IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`C. A. No. 2023-0148-NAC
`
`THE COBI GROUP, INC.
`
`and
`
`ANNE JACOBI,
`
`Plaintiffs,
`
`vs.
`
`ALLEGHENY CASUALTY COMPANY
`and INTERNATIONAL FIDELITY
`INSURANCE COMPANY
`One Newark Center, 20th Floor
`Newark, NJ 07102
`
`and
`
`ENVIRONMENTAL SERVICES, INC.
`461 New Churchman Road
`New Castle, DE 19720
`
`Defendants.
`
`PLAINTIFFS’ ANSWER AND AFFIRMATIVE DEFENSES OF
`DEFENDANTS, ALLEGHENY CASUALTY COMPANY’S AND
`INTERNATIONAL FIDELITY INSURANCE COMPANY’S
`COUNTERCLAIM
`
`The Cobi Group, Inc. and Anne Jacobi (collectively, “Cobi” or “Plaintiffs”),
`
`by and through their counsel, hereby submits this Answer and Affirmative
`
`Defenses to Allegheny Casualty Company’s and International Fidelity Insurance
`
`Company’s Counterclaim. For convenience, headings in this Answer repeat the
`
`EFiled: Jun 06 2023 01:03PM EDT
`Transaction ID 70148781
`Case No. 2023-0148-NAC
`
`
`
`C. A. No. 2023-0148-NAC
`
`THE COBI GROUP, INC.
`
`and
`
`ANNE JACOBI,
`
`Plaintiffs,
`
`vs.
`
`ALLEGHENY CASUALTY COMPANY
`and INTERNATIONAL FIDELITY
`INSURANCE COMPANY
`One Newark Center, 20th Floor
`Newark, NJ 07102
`
`and
`
`ENVIRONMENTAL SERVICES, INC.
`461 New Churchman Road
`New Castle, DE 19720
`
`Defendants.
`
`PLAINTIFFS’ ANSWER AND AFFIRMATIVE DEFENSES OF
`DEFENDANTS, ALLEGHENY CASUALTY COMPANY’S AND
`INTERNATIONAL FIDELITY INSURANCE COMPANY’S
`COUNTERCLAIM
`
`The Cobi Group, Inc. and Anne Jacobi (collectively, “Cobi” or “Plaintiffs”),
`
`by and through their counsel, hereby submits this Answer and Affirmative
`
`Defenses to Allegheny Casualty Company’s and International Fidelity Insurance
`
`Company’s Counterclaim. For convenience, headings in this Answer repeat the
`
`EFiled: Jun 06 2023 01:03PM EDT
`Transaction ID 70148781
`Case No. 2023-0148-NAC
`
`
`
`wording of the headings used by Plaintiffs in the Complaint and do not in any
`
`way constitute allegations, averments, or admissions by Cobi. Each and every
`
`allegation in the Counterclaim not specifically admitted below is denied.
`
`1.
`
`Counterclaimants Allegheny Casualty Company and International
`
`Fidelity Insurance Company are business corporations organized and existing
`
`under the laws of the State of New Jersey with their principal place of business
`
`located in Newark, New Jersey.
`
`ANSWER: Admitted, upon information and belief.
`
`2.
`
`Upon information and belief, Counterclaim Defendant The Cobi
`
`Group, Inc. (“Cobi”) is a business corporation organized and existing under the
`
`laws of the State of Delaware with its principal place of business in Wilmington,
`
`Delaware.
`
`ANSWER: Admitted.
`
`3.
`
`Upon information and belief, Counterclaim Defendant Anne Jacobi
`
`(“Jacobi”) is a natural person residing within the State of Delaware.
`
`ANSWER: Admitted.
`
`4.
`
`Upon information and belief, Environmental Services, Inc. (“ESI”) is
`
`a business corporation organized and existing under the laws of the State of
`
`Delaware with its principal place of business in Bear, Delaware.
`
`ANSWER: Admitted, upon information and belief.
`
`2
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`
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`5.
