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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

UNITED STATES FOR THE USE OF BAC FUNDING CONSORTIUM, INC. v. WESTCHESTER FIRE INSURANCE COMPANY et al

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:13-cv-22536 Search Pacer
ACE Group party(s): 
Opposing Party: 
United States for the use of BAC Funding Consortium, Inc.
Court Type: 
Federal
US District Court: 
Southern District of Florida
Date Filed: 
Jul 16 2013

"COUNT I
(Miller Act Claim against Leno and WFIC under Payment Bond)

32. BAC realleges and incorporates by reference paragraphs 1 through 5 and 10 through 31, as though fully alleged herein.

33. This is an action under the Miller Act, 40 U.S.C. Section 3131, et seq., for sums due and owing under the payment bond issued by Leno and WFIC on the Project.

34. Leno and WFIC issued the payment and performance bonds on the Project, as required by the Construction Contract and the Miller Act. The Project payment bond issued by WFIC, as surety and Leno, as principal, is attached as Exhibit “D” (the “Payment Bond”).

35. Pursuant to the Payment Bond, Leno and WFIC are obligated to pay all claims for subcontractors, suppliers, labors and others performing work on the Project.

36. BAC paid subcontractors, suppliers and laborers for work on the Project. Thus, BAC is equitably subrogated to these payees’ Miller Act bond claims against Leno and WFIC under the Payment Bond including their claim for attorney's fees pursuant to the payees' contracts with Leno.

37. BAC served notice of its Payment Bond claims to Leno by letter dated July 3, 2013, a copy of which is attached hereto as Exhibit “E.”

38. BAC hired the undersigned firm to represent it in this matter and agreed to pay its counsel for such services. BAC is entitled to recover such fees and costs from WFIC pursuant to the Miller Act.
WHEREFORE, Plaintiff BAC Funding Consortium, Inc. demands judgment against Defendants Leno Dredging & Hauling, Inc., and Westchester Fire Insurance Company for damages plus attorney's fees, costs, and pre-judgment interest and such other and further relief as to the Court appears just and proper.

COUNT II
(Promissory Estoppel against Ace)

39. BAC realleges paragraphs 1 through 5 and 10 through 31, as though fully alleged herein.

40. To induce BAC to fund Project subcontractors and suppliers, Ace had committed to and represented that it would honor Leno’s disbursement instructions to reimburse payments for Project work made by BAC. BAC had relied on Ace’s representation in initially funding the Project work, and then exceeding its original $150,000 funding commitment. BAC changed position in reliance on Ace’s commitment and representation by paying the Project subcontractors and suppliers so that the Project work could proceed.

41. Ace is estopped from refusing to reimburse BAC for the payments made to the Project subcontractors and suppliers and all sums funded under the Disbursement Agreement, as directed by Leno in its Disbursement Requests, as BAC changed position in reliance on Ace’s assurances and representations.
WHEREFORE, Plaintiff BAC Funding Consortium, Inc. demands judgment against Defendant ACE American Insurance Company for damages in excess of $75,000.00, plus costs, and pre-judgment interest and such other and further relief as to the Court appears just and proper.

COUNT III
(Unjust Enrichment against Ace)

42. BAC realleges paragraphs 1 through 5 and 10 through 31, as though fully alleged herein.

43. Having issued the Project payment and performance bonds on the Project on May 10, 2012, Ace’s affiliate, WFIC had undertaken to insure the risk associated with Leno’s inability to perform the Project. When Owner issued the notice to proceed in June, 2012, Leno lacked the operating capital to undertake the work. Thus, Ace recognized that without any funding, Leno would default, and its affiliate, WFIC, would be called upon to undertake the completion of the Project under the performance bond issued by WFIC. Ace also recognized that unpaid Project subcontractors, suppliers and laborers that remained unpaid by an undercapitalized Leno would look to its affiliate for payment pursuant to the Project payment bond.

44. In inducing BAC to fund mobilization costs and pay Project subcontractors, Ace accrued a double benefit: Ace averted a default under the Construction Contract, thus preventing a performance bond claim, and Ace reduced its affiliate’s exposure to payment bond claims; each Project subcontractor or supplier paid by BAC was one less claimant that its affiliate would have to pay. Ace encouraged BAC to fund Leno’s performance to reduce its own affiliate’s exposure to bond claims.

45. BAC, however, only paid for Project work based on Ace’s commitment to turn over to BAC Owner’s payment for such work. After inducing BAC to pay for Leno’s work, Ace then withheld the Owner’s payments for the work that BAC had funded.

46. Ace has been unjustly enriched by having induced BAC to pay the expense of avoiding a performance bond default and paying down the payment bond claims of its affiliate and then withholding the Project funds intended to reimburse BAC for these expenditures that reduced Ace’s affiliate’s bond exposure.

WHEREFORE, Plaintiff BAC Funding Consortium, Inc. demands judgment against Defendant ACE American Insurance Company for damages in excess of $75,000.00, plus costs, and pre-judgment interest and such other and further relief as to the Court appears just and proper.

COUNT IV
(Tortious Interference against Ace)

47. BAC realleges paragraphs 2 through 5 and 10 through 31, as though fully alleged herein.

48. Ace had knowledge of the Disbursement Agreement between BAC and Leno that BAC had the first right to reimbursement of the funds BAC advanced to perform Project work from the payments made by Owner for Project work.

49. Ace, without justification or privilege, interfered with BAC's right to receive payment from periodic Project payments made by Owner for Project work. Ace refused to disburse Project funds to BAC; however, such directions were without justification or privilege because neither Ace nor the Project surety paid any payment bond claims on the Project.

