PVGC's project manager determined that ATO had misreported the amount of work completed, and he assisted PVGC in issuing a credit that corrected the completion percentages and reduced the money due from PVGC.

ATO alleged, on the other hand, that multiple entities, including PVGC, had previously approved the applications and completion percentages and, therefore, that PVGC should not have created corrective pay applications.

On October 12, 2017, after PVGC failed to pay ATO for applications 6 and 7, ATO served PVGC with a notice of default. Five days later, ATO filed a notice of termination.

Thereafter, ATO sued PVGC and Allied World Insurance Company, PVGC's surety, for breach of the payment bond.

The trial court determined that PVGC had:

• Breached the subcontracts;
• Failed to pay ATO for work performed under the subcontracts; and
• Failed to prove any of its five affirmative defenses.

The trial court entered final judgment for ATO against both defendants and awarded ATO $125,000 in damages with $9,729.16 in prejudgment interest, for a total judgment of $134,729.16. The trial court then awarded ATO $9,010.46 in taxable costs, $459,209.20 in attorneys' fees, and $1,443.47 in nontaxable costs.

PVGC and Allied World moved to post two supersedeas bonds pending appeal, one for $158,113.58 (as security for the judgment principal, prejudgment interest, and taxable costs) and a second for $506,706.94 (as security for the attorneys' fee award and nontaxable costs).

ATO opposed the motion, asserting that PVGC and Allied World were attempting to use a subsidiary of Allied World – Allied World Specialty – to post the bonds. ATO claimed that there was no proof that Allied World Specialty was financially independent from Allied World or otherwise free of Allied World's control. It alleged that the two companies shared the same Manhattan address and the same listed officers. ATO contended that the proposed bonds, therefore, did not represent any new collateral to secure the judgment and did nothing to protect ATO from the risk that PVGC and Allied World might be unable to meet their obligations pending appeal.

ATO also argued that PVGC and Allied World were jointly and severally liable and that they each should be required to post their own supersedeas bond.

For these reasons, ATO requested that PVGC and Allied World identify another surety and that they each post their own bond to secure ATO's interests on appeal.

The Court's Decision

In its decision, the court first rejected ATO's argument that each defendant had to post its own bond, finding no persuasive court decision explaining how or why two defendants found to be jointly and severally liable should be required to post two separate bonds. According to the court, because there was only a "single debt" and the underlying judgment applied jointly to each defendant, there was no need for each defendant to post a separate bond.

The court then rejected ATO's contention that PVGC and Allied World should not be allowed to use Allied World Specialty to post a supersedeas bond.

Among other things, the court found no authority that a parent corporation could not use a subsidiary for the posting of a supersedeas bond. The court added that there was no evidence that Allied World Specialty lacked assets or that the proposed supersedeas bond was otherwise defective. Moreover, the court observed, Allied World Specialty was licensed in all 50 states and was certified by the U.S. Department of Treasury to operate as a surety.

Accordingly, the court ruled that PVGC and Allied World could post a supersedeas bond totaling $664,820.52.

The case is A.T.O. Golden Construction Corp. v. Allied World Ins. Co., No. 17-24223-Civ-WILLIAMS/TORRES (S.D. Fla. Dec. 10, 2019).