`
`Upon information and belief, ESI and Cobi formed a joint venture,
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`ESI/Cobi, LLC (“ESI/Cobi”), which is a limited liability company organized and
`
`existing under the laws of the State of Delaware with its principal place of
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`business in New Castle, Delaware, pursuant to a Joint Venture Agreement dated
`
`January 17, 2018 (the “JV Agreement”).
`
`ANSWER: Admitted.
`
`6.
`
`On or about January 19, 2018, the Counterclaim Defendants and
`
`ESI/Cobi, among others, executed an Agreement of Indemnity (the “Indemnity
`
`Agreement”) in favor of the Surety (collectively, all entities and individuals,
`
`including certain current non-parties to this action, that executed the Indemnity
`
`Agreement shall be referred the “Indemnitors”).
`
`ANSWER: The allegations of Paragraph 6 refer to an Indemnity Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Indemnity Agreement is denied. The Counterclaim Defendants incorporate their
`
`complaint as further response.
`
`7.
`
`Pursuant to the Indemnity Agreement, the Indemnitors agreed, among
`
`other things, to: (i) indemnify the Surety from and against any losses and
`
`expenses, including attorney’s fees, incurred as a result of issuing any bonds on
`
`behalf of ESI/Cobi, and/or as a result of enforcing the Surety’s rights under the
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`Indemnity Agreement; (ii) deposit collateral with the Surety, in a form and amount
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`3
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`
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`demanded by the Surety, in the event that any claims are made under bonds issued
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`by the Surety on ESI/Cobi’s behalf, such as the claims made by Counterclaim
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`Defendants against the Bond in this action; and (iii) promptly procure the full and
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`complete discharge of the Surety from any liability under the Bond.
`
`ANSWER: The allegations of Paragraph 7 refer to an Indemnity Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Indemnity Agreement is denied. The Counterclaim Defendants incorporate their
`
`complaint as further response. The Surety breached its obligations owed to the
`
`Counterclaim Defendants as alleged and therefore cannot enforce any part of the
`
`Indemnity Agreement.
`
`8.
`
`Paragraph 2 of the Indemnity Agreement thus provides the following:
`
`INDEMNITY:
`
`The Contractor and Indemnitors shall exonerate,
`indemnify, and keep indemnified the Surety from and
`against any and all liability for losses and/or expenses
`of whatsoever kind or nature (including, but not
`limited to, interest, court costs and the cost of
`services
`rendered
`by
`counsel,
`investigators,
`accountants, engineers or other consultants, whether
`consisting of in-house personnel or third party
`providers) and from and against any and all losses
`and/or expenses which the Surety may sustain and
`incur: (1) By reason of having executed or procured
`the execution of the Bonds, (2) By reason of the
`failure of the Contractor or Indemnitors to perform or
`comply with the covenants and conditions of this
`
`4
`
`
`
`Agreement or (3) In enforcing any of the covenants
`and conditions of this Agreement.
`
`The Contractor and Indemnitors shall deposit with the
`Surety on demand an amount of money or other
`collateral security acceptable to the Surety, as soon as
`liability exists or is asserted against the Surety,
`whether or not the Surety shall have made any
`payment therefor, equivalent to such amount that the
`Surety, in its sole judgment, shall deem sufficient to
`protect it from loss.
`
`ANSWER: The allegations of Paragraph 8 refer to an Indemnity Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Indemnity Agreement is denied. The Counterclaim Defendants incorporate their
`
`complaint as further response. The Surety breached its obligations owed to the
`
`Counterclaim Defendants as alleged and therefore cannot enforce any part of the
`
`Indemnity Agreement.
`
`9.
`
`Paragraph 3 of the Indemnity Agreement provides the following:
`
`THIRD: The Contractor and Indemnitors will, upon the
`written request of the Surety, promptly procure the full and
`complete discharge of the Surety from any Bonds specified in
`such request and all potential liability by reason of such
`Bonds. If such full and complete discharge is unattainable, the
`Contractor and Indemnitors will, if requested by the Surety,
`within five (5) business days, place the Surety in funds that
`are immediately available and sufficient to meet all of the
`Surety’s liabilities that are in force prior to the date of the
`Surety’s demand. The Surety may make such demand for
`funds at any time and without regard to whether it has
`sustained any loss or received any claim. The amount of such
`
`5
`
`
`
`demand, including reasonable attorney fees and expenses, is at
`the sole discretion of the Surety.
