Liberty Mutual v. Devere Construction

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 1 of 62
Pg ID 1
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN
Liberty Mutual Insurance Company,
a Massachusetts Corporation
)
)
)
)
Plaintiff,
)
)
vs.
)
)
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-10421

Judge
COMPLAINT
Liberty Mutual Insurance Company (Liberty), by and through its attorney John E.
Sebastian of Watt, Tieder, Hoffar & Fitzgerald, L.L.P., sets forth the following complaint against
Defendants DeVere Construction Co., Inc., Crittenden Construction Co., Inc., Reds Traders
Limited, Richard Lee Crittenden, Michael Bruce Crittenden, Cynthia Sue Gabara, Cheryl Jean
Lumsden, DeVere Swepco JV, LLC, and DeVere Construction Company MI, LLC
(collectively Defendants or Indemnitors).
PARTIES
1.
Liberty is a Massachusetts corporation and citizen organized and existing under
the laws of the State of Massachusetts, with its principal place of business at 175 Berkeley Street,
Boston, MA 02116.
1
2.
Pg ID 2
DeVere Construction Co., Inc. (DeVere Construction or DeVere), is a
Michigan corporation and citizen existing under the laws of the State of Michigan, with its
principal place of business at 1030 DeVere Drive, Alpena, MI 49707, and can be served care of
its registered agent Richard Lee Crittenden at the same address.
3.
Crittenden Construction Co., Inc. (Crittenden Construction), is a Michigan
corporation and citizen existing under the laws of the State of Michigan, with its principal place
of business at 1030 DeVere Drive, Alpena, MI 49707 and can be served care of its registered
agent Bruce D. Crittenden at the same address.
4.
Reds Traders Limited has its principal place of business at 40A Central America
Boulevard, Belize City, Belize, and can be served care of Richard Lee Crittenden.
5.
Richard Lee Crittenden is a Michigan citizen and resident located 1921 Long
Rapids Road, Alpena, MI 49707.

6.
Michael Bruce Crittenden is a Michigan citizen and resident located in 4515 Long
Rapids Road, Alpena, MI 49707.

7.
Cynthia Sue Gabara is a Michigan citizen and resident located at 101 Bernice
Lane, Alpena, MI 49707.

8.
Cheryl Jean Lumsden is a Michigan citizen and resident located at 6251 Leer
Road, Lachine, MI 49753.

9.
DeVere Swepco JV, LLC is a Louisiana limited liability company with its
principal place of business at 8126 One Calais Ave, Suite 2-C, Baton Rouge, LA 70809 and can
be served care of its registered agent John E. Seago at 8126 One Calais Ave., Suite 2-C, Baton
Rouge, LA 70809.
10.
Pg ID 3
DeVere Construction Company MI, LLC, is a Michigan limited liability
company with its principal place of business at 1030 DeVere Drive, Alpena, MI 49707 and can
be served care of its registered agent Richard Lee Crittenden at the same address.
JURISDICTION AND VENUE
11.
This court has jurisdiction over this cause under 28 U.S.C. 1332(a)(1) in that the
matter in controversy, exclusive of interest and costs, exceeds the sum or value of $75,000.00,
and is between citizens of different states.
12.
Venue is proper in this Court under 28 U.S.C. 1391(b) in that a substantial part
of the events or omissions giving rise to the claim occurred in this District and several
Defendants reside in this District.
FACTS COMMON TO ALL COUNTS
A. The Bonds and Indemnity Agreement.
13.
DeVere Construction is in the business of providing construction services for
public and private construction projects located in the State of Michigan and elsewhere.
14.
In accordance with its contracts between DeVere Construction and the various
Project owners for the Projects, and the governing bond acts, DeVere Construction was required
to obtain and provide payment and performance surety bonds for the Projects identified in
Paragraph 15 (referred to as the Projects) to guarantee DeVere Constructions performance
obligations under the contracts and to secure DeVere Constructions payment obligations to its
subcontractors and materialmen that it engaged for the Projects, subject to the terms of the
Bonds, the contracts and law.
15.
Pg ID 4
Pursuant to and at the request of DeVere Construction and the Indemnitors,
Liberty, as surety, issued payment and performance bonds on behalf of DeVere Construction as
principal, in connection with the Projects as follows:
Principal
DeVere
Construction
Co., Inc.
Project
C203044 NC DOT
Bridge #156 Over CSX
Railroad
DeVere
Construction
Co., Inc.
US-221 from South

Carolina Line to South
of Floyd's Creek
DeVere
Construction
Co., Inc.
Contract No. C202265

NCDOT Rutherford
Phase II
DeVere
Construction
Co., Inc.
Sanford Bypass
DeVere
Construction
Co., Inc.

NCDOT Rolesville
Bypass
DeVere
Construction
Co., Inc.
NCDOT C202847
Bridge #36 at US-301
on I-95 (Robeson)
DeVere
Construction
Co., Inc.
NCDOT C202880
Bridges #235 & #238
(Buncombe County)
DeVere
Construction
Co., Inc.

Jackson County NC166 to NC107
DeVere
Construction
Co., Inc.
NCDOT C202824
Mecklenburg County
Independence Blvd.
DeVere
Construction
NCDOT DN00178
Bridge #251 & #253
Obligee
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
Bond No.
013124963
Penal Sum
1,897,666.00
013023593
35,855,177.00
013124066
$30,438,069.00
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
013124115
30,181,609.00
013124193
$24,956,388.00
013125048
12,662,052.00
013125079
11,947,609.00
013125344
$15,939,043.00
013125523
51,669,285.00
013126077
990,087.00
Co., Inc.
Jackson County
DeVere
Construction
Co., Inc.
NCDOT C202573
Wake Co. Bridge Over
Beaver Creek
DeVere
Construction
Co., Inc.
NCDOT C203347
Henderson Co. Bridge
#42 - Saconon Creek
DeVere
Construction
Co., Inc.
C203284 Bridges #147

& 140 Over Mallard
Creek
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
Northeast Remote
Operations Facility
DeVere
Construction
Co., Inc.
Wilkes Bridge 302

Reddies River C203303
DeVere
Construction
Co., Inc.
Ctawba Bridge 83 C203299
DeVere
Construction
Co., Inc.
Falls of Nuese Phase II

Roadway
DeVere
Construction
Co., Inc.
NCDOT C202842
Henderson County
Bridges #75 & #76
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
Richmond County US
220 Bypass Waterline
DeVere
Construction
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
City of
Raleigh
Pg ID 5
013126113
3,927,599.00
013126115
1,024,949.00
013126237
4,393,837.00
013125247
$17,193,000.00
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
Richmond
County
013125226
1,288,601.00
013126083
972,073.00
013126084
894,894.00
013124100
6,516,956.00
013125404
1,317,685.00
013125200
3,722,258.00
Union County East Side Union County

Sewer System
Improvements
013124656
7,222,781.00
Fayetteville Annexation City of

Phase V, Shenandoah
Fayetteville
013125400
2,712,339.00
Bridge #69 over CCSX

Railroad on SR-1576
Pg ID 6
Co., Inc.
Subdivision
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
DeVere
Construction
Co., Inc.
Henderson Water
Reclamation Facility
Improvements
Chestnut Parkway
Phase 1B - Indian Trail
City of
Henderson
013125412
$15,519,000.00
Town of
Indian Trail
013125893
1,415,527.00
Lynwood Lakes Water

& Sewer Improvements
City of
Greensboro
013125966
10,768,026.00
Leesille Road Widening City of

PW 2011-05
Raleigh
013125978
5,561,233.00
Albemarle Water
City of
Transmission Line
Concord
Contract 2 Division 1 &
2
013125845
17,816,599.00
DeVere
Construction
Co., Inc.
Millennium One
UNCC
Millennium
LLC
013125733
28,675,182.00
DeVere
Construction
Co., Inc.
Highland Creek Relief

School - Sitework
Clancy &
Theys
Construction
Co.
013126261
2,019,882.00
DeVere
Construction
Co., Inc.
Westgate
Westgate
Development/Parkwood Development,
Place Subdivision
Inc.
013125877
$2,200,000.00
Swepco, Inc.
SRPP-2522-24 N. Tonti Louise Leflore 013125402

Street-Reconstruction
and State of
Louisiana
276,510.00
DeVere
Construction
Co., Inc.
Cypress Grove Homes

of Warren
CGH of
Warren AR
2011, L.P.
013125544
4,144,875.00
DeVere
Construction
Co., Inc.
Cypress Grove Homes

of McGehee
CGH of
McGeHee AR
2011, L.P.
013125690
3,880,500.00
DeVere
Construction
Cypress Grove Homes

of Lake Village
CGH of Lake
Village AR
013125547
4,049,400.00
Co., Inc.
Pg ID 7
2011, L.P.
DeVere
Construction
Co., Inc.
Bay River Medical
4C's
Acquisitions,
Inc.
013126454
3,442,200.00
DeVere
Construction
Co., Inc.
ARMC Emergency
Department & Enabling
Projects Phases 1-5
Alpena
Regional
Medical
Center
013125951
3,942,641.00
DeVere
Construction
Co., Inc.
M00216; IBA-US Toll

Plaza Redevelopment
Michigan
Department
Of
Transportation
013126390
8,889,575.00
TOTAL
$380,325,107.00
The Bonds in the above referenced table will be collectively referred to as the Bonds. The
Obligees in the above referenced table will be referred to as the Obligees. The Projects in the
above referenced table will be referred to as the Projects.
16.
As a condition for Libertys issuance of Bonds on behalf of DeVere Construction,
Liberty first required that the Indemnitors enter into a General Agreement of Indemnity.
17.
On or about March 14, 1995, a General Agreement of Indemnity was executed,
between DeVere Construction, Crittenden Construction., Reds Traders Limited, Richard

