Case 1:08-cv-10726-FM Document 1

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK WESTCHESTER FIRE INSURANCE COMPANY, Plaintiff,
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x
Case No.: COMPLAINT

against

JERRY MOYES, Defendant.

Plaintiff Westchester Fire Insurance

respectfully alleges the following: JURISDICTION AND VENUE 1. The Court has jurisdiction over this action based upon the diversity of

citizenship pursuant to 28 U.S.C. 2. $75,000. 3.

1332.

The amount in controversy, exclusive of interest and costs, exceeds

Venue is proper in the Southern District of New York pursuant to the forum

selection clause in the Agreement of Indemnity between Westchester Fire Insurance Company and the Defendant referred to below. THE PARTIES 4. Westchester Fire Insurance Company (hereinafter referred to as

Westchester Fire or Surety) was, at all times, a corporation organized and existing under and by virtue of the laws of the State of New York, and duly authorized to transact surety business in the State of New York.

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5.

Upon information and belief, defendant Jerry Moyes is a citizen of the

th 65

State of Arizona residing at 13327 North 6.

Drive, Glendale, AZ 85304.

On December 15, 2005, the Defendant, in partial consideration of and as

an inducement to Westchester Fire to execute bonds as surety for Palm Beach Resort Condominiums, LLC, (hereinafter referred to as Palm Beach) as principal, executed an Agreement of Indemnity that provides in part as follows: PREMIUMS & COLLATERAL FOR SURETYSHIP-The INDEMNITORS shall pay or cause to be paid to the SURETY both the agreed premium and, upon written request by the SURETY at any time, collateral security for its suretyship until the INDEMNITOR shall furnish to the SURETY competent written evidence, satisfactory to the SURETY, of the termination of any past, present and future liability under any Bond. The INDEMNITOR expressly waives any right to interest which may be earned on the collateral security and further consents that the collateral security provided in consideration of the suretyship may be held by the SURETY in any investment or depository that the SURETY in its sole discretion deems advisable and prudent. The Suretys election not to demand collateral at the inception of the suretyship obligation shall not operate as a waiver of the right to demand and receive such collateral at any time before liability has terminated under any Bond. 2. INDEMNITY & COLLATERAL FOR CLAIM- The INDEMNITOR shall indemnify and save harmless the SURETY from and against any and all liability, claim, demand, loss, damages, expense, cost, attorneys fees and expenses, including without limitation, fees and disbursements of counsel incurred by the SURETY in any action or proceeding between the INDEMNITOR and the SURETY, or between the SURETY and any third party, which SURETY shall at any time incur by reason of its execution of any Bond or its payment of or its liability to pay any claim, irrespective of whether the claim is made against the SURETY as a joint or several obligor and whether the INDEMNITOR is then liable to make such payment, and to place the SURETY in funds to meet all of its liability under any Bond, promptly upon request and before the SURETY may be required to make any payment thereunder; and copy of the claim, demand, voucher or other evidence of the payment by the SURETY of any liability, claim, demand, loss, damage, expense, cost and attorneys fees, shall

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be prima facie evidence of the fact and amount of INDEMNITORS liability to the SURETY under this Agreement. Any demand upon the SURETY by the Obligee shall be sufficient to conclude that a liability exists and the INDEMNITOR shall then place the SURETY with sufficient funds in a form and amount deemed acceptable in the SURETYS sole discretion, as collateral security to cover the liability. A copy of the Agreement of Indemnity is annexed hereto as Exhibit A. 7. Following execution of the Agreement of Indemnity by Defendant,

Westchester executed release of mechanics lien bonds as surety for Palm Beach in the aggregate amount of $6,382,389 to secure claims by subcontractors who had filed mechanics liens against a condominium apartment building in Las Vegas owned by that Palm Beach. AS AND FOR A FIRST CAUSE OF ACTION AGAINST THE DEFENDANT FOR DEPOSIT OF COLLATERAL 8. Plaintiff Westchester Fire repeats and realleges the allegations contained

in paragraphs 1 through 7 hereof. 9. Subsequently PGAL, LLC and Hardy Companies, Inc. commenced actions

in Clark County District Court in the State of Nevada against, among others, Palm Beach and Westchester Fire to foreclose on bonds Westchester Fire had executed as surety for Palm Beach. 10. By letter dated November 14, 2008, Westchester Fire further demanded

that the Defendant provide collateral in the amount of $6,382,389 pursuant to the terms of the Agreement of Indemnity.

