Opinion
8:18-CV-360
2020-09-25
NORTH AMERICAN SPECIALTY INSURANCE COMPANY, Plaintiff, v. CARSON STONE & SUPPLY, LLC, Scott Carson, and Adrianne Carson, Defendants.
Daniel A. Ellerbrock, Pro Hac Vice, David H. Gregerson, Pro Hac Vice, Gregerson, Rosow Law Firm, Minneapolis, MN, Michael L. Moran, Robert S. Keith, Engles, Ketcham Law Firm, Omaha, NE, for Plaintiff. David D. Ernst, Jeffrey A. Nix, Pansing, Hogan Law Firm, Omaha, NE, for Defendants.
Daniel A. Ellerbrock, Pro Hac Vice, David H. Gregerson, Pro Hac Vice, Gregerson, Rosow Law Firm, Minneapolis, MN, Michael L. Moran, Robert S. Keith, Engles, Ketcham Law Firm, Omaha, NE, for Plaintiff.
David D. Ernst, Jeffrey A. Nix, Pansing, Hogan Law Firm, Omaha, NE, for Defendants.
MEMORANDUM AND ORDER
Brian C. Buescher, United States District Judge
I. INTRODUCTION
North American Specialty Insurance Company ("NAS") sued Carson Stone & Supply, LLC (Carson Stone); Scott Carson, and Adrianne Carson for breach of an indemnity agreement arising out of two surety bonds issued by NAS with Carson Stone as bond principal. NAS also asserted an alternative theory of recovery based on legal and equitable subrogation. The parties have filed cross-motions for summary judgment on the breach-of-contract issue. For the reasons stated herein, the Court grants NAS's summary-judgment motion and denies Carson's.
The Court will refer to Carson Stone, Scott Carson, and Adrianne Carson collectively as "Carson."
Carson did not controvert any of the facts set forth in NAS's statement of undisputed facts. See Filing 70; see also NECivR 56.1(b)(1) ("Properly referenced material facts in the movant's statement are considered admitted unless controverted in the opposing party's response."). Furthermore, Carson set forth only four facts in support of its own summary-judgment motion, all simply stating that the Carson defendants signed the indemnity agreement. See Filing 48 at 2-3. Given the scant factual support provided by Carson, the Court recites this background primarily from NAS's statement of undisputed facts and supporting documentation.
NAS is a New Hampshire corporation, with its principal place of business in New Hampshire. Filing 1 at 1; Filing 43 at 2. Carson Stone is a Nebraska limited liability company owned by Scott Carson with its principal place of business in Elkhorn, Nebraska. Filing 22 at 1. Adrianne Carson is a former employee of Carson Stone and co-signed the indemnity contract at issue. Filing 44 at 11, 302.
Carson was hired as a subcontractor by Meyer Carlisle Leapley Construction, Inc. ("MCL") for the project known as the Cloisters on the Platte. Filing 44 at 43. As part of its contract, MCL required Carson to obtain a surety bond guaranteeing its performance. Filing 44 at 43. NAS issued two surety bonds with Carson as principal. The first was a performance bond with MCL as obligee and the second was a payment bond with a supplier of Carson's, Cold Spring Granite, as obligee. Filing 44 at 14-15. Carson signed an indemnity agreement with NAS as consideration for the surety bonds. Filing 44 at 7. The parties executed the indemnity agreement in March 2016. Filing 44 at 7-13. It was signed by Scott and Adrianne Carson on behalf of Carson Stone. Filing 44 at 10-11. It is undisputed that as president and sole owner, Scott Carson had the authority to execute the indemnity agreement on behalf of Carson Stone. Filing 44 at 312.
The indemnity agreement provided that Carson would "exonerate, hold harmless, and indemnify" NAS against "any and all [l]oss" incurred by reason of NAS becoming surety to Carson Stone. Filing 44 at 7. Covered loss was defined to include "any liability, loss, costs, damages, attorneys’ fees, consultants’ fees, and other expenses including interest, which [NAS] may sustain or incur by reason of, or in consequence of, the execution of the Bonds." Filing 44 at 7. It expressly included the following:
(a) any sums paid or liabilities incurred in the settlement of claims; (b) expenses paid or incurred in connection with the investigation of any claims; (c) sums paid in attempting to procure a release from liability; (d) expenses paid or incurred in the prosecution or defense of any suits; (e) any judgments under the Bonds; (f) expenses paid or incurred in enforcing the terms of this Agreement; (g) sums or expenses paid or liabilities incurred in the performance of any Bonded contract or related obligation; and (h) expenses paid in recovering or attempting to recover losses or expenses paid or incurred.
