.2d at 1156. In this case, the Defendant could have easily ascertained the purpose and consequences of signing the Agreement had she simply read the document. Accordingly, the Court finds that the Defendant, by signing the Agreement, obligated herself to indemnify the Plaintiff.
A contract has the effect of law between the parties. Louisiana Nat'l Leasing Corp. v. Family Pools, Inc., 345 So.2d 480, 482 (La. 1977). In a breach of contract action in Louisiana, specific performance is the preferred remedy. La. Civ. Code art. 1986: J. Weingarten, Inc. v. Northgate Mall, Inc., 404 So.2d 896, 900-01 (La. 1981). The Plaintiff asks for specific performance in this case, namely, that the Defendant indemnify the Plaintiff for its losses, totaling 5488,497.45, under the bonds, and $4,037.39 in attorney's fees. The Agreement provides that the undersigned will indemnify the surety and hold it harmless from and against all "liability, losses, costs, damages, attorneys' fees, disbursements and expenses of every nature" incurred by paying claims on the bonds or by bringing an action to enforce the Agreement. Accordingly, the Plaintiff is entitled to recover the total amounts paid pursuant to the Agreement and the reasonable attorneys' fees incurred in bringing this action.
III. DEFENDANT'S COUNTERCLAIM
In her answer to Plaintiffs complaint, the Defendant requests that the Court:
[F]ind in her favor, and against Plaintiff/Defendant in Reconvention, United States Fidelity Guaranty Company, dismissing this action at Plaintiff/Defendant in Reconvention's costs, and awarding Plaintiff in reconvention attorneys' fees, costs, and expenses in equal measure to the requests made by Plaintiff/Defendant in Reconvention in the complaint.
As the Court has granted the Plaintiffs Motion for Summary' Judgment, it follows that the Defendant's counterclaim should be and is hereby DISMISSED.
IV. CONCLUSION
For the foregoing reasons, Plaintiffs Motion for Summary Judgment is GRANTED, and Defendant's counterclaim is DISMISSED.
New Orleans, Louisiana