Crittenden, Cynthia S. Gabara, Cheryl Lumsden and Michael B. Crittenden, as indemnitors, and
Liberty, as surety (1995 GAI). A true and correct copy of the 1995 GAI is attached hereto as
Exhibit A.
18.
On or about July 29, 2010, DeVere Construction., Crittenden Construction,
DeVere/FCC, LLC; Flaherty & Collins Construction, Inc., Anson Member I, LLC, Richard Lee
Crittenden, Michael Bruce Crittenden, Cynthia Sue Gabara, and Cheryl Jean Lumsden executed
Pg ID 8
a second General Agreement of Indemnity in favor of Liberty, (Indemnity Agreement). A true

and correct copy of the Indemnity Agreement is attached hereto as Exhibit B
19.
The Indemnity Agreement limits the liability of DeVere/FCC, LLC, Flaherty &
Collins Construction, Inc., and Anson Member I, LLC, to only those bonds issued for
DeVere/FCC, LLC, as Principal.
20.
On or about March 28, 2011, Amendment No. 1 to the Indemnity Agreement was
executed to add the following entities DeVere Swepco JV, LLC, DeVere Construction Company
MI, LLC, and Swepco, Inc. as indemnitors to the Indemnity Agreement. Amendment No. 1
added Swepson Chaney as an indemnitor to the Indemnity Agreement but limited Swepson
Chaneys liability under the Indemnity Agreement to the extent that DeVere Swepco JV, LLC or
Swepco, Inc., are principals on a bond. A true and correct copy of Amendment No. 1 is attached
hereto as Exhibit C.
21.
Amendment No. 2 to the Indemnity Agreement adds D.A. Thomas Construction
Company, Inc., and David Thomas as indemnitors to the Indemnity Agreement but limits
liability to bonds that D.A. Thomas Construction Company, Inc., and/or David Thomas are
identified as principals or in a joint venture with any other party to the Indemnity Agreement. A
true and correct copy of Amendment No. 2 is attached hereto as Exhibit D.
22.
On or about January 11, 2012, Amendment No. 3 to the Indemnity Agreement
was executed to add Chapel Place Homes I, L.P., and Gary Gibbs as indemnitors to the
Indemnity Agreement but limits liability to bonds that Chapel Place Homes I, L.P., and/or Gary
Gibbs are the principals or in a joint venture with any other party to the Indemnity Agreement. A
true and correct copy of Amendment No. 3 is attached hereto as Exhibit E.
23.
Pg ID 9
On or about October 15, 2012, Amendment No. 4 to the Indemnity Agreement
was executed to add HICAPS, Inc., Daniel M. Hood, R. Wayne McGee, and Peyton Fairbank as
indemnitors to the Indemnity Agreement but limits liability for bonds issued for HICAPS, Inc.,
Daniel M. Hood, R. Wayne McGee, and Peyton Fairbank as Principal, either alone or in joint
venture with another indemnitor or principal. A true and correct copy of Amendment No. 4 is
attached hereto as Exhibit F.
24.
On or about October 22, 2012, Amendment No. 5 to the Indemnity Agreement
was executed to add Consultech Environmental, LLC, Consultech DeVere JV, LLC, Pragna R.
Shah and Rajesh B. Shah as indemnitors to the Indemnity Agreement but limits liability to bonds
issued for Consultech Environmental, LLC, Consultech DeVere JV, LLC, and/or any joint
venture to which either is a party. A true and correct copy of Amendment No. 5 is attached
hereto as Exhibit G.
25.
As for the Defendants, the Indemnity Agreement requires, in part, the Indemnitors
to indemnify and hold Liberty harmless from any and all liability, loss, costs and expenses of
whatsoever kind and nature, Liberty incurs by reason of having executed any Bond, including the
Bonds, on behalf of DeVere Construction or as a result of any default under the Indemnity
Agreement, as detailed below.
The Indemnitors shall exonerate, hold harmless, indemnify, and
keep indemnified the Surety from and against any and all liability
for losses, fees, costs and expenses of whatsoever kind or nature
including, but not limited to, pre- and post-judgment interest at the
maximum rate permitted by law accruing 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 Idemnitor(s) and/or
Principal(s), court costs, counsel fees, accounting, engineering and
other outside consulting fees and from and against any and all such
losses, fees, costs and expenses 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
9
Pg ID 10
execution of any Bond; or (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.
Exhibit B, 2.
26.
The Indemnity Agreement also requires, in part, the Indemnitors to deposit and
pay to Liberty upon demand as collateral security as follows:

If 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,
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: (a) established or increased any reserve; (b) made any
payments; or (c) received any notice of any claims therefor. At the
Suretys sole option, such collateral shall be in addition to and not
in lieu of any other collateral that has been previously provided to
the Surety. The Surety shall have the right to use any collateral, or
any part thereof, in payment or settlement of any such liabilities for
which the Indemnitors and Principals would be obliged to
indemnify the Surety under the terms of this Agreement or Other
Agreements.
Exhibit B, 2.
27.
The Indemnity Agreement also requires, in part, the Indemnitors provide access to
Indemnitors books and records and failure to do so is an express breach of the Indemnity
Agreement. The Indemnity Agreement provides in relevant part:
In addition to the foregoing, at any time, and until such time as the
liability of the Surety under any and all Bonds is terminated, or the
Surety is fully reimbursed all amounts due to it under this
Agreement or Other Agreements, the Surety shall have the right of
reasonable access to the books, records and/or accounts of the
Indemnitors and PrincipalsFailure to provide the information
required in this paragraph shall be a breach of this Agreement, and
shall entitle Surety to demand, in its sole discretion, cash collateral
up to the penal sum of any outstanding Bond(s).
Exhibit B, 8.
10
28.
Pg ID 11
The Indemnity Agreement also provides that the Indemnitors interest, title and
rights in Bonded Contracts, including, but not limited to, accounts receivables for Bonded
Contracts, are held as a trust fund that Liberty has an express interest in. The Indemnity
Agreement provides, in relevant part:
To the extent permitted under applicable law, the Indemnitors and
Principals covenant and agree that all of their interest, title and
rights in any contract or undertaking referred to in any Bond, or in,
or growing in any manner out of any Bond, including but not
limited to payments for or on account of any contract, shall be held
as a trust fund and/or as a constructive or equitable trust in which
the Surety has an interest, and shall inure to the benefit of the
Surety for any liability or loss it may have to sustain under any
Bond including but not limited to the payment of obligations
incurred in the performance of any contract and for labor,
materials, and services furnished in the prosecution of the work
provided in any contract or any authorized extension or
modification thereof; and, further, it is expressly understood and
declared that all monies due and to become due under any contract
covered by any Bond are trust funds, whether in the possession of
the Indemnitors or Principals or otherwise, for the benefit of and
for payment of all such obligations in connection with any such
contract for which the Surety would be liable under any Bond; said
trust also inures to the benefit of the Surety for any liability or loss
it may have or sustain under any Bond, under this Agreement, or
under any Other Agreements, and this Agreement constitutes
notice of such trust.
Exhibit B, 11.
B. Indemnitors Representations Inducing Libertys Subsequent Issuance of Bonds.
29.
In addition to executing the Indemnity Agreement, as a condition precedent to
Liberty issuing Bonds on behalf of the DeVere Construction, Liberty required that the
Indemnitors submit certain financial information to Liberty revealing the assets which would be
available to indemnify Liberty for any loss, costs or expenses related to the Bonds. 1
All financial statements submitted by various Indemnitors and as discussed in the instant Complaint will be
provided to Defendants and the Court under seal in order to preserve the Indemnitors confidentiality of personal
financial information.
11
30.
Pg ID 12
Liberty reasonably and justifiably relied upon the financial information the
Indemnitors provided Liberty.

a. The Individual Indemnitors 2010 Financial Statements
i. Richard Crittendens Personal Financial Statements
31.
Richard Crittenden and his wife, Tamyra Crittenden, submitted to Liberty a
personal financial statement dated December 31, 2010.

32.
Crittendens 2010 Personal Financial Statement provided that his net worth was
Eight Million Eight Hundred Seventy-Four Thousand Thirty-Nine and 91/100 Dollars
($8,874,039.91). Of that amount, Crittenden claimed to have assets of the following:
Category
Amount
Cash
$135,306.72
Note Receivable from DeVere
$1,120,000.00
Stocks/Equity
$6,569,209.00
Real Estate
$700,000.00
Personal Property
$80,000.00
Retirement Accounts
$415,117.00
Total Assets
33.
$9,019,632.72
Based upon the Crittendens representations made to Liberty as set forth in his
respective 2010 Personal Financial Statements, Liberty agreed to issue the Bonds.
34.
Liberty reasonably and justifiably relied upon the accuracy of the 2010 Personal
Financial Statements provided by Crittenden. Such financial statements were material to

Libertys decision to issue the Bonds.
12
35.
Pg ID 13
In reliance upon Crittendens representations of his assets made to Liberty as set
forth in his respective 2010 Personal Financial Statements and subject to the execution of the
Indemnity Agreement, Liberty agreed to issue and continue to issue surety credit to DeVere
Construction.
ii. Cynthia Gabaras Personal Financial Statements
36.
Cynthia Gabara and her husband, Merton Gabara, submitted to Liberty a personal
financial statement dated December 31, 2010.

37.
The Gabaras 2010 Personal Financial Statement provided that her net worth was
Four Million Nine Hundred Sixty-One Thousand Fifteen and 81/100 Dollars ($4,927,357.81). Of
that amount, Garbara claimed to have assets of the following:
Category
Amount
Cash
$101,453.49
$320,000.00
Stocks/Equity
$3,200,149.59
Real Estate
$470,000.00
Personal Property
$45,000.00
Retirement Accounts
$673,073.16
Life Insurance
$151,339.57
Total Assets
38.
$4,961,015.81
Based upon Garbaras representations made to Liberty as set forth in her
13
39.
Pg ID 14
Financial Statements provided by Gabara. Such financial statements were material to Libertys
decision to issue the Bonds.
40.
In reliance upon Gabaras representations of her assets made to Liberty as set
forth in their respective 2010 Personal Financial Statements and subject to the execution of the
Indemnity Agreement, Liberty agreed to issue and continue to issue surety credit to the DeVere
Construction.
b. The Individual Indemnitors 2013 Financial Statements
41.
Richard Crittenden and his wife, Tamyra Crittenden, submitted to Liberty a
personal financial statement dated December 31, 2013.

42.
Crittendens 2013 Personal Financial Statement provided that his net worth was
Ten Million One Hundred Sixty-Four Thousand Seven Hundred Fifty-Two and 72/100 Dollars
($10,164,752.72). Of that amount, Crittenden claimed to have assets of the following:
Category
Amount
Cash
$147,610.72
$1,223,750.00
Stocks/Equity
$7,480,705.00
Real Estate
$700,000.00
Personal Property
$150,000.00
Retirement Accounts
$592,522.00
Total Assets
14
$10,294,587.72
43.
Pg ID 15
Based upon Crittendens representations made to Liberty as set forth in his
44.
Financial Statements provided by Crittenden. Such financial statements were material to

Libertys decision to issue the Bonds.
45.
In reliance upon Crittendens representations of their assets made to Liberty as set
forth in his respective 2013 Personal Financial Statements and subject to the execution of the
Construction.
46.
Cynthia Gabara and her husband, Merton Gabara, submitted to Liberty a one-page
personal financial statement dated September 20, 2013.

