Full opinion text
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT; GRANTING PLAINTIFF’S RENEWED AND SUPPLEMENTAL EMERGENCY MOTION FOR PRELIMINARY INJUNCTION; DENYING AS MOOT PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION; CLOSING CASE ALAN S. GOLD, District Judge. THIS CAUSE is before the Court on: (1) Plaintiffs Motion for Summary Judgment [DE 101]; (2) Plaintiffs Motion for Preliminary Injunction [DE 113]; and (3) Plaintiffs Renewed and Supplemental Emergency Motion for Temporary Restraining Order with Notice and for Preliminary Injunction [DE 116]. The parties have filed responses and replies, and oral argument on these motions was held on November 20, 2007 and on December 20, 2007. This Court has jurisdiction pursuant to 28 U.S.C. § 1332 based on the parties diversity of citizenship. Having reviewed the parties’ arguments and the relevant case law, I conclude that Plaintiffs Motion for Summary Judgment seeking: (1) a judicial declaration that Plaintiff had the right to settle Aventura’s claim against Goodwill, based on Aventu-ra’s breach of the Indemnity Agreement; (2) a monetary judgment in the amount of $2,755,936.51 to indemnify Plaintiff for losses and costs incurred in connection with the Goodwill Bond, with the Court reserving jurisdiction to determine Plaintiffs entitlement to recover interest, additional costs, and attorneys’ fees; and, (3) a final decree of specific performance requiring that Defendants post collateral in the amount of $1,015,000.00 to secure Plaintiff against potential liability on the Village of Pinecrest Bond and the pending claim by Jag-Air Mechanical in connection with the Silver Lakes School Payment Bond, must be granted in its entirety. Based on the entry of summary judgment, I further conclude that Plaintiff is entitled to an All Writs Act Injunction to restrain Aventura and the American Arbitration Association (“AAA”) from proceeding with the pending arbitration proceeding styled Aventura Engineering & Construction Corp. v. Goodwill Industries of Southern Florida, Inc., AAA Case No. 32-110-Y-00500-06 (the “Arbitration Action”). Finally, because I granted summary judgment on Plaintiffs request for a final decree of specific performance, Plaintiffs Motion for Preliminary Injunction: (1) seeking to disgorge improperly received payments from the School Board of Broward County, Florida, in the amount of $163,628.00 in relation to the Silver Lakes Middle School Project; and, (2) requiring Defendants to post collateral in the additional amount of $411,372.00 to cover the potential losses and expenses associated with the pending claim on the Silver Lakes Bond by Jag-Air Mechanical, is denied as moot. I. Factual Background The following material facts are undisputed and supported by evidence in the record. Liberty Mutual Insurance Company (“Liberty”) is a Massachusetts corporation which, among other things, issues surety bonds. Defendant Aventura Engineering & Construction Corp. (“Aventura”), a Florida Corporation, is a general contractor in the construction industry. Defendants Cary O. Lopez (“Lopez”), Camille A. Davis (“Davis”), and Rosaline Williams (“Williams”) are citizens and residents of the state of Florida. A. The General Indemnity Agreement On or about December 4, 2003, Defendants Aventura, Lopez, Davis, and Williams (collectively “Defendants”, “In-demnitors”, or “Principals”) executed an Indemnity Agreement in favor of Liberty. (Plaintiffs Revised Statement of Undisputed Facts, DE 143 at ¶ 1). The execution of the Indemnity Agreement was a condition precedent to Liberty issuing the bonds discussed in Section I.B of this Order on behalf of Aventura. (Id. at ¶ 6). Although relevant parts of the Indemnity Agreement, a copy of which has been filed with the Court, are addressed in the substantive argument section of this order, certain key provisions are set forth below. SECOND: INDEMNITY — The Indem-nitors shall exonerate, hold harmless, indemnify, and keep indemnified the Surety from and against any and all losses, fees, costs and expenses whatsoever kind or nature ... from the date of a breach of this Agreement or a breach of any other written agreements between or for the benefit of the Surety and the Indemnitor(s) and/or Princi-palis) (hereinafter referred to as “Other Agreements”) ... which the Surety may sustain or incur: (1) by reason of being requested to execute or procure the execution of any Bond; or (2) by having executed or procured the execution of any Bond; (3) by reason of the failure of the Indemnitors or Principals to perform or comply with any of the covenants and conditions of this Agreement or Other Agreements; or (4) in enforcing any of the covenants and conditions of this Agreement or Other Agreements. Payment ... shall be made to the Surety by the Indemnitors ... promptly, upon demand by the Surety, whether or not the Surety shall have made any payment therefore and, at the Surety’s sole option, irrespective of any deposit or collateral. If the Surety determines, in its sole judgment, that potential liability exists for losses and/or fees, costs and expenses for which the Indemnitors and Principals will be obliged to Indemnify the Surety under the terms of this Agreement or Other Agreements, the Indemnitors ... shall deposit with the Surety, promptly upon demand, a sum of money equal to an amount determined by the Surety or collateral security of a type and value satisfactory to the Surety, to cover that liability, whether or not the Surety has: ... (b) made any payments; or (c) received any notice of any claims thereof.... In the event of any payment by the Surety, the Indem-nitors ... further agree that in any accounting between the Surety ... and the Indemnitors ... the Surety shall be entitled to charge for any and all disbursements made by it in good faith in and about the matters herein contemplated by this Agreement or Other Agreements under the belief that it is, or was, or might be labile for the sums and amounts so disbursed or that it was necessary or expedient to make to make such disbursements, whether or not such liability, necessity or expediency existed; and that the vouchers or other evidence of any such payments made by the Surety shall be prima facie evidence of the fact and amount of the liability to the Surety. THIRD: ASSIGNMENT — The Indem-nitors hereby consenting do assign, transfer, pledge and convey to the Surety ... as collateral security for the performance of the covenants and agreements herein contained, contained in Other Agreements and for the payment of any other indebtedness or liability of the Indemnitors and/or Principals to the Surety, whether therefore or hereafter incurred, the assignment in the case of each contract being effective as of the date of the Bond covering such contract the following: (a) all of the right, title and interest of the Indemintors and/or Principals in, and growing in any manner out of, all contracts referred to in the Bonds, or in, or growing in any matter out of the Bonds; ... (d) all actions, causes of action, claims and demands whatsoever which the Indemni-tors and/or Principals may have or acquire against any subcontractor, laborer or materialman, or any person furnishing or agreeing to furnish or supply labor, material, supplies, machinery, tools or other equipment in connection with or on account of any and all contracts