Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

The Metropolitan Government of Nashville and Davidson v. Wood Ridge Development, Inc.

Court of Appeals of Tennessee, Nashville

November 4, 2016

THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON
v.
WOOD RIDGE DEVELOPMENT, INC., ET AL.

          Session Date: July 12, 2016

          Appeal from the Chancery Court for Davidson County No. 12777I Claudia Bonnyman, Chancellor

          The developer of a Nashville subdivision and its surety entered into three performance agreements by which they bound themselves to complete the infrastructure in the subdivision. The Metropolitan Government brought an action to enforce the agreements against both parties when the developer failed to complete the infrastructure. The surety filed an answer as well as a cross claim against the developer and a third-party complaint against a group of investors who had executed a separate agreement to indemnify the surety for any amounts the surety might pay or be held liable. After settling with the Metropolitan Government, the surety sought summary judgment against the developer and investors; the cross and third-party defendants also sought summary judgment asserting that, since the surety did not issue a separate bond, they had no obligation to indemnify the surety. The court granted summary judgment to the surety upon holding that the performance agreement operated as a bond and entitled the surety to indemnification. The developer and investors appeal the grant of the surety's motion and the denial of their motion. We hold that the surety's execution of the performance agreements operated as an "undertaking[] or other writing[] obligatory in nature of a bond" as contemplated by the indemnity agreement and, accordingly, affirm the judgment of the trial court.

          Arthur E. McClellan, Gallatin, Tennessee, for the appellants, Wood Ridge Development, Inc., et al.

          Lora Barkenbus Fox and Catherine J. Pham, Nashville, Tennessee, for the appellee, the Metropolitan Government of Nashville and Davidson County.

          Philip L. Robertson, Franklin, Tennessee, for the appellee, Lexon Insurance Company.

          Richard H. Dinkins, J., delivered the opinion of the court, in which Andy D. Bennett and W. Neal McBrayer, JJ., joined.

          OPINION

          RICHARD H. DINKINS, JUDGE

         I. Factual and Procedural History

         Wood Ridge Development, Inc. ("WRD") was the developer of Carothers Crossing Subdivision, located in Davidson County. In order to receive approval of the subdivision plat for Carothers Crossing, WRD was required by the Metropolitan Government of Nashville and Davidson County ("Metro") to construct the roadways, sidewalks, water facilities, drainage facilities, sewer infrastructure, and other improvements in the subdivision. To fulfill this obligation, WRD, as principal, and Lexon Insurance Company ("Lexon"), as surety, executed three performance agreements wherein they bound themselves to Metro to complete all required public infrastructure in the subdivision. Each agreement covered a different phase of construction within the subdivision and bore a different number, identified as a "Bond #." The first agreement was executed on May 24, 2007; it bore the bond number 1021035, covered improvements in Phase I of the subdivision, and required "the execution of a bond or other surety in the sum of . . . $1, 186, 900" and that the infrastructure construction be completed by June 1, 2008. The second and third agreements were both executed on July 23 and covered Phase 2, Section 1 and Phase 2, Section 2; both required "a bond or other surety" in the amount of $764, 850 and $645, 425, respectively, and the completion of infrastructure construction by August 1, 2008. They bore bond numbers 1021050 and 1021049, respectively.

         WRD did not complete the infrastructure by the deadlines in the performance agreements, and in August 2009 WRD was administratively dissolved by the State of Tennessee. Metro sent three letters to Lexon in October 2009, demanding payments of $309, 500 for WRD's default with respect to Phase 1; $318, 850 for Phase 2, Section 1; and $450, 425 for Phase 2, Section 2. When payment was not made, Metro filed suit in Davidson County Chancery Court on May 31, 2012, naming WRD and Lexon as defendants and seeking "injunctive relief, specific performance under the Agreements, and a declaration of the parties' rights under the Agreements, and/or damages, costs, and fees, including attorneys' fees."

         Lexon answered, generally denying the allegations that it was liable to Metro. Lexon filed a cross claim against WRD and a third-party complaint against Wood Ridge Investments, LLC, and its members Don Smithson, Susan Smithson, Ed Richey, and Candy Richey (collectively, "Wood Ridge Investments") for breach of contract arising under a General Agreement of Indemnity ("indemnity agreement"), which had been executed on May 10, 2007 and in which WRD, Wood Ridge Investments, and its members (collectively the "Indemnitors") agreed to indemnify Lexon for any amounts Lexon was required to pay for executing "certain bonds, undertakings, and other writings obligatory in the nature of a bond" on behalf of the Indemnitors.

         In due course, Lexon filed a motion for summary judgment on both its cross-claim and third party complaint, and the Indemnitors filed a motion for summary judgment seeking dismissal of Lexon's claim. The court granted summary judgment to Lexon and denied the Indemnitors' motion; the court subsequently certified the order as final pursuant to Rule 54.02 of the Tennessee Rules of Civil Procedure.