Filing 44 at 7.
According to the indemnity agreement, Carson would be found in default if NAS "receive[d] notice of a claim, breach or default under a Bonded contract" or if Carson "fail[ed] to diligently prosecute the work under any Bonded contract." Filing 44 at 7. The agreement provided that in the event of a default, Carson agreed to assign all of its rights under the MCL and Cold Spring contracts to NAS. Filing 44 at 7. Finally, the indemnity agreement stated that NAS "shall have the right to decide and determine in its sole discretion whether any claim, liability, suit or judgment made or brought against [NAS] or [Carson] on any Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed." Filing 44 at 8. Furthermore, NAS's decision to settle or litigate a claim under either the performance or payment bond was to "be final, binding and conclusive upon [Carson]." Filing 44 at 8.
Following execution of the indemnity agreement and bond contracts, Carson began its work on the Cloisters on the Platte project. Filing 44 at 320-21. Carson was charged with providing the labor, material, equipment, and supervision necessary to furnish and install a number of granite slabs and columns for a series of sculptures. Filing 44 at 350; Filing 44 at 319-20. Carson initially agreed with MCL that it would complete its work on the granite bases for the sculptures by August 16, 2016, and would complete all of the remaining work on the various sculptures sites as a whole by September 27, 2016. Filing 44 at 324, 351, 357. Carson failed to meet these deadlines. Filing 44 at 325.
On September 13, 2016, Carson sent MCL an email promising to "have everything fabricated [and] ready for installation by 12-31." Filing 44 at 359. According to Carson, the "[w]orst case scenario would be completion in mid April" 2017. Filing 44 at 359. These new deadlines came and went, and in mid-April 2017, Carson promised to have various granite pieces delivered to the jobsite throughout May 2017 and to complete the final work by the end of June. Filing 44 at 360. However, by August 2017, one year after the originally agreed-upon completion date, Carson still had not procured or installed various granite pieces and the work remained unfinished. Filing 44 at 335-36, 344.
On August 17, 2017, MCL submitted a claim against the performance bond issued by NAS asserting that Carson had not met its contractual obligations by failing to timely complete its work on the Cloisters on the Platte project. Filing 44 at 16. MCL ended up hiring Carson's installation subcontractor, Creative Structures, to complete the remaining work. Filing 44 at 16. In response to MCL's bond claim, NAS hired an expert consultant, Frank Alampi, to investigate and evaluate MCL's claim. Filing 44 at 328, 364. Alampi has degrees in mechanical engineering and business and is a surety-claims consultant who has consulted on hundreds of construction projects. Filing 44 at 363-64. Alampi conferred with both MCL and Carson regarding the work remaining to be done and arranged for Carson to deliver material in its possession to the jobsite to be used by Creative Structures in completing the project. Filing 44 at 328-29. Alampi also conferred with Carson regarding Creatives Structures’ proposed fees and Scott Carson opined that "[t]he hourly rates for the scope of work ... were fair and reasonable." Filing 44 at 330.
After Creative Structures had completed the project, MCL sent NAS a demand for $174,050.95, which it claimed represented the total cost of additional granite material, Creative Structures’ work, and MCL's own labor in completing the project. Filing 44 at 94-122, 182. Alampi twice emailed a copy of MCL's demand and supporting documents and asked for Carson's input regarding the costs and if Carson felt it had any defense to payment. Filing 44 at 123, 153, 331. Carson never responded. Filing 44 at 384. Instead, Alampi conducted his own review of MCL's demand and disputed the reasonableness of some of the costs, including a portion of the work that he believed was outside the scope of Carson's original contract and a portion of MCL's labor costs which he found excessive. Filing 44 at 91, 374-75, 384. Alampi negotiated with MCL and eventually NAS settled its claim with MCL for a reduced amount of $125,637.64. Filing 44 at 5, 86-88.
