devere response

00287289-1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

____________________________

Liberty Mutual Insurance Company, a

Massachusetts Corporation,

Plaintiff,

v

DeVere Construction Co., Inc., a Michigan

Corporation, Crittenden Construction Co.,

Inc., a Michigan Corporation, Reds Traders

Limited, a foreign corporation, a Belize

Company, Richard Lee Crittenden, a

Michigan Individual, Michael Bruce

Crittenden, a Michigan Individual, Cynthia

Sue Gabara, a Michigan Individual, Cheryl

Jean Lumsden, a Michigan Individual,

DeVere Swepco JV, LLC, a Louisiana

Limited Liability Company, DeVere

Construction Company - MI, LLC, a

Michigan Limited Liability Company,

Defendants.

Case No: 1:16-CV-10423

Honorable Thomas L. Ludington

Magistrate Patricia T. Morris

ANSWER TO COMPLAINT AND DEMAND FOR JURY TRIAL

Defendants DeVere Construction Co., Inc. (“DeVere”), Crittenden Construction Co., Inc.

(“Crittenden”), Reds Traders Limited (“Reds Traders”), Richard Lee Crittenden (“Richard

Crittenden”), Michael Bruce Crittenden (“Michael Crittenden”), Cynthia Sue Gabara (“Cynthia

Gabara”), Cheryl Jean Lumsden (“Cheryl Lumsden”), DeVere Swepco JV, LLC (“DeVere

Swepco”) and DeVere Construction Company—MI, LLC (“DeVere—MI”) (collectively

"Defendants"), by and through their attorneys, LAMBERT LESER, answer the complaint filed

against them by Plaintiff Liberty Mutual Insurance Company ("Plaintiff") as follows:

1:16-cv-10423-TLL-PTM Doc # 18 Filed 03/07/16 Pg 1 of 45 Pg ID 575

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PARTIES

1. The Defendants are without sufficient knowledge or information to form a belief

as to the truth of the allegations contained in this paragraph since they do not have first-hand

knowledge of the Plaintiff’s place of incorporation or principal place of business. Therefore, the

Defendants deny the allegations contained in this paragraph and leave the Plaintiff to its proofs.

2. The Defendants admit that DeVere is a Michigan corporation with its principal

place of business located at 1030 DeVere Drive, Alpena Michigan 49707. The Defendants deny

all other allegations contained in this paragraph for the reason they are untrue in fact, including

the Plaintiff’s allegations regarding service, which are conclusions of law to which no response

is required.

3. The Defendants admit that Crittenden is a Michigan corporation with its principal

place of business located at 1030 DeVere Drive, Alpena Michigan 49707. The Defendants deny

all other allegations contained in this paragraph for the reason they are untrue in fact, including

the Plaintiff’s allegations regarding service, which are conclusions of law to which no response

is required.

4. The Defendants admit that Reds Traders has a principal place of business located

at 40A Central America Boulevard, Belize City, Belize. The Defendants deny all other

allegations contained in this paragraph for the reason they are untrue in fact, including the

Plaintiff’s allegations regarding service, which are conclusions of law to which no response is

required.

5. The Defendants admit the allegations contained in this paragraph.




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9. The Defendants admit that DeVere Servpro is a Louisiana limited liability

company with its principal place of business located at 8126 One Calais Ave, Suite 2-C, Baton

Rouge, Louisiana 70809. The Defendants deny all other allegations contained in this paragraph

for the reason they are untrue in fact, including the Plaintiff’s allegations regarding service,

which are conclusions of law to which no response is required.

10. The Defendants admit that DeVere—MI is a Michigan corporation with its

principal place of business located at 1030 DeVere Drive, Alpena Michigan 49707. The

Defendants deny all other allegations contained in this paragraph for the reason they are untrue

in fact, including the Plaintiff’s allegations regarding service, which are conclusions of law to

which no response is required.

JURISDICTION AND VENUE

11. This paragraph contains conclusions of law to which no response is required.

To the extent a response is required, the Defendants are without sufficient knowledge or

information to form a belief as to the truth of the allegations contained in this paragraph

and, therefore, deny them and leave the Plaintiff to its proofs.


To the extent a response is required, the Defendants are without sufficient knowledge or

information to form a belief as to the truth of the allegations contained in this paragraph

and, therefore, deny them and leave the Plaintiff to its proofs.