`The Contractor and Indemnitors waive, to the fullest extent
`permitted by applicable law, each and every right which they
`may have to contest such payment. Failure to make
`immediate payment to Surety as herein provided shall cause
`the Contractor and Indemnitors to be additionally liable for
`any and all reasonable costs and expenses, including
`attorneys fees, incurred by the Surety in enforcing this
`provision.
`
`In the event that any or all of the Contractor and
`Indemnitors fail to comply with such demand as stated in
`this provision, the Contractor and Indemnitors hereby
`authorize and empower any attorney of any court of record
`of the United States or any of its territories or possessions,
`to appear for them or any of them in any suit by Surety and
`confess judgment against them or any of them for any sum
`or sums of money up to the amount of any or all Bond or
`Bonds, with costs, interest and attorney’s fees; such
`judgment, however, to be satisfied upon the payment of any
`and all such sums as may be found due by the Contractor
`and Indemnitors to Surety under the terms of this provision.
`The authority to confess judgment as set forth herein shall
`not be exhausted by one exercise thereof, but may be
`exercised from time to time and more than one time until all
`liability of the Contractor and Indemnitors to the Surety
`shall have been paid in full. Demand shall be sufficient if
`sent by registered or certified mail, hand delivered, or via
`overnight mail to the last known address of the Contractor
`and Indemnitors, whether or not actually received.
`
`ANSWER: The allegations of Paragraph 9 refer to an Indemnity Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Indemnity Agreement is denied. The Counterclaim Defendants incorporate their
`
`6
`
`
`
`complaint as further response. The Surety breached its obligations owed to the
`
`Counterclaim Defendants as alleged and therefore cannot enforce any part of the
`
`Indemnity Agreement.
`
`10.
`
`Paragraph 7 of the Indemnity Agreement, entitled “Takeover”,
`
`provides in pertinent part:
`
`In the event of any breach, delay or default asserted by the
`obligee in any said Bonds, or the Contractor has
`suspended or ceased work on any contract or contracts
`covered by any said Bonds, or failed to pay obligations
`incurred in connection therewith...the Surety shall have
`the right, at its option and in its sole discretion and is
`hereby authorized, with or without exercising any other
`right or option conferred upon it by law or in the terms of
`this Agreement, to take possession of any part or all of the
`work under any contract or contracts covered by any said
`Bonds, and at the expense of the Contractor and
`Indemnitors to complete or arrange for the completion of
`the same, and the Contractor and Indemnitors shall
`promptly upon demand pay to the Surety all losses and
`expenses so incurred
`
`ANSWER: The allegations of Paragraph 10 refer to an Indemnity
`
`Agreement which is a document that speaks for itself. Any mischaracterization of
`
`the Indemnity Agreement is denied. The Counterclaim Defendants incorporate
`
`their complaint as further response. The Surety breached its obligations owed to
`
`the Counterclaim Defendants as alleged and therefore cannot enforce any part of
`
`the Indemnity Agreement.
`
`7
`
`
`
`11.
`
`Paragraph 15 of the Indemnity Agreement, entitled “Settlements”,
`
`provides in pertinent part:
`
`The Surety shall have the right to adjust, settle or
`compromise any claim, demand, suit or judgment
`upon the Bonds, unless the Contractor and the
`Indemnitors shall demonstrate to the Surety’s
`satisfaction that there is a valid basis to dispute
`said claim, demand, suit or judgment, and shall in
`good faith request the Surety to litigate such claim
`or demand, or to defend such suit, or to appeal
`from such judgment, and shall deposit with the
`Surety, at the time of such request, cash or
`collateral satisfactory to the Surety in kind and
`amount, to be used in paying any judgment or
`judgments rendered or that may be rendered, with
`interest, costs, expenses and attorneys’ fees,
`including those of the Surety.
