Court Grants Surety Summary Judgment on Issue of Indemnification Where Defendant Provided “Not a Shred of Evidence” to Contravene Surety’s Showing of Good Faith

Great American Ins. Co. v. Gen. Contractors & Constr. Management, Inc., 2008 WL 2245986 (S.D. Fla. May 29, 2008)

In this case, a surety company sought indemnification from a contractor under a payment bond.  The surety had paid claimants under the bond and argued that it was contractually entitled to reimbursement.  The contractor argued that the surety failed to bear its alleged initial burden of proving that the surety paid the claims in good faith.  The Court held that the surety’s initial burden was satisfied by evidence that the surety had indeed paid claims under the bond.  Thereafter, it was then the contractor’s burden to provide contradictory evidence or evidence that the surety paid the claims in “bad faith.”

It is well settled in Florida that a surety’s bad faith is the only defense to a surety’s indemnity claim.  Therefore, Florida courts will uphold a surety’s contractual right to indemnification so long as the surety acted on a good faith belief that it was required to act or pay, regardless of whether any liability existed.  To establish a surety’s bad faith, the contractor must demonstrate that the surety acted “with deliberate malfeasance”—meaning that that surety intentionally and wrongfully acted without legal right.  A lack of due diligence or negligence is not the equivalent of bad faith and even “gross negligence” is not the same as bad faith.