In December 2017, NAS also received a claim against the payment bond it had issued with Cold Spring Granite as obligee. Filing 44 at 83. Cold Spring claimed that Carson had failed to pay it $9,664 for four granite slabs Carson had ordered and picked up in April 2016, and $3,690 for four additional granite slabs which Carson had ordered but never picked up. Filing 44 at 216. Cold Spring also produced correspondence with Carson in which Carson repeatedly promised to pay the outstanding $9,664, but never followed through. Filing 44 at 221, 227, 341.
Upon receiving Cold Spring's demand, Alampi sent a copy to Carson and asked for its response. Filing 44 at 282. Carson informed Alampi that it would pay Cold Spring in order to resolve the dispute. Filing 44 at 282, 341. Carson claims not to recall if it paid Cold Spring in January 2018, but it appears it did not as Cold Spring continued to demand this amount. Filing 44 at 341. Later, Carson's attorney also offered to settle with Cold Spring for $9,664, which offer Cold Spring accepted, but again, Carson did not pay. Filing 44 at 341, 405-08. NAS eventually settled with Cold Spring for $9,664. Filing 44 at 5, 89.
On July 5, 2018, after having settled the bond claims with both MCL and Cold Spring, NAS made a demand upon Carson for payment $161,900.71 pursuant to the indemnification agreement. Filing 44 at 387-88. NAS claimed this amount consisted of the $125,637.64 and $9,664 payments made to MCL and Cold Spring respectively, $16,285.13 paid to Alampi his time and costs investigating the bond claims, and $10,313.94 expended in legal feels during the investigation and settlement of the bond claims. Filing 44 at 5-6, 387-88. Carson refused to pay NAS and NAS filed the present suit asserting breach-of-contract and subrogation causes of action. Filing 44 at 6; Filing 1. Both parties have moved for summary judgment.
III. ANALYSIS
A. Standard of Review
"Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Garrison v. ConAgra Foods Packaged Foods, LLC , 833 F.3d 881, 884 (8th Cir. 2016) (citing Fed. R. Civ. P. 56(c) ). "[S]ummary judgment is not disfavored and is designed for every action." Briscoe v. Cty. of St. Louis , 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (internal quotation marks omitted) (quoting Torgerson v. City of Rochester , 643 F.3d 1031, 1043 (8th Cir. 2011) (en banc)). In reviewing a motion for summary judgment, the Court will view "the record in the light most favorable to the nonmoving party ... drawing all reasonable inferences in that party's favor." Whitney v. Guys, Inc. , 826 F.3d 1074, 1076 (8th Cir. 2016) (citing Hitt v. Harsco Corp. , 356 F.3d 920, 923–24 (8th Cir. 2004) ). Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, " Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves." Se. Mo. Hosp. v. C.R. Bard, Inc. , 642 F.3d 608, 618 (8th Cir. 2011) (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) ). The moving party need not produce evidence showing "an absence of a genuine issue of material fact." Johnson v. Wheeling Mach. Prods. , 779 F.3d 514, 517 (8th Cir. 2015) (citing Celotex , 477 U.S. at 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 ). Instead, "the burden on the moving party may be discharged by ‘showing’ ... that there is an absence of evidence to support the nonmoving party's case." St. Jude Med., Inc. v. Lifecare Int'l, Inc. , 250 F.3d 587, 596 (8th Cir. 2001) (quoting Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ).
In response to the moving party's showing, the nonmoving party's burden is to produce "specific facts sufficient to raise a genuine issue for trial." Haggenmiller v. ABM Parking Servs., Inc. , 837 F.3d 879, 884 (8th Cir. 2016) (quoting Gibson v. Am. Greetings Corp. , 670 F.3d 844, 853 (8th Cir. 2012) ). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial." Wagner v. Gallup, Inc. , 788 F.3d 877, 882 (8th Cir. 2015) (quoting Torgerson , 643 F.3d at 1042 ). "[T]here must be more than ‘the mere existence of some alleged factual dispute’ " between the parties in order to overcome summary judgment. Dick v. Dickinson State Univ. , 826 F.3d 1054, 1061 (8th Cir. 2016) (quoting Vacca v. Viacom Broad. of Mo., Inc. , 875 F.2d 1337, 1339 (8th Cir. 1989) ).