`
`ANSWER: The allegations of Paragraph 11 refer to an Indemnity
`
`Agreement which is a document that speaks for itself. Any mischaracterization of
`
`the Indemnity Agreement is denied. The Counterclaim Defendants incorporate
`
`their complaint as further response. The Surety breached its obligations owed to
`
`the Counterclaim Defendants as alleged and therefore cannot enforce any part of
`
`the Indemnity Agreement.
`
`12. On or about April 25, 2018, at the request of the Indemnitors, the Surety
`
`issued performance and payment bond no. PHACSU0726724 (the “Bond”), on
`
`behalf of ESI/Cobi, as principal, in the penal sum of $9,481,488.00, pursuant to
`
`8
`
`
`
`which the Surety, subject to the terms and conditions of the Bond and applicable law,
`
`guaranteed the performance of and payment by ESI/Cobi of certain obligations in
`
`connection with Delaware Department of Transportation (“DTC”) Contract No.
`
`T201753109.02 (the “Bonded Contract”).
`
`ANSWER: The allegations of Paragraph 12 refer to a performance and
`
`payment bond which is a document that speaks for itself. Any mischaracterization
`
`of the performance and payment bond is denied. The Counterclaim Defendants
`
`incorporate their complaint as further response. By way of further response, to the
`
`extent this averment is deemed factual, it is incorrect as to how and why the bonds
`
`were obtained.
`
`13. Upon information and belief, ESI/Cobi entered into the Bonded
`
`Contract in its capacity as a joint venture, Cobi’s work under the Bonded Contract
`
`was performed solely in its capacity as a joint venturer pursuant to the JV
`
`Agreement, and Cobi did not enter into a subcontract with ESI/Cobi nor did it ever
`
`act as a subcontractor of ESI/Cobi.
`
`ANSWER: Admitted in part. It is admitted that The Cobi Group was a
`
`subcontractor to ESI/COBI, LLC. The Cobi Group incorporates its Complaint as
`
`though fully set forth which documents the amounts owed by the Surety as
`
`ESI/COBI, LLC’s Subcontractor. Further, although the name appears in the
`
`9
`
`
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`caption, ESI/COBI, LLC is not a party to this litigation and therefore reference to
`
`ESI/COBI as a crossclaim defendant is incorrect. All other averments are denied.
`
`14. By letter dated December 3, 2020, DTC provided notice to the
`
`Principal and the Surety that the Principal was allegedly in default of the Bonded
`
`Contract for, among other reasons, failure to adequately prosecute the site work
`
`and noise wall work, which, upon information and belief, were within the scope of
`
`Cobi’s subcontract with the Principal for the Bonded Contract.
`
`ANSWER: The allegations of Paragraph 14 refer to a December 3, 2020
`
`letter which is a document that speaks for itself. Any mischaracterization of the
`
`letter is denied. It is further denied that ESI/COBI was in default of the Bonded
`
`Contract. As of December 3, 2020, the DTC had not issued engineered drawings
`
`related to the Sound Barrier Wall System; had not issued engineering plans
`
`respecting the changes to the site-work; and had not engineered corrections to the
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`Civil Drawings that had resulted in the necessity for corrective work to the site
`
`drainage and the placement of electrical conduit. Further, as of December 3, 2020,
`
`the DTC had not issued change orders to pay for the extended duration of the
`
`Project, nor had it paid for all Change Orders and PCOs, and had not issued time
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`extensions reflecting the admitted changes, including the changes to the Noise
`
`Barrier Wall System which DTC had admitted was changed (albeit not in
`
`accordance with the Contract Specifications) when it directed the changed work to
`
`10
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`
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`proceed on a “force account” basis. Accordingly, as of December 3, 2020, DTC
`
`was in material breach of the Contract with ESI/COBI. The Cobi Group
`
`incorporates its Complaint as though fully set forth.
`
`15. Upon information and belief, Cobi disputed the efficacy and
`
`completeness of the Bonded Contract plans and specifications relating to the noise
`
`wall work, and following the December 3, 2020 notice, along with the Principal,
`
`engaged in a mediation process with DTC in an attempt to resolve the dispute.
`
`ANSWER: Admitted in part, denied in part. The Cobi Group documented to
`
`the Surety and DTC that DTC was in material breach. It is admitted that
`
`ESI/COBI and the DTC engaged in a mediation. By way of further response,
`
`Plaintiffs incorporate their response to Paragraph 14.