II.

Despite said demand, the Defendant has failed provide Westchester Fire

with collateral.

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12.

Under the Agreement of Indemnity, Defendant is obligated to immediately

provide Westchester with the collateral it has demanded pursuant to the Agreement of Indemnity. 13. By reason of the foregoing, Plaintiff demands that Defendant pay collateral

and deposit the sum of $6,382,389 plus any future loss, costs, fees or expenses incurred plus interest and attorneys fees with Plaintiff. AS AND FOR A SECOND CAUSE OF ACTION AGAINST THE DEFENDANT FOR DECLARATORY JUDGMENT OF INDEMNIFICATION 14. Plaintiff Westchester Fire repeats and realleges the allegations set forth in

paragraphs 1 through 13 hereof. 15. Westchester may be required to pay the obligees under the bonds it has

executed as surety for Palm Beach and to defend the actions brought by those obligees. 16. Under the Agreement of Indemnity Defendant is obligated to indemnify

Westchester for all losses, expenses or other payments it may be required to incur or make by reason of having executed the bonds. 17. Westchester Fire is entitled to a declaratory judgment that Defendant has

the foregoing obligations. AS AND FOR A THIRD CAUSE OF ACTION AGAINST THE DEFENDANT FOR A PRELIMINARY INJUNCTION 18. Plaintiff Westchester Fire repeats and realleges the allegations set forth in

paragraphs 1 through 17 hereof. 19. The Agreement of Indemnity requires the Defendant to post collateral with

the Plaintiff promptly upon the request of the Plaintiff.

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20.

Westchester Fires right to collateral from Defendant was specifically

bargained for and agreed to by Defendant. 21. Westchester Fire has no adequate remedy at law and will be irreparably

harmed if the Defendant fails to pay collateral in the sum of $6,382,389 to Plaintiff. 22. action. 23. The issuance of a preliminary injunction will not create an undue hardship Westchester Fire has a strong likelihood of success on the merits in this

for the Defendant as the preliminary injunction will require the Defendant only to do what Defendant contracted to do in the Agreement of Indemnity. 24. Westchester Fire will suffer undue hardship if a preliminary injunction is

not granted as Westchester Fire would then be required to use its own funds to defend and pay any claims despite the promise of the Defendant to post collateral upon the request of Plaintiff. 25. For the aforementioned reasons, Westchester Fire respectfully requests

that the Court issue a preliminary injunction requiring (1) Defendant to immediately post collateral in the sum of $6,382,389 and (2) until the collateral is posted, enjoining and restraining Defendant from selling, transferring, disposing or encumbering Defendants assets and property and granting Westchester Fire a lien upon all the assets and property owned by the Defendant and in which the Defendant has an interest.

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AS AND FOR A FOURTH CAUSE OF ACTION AGAINST THE DEFENDANT FOR COSTS, EXPENSES AND ATTORNEYS FEES 26. Plaintiff Westchester Fire repeats and realleges the allegations set forth in

paragraphs 1 through 26 hereof. 27. The Agreement of Indemnity requires that Defendant indemnify

Westchester Fire for all losses and/or expenses of whatsoever kind or nature, including interest, court costs and attorneys fees that Westchester may incur by reason of having executed the bonds. 28. Defendant is obligated to pay Westchester Fire the attorneys fees and

expenses it has incurred in connection with this action. WHEREFORE, Plaintiff Westchester Fire Insurance Company respectfully requests judgment as follows: a. On the First Cause of Action against Defendant Jerry Moyes for the

deposit of the sum of $6,382,389.00 plus any future loss, costs, fees or expenses incurred plus interest and attorneys fees; b. On the Second Cause of Action a declaration that Defendant is

required to indemnify plaintiff for all losses, expenses or other payments that it may incur or be required to make by reason of having executed the bonds; c. On the Third Cause of Action issuing a preliminary injunction

requiring (1) Defendant to immediately post collateral in the sum of $6,382,389 and (2) until the collateral is posted, enjoining and restraining Defendant from selling, transferring, disposing or encumbering Defendants assets and property and granting Westchester Fire a lien upon all the assets and property owned by the Defendant and in which the Defendant has an interest;

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d.