B. Contract Cause of Action
Both parties move for summary judgment on NAS's claim for breach of contract. NAS argues the indemnity agreement was a valid, binding contract and that Carson breached the agreement when it refused to pay NAS for the cost of settling the bond claims with MCL and Cold Spring. Carson argues the contract was not valid or, in the alternative, that NAS did not act reasonably in settling the bond claims for the amounts it did. The Court will address the questions of the validity of the contract and damages in turn.
1. Validity
NAS argues the indemnity agreement is a valid and enforceable contract which entitles it to payment of its losses incurred by reason of settling MCL's and Cold Spring's bond claims. Filing 43 at 14-22. Carson argues the contract is invalid because it is an unconscionable adhesion contract and because NAS violated the covenant of good faith and fair dealing. Filing 48 at 4-8. The Court finds the undisputed evidence demonstrates the contract is valid and enforceable.
"In order to recover in an action for breach of contract, the plaintiff must plead and prove the existence of a promise, its breach, damage, and compliance with any conditions precedent that activate the defendant's duty." Henriksen v. Gleason , 263 Neb. 840, 847, 643 N.W.2d 652, 658 (2002) (citing Phipps v. Skyview Farms , 259 Neb. 492, 610 N.W.2d 723 (2000) ). Carson does not deny that its actions in failing to complete work on the Cloisters on the Platte project and in failing to pay Cold Spring would constitute a breach of the indemnity agreement with NAS. See generally Filing 48. Rather, Carson argues the Court should find the indemnity agreement itself invalid.
Matters which seek to avoid a valid contract are affirmative defenses, and the burden of proving an affirmative defense rests upon the party alleging the defense. Schuelke v. Wilson , 255 Neb. 726, 732, 587 N.W.2d 369, 374 (1998) (citing Prod. Credit Ass'n v. Eldin Haussermann Farms , 247 Neb. 538, 529 N.W.2d 26 (1995) ). "When considering whether an agreement is unconscionable, [the Nebraska Supreme Court] has stated that the term ‘unconscionable’ means manifestly unfair or inequitable." Myers v. Neb. Inv. Council , 272 Neb. 669, 692, 724 N.W.2d 776, 799 (2006) (citing Weber v. Weber , 200 Neb. 659, 265 N.W.2d 436 (1978) ). "A contract is not substantively unconscionable unless the terms are grossly unfair under the circumstances that existed when the parties entered into the contract." Id. at 692-93, 724 N.W.2d at 799 (citing Adams v. American Cyanamid Co. , 1 Neb. App. 337, 498 N.W.2d 577 (1992) ). "Nebraska courts also consider whether a contract is ‘procedurally unconscionable,’ an essential element of which includes ‘the disparity in respective bargaining positions of parties to a contract.’ " E.E.O.C. v. Woodmen of World Life Ins. Soc. , 479 F.3d 561, 566 (8th Cir. 2007) (quoting Myers , 272 Neb. at 693, 724 N.W.2d at 799 ). However, while they may involve parties of unequal bargaining power, " ‘adhesion contracts are not automatically unconscionable or void’ under Nebraska law." Id. (quoting Kosmicki v. Nebraska , 264 Neb. 887, 652 N.W.2d 883, 893 (2002) ).
Carson does not argue that the indemnity agreement is substantively unconscionable but points instead to the alleged procedural unconscionability of the contract based on the parties’ unequal bargaining power. Filing 48 at 4-6. The factors which the Court will consider in determining whether the indemnity contract is unconscionable due to an imbalance in Carson and NAS's respective bargaining positions include the availability of other sureties with which Carson could have contracted, Ray Tucker & Sons, Inc. v. GTE Directories Sales Corp. , 253 Neb. 458, 466, 571 N.W.2d 64, 70 (1997) ; Carson's ability to negotiate the indemnity agreement, id. ; Carson's ability to review and inquire about the terms of the agreement, Schreiner v. Credit Advisors, Inc. , No. 8:07CV78, 2007 WL 2904098, at *6 (D. Neb. Oct. 2, 2007) ; and the length, location, and complexity of the disputed terms, Hill v. Antioch Co. , No. 8:09CV275, 2009 WL 3838251, at *6 (D. Neb. Nov. 17, 2009).
