Travelers Casualty and Surety Company of America v. Henry County Board of Education

In Travelers Casualty and Surety Company of America v. Henry County Board of Education, 2008 WL 821868 (N.D.Ga. March 25, 2008) the School Board sought an award of attorneys fees incurred in securing dismissal of the surety’s federal declaratory judgment action.  The School Board sued the surety in state court and named the principal to avoid diversity of citizenship.  The surety sued the School Board in federal court and removed the state court suit on the ground that joinder of the non-diverse principal was fraudulent.  The district court ruled for the School Board, remanded the state suit and dismissed the declaratory judgment action, see Henry County School District v. Action Development, Inc., 2007 WL 2683726 (N.D.Ga. September 6, 2007) and  Travelers Casualty and Surety Company of America v. Henry County Board of Education 2008 WL 160775 (N.D.Ga. January 15, 2008).  The School Board sought to recover its attorneys fees arguing that the bonded contract had an attorneys fee provisions and that the surety’s suit was filed in bad faith.  The court interpreted the attorneys fee provision in the bonded contract not to cover the fees sought, and held that the surety acted in good faith.  The desire for a more neutral litigation forum was reasonable, and the action was not prosecuted vexatiously.  The court denied the motion for attorneys fees.