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Aztec Engineering Group, Inc. v. Liberty Mutual Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

January 4, 2017

AZTEC ENGINEERING GROUP, INC., TECNICA Y PROYECTOS S.A., Plaintiffs,
v.
LIBERTY MUTUAL INSURANCE COMPANY, FIDELITY AND DEPOSIT COMPANY OF MARYLAND, XL SPECIALTY INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, Defendants.

          ORDER DENYING MOTION TO INTERVENE

          Hon. Jane Magnus-Stinson, Chief Judge.

         In this action, Plaintiffs Aztec Engineering Group, Inc., and Tecnica y Proyectos S.A. (collectively, “Aztec-TYPSA”) seek payment from Defendants Liberty Mutual Insurance Company, Fidelity and Deposit Company of Maryland, XL Specialty Insurance Company, and American Home Assurance Company (collectively, the “Co-Sureties”) pursuant to a payment bond issued on a 21-mile portion of the I-69 development project. Isolux-Corsán, LLC (“Isolux-Corsán”) wants to intervene to assert a counterclaim against Aztec-TYPSA and then seek to stay this litigation to pursue arbitration. [Filing No. 35.] For the reasons that follow, the Court denies Isolux-Corsán's request to intervene.

         I.

         Standard of Review

         On timely motion, the Court must permit anyone to intervene as a matter of right who “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” Fed. R. Civ. Pro. 24(a)(2). If the movant does not have a right to intervene, the Court may exercise its discretion to permit intervention if the movant “has a claim or defense that shares with the main action a common question of law or fact.” Fed. R. Civ. Pro. 24(b)(1)(B). In doing so, however, the Court “must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights.” Fed. R. Civ. Pro. 24(b)(3). Permissive intervention and intervention as a matter of right both must be pursued through a timely motion. Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 797-98 (7th Cir. 2013).

         II.

         Background

         On April 8, 2014, the Indiana Finance Authority (“IFA”) awarded I-69 Development Partners LLC (the “Developer”) a Public-Private Agreement (the “PPA”) pursuant to Indiana Code § 8-15.5-1-1, et seq., for the Developer to design, build, finance, operate, and upgrade approximately 21 miles of existing State Road 37 into an interstate highway (the “Project”). [Filing No. 1 at 3.] Corsan Corviam Construcción, SA (“Corsan”), entered into a Design-Build Contract with the Developer for the design and construction work of the Project. [Filing No. 1 at 4.] Corsan later assigned the Design-Build Contract to its affiliate, Isolux-Corsán. [Filing No. 1 at 4.]

         Pursuant to the terms of the PPA and the Design-Build Contract, Isolux-Corsán later executed a payment bond (the “Payment Bond”) with the Co-Sureties in the penal sum of $15, 350, 000 to ensure that payment would be made to Isolux-Corsán's subcontractors on the Project. [Filing No. 1 at 4; Filing No. 1-3.]

         B. The Engineering Services Agreement

         On August 15, 2014, Corsan entered into an Engineering Services Agreement (the “ESA”) with Aztec-TYPSA for Aztec-TYPSA to be a design-consultant subcontractor on the Project. [Filing No. 1 at 4; Filing No. 1-4.] The ESA was assigned by Corsan to Isolux-Corsán. [Filing No. 1 at 4; Filing No. 1-5 at 1.] Aztec-TYPSA assumed various obligations under the ESA to perform design-related services on the Project. [Filing No. 1-4 at 8.] Pursuant to the ESA, Isolux-Corsán was permitted to withhold payment if it disputed “any items . . . for any reason, including the lack of supporting documentation or suspected defective or negligently performed Services . . . .” [Filing No. 1-4 at 17.] If it disputed items, Isolux-Corsán was to withhold payment for the disputed items, promptly notify Aztec-TYPSA of the dispute, and request clarification or remedial action. [Filing No. 1-4 at 17.] Payment for undisputed items was to be made within sixty days, although full or partial payment was not evidence of Aztec-TYPSA's satisfactory performance of the services covered by the ESA. [Filing No. 1-4 at 17.]

         Aztec-TYPSA submitted invoices to Isolux-Corsán and alleges that until April 2015, the majority of them were not disputed or only partially disputed. [Filing No. 1 at 5.] Aztec-TYPSA contends, however, that since April 2015, Isolux-Corsán failed to make the required payments within the sixty-day period. [Filing No. 1 at 5.] Aztec-TYPSA alleges that it served Isolux-Corsán with a notice of default in April 2015, but Isolux-Corsán made payment and cured that default. [Filing No. 1 at 6.] Aztec-TYPSA served Isolux-Corsán with a second notice of default on March 21, 2016, listing twenty unpaid invoices totaling $4, 811, 869.62. [Filing No. 1 at 6-7; Filing No. 1-6 at 1-2.] Isolux-Corsán made partial payments, [Filing No. 1 at 7], but Aztec-TYPSA served it with a third notice of default on June 9, 2016 after additional amounts became overdue, [Filing No. 1 at 7; Filing No. 1-9].

         On June 1, 2016, Aztec-TYPSA suspended services under the ESA. [Filing No. 1 at 5.] It alleges that to date, Isolux-Cors├ín owes it an outstanding balance of $4, ...


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