FACTS COMMON TO ALL COUNTS



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14. The Defendants admit that the Plaintiff issued payment and performance

bonds to DeVere on various projects. The Defendants are without sufficient knowledge or

information to form a belief as to the truth of all other allegations contained in this

paragraph since copies of the bonds identified in the Table in paragraph 15 were not

attached to the complaint as exhibits, as required by applicable court rule, and since the

Table, itself, indicates that DeVere Swepco was the principal on at least one of the projects.

Therefore, the Defendants deny all other allegations contained in this paragraph and leave

the Plaintiff to its proofs.

15. The Defendants admit that the Plaintiff issued payment and performance

bonds to DeVere on various projects. The Defendants are without sufficient knowledge or


paragraph since copies of the bonds identified in the Table were not attached to the

complaint as exhibits, as required by applicable court rule, and since the Table, itself,

indicates that DeVere Swepco was the principal on at least one of the projects. Therefore,

the Defendants deny all other allegations contained in this paragraph and leave the Plaintiff

to its proofs.

16. The Defendants are without sufficient knowledge or information to form a

belief as to the truth of the allegations contained in this paragraph and, therefore, deny

them and leave the Plaintiff to its proofs.

17. The Defendants admit that DeVere, Crittenden, Reds Traders, Richard

Crittenden, Michael Crittenden, Cynthia Gabara and Cheryl Lumsden appear to have

executed the document entitled General Agreement of Indemnity dated March 14, 1995

(“1995 GAI”) and attached as Exhibit A. However, the Defendants are without sufficient


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knowledge or information to form a belief as to the truth of all other allegations contained

in this paragraph, including any inference or allegation that the document identified as the

1995 GAI and attached as Exhibit A is enforceable or a true and accurate copy of the

original since, by way of example and not limitation, the document does not appear to have

been accepted by the Plaintiff and also appears to have been superseded by alleged

subsequent agreements. Therefore, the Defendants deny all other allegations contained in

this paragraph and leave the Plaintiff to its proofs.

18. The Defendants admit that DeVere, Crittenden, DeVere/FFC, LLC Flaherty &

Collins Construction, Inc., Anson Member I, LLC, Richard Crittenden, Michael Crittenden,

Cynthia Gabara and Cheryl Lumsden appear to have executed the document entitled

General Agreement of Indemnity dated July 29, 2010 (“2010 GAI”) and attached as Exhibit

B. However, the Defendants are without sufficient knowledge or information to form a

belief as to the truth of all other allegations contained in this paragraph, including any

inference or allegation that the document identified as the 2010 GAI and attached as

Exhibit B is enforceable or a true and accurate copy of the original since, by way of example

and not limitation, the document does not appear to have been accepted by the Plaintiff.



19. The Defendants admit that the TWENTY-FIFTH paragraph of the document

identified as the 2010 GAI and attached as Exhibit B contains such a provision. However,

the Defendants are without sufficient knowledge or information to form a belief as to the

truth of all other allegations contained in this paragraph, including any inference or

allegation that the document identified as the 2010 GAI and attached as Exhibit B is


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enforceable or a true and accurate copy of the original since, by way of example and not

limitation, the document does not appear to have been accepted by the Plaintiff. Therefore,

the Defendants deny all other allegations contained in this paragraph and leave the Plaintiff

to its proofs.

20. The Defendants admit that the document entitled Amendment #1 to the

General Agreement of Indemnity and attached as Exhibit C contains such amendments and

provisions with respect to the document identified as the 2010 GAI and attached as Exhibit



inference or allegation that the document is enforceable or a true and accurate copy of the

original since, by way of example and not limitation: (1) the document is not executed by

the parties who allegedly executed the document identified as the 2010 GAI and attached

as Exhibit B; and (2) the document does not appear to have been accepted by the Plaintiff.




General Agreement of Indemnity and attached as Exhibit D contains such amendments and








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as Exhibit B; (2) the document is not executed by the alleged additional indemnitors; and

(3) the document does not appear to have been accepted by the Plaintiff. Therefore, the

Defendants deny all other allegations contained in this paragraph and leave the Plaintiff to

its proofs.


General Agreement of Indemnity and attached as Exhibit E contains such amendments and











General Agreement of Indemnity and attached as Exhibit F contains such amendments and








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General Agreement of Indemnity and attached as Exhibit G contains such amendments and











However, to the extent a response is required, the Defendants are without sufficient

knowledge or information to form a belief as to the truth of the allegations contained in this

paragraph and, therefore, deny them and leave the Plaintiff to its proofs.






