The defendants in a breach of contract case had their application for preliminary injunction granted, in part, in U.S. District Court on April 19.
Travelers Casualty & Surety Co. of America must file a memorandum, to address the amount of anticipated loss, by Wednesday. Fucich Contracting Inc.’s (FCI), Clayton Fucich's and Kathleen Fucich's motion for preliminary injunction was denied, as well as the indemnitor’s motion to expedite the hearing.
The motion was filed on behalf of Travelers by FCI and the order was signed by U.S. District Judge Barry W. Ashe.
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In December 2016, FCI entered a contract with St. Bernard Parish to be the contractor for the Lake Borgne Basin Levee District Pump Station, a public works project. The main goal of the project was replacing the engine and gears in the water drainage pumps. FCI provided a payment and performance bond. Travelers also required FCI to sign a general agreement that gave Travelers the right to require that FCI provide collateral security for any loss or anticipated loss.
In October 2017, FCI alleged "its crew discovered a design defect in the engines supplied for the Project that made them incompatible with the gears,” according to court filings. “When the Parish refused to pay FCI, FCI filed suit against the Parish and the Parish’s engineer, seeking to recover unpaid contract balances owed to FCI for work performed on the Project and other damages.”
Parish terminated FCI’s contract. FCI denied any fault on the design defect. Travelers agreed.
“As a result, the Parish filed suit against Travelers on Sept. 5, 2018, for the penal sum of the Bond, $5,009,908.00,” according to court filings. Settlement negotiations went on for months, but neither party could come to a resolution.
Travelers claimed that the indemnitors would be bankrupt if they paid the money demanded by parish to complete the project.
“FCI submitted a financial statement showing its positive net worth of about $859,000 as of Nov. 16, 2018, and a personal financial statement of Clayton Fucich showing a net worth of approximately $3 million as of Feb. 8, 2018,” according to court filings. “Clayton Fucich testified that he would be unable to meet his other financial obligations if he were forced to comply with the collateral demand.”
The indemnitors argued that forcing them to deposit collateral with Travelers would be a disservice to the public. They have an interest in seeing justice served.
Ultimately, the court concluded that the indemnity agreement and bond made sure that the principal purpose of the public works project was for the public’s benefit.
“Thus, the public interest would not be disserved in granting Travelers’ injunction; in fact, the public stands to benefit,” the court ruled.