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Great American Insurance Co. v. Yd Fence, LLC

United States District Court, M.D. Tennessee, Nashville Division

January 8, 2015

Great American Insurance Company, Plaintiff,
v.
YD FENCE, LLC D/B/A YARD DOG FENCE, TRIAX, LLC, ANDREW RHODES, and MICHAEL CASPER Defendant.

REPORT AND RECOMMENDATION

To The Honorable Judge Todd J. Campbell, United States District Judge

JOHN S. BRYANT, Magistrate Judge.

Pending before the Court is Plaintiff's Motion for Attorneys' Fees, Costs and Expenses against Triax, LLC (Defendant Triax) and YD Fence, LLC d/b/a/Yard Dog Fence (Defendant YD Fence). (Docket Entry (DE) 29). For the reasons explained herein, the Magistrate Judge RECOMMENDS that the Court GRANT Plaintiff's Motion in part and DENY it in part. The Magistrate Judge RECOMMENDS that the Court GRANT Plaintiff's Motion as to the attorneys' fees in the amount of $9, 647.23 instead of the $10, 556.00 requested, and that the Court GRANT Plaintiff's Motion for the additional expenses totaling $11, 190.70. The Magistrate Judge RECOMMENDS that the Court find Defendants jointly and severally liable for these fees and expenses. The Magistrate Judge also RECOMMENDS that the Court DENY Plaintiff's Motion for "expenses, " which are actually costs in the amount of $548.80, and order Plaintiff to file a Bill of Costs pursuant to 28 U.S.C. ยงยง 1920 and 1924, and Local Rule 54.01(a).

I. Background and Procedural History

The underlying action arose out of the following events. In January 2012, Plaintiff and Defendant Triax entered into an agreement (the Triax Indemnity Agreement) by which Plaintiff would issue performance and payment surety bonds (the bonds) on behalf of Defendant Triax pursuant to a construction subcontract. (DE 29-1, p. 3). Under the Triax Indemnity Agreement, Vaughn Contractors became the Obligee of the bonds, Andrew Rhodes (Defendant Rhodes) was listed as an officer or director of Triax, and Defendant Triax agreed to the following provisions:

[I]ndemnify [Great American] against all liability, loss, costs, damages, expenses, counsel and attorneys' fees whatsoever sustained or incurred by [Great American] by reason of executing said bond or bonds, or any of them, in making any investigation on account thereof, in prosecuting or defending any action brought in connection therewith, in obtaining or seeking to obtain a release therefrom, and in enforcing any of the agreements herein contained[.]

(DE 29-1, p. 3; DE 1-1, p. 4).

[I]n event of payment, settlement or compromise of liability, loss, costs, damages, expenses, counsel and attorneys' fees, claims, demands, suits, judgments, orders and adjudications as aforesaid, an itemized statement thereof, sworn to by any officer of [Great American], or the voucher or vouchers or other evidence of such payment, settlement or compromise shall be conclusive evidence of the fact and extent of the liability of the undersigned, in any claim or suit hereunder, and in any and all matters arising between the undersigned and [Great American], provided such payment, settlement or compromise shall have been made by [Great American] in good faith, believing itself liable therefor, whether liable or not[.]

(DE 29-1, p. 3; DE 1-1, p. 4). When Defendant Triax was unable to complete the project, Defendant YD Fence assumed the obligation and Plaintiff agreed to add YD Fence as a Principal on the bonds. (DE 29-1, p. 3). Plaintiff required YD Fence, Defendant Rhodes, and Michael Casper (Defendant Casper), (the "YD Fence Indemnitors"), to execute another indemnity agreement in November 2012 (the YD Fence Indemnity Agreement). (DE 29-1, p. 3; DE 1-2). Under this agreement, the YD Fence Indemnitors agreed to the following provisions:

The [YD Fence Indemnitors], jointly and severally, shall exonerate, indemnify, hold harmless and keep [Great American] indemnified from and against any and all liability for losses, costs, and/or expenses of whatsoever kind or nature (including, but not limited to, interest, court costs, consultant or expert fees, and counsel fees) and from and against any and all such losses and/or expenses which [Great American] may sustain and incur: (1) By reason of being requested to execute or procure, or having executed or procured the execution of Bonds on behalf of any of the [YD Fence Indemnitors], (2) By reason of the failure of the [YD Fence Indemnitors] to perform or comply with any of the covenants and conditions of this Agreement or (3) In enforcing any of the terms, covenants or conditions of this Agreement. Payment by reason of the aforesaid causes shall be made to [Great American] by the [YD Fence Indemnitors], upon demand by [Great American], as soon as liability exists or is asserted against [Great American], whether or not [Great American] shall have made any payment therefor.

(DE 29-1, p. 3; DE 1-2, p. 3).

In the event of any payment of any kind by [Great American], the [YD Fence Indemnitors] further agree that in any accounting between [Great American] and the [YD Fence Indemnitors], [Great American] shall be entitled to charge for any and all disbursements made by [Great American] in good faith in and about the matters herein contemplated by this Agreement under the belief that [Great American] is or wall liable for the sums and amounts so disbursed, or that it was necessary or expedient for [Great American] to make such disbursements, whether or not such liability, necessity or expediency existed; and that the vouchers, invoices, an affidavit or other evidence of any such payments made by [Great American] shall be prima facie evidence of the fact and amount of the [YD Fence Indemnitors]'s liability to [Great American].

(DE 29-1, p. 3; DE 1-2, p. 3). Ultimately, Vaughn Contractors declared the Principals in default on the subcontract and asserted a claim under the performance contract. (DE 1, p. 9). Likewise, a subcontractor/supplier to the Principals asserted a claim under the payment bond. (DE 1, p. 10). Plaintiff satisfied these claims. (DE 1, p. 10). Plaintiff also retained a construction consultant to evaluate the claims and to assist Plaintiff in "tendering a replacement contractor to perform the subcontract work of... [YD Fence and Triax]." (DE 29-2, p. 3). On November 26, 2013, Plaintiff filed its Complaint. (DE 1). Only Defendant Casper filed an Answer. (DE 15).

Plaintiff then filed an Application for Entry of Default against the remaining Defendants, ultimately dismissed Defendant Rhodes without prejudice, and filed a Motion for Default Judgment after the Clerk entered Default against Defendant Triax and Defendant YD Fence. (DE 19; 23-27). On April 15, 2014, the Clerk awarded Default Judgment against Defendant Triax and Defendant YD Fence exclusive of attorneys' fees, expenses, and taxable costs; explaining that the Court may award these only pursuant to Federal Rule of Civil Procedure (FED. R. CIV. P.) 54(d)(2) and Local Rule 54.01(a). (DE 28). On April 29, 2014, Plaintiff filed the instant Motion, ...


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