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M.E.S., Inc. v. Safeco Ins. Co. of Am., Liberty Mut. Ins. Co., S.A. Comunale Co. Inc.
Citation: 910 F.3d 705Docket: Docket No. 17-2997-cv; August Term 2018
Court: Court of Appeals for the Second Circuit; December 13, 2018; Federal Appellate Court
Plaintiffs-appellants M.E.S. Inc., M.C.E.S. Inc., and George Makhoul (collectively, "Plaintiffs") appeal the district court's August 25, 2017 judgment that dismissed all claims in their Second Amended Complaint against defendants-appellees Safeco Insurance Company of America and others (collectively, "Safeco"), Liberty Mutual Insurance Company, and S.A. Comunale Co. Inc. This case involves three construction projects managed by the U.S. Army Corps of Engineers from 2003 to 2006, where MES served as the general contractor for two projects and a joint venture for the third. At MES’s request, Safeco provided performance and payment bonds for the projects, with MES agreeing to indemnify Safeco for losses on two of them. The Joint Venture entered a similar indemnity agreement with Safeco for the third project. After the Corps issued Cure Notices in 2008 citing failures by MES and the Joint Venture, contracts were terminated for default, leading to bond demands on Safeco. Safeco incurred losses due to these demands and pursued separate actions against MES in court. The district court previously dismissed MES's claims regarding the third project for lack of standing, noting MES's failure to prove it was a third-party beneficiary of the relevant contract. Although the court had doubts about this dismissal, it ultimately concluded that MES's claims were meritless, as MES failed to substantiate allegations of Safeco’s breach of contract or bad faith after extensive litigation. The court found MES's claim regarding Safeco's attendance at cure meetings frivolous, given that the Corps required the bonding company's presence. The court affirmed the dismissal of the Second Amended Complaint, granted Safeco double costs sua sponte due to MES's numerous baseless arguments, and noted that while the Joint Venture was mentioned, it was not part of the judgment or appeal. There is an ongoing appeal related to Safeco's actions, and the legal status of the Joint Venture remains unclear. The original contract was signed in MES's name, but the indemnity agreement named the Joint Venture as the principal, signed by MES and its partners.