47.
Million
Gabaras 2013 Personal Financial Statement provided that her net worth was Four
Four
Hundred
Seventy-Eight
Thousand
Seventy-Four
and
27/100
($4,478,074.27). Of that amount, Garbara claimed to have assets of the following:

Category
Amount
Cash
$69,168.25
$390,000.00
Stocks/Equity
$2,395,463.67
Real Estate
$404,000.00
Personal Property
$45,000.00
Retirement Accounts
$673,073.16
Life Insurance
$221,288.99
15
Dollars
Pg ID 16
Total Assets
48.
$4,607,984.27
Based upon Garbaras representations made to Liberty as set forth in her
49.
Financial Statements provided by Gabara. Such financial statements were material to Libertys
50.
In reliance upon Gabaras representations of her assets made to Liberty as set
forth in her respective 2013 Personal Financial Statements and subject to the execution of the
Construction.
iii. Cheryl Lumsdens Personal Financial Statements
51.
Cheryl Lumsden and her husband, Gary Lumsden, submitted to Liberty a one-
page personal financial statement dated December 31, 2013.

52.
Lumsdens 2013 Personal Financial Statement provided that her net worth was
Five Million Three Hundred Seventy-Five Thousand Three Hundred Eleven and 84/100 Dollars
($5,375,311.84). Of that amount, Lumsden claimed to have assets of the following:
Category
Amount
Cash
$284,818.00
$401,500.00
Stocks/Equity
$2,836,911.84
Real Estate
$990,000.00
Personal Property
$525,000.00
16
Retirement Accounts
$610,042.00
Life Insurance
$48,915.00
Pg ID 17
Total Assets
53.
$5,677,186.84
Based upon Lumsdens representations made to Liberty as set forth in her
54.
Financial Statements provided by Lumsden. Such financial statements were material to Libertys
55.
In reliance upon Lumsdens representations of her assets made to Liberty as set
forth in her respective 2013 Personal Financial Statements and subject to the execution of the
Construction.
c. The Individual Indemnitors 2015 Financial Statements
56.
Richard Crittenden, submitted to Liberty a personal financial statement dated
November 27, 2015. Unlike Crittendens 2010 and 2013 Personal Financial Statements, the 2015
Personal Financial Statement excludes his wife, Tamyra Crittenden.
57.
Crittendens 2015 Personal Financial Statement provided that his net worth had
significantly decreased to only Three Million Three Hundred Twenty-Five Thousand Five
Hundred Twenty and 27/100 Dollars ($3,325,520.27). Of that amount, the Crittenden claimed to
have only the following assets:
Category
Amount
17
Cash
$2,306.00
$0
Stocks/Equity
$2,771,341.27
Real Estate
$0
Personal Property
$400.00
Retirement Accounts
$549,598.00
Pg ID 18
Total Assets
58.
$3,325,520.27
There is a difference of approximately $7,000,000.00 in overall assets. Notably,
Crittenden no longer claims to have a Notes Receivable due from DeVere Construction and has
dissipated a significant amount of his stocks/equity in several entities, both with no indication of
receiving a reasonable equivalent value for the Note and/or stocks/equity.
59.
Crittendens 2015 Personal Financial Statement now discloses for the first time
that over $70,000.00 is not owned by him individually, rather, it is owned by The Richard L.
Crittenden Trust U/A/D May 12, 2000, which Crittenden is identified as the Trustee of.
60.
Crittenden did not notify Liberty of his significant decrease in net worth.
61.
Crittenden has claimed to Liberty that he is now insolvent.
62.
Had Liberty been aware of the misrepresentations and/or decrease in available
assets, Liberty would not have continued with the bonding program it had in place on behalf of
DeVere Construction.
18
63.
Pg ID 19
Cynthia Gabara, submitted to Liberty a personal financial statement dated
November 30, 2015. Unlike Gabaras 2010 and 2013 Personal Financial Statements, the 2015
Personal Financial Statement excludes her husband, Merton Gabara.
64.
Gabaras 2015 Personal Financial Statement provides that her net worth has
significantly decreased to only Two Million One Hundred Fifteen Thousand Six Hundred Fifteen
and 70/100 Dollars ($2,115,615.70). Of that amount, the Gabara claimed to have only the
following assets:
Category
Amount
Cash
$32,205.10
$0
Stocks/Equity
$1,398,265.07
Real Estate
$0
Personal Property
$0
Retirement Accounts
$596,536.30
Life Insurance
$88,609.23
Total Assets
65.
$2,115,615.70
Gabara no longer claims to have a Notes Receivable due from DeVere Construction and has
19
66.
Pg ID 20
Gabaras 2015 Personal Financial Statement now discloses for the first time that
over $70,000.00 is not owned by her individually, rather, it is owned by The Cynthia S. Gabara
U/A/D July 24, 2000, which Gabara is identified as the Trustee of.
67.
Gabara did not notify Liberty of her significant decrease in net worth.
68.
iii.
69.
Cheryl Lumsdens Personal Financial Statements
Cheryl Lumsden, submitted to Liberty a personal financial statement dated
November 30, 2015. Unlike Lumsdens 2013 Personal Financial Statements, the 2015 Personal
Financial Statement excludes her husband, Gary Lumsden.
70.
Lumsdens 2015 Personal Financial Statement provides that her net worth has
significantly decreased to only Two Million Thirty-Seven Thousand Seven Hundred Sixty and
33/100 Dollars ($2,037,760.33). Of that amount, the Lumsden claimed to have only the
following assets:
Category
Amount
Cash
$5,281.90
$0
Stocks/Equity
$1,430,265.07
Real Estate
$0
Personal Property
$15,240.00
Retirement Accounts
$594,813.36
Life Insurance
$0
20
Total Assets
71.
Pg ID 21
$2,037,760.33
Lumsden no longer claims to have a Notes Receivable due from DeVere Construction and has
72.
Lumsdens 2015 Personal Financial Statement now discloses for the first time that
over $70,000.00 is not owned by her individually, rather, it is owned by The Cheryl Lumsden
Turst U/A/D July 24, 2000, which Lumsden is identified as the Trustee of.
73.
Lumsden did not notify Liberty of her significant decrease in net worth.
74.
C. The Claims.
75.
Subsequent to the issuance of the Bonds, Liberty received numerous claims, as
detailed below, on the Bonds from Obligees and/or other claimants claiming, inter alia, DeVere
Construction failed to perform pursuant to the terms of the contracts.
Bond No.
Claimant
013124115
Site-Prep, Inc. of NC
013124115
HRI Bridge Company
013124115
Southern Garden, Inc.
013124115
Reynolds Fence &
Project
Obligee
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
21
Claim Amt
Lee County US
421 Sanford
$206,326.00
Lee County US
421 Sanford
$69,012.00
Lee County US
421 Sanford
$22,393.00
Lee County US
$700.00
Guardrail, Inc.
013124115
013124193
013124193
013124193
013124193
013124193
013124193
013124193
013124193
013124193
013124193
013125048
013125048
013125048
013125048
Department of
Transp.
S. T. Wooten
North Carolina
Corporation
Department of
Transp.
Pledmont Drilling &
North Carolina
Blasting, Inc.
Department of
Transp.
Parrish Company, Inc. North Carolina
Department of
Transp.
ALS of North Carolina, North Carolina
Inc.
Department of
Transp.
Southern Garden, Inc. North Carolina
Department of
Transp.
Young Construction
North Carolina
Company, LLC
Department of
Transp.
Carolina Concrete
North Carolina
Systems, Inc.
Department of
Transp.
On Point Land
North Carolina
Surveying, Inc.
Department of
Transp.
Site-Prep, Inc. of NC
North Carolina
Department of
Transp.
FSC II, LLC d/b/a/
North Carolina
Fred Smith Co.
Department of
Transp.
Midasco, LLC
North Carolina
Department of
Transp.
Stay Alert Safety
North Carolina
Services Inc.
Department of
Transp.
Cruz Brothers
North Carolina
Concrete, Inc.
Department of
Transp.
Southeastern Concrete North Carolina
Company of
Department of
Lumberton, Inc.
Transp.
Tricor Construction,
North Carolina
22
Pg ID 22
421 Sanford
Lee County US
421 Sanford
$152,559.00
NCDOT Rolesville
Bypass
$144,133.00
NCDOT Rolesville
Bypass
$16,630.00
NCDOT Rolesville
Bypass
$38,627.00
NCDOT Rolesville
Bypass
$50,523.00
NCDOT Rolesville
Bypass
$1,789.00
NCDOT Rolesville
Bypass
$14,996.00
NCDOT Rolesville
Bypass
Unknown
NCDOT Rolesville
Bypass
$238,861.00
NCDOT Rolesville
Bypass
$1,206,019.00
NCDOT Rolesville
Bypass
$214,784.00
Robeson
$11,393.00
Robeson
$59,235.00
Robeson
$29,883.00
Robeson
$7,446.58
Inc.
013125079
Bear & Co. Signs &

Lighting, Inc.
013125079
Department of
Transp.
North Carolina
Department of
Transp.
Pg ID 23
NCDOT C202880
Bridges #235 &
#238 (Buncombe
County)
$6,800.00
J. Owen Trucking, Inc. North Carolina

Department of
Transp.
NCDOT C202880
Bridges #235 &
#238 (Buncombe
County)
$47,334.00
013125079
Reynolds Fence &

Guardrail, Inc.
North Carolina
Department of
Transp.
NCDOT C202880
Bridges #235 &
#238 (Buncombe
County)
$1,263.00
013125247
Keen Plumbing
City of Raleigh
Company
CityLink Construction, City of Raleigh
LLC
Proven Products, Inc.
City of Raleigh
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
$48,081.00
013125247
013125247
013125247
First Petroleum
Services
City of Raleigh
013125247
Sears Contract, Inc.
City of Raleigh
013125247
Structural Steel of
Carolina, LLC
Skyrock Construction,
LLC
Neuse Title Service,
Inc.
City of Raleigh
013125247
013125247
013125247
013125247
013125344
Wayne J. Griffin
Electric, Inc.
The Lane Construction
Corporation
RKC Trucking Inc.
013125344
Theresa's Concrete
Service, Inc.
013125344
High Country
City of Raleigh
City of Raleigh
City of Raleigh
City of Raleigh
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
23
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
Northeast Remote
Operations Facility
$23,761.00
$1,714.00
$68,996.00
$30,072.00
$35,902.00
$71,020.00
$9,161.00
Northeast Remote $279,445.00

Operations Facility
Northeast Remote $43,509.00
Operations Facility
NCDOT C203133 $76,470.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $23,195.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $69,978.00
Hydroseeding Inc.
Department of
Transp.
North Carolina
Department of
Transp.
013125344
APAC-Atlantic, Inc.
dba Harrison
Construction
013125344
Precast Supply
Company
013125344
BREC, PA
013125344
Gossett Concrete Pipe