`
`16. Upon information and belief, in March of 2021, DTC withdrew from
`
`the mediation process with Cobi and the Principal and DTC then re-engaged the
`
`Surety under the Bond relating to the Principal’s alleged default.
`
`ANSWER: Admitted in part, denied in part. It is admitted that DTC
`
`terminated the mediation process; it is incorrect that the mediation was with Cobi.
`
`17. By letter dated June 3, 2021, DTC terminated the right of the
`
`Principal to complete the Bonded Contract for default.
`
`ANSWER: The allegations of Paragraph 17 refer to June 3, 2021 letter
`
`which is a document that speaks for itself. Any mischaracterization of the June 3,
`
`11
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`
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`2021 letter is denied. By way of further reply, DTC’s purported “termination” was
`
`wrongful and without a factual, contractual or other legal basis.
`
`18. Whereas DTC sought to preclude Cobi’s attendance at post-termination
`
`meetings, the Surety insisted that Cobi, as a joint venture party of the Principal and
`
`Indemnitor of the Surety, be included and be given the opportunity to attend.
`
`ANSWER: Denied. Plaintiffs are not aware of any such “insistence” by the
`
`Surety or that DTC sought to preclude Plaintiffs from attending the meeting on
`
`July 13, 2021. To the contrary, the Surety’s representative, Ira Sussman, emailed
`
`DTC counsel, Stacey Stewart on July 6, 2021: “It looks like we can all meet on
`
`July 13. How does 2:00 PM work. If that time works please pick a place for the
`
`meeting. Stacey’s office is fine with us. Please confirm.” The “all” included the
`
`plaintiffs and their counsel. In reply, DTC’s counsel wrote: “Yes, we can reserve a
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`conference room at the DTC office, 119 Beech St. Wilmington 19805. Stacey.” In
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`fact, when the Surety’s counsel was asked by Plaintiffs’ counsel if the meeting
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`could be earlier than 2pm. Ira Sussman replied: “Paul: Can’t do it. It has to be
`
`2:00. I’m flying in from Chicago and you already committed to the whole
`
`day. I’m sick of putting this off. If you can’t be there we will meet without you.”
`
`It was the Surety who sought to exclude the Plaintiffs, not DTC.
`
`19. As referenced in the Complaint by Counterclaim Defendants, a
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`meeting was held at DTC’s offices on July 13, 2021 to discuss a path forward
`
`12
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`
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`following the termination of the Principal for default. At that meeting, Cobi was
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`present and represented by counsel.
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`ANSWER: It is admitted only that a meeting was held at DTC’s offices on
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`July 13, 2021. It is further admitted that Cobi was present and represented by
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`counsel. The remaining claims are denied. Plaintiffs incorporate Paragraphs 102-
`
`109 of the Amended Complaint as if set forth herein in full.
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`20.
`
`Typically upon the termination of a principal under a bond on a
`
`project of this magnitude, if the surety is forced to have a completely new
`
`contractor take over the remaining work, such replacement contractor will charge
`
`the surety a significant “relet premium” associated with, among other things, the
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`new contractor not having the institutional knowledge of the partially completed
`
`project, the new contractor having to take responsibility for work in place that was
`
`performed by another contractor that was terminated for default, and the new
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`contractor having to potentially “buy-out” subcontract trades in what could be a
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`drastically different price environment than what prevailed when the job was first
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`bid years prior to the bond demand.
`
`ANSWER: Denied. These are conclusions to which no response is required.
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`Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
`
`of the allegations contained in paragraph 20 of the Counterclaim and they are
`
`13
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`
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`therefore denied. Further, these averments have no application to Plaintiffs’
`
`claims.
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`21.
`
`In order to avoid a significant relet premium, the Surety and Principal
`
`sought to reinstitute the Principal following the termination. DTC agreed, to the
`
`great benefit of the Counterclaim Defendants who are Indemnitors of the Surety,
`
`to allow an ESI affiliate, ESI-LF, LLC (“ESI-LF”), to complete the Bonded
`
`Project pursuant to a Takeover Agreement with the Surety, but such allowance
`
`was conditioned upon Cobi’s removal from the site.