On the Fourth Cause of Action against Defendant Jerry Moyes for

costs, expenses and attorneys fees; e. proper. Dated:New York, New York December 9, 2008 And for such other further relief as this Court deems just and

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Richard B. Demas, Esq. (RI Gottesman, Wolgel, Malamy, Flynn & Weinberg, P.C. Attorneys for Plaintiff Westchester Fire Insurance Co. th 11 Hanover Square, 4 Floor New York, New York 10005 (212) 495-0100

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Mixed Sources Case 1:08-cv-10726-FM Document 1 Filed 12/10/08 Page 8 of 11 Cert no. SW-COC-002980 wwwfscorg 1996 Forest Stewardship Council

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Agreement of Indemasty

ACEUSA ACE Bond Services

J J I i

Insurance Company of North America

Pacific Employers Insurance Company Wcctchester Fire Insurance Company indemnity Insurance Company of North America

Wherest the undersigned (lwwinaftcr individually and collectively called INDIIMNITOR) desirer one or more of the companies named above, us the ease may Ire, (hereinafter celled SURItTY) to execute bonds including urrrlrxtskings and other obligations. including any Sound or bondt predating thia Agreement, (hereinafter referred to as Bonds) on its behalf and on behalf of any of itt present or future, directly ste indirectly owned or ectoanlted subsidiaries or afttliates, whether alone or itt joint venture with others whether or not named herein, and any corporation, partnership or pamon upon the written request of any of the undersigned (collectively hereinafter referred let as Principals) or to renew or continue and to refrain from canceling the Bonds, us the case may be, and NOW TI4EPJItrURE, in consideration of the SuRETY executing the Bonds, the I14flEMNITORS agree that PREMIUMS & COLLATERAL FOR SURETYSHIP-The INDEMNITORS shall pay or cause to be paid to the SURETY both the agreed pretniuno and, upon written request by the SURETY at any time, collateral security fur itt turetyship until the INDEMNrIOR shall furnish to the SURETY competent written evidence, tauiofuctoty to the SURETY, of the termination of any past, present and future liability under any Bond, The INf)EMNITOR ospressly waives any right to interest which may toe earned on the collateral aecurity am) further consenlo that the collateral security provided in Consideration of suretyship tnaybc held lay the sUttEfy in any investment or depository that the SURETY in its sole rliecretioo deems advisable and prudent. The Suretys election not to demand collateral at the inception of the oaretyslsip obligation ohalt not operale as a waiver of the right to demand and receive such collateral at any time before liability has terminated under any Bond. 2
INDEMNITY St COLLATERAL FOR CLAIM- tire INDI3MNITOR ahati indemnity and save harmless the SUXElY from and against any aird all liability, claim, demand, loes, damages, expense, cost, attorneys fees snd espenoes, inclsding without limitation, fees and disbursements of counsel ineu#ed by the SIJRETY in any action or proceeding between the INI)EMNJTOR and the St)RETY, or between the SURETY and any third party, which SURETY shall at any time incur by reason of its execution of any Bond tsr its payment of or its liability to pay any claire, irrespective of whet/sr the claim in made against the SURETY as ajoint or several obligor and whether the INDEMNIrOR is then liable to make such poymertl, arid to p10cc the SURETY in funrl to meet alt of its liability under any Bond, promptly upon request and before the SURETY maybe required to make any payment thereunder; and copy of the claire, demand, voucher or other evidence of the payrrrent by tIre SURETY of any liability, claim, demand, loss, damage, expense, coal and attorneys fees, shall be prima Stoic evidence of the fact and amount of INDEMNITOR S liability to the St.JRETY under thin Agreement Any demand apex the SURETY by the Obliger shall be sufficient to conclude that a liability exists and the rNDEMNITOR shall then place the SURETY with oufficienl funds in a form and amount deemed acceptable in the SURETYS sole discretion, as collateral eecuriey to cover the liability. OTRER INDEMNITY- The INDEMNITOII. shall continue 5cr remain bound under the terms of this Agreement even though the SUIt,ElY may have heretofore or hereafter, with or without notice to or larowledgc of LIme lrinctpale and the INDEMNItOR, accepted or relented other agreements of indemnity or collateral in connection with the exccutinn or prncuresnenl of said Honda, from the principals or INDEMNITOR or others. The rights, powers and remedies given the SIJREtY under this Agreement shalt be and are in addition tr and not in lieu of any and all other rights, powers acid remedies which the SURETY may have or acquire against the Principals and INDEMNITORov others, whether by the teems of any agreement or by operation uf law or otherwine. INVALIDITY- In ease any of the lNl)EMNITORS fail to execute thia Agreement, or in case the execution hereof by any of the lNl)SMNITORS be defect/vt or invalid for any reason, such failure, defect or invalidity shall not in any nianner affect the validity of this Agreement or the liability hereunder of any of the INDEEtNrIOBS e,tecmstisrg the sante, but each and every tNt3t/MNITOK so executing shall be antI remain full bosmtt sod liabte hesestnder us the same extent us if such failure, defector invalidity had riot esiuled, SURETIES Alt of the terms, proviaionu and conditions of this Agreement strati be extended to and for the benefit not only of the SURETY, either us a direct writing company or an a co-surety or reinaurer, but also fur She benefit of arty surety or inaurance company or comnpanies with which the SURETY may participate as a co surety or reinsurer and also for the benefit of any other company which may execute any bond or bends at the request of the SURBIY on behalf of any of the Principals. DECLINE EXECUTION Ustlese otherwise specifically agreed in writing, the SURETY may decline to execute soy borrd and the Priseipals and INDEMNITOR shall moire no cluim to the contrary
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3.