         The Indemnitors appeal, articulating the following issues for our review:

1. Whether the trial court erred in failing to conform with Tennessee Rules of Civil Procedure, Rule 56.04, by stating legal grounds for its holdings.
2. Whether the trial court erred in holding that the three (3) performance agreements were surety bonds.
3. Whether the trial court erred in holding that cross/third-party defendants were liable under the indemnity agreement without a finding that Wood Ridge Development, Inc. had defaulted pursuant to the performance agreements.

         II. Standard of Review

         The resolution of this appeal turns upon the interpretation and application of the indemnity agreement, a contract; this is a matter of law and thus appropriate for resolution by summary judgment. Pitt v. Tyree Org. Ltd., 90 S.W.3d 244, 252 (Tenn. Ct. App. 2002). The lower court's interpretation of a contractual document is not entitled to a presumption of correctness on appeal. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999); Angus v. Western Heritage Ins. Co., 48 S.W.3d 728, 730 (Tenn. Ct. App. 2000). On appeal, we must "review the contract anew and make our own independent determination of the agreement's meaning." Hillsboro Plaza Enters. v. Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App. 1993)).

         We review the trial court's ruling on a motion for summary judgment de novo, without a presumption of correctness. Rye v. Women's Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Abshure v. Methodist Healthcare-Memphis Hosp., 325 S.W.3d 98, 103 (Tenn. 2010); Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997)). Our review requires "a fresh determination of whether the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been satisfied." Id. (citing Estate of Brown, 402 S.W.3d 193, 198 (Tenn. 2013)). Under Rule 56, summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Tenn. R. Civ. P. 56.04. "Cross-motions for summary judgment are no more than claims by each side that it alone is entitled to a summary judgment, " and each must be ruled on in an "individual and separate basis." CAO Holdings, Inc. v. Trost, 333 S.W.3d 73, 83 (Tenn. 2010) (citing Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968); Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003); Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001); Philip Morris, Inc. v. Harshbarger, 122 F.3d 58, 62 n. 4 (1st Cir. 1997); 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720, at 335-36 (3d ed. 1998)). "When considering individual competing cross-motions for summary judgment, the court must take care to resolve all factual disputes and any competing rational inferences in the light most favorable to the party opposing each motion." Id. (citing Wightman v. Springfield Terminal Ry., 100 F.3d 228, 230 (1st Cir. 1996); Schwabenbauer v. Bd. of Educ, 667 F.2d 305, 314 (2d Cir. 1981)).

         III. Analysis

         A. Compliance with Rule 56.04

         The Indemnitors first contend that the order on the motions for summary judgment fails to comply with Rule 56.04 of the Tennessee Rules of Civil Procedure, which requires the court to "state the legal grounds upon which the court denies or grants the motion, which shall be included in the order reflecting the court's ruling." Tenn. R. Civ. P. 56.04. The Indemnitors assert that the court failed to state the factual and legal grounds for denying their motion for summary judgment and for granting Lexon's motion for summary judgment.

         We do not agree with the argument that the order contains no findings of fact or conclusions of law. The order reads in pertinent part:

The Court finds the following material facts to be undisputed and makes the following conclusions of law:
1. Lexon, as surety, issued and delivered the Performance Agreement at issue in this lawsuit in favor of Plaintiff Metropolitan Government of Nashville and Davidson County ("Metro"), as obligee, and on behalf of Indemnitor Wood Ridge Development, LLC, as principal;
2. The Performance Agreement is a surety bond and an undertaking in the nature of a surety bond;
3. Indemnitors signed the indemnity agreements at issue in this lawsuit in consideration for Lexon issuing the Performance Agreement (collectively, the "indemnity agreement");
4. A claim was made upon Lexon by Metro under the Performance Agreement;
5. The Indemnity Agreement affords Lexon the sole right to determine for itself and the Indemnitors whether to defend or compromise claims;
6. The Indemnity Agreement further requires Indemnitors to post collateral sufficient to cover any reserve created by Lexon, and Lexon did in fact set up a reserve;
7. The Indemnity Agreement requires Indemnitors to defend, exonerate, and indemnify Lexon from and against any and all loss, costs, expenses, and attorneys['] fees, incurred by it as a result of having executed any surety bond or undertaking in the nature of a bond, and to further pay all premiums;
8.Lexon made demand upon Indemnitors to defend, exonerate, and indemnify it from Metro's claim, to collateralize Lexon in the amount of $1, 078, 775, and to pay premiums, all of which Indemnitors failed to do;
9. Lexon reasonably determined to defend and to ultimately compromise Metro's claim and entered into an agreed order with Metro dated December 9, 2013, whereby Lexon agreed to perform a certain scope of ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.