Carson argues that the indemnity agreement should be found unconscionable based solely upon the fact it is an adhesion contract. Filing 48 at 4-6. However, as set forth above, in Nebraska, the mere fact that a contract is one of adhesion is not determinative of unconscionability. Carson advances no substantive argument regarding the relative bargaining positions of the parties and the evidence shows that Carson did not lack bargaining power such as would render the contract invalid. For example, Scott Carson testified he had experience executing contracts on Carson Stone's behalf and that he had the opportunity to fully review the agreement prior to signing it. Filing 44 at 311-12, 288, 293; see Schreiner v. Credit Advisors, Inc. , No. 8:07CV78, 2007 WL 2904098, at *6 (rejecting claim of unconscionability where "the plaintiff had ample time to review and inquire about the terms of the [a]greement"). Scott also testified that he never asked to change any of the terms prior to signing the agreement. Filing 44 at 317; see also Plummer v. McSweeney , 941 F.3d 341, 348 (8th Cir. 2019) ("[G]iven that [the plaintiff] did not attempt to bargain with [the defendant] over the agreement's terms, it is difficult to see why she thinks she could not have."). Furthermore, it does not appear that Carson was rushed into signing the indemnity agreement; it was executed months before the subject bonds were executed and Carson did not ask any questions about the indemnity agreement or seek to rescind, terminate, or modify it in the interim. Filing 44 at 14-15, 224-25, 304; see also Leonard v. Del. N. Cos. Sport Serv., Inc. , 861 F.3d 727, 730 (8th Cir. 2017). Lastly, the terms Carson takes issue with—NAS's ability to unilaterally settle claims and Carson's assignment of claims to NAS—appear under separate headings in uniform type font and are not otherwise hidden or misleading in the contract. Filing 44 at 7-7; Hill v. Antioch Co. , No. 8:09CV275, 2009 WL 3838251, at *6 (D. Neb. Nov. 17, 2009) (finding contract provision was not unconscionable where it was printed in uniform font, appeared under a bold heading, and was located directly above the signature line where the plaintiff had signed). Thus, the Court finds Carson has not demonstrated that the indemnity agreement is unconscionable.
In the alternative, Carson also appears to argue that NAS violated the implied covenant of good faith and fair dealing in executing the indemnity agreement. Filing 48 at 6-7. However, Carson fails to specify what actions on NAS's part it believes constituted a violation of the covenant in question. See Filing 48 at 6-7.
"The implied covenant of good faith and fair dealing exists in every contract and requires that none of the parties to the contract do anything which will injure the right of another party to receive the benefit of the contract." Coffey v. Planet Group, Inc. , 287 Neb. 834, 843, 845 N.W.2d 255, 263 (2014) (citing RSUI Indemnity Co. v. Bacon , 282 Neb. 436, 810 N.W.2d 666 (2011) ). "The nature and extent of an implied covenant of good faith and fair dealing are measured in a particular contract by the justifiable expectations of the parties." Id. (citing RSUI Indemnity Co. , 282 Neb. 436, 810 N.W.2d 666 ). "Where one party acts arbitrarily, capriciously, or unreasonably, that conduct exceeds the justifiable expectations of the second party." Id. (citing RSUI Indemnity Co. , 282 Neb. 436, 810 N.W.2d 666 ). "A violation of the covenant of good faith and fair dealing occurs only when a party violates, nullifies, or significantly impairs any benefit of the contract." Id. at 843-44, 845 N.W.2d at 263 (citing RSUI Indemnity Co. , 282 Neb. 436, 810 N.W.2d 666 ). "The scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract." Id. at 844, 845 N.W.2d at 263 (citing Spanish Oaks v. Hy–Vee , 265 Neb. 133, 655 N.W.2d 390 (2003) ).