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`ANSWER: Denied. These are conclusions to which no response is required.
`
`Plaintiffs deny knowledge or information sufficient to form a belief as to the truth
`
`of the allegations contained in paragraph 21 of the Counterclaim and they are
`
`therefore denied. Further, these averments are false. Cobi was the majority
`
`member of the Principal, ESI/COBI and was purposefully excluded from all
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`discussions with DTC at and after the July 13, 2021 meeting. This averment
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`admits the conspiracy between the Surety and ESI since it is false that “the Surety
`
`and Principal sought to reinstitute the Principal following the termination.” ESI
`
`was a minority member of ESI/COBI and had no authority to speak on behalf of
`
`ESI/COBI. The Plaintiffs incorporate their Complaint as further response.
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`22.
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`In connection with DTC’s termination of the Principal’s right to
`
`complete the Bonded Contract, ESI demonstrated to the Surety an understanding
`
`14
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`
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`of its obligation to indemnify, exonerate and hold the Surety harmless for all
`
`losses, costs and expenses emanating from the issuance of the Bond and also for
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`the Indemnitors to secure the discharge of the Surety under the Bond.
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`ANSWER: Denied. These are conclusions to which no response is required.
`
`Plaintiffs specifically incorporate their answer to paragraph 21 and the admissions
`
`by the Surety that it agreed to “Cobi’s removal from the site.” This is an admission
`
`of the conspiracy between ESI and the Surety to exclude Cobi and ESI/COBI and
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`the Surety’s agreement without the knowledge or agreement of the Plaintiffs for
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`an ESI entity to assume the rights of ESI/COBI. None of the defendants had this
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`right. The Plaintiffs incorporate their Complaint as further response.
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`23. While the Indemnitors have not yet completely secured the discharge
`
`of the Surety under the Bond, some of the Indemnitors, including ESI, have
`
`partially performed their obligation to the Surety under the Indemnity Agreement.
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`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 23 of the
`
`Counterclaim and they are therefore denied. The Plaintiffs incorporate their
`
`Complaint as further response and answers to paragraphs 21 and 22.
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`24.
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`Specifically, ESI and other Indemnitors of the Surety which are
`
`affiliated with ESI have provided the Surety with collateral in the form of an
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`irrevocable letter of credit.
`
`15
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`
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`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 24 of the
`
`Counterclaim and they are therefore denied.
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`25.
`
`ESI furthermore made its affiliate ESI-LF the Completion Contractor
`
`for the Bonded Contract for the Surety, with DTC’s agreement, following the
`
`Principal’s termination.
`
`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 25 of the
`
`Counterclaim and they are therefore denied.
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`26. When the Surety received four payment bond claims from vendors to
`
`the Principal for work performed on the Bonded Contract, ESI discharged the
`
`Surety’s liability without a loss.
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`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 26 of the
`
`Counterclaim and they are therefore denied.
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`27. Under date of February 14, 2022, as a measure to mitigate the
`
`Surety’s damages, the Surety entered into a Takeover Agreement with DTC,
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`pursuant to which the Surety, by and through ESI-LF as Completion Contractor, is
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`to complete the Bonded Contract, except that the sound wall work, as to which
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`there was an open dispute, was removed from the Bonded Contract scope under
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`16
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`
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`the Takeover Agreement. Additionally, the rights of the Principal, including to
`
`contend that the termination for default by DTC was wrongful, are expressly
`
`reserved under the Takeover Agreement.
`
`ANSWER: The allegations of Paragraph 27 refer to a Takeover Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Takeover Agreement is denied.
`
`28. Under the Takeover Agreement, the DTC granted the Surety an
`
`extension of the completion date three years beyond the original contract date of
`
`completion of June 1, 2019.
`
`ANSWER: The allegations of Paragraph 28 refer to a Takeover Agreement
`
`which is a document that speaks for itself. Any mischaracterization of the
`
`Takeover Agreement is denied.
`
`29.