4.

5.

CItAI4GES, WAIVER OF NOTICE The SURETY is autltoriecd snd empowered, without notice to or knowledge of the INDEMN1TOR, to assent mrs any change whatsoever in Btonds and/or the esntrsuts or obligations covered by any said Bonds including but not limited to time time for perfomnassee and any continuations, uvtcnsioss or renewals of the Bonds, the execution of any snbstitule or substitutes therefore, with the sante or differest conditions, provisions and obligeeu with the same or larger or smaller penalties; it being expressly understood sod agreed that the INDEMNITOR shall remain bound under the lemt of this Agreement even thsugh arty such assent by she SURETY does or might substantially increase rIte liability of the INDEMNITOR. The INDEMNITOR waives notice of the execulinu of Bonds, scceprunce of this Agreemeet, default or other sets giving rice to a bond claim or liability of star SURETY antler Bonds.
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TERMINATION This Agreemenl tray be temsinaletl by the INl)EMNflOR upon twenty days written notice sent by registered mail to the SURETY at its home office at ACE I3ond Servicm, TI,33B, 1601 Chestnut Sleet, Philadelphia, Pensoylvunia 19103, but any such notice of termination shall not operate to modify, bar or discharge the ttIDEMNITOR as to tire Bonds that may have been therefore executed.
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sEvEp,AIaa,ITV -If ssy provision or provisions of this Agreement be declatnd void or unenforceable under any law governing its construction or enforcerrterrt, this Agreement slrsll not be sold or vitiated thereby, but shall Ire cunabued und enforced with the sante effect on though such provision or provisions were omitted. a. CHOICE OF LAW/FORUM It is mutually agreed that this Agreement it deserted mads in the State ef New York. regardless of the order in which tise signatures of the pantres shalt have beets affixed end shalt be interpreted, and the rights arid liabilities of the parties determined in accordance with the lawn of the Slate of New York. INDI2MNITOR agrees that alt actions or proceedings arising directly or indirectly from this Agreement shall be litigated only in courts having status withirr thc State of New York. and couseetts to the personal jrtriscliction and venue of any local, State or Federal Court located therein.
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I. 3.

JOINT/SEVERAl. Each undersigned lndtrtmitor, its successors and uuuigrsc, are jointly and srraeratly bound by the foregoing conditions of tha Agreement.
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FACSIMSLE This Agreement bearing the signature of the Indemsiter(s) shall h valid, effective and enforceable whether received by the Surety as an original sir as 0 a facsimile transmission.

