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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DIVISION * * Plaintiff, * * v. * * WASTE MGMT. DISPOSAL SERVICES * OF MARYLAND, INC., * * Defendant, * * v. * * GREAT AMERICAN INS. CO., et al. * Civil Action No. AW-05-1044 * AW-05-2584 Third-Party Defendants. * ******************************************* * STRITTMATTER CONTRACTING, LLC, * * Plaintiff, * * v. * * GREAT AMERICAN INS. CO., * * Defendant. * ****************************************************************************** MEMORANDUM OPINION Currently pending before the Court is Great American Insurance Company's Motion for Clarification of Court's Order [39]. Great American Insurance Company ("Great American" or "Surety") has asked this Court to allow it, as a surety, to prosecute the claims of Handex of Maryland, Inc. ("Handex" or "Contractor") against Waste Management Disposal Services of Maryland, Inc. ("Waste Management" or "Owner"). This consolidated action presents the question whether an assignment clause in a construction indemnity agreement creating a suretyship prevails HANDEX OF MARYLAND, INC.,

over a nonassignment clause in the general contract between the Owner and Contractor. The Court has reviewed the parties' pleadings and oral arguments on the motion. An opinion will now issue. FACTUAL AND PROCEDURAL BACKGROUND Waste Management, as Owner, contracted with Handex, as general contractor, for the capping of the municipal waste disposal site at the Sandy Hill Creative Disposal Project (the "Project") in Bowie, Maryland. Great American issued payment and performance bonds assuring the obligations of Handex arising under its contract with Waste Management. Handex subcontracted to Strittmatter Contracting LLC ("Strittmatter") the earthwork portion of the scope of work. The subcontract required Strittmatter to perform work under the plans and specifications issued by Waste Management under the general contract. It also included provisions which limit Strittmatter's rights of recovery for extra work and claims to those monies recovered from Waste Management. Work began at the Project on April 29, 2003 and the original project schedule called for completion within 385 calendar days. On January 14, 2005, when the project was over ninety percent complete, Waste Management terminated its contract with Handex. Handex then terminated its subcontract with Strittmatter on January 17, 2005. On April 15, 2005, Handex filed this action against Waste Management for damages relating to the project. Specifically, Handex alleges that Waste Management breached the contract by failing to pay for contract work and extra work, providing defective specifications, refusing to grant time extensions and by wrongfully terminating the project. On the other hand, Waste Management counterclaims for breach of contract alleging that Handex, through its subcontractor Strittmatter, failed to comply with the contract requirements, delayed the work and was properly terminated for default. Waste Management has joined Great American as a third party defendant for Great American's refusal to complete Handex's work once the contract was terminated.

On November 23, 2005, Handex filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. On December 19, 2005, this Court informed the parties that it was "inclined to administratively close this case" until the Bankruptcy Court lifts the automatic stay. On January 10, 2006, the Court issued an order stating that the automatic stay does not apply to Waste Management's third party claims against Great American. On February 10, 2006, the Court clarified its order that fourth party claims by Great American were not subject to the automatic stay and could proceed. Thereafter, Great American served its Complaint on the Fourth Party Defendants. Great American based those claims under an Indemnity Agreement dated January 15, 2002, which was executed as part of Great American's surety relationship with Handex. The Indemnity Agreement contains a clause that assigns to Great American all contract rights, claims and actions that Handex may have in the event of "a breach or alleged breach" or "a default or an alleged default." In March 2003, however, Great American entered into a performance bond agreement and a payment bond agreement with Waste Management. The bond agreements incorporated the Handex

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Maryland Law