Co., Inc.
013125344
McNeely's Store and

Rental
013125344
Southern Concrete
Materials, Inc.
013125344
Mountain Creek
Contractors, Inc.
013125344
Piling Products, a
Division of Roll Form
013125344
Carolina Concrete
Designs, Inc.
013125344
Guaranteed Supply
Company
013125344
Reynolds Fence &

Guardrail, Inc.
013125344
E&E Contracting
Group, Inc.
013125523
Kerns Trucking, Inc.
013125523
Davis H. Elliot
North Carolina
Construction Company, Department of
Inc.
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
24
Pg ID 24
Jackson County
NC-116 to NC-107
NCDOT C203133
Jackson County
NC-116 to NC-107
$1,045,488.00
NCDOT C203133 $21,817.00

Jackson County
NC-116 to NC-107
NCDOT C203133 $13,957.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $25,205.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $5,060.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $96,202.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $33,000.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $56,287.00
Jackson County
NC-116 to NC-107
NCDOT C203133 $24,123.00
Jackson County
NC-116 to NC-107
NCDOT C203133
$4,355.00
Jackson County
NC-116 to NC-107
NCDOT C203133
$16,213.00
Jackson County
NC-116 to NC-107
NCDOT C203133
$2,000.00
Jackson County
NC-116 to NC-107
NCDOT C202824 $47,007.00
Mecklenburg Co.
Independence Ave
NCDOT C202824
Mecklenburg Co.
Independence Ave
Unknown
Pg ID 25
013125523
Concord Engineering
& Surveying, Inc. dba
CESI
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$30,552.00
013125523
Stay Alert Safety

Services Inc.
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$10,096.00
013125523
The Lane Construction North Carolina

Corporation
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$1,674,595.00
013125523
Cruz Brothers
Concrete, Inc.
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$45,822.00
013125523
Reynolds Fence &

Guardrail, Inc.
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$366.00
013125523
Anlaan Corporation
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$355,715.00
013125523
P & TL Inc.
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$23,276.00
013125523
Tricor Construction,
Inc.
North Carolina
Department of
Transp.
NCDOT C202824
Mecklenburg Co.
Independence Ave
$56,526.99
013125845
North State Water and

Sewer, Inc.
City of Concord
Albemarie Water
$48,116.00
Transmission Line
Contract 2 Division
1&2
013125845
Young Construction
Company, LLC
City of Concord
Albemarie Water
$36,760.00
Transmission Line
Contract 2 Division
1&2
013125845
Water Guard, Inc.
City of Concord
Albemarie Water
$29,011.00
Transmission Line
Contract 2 Division
25
Pg ID 26
1&2
013125966
Cruz Brothers
Concrete, Inc.
City of Greensboro
Lynwood Lakes
Water and Sewer
Improvements
$12,915.00
013125966
Chandler Concrete, Inc. City of Greensboro
Lynwood Lakes
Water and Sewer
Improvements
$11,753.00
013125966
Young Construction
Company, LLC
City of Greensboro
Lynwood Lakes
Water and Sewer
Improvements
$29,080.00
013125966
5&20, LLC
City of Greensboro
Lynwood Lakes
Water and Sewer
Improvements
$16,000.00
013125978
Stay Alert Safety

Services Inc.
City of Raleigh
Leesville Road
Widening PW
2011-05
$3,794.00
013125978
The Lane Construction

Corporation
City of Raleigh
Leesville Road
Widening PW
2011-05
$258,025.00
013125978
Cruz Brothers
Concrete, Inc.
City of Raleigh
Leesville Road
Widening PW
2011-05
$111,067.00
013126077
APAC-Atlantic, Inc.
dba Harrison
Construction
North Carolina
Department of
Transp.
NCDOT DN00178
Bridge #251 &
#253 Jackson
County
$10,604.00
013126077
HFK Corporation
North Carolina
Department of
Transp.
NCDOT DN00178
Bridge #251 &
#253 Jackson
County
$9,338.00
013126113

Corporation
Department of
Transp.
NCDOT C202573
Wake Co. Bridge
over Beaver Creek
$38,369.00
013126113
Young Construction
Company, LLC
NCDOT C202573
Wake Co. Bridge
$40,392.00
North Carolina
Department of
26
Transp.
Pg ID 27
over Beaver Creek
013126237

Corporation
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$48,383.00
013126237
Cruz Brothers
Concrete, Inc.
North Carolina
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$5,786.00
013126237
Red Clay Industries,

Inc.
North Carolina
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$19,863.00
013126237
Kerns Trucking, Inc.
North Carolina
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$3,983.00
013126237
Crane & Rigging

Corporation
North Carolina
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$30,000.00
013126237
Young Construction
Company, LLC
North Carolina
Department of
Transp.
C203284 Bridges
#147 & 140 Over
Mallard Creek
$3,598.00
013126390
M & M Excavating
Co., Inc.
Michigan
Department Of
Transportation
M00216 IBA - US
Toll Plaza
Redevelopment
$280,138.00
013126390
S. A. Morman & Co.
Michigan
Department Of
Transportation
M00216 IBA - US
Toll Plaza
Redevelopment
$10,660.00
013023593
Reynolds Fence &

Guardrail, Inc.
North Carolina
Department of
Transp.
NCDOT Rutherford
Roadwork
$17,611.00
013124066
Buffington & Smith

Contracting
013124066
Rogers Group, Inc.
013124066
Midasco, LLC
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
27
NCDOT Rutherford $27,388.00

Phase II
Phase II
Phase II
013124066
HRI Bridge Company
013124066
Reynolds Fence &

Guardrail, Inc.
013124066
BREC, PA
013124066
On Point Land
Surveying, Inc.
013125412
Carolina Pumpworks,
LLC
013125733
Getebe, Inc.
013125733
Pace Electrical
Contractors, Inc.
Bottom Line
Equipment, LLC
013125877
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
North Carolina
Department of
Transp.
City of Henderson
UCC Millennium,
LLC
UCC Millennium,
LLC
Westgate
Development, Inc.
Alpena Regional
Medical Center
Pg ID 28
NCDOT Rutherford
Phase II
$29,397.00
NCDOT Rutherford
Phase II
$4,532.00
NCDOT Rutherford
Phase II
$13,957.00
NCDOT Rutherford
Phase II
Unknown
Henderson Water
Reclamation
Facility
Improvements
Millennium One
$1,000.00
Millennium One
$220,196.00
$180,089.00
Westgate
$15,930.00
Development/Parkw
ood Place
Subdivision
ARMC Emergency $3,775.00
Department/Enabli
ng Projects
013125951
S. A. Morman & Co.
013126115
APAC-Atlantic, Inc.
dba Harrison
Construction
North Carolina
Department of
Transp.
NCDOT C203347
Henderson Co.
Bridge #42 over
Saconon Creek
$52,474.00
013126113

Corporation
Department of
Transp.
NCDOT C202573
Wake Co. Bridge
over Beaver Creek
$38,369.00
013125251
Pinnacle Construction
Group, LLC
Parish of St.
Landry, State of
Louisiana &
Pinnacle
Mechanics Lien
Discharge Louisiana
$248,125.00
$9,459,310.57
(hereinafter Claims).
28
76.
Pg ID 29
Pursuant to the terms of the Indemnity Agreement, Liberty retained legal counsel
and consultants to assist Liberty in investigating, defending and resolving the Claims and in
enforcing the terms of the Indemnity Agreement.
77.
Several of the foregoing Claims are currently in pending litigation.
78.
Liberty has continually notified the Indemnitors of the Claims asserted against the
79.
On or about November 20, 2015, Liberty made its first demand in writing that the
Bonds.
Indemnitors post collateral and indemnify Liberty from current losses, pursuant to the terms of
the Indemnity Agreement. A true and correct copy of Libertys written demand is attached
hereto as Exhibit H.
80.
Simultaneously, Liberty and its consultants demanded access to DeVeres books
and records.
81.
To date, the Indemnitors have not indemnified Liberty.
82.
To date, the Indemnitors have not posted collateral security in the amount
demanded by Liberty.
83.
The Indemnitors denied Liberty and its consultants reasonable access to its books
and records.
D. Indemnitors Request for Financial Assistance.
84.
On or about November 24, 2015, DeVere advised Liberty of DeVeres financial
difficulties, inability to perform their obligations under the contracts for the Bonded Projects, and
inability to pay bills or other indebtedness incurred in, or in connection with, the performance of
the Bonded Contracts, the Bonds, and the Indemnity Agreement, each of which constitutes an
29
Pg ID 30
express default pursuant to the terms of the Indemnity Agreement. A true and correct copy of
DeVeres November 24, 2015 Letter is attached hereto as Exhibit I.
85.
In its November 2015 Letter, Indemnitors represented that they were unable to
complete the Bonded Projects and/or pay claims for labor and materials furnished in connection
with the Bonded Projects without the assistance of Liberty. Consequently, the Indemnitors have
requested that Liberty provide financial assistance in paying such Claims.
E. Memorandum of Understanding.
86.
In response to the Indemnitors request, on or about December 23, 2015, Liberty
proposed certain financing terms set forth in a Memorandum of Understanding (MOU). The
Indemnitors executed the MOU which extended financial assistance to the Indemnitors in the
amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00). A true and correct
copy of the MOU is attached hereto as Exhibit J.
87.
The Indemnitors agreed, among other things, to reaffirm their obligations under
the Indemnity Agreement. Specifically, the Indemnitors agreed that any funds it receives from
Liberty through financing are trust funds pursuant to the Indemnity Agreement. The MOU
provides, in relevant part:
Indemnitors hereby acknowledge and reaffirm their obligations
under the Indemnity Agreement. Indemnitors expressly
acknowledge that any funds received by Liberty pursuant to the
Indemnity Agreement, this Request for Financial Assistance,
and/or a letter of direction, are trust funds pursuant to and as
contemplated by Paragraph Eleventh Trust Fund of the Indemnity
Agreement. All sums paid on the account of the Indemnitors or
otherwise, less any amounts received by Liberty on account of
money due, or to become due on the Bonded Projects or
liquidation of pledged initial collateral shall conclusively be
deemed a loss covered under the Indemnity Agreement. Nothing
contained herein will constitute a waiver of limitation of said
obligations.
Exhibit J, pg. 3.
30
88.
Pg ID 31
The Indemnitors also agreed to cooperate with Liberty in its investigation of
DeVere Constructions operations. Indemnitors again acknowledged that it is required to