`
`Since the execution of the Takeover Agreement, and the start of ESI-
`
`LF’s performance, there have been no major issues.
`
`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 29 of the
`
`Counterclaim and they are therefore denied.
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`30.
`
`In connection with the declaration of default of the Principal and the
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`termination of the Principal’s right to complete the Bonded Contract, as well as in
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`connection with Counterclaim Defendants’ claims and in the enforcement of the
`
`17
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`
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`Indemnity Agreement, the Surety has retained construction consultants Guardian
`
`Group, Inc. and firm counsel and thereby has incurred and will incur expenses for
`
`which the Indemnitors are jointly and severally liable to the Surety under the
`
`Indemnity Agreement.
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`ANSWER: Plaintiffs deny knowledge or information sufficient to form a
`
`belief as to the truth of the allegations contained in paragraph 30 of the
`
`Counterclaim and they are therefore denied.
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`31. On July 5, 2022, Counterclaim Defendants filed an amended
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`complaint (the “Superior Court Complaint”) in an action currently pending in the
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`Superior Court of the State of Delaware, titled The Cobi Group, Inc. and Anne
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`Jacobi v. Allegheny Casualty Company, International Fidelity Insurance
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`Company, Environmental Services, Inc., and ESI/Cobi, LLC (No. N22C-05-155
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`FWW) (the “Superior Court Action”), in which Counterclaim Defendants
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`demanded judgment against the Surety, under the Bond, in the sum of at least
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`$3,042,595.09, plus interest, costs, and additional relief.
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`ANSWER: It is admitted that Plaintiffs/Counterclaim Defendants filed an
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`Amended Complaint in Superior Court Matter No. N22C-05-155 FWW. The
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`Superior Court Complaint is a document which speaks for itself, and is
`
`incorporated herein, in its entirety. Any mischaracterization thereof is denied.
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`18
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`
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`32. On September 16, 2022, the Surety filed an answer to the Superior
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`Court Complaint and asserted counterclaims against Counterclaim Defendants for
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`contractual indemnification pursuant to the Indemnity Agreement, and for tortious
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`interference.
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`ANSWER: It is admitted that Surety filed an answer to the Superior Court
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`Complaint. Surety’s answer and counterclaim is a document which speaks for
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`itself, and any mischaracterization thereof is denied.
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`33. On November 4, 2022, Counterclaim Defendants filed their answer to
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`the Surety’s counterclaims in the Superior Court Action.
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`ANSWER: Admitted.
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`COUNTERCLAIM FOR DECLARATORY JUDGMENT
`(As Against the Counterclaim Defendants)
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`34.
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`The Surety repeats and realleges each and every allegation set forth in
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`paragraphs 1 through 33 hereof as if set forth at length herein.
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`ANSWER: Plaintiffs repeat and reallege each and every response set forth
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`in the preceding paragraphs, as well as Plaintiffs’ Complaint, as if set forth at
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`length herein.
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`35. A justiciable controversy exists between Counterclaim Defendants
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`and the Surety as to their respective rights and obligations under the Bond,
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`including but not limited to whether Counterclaim Defendants have any standing to
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`assert any claim under the Bond, and even if they have standing, whether the
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`19
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`
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`Surety has any liability to Counterclaim Defendants under the Bond, which the
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`Surety denies.
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`ANSWER: The allegations contained in this paragraph are conclusions of
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`law to which no response is required and Plaintiffs direct all such questions of law
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`to the Court. To the extent they are deemed allegations of fact, Plaintiffs
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`incorporate their Complaint, including all relief requested therein, as if set forth in
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`its entirety herein.
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`36.
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`The Surety seeks a judicial determination to resolve a present
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`justiciable controversy among the parties regarding Counterclaim Defendants’
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`rights under the Bond, if any, and the Surety’s obligations to Counterclaim
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`Defendants, if any, under the Bond.
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`ANSWER: The allegations contained in this paragraph are conclusions of
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`law to which no response is required and Plaintiffs direct all such questions of law
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`to the Court. To the extent they are deemed allegations of fact, Plaintiffs
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`incorporate their Complaint, including all relief requested therein, as if set forth in
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`its entirety herein.
