United States District Court, D. Hawaii
ORDER GRANTING IN PART MOTION FOR PARTIAL SUMMARY
DERRICK K. WATSON JUDGE.
Travelers Casualty and Surety Company of America
(“Travelers”) moves for summary judgment on two
of its claims on the basis that Defendants have breached a
contract between the parties and damages have ensued.
Travelers seeks both damages it has already suffered and
damages it anticipates suffering due to Defendants'
conduct. In no small part due to Defendants not responding to
Travelers' motion, the facts are undisputed, and those
facts show that the parties' contract has been breached,
and Travelers has suffered damages. However, because the
Court has questions regarding the damages Travelers
anticipates suffering, the motion for partial summary
judgment is GRANTED IN PART without prejudice pending
clarification of Travelers' anticipated damages.
initiated this action with the filing of a Complaint on March
18, 2019 against BCP Construction of Hawaii, Inc.
(“BCP”), Legacy One Development, LLC, Close
Family Trust, Robert N. Close, and Betty Close (collectively,
“Defendants”). Dkt. No. 1. In the Complaint,
Travelers asserts five claims for relief, two of which are
the subject of the pending motion for partial summary
judgment: Claim One - Breach of Contract - and Claim Five -
Specific Performance. Essentially, Travelers alleges a breach
of contract by Defendants and seeks, inter alia,
damages and specific performance of the contract.
April 12, 2019, Defendants appeared in this action by
answering the Complaint. Dkt. No. 15. On July 8, 2019, the
parties appeared before the assigned Magistrate Judge for a
settlement conference that did not result in a resolution.
Dkt. No. 44.
October 16, 2019, Travelers filed the instant motion for
partial summary judgment (“the motion”), along
with a concise statement of facts and accompanying exhibits.
Dkt. Nos. 48-49. The motion was scheduled for a hearing on
December 2, 2019, meaning that, pursuant to Local Rule 7.2,
an opposition was due three weeks before that date. No
opposition to the motion was (or has been) filed. On November
18, 2019, Travelers filed a brief reply, and the Court
subsequently vacated the December 2, 2019 hearing. Dkt. Nos.
a contractor licensed to conduct business in the State of
Hawai‘i. Concise Statement of Facts (“CSF”)
at ¶ 1, Dkt. No. 49. Robert Close and Betty Close, both
individually and as trustees of the Close Family Trust, and
BCP entered into a General Agreement of Indemnity
(“GAI”) with Travelers dated May 20, 2013.
Id. at ¶ 2. On December 12, 2014, Legacy One
Development, LLC was added as an indemnitor under the GAI.
Id. at ¶ 3. Pursuant to the GAI, Defendants
agreed to (1) indemnify Travelers against all
“Loss” and (2) deposit, upon demand, an amount
determined by Travelers to be sufficient to discharge any
“Loss” or anticipated “Loss.” GAI at
¶¶ 3, 5, Dkt. No. 48-4. The GAI defines
“Loss” as “[a]ll loss and expense of any
kind or nature, including attorneys' and other
professional fees, which [Travelers] incurs in connection
with any Bond or [the GAI]….” Id. at
execution of the GAI, BCP entered into a contract with the
State of Hawai‘i Department of Accounting and General
Services (“DAGS”) for BCP to upgrade the security
electronics at the Halawa Correctional Facility (“the
Halawa Project”). CSF at ¶¶ 6, 9. In
connection therewith, Travelers issued bonds for BCP's
work on the Halawa Project (“the Halawa Bonds”).
Decl. of Paul Harmon at ¶ 10, Dkt. No. 48-3; 12/15/15
Performance Bond, Dkt. No. 48-5 at 7; 12/15/15 Labor and
Material Payment Bond, Dkt. No. 48-5 at 9. Travelers also
issued numerous other bonds on behalf of BCP. Harmon Decl. at
notice to proceed on the Halawa Project was issued on
February 16, 2016. CSF at ¶ 8. Most of the work for the
Halawa Project was to be completed by two BCP subcontractors:
Sierra Detention Systems (“SDS”) with respect to
hardware supply and programming; and Hawaiya Technologies,
Inc. (“HTI”) as the electrician. Id. at
¶ 9. The Halawa Project was scheduled for completion on
September 7, 2017, but this date was subsequently extended to
August 31, 2018. Id. at ¶ 8. Construction was
complicated due to the Halawa Correctional Facility
(“HCF”) being fully occupied with inmates in four
cell modules at the time of the work. Id. at ¶
11. To accommodate construction activities, 248 inmates were
temporarily sent from HCF to a private prison in Arizona.
Id. at ¶ 12. Due to the high cost of re-housing
inmates, a penalty clause was included in the contract
between DAGS and BCP, charging BCP $16, 829.00 per day for
every day the Halawa Project was late. Id. at ¶
various points during the Halawa Project, SDS went out of
business, and HTI was terminated after installing defective
electrical work. Id. at ¶ 14. As a result of
these and other issues, the Halawa Project was delayed by
over two years, with DAGS alleging that it had incurred over
$7.2 million in delay damages. Id. at ¶ 16.
approximately February 15, 2019, Travelers received a payment
bond claim from one of BCP's subcontractors, CML RW
Security, LLC (“CML”), which had been hired to
complete SDS' remaining work. Id. at ¶ 17.
Travelers paid CML's claim in the amount of $315, 353.89,
after being informed by BCP that, although the claim was
valid, BCP did not have the money to pay it. Id. at
¶ 19. BCP subsequently failed to pay other
subcontractors and suppliers, resulting in additional claims
being made against the bonds Travelers had issued.
Id. at ¶ 20. After conducting its own
investigations, Travelers paid the claims it determined were
valid, but has not been reimbursed by Defendants under the
GAI. Id. at ¶ 21.
February 14, 2019, Travelers made a formal written demand to
Defendants to deposit cash or other property in the amount of
$7.6 million to indemnify Travelers from the losses
potentially resulting from the claims made against the Halawa
Bonds. Id. ...