referred to in the Bonds; ... FIFTH: TAKEOVER — In the event of any of the following: breach, default, or termination asserted by the obligee in any Bond; any Principal’s abandonment of the work or forfeiture of any contract covered by any Bond, any Principal’s failure to pay obligations incurred in connection therewith; ... then the Surety shall have the right at its option and its sole discretion and is hereby authorized, with or without exercising any other right or option conferred upon it by law or under the terms of this Agreement, to take possession of any part or all of the work under any contract or contracts covered by the Bonds, and the Indemintors hereby agree to use their best efforts to cause the Principal to permit the Surety to take possession of any part or all of the work ..., at the expense of the Indemnitors and Principal, to complete or arrange for the completion of the same, and the Indem-nitors and Principals shall promptly, upon demand, pay to the Surety all losses, fees, costs and expenses so incurred. THIRTEENTH: SETTLEMENTS— The Surety shall have the right, at its option and sole discretion, to adjust, settle or compromise any claim, demand, suit or judgment upon any Bond, unless any indemnitor or Principal providing a reasonable legal basis thereof, shall 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 judgements rendered or that may be rendered, with interest, costs, expenses and attorneys’ fees, including those of the Surety. EIGHTEENTH: ATTORNEY-IN-FACT — The Indemnitors and Principals hereby irrevocably nominate, constitute, appoint and designate the Surety as their attorney-in-fact with the full right and authority, but not the obligation, to exercise all the rights of the Indemni-tors and Principals assigned, transferred and set over to the Surety in this Agreement, with full power and authority to execute on behalf of and sign any In-demnitor or Principal to any ... release, ... or any other document or papers deemed necessary and proper by the Surety in order to give full effect not only to the intent and meaning of the within assignments, but also to the full protection intended to be herein given to the Surety under all other provisions of this Agreement. The Indemnitors and Principals hereby ratify and confirm all acts and actions taken and done by the Surety as such attorney-in-fact and agree to protect and hold harmless the Surety for acts herein granted as attorney-in-fact. TWENTIETH: AMENDMENTS— This Agreement may not be changed or modified orally. No change or modification shall be effective unless made by written amendment to form a part thereof. B. The Goodwill Bond In reliance upon the rights conveyed by the Indemnity Agreement, Liberty issued the following contract performance and payment bonds on behalf of Aventura: (1) Payment and Performance Bond No. 964-004-212 in favor of Goodwill Industries of South Florida, Inc. (owner/obligee) in connection with the Goodwill Miami Facility Expansion Project (hereinafter, the “Goodwill Bond”); (2) Payment and Performance Bond No. 964-004-221 in favor of Cromp-ton Construction (owner/obligee) in connection with the Pre-Demolition American Airlines Project; (3) Payment and Performance Bond No. 964-007-923 in favor of Broward County School Board (owner/obligee) in connection with the Silver Lakes Middle School Project (hereinafter, the “Silver Lakes Bond”); (4) Payment and Performance Bond No. 964-007-925 in favor of Broward County School Board (owner/obligee) in connection with the Attacks Middle School Project (hereinafter, the “Attacks Bond”); (5) Bid Bond No. 964-004-212 in favor of Village of Pine-crest (owner/obligee) in connection with the Library/Community Center Project (hereinafter, the “Pinecrest Bond”); (6) Payment and Performance Bond No. 964-004-236 in favor of American Airlines, Inc. (owner/obligee) in connection with the Relocation for MDAD Ramp Control Tower North Terminal Project; (7) Payment and Performance Bond No. 964-004-278 in favor of Turner-Austin American Airlines, and Miami-County Dade (owner/obligee) in connection with the Interior Finish, North Terminal at MIA Project; (8) Payment and Performance Bond No. 964-007-927 in favor of Miami-Dade County Park and Recreation Department (owner/obli-gee) in connection with the Interior Homestead Air Reserve Project. (Id. at ¶ 7). On or about September 9, 2004, Aventu-ra entered into a contract with Goodwill for the construction of a Goodwill facility (the “Goodwill Project”). (Defendants’ Statement of Material Facts, DE 150 at ¶ 1). Section 4.6 of the contract included an arbitration clause for dispute resolution. (Id. at ¶ 1). On September 29, 2004, pursuant to the Indemnity Agreement, the parties executed The American Institute of the Architects standard performance bond document, Document A312, as the Performance Bond in favor of Goodwill for the Goodwill Project. (Id. at ¶ 2). On April 8, 2006, Aventura sent Goodwill’s architect a letter advising it of increased costs that Aventura was requesting as a change order to the project. (Id. at ¶ 3). On April 12, 2006, Goodwill responded by notifying Liberty and Aventu-ra that Goodwill was invoking § 3.1 of the Goodwill Bond, which required a meeting between the parties when Goodwill is considering declaring a contractor default. (DE 143 at ¶ 8). On April 20, 2006, Aven-tura sent Goodwill a follow-up letter to the April 8th letter providing an additional breakdown of the amounts of money and time Aventura was requesting, and showing that the increase was due to price escalations due to the impact of the hurricanes and the construction boom, as well as a bid mistake. (DE 150 at ¶ 5). On May 4, 2006, representatives from Goodwill, Aventura, Liberty and Sousa Architecture, P.A. met to discuss Goodwill’s intention of declaring Aventura in default. At that meeting, it was agreed that Aven-tura would continue its performance as the project was already ninety percent completed. (Id. at ¶ 6). In a letter dated May 23, 2006, Goodwill informed Aventura and Liberty that it was “extremely disappointed” with the lack of progress on the project since the parties had met on May 4, 2006 and, as a result, was once again demanding that Liberty take whatever action was necessary to complete the project on an expedited matter. (See DE 107-3, Ex. 5). In response to this letter, Liberty conducted a review of Aventura’s books and records, including those of the Goodwill Project and asked Goodwill to continue the pre-termination meeting process under § 3.1 of the Bond for two more weeks, to allow the parties time to develop a proposal for completion of the work. (DE 143 at ¶ 9, & n. 7). After the books and records review, Aven-tura provided Liberty a handwritten analysis showing that Aventura calculated the costs to complete at $900,000.00 over the existing contract balance held by Goodwill. (Id. at ¶ 9). This amount did not include general conditions of $40,000 a month or any allowance for non-compliant work. (Id.). In addition, Liberty discovered letters from Aventura to Goodwill in which Aventura admitted that it under-bid the project by approximately $1.7 million. (Id. at ¶ 9; DE 107 at Ex. 10). During this time, Goodwill did not pay the April and May Payment Applications. (DE 150 at ¶ 7). On June 1, 2007, Aventura’s counsel wrote to Goodwill advising that it was in default of their