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paragraph since the language cited does not impose a trust under applicable law.

Therefore, the Defendants deny the allegations contained in this paragraph and leave the

Plaintiff to its proofs.

29. The Defendants admit that Plaintiff asked some of them to provide financial

information, but deny all other allegations contained in this paragraph for the reason they

are untrue in fact, including the allegations that submission of any financial information

was a condition precedent to the issuance of any bond or a representation of future net

worth and/or collectability.

30. The Defendants deny the allegations contained in this paragraph for the

reason they are untrue in fact.


belief as to the truth of the allegations contained in this paragraph since a copy of the

financial statement was not provided to them under seal, as the complaint indicated.




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Therefore, therefore the Defendants deny the allegations contained in this paragraph and

leave the Plaintiff to its proofs.




















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reason they are untrue in fact, including the allegation, that submission of any financial

information was a condition precedent to the issuance of any bond or a representation of

future net worth and/or collectability.












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77. The Defendants admit that there are some payment bond claims pending in

litigation, but are without sufficient knowledge or information to form a belief as to the

truth of all other allegations contained in this paragraph and, therefore, deny them and



belief as to the truth of the allegations contained in this paragraph and copies of the alleged

demands were not attached to the complaint as exhibits. Therefore, the Defendants deny

the allegations contained in this paragraph and leave the Plaintiff to its proofs.

79. The Defendants admit that the letter dated November 20, 2015 and attached

as Exhibit H was sent. However, the Defendants are without sufficient knowledge or




belief as to the truth of the allegations contained in this paragraph and a copy of the alleged

demand was not attached to the complaint as an exhibit. The Plaintiff has been provided

with access to DeVere’s books and records. Therefore, the Defendants deny the allegations

contained in this paragraph and leave the Plaintiff to its proofs.


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84. The Defendants admit that DeVere sent the letter attached as Exhibit I at the

request of a Plaintiff representative but deny all other allegations contained in this

paragraph for the reason they are untrue in fact, including any allegation that DeVere was

completely unable to finish projects or pay contractors. Rather, DeVere was advising the

Plaintiff of its need for financial assistance to help combat the cash flow issue caused by

North Carolina’s Department of Transportation failure to timely pay for projects DeVere

had completed.


reason they are untrue in fact, including any allegation that DeVere was completely

unwilling and unable to finish projects or pay contractors. Rather, DeVere was advising the

Plaintiff of the cash flow issue caused by the North Carolina Department of

Transportation’s intentional and improper failure to timely pay DeVere for projects it had

completed and requesting financing assistance.

86. The Defendants admit that DeVere, Crittenden, Reds Traders, Richard

Crittenden, Michael Crittenden, Cynthia Gabara and Cheryl Lumsden appear to have


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executed the document entitled Memorandum of Understanding (“MOU”) and attached as

Exhibit J. However, the Defendants are without sufficient knowledge or information to

form a belief as to the truth of all other allegations contained in this paragraph and,

therefore, deny them and leave the Plaintiff to its proofs.




paragraph since the language cited does not impose a trust under applicable law.



88. This paragraph contains conclusions of law to which no response is

required. However, to the extent a response is required, the Defendants are without

sufficient knowledge or information to form a belief as to the truth of the allegations

contained in this paragraph since Plaintiff has been provided with access to DeVere’s books

and records. Therefore, the Defendants deny the allegations contained in this paragraph

and leave the Plaintiff to its proofs.









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paragraph and therefore, deny them and leave the Plaintiff to its proofs. The Defendants

did propose a plan of completion, which included third-party funding for the defense of

payment bond claims and the prosecution of DeVere’s claims against the North Carolina

Department of Transportation, but Plaintiff has refused to even consider the proposal.

Therefore, the Defendants deny the allegations and leave the Plaintiff to its proofs.
















95. The Defendants admit that DeVere sent the letter attached as Exhibit K at the

request of a Plaintiff representative, but deny all other allegations contained in this

paragraph for the reason they are untrue in fact, including any allegation that DeVere was


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completely unable to finish projects or pay contractors. Rather, DeVere was, again,

advising Plaintiff of its need for financial assistance to help combat the cash flow issue

caused by North Carolina’s Department of Transportation failure to timely pay for projects

DeVere had completed.