The Court finds no arbitrary, capricious, or unreasonable actions on NAS's part, nor does the Court see how NAS undertook any actions which violated, nullified, or impaired the benefit of the indemnity agreement. See id. Carson takes issue with the fact that the indemnity agreement allowed NAS to unilaterally settle any bond claims and that it required Carson to assign its interest in the underlying contracts to NAS upon a default. See Filing 48 at 8. But these actions are expressly provided for in the indemnity contract which Carson signed and "[t]he scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract." Coffey , 287 Neb. at 844, 845 N.W.2d at 263 (citing Spanish Oaks , 265 Neb. 133, 655 N.W.2d 390 ). Carson may now dislike the terms of the indemnity agreement and wish it had not signed the contract but regret alone does not violate the covenant of good faith and fair dealing or render the contract invalid.
Carson has failed to demonstrate and the Court declines to find that NAS violated the implied covenant of good faith and fair dealing. The indemnity agreement constitutes a valid and enforceable contract and NAS is entitled to summary judgment on that issue.
2. Damages
Carson next argues that, even if the contract is found valid and enforceable, the amount of damages NAS seeks is unreasonable. Filing 48 at 6-8. Carson argues NAS "paid far too much money on [Carson]’s behalf and did so without properly informing themselves of the appropriate cost and scope of the project." Filing 48 at 6. Carson further argues that NAS should not be compensated for the costs and attorney fees it expended in resolving the bond claims because Nebraska generally disallows the recovery of attorney fees. Filing 48 at 6 (citing Eicher v. Mid America Financial Inv. Corp. , 270 Neb. 370, 381, 702 N.W.2d 792, 806 (2005) ("[A]s a general rule, attorney fees and expenses may be recovered in a civil action only when provided for by statute or when the recognized and accepted uniform course of procedure has been to allow recovery of attorney's fees.")). Lastly, Carson implies that NAS should have consulted with it before settling the bond claims. Filing 48 at 2. The Court finds NAS has demonstrated it is entitled to the full amount of damages it seeks.
NAS seeks $161,900.71 in damages, representing the amounts it paid MCL and Cold Spring, the amount it paid Alampi, and its attorney fees incurred in investigating the bond claims, plus pre-judgment interest as provided for by Neb. Rev. Stat. § 45-104. Filing 43 at 24. While Carson expends substantial space in its briefing arguing about the reasonableness of the amounts NAS paid MCL and Cold Spring to settle the bond claims and the extent of its investigation into these amounts. However, under the terms of the indemnity contract—which Carson agreed to—NAS had the authority "to decide and determine in its sole discretion whether any claim, liability, suit or judgment made or brought against [NAS] or [Carson] on any Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed." Filing 44 at 8. The contract did not require NAS to consult with Carson on the reasonableness of the bond claim, to conduct an inquiry into the reasonableness of the bond claim, or to limit its payments under the bond to a certain amount. See generally Filing 44 at 7-13. NAS complied with the terms of the indemnity agreement when it negotiated and settled MCL's and Cold Spring's respective bond claims. Carson is not allowed to rewrite the terms of the indemnity contract after the fact in order to allow it to second guess the reasonableness of NAS's actions; Carson expressly contracted to give NAS the authority it exercised in reaching the settlements.
Although the indemnity contract gave NAS the authority it exercised, the evidence shows NAS, did, in fact, act reasonably. Upon receiving the bond claims, NAS hired Alampi to assess the reasonableness of the claims and negotiate the settlements. Filing 44 at 366. Alampi reviewed extensive documentation from MCL and Cold Spring and reduced portions of the claims that he thought were beyond the scope of work or otherwise excessive. Filing 44 at 90-91, 123, 91. In fact, NAS settled the claim with MCL for $48,413.31 less than it originally sought. Compare Filing 44 at 94-122 (MCL's original bond claim), with Filing 44 at 86-88 (settlement of MCL bond claim). NAS also sought Carson's input on the bond claims, including repeatedly emailing him the supporting evidence and asking for feedback. Filing 44 at 123, 153, 331. Scott himself opined on the reasonableness of Creative Structures’ hourly rate to finish the work Carson had not completed. Filing 44 at 330. The Court has no doubt that NAS conducted a thorough investigation and arrived at reasonable settlement amounts with MCL and Cold Spring, despite no contractual obligation in the indemnity agreement requiring it to do so.