payment obligations under their agreement. (Id. at ¶ 8). In a letter dated June 5, 2006, Liberty demanded that Aventura post $900,000.00 in collateral to cover what Liberty estimated to be its potential exposure with regard to the Goodwill Bond. (DE 143 at ¶ 10; DE 107 at Ex. 11). The letter stated that Liberty wanted to meet with Aventura to discuss the status of the Goodwill Project and the steps necessary to complete it. (DE 107 at Ex. 11). In addition, the letter stated: “This letter is written under a full reservation of all rights and defenses available to Liberty under its Bond, its General Agreement of Indemnity, any other contract, at law or in equity.” (Id.). On June 9, 2006, Liberty provided Defendants with Liberty’s detailed calculations justifying the collateral amount demanded, which was based on the projected deficit of the project. (DE 143 at 10; DE 107, Ex. 12 & 13). In a different letter, also dated June 9, 2006, Aventura provided Liberty with a counter-proposal. (DE 107 at Ex. 14). In the June 9 letter, Aventura alleged that it had not yet been terminated, that it had not been declared in default, and it did not think there was any justification for Liberty to have any involvement with the matter. (Id.). The counter-proposal included a statement that Aventura would agree to “collateral assignment of a security interest in the building but at a number to be agreed based upon a further analysis of the financial numbers on the Project.” (Id.). Furthermore, the counter-proposal required Goodwill to release all funds due under the April and May pay applications to Aventura directly and not as joint checks. (Id.). Finally, Liberty was required to issue performance and payment bonds for the Village of Pinecrest Project. (Id.). Several other letters and emails were exchanged between Aventura and Liberty regarding the demand for collateral on the Goodwill Bond. Liberty’s demands continued through October 5, 2006, the date this lawsuit was filed. The seven additional written demands were made on June 20, June 30, July 7, July 11, July 25, September 14, and October 4, 2006. (DE 143 at ¶ 11, n. 13). Each demand included “a full reservation of all rights and defenses available to Liberty under its Bond, its General Agreement of Indemnity, any other contract, at law or in equity.” (See DE 104 at Ex. 20-24, 27, 29). The Indemnitors did not provide the demanded collateral. On June 19, 2006, Goodwill terminated Aventura’s contract for an alleged default and made a demand on Liberty to perform the contract pursuant to the Performance Bond. (DE 143 at ¶ 8). The letter demanding Liberty to perform stated that Goodwill had already complied with § 3.1 of the Performance Bond, and provided Aventura seven days to cure its default (DE 39 at ¶ 11, & Ex. 3; DE 143 at ¶ 10). Aventura had continued to perform work pursuant to the contract and to fully man the project until it was terminated on June 19, 2006. (DE 150 at ¶ 9). On June 20, 2006, Aventura formally demanded that Liberty not honor Goodwill’s claim against the Bond, and that Liberty allow Aventura to litigate its claim against Goodwill. (DE 143 at ¶ 18). Aventura did not accompany the demand with any type of collateral. (Id.). On June 20, 2006, Aventura’s counsel wrote to Goodwill’s attorney alleging that Goodwill was in default of the contract, that its termination was improper, and requesting that Goodwill withdraw its termination letter and that it pay the outstanding pay applications. (DE 150 at ¶ 18). On that same date, Aventura initiated arbitration proceedings against Goodwill for an alleged wrongful termination and seeking over $3,000,000.00 in damages. (DE 150 at ¶ 19, 25). Also on June 20, 2006, Aventura’s counsel wrote to Liberty advising them that Goodwill was in default of the contract for failure to pay Aventura the April and May Pay Applications, totaling $558,328.10; that its termination was wrongful; that Goodwill had failed to comply with the notice and cure provisions required by the construction contract; and requesting that Liberty deny Goodwill’s request that Liberty complete the project. (DE 150 at ¶ 20). Section 12.4 of the performance bond defines “Owner Default” as “Failure of the Owner, which has neither been remedied nor waived, to pay the Contractor as required by the Construction Contract or to perform and complete or comply with the other terms thereof.” (Goodwill Performance Bond, DE 152-8). Liberty does not dispute that Goodwill owed at least one payment at the time that it declared that Aventura was in default. (DE 150 at ¶ 16). In response to Aventura’s and Goodwill’s allegations of default, Liberty requested Aventura’s cooperation in getting the subcontractors to agree to continue to perform and to ratify their contracts and also requested that Aventura provide the assistance of its personnel in the completion of the work. (Id. at ¶ 26). On July 12, 2006, Liberty and Goodwill negotiated and drafted a Takeover Agreement (the “Takeover Agreement”), to which Aventura was not a party. (Affidavit of Cary Lopez, DE 56-4 at Ex. 13). In the Takeover Agreement, Liberty proposed to complete the Goodwill project under a complete reservation of rights. (DE 143 at ¶ 21). Specifically, the Takeover Agreement provided: 8. Reservation of Rights. This Agreement is being entered into under a complete reservation of rights by all parties, and the parties agree that the Surety’s election to perform the Project under the Performance Bond shall not be construed as an admission of liability under the Performance Bond, or admission of Aventura’s default under the Contract or a waiver of Aventura’s claims thereunder. The Surety’s decision to perform the Contract is for mitigation purposes only. 14. No Third Party Beneficiaries. This Agreement is solely for the benefit of the Owner and the Surety. The Owner and the Surety do not intend by any provision of this Agreement to create any rights in or increase the rights of any third-party beneficiaries, nor to confer any benefit upon or enforceable rights under this Agreement or otherwise upon anyone other than the Owner and the Surety. After the Takeover Agreement was executed, Aventura continued to assist Liberty to complete the project. (DE 150 at ¶ 28). This assistance included providing Liberty with Aventura personnel and documents, as well as reviewing subcontractor invoices. Aventura also executed a partial release of lien in favor of Goodwill on August 16, 2006, so that Goodwill would pay Liberty $305,509.50 in contract proceeds, so that Goodwill could release a payment to Liberty. (Id.). Subsequent to the Takeover Agreement, Liberty made a demand upon Aventura for collateral and indemnity that Aventura thought was excessive. (Id. at ¶ 29). Aventura countered and requested proof of the amounts that Goodwill was claiming and proof that the amounts did not include extra change order work that was not within Aventura’s scope of work. (Id.). Liberty’s written communications with Defendants, both before and after the Takeover Agreement, stated that Liberty continued to reserve all rights under the Indemnity Agreement and that nothing about Liberty’s actions could be deemed a waiver of or estoppel against those rights. On August 3, 2007, Liberty informed the Indemnitors, in writing, that among the rights Liberty reserved was the right to execute release