Companion Property and Casualty Insurance Company v. Greaves-Walker, Inc. et al
Order re: 15 MOTION for Default Judgment as to Greaves-Walker, Inc. and Edward Agostinelli filed by Companion Property and Casualty Insurance Company. Companions motion for default judgment DENIED as toCount One and Count Two and GRAN TED as to Three. Companion to provide Court with additional briefing by 12/23/13 re: attorney's fees and pre-judgment interest. Final default judgment shall be entered upon resolution of Companions claim for attorneys fees, costs and expenses in this litigation and its claim for pre-judgment interest. ( Brief due by 12/23/2013) (copy of order mailed to Greaves-Walker and Edward Agostinelli). Signed by Judge Kristi K. DuBose on 12/10/2013. (cmj)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
COMPANION PROPERTY AND
CASUALTY INSURANCE COMPANY,
GREAVES-WALKER, INC. d/b/a
GLEEM’S CARPET ONE, CARPET
ONE’S FLOORING WAREHOUSE and
GLEEM COLOR AND DESIGN;
JO ANN AGOSTINELLI; and
CIVIL ACTION NO.: 13-00298-KD-N
This action is before the Court on the motion for default judgment filed by plaintiff
Companion Property and Casualty Insurance Company (Companion). (Doc. 15) Upon
consideration, and for the reasons set forth herein, the motion is DENIED as to Count One and
Count Two and GRANTED as to Three.
I. Background and procedural history
In 2009, defendant Greaves-Walker, Inc., an Alabama corporation, with its principal
place of business in Mobile, Alabama, entered into a subcontract in the amount of $331,000.00
with general contactor The LaSalle Group, Inc. whose address is in Clanton, Michigan, for
work to be done at the “Double Dining Facility - Ft. Leonard Wood, Mo. . . .” (Doc. 1)
Companion issued subcontract payment and performance bonds for the project naming
Greaves-Walker as Principal, Companion as Surety, and LaSalle as the Obligee. Defendants
Greaves-Walker, Edward Agostinelli and JoAnn Agostinelli executed a General Agreement of
Indemnity (GAI) wherein they agreed to indemnify and hold harmless Companion for any
claims against the bonds. (Doc. 1, Exhibit B) Edward signed as President, on behalf of
Greaves-Walker, the “Principal/Indemnitor”.
Greaves-Walker defaulted on the subcontract. As a result, general contractor LaSalle
filed suit against Greaves-Walker and Companion in April 2011in the Eastern District of
Michigan alleging that Greaves-Walker failed to perform its subcontract and that Companion
was liable under the terms of the subcontract performance bond. Companion settled the action
for $50,000.00. Companion alleges that it incurred $1,617.00 for the services of a construction
expert to investigate and evaluate the default and attorney’s fees, costs and expenses in the
amount of $66,056.75 for defense of the LaSalle suit.
In March 2012, Greaves-Walker’s general liability insurance carrier QBE Insurance
Corporation filed a complaint for declaratory judgment against Greaves-Walker and
Companion in the Southern District of Alabama. QBE sought a declaration that it was not
liable to Greaves-Walker or Companion for indemnity or a defense in the LaSalle action.
Companion incurred attorney’s fees, costs, and expenses of $15,603.40 to defend the QBE
declaratory judgment action.
Companion filed the instant complaint against Greaves-Walker and Jo Ann and Edward
Agostinelli. In Count One, Companion plead a claim for common law indemnity in the amount
of $50,000 against Greaves-Walker under the laws of Alabama; in Count Two, Companion
plead a claim for statutory indemnity in the amount of $50,000 against Greaves-Walker under
Ala. Code § 8-3-2 and § 8-3-5; and in Count Three, Companion plead a claim for contractual
indemnity in the total amount of $133,277.15, based upon the terms of the GAI. (Doc. 1)
All defendants executed a Waiver of the Service of Summons and their answers or other
responses were due on August 12, 2013. (Docs. 5, 6, 7) Defendants did not file an answer or
otherwise respond to the complaint. Companion filed a motion for entry of default and default
was entered on September 18, 2013. (Doc. 11, 13) On September 20, 2013, Companion filed a
suggestion of bankruptcy as to defendant Jo Ann Agostinelli informing the Court that she had
filed a petition for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the
Southern District of Alabama, Case. No. 13-02269. (Doc. 14) This action was stayed as to Jo
Ann Agostinelli. (Doc. 16) 1
Companion then filed the instant motion for entry of default judgment as to GreavesWalker and Edward Agostinelli. (Doc. 15) Companion seeks judgment in the amount of
$133,277.15, plus interest, costs, and attorneys’ fees incurred in this action. To date, GreavesWalker and Edward Agostinelli have not appeared, answered or otherwise defended this action.