Carson also argues that Nebraska law does not allow NAS to recover the legal and expert fees it expended in the course of investigating and settling the bond claim. Filing 48 at 7. While Carson is correct that Nebraska courts have held that "in the absence of a uniform course of procedure or authorization by statute, contractual agreements for attorney fees are against public policy and will not be judicially enforced," Stewart v. Bennett , 273 Neb. 17, 22, 727 N.W.2d 424, 429 (2007), that rule applies only to attorney fees incurred in the case litigated before the court. In contrast, courts applying Nebraska law have allowed an indemnified party to recover attorney fees and costs from the indemnitor arising from the underlying dispute from which the party should have been indemnified. See Oddo v. Speedway Scaffold Co. , 233 Neb. 1, 2, 443 N.W.2d 596, 598 (1989) (allowing recovery of both the amount of a personal injury settlement and the attorney fees expended in defending the indemnitor's claims); see also FPP Sandbox, LLC v. Redstone Commc'ns Grp., Inc. , No. 8:18-CV-106, 2019 WL 7161228, at *5 (D. Neb. Oct. 22, 2019) (concluding "the cost of defending the [dispute] underlying an indemnity agreement is properly excluded from the Nebraska Supreme Court's prohibition on the recovery of attorney fees"); McGreevy v. Bremers , 205 Neb. 554, 557, 288 N.W.2d 490, 492 (1980) (allowing recovery of attorney fees paid in underlying suit in indemnification claim between guardian of estate and surety on guardian's bond because the attorney fees "were incurred in consequence of the issuance of the guardian's bond" in accordance with the agreement to indemnify); Am. Sur. Co. of N.Y. v. Vinsonhaler , 92 Neb. 1, 137 N.W. 848, 850 (1912) (stating that under indemnification agreement between surety and principal there was "[n]o doubt under this contract the surety ought to be protected against all necessary expenses incurred in defending itself against liability on these bonds" which would include attorney fees, but finding attorney fees in this specific situation were not necessary and therefore should not be awarded).
Here, NAS seeks to recover only the attorney fees and expenses it incurred in the course of settling the underlying bond claims; it does not seek to recover any attorney fees or costs related to the present case. See Filing 43 at 23-24; Filing 67 at 4 ("North American Specialty is not asking the Court to award attorney fees incurred in the current litigation .... North American Specialty is seeking only those consultant and attorney fees which were incurred to respond to the underlying claims."). Furthermore, the indemnity agreement expressly allowed NAS to recover "any sums paid or liabilities incurred in the settlement of claims," including "attorneys’ fees, consultants’ fees, and other expenses including interest." Filing 44 at 7. The recovery of such amounts, in addition to being contemplated by the parties’ agreement, is permissible under Nebraska law. Thus, the Court finds no issue in the amount of damages NAS asserts in conjunction with its breach-of-contract claim and finds it should be granted summary judgment on that issue.
C. Subrogation
Carson's Motion for Summary Judgment purports to seek summary judgment as to both counts set forth in NAS's Complaint, breach of contract and subrogation. Filing 46 at 1. However, Carson advances no argument in its brief related to the issue of equitable or legal subrogation. See generally Filing 48. Accordingly, the Court concludes Carson has waived that issue for summary judgment. See NECivR 7.1(a)(1)(A) ("A party's failure to brief an issue raised in a motion may be considered a waiver of that issue.").
NAS did not seek summary judgment on its subrogation claim. See generally Filing 42.
IV. CONCLUSION
For the foregoing reasons, the Court grants NAS summary judgment on its breach-of-contract claim. The Court denies Carson's Motion for Summary Judgment. NAS's claim for subrogation remains pending as it was not addressed in the summary judgment briefing.
IT IS ORDERED:
1. Plaintiff, North American Specialty Insurance Company's Motion for Summary Judgment, Filing 42, is granted;
2. Defendants’, Carson Stone, Scott Carson, and Adrianne Carson's, Motion for Summary Judgment, Filing 46, is denied; and
3. In accordance with the Court's prior Order, Filing 58, the parties are instructed to contact the magistrate judge within 14 days of this ruling in order to discuss case progression.