documents using the Indemnity, Assignment, Settlements, and Attorney-in-Fact provisions of the Indemnity Agreement. (DE 107-10 at Ex. 38). By November of 2006, Liberty had incurred substantial expenditures to complete the Goodwill project. (DE 143 at ¶ 19). As a result, Liberty made a series of demands for indemnification and proposals to resolve the indemnity obligations of the Defendants. (Id.). On November 13, 2006, Liberty formally declared the Indemnitors in default under the Indemnity Agreement due to their continued failure to post collateral. (DE 143 at ¶ 24 & EX. 32). In the default letter, Liberty formally invoked the assignment, right to settle and power of attorney provisions. (DE 107 at Ex. 32). The letter once again stated that Liberty was reserving all rights and defenses and informed the In-demnitors that Liberty would exercise its ownership of and right to settle Aventura’s affirmative claim against Goodwill as part of Liberty’s overall settlement with Goodwill on the claim against the Performance Bond. (DE 107 at Ex. 32). Defendants did not paid Liberty any amount for indemnification of Liberty’s losses, costs, and expenses, nor did they post any collateral. On January 9, 2007, Liberty executed a Settlement Agreement with Goodwill. (DE 39 at Ex. 7-8). As part of the Settlement Agreement, Liberty exercised its power-of-attorney to execute a release of all claims that Aventura had against Goodwill growing out of the bonded contract. (Id.). Liberty has provided evidence showing it has incurred damages, including completion costs, investigative costs, and attorney’s fees, in the amount of $2,755,936.51 as a result of issuing the Goodwill Bond. (DE 143 at ¶27). At the December 20 Hearing, Defendants conceded that Liberty has incurred these expenses. C. The Pinecrest Bond On June 21, 2007, the Village of Pine-crest, Florida, made a demand on the Pi-necrest Bond. (DE 143 at ¶ 12). The sum of the Bond is $336,970 (5% of Aventura’s Bid). Liberty’s potential exposure is the full amount of the Bond, plus potential interests, costs, and attorneys’ fees. (Id.). In a letter dated July 25, 2006, Liberty made a demand for collateral in the amount of $1.4 million: $336,970 demand by the Village of Pinecrest, and an allowance for Liberty’s continuing and projected investigation and completion expenses on the Goodwill Bond. (DE 107 at Ex. 24). On September 14 and October 4, 2006, Liberty again made formal written demand upon the Indemnitors for posting of the Pinecrest Bond collateral. (Id. at Ex. 27 & 29). The Indemnitors have not posted the demanded collateral. To this date, Liberty remains uncollateralized against any alleged loss with regard to the Village of Pinecrest claim in the amount of $440,000. (DE 143 at ¶ 26). D. The Claim by Jag-Air Against the Silver Lakes Payment Bond On September 5 and 23, 2007, Liberty received a claim in the amount of $525,-437.94.18 on Payment Bond No. 964-007-923, for the Silver Lakes School project, from Jag-Air Mechanical (the “Jag-Air Claim”), Aventura’s HVAC subcontractor. (DE 103 at p. 6 & Ex. A). On September 7, 2007, and again on October 4, 2007, Liberty demanded collateral in the amount of $575,000.00 as security against the potential liability on the Silver Lakes Bond, including potential claims for interest, costs and attorneys’ fees. (DE 103 at p. 7 & Ex. B). Aventura terminated Jag-Air on September 5, 2007 at the express written direction of the School Board of Bro-ward County, the owner of the Silver Lakes project. (DE 150 at ¶ 46). The Indemnitors have not responded to Liberty’s demand for collateral on the Silver Lakes Bond, and have not posted collateral in any amount. (DE 143 at ¶ 17). Liberty remains uncollateralized against its alleged loss with regard to the Jag-Air claim in the amount of $575,000. (Id. at 26). No collateral has been posted with Liberty. II. Standard for Summary Judgment Rule 56(c) of the Federal Rules of Civil Procedure authorizes summary judgment when the pleadings and supporting materials show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is “material” if it hinges on the substantive law at issue and it might affect the outcome of the nonmoving party’s claim. See id. (“Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.”). The court’s focus in reviewing a motion for summary judgment is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Bishop v. Birmingham Police Dep’t, 361 F.3d 607, 609 (11th Cir.2004). The moving party bears the initial burden under Rule 56(c) of demonstrating the absence of a genuine issue of material fact. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997). Once the moving party satisfies this burden, the burden shifts to the party opposing the motion to go beyond the pleadings and designate “specific facts showing that there is a genuine issue for trial.” Celotex v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A factual dispute is genuine only if the evidence is such that a reasonable fact finder could return a verdict for the non-moving party. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Denney v. City of Albany, 247 F.3d 1172, 1181 (11th Cir.2001). In assessing whether the movant has met its burden, the court should view the evidence in the light most favorable to the party opposing the motion and should resolve all reasonable doubts about the facts in favor of the non-moving party. Denney, 247 F.3d at 1181. In determining whether to grant summary judgment, the court must remember that “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Anderson, 477 U.S. at 255, 106 S.Ct. 2505. III. Applicable Law This case is before me on diversity grounds pursuant to 28 U.S.C. § 1332; therefore, Florida choice-of-law rules apply. See Attorney’s Title Ins. Fund, Inc. v. Regions Bank, 491 F.Supp.2d 1087, 1093 (S.D.Fla.2007) (“Florida law indisputably governs the substantive issues in a case where the federal court’s jurisdiction is based on diversity of citizenship.”); Maz-zoni Farms v. E.I. Dupont De Nemours & Co., 166 F.3d 1162, 1164 (11th Cir.1999) (applying Florida’s choice-of-law rules in a diversity case). Neither the Indemnity Agreement nor the Performance Bond contain a choice-of-law clause; however, since both agreements were executed in Florida for work to be performed in Florida, under Florida choice-of-law rules, Florida substantive law applies. Morgan Wal ton Prop. v. Int’l City Bank & Trust Co., 404 So.2d 1059, 1061 (Fla.1981) (“Florida’s established rule for choice of law governing the validity and interpretation of contracts looks to the law of the place of contracting and the law of the place of performance.”). The Eleventh Circuit has explained that in diversity cases, “[i]n the absence of definitive guidance from the Florida Supreme Court, we follow relevant decisions from Florida’s intermediate appellate courts.” State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1231 (11th Cir. 2004) (citing 17A James Wm. Moore, et al., Moore’s Federal Practice § 124.22[3]. 124-87, 124-88). Florida District Courts of Appeal are the law of Florida unless and until overruled by the Florida Supreme Court. Pardo v. State, 596 So.2d 665, 666 (Fla.1992). Thus, “[a] federal court applying state law is bound to adhere to decisions of the state’s intermediate appellate courts absent some persuasive indication that the state’s highest court would decide the issue otherwise.” Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F.2d 678, 690 (11th Cir.1983) (citations omitted). Only “[i]n the absence of precedents from Florida’s intermediate appellate courts ... may [we] consider the case law of other jurisdictions that have examined similar [issues].” State Farm Fire, 393 F.3d at 1231. The objective is for the Federal Court to determine the issues of state law as it believes the Florida Supreme Court would. While neither the Florida Supreme Court nor Florida’s intermediate appellate courts have spoken definitively on all the issues before me, Florida cases that generally discuss the rights and obligations of sureties and contractors guide my decision in this case. Courts nationally, as well as in Florida, have recognized the vital role of sureties in the construction industry. See, e.g., Gen. Accident Ins. Co. of Am. v. Merritt-Meridian Constr. Corp, 975 F.Supp. 511, 516 (S.D.N.Y.1997) (“Sureties enjoy such discretion to settle claims because of the important function they serve in the construction industry, and because the economic incentives motivating them are a sufficient safeguard against payment of invalid claims.”). Therefore, if a surety is called upon to discharge an obligation of one of its principals, it may enforce several common law rights, including its right to exoneration, quia timet, subrogation, contribution, and common law indemnity. See Am. Surety Co. v. Lewis State Bank, 58 F.2d 559, 560-561 (5th Cir.1932). As the former Fifth Court explained, “[a] surety is indeed a favorite of equity, which will extend its aid in exoneration, quia timet, before he pays, and will subrogate him after he pays, liberally and fully, as against others primarily liable on the debt.” Id. at 560. In addition to these rights, as a precondition to issuance of its bonds, sureties often require that the principal execute a written indemnity agreement which memorialize, enhance and supplement its common law rights. See BRuneR and Haley, Managing and Litigating the Complex Surety Case, 121 (American Bar Association, 2d Ed.2007). Sureties draft their indemnity agreements broadly, and with extensive protections, and the courts, understanding the importance of the indemnity agreement, consistently enforce the agreements and the remedies granted to the sureties. See, e.g., The Revenue Markets, Inc. v. Amwest Surety, 35 F.Supp.2d 899 (S.D.Fla.1998) (enforcing the broad provisions of the indemnity agreement), aff'd in part, rev’d in part, 204 F.3d 1121, 209 F.3d 722, 204 F.3d 1121, 209 F.3d 725; see also, Thurston v. Int’l Fidelity Ins. Co., 528 So.2d 128, 129 (Fla. 3rd DCA 1988) (“A surety is entitled to reimbursement pursuant to an indemnity contract for any payments made by it in a good faith belief that it was required to pay, regardless of whether any liability actually existed.”); Employers Ins. of Wausau v. Able Green, Inc., 749 F.Supp. 1100, 1103-1104 (S.D.Fla. 1990) (holding that similar indemnity provisions were not unconscionable and noting that other courts had consistently upheld such provisions in general indemnity agreements); Gen. Accident Ins. Co. of Am., 975 F.Supp. at 516 (“Sureties enjoy such discretion to settle claims because of the important function they serve in the construction industry, and because the economic incentives motivating them are a sufficient safeguard against payment of invalid claims.”); United States Fid. & Guar. Co. v. Feibus, 15 F.Supp.2d 579, 584 (D.Pa.1998) (“Sureties enjoy such discretion to settle claims because of the important function they serve in the construction industry. The purpose of good faith clauses is to facilitate the handling of settlements by sureties and protect them from unnecessary and costly litigation.”). The Supreme Court has found that “suretyship is not insurance.” Pearlman v. Reliance Ins. Co., 371 U.S. 132, 140 n. 19, 83 S.Ct. 232, 9 L.Ed.2d 190 (1962). Similarly, the Florida Supreme Court has described a suretyship as a contractual tripartite relationship in which one party (the surety) guarantees to another party (the obligee) that a third party (the principal) will perform a contract in accordance with its terms and conditions. The surety promises the obligee to answer the debt, default, or miscarriage of the principal. Surety-ship is a form of guaranty. In exchange for a premium, the surety lends its financial strength and credit to the principal on the condition that, if the surety has to satisfy the principal’s debt or default, the principal will indemnify the surety for its losses and expenses. In essence, the surety becomes the guarantor of the principal’s ability to perform its obligations to the obligee. Given this description, it is reasonable to conclude that an owner/obligee, by requiring that a bond be obtained by the principal, is essentially insuring itself from potential losses that would result in the event the principal defaults on its obligations required by the underlying construction contract. Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 945 So.2d 1216, 1226 (Fla. 2006) (internal quotations omitted); see also, Am. Home Assurance Co. v. Larkin Gen. Hosp., Ltd., 593 So.2d 195, 198 (Fla. 1992) (“The surety agrees to complete the construction or to pay the obligee the reasonable costs of completion if the [principal] defaults.”); W. World Ins. Co. v. Travelers Indem. Co., 358 So.2d 602, 604 (Fla. 1st DCA 1978) (“The usual view, grounded in commercial practice, [is] that suretyship is not insurance... .The surety on a bond is lending its credit to make certain, if the conditions of the bond are violated, that the aggrieved party will be protected in the event the principal is financially unable to comply with the conditions of the bond. If the principal can satisfy the obligation, the surety need not respond. The surety, unlike the liability insurer, however, is entitled to be indemnified by the one who should have performed the obligation.”). The Florida Legislature and Florida Courts have recognized the importance of sureties in the construction business. For example, persons wishing to enter into a formal contract with the state or its subdivisions for the construction of a public work are required to execute, deliver, and publicly record a payment and a performance bond with a surety insurer. See § 255.05(2), Fla. Stat. (1995). Although Florida law does not require private developers and contractors to acquire these bonds, almost all of them do. See Trans-america Ins. Co. v. Barnett Bank of Marion County, N.A., 540 So.2d 113, 115 (Fla. 1989) (“Because of their importance, payment and performance bonds are mandatory under section 255.05 for government projects and are commonly employed by prudent private owners.”). Furthermore, Florida courts have recognized that the “purpose of a surety [is] to protect the obligee,” and that the surety has a right to protect itself. Id. at 116; see also Auto-Owners Ins. Co. v. Se. Floating Docks, Inc., No. 05-334-31, 2007 WL 676217, *3, 2007 U.S. Dist. LEXIS 14252, at *8 (M.D.Fla. March 1, 2007) (“[T]he surety on the one hand has to act in the best interests of the insured, and on the other hand it obviously has self-interest and can legitimately protect that self-interest”). With these principles in mind, I will apply the majority rule on the issues raised which the Florida courts have not addressed, unless