4 WITNdSS WI4EREOI. D4DEMNTfOR has signed this Agrnenrnrs this _i6__day of

2t?41 4

2005

aim Beach Resort Condominiums, LLC 951 Las Vegas Boulevard South ,as Vegas, NV 89119
By:_______ oy , on ly aud Indovadually

amo.itle: ame: tb:

;.lf,l 1,01

. Richard 3. 1 t etero ManaEinE Member

4tatemata3L Managing Member

(over)

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(Either attach copies of resolutions of Boards f Directors or executO notoriat acknowledgment)

FOR NOTARIAL ACXNOWLED(MENT OP ?RINCIPAIJINDEMNITORS CORPORATE ACKNOWLEDGMENT State County of as:

day of

20 betbnt mc personally came to mc known, who being by toe duly sworn, deposcd and nays that he in the
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the corporation described in and which executed lbs foregoing Agreement: that he knows tile seal of tIle said corporation; that the neal affixed to the said Agreement is uch corporate seal; that it woo so uffixol by the order to t signed (her)sis) name therettt by like orden. of the Board of Directors f said corporation, and that

Palm Beach Resort Condominiums. LLC

(Signatso

story Public)

INDIVIDUAL ACKNOWLEDGMENT
State of

TE OF Naas.
tmeett

t,

Countyof

2 tVl 0.. (Cjtt,

so:

roaNov 10,2009

,P1 InLY day of On thie 20 csS betbre me personally sante JERRY MOYES j to me known, who acknowledged that he exceutod the foregoing Agreement as a free act. TN WflNESS WHEREOTt, I have hereunto set my hand and affixed my oflicist seal, at my office in the aibresaid County, the clay acid year in this certificate first above written.
, ,

CP
(Signature of Notary toblic)
My commission eppirce -w OF1ClAL SEAL

I
I
CORPORATE ACKNOWLEDGMENT
State of_________

AThC1ASV4NBENSCHOTEN

JNOTARyptJglJC.6teofm

20 beibte me personally caine to me known, who taring by mc duly oworet, deposed and osys that he is the the corporation dtecdhcd in and ich execeted tltc foregoing Agreement; that he knows the Seal of the mid corporation; that the teat offixcd to the said Agreement ie such corporate seal; that it was so affixed by the order of the Board of Directors of said corporation, and that tar signed (her)(his) name thereto by like order
of

On tins

day of

(Signature of Notary l csblic) 5

My commission expires

CORPORATE ACKNOWI,EDGMENT Slate of County of Os thts

Sn:

20 before roe personally came to me known, who being by me duty sworn, deposed and nays that he is the of the corporation dgscribed in and which executed the foregoing Agreesniettt; that he knows the seat of the said corporation; that the neat affixed to the snid Agreement is such corporate scat; that it war so affixed by the order of the Board of Directors of said corpnrntion, and tbat_ tsr signed (herxltio) name thereto by like order

_________

day of

(Signature of Notary Public)

My commission expires

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22.O51O wIeg,I.orn

UNiTED STATES DISTICT COURT SOUTHERN DISTRICT OF NEW YORK WESTCHESTER FIRE INSURANCE COMPANY Plaintiff,
.

-against-

JERRY MOYES Defendant.

COPY

COMPLAINT

Attorneys for

GOTTESMAN, WOLGEL, MALAMY, FLYNN & WEINBERG, P.C. Plaintiff Westchester Fire Insurance Co.
11 HANOVER SQUARE NEW YORK, N.Y. 10005 TEL. NO. (212) 495-0100 FAX NO. (212) 480-9797

Pursuant to 22 IVYCRR 130-1.1-a, the undersigned, an attorney admitted to practice in the courts of New York State, certifies that, upon information and belief and reasonable inquiry, (1) the contentions contained in the annexed document are not frivolous and that (2) if the annexed document is an initiating pleading, (i) the matter was not obtained through illegal conduct, or that if it was, the attorney or other persons responsible for the illegal conduct are not participating in the matter or sharing in any fee earned therefrom and that (ii) if the matter involves potential. claims for personal injury or wrongful death, the matter was not obtained in violation of 22 NYCRR 1200.41-a. Dated:
Signature Print Signers Name

Service of a copy of the within Dated: Attorney(s) for PLEASE TAKE NOTICE
0

is hereby admitted.

NOTICE OF ENTRY

that the within is a (certified) true copy of a entered in the office of the clerk of the within-named Court on

20

C.)

NOTICE OF SETTLEMENT

that an Order of which the within is a true copy will be presented for settlement to the Hon. one of the judges of the within-named Court, at M. ,at 20 on
,

Dated: Attorneys for

GOTTESMAN, WOLGEL, MALAM FLYNN & WEINBERG, P.C.

To:

11 HANOVER SQUARE NEW YORK, N.Y 10005