96. The Defendants admit that Plaintiff presented a proposed Addendum #1 to

Memorandum of Understanding. However, the Defendants are without sufficient

knowledge or information to form a belief as to the truth of all other allegations contained

in this paragraph and, therefore, deny them and leave the Plaintiff to its proofs.




98. The Defendants admit that DeVere sent the letter attached as Exhibit M.

However, the Defendants are without sufficient knowledge or information to form a belief

as to the truth of all other allegations contained in this paragraph and, therefore, deny them


99. The Defendants admit that DeVere sent the letter attached as Exhibit M.








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101. The Defendants admit that DeVere sent the email attached as Exhibit N.




102. The Defendants admit that there were various email exchanges between

DeVere and the Plaintiff, which are attached as part of Exhibit N. However, the Defendants

are without sufficient knowledge or information to form a belief as to the truth of all other

allegations contained in this paragraph and, therefore, deny them and leave the Plaintiff to

its proofs.





its proofs.





its proofs.





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its proofs.

106. The Defendants admit that the letter dated January 27, 2016 and attached as

Exhibit O was sent. However, the Defendants are without sufficient knowledge or
















belief as to the truth of the allegations contained in this paragraph and no documentation

to support the Plaintiff’s payment of the alleged claims, costs and fees was attached to the

complaint as an exhibit. Therefore, the Defendants deny the allegations contained in this

paragraph and leave the Plaintiff to its proofs.


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belief as to the truth of the allegations contained in this paragraph since DeVere has

provided Plaintiff the documents and/or access to the documents it has requested.




belief as to the truth of the allegations contained in this paragraph since DeVere has

provided the Plaintiff the documents and/or access to the documents it has requested.

Also, copies of the alleged continued demands were not attached to the complaint as

exhibits. Therefore, the Defendants deny the allegations contained in this paragraph and


114. The Defendants admit that the letters attached as Exhibit Q were sent.





belief as to the truth of the allegations contained in this paragraph since no Exhibit Y was

attached to the complaint. Therefore, the Defendants deny the allegations contained in this

paragraph and leave the Plaintiff to its proofs.





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COUNT I—BREACH OF CONTRACT

119. The Defendants incorporate the previous paragraphs of this answer.
















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contained in this paragraph and, therefore, deny them and leave the Plaintiff to its proofs.








paragraph and no documentation to support Plaintiff’s payment of the alleged claims, costs

and fees was attached to the complaint as an exhibit. Therefore, the Defendants deny the

allegations contained in this paragraph and leave the Plaintiff to its proofs.




contained in this paragraph and, therefore, deny them and leave the Plaintiff to its proofs.









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contained in this paragraph since DeVere has provided Plaintiff the documents and/or

access to the documents it has requested. Therefore, the Defendants deny the allegations

contained in this paragraph and leave the Plaintiff to its proofs.




paragraph and no documentation to support Plaintiff’s payment of the alleged claims, costs

and fees was attached to the complaint as an exhibit. Therefore, the Defendants deny the

allegations contained in this paragraph and leave the Plaintiff to its proofs.
















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COUNT II—EXONERATION AND QUIA TIMET













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COUNT III—SPECIFIC PERFORMANCE OF THE INDEMNITY AGREEMENT









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COUNT IV—BREACH OF TRUST FUND PROVISIONS









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COUNT V—BREACH OF STATUTORY TRUST FUND PROVISION







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164. The Defendants admit that DeVere was engaged in the Bay River project, but

deny all other allegations contained in this paragraph for the reason they are untrue in fact.























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COUNT VI—COMMON LAW CONVERSION



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COUNT VII—STATUTORY CONVERSION









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COUNT VIII—FRAUD/MISREPRESENTATIONIN THE INDUCMENTOF CONTINUED BONDING RELATIONSHIP


















COUNT IX—CONSTRUCTIVE FRAUD/MISREPRESENTATIONIN THE INDUCEMENTOF CONTINUED BONDING RELATIONSHIP





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COUNT X—FRAUDLENT CONVEYANCE/TRANSFER (Actual Intent)
















COUNT XI—FRAUDLENT CONVEYANCE (Constructive Fraud)





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Affirmative Defenses

The Defendants assert the following affirmative defenses:

a. Failure to State a Claim. The Plaintiff has failed to state a claim upon which

relief can be granted;

b. Bar, Estoppel and Waiver. The Plaintiff is barred and estopped from raising

the claims asserted and/or has waived the claims asserted;


