Results

Surety v. Guarantor

October 2010

Sedgwick obtained a summary judgment on behalf of our client, a guarantor to a surety's obligations on an appeal bond, in an action filed in federal court in Minnesota.  The surety became insolvent and the guarantor issued payment on a claim made in connection with the appeal bond.  After payment was issued, Sedgwick obtained an assignment of an indemnity agreement executed in favor of the insolvent surety.  Then, it pursued the indemnitor for reimbursement under the doctrines of equitable subrogation and assignment. The parties both filed cross-motions for summary judgment.  The court upheld the assignment of the indemnity agreement to the guarantor and found that the guarantor was equitably subrogated to the insolvent surety's rights.  The court rejected the indemnitor’s argument that the guarantor did not issue payment “relative to the bond,” as required under the indemnity agreement, noting that the guarantor was only obligated to pay because the insolvent surety failed to pay.  The court entered judgment in favor of our client for the full amount of the claim paid.