Court Affirms Dismissal of $12 Million Surety Suit

November 1, 2016 in Firm News

NEWARK, NJ November 1, 2016 − A panel of the United States Court of Appeals for the Second Circuit today affirmed the dismissal of a Venezuelan surety’s complaint seeking $12 million from Walsh’s client, the former chief executive of GRAD Associates, P.A., a Newark architectural firm.  In 1999, GRAD partnered with an international construction company to build a prison in Venezuela and thereby entered into an agreement with the Venezuelan surety.  Though designed by GRAD, the prison was never constructed, and the surety allegedly paid $12 million to Venezuela on bonds issued against the project.  By the time of the surety’s 2014 lawsuit, GRAD, a victim of the global recession, had wound up its business. As a result, the surety instead sought judgment only against Walsh’s client, the officer of GRAD who signed the instrument in question, a retiree living in Brooklyn.

In Seguros Nuevo Mundo, S.A. v. Trousdale, 2016 U.S. App. LEXIS 19761, 16‐998‐cv (November 1, 2016), the Second Circuit applied well-established principles of New York law holding that a document binding upon a corporate party – in this case GRAD – may not be enforced personally against the signatory in the absence of “clear and explicit evidence” that the individual signer intended to make himself personally liable on the instrument.  Because such evidence was absent on the face of the instrument in question, the court found that the complaint against Walsh’s client was properly dismissed by Judge Rosalynn R. Mauskopf, U.S.D.J., on a pre-discovery motion to dismiss, and affirmed Judge Mauskopf’s ruling.

Peter J. Pizzi and Mariel L. Belanger represented the defendant on appeal.

For further information about the firm’s Business and Commercial Litigation practice, please contact Peter at (973) 757-1011 or [email protected]

Read the Full Decision Here.