reimburse and indemnity Liberty for any and all losses incurred as a result of investigating and
handling Claims that arise under the Bonds. MOU provides in relevant part:
Indemnitors acknowledge that it is reasonable and necessary for
Liberty to conduct an investigation into DeVeres operations and
the status of the projects related to the Bonds and Bonded
Contracts. Indemnitors will cooperate with Liberty in its
investigation and provide Liberty documentation and information
requested by Liberty to assist Liberty in its evaluation of this
Request for Financial Assistance and of the projects related to the
Bonded Contracts. Indemnitors further agree and acknowledge that
reimbursement and indemnification by the Indemnitors of the
expenses (including, but not limited to, fees of third party
professionals) incurred by Liberty in its investigation and handling
of claims arising under the Bonds are obligations under the
Indemnity Agreement which obligations are hereby reaffirmed.
Exhibit J, pgs. 5-6.
89.
The Indemnitors also agreed to execute and deliver certain documents within
fourteen days of execution of the MOU. The MOU states in relevant part:
Except for the letters of default and direction the Principal and
Indemnitor shall execute and deliver the following documents
within fourteen days of execution of this Agreement:
Concurrently herewith, as partial consideration for Liberty's
funding of certain and limited payment obligations, the
Indemnitors will grant to Liberty a security interest in all real
property owned, excluding property held in its entirety between
any Indemnitor and his or her spouse, and personal property assets,
wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof, including, but not
limited to, the following: all goods (including inventory,
equipment and any accessions thereto), instruments (including
promissory notes), documents, accounts, chattel paper, deposit
accounts, letter-of-credit rights, securities and all other investment
property, supporting obligations, any contractor or contract rights
or rights to the payment of money, insurance claims and proceeds,
and all general intangibles (collectively, "Collateral").
31
Pg ID 32
The Indemnitors agree to execute all necessary documents to

perfect Libertys security interest in the Collateral.
Mortgages on all real property of the Indemnitors, excluding
property held in its entirety between any Indemnitor and his or her
spouse.
Assignments to all of the following:
Any and all Income Tax Refunds due to DeVere
Construction Company, Inc., Crittenden Construction Co.,
Inc., Reds Traders Limited, DeVere Swepco JV, LLC, and
DeVere Construction Company MI, LLC.
Any and all insurance premium refunds.
Assignment of rents for any real property leased by the
Indemnitors.
Provide all documents related to bank note.
Provide all documents regarding affirmative claims.
Provide a 3 month cash flow projection.
Key DeVere personnel and DeVeres attorney(s) handling claims
to meet with Liberty to review affirmative claims and provide
Liberty all supporting documentation for each claim(s).
DeVere to contact each of the bonded owner(s) and each of the
suppliers and subcontractors by bonded project in an attempt to set
up meetings with Liberty for Liberty to review the financials of
each respective contract(s), the remaining scope of work and the
same for each subcontract(s)/purchase order(s).
Provide all documentation requested by Liberty related to all assets
and the bonded projects.
Letters of Direction and Default to be executed contemporaneously
upon the execution of this Agreement attached hereto as Group
Exhibit J.
Exhibit J, pgs. 5-6.
32
90.
Pg ID 33
In addition to the above referenced MOU obligations, DeVere is required under
the Bond and Contracts to complete it performance obligations and complete each Bonded
Contract.
91.
To date, Liberty has advanced all of the $2,500,000.00 as agreed to under the
92.
93.
To date, the Indemnitors have not posted collateral security in the amount
MOU.
demanded by Liberty.
94.
To date, the Indemnitors have failed to provide and execute all of the
aforementioned documents as required by the MOU. See Exhibit j, pgs. 5-6.

F. Indemnitors Request for an Additional $4,092,784.02 Loan and Addendum No. 1.
95.
On or about January 5, 2016, Indemnitors requested additional funding from
Liberty in the amount of Four Million Ninety-Two Thousand Seven Hundred Eighty-Four
02/100 Dollars ($4,092,784.02). A true copy of January 5, 2016 Letter is attached hereto as
Exhibit K. Indemnitors advised Liberty that they needed additional financial assistance for
paying overhead, payroll, vendors, suppliers, equipment rentals, and other potential claimants
that may have the ability to file on any of the Bonds. Indemnitors represented without such
additional financial assistance from Liberty they will be unable to satisfy their obligations on the
projects bonded by Liberty.
96.
In order to fund the Indemnitors the additional $4,092,784.02 financing request,
Liberty required certain terms and conditions of the Indemnitors as set forth in Addendum No. 1.
Liberty sent Addendum No. 1 to Indemnitors on January 14, 2016. A true and correct copy of
Addendum No 1 is attached hereto as Exhibit L.
33
97.
Pg ID 34
Liberty required, in part, the Indemnitors to agree to the following:

Contemporaneously with execution of Addendum No. 1, execute
the attached Promissory Note, attached hereto as Exhibit 1;
Contemporaneously with execution of Addendum No. 1, execute
the attached Cognovit, attached hereto as Exhibit 2;
Within 14 days from execution of Addendum No. 1, the
Indemnitors shall prepare, execute, and record mortgages in favor
of Liberty for all real estate owned by the Indemnitors as pledged
by the MOU;
Within 14 days from execution of Addendum No. 1, assignment of
Crittendon Notes to Liberty
Crittenden Construction Company Inc. holds two unsecured
demand notes with Hazel J. Crittenden Marital Inter-Vivos Trust
($100,051) and Bruce D. Crittenden ($100,000) issued December
31, 2012, with an interest paid annually at the rate of .82%;
Within 14 days from execution of Addendum No. 1, payment of all
PNC Stock Account owned by Richard Crittenden to Liberty;
Within 14 days from execution of Addendum No. 1, the
Indemnitors shall have prepared and deliver to Liberty a current
Accounts Receivable for Crittenden Construction and Letters of
Direction for all Crittenden Accounts Receivables;
Within 14 days of the execution of the Addenda, liens on title on
the following property shall be executed, recorded, and delivered
to Liberty by the Indemnitors:
a. 1999 Pop Up Campber owned by Cynthia Gabara
b. 2008 Fifth Wheel Camper owned by Cynthia Gabara
c. 2006 Jayco Trlr Coach owned by Cynthia Gabara
d. 2000 Coleman Tr Coach owned by Cynthia Gabara
e. 1995 Camaro owned by Cheryl Lumsden
f. 2005 Motorcycle owned by Cheryl Lumsden
g. 1971 Oday Yingling Sailboat owned by Richard Crittenden
h. 1992 Polaris Snowmobile owned by Richard Crittenden
34
Pg ID 35
A copy of the trust agreement, all amendments thereto, and a list of

all assets contained in the following trusts:
a. The Cheryl Lumsden Trust U/A/D July 24, 2000 Cheryl
Lumsden, Trustee;
b. The Richard L. Crittenden Trust U/A/D May 12, 2000
Richard L. Crittenden, Trustee;
c. The Cynthia S. Gabara Trust U/A/D July 24, 2000 Cynthia
S. Gabara, Trustee;
d. Michael B. Crittenden Living Trust Dated 2/26/93 Michael
Crittenden, Trustee;
e. Any other trust that any Indemnitor has a beneficiary
interest;
Continue to provide Liberty all information, documentation, and
cooperation as required by the MOU and GAI related to the
bonded project and affirmative claims.
See Exhibit L.
G. Indemnitors Response to Addendum No. 1.
98.
On or about January 20, 2016, Indemnitors refused to execute Addendum No. 1
and instead demanded the following in order for the Indemnitors to accept from Liberty the $4
million in additional financing to complete the Indemnitors obligations under the Bonded
Contracts and Bonds (Response):
Loan terms will be payment due in accordance with original MOU
The following language shall not be included in the amendment.
Liberty shall have the discretion but not the obligation to provide
funding for the Special Items identified in the Indemnitors
funding request.
DeVere shall be reimbursed for payroll and overhead previously
agreed to in the original MOU.
Funds disbursement shall include all attorney fees to defend all
bond claims and for the prosecution of all affirmative claims in
order to facilitate the repayment of the Liberty loan.
35
Pg ID 36
Liberty will furnish a $4.2 million bond to the North Carolina State
Licensing Board so that DeVere can retain their general
contractors license to complete Liberty bonded projects.
DeVere will provide estimates of payroll, approved company
overhead, equipment payments and rentals, legal fees and job cost
overhead. These must be paid one week in advance of DeVere
incurring these costs. DeVere must be reimbursed for the same
items since December 15, 2015 for items not previously funded.
No further deliverables will be furnished.
No further documents will be furnished.
A true and correct copy of Indemnitors Response is attached hereto as Exhibit M.
99.
Indemnitors demanded that Liberty provide its reply to the Indemnitors Response
by noon that same day or threatened to demobilize from all Projects. See Exhibit M.
100.
Liberty took Indemnitors Response under advisement to determine whether such
terms were acceptable.

H. Libertys Rejection of Indemnitors Response and Notice of Default.
101.
On or about January 27, 2016, Indemnitors followed up with their continued
request that Liberty issue a contractors bond in the amount of Four Million Two Hundred
Thousand and 00/100 ($4,200,000.00) to keep DeVeres license active in North Carolina. A true
and correct copy of Email Correspondence is attached hereto as Exhibit N.
102.
On that same day, January 27, 2016, Liberty declined Indemnitors request for the
contractor bond but continued to offer financing to DeVere upon the execution of Addendum
No. 1. Liberty reasoned that it stopped issuing bonds for DeVere some time ago and that DeVere
has a bonding program with a different surety from which it should obtain its contractor bond.
See Exhibit N.
36
103.
Pg ID 37
DeVere refused to execute Addendum No. 1 and informed Liberty that it would
be demobilizing from all of its Bonded Projects wishing Liberty good luck in finishing this
work. See Exhibit N.
104.
Liberty again tried to reason with DeVere by informing DeVere that walking off
of the Bonded Projects is not DeVeres only option. Liberty informed DeVere that a bond may
not even be necessary under the law as long as DeVere can demonstrate working capital of
$150,000.00. Liberty rationally stated that requesting $150,000 in working capital as compared
to increasing Libertys exposure by $4,200,000.00 is more reasonable. See Exhibit N.
105.
The Indemnitors responded that they do not have the ability to show $150,000 in
working capital. The Indemnitors explained that the company overhead is about 700k per
month and in order to pay that the Indemnitors have begged, borrowed and taken from other
projects to pay this overhead to remain in business to try to get Liberty bonded work [] done,
meaning Arch subcontractors have not been paidthe equipment vendors are dueetc. See
Exhibit N.
106.
Given this exchange of correspondence, Liberty sent a Notice of Default under
Memorandum of Understanding and Indemnity Agreement (Notice of Default) dated January

27, 2016, to the Indemnitors rejecting Indemnitors required financing conditions in their
Response and formalizing its last notice of default of the MOU and Indemnity Agreement. A true
and correct copy of Libertys Notice of Default Letter dated January 27, 2016, is attached hereto
as Exhibit O.
107.
In the event that the Indemnitors did not withdraw and rescind their required
conditions to Addendum No. 1, Liberty demanded that the Indemnitors post collateral in the
37
Pg ID 38
amended amount of Twelve Million Five Hundred Thousand and 00/100 Dollars
($12,500,000.00) by the close of business on January 29, 2016.
108.
The Indemnitors failed to rescind their required conditions to Addendum No. 1
and failed to post collateral in the amount of Twelve Million Five Hundred Thousand and 00/100
Dollars ($12,500,000.00) by the close of business on January 29, 2016.
109.
110.
To date, the Indemnitors have not posted collateral security in the amended
amount demanded by Liberty.