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`37.
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`The Surety is entitled to a judicial declaration by this Court that
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`Counterclaim Defendants do not have standing to assert a claim against the Surety
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`under the Bond.
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`20
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`
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`ANSWER: The allegations contained in this paragraph are conclusions of
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`law to which no response is required and Plaintiffs direct all such questions of law
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`to the Court. To the extent they are deemed allegations of fact, Plaintiffs
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`incorporate their Complaint, including all relief requested therein, as if set forth in
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`its entirety herein.
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`38.
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`The Surety is entitled to a judicial declaration by this Court that the
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`Surety has no obligations to Counterclaim Defendants under the Bond due to
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`Counterclaim Defendants’ misconduct.
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`ANSWER: The allegations contained in this paragraph are conclusions of
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`law to which no response is required and Plaintiffs direct all such questions of law
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`to the Court. To the extent they are deemed allegations of fact, Plaintiffs
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`incorporate their Complaint, including all relief requested therein, as if set forth in
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`its entirety herein.
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`39.
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`The issuance of declaratory relief by this Court will terminate some
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`or all of the existing controversy among the parties.
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`ANSWER: The allegations contained in this paragraph are conclusions of
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`law to which no response is required and Plaintiffs direct all such questions of law
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`to the Court. To the extent they are deemed allegations of fact, Plaintiffs
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`incorporate their Complaint, including all relief requested therein, as if set forth in
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`its entirety herein.
`
`21
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`
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`WHEREFORE, The Cobi Group and Anne Jacobi demand judgment
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`against all defendants, jointly and severally, for actual and exemplary damages,
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`with interest, the costs of suit, and reasonable attorneys’ fees, and such other relief
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`as the court may find appropriate.
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`AFFIRMATIVE DEFENSES
`Plaintiffs assert the following affirmative defenses with respect to Surety’s
`Counterclaim. Nothing herein may be construed as to suggest that Plaintiffs bear
`the burden of proof of any of the issues set forth below. All defenses are pled in
`the alternative, do not constitute an admission of liability or an admission that
`Surety is entitled to any relief whatsoever, and are without prejudice to the
`allegations and denials in Plaintiffs’ Answer to Surety’s Counterclaim. Plaintiffs
`hereby reserve the right to amend and/or supplement its Answer to the
`Counterclaim to assert any and all pertinent affirmative defenses ascertained
`through discovery in this action or by any other means.
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`FIRST AFFIRMATIVE DEFENSE
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`The Counterclaim fails to state a cause of action upon which relief may be
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`granted.
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`SECOND AFFIRMATIVE DEFENSE
`Surety has failed to mitigate their damages, if any.
`
`22
`
`
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`THIRD AFFIRMATIVE DEFENSE
`Surety’s Counterclaims fail to the extent they are barred by the statute of
`limitations under law or contract.
`FOURTH AFFIRMATIVE DEFENSE
`Surety’s Counterclaims are barred, in whole or in part, by the doctrines of
`waiver, estoppel, ratification, acquiescence, and unclean hands.
`FIFTH AFFIRMATIVE DEFENSE
`Surety lacks standing to assert its claims for indemnification as it has not
`incurred a loss and/or liability. Without liability, there can be no indemnity.
`SIXTH AFFIRMATIVE DEFENSE
`Surety’s actions, conduct and communications have resulted in a waiver of
`the right to maintain the claims asserted in Surety’s Counterclaim.
`SEVENTH AFFIRMATIVE DEFENSE
`Surety’s alleged damages must be offset by any and all recoveries
`heretofore obtained by it in satisfaction of the claimed damages.
`EIGHTH AFFIRMATIVE DEFENSE
`Surety’s claims are barred in whole or in part by its own failures to perform
`and breach of the contract between the Parties.
`NINTH AFFIRMATIVE DEFENSE
`Surety is not entitled to any recovery because they have not suffered any
`cognizable damages.
`
`23
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`
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`TENTH AFFIRMATIVE DEFENSE
`Surety’s claims are barred because their damages, if any, were caused by
`persons or entities other than Plaintiffs.
`ELEVENTH AFFIRMA
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