Aventura Opens Floodgates to Injunctive Collateral Relief
The surety, in Liberty Mutual Insurance Company v. Aventura Engineering & Construction Corp., 534 F.Supp. 2d. 1290 (S.D. Fla. 2008), fought a pitched battle to obtain an injunction against its principal and indemnitors requiring them to post collateral sufficient to secure the surety against potential loss and expenses in a pending bond litigation. The Aventura decision has truly opened the floodgates to injunctions to post collateral in Florida and elsewhere.
Largely because of Aventura, what was once a battle has now become mostly smooth sailing in Florida (with a few bumps). Since 2008, there are eight (8) Florida decisions from federal courts awarding injunctive relief to the surety. See Allegheny Casualty Company v. United Construction Company of Central Florida, Inc., 2014 WL 440083 (M.D. Fla. 2014) (indemnitors ordered to deposit collateral for surety’s expected future losses); Developers Surety and Indemnity Co. v. Hansel Innovations, Inc., 2014 WL 2968138 (M.D. Fla. 2014) (surety’s request for preliminary injunction granted ordering indemnitors to deposit collateral as demanded by the surety).
Aventura is also gaining traction outside of Florida. See Fidelity and Deposit Co. of Maryland v. C.E. Hall Constr., Inc., 2012 WL 1100658 (S.D. Ga. 2012) (citing to Aventura, for the principle that a surety company may seek both monetary and specific performance of a collateral deposit provision); Fidelity and Deposit Co. of Maryland v. D.M. Ward Const. Co., Inc., 2008 WL 2761314 (D. Kan. 2008) (citing to Aventura for that principle that the damages are not an adequate remedy for breach of a collateral deposit clause);Frontier Ins. Co. in Rehabilitation v. MC Management, Inc., 2009 WL 541301 (W.D. Ky. 2009) (courts may require indemnitors to post collateral to cover potential liability); and First Nat. Ins. Co. of America v. Sappah Bros. Inc., 771 F. Supp.2d 569 (E.D.N.C. 2011) (courts routinely recognize that “a surety’s loss of its right to collateralization cannot be adequately remedied through monetary damages”).
Although other states are climbing aboard, the surety’s interests in requiring its principal to post collateral, as well as the surety’s right to exercise control over its principal’s claims, seem well protected in Florida in light of the comprehensive decision in Aventura. Click here to read the Aventura Decision