111.
To date, in order to discharge its obligations under the Bonds, Liberty has
incurred costs in excess of $2,500,000.00 in Claim payments, costs and fees in connection with
Claims against the Bonds and financing and will continue to incur such costs.
112.
Simultaneously, Liberty renewed its previous document request to the
Indemnitors by sending Document Request List dated January 28, 2016. A true and accurate
copy of Libertys Document Request list is attached as Exhibit P.
113.
Liberty has continually requested that Indemnitors comply with the Document
Request List. To date, Liberty has not received all of the documents it requested.
I. NCDOTs Notice of Default
114.
In four separate letters dated January 29, 2016, the North Carolina Department of
Transportation issued its own notice of default letters to DeVere. A true and correct copy of
NDOTs Notice of Default Letters are attached hereto as Exhibit Q.
115.
Principal
DeVere
Construction
Co., Inc.
The Notice of Default letters are directed for the following Projects:
Project
NCDOT C202880
Bridges #235 & #238
(Buncombe County)
Obligee
North
Carolina
Department of
38
Bond No.
013125079
Penal Sum
11,947,609.00
DeVere
Construction
Co., Inc.

Jackson County NC166 to NC107
DeVere
Construction
Co., Inc.
NCDOT C202824
Mecklenburg County
Independence Blvd.
DeVere
Construction
Co., Inc.
C203284 Bridges #147

& 140 Over Mallard
Creek
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
North
Carolina
Department of
Transportation
Pg ID 39
013125344
$15,939,043.00
013125523
51,669,285.00
013126237
4,393,837.00
See Exhibit Y.
116.
NDOTs Notice of Default letters state that DeVere is in default of Article 108-1
of the Standard Specifications of the Contractor because DeVere has effectively shut down the
Project as of January 29, 2016. See Exhibit Q.
117.
NDOTs Notice of Default letters provide DeVere the opportunity to cure this
default by February 8, 2016. Upon DeVeres failure to timely cure its default, it would be
terminated from the Project placing the bonding company the responsibility for completion of
the work. See Exhibit Q.
118.
To date, DeVere has not cured its defaults under the contracts.
COUNT I
BREACH OF CONTRACT
119.
Liberty re-alleges and incorporates paragraphs 1 through 118 for Count I as
though fully set forth herein.

120.
There was, at all relevant times, a valid and enforceable contractual relationship
between Liberty and the Indemnitors by virtue of the Indemnity Agreement and MOU.
121.
The Indemnitors owed certain duties to Liberty as set forth in the Indemnity
Agreement and MOU which are outlined elsewhere in this Complaint.

39
122.
Pg ID 40
Due to DeVeres defaults under the Bonds, the Indemnity Agreement, and on the
Bonded Projects, Liberty, as surety, has been required to perform its obligations under the Bonds
issued for the Bonded Projects.
123.
In satisfying its obligations under the Bonds and in accordance with the Indemnity
Agreement, Liberty has made and will continue to make expenditures to investigate, settle, or
otherwise satisfy Claims and/or demands by subcontractors, suppliers, and obligees.
124.
As a result of DeVeres defaults under the Bonds issued for the Bonded Projects
and under the Indemnity Agreement, Liberty has incurred and will continue to incur losses, costs
and damages arising from, but not limited to, investigating, defending and resolving actual and
potential Bond claims.
125.
As a result of DeVeres defaults under the Bonds issued for the Bonded Projects
and under the Indemnity Agreement, Liberty has incurred losses, costs, attorneys fees and
damages pursuing its rights under the Indemnity Agreement and MOU.
126.
Under the Indemnity Agreement and MOU, the Indemnitors have a duty to and
are obligated to indemnify Liberty from all losses, costs, expenses and attorneys fees Liberty
has incurred in connection with the Bonds and in enforcing the terms of the Indemnity
Agreement and MOU.
127.
Under the Indemnity Agreement and MOU, Indemnitors also have a duty to and
are obligated to hold Liberty harmless from any liability which may be asserted against Liberty
as a result of the issuance of any Bonds and in connection with the Indemnity Agreement and
MOU.
128.
Under the Indemnity Agreement and MOU, Indemnitors are further required to
provide Liberty access to their books and records and any information requested to investigate
40
Pg ID 41
Libertys exposure to loss until such time as Libertys liability under the Bonds it issued on
behalf of DeVere is terminated and Liberty has been reimbursed for all of its losses, costs, and
expenses.
129.
To date, the Indemnitors have failed and/or refused to indemnify, exonerate, or
hold Liberty harmless from Libertys existing losses, costs, expenses, and fees incurred as a
result of issuing the Bonds on behalf of DeVere and in enforcing the Indemnity Agreement and
MOU.
130.
Despite Libertys written demands, the Indemnitors have breached the Indemnity
Agreement and MOU by failing and refusing to comply with the Indemnity Agreement and
MOU and to post collateral with Liberty in order to hold Liberty harmless from the amounts
claimed.
131.
Liberty and its consultants have demanded access to Indemnitors books and
records and have provided a concise list of documents needed. To date, the Indemnitors have
failed to provide all of the documents it has requested in Exhibit P.
132.
Despite Liberty and its consultants demands, the Indemnitors have breached the
Indemnity Agreement by failing and refusing to comply with the Indemnity Agreement and
MOU and to allow Liberty and its consultants full access to the Indemnitors books and records.
133.
Pursuant to the Indemnity Agreement and MOU, Liberty is entitled to recover in
any action from the Indemnitors all costs and expenses, including attorneys fees, incurred by
Liberty in any action to enforce any of the covenants or conditions of the Indemnity Agreement
and MOU.
134.
Liberty has satisfied all conditions precedent to bringing this action and enforcing
the Indemnity Agreement and MOU.
41
135.
Pg ID 42
As a direct and proximate result of Indemnitors material breaches of the
Indemnity Agreement and MOU, Liberty has been damaged, which may continue to increase due
to additional claims against the Bonds, as well as legal fees, costs, and expenses, interest form
the dates of Libertys payments, and any other recoverable damages to which Liberty may be
entitled.
136.
Liberty is likely to continue to incur losses, costs and damages in pursuit of its
rights under the Indemnity Agreement and MOU, including costs and expenses of this action,
which are recoverable from Indemnitors under the Indemnity Agreement and MOU.
PRAYER FOR RELIEF
WHEREFORE, Liberty Mutual Insurance Company prays for:
A. Order the Indemnitors to indemnify and exonerate Liberty for all
liabilities, losses, and expenses incurred by Liberty as a result of Liberty
having executed the Bonds;
B. Order the Indemnitors to pay for Libertys costs incurred to-date;
C. Order the Defendants to provide Liberty complete access to inspect their
books and records;
D. Order the Defendants to post collateral in the amount of $12,500,000.00;
E. For such additional relief as this Court deems appropriate.
COUNT II
EXONERATION AND QUIA TIMET
137.
Liberty adopts and re-alleges paragraphs 1 through 136 for Count II as though
fully set forth herein.

138.
Liberty has previously demanded in writing that the Indemnitors post collateral in
order to hold Liberty harmless from the Claims asserted in the amended amount of
$12,500,000.00 This amount will continue to increase as Liberty incurs further fees and expenses
42
Pg ID 43
in enforcing Libertys rights under the Indemnity Agreement and in resolving the pending claims
against the Bonds.
139.
As the principal of the Bonds, DeVere Construction and the Indemnitors owe
Liberty the duty of exoneration, requiring DeVere Construction and the Indemnitors to perform
their obligation before Liberty is called upon to perform its obligations under the Bonds.
140.
Liberty is entitled to a remedy known as quia timet. This remedy secures a surety
from loss when it appears that the principal is reasonably likely to fail or refuse to perform or to
protect the surety from loss.
141.
The Indemnitors have failed and refused to meet their obligations under the
Indemnity Agreement and MOU by failing to post collateral to Liberty relating to the claims
asserted and fees and expenses Liberty will incur in resolving the Claims.
142.
Liberty is entitled to be reimbursed for the attorneys fees it has currently paid and
to be fully collateralized by the Indemnitors for its potential liability in order to discharge its
obligations under the Bonds.
143.
Liberty lacks an adequate remedy at law to secure its right of exoneration from
the Indemnitors and is without a plain, speedy remedy at law, and will be irreparably and
permanently injured unless this Court grants the injunctive and equitable relief requested herein.
PRAYER FOR RELIEF
WHEREFORE, Liberty Mutual Insurance Company respectfully requests this Court grant
the following relief:
43
Pg ID 44
C. Order the Defendants to provide Liberty complete access to inspect their

books and records;
COUNT III
SPECIFIC PERFORMANCE OF THE INDEMNITY AGREEMENT
144.
Liberty re-alleges and incorporates paragraphs 1 through 143 for Count III as

145.
Liberty has demanded in writing on two separate occasions that the Indemnitors
post collateral in order to indemnify and hold Liberty harmless from any and all costs resulting
from the Bonds Liberty issued for the Projects. To date, the Indemnitors have failed to indemnify
Liberty.
146.
Liberty has demanded in writing that the Indemnitors post collateral in the amount
of $12,500,000.00. To date, the Indemnitors have failed to post collateral.

