PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 20-2253 RLI INSURANCE COMPANY, Plaintiff - Appellee, v. NEXUS SERVICES, INC.; LIBRE BY NEXUS, INC.; HOMES BY NEXUS, INC., Defendants - Appellants. Appeal from the United States District Court for the Western District of Virginia, at Harrisonburg. Michael F. Urbanski, Chief District Judge. (5:18-cv-00066-MFU-JCH) Argued: October 28, 2021 Decided: January 27, 2022 Before GREGORY, Chief Judge, QUATTLEBAUM, Circuit Judge, and FLOYD, Senior Circuit Judge. Affirmed by published opinion. Senior Judge Floyd wrote the opinion in which Judge Gregory joined. Judge Quattlebaum wrote an opinion concurring in parts I, II, III, V, and VI and in the judgment. ARGUED: Carl August Anderson, ROCK SPRING LAW GROUP, PLLC, Washington, D.C., for Appellants. Vivian Katsantonis, WATT, TIEDER, HOFFAR & FITZGERALD, LLP, McLean, Virginia, for Appellee. ON BRIEF: Mario B. Williams, NDH LLC, Atlanta, Georgia; John M. Shoreman, MCFADDEN & SHOREMAN, Washington, D.C., for Appellants. FLOYD, Senior Circuit Judge: This case concerns relatively straightforward obligations of a bond surety, RLI Insurance Company (RLI), and its indemnitor, Nexus Services, Inc. (Nexus), under a standard Commercial Surety General Indemnity Agreement (the Agreement). Because surety is a zero-loss industry, the Agreement contains several clauses designed to keep RLI whole. One obligates Nexus to provide collateral sufficient to cover all of RLI’s exposure, and the parties task us with resolving what kinds of risk “exposure” means to capture. What makes our task unique is that, unlike the familiar commercial or construction relationships that typically contemplate only a handful of guarantees, this Agreement involves nearly 2,500 bonds RLI issued to the U.S. government on behalf of individual immigrant detainees. Nexus insists that we must nonetheless measure RLI’s exposure on each bond individually and that RLI is not actually “exposed” to any risk—and Nexus correspondingly does not need to deposit collateral—until the parties have reason to believe that RLI will have to pay out that particular bond. The first tangible evidence of that, Nexus continues, comes about when an immigrant fails to appear in court on the designated date, breaching the bond. In short, Nexus suggests it should deposit collateral only up to the sum of the already-breached bonds. RLI objects the Agreement is not so limited. Although we do not know which particular immigrant will breach, we can be certain some will. It follows that the Agreement must secure against aggregate risk—that is, the likelihood Nexus will be able to (timely) indemnify RLI for all future breached bonds. Because Nexus’s financial condition, its willingness to indemnify RLI so far, and historical rate of bonds breached all bear on that likelihood, they should likewise inform 2 the collateral calculus. The district court sided with RLI, and after reviewing the plain terms of the Agreement, we agree. We also affirm the district court’s calculation of the collateral amount as a sound exercise of its discretion to order equitable relief. I. An immigration bond, much like a criminal bond, allows the release of a detained individual from custody based on a …
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