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c. Statute of Frauds. The Plaintiff’s claims may be barred, in whole or in part,

by the statute of frauds;

d. Statute of Limitations. The Plaintiff's claims may be barred, in whole or in

part, by the applicable statute of limitations;

e. Mitigation of Damages. The Plaintiff, upon information and belief, has failed

to mitigate its damages;

f. Unreasonable/Unrecoverable Costs, Expenses and Attorney Fees. Any costs,

expenses and attorney fees claimed by the Plaintiff may not be reasonable or recoverable

by contract or applicable law;

g. Bad Faith. The Plaintiff has not acting in good faith;

h. Lack of Consideration. There was no consideration for the agreements or

promises allegedly made by the Defendants;

i. Agreement Superseded. The 1995 GAI was superseded by the 2010 GAI;

j. No Liability for Payments and/or Right of Set-Off. The Defendants have no

liability for any payment made by the Plaintiff and/or have a right of set-off;

k. Failure to Pursue Principal. The Plaintiff has failed to pursue the principal;

l. Release. The Plaintiff, by its actions, has released the indemnitors through

the breach of its obligations under the bonds and indemnity agreements or otherwise;

m. No Notice. The Plaintiff failed to give the Defendants proper notice;

n. Failure to Write Bonds. The Plaintiff has refused to continue writing bonds

for the principal;

o. No Default. There has been no default;


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p. Interference with Contractual Business Relationships/Expectancy. The

Plaintiff has interfered with business relationships and/or expectancies of the Defendants;

q. No Trust. The 1995 GAI and 2010 GAI did not impose a trust under

applicable law;

r. No Title or Right to Possession. The Plaintiff did not have title or right of

possession to any assets it claims were allegedly converted;

s. Tort Claims not Independent of Contract Claims. The Plaintiff's tort claims

are not distinct and independent from its breach of contract claims and,

therefore, improper and/or barred;

t. Tort Claims Barred Under Economic Loss Doctrine. The Plaintiff's tort claims

are barred under the economic loss doctrine;

u. Fraud Claims Not Specifically Plead. The Plaintiff's fraud claims have not

been pled with specificity;

v. Implied Contract Claims Improper. Implied contract claims are improper if

an express contract exists between the parties;

w. No Irreparable Harm. The Plaintiff cannot demonstrate that it has or will

suffer irreparable harm;

x. Adequate Remedy at Law. The Plaintiff has an adequate remedy at law;

y. Failure to Demonstrate Entitlement to Injunctive Relief. The Plaintiff has not

and cannot demonstrate it is entitled to the injunctive relief requested; and

z. Reservation of Right. The Defendants reserve the right to add any additional

affirmative defenses that become apparent during the course of discovery.


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Accordingly, the Defendants request that the Court dismiss the Plaintiff’s complaint

with prejudice and award them any other relief deemed appropriate, including the costs,

expenses and attorney fees they have incurred in defending the same.

LAMBERT LESER

Date: March 7, 2016. By:

/s/ John E. Gannon

John E. Gannon (P41349)

Attorneys for Defendants

916 Washington Ave., Ste. 309

Bay City, MI 48708

(989) 893-3518

[email protected]

DEMAND FOR JURY TRIAL

Defendants DeVere Construction Co., Inc. (“DeVere”), Crittenden Construction Co., Inc.

(“Crittenden”), Reds Traders Limited (“Reds Traders”), Richard Lee Crittenden (“Richard

Crittenden”), Michael Bruce Crittenden (“Michael Crittenden”), Cynthia Sue Gabara (“Cynthia

Gabara”), Cheryl Jean Lumsden (“Cheryl Lumsden”), DeVere Swepco JV, LLC (“DeVere

Swepco”) and DeVere Construction Company—MI, LLC (“DeVere—MI”) (collectively

"Defendants"), by and through their attorneys, LAMBERT LESER, request a jury trial in this

matter.

LAMBERT LESER

Date: March 7, 2016. By:

/s/ John E. Gannon

John E. Gannon (P41349)

Attorneys for Defendants

916 Washington Ave., Ste. 309

Bay City, MI 48708

(989) 893-3518

[email protected]


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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document has been properly forwarded to all counsel of record per the FEDERAL RULES OF CIVIL PROCEDURE by ECF transmission, on this 7th day of March, 2016. /s/ John E. Gannon


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