147.
Liberty and its consultants have demanded to have access to Indemnitors books
and records but have been denied reasonable access. To date, the Indemnitors have failed to
provide such reasonable access to inspect their books and records.
148.
Liberty lacks an adequate remedy at law and will suffer irreparable harm if any
relief sought in this litigation consistent with Libertys rights under the Indemnity Agreement is
not granted.
PRAYER FOR RELIEF
WHEREFORE, Liberty Mutual Insurance Company respectfully requests the Court grant
the following relief:
liabilities, losses, and expenses incurred by Liberty as a result of having
executed the Bonds;
44
Pg ID 45
B. Order the Indemnitors to reimburse Liberty for its current costs;

C. Order the Defendants to provide Liberty reasonable access to inspect their
books and records;
COUNT IV
BREACH OF TRUST FUND PROVISIONS
149.
Liberty re-alleges and incorporates paragraphs 1 through 148 for Count IV as

150.
There was, at all relevant times, a valid and enforceable contractual relationship
between Liberty and the Indemnitors by virtue of the Indemnity Agreement.

151.
Pursuant to paragraph 11 of the Indemnity Agreement, the Indemnitors agreed
and had a duty to treat all funds received under any Bonded Project as trust funds for the benefit
and payment of all obligations under the Bonded Contract. Paragraph 11 of the Indemnity
45
Pg ID 46

Exhibit B, 11.
152.
Under each of the Bonded Projects, the Indemnitors agreed and had a fiduciary
duty under the Indemnity Agreement to ensure and to use the contract funds received from
Project Owners to pay Project vendors and to complete each Bonded Project.
153.
Liberty received numerous Claims from various subcontractors, suppliers and
obligees. During Libertys investigation of such Claims, Liberty discovered that the remaining
contract balances on the Bonded Projects were significantly depleted and not sufficient to
discharge Libertys obligations under the Bonds.
154.
On or about December 3, 2015, Liberty hosted a meeting with several
Indemnitors, including but not limited to, Richard Lee Crittenden. During that meeting, in
response to Libertys counsels question regarding an approximate Ten Million and 00/100
Dollars ($10,000,000.00) shortfall in Bonded receivables, in relation to Bonded payables, Mr.
Crittenden stated the reason for the shortfall was because the Indemnitors had to utilize contract
funds from Bonded Projects to help pay for overhead and other costs for other projects not
bonded by Liberty.
155.
As further evidence of such conduct by the Indemnitors, in an email dated January
28, 2016, Mr. Crittenden again admitted that the Indemnitors are using Bonded Contract
receivables to pay for obligations other than what the Indemnitors have a contractual and legal
obligation to satisfy. See January 28th Email, attached hereto as Exhibit N.
156.
The Indemnitors willfully breached their fiduciary duty as trustee under the
Indemnity Agreement and Bonded Contracts by failing to treat the contract funds as trust funds
46
Pg ID 47
and pay the contract funds to the Project vendors and to use the funds to complete the underlying
Bonded Project.
157.
Pursuant to the trust fund provision in the Indemnity Agreement, the Indemnitors
were required to hold, in trust, all contract funds it received for the use and benefit of the Project
vendors that DeVere engaged on the Bonded Projects and to use the contract funds to complete
the Projects.
158.
Based solely upon the Claims received by Liberty and the Indemnitors own
admissions on two separate occassions, the Indemnitors did not use the contract funds as trust
funds to pay DeVeres Project vendors and to complete the Projects. Instead, Indemnitors
breached such the Indemnity Agreement by utilizing the Bonded receivables to pay for projects
not bonded by Liberty.
159.
Indemnitors harmed Liberty by obtaining contract funds from the Bonded
obligees and not using those monies as contractually required to Indemnitors did not pass on
those monies to DeVeres Project vendors and did not use the contract funds to complete each
Bonded Project.
160.
As a direct and proximate result of Indemnitors material breach of the executed
Indemnity Agreement, Liberty has been damaged, which may continue to increase due to
additional claims against the Bonds, as well as legal fees, costs, and expenses, interest form the
dates of Libertys payments, and any other recoverable damages to which Liberty may be
entitled.
161.
Liberty is likely to continue to incur losses, costs and damages in pursuit of its
rights under the Indemnity Agreement and MOU, including costs and expenses of this action,
which are recoverable from Indemnitors under the Indemnity Agreement and MOU.
47
Pg ID 48
PRAYER FOR RELIEF

C. Order the Defendants to post collateral in the amount of $12,500,000.00;
D. For such additional relief as this Court deems appropriate.
COUNT V
BREACH OF STATUTORY TRUST FUND PROVISION
162.
Liberty -re-alleges and incorporates paragraphs 1 through 161 for Count V as

163.
Mich. Comp. Laws Ann. 570.151, et seq., the Michigan Building Contract Fund
Act treats all contact funds paid by any person to the contractor on a private project as trust funds
for the benefit and payment of all obligations under the particular project for which payment to
the contractor was issued. Violation of this statute imposes civil and criminal liability.
164.
The Indemnitors were engaged in the following private Project located in
Michigan:
Principal
DeVere
Construction
Co., Inc.
165.
Project
Bay River Medical
Obligee
4C's
Acquisitions,
Inc.
Bond No.
013126454
Penal Sum
3,442,200.00
The Indemnitors were obligated by law to ensure and to use the contract funds
received from 4Cs Acquisitions, Inc., to pay vendors of the Bay River Medical Project and to
complete the project.
48
166.
Pg ID 49
To date there has not been a claim on Bond No. 013126454, however, time has
not expired for claimants to file claims under the payment bond.
167.
obligees no other Bonded Projects. During Libertys investigation of such Claims, Liberty
discovered that the remaining contract balances on the Bonded Projects were significantly
depleted and not sufficient to discharge Libertys obligations under the Bonds.
168.
bonded by Liberty.
169.
28, 2016, Mr. Crittenden again admitted that the Indemnitors are using Bonded Contract
receivables to pay for obligations other than what the Indemnitors have a contractual and legal
obligation to satisfy. See January 28th Email, attached hereto as Exhibit N.
170.
Based solely upon the Claims received by Liberty and the Indemnitors own
admissions on two separate occassions, the Indemnitors did not use the contract funds as trust
funds to pay DeVeres Project vendors and to complete the Projects.
171.
Upon information and belief, the Indemnitors violated the law by failing to treat
the contract funds received from 4Cs Acquisitions, Inc., as trust funds to pay vendors of the Bay
River Medical Project and to complete the project.
49
172.
Pg ID 50
Pursuant to Mich. Comp. Laws Ann. 570.151, et seq., the Indemnitors were
required to hold, in trust, all contract funds it received for the use and benefit of the Project
vendors that DeVere engaged on the Bonded Projects and to use the contract funds to complete
the Projects.
173.
Instead, Indemnitors violated their legal obligations by utilizing the receivables
for the Bay Medical Project to pay for other costs, including DeVeres overhead. See January
28th Email, attached hereto as Exhibit N.
174.
Indemnitors harmed Liberty by obtaining contract funds from 4Cs Acquisitions,
Inc. and not using those monies as legally required to Indemnitors did not pass on those monies
to the Bay Medical Project vendors and did not use the contract funds to complete the particular
project.
175.
As a direct and proximate result of Indemnitors violation of law, Liberty has
been damaged, which may continue to increase due to additional claims against the Bond, as
well as legal fees, costs, and expenses, interest form the dates of Libertys payments, and any
other recoverable damages to which Liberty may be entitled.
PRAYER FOR RELIEF
50
Pg ID 51
COUNT VI
COMMON LAW CONVERSION
176.
Liberty re-alleges and incorporates by reference paragraphs 1 through 175 for
Count VI as though set forth fully herein.

177.
There was at all relevant times a valid and enforceable contractual relationship

178.
Pursuant to paragraph 11 of the Indemnity Agreement, the Indemnitors agreed to
Exhibit B, 11.
51
179.
Pg ID 52
Under each of the Bonded Projects, the Indemnitors were entrusted with contract
funds received from Project Owners. The Indemnitors agreed to ensure and use the contract
funds to pay Project vendors and complete each of the Bonded Projects.
180.
The Indemnitors had an obligation to return the trust funds that were entrusted in
their care.
181.
Liberty, as surety, has an expressed, absolute and unconditional right to the
possession, use and benefit of such funds held in trust to protect it from any liability or loss it
may incur under any Bond or Agreement.
182.
183.
bonded by Liberty.
184.
28, 2016, Mr. Richard Lee Crittenden again admitted that the Indemnitors are using Bonded
Contract receivables to pay for obligations other than what the Indemnitors have a contractual
and legal obligation to satisfy. See January 28th Email, attached hereto as Exhibit N.
52
185.
Pg ID 53
The Indemnitors knowingly, intentionally and wrongfully exercised dominion and
control over the Bonded Contract funds for their own benefit, use and purpose depriving Liberty
of its rightful entitlement to use and benefit from such funds.
186.
As a direct and proximate result of Indemnitors conversion, Liberty has been
damaged, which may continue to increase due to additional claims against the Bond, as well as
legal fees, costs, and expenses, interest form the dates of Libertys payments, and any other
recoverable damages to which Liberty may be entitled.
PRAYER FOR RELIEF
liabilities, losses, and expenses incurred by Indemnitors conversion;
COUNT VII
STATUTORY CONVERSION
187.
Count VII as though set forth fully herein.

188.
Michigan law allows recovery of three times the amount of actual damages
sustained, plus costs and reasonable attorney fees for either or both of the following: (a) stealing
or embezzling property or converting property to the other persons own use; and (b) buying,
receiving, possessing, concealing, or aiding in the concealment of stolen, embezzled, or
converted property when it is known that the property is stolen, embezzled or converted. Mich.
Comp. Laws. Ann. 600.2919a.
53
189.
Pg ID 54
There was at all relevant times a valid and enforceable contractual relationship

190.
Pursuant to paragraph 11 of the Indemnity Agreement, the Indemnitors agreed to
Exhibit B, 11.
191.
Under each of the Bonded Projects, the Indemnitors were entrusted with contract
funds received from Project Owners. The Indemnitors agreed to ensure and use the contract
funds to pay Project vendors and complete each of the Bonded Projects.
192.
The Indemnitors had actual knowledge that the contract funds were trust funds
and that they had an obligation to return the trust funds that were entrusted in their care.
54
193.
Pg ID 55
Liberty, as surety, has an expressed, absolute and unconditional right to the
possession, use and benefit of such funds held in trust to protect it from any liability or loss it
may incur under any Bond or Agreement.
194.
195.
bonded by Liberty.
196.
28, 2016, Mr. Richard Lee Crittenden again admitted that the Indemnitors are using Bonded
Contract receivables to pay for obligations other than what the Indemnitors have a contractual
and legal obligation to satisfy. See January 28th Email, attached hereto as Exhibit N.
197.
The Indemnitors had actual knowledge that the trust funds were converted by the
Indemnitors, given to DeVere to use for DeVeres benefit.

