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Lexon Insurance Co. v. Windhaven Shores, Inc.

Court of Appeals of Tennessee, Nashville

August 27, 2019


          April 11, 2018 Session

          Appeal from the Chancery Court for Davidson County No. 15-165-III Ellen Hobbs Lyle, Chancellor

         In this appeal arising from a suit on an indemnity agreement, the indemnitee plaintiff moved for summary judgment. In response, one of the named indemnitors claimed that she could not determine if the signature on the agreement was hers. Another named indemnitor claimed that he was not sure if the signature on the agreement was his but conceded that it could be. And neither purported indemnitor recalled signing the indemnity agreement. The trial court determined that there was no genuine issue of material fact and granted summary judgment. On appeal, the purported indemnitors claim that, because the authenticity of their signatures was in dispute, summary judgment was improper. Alternatively, if summary judgment was appropriate on the issue of liability, the purported indemnitors claim that the trial court erred in its award of damages by including certain unpaid bond premiums and attorney's fees. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Mike J. Urquhart, Nashville, Tennessee, for the appellants, the Estate of Jack Williams and Frances Williams.

          Philip L. Robertson and Katherine Garro McCain, Franklin, Tennessee, for the appellee, Lexon Insurance Company.

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


          W. NEAL McBRAYER, JUDGE.



         As a condition to obtaining final plat approval for a section of a residential subdivision, the Metropolitan Planning Commission for Nashville and Davidson County required the developer, Windhaven Shores, Inc., to provide a performance bond for the public improvements in the section.[1] The performance bond took the form of a "Performance Agreement" signed by Windhaven Shores, as principal, and Lexon Insurance Co., as surety, in which they both bound themselves in a penal sum of $334, 500 as guarantors for the completion of the public improvements.

         Days before execution of the performance agreement, Windhaven Shores and Jack Williams Construction Co. signed, allegedly along with five individuals, a General Agreement of Indemnity (the "Indemnity Agreement") in favor of Lexon. In consideration for Lexon agreeing to serve as surety under the performance agreement, the parties to the Indemnity Agreement agreed to "indemnify and save [Lexon] harmless from and against every claim, demand, liability, cost, charge, suit, judgment and expense which [Lexon] may pay or incur in consequence of having executed, or procured the execution of, such bond[ ]." The indemnified obligations specifically extended to "fees of attorneys" as well as to "the expense of procuring, or attempting to procure, release from liability, or in bringing suit to enforce the obligation of any of the indemnitors under [the Indemnity Agreement]." The Indemnity Agreement covered all current and future performance agreements that might be executed by Lexon on behalf of any one of the indemnitors.

         As work progressed on the subdivision, Windhaven Shores and Lexon signed additional performance agreements in favor of the planning commission, which were similar to the first. The additional performance agreements guaranteed the completion of the public improvements in other sections of the subdivision.

         Problems arose when Lexon's obligations as surety under the performance agreements came up for renewal. Despite sending invoices, Lexon's efforts to collect renewal premiums or, alternatively, to obtain a release of its obligations under the performance agreements proved unsuccessful. Then Lexon received separate demands from the planning commission under the performance agreements due to Windhaven Shores's alleged failure to complete improvements in the subdivision.

         Ultimately, the Metropolitan Government of Nashville & Davidson County, on behalf of the planning commission, sued Windhaven Shores and Lexon for failure to complete the public improvements in the subdivision and for breach of the performance agreements. Windhaven Shores did not respond to the complaint.

         Lexon settled a portion of the suit, with Lexon agreeing to complete some of the improvements. Lexon spent $144, 172.10 on this effort. The case proceeded on the issues of whether, under the performance agreements, Lexon guaranteed completion of turn lanes on the public road providing access to the subdivision and, if so, whether Lexon could be held solely liable for that work.[2] Lexon lost in the trial court, and while the case was on appeal to this Court, Lexon agreed to settle with Metro by payment of $121, 000. The parties' settlement agreement provided that, with receipt of the $121, 000 payment, the performance agreements would be "deemed satisfied in full and rendered null, void, and of no further operation and effect."


         Having incurred expenses in completing the public improvements and defending against Metro's suit, Lexon sued in the Chancery Court of Davidson County, Tennessee, seeking recovery of those amounts plus unpaid premiums and attorney's fees and costs under the terms of the Indemnity Agreement. Lexon named as defendants Windhaven Shores, Jack Williams Construction Co., spouses Jack and Frances Williams, and Bonnie Saindon, claiming that each had signed the Indemnity Agreement.[3] Neither Windhaven Shores nor Jack Williams Construction Co. answered the complaint. In their answers, the individual defendants each denied Lexon's allegations that they signed the Indemnity Agreement, albeit for different reasons. Ms. Saindon denied signing the Indemnity Agreement while Mr. and Mrs. Williams answered that they could "not recall" signing the Indemnity Agreement.

         Lexon moved for summary judgment against the defendants, including those that had not answered. In support of its motion, among other things, Lexon relied on the declaration of Michael Belinski, an employee and attorney for Lexon. Under penalty of perjury and based on his personal knowledge, Mr. Belinski stated that each of the defendants executed the Indemnity Agreement.

         Ms. Saindon responded with her own motion for summary judgment. Her accompanying affidavit stated that "I have reviewed the Indemnity Agreement, and I did not sign it, nor did I authorize someone to sign the Indemnity Agreement on my behalf." The affidavit went on that "[t]he signature on the Indemnity Agreement purporting to be mine was forged and is fraudulent." In addition to her affidavit, Ms. Saindon exhibited to her motion the signature page from the Indemnity Agreement and, as examples of her signature, other documents she had signed.

         Mr. and Mrs. Williams also submitted affidavits in opposition to Lexon's motion for summary judgment. Mrs. Williams's affidavit stated that she "ha[d] no knowledge or recollection of signing the referenced October 29, 2003 Indemnity Agreement." She explained that "I do not admit that one of the signatures [on the Indemnity Agreement] appears to be mine as I have looked at the signature and I cannot determine for sure it to be mine."

         Mr. Williams's affidavit also stated that he could not recall signing the Indemnity Agreement. But then he conceded that he was unsure whether the signature on the Indemnity Agreement was his, blaming both the passage of time and his advanced age.

I have looked at the signatures on the [Indemnity Agreement], I cannot definitively state that one of those signatures is or is not mine, I am not sure. Frankly it could or could not be mine. I just don't know. You must understand that I am 87 years old, and the loss of my memory is very frustrating for ...

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