Traveler’s Surety and Casualty Company of America is suing developer Tommy Spinosa for $12 million. The company guaranteed performance and payment bonds both for the construction of Perkins Rowe and for a St. Tammany Parish apartment complex also developed by Spinosa. In a lawsuit filed earlier this week in U.S. District Court in New Orleans, Traveler’s alleges that Spinosa and his now-defunct Echelon Construction Company defaulted on an indemnity agreement he signed in January 2006 guaranteeing the insurance giant against any loss it might incur as a result of bonding the two projects. The suit alleges that, in fact, Traveler’s has incurred more than $5 million in losses to date from paying claims to more than 20 vendors and subcontractors who did work on Perkins Rowe and the Chenier Apartments in Mandeville but were never paid by Spinosa or Echelon. The suit alleges an additional 25 claims from subcontractors and vendors on the two projects are still pending, and that the insurance company’s total potential loss, including attorneys’ fees, is $12 million. The suit asks the court to require Spinosa to pay that amount and to “exonerate Traveler’s from all liabilities, losses and expenses.” Spinosa’s office did not return a call seeking comment on the suit.
The suit suggests Traveler’s was leery of bonding Spinosa’s projects to begin with, so he was required to personally guarantee the bonds. “In order to submit bids on and obtain certain projects Echelon required performance and payment bonds and sought to obtain these from Traveler’s,” says the suit. “As Traveler’s was not willing to assume the sole risk that any failure or default by Echelon might result in a loss to it, Traveler’s required an indemnity agreement from Echelon.” Under the terms of that agreement, Spinosa agreed to “exonerate, indemnify and save Traveler’s harmless from and against Loss.”
Liens and lawsuits from subcontractors and vendors demanding payment for work on the mixed-use Perkins Rowe development have been tied up in court for years. In July 2009, the main lender on the project, KeyBank National Associates, initiated foreclosure proceedings against Spinosa in federal court in Baton Rouge. That case is still wending its way through the system.
Less well-known are the allegations surrounding the Chenier Apartments in Mandeville. That project dates back to early 2007, when Echelon entered into a contract with Chenier Property Partners LLC, a group of Metairie investors, to build the Chenier Apartments on Highway 190. The project was financed with a mortgage insured by the U.S. Department of Housing and Urban Development, and was completed on schedule in early 2009. But last fall, subcontractors and vendors started filing liens in St. Tammany Parish court against Echelon, some claiming they hadn’t been paid in more than a year.
The Traveler’s lawsuit is just the latest of Spinosa’s many legal troubles, though even plaintiffs that have prevailed against him in court have not had much success actually getting paid. In July, Bernhard Mechanical, a Baton Rouge company that did air conditioning and plumbing work at Perkins Rowe, tried to force Spinosa to pay a $678,000 personal judgment against him that was awarded to the company last fall. According to attorneys present at the judgment debtor’s exam, Spinosa testified under oath he does not have the assets to pay the judgment.