50. Ace, without justification or privilege, interfered with BAC's rights under the Disbursement Agreement by refusing to make disbursements as directed by Leno in Disbursement Requests. Solely as a result of Ace's interference, BAC was unable to obtain payment of Project funds as directed by Leno.

51. As a result of Ace's tortious interference in BAC's contractual relationship with Leno, BAC was unable to obtain payment required under the Disbursement Agreement.
The damages BAC incurred by virtue of this tortious interference include, but are not limited to, the $569,295.40 BAC would have received as reimbursements for BAC’s payments to Project subcontractors and suppliers.
WHEREFORE, Plaintiff BAC Funding Consortium, Inc. demands judgment against Defendant ACE American Insurance Company for damages in excess of $75,000.00 plus costs, and pre-judgment interest and such other and further relief as to the Court appears just and proper.

COUNT V
(Breach of Disbursement Agreement against Leno)

52. BAC realleges paragraphs 1, 2, 5, 10 through 17, 30 and 31, as though fully alleged herein.

53. BAC owns and holds the Disbursement Agreement, as well as all claims and rights arising thereunder.

54. By letter dated June 11, 2013, a copy of which is attached as Exhibit “C,” BAC made demand on Leno for repayment of the full balance funded under the Disbursement Agreement. Leno owes BAC the total sum of $569,295.40 as of June 11, 2013, as principal, plus interest and late fees as specified in the Disbursement Agreement, in addition to default interest accruing at the rate of 18% per year from that date.

55. BAC does again herein declare to be due and payable the full amount of indebtedness outstanding under the Disbursement Agreement.

56. The Disbursement Agreement expressly provides that Leno shall be liable for all attorneys fees and costs incurred by BAC in filing suit to recover upon Leno’s default thereunder.
WHEREFORE, Plaintiff BAC Funding Consortium, Inc. respectfully requests the Court to enter judgment against Defendant Leno Dredging & Hauling, Inc. for damages in the amount of the outstanding principal, interest, and late fees owed under the Disbursement Agreement, plus attorney’s fees and costs and to grant such additional relief as to the Court appears just and proper.

COUNT VI
(Action to Foreclose Interest in Leno’s Assets and Accounts)

57. BAC realleges paragraphs 2, 5, 10 through 17, 30 and 31, as though fully alleged herein.

58. This is an action to foreclose a security interest in accounts receivable and other assets, over which this Court has subject matter jurisdiction.

59. Pursuant to the Disbursement Agreement, Leno granted BAC a security interest in all of its collateral, including its “assets,” defined to include all tangible and intangible property such as accounts, inventory, equipment and instruments and its “accounts,” including all accounts chattel paper, instruments, contract rights, general intangibles and chooses in action.

60. Upon information and belief, Leno is currently in possession of collateral that is subject to BAC’s security interest arising under the Disbursement Agreement.

61. BAC perfected its security interest in Leno’s assets and accounts by filing a UCC financing statement in the Official Records of Miami-Dade County, Florida at Official Records Book 27389, Page 3072 on August 17, 2010, a copy of which is attached hereto as Exhibit “F,” and in the records of the Florida Secretary of State in Tallahassee, Florida on August 17, 2010 at Record #201003056413, a copy of which is attached hereto as Exhibit “G.”

62. The Disbursement Agreement is in default, with the entire principal balance and interest accruing thereon unpaid.

63. BAC has declared and does herein again declare the full amount owing under the Disbursement Agreement to be due and payable. Pursuant to the Security Agreement incorporated therein, BAC is entitled to foreclose upon Leno’s collateral, including all assets and accounts as defined in the Disbursement Agreement.

WHEREFORE, Plaintiff BAC Funding Consortium, Inc. respectfully requests the Court to enter judgment against Defendant Leno Dredging & Hauling, Inc. foreclosing BAC’s security interest in all of its assets, with the proceeds to be applied to the outstanding principal, interest, late fees and attorney’s fees and costs owed to BAC under the Disbursement Agreement, and to grant such additional relief as to the Court appears just and proper.

COUNT VII
(Action against Lenos to Enforce Guaranties)

64. BAC realleges paragraphs 1, 5 through 17, 30 and 31, as though fully alleged herein.

65. On or about July 20, 2012, Defendants James A. Leno, Calvin Leno, Linell Leno and Carolyn Leno (collectively, the "Guarantors") endorsed and delivered to BAC absolute and unconditional guaranties to repay amounts due and owing under the Disbursement Agreement. These guaranties are incorporated in the Disbursement Agreement attached hereto as Exhibit “B.”

66. Despite BAC’s demand for payment, the Guarantors have each defaulted on their guaranties by failing to pay sums due to BAC under the Disbursement Agreement.

67. Pursuant to the guaranties incorporated into the Disbursement Agreement, Guarantors each, jointly and severally, owe BAC the sum of $569,295.40, plus interest, and default interest accruing after June 11, 2013.

68. Pursuant to the guaranties and other provisions of the Disbursement Agreement, Guarantors are obligated to pay BAC’s attorneys’ fees and costs incurred in collecting the obligation due under the Disbursement Agreement.
WHEREFORE, Plaintiff BAC Funding Consortium, Inc. respectfully requests the Court to enter judgment, jointly and severally, against Defendants James A. Leno, Calvin Leno, Linell Leno and Carolyn Leno for damages in the amount of the outstanding principal balance, interest, and late fees owed under the Disbursement Agreement, plus attorneys’ fees and costs, and to grant such additional relief as to the Court appears just and proper."

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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