Motion granted to dismiss breach of indemnity agreement regarding charter school renovation

By Gabriel Neves | Feb 8, 2019

NEW ORLEANS -- An insurance company that first sued a steel company for breaching an indemnity agreement regarding the renovation of a New Orleans charter school, and was also being sued for breach of fiduciary duty, has obtained a victory in court.

U.S. District Judge Martin Feldman, on the bench of the U.S. District Court for the Eastern District of Louisiana, issued a 21-page ruling on Jan. 23, dismissing the counterclaims filed by Strategic Planning Associates LLC (SPA), Charlotte Burnell, and William Burnell against U.S. Specialty Insurance Co. (USSIC).

The court dismissed the counterclaim that the defendants failed to state a claim of the allegations of breach of fiduciary duty committed by USSIC.

USSIC first sued the Burnells and Strategic Planning Associates, claiming they violated a general indemnity agreement that involved the renovation of Sophie B. Wright High School. As stated in the ruling, "in 2013, the Louisiana Department of Education Recovery School District, as owner, entered into a contract with Core Construction Services, LLC, as general contractor, for the renovation of Sophie B. Wright High School. Core, in turn, entered into a subcontract with Strategic Planning Associates, LLC, a Disadvantaged Business Enterprise, for the fabrication and erection of steel for the project."

The subcontract required SPA to provide a bond to secure the work, as well as to ensure payment to subcontractors and suppliers, for which it turned to USSIC. The project fell behind, and several disputes arose between Core and SPA. Core terminated SPA from the project and triggered the bond, which was settled afterwards.

On Aug. 15, 2018, USSIC sued SPA and the Burnells for damages, followed by the counterclaim, alleging that USSIC committed breach of fiduciary duty and bad-faith breach. In his ruling, judge Feldman stated that "because USSIC owes no fiduciary duty to SPA or the Burnells, the defendants have failed to state a claim against USSIC for bad-faith breach of a fiduciary duty."

U.S. District Court for the Eastern District of Louisiana Case number 2:18-cv-07741-MLCF-JCW

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