such rule does not comport to the principles discussed herein. IV. Motion for Summary Judgment In its Motion for Summary Judgment, Plaintiff seeks: (1) entry of a final declaratory judgment that Liberty had the right to settle Aventura’s claim against Goodwill; (2) entry of a monetary judgment in the amount of $2,755,936.51 against all Defendants, jointly and severally, with the Court reserving jurisdiction to determine Liberty’s entitlement to recover interest, additional costs and attorneys’ fees; and, (3) entry of a permanent injunction requiring all Defendants, jointly and severally, to provide Liberty with cash collateral in the amount of $1,015,000.00 to secure Liberty against potential liability as a result of having issued bonds on behalf of Aventura, namely the Pinecrest and Silver Lakes Bonds. A. Liberty’s Right to Release Aventu-ra’s Claim Liberty argues that Aventura breached the Indemnity Agreement by failing to provide collateral upon demand, by demanding that Liberty deny Goodwill’s claim without providing security to Liberty, and by failing to provide any indemnification to Liberty. According to Liberty, these breaches triggered Liberty’s right to the assignment of Aventura’s claim against Goodwill, to settle that claim in order to procure Liberty’s release of any further liability to Goodwill, and to act as Aventura’s attorney-in-fact for purposes of executing any necessary documents to effectuate the benefit of receiving the claim. Aventura responds that Liberty did not have the right to settle Aventura’s claim against Goodwill because: (1) Goodwill did not have a proper claim under the Performance Bond because it was in default of its contract with Aventura; (2) that the Settlements provision (§ 13) of the Indemnity Agreement is limited to claims against the Bond, and the Attorney-in-Fact provision (§ 18) is limited to rights assigned elsewhere in the Indemnity Agreement; and, alternatively, (3) if Liberty was authorized to settle Aventura’s claim, Liberty waived such rights; and, (4) Liberty’s bad faith vitiates any right, otherwise not waived, to release Aventura’s claim. Defendants further argue that Liberty cannot be awarded summary judgment on Count I, seeking a declaration of Liberty’s right to settle and release Aventura’s claim against Goodwill, because it failed to join Goodwill and the Architect, both of which, according to Defendants, are indispensable parties. I conclude that Defendant’s arguments are unavailing for the reasons discussed below. 1. Righb-to-Settle Clauses A right-to-settle clause provides a surety with wide discretion in settling claims, even where the principal is not liable for the underlying claim. Auto-Owners Ins. Co., No. 05-334, 2007 WL 676217 at* 5. In fact, it is a well settled principle that a surety may settle claims regardless of whether liability for the claim actually existed, Thurston, 528 So.2d at 129, and for the sole purposes of avoiding the cost of litigation. See generally, Employers Ins. of Wausau, 749 F.Supp. at 1103 (surety’s decision to forgo litigation and settle claims is not evidence of bad faith where litigation would far exceed the expense fo settling the claims). While neither the Florida Supreme Court, Florida intermediate courts of appeals, nor the Eleventh Circuit have addressed the specific question of whether the surety may, in addition to settling a claim on the bond, also settle the principal’s claims against the owner of the bond, other courts that have done so have expressly recognized a surety’s right to settle the principal’s claims, by virtue of the assignment and power-of-attorney provisions of an indemnity agreement. See, e.g., Hutton Constr. Co. v. County of Rockland, 52 F.3d 1191 (2d Cir.1995) (affirming trial court’s decision to enforce a settlement which included the surety’s dismissal of its principal’s affirmative claims, over the principal’s objections). The Hutton Court reasoned that the principal breached the indemnity agreement by failing to make the demanded indemnity payments. Id. at 1192. This breach triggered the assignment clause and caused assignment of to the surety of all of the principal’s rights growing out of the construction contracts. Id. The assignment clause, and the attorney-in-fact clause, which unambiguously appointed the surety as the principal’s attorney-in-fact with the power to exercise all rights assigned to them, gave the surety the right to settle the principal’s claims against the owner. Id. 1192-93. Similarly, in Mezzacappa Brothers, Inc. v. City of New York, No. 03-0223, 2003 WL 22801429, *6 -7 (S.D.N.Y. Nov.24, 2003), the Court found that the assignment provision in the indemnity agreement, which stated that “[Principal] assigns to [Surety] ... [a]ny actions, causes of action, claims or demands whatsoever which [Principal] may have or acquire against any party to the Contract, or arising out of or in connection with any Contract ... and [Surety] shall have the full and exclusive right, in its name or in the name of [Principal] ... to prosecute, compromise, release or otherwise resolve such actions, causes of action, claims or demands,” gave the surety the authority to release and settle the principal’s affirmative claims. Id.; see also, Bell BCI Co. v. Old Dominion Demolition Corp., 294 F.Supp.2d 807, 812 (E.D.Va.2003) (applying Virginia Law and finding that the Indemnity Agreement’s unambiguous assignment and attorney-in-fact provisions conferred on the Surety the authority to settle and resolve the principal’s claims against the owner); Harlandale Indep. School Dist. v. C2M Const., Inc., No. 04-07-00304, 2007 WL 2253510, *2 (Tex.App. Aug.8, 2007) (finding that the industry standard indemnity, assignment, settlement, and attorney in fact provisions give the surety the right to settle principal’s claims against the project owner); North Am. Specialty Ins. Co. v. Monteo Constr. Co., Inc., No. 01-0246E, 2003 WL 2138321, at *7 (W.D.N.Y. April 25, 2003) (finding that a principal’s breach of indemnity agreement by failing to post collateral or otherwise exonerate the indemnity surety activated the attorney-in-fact and assignment clauses of the Indemnity Agreement and gave the surety the right to settle the principal’s pending lawsuit against the owner/obligee). Courts that have addressed this question answer it by construing the language of the Indemnity Agreement to ascertain the surety’s rights and obligations. See id. These cases are consistent with Florida’s cardinal rule of contract construction which is “... to ascertain the intention of the contracting parties and to give effect to that intention if it can be done consistently with legal principles.” J.A. Jones Constr. Co. v. Zack Co., 232 So.2d 447, 449-450 (Fla. 3rd DCA 1970). “To ascertain the real intent, the language used, the subject-matter, and the purpose designed may be considered. When the purpose designed to be accomplished is ascertained, the meaning and effect given to the language used should comport with the intended purpose.” Id. When a contract is clear, complete, and unambiguous, no judicial construction is necessary. Jenkins v. Eckerd Corp., 913 So.2d 43, 50 (Fla. 1st DCA 2005); Maher v. Schumacher, 605 So.2d 481, 482 (Fla. 3rd DCA 1992) (“When a contract is clear and unambiguous, the actual language used in the contract is the best evidence of the intent of the