When the Indemnity Names the Wrong Entity

It’s a problem. Per the court: "Just as 'Ten' is not 'Twenty,' a 'corporation' cannot mean 'a limited partnership.'" So a surety who obtained an indemnity agreement for claims arising from bonds issued to “Reginella Construction Company, Ltd.”, but then issued performance and payment bonds for the benefit of “Reginella Construction Company (a corporation),” saw its claims for indemnity dismissed by the court.

There isn’t much background information in the decision, nor is there any suggestion that the difference in identity of the correct entity was more than an innocent mistake (or perhaps blunder, from the surety’s perspective). But one or more entities and individuals signed a general agreement of indemnity (GAI, as commonly referred to in the surety world) for the surety’s benefit, for bonds that would be issued to Reginella Ltd., but the actual bonds were written for the benefit of Reginella, Inc., when Reginella, Inc. signed a construction contract for a public school project. And the surety’s attempt to seek indemnity and exoneration under the GAI failed as a result, since it was owed an indemnity only for bonds issued to Reginella Ltd.

This is a sobering lesson about paying attention to the details. The case is Star Ins. Co. v. Reginella Constr. Co. Ltd., 2017 U.S. App. LEXIS 6439 (3rd Cir., April 14, 2017).