198.
The Indemnitors knowingly, intentionally and wrongfully converted the trust
funds exercised dominion and control over the Bonded Contract funds for their own benefit, use
and purpose depriving Liberty of its rightful entitlement to use and benefit from such funds.
55
199.
Pg ID 56
As a direct and proximate result of Indemnitors conversion, Liberty has been
damaged, which may continue to increase due to additional claims against the Bond, as well as
legal fees, costs, and expenses, interest form the dates of Libertys payments, and any other
recoverable damages to which Liberty may be entitled.
200.
Pursuant to the statute, Liberty is entitled to a recovery of three times the amount
of actual damages sustained, plus costs and reasonable attorneys fees.

PRAYER FOR RELIEF
liabilities, losses, and expenses incurred by Liberty as a result of
Indemnitors conversion;
C. Order the Defendants to reimburse Liberty three times the amount of
actual damages sustained, plus costs and reasonable attorneys fees
pursuant to MCLA 600.2919a;
COUNT VIII
FRAUD/MISREPRESENTATION IN THE INDUCEMENT OF CONTINUED BONDING
RELATIONSHIP
201.
Count VIII as though set forth fully herein.

202.
At all times pertinent hereto, the Indemnitors had knowledge of all information
presented in their personal financial statements including, but not limited to, the following:
a. The origin of ownership of each asset;
b. The form of ownership of each asset; and
c. The value of each asset.
56
203.
Pg ID 57
Notwithstanding such knowledge of the matter referenced in the preceding
paragraph, the Indemnitors provided the financial statements with the knowledge that the
information contained in the financial statements was materially false, misleading, and/or
inaccurate, in whole or in part, in at least the following ways:
a. The manner in which the assets were owned between the Indemnitors and
their spouse; and
b. The value of the Indemnitors assets.
204.
The Indemnitors intentionally submitted false, misleading and/or inaccurate
information contained in the financial statements submitted to Liberty.

205.
The Indemnitors provided such financial statements to Liberty in a knowing effort
to induce Liberty to issue Bonds on behalf of DeVere Construction.

206.
Liberty reasonably and justifiably relied upon information it received from the
Indemnitors, including, but not limited to, any and all information contained within the financial
statements when issuing the Bonds on behalf of DeVere Construction. Had Liberty been aware
of the misrepresentations and/or restrictions concerning the assets set forth in the financial
statements, Liberty would not have continued with the bonding program on behalf of DeVere
Construction.
207.
As a direct and proximate result of Libertys reasonable and justifiable reliance
upon the misleading, material information provided by the Indemnitors, Liberty was harmed in
one or more of the following ways:
a. Liberty was induced to continue a bonding relationship with DeVere
which it would not have continued but for the Indemnitors fraudulent
acts; and
57
Pg ID 58
b. Liberty to date incurred and continues to incur Bond claim losses,

attorneys fees, costs and expenses.
PRAYER FOR RELIEF
COUNT IX
CONSTRUCTIVE FRAUD/MISREPRESENTATION IN THE INDUCEMENT OF
CONTINUED BONDING RELATIONSHIP
208.
Count IX as though set forth fully herein.

209.
To any extent one or more of the Indemnitors material misrepresentation(s) of
any statement(s) of any given material fact(s) alleged in Count VIII were made and/or caused to
be made without a purposeful design to defraud Liberty, each and every such material
misrepresentation of material fact constitutes an act or acts of constructive fraud.
PRAYER FOR RELIEF
E. Order the Indemnitors to indemnify and exonerate Liberty for all
F. Order the Indemnitors to pay for Libertys costs incurred to-date;
G. Order the Defendants to post collateral in the amount of $12,500,000.00;
H. For such additional relief as this Court deems appropriate.
58
Pg ID 59
COUNT X
FRAUDULENT CONVEYANCE/TRANSFER (Actual Intent)
210.
Count X as though set forth fully herein.

211.
The Uniform Fraudulent Transfer Act has been enacted under Michigan law as
the Michigan Uniform Fraudulent Transfer Act, Mich. Comp. Laws Ann. 566.31 et seq.
(MUFTA).
212.
Upon information and belief, Indemnitors knowingly transferred substantial
portions of their assets making the Indemnitors insolvent.

213.
The Indemnitors transferred such assets despite of their knowledge of the
obligations under the Indemnity Agreement and MOU.

214.
By making such transfers of assets, the Indemnitors specifically intended to
deprive Liberty of the full amount of collateral and personal indemnity that they had previously
pledged and would pledge to the Liberty in the future.
215.
Such transfers of assets was in violation of the MUFTA, in one or more of the
following ways:
a. To the extent that such transfers were made with the actual intent to
hinder, delay or defraud Liberty and/or with badges of fraud
demonstrating intent to defraud Liberty in violation of Mich. Comp. Laws
Ann. 566.34(1)(a), (2)(a)-(k), and making said transaction fraudulent as
to Liberty under Mich. Comp. Laws Ann. 566.34(1)(a);
b. To the extent that such transfers were made without reasonably equivalent
value the transfers were in violation of Mich. Comp. Laws Ann.
566.34(1)(b);
59
Pg ID 60
c. To the extent that such transfers were made without reasonably equivalent
value and the Indemnitors were engaged or about to become engaged in a
business for which the remaining assets were unreasonably small in
relation to the business or transaction the transfers were in violation of
Mich. Comp. Laws Ann. 566.34(1)(b)(i):
d. To the extent that such transfers were made without reasonably equivalent
value and the Indemnitors believed or reasonably should have believed
that they would incur debts beyond their ability to pay when it became due
the transfers
were in
violation
of Mich.
Comp.
Laws
Ann.
566.34(1)(b)(ii).
PRAYER FOR RELIEF
I. Order the Indemnitors to indemnify and exonerate Liberty for all
J. Order the Indemnitors to pay for Libertys costs incurred to-date;
K. Order the Defendants to post collateral in the amount of $12,500,000.00;
L. For such additional relief as this Court deems appropriate.
COUNT XI
FRAUDULENT CONVEYANCE (Constructive Fraud)
216.
Count XI as though set forth fully herein.

217.
The Uniform Fraudulent Transfer Act has been enacted under Michigan law as
the Michigan Uniform Fraudulent Transfer Act, Mich. Comp. Laws Ann. 566.31 et seq.
(MUFTA).
60
218.
Pg ID 61
Upon information and belief, Indemnitors transferred substantial portions of their
assets making the Indemnitors insolvent.

219.
The Indemnitors transferred such assets despite of their knowledge of the
obligations under the Indmenity Agreement and MOU.

220.
By making such transfers of assets, the Indemnitors deprived Liberty of the full
amount of collateral and personal indemnity that they had previously pledged and would pledge
to the Liberty in the future.
221.
Such transfers of assets was in violation of the MUFTA, to the extent that such
transfers were made without receiving reasonably equivalent value and the Indemnitors became
insolvent as a result of the transfer.
222.
Such transfers of assets was in violation of the MUFTA, to the extent that such
transfers were made to an insider for an antecedent debt, the Indemnitors were insolvent at the
time and the insider had cause to believe that the Indemnitor was insolvent.
PRAYER FOR RELIEF
M. Order the Indemnitors to indemnify and exonerate Liberty for all
N. Order the Indemnitors to pay for Libertys costs incurred to-date;
O. Order the Defendants to post collateral in the amount of $12,500,000.00;
P. For such additional relief as this Court deems appropriate.
61
Pg ID 62
Respectfully submitted:
LIBERTY MUTUAL INSURANCE COMPANY
Dated: February 5, 2016
By: /s/ John E. Sebastian
John E. Sebastian (#P78111)

WATT, TIEDER, HOFFAR & FITZGERALD, L.L.P.
10 South Wacker Dr., Suite 2935
Chicago, IL 60606-7411
(312) 219-6900
(312) 559-2758 (Fax)
Attorneys for Plaintiff
jsebastian@watttieder.com
62

Liberty Mutual v. Devere Construction

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Liberty Mutual v. Devere Construction

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1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 1 of 62

IN THE UNITED STATES DISTRICT COURT

Case No. 1:16-CV-10421

Liberty is a Massachusetts corporation and citizen organized and existing under

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 2 of 62

DeVere Construction Co., Inc. (DeVere Construction or DeVere), is a

Crittenden Construction Co., Inc. (Crittenden Construction), is a Michigan

Rapids Road, Alpena, MI 49707.

Rapids Road, Alpena, MI 49707.

Lane, Alpena, MI 49707.

Road, Lachine, MI 49753.

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 3 of 62

DeVere Construction Company MI, LLC, is a Michigan limited liability

DeVere Construction is in the business of providing construction services for

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 4 of 62

Pursuant to and at the request of DeVere Construction and the Indemnitors,

US-221 from South

Contract No. C202265

Contract No. C202583

Contract No. C203133

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 5 of 62

C203284 Bridges #147

Wilkes Bridge 302

Ctawba Bridge 83 C203299

Falls of Nuese Phase II

Union County East Side Union County

Fayetteville Annexation City of

Bridge #69 over CCSX

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 6 of 62

Lynwood Lakes Water

Leesille Road Widening City of

Highland Creek Relief

SRPP-2522-24 N. Tonti Louise Leflore 013125402

Cypress Grove Homes

Cypress Grove Homes

Cypress Grove Homes

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 7 of 62

Bay River Medical

M00216; IBA-US Toll

As a condition for Libertys issuance of Bonds on behalf of DeVere Construction,

On or about March 14, 1995, a General Agreement of Indemnity was executed,

between DeVere Construction, Crittenden Construction., Reds Traders Limited, Richard

On or about July 29, 2010, DeVere Construction., Crittenden Construction,

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 8 of 62

a second General Agreement of Indemnity in favor of Liberty, (Indemnity Agreement). A true

Amendment No. 2 to the Indemnity Agreement adds D.A. Thomas Construction

On or about January 11, 2012, Amendment No. 3 to the Indemnity Agreement

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 9 of 62

On or about October 15, 2012, Amendment No. 4 to the Indemnity Agreement

On or about October 22, 2012, Amendment No. 5 to the Indemnity Agreement

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 10 of 62

execution of any Bond; or (3) by reason of the failure of the

pay to Liberty upon demand as collateral security as follows:

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 11 of 62

In addition to executing the Indemnity Agreement, as a condition precedent to

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 12 of 62

Indemnitors provided Liberty.

Richard Crittenden and his wife, Tamyra Crittenden, submitted to Liberty a

personal financial statement dated December 31, 2010.

Note Receivable from DeVere

Financial Statements provided by Crittenden. Such financial statements were material to

1:16-cv-10423-TLL-PTM Doc # 1 Filed 02/05/16 Pg 13 of 62

In reliance upon Crittendens representations of his assets made to Liberty as set

financial statement dated December 31, 2010.