parties, and the plain meaning of that language controls.”). Applying this fundamental principle of Florida law, consistent with the Hutton case and its progeny, it is clear and unambiguous that the Indemnity Agreement in this case clearly provides that when the surety faces potential liability under any of the issued bonds, it has the right to be exonerated and indemnified. (Indemnity Agreement, DE 33-2 at § 2). The Indemnity provision provides that Liberty has the right to be exonerated and indemnified for all costs it sustains by, among other things, being requested to execute the Bond or in enforcing the covenants of the agreement. (Id.). The Indemnity Agreement further provides that the Indemnitors assign to the Surety, for performance of the covenants in the agreement, all “right, title, and interest ... in, and growing in any manner out of, all contracts referred to in the Bonds, or in, or growing in any matter out of the Bonds.” (Id. at § 3). Further, the Settlements provision gives the surety “the right, at its option and sole discretion, to adjust, settle or compromise any claim, demand, suit or judgment upon any Bond, unless any indemnitor ... providing a reasonable legal basis ... shall request the Surety to litigate such claim or demand ... and shall deposit with the Surety, at the time of such request, cash or collateral satisfactory to the Surety.” (Id. at § 13) (emphasis added). Finally, the Attorney-in-Fact provision “irrevocably ... appoints] ... the Surety as their attorney-in-fact with the full right and authority ... to exercise all the rights of the Indemni-tors and Principals assigned, transferred and set over to the Surety in this Agreement, with full power and authority to execute on behalf of and sign any Indemnitor or Principal to any ... release, ... or any other document or papers deemed necessary and proper by the Surety in order to give full effect not only to the intent and meaning of the within assignments, but also to the full protection intended to be herein given to the Surety under all other provisions of this Agreement.” (Id. at § 18). Read together, these provisions give Liberty the right, at its option and sole discretion, to settle or compromise any claim or demand upon any Bond. If Aven-tura wants to protect its claims against the owner of the bonds, the Indemnity Agreement sets forth a mechanism that allows it to do so: it must first ask Liberty to deny the claim, and, at the same time, it must provide Liberty with collateral that exonerates and indemnifies it against any potential loss. Although Aventura was given multiple opportunities to do so, and was even warned that failure to do so would result in Liberty settling Aventura’s claim against Goodwill, Aventura chose to ignore the demands and never posted collateral. As in Hutton, this breach of the Indemnity Agreement, coupled with Goodwill’s demand on the Bond, triggered all of Liberty’s rights under it. Applying Florida rules of contract construction consistent with Hutton, I conclude that the Florida Supreme Court would adopt the reasoning in Hutton and hold that the Indemnity Agreement, through the Assignment, Settlements, and Attorney-in-Fact provisions, gave Liberty the right to release Aventu-ra’s claims against Goodwill. 2. Goodwill’s Claim under the Performance Bond Defendants urge this Court to read the Goodwill Performance Bond in conjunction with the Indemnity Agreement and argue that the Indemnity Agreement provides that Liberty’s rights arise only if Goodwill can make a valid claim under the Performance Bond. According to Defendants, § 3 of the Performance Bond provides that Goodwill can only make a claim upon the bond if there is “no Owner Default.” Specifically, the Goodwill Performance Bond provides: If there is no Owner Default, the Surety’s obligation under this Bond shall arise after: 3.1 The Owner has notified the Contractor and the Surety ... that the Owner is considering declaring a Contractor Default and has requested and attempted to arrange a conference with the Contractor and the Surety to be held not later than fifteen days after receipt of such notice to discuss methods of performing the Construction Contract. If the Owner, the Contractor and the Surety agree, the Contractor shall be allowed a reasonable time to perform the Construction Contract, but such an agreement shall not waive the Owner’s right, if any, subsequently to declare a Contractor Default. 3.2 The Owner has declared a Contractor Default and formally terminated the Contractor’s right to complete the contract. Such Contractor Default shall not be declared earlier than twenty days after the Contractor and the Surety have received notice as provided in Sub-paragraph 3.1; ... The Definitions section of thee Performance Bond defines: Contractor Default: Failure of the Contractor, which has neither been remedied nor waived, to perform or otherwise to comply with the terms of the Construction Contract. and, Owner Default: Failure of the Owner, which has neither been remedied or waived, to pay the Contractor as required by the Construction Contract or to perform and complete or comply with the other terms thereof. Defendants argue that because Goodwill had not paid the April and May pay applications, it was in default of the construction contract and could not make a proper claim on the bond. According to Defendants, because Aventura had declared Goodwill in default, the rights Liberty negotiated for in the Indemnity Agreement, including the Assignment (§ 3), Settlements (§ 13), and the Attorney-in-Fact (§ 18) provisions, could not properly be invoked. Defendants’ argument fails for several reasons. Under Florida law, the indemnity agreement, and not the performance bond, delineates the rights and obligations of a principal and surety. See Aetna Ins. Co. v. Buchanan, 369 So.2d 351, 354 (Fla. 2d DCA 1979) (“The status of an indemnitor of a surety on a bond is to be determined by the indemnity agreement and not by the provisions of the bond.”); Harrison v. Am. Fire & Cas. Co., 226 So.2d 28, 29 (Fla. 4th DCA 1969) (rejecting the argument that an indemnitor’s liability shall be fixed by the terms of the bond since the status of an indemnitor is governed by the indemnity agreement, not the bond); see also, Gen. Accident Ins. Co. Of Am., 975 F.Supp. at 517 (“[A] contractor, whose relationship with the surety is governed by an express indemnity agreement contract containing provisions that permit the surety to settle in good faith, may [not] avoid its obligation to indemnify by pointing to inconsistent provisions in a separate contract between itself and the subcontractor.”). Moreover, courts nationally have recognized that the difference between the right to indemnity under the common law and the right to indemnity under a general indemnity agreement is that, “[a]bsent a written indemnity agreement, the surety’s common law indemnity rights exist only when there is actual liability ... however, there will usually exist a written indemnity agreement between the parties, which will typically provide, among other things, that the surety need only show potential liability or that it believed in good faith that it was necessary or expedient to satisfy a claim to invoke its rights.” BRuneR, p. 120. a. Receipt of a “valid” claim is not a precondition on the Indemnity Agreement Contrary to Defendants’ assertions, the Indemnity Agreement does not condition Liberty’s rights on a “proper” or “valid” claim upon the Bond. Instead, Liberty and Aventura executed an Indemnity Agreement giving Liberty the right to seek collateral in order to be exonerated and to be indemnified for all costs associated with the issued bonds. The Indemnity provision states that if the “Surety determines, in its sole judgment, that potential liability exists” the principals must deposit a sum of money satisfactory to the Surety, regardless of whether the Surety has made any payments or even received a notice of a claim on the bond. (Indemnity Agreement, DE 33-2 at § 2) (emphasis added). The Settlements provision gives the surety “the right, at its option and sole discretion, to adjust, settle or compromise any claim [or] demand ...” (Id. at § 13) (emphasis added). The Assignment provision assigns “all of the right, title and interest of the Indemnitors and/or Principals in, and growing in any manner out of, all contracts referred to in the Bonds, or ... out of the Bonds.” In turn, the Attorney-in-Fact provision appoints the Surety as Defendants’ “attorney-in-fact ... to exercise all the rights ... assigned ... over to the Surety ... in this Agreement, with full power and authority to execute on behalf of and sign any Indemnitor or Principal to any ... release ...”. Nowhere in these provisions does the Indemnity Agreement require that the owner’s claim on the bond be “valid” before Liberty may exercise its contractual rights to indemnity, exoneration, assignment and settlements of claims. Rather, these provisions unequivocally state that Liberty’s rights arise once Liberty determines that it may incur potential liability and that actual liability need not be shown. Cf. Thurston, 528 So.2d at 129 (“A surety is entitled to reimbursement pursuant to an indemnity contract for any payments made by it in a good faith belief that it was required to pay, regardless of whether any liability actually existed.”). Therefore, whether Goodwill’s claim is ultimately found to have been “proper” or “valid” is immaterial. The Indemnity Agreement simply does not provide that Liberty must receive a valid claim before it can exercise its rights. Additionally, Defendants’ assertion that there was an Owner Default because Goodwill did not pay the April and May applications is not persuasive. The Performance Bond defines an Owner Default as “Failure of the Owner, which has neither been remedied nor waived, to pay the Contractor as required by the Construction Contract ...” (Goodwill Performance Bond, DE 152-8) (emphasis added). It also defines “Contractor Default” as the “[f]ailure of the Contractor, which has neither been remedied nor waived, to perform or otherwise to comply with the terms of the Construction Contract.” The Construction Contract has not been submitted, and the issue of whether an Owner Default actually occurred is not before me. However, the undisputed facts indicate that Goodwill was considering declaring a Principal/Contractor Default prior to Aventura declaring it in default. Aventura’s formal demand asking Liberty not to honor Goodwill claims was actually submitted a day after Goodwill had formally declared Aventura in default. At that time, Liberty was already aware that Goodwill did not believe Aventura had complied with the Construction Contract. Whether Goodwill was required to make the April and May payments under these circumstances is not clear. What is clear, however, is that demonstrating that Goodwill’s claim on the bond was “valid” is not a precondition to Liberty’s exercise of its right to be exonerated. b. Goodwill’s formal demand on the Bond for an alleged breach by Aven-tura Defendants do not dispute that Goodwill declared a Contractor/Principal Default and that Liberty received a claim by Goodwill demanding that Liberty complete the project. The undisputed facts also establish that Liberty conducted a review of Aventura’s books and records and determined that Aventura had underbid the project by approximately $1.7 million. Given the findings of the review and Goodwill’s formal demand on the Bond, Liberty was facing potential liability under the Goodwill Bond. Thus, under the clear terms of the Indemnity Agreement, Liberty had the right to demand collateral from Aventura. Despite the unambiguous language of the Indemnity Agreement, which requires that if the indemnitors request that the surety dispute the claim, the principals “shall deposit with the Surety, at the time of such request, cash or collateral satisfactory to the Surety ... to be used in paying any judgment or judgements rendered or that may be rendered ... ”, Indemnity Agreement, § 13, the indemnitors did not post the demanded collateral. Once Aventura breached the Indemnity Agreement, Liberty had the right to settle Aventura’s claim against Goodwill. Defendants also argue that Liberty may not unilaterally decide if an actual breach of the construction contract has occurred. I find this argument to favor Plaintiffs position: not only can it not conclusively decide if an actual breach of the construction contract — a contract it is not a party to — has occurred, but Plaintiffs were under no obligation to do so. What the Indemnity Agreement provides is that if Plaintiffs determine that potential liability exists, it can protect itself by invoking the broad provisions of the agreement it bargained for. Defendants’ argument is also flawed because it ignores the fact that the Indemnity Agreement does not require that there be an actual default for the broad provisions of the Indemnity Agreement to take effect. The undisputed facts establish that both Goodwill and Aventura declared each other in default and both looked to the Surety to protect their rights. A reasonable surety would objectively conclude that it faced potential liability under the bond. To protect itself, it requested collateral from the indemnitors. Once the indemni-tors breached the Indemnity Agreement by failing to indemnify and exonerate Liberty, the Assignment, Settlements, and Attorney — in-Fact provisions were triggered. c. The Performance Bond does not limit Liberty’s rights Finally, the interpretation that Defendants urge this Court to adopt would place the surety in a “lose-lose situation.” In this case, the principal claimed that the owner was in default and asked the surety not to honor the owner’s claim on the bond, and, at the same time, the owner claimed that the principal was in default and turned to the surety under the terms of the bond. This situation places the surety in an unacceptable dilemma: if it does not honor the claim on the bond, the owner sues the surety and the surety incurs the cost of litigation and of a potential judgment. On the other hand, if the surety honors or settles the claim on the bond, the principal sues under a bad faith theory in an attempt to avoid its obligation to indemnify the surety and the surety once again has to absorb, or at least advance, the cost of the litigation and a potential judgment. This lose-lose situation is not a reasonable interpretation of the Indemnity Agreement or the Bond. A more reasonable interpretation is consistent with what happened in this case (as established by the undisputed facts). Once Liberty was informed that both parties were alleging a default, Liberty reviewed Aventura’