II. Subject matter jurisdiction
Companion was incorporated under the laws of South Carolina and its principal place of
business is in Columbia, South Carolina. (Doc. 1) Greaves-Walker is an Alabama corporation
with its principal place of business in Mobile County, Alabama. (Id). The Agostinellis are
adult citizens of Baldwin County, Alabama. (Id.) The amount in controversy is $133,277.15.
Therefore, the Court has subject matter jurisdiction based on the allegations of diversity of
citizenship and an alleged amount in controversy in excess of the jurisdictional amount. 28
U.S.C. § 1332; System Pipe and Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324
On November 25, 2013, Companion filed a status report informing the Court that Jo
Ann Agostinelli had been discharged from bankruptcy but Companion was “taking no further
action with respect to” her. (Doc. 17) By separate order, the Court will address Companion’s
As discussed in section C, the parties’ indemnity agreement contains a choice of law
provision applying Georgia law. Even under Georgia law, a common law indemnity claim
gives way to the indemnity agreement. Fidelity and Deposit Co. of Maryland v. C.E. Hall
(5th Cir.2001) (“When entry of default is sought against a party who has failed to plead or
otherwise defend, the district court has an affirmative duty to look into its jurisdiction both over
the subject matter and the parties.”).
III. Personal Jurisdiction and venue
Greaves-Walker, Agostinelli and Companion agreed in the GAI that the “State of
Georgia shall have jurisdiction over all legal proceedings arising out of or related to this
Agreement, unless Surety, in its sole discretion, shall agree, in writing, that another State has
jurisdiction.” (Doc. 1, p. 16) The parties also agreed that “[v]enue of all legal proceedings
arising out of or related to this Agreement shall be in Cobb County, Georgia unless Surety, in
its sole discretion, shall agree, in writing, that venue shall lie in another County.” (Doc. 1, p.
16) Under Georgia law, a “nonresident can consent to personal jurisdiction in Georgia if the
nonresident enters into a contract that contains a Georgia forum selection clause, so long as the
forum selection clause is enforceable.” Gill v. Nicol, 2012 WL 1358490, *4 (M.D. Ga., Apr.19,
Despite their agreement, Companion filed suit in the Southern District of Alabama
alleging that this Court has diversity jurisdiction and alleging that “[v]enue is proper in the
Southern District as the Defendants maintain their principal place of business and are residents
of Mobile and Baldwin County, Alabama.” (Doc.1, p. 2) Nothing in the docket before the
Court evidences a written agreement by Companion that Alabama has jurisdiction and that
venue is proper in Mobile County, Alabama. However, under the forum selection clause,
Companion had “sole discretion” to decide whether another state had jurisdiction and whether
another county was a proper venue. Apparently, Companion has now exercised its “sole
discretion” even though it did not specifically “agree, in writing” with Greaves-Walker and
Generally, the “plaintiff’s choice of forum should not be disturbed unless it is clearly
outweighed by other considerations.” Robinson v. Giarmarco & Bill, P.C., 74 F. 3d 253, 260
(11th Cir. 1996). In that regard, Greaves-Walker and Agostinelli did not “plead or otherwise
defend” this action, and default has been entered against them. Fed. R. Civ. P. 55(a). Because
Greaves-Walker and Agostinelli did not file a timely motion to enforce these terms of the GAI
or include this argument in a responsive pleading, they have waived any defense based on
improper venue in this District. Fed. R. Civ. P. 12(b)(3) and (h). Generally, a “defendant in
default still can challenge the validity of service of process or contest the court’s exercise of
personal jurisdiction over him . . . [but] once a default has been entered against him, [the
defendant] is not entitled to raise any other defenses[. Thus], procedural defenses, such as a
motion to dismiss for forum non conveniens . . . are lost.” Tyco Fire & Sec., LLC v. Alcocer,
218 Fed. Appx. 860, 863-864 (11th Cir. 2007) (citing Am. Dredging Co. v. Miller, 510 U.S.
443, 453, 114 S.Ct. 981, 988 (1994)). Importantly, venue is proper in this district because
Agostinelli resides here and it is the principal place of business of Greaves-Walker. 28 U.S.C. §
1391(b)(1) (“Venue in general.--A civil action may be brought in-- (1) a judicial district in
which any defendant resides, if all defendants are residents of the State in which the district is
located”); 28 U.S.C. § 1391(c).
IV. Personal jurisdiction
The Court must address service of process and personal jurisdiction because a default
judgment would be invalid and ineffective unless the Court has personal jurisdiction over
Greaves-Walker and Agostinelli. Rash v. Rash, 173 F.3d 1376, 1381 (11th Cir.1999); Oldfield
v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1217 (11th Cir. 2009) (“an in personam
judgment entered without personal jurisdiction over a defendant is void as to that defendant”)
(citations omitted); Whitney Bank v. Davis-Jeffries-Hunold, Inc., 2012 WL 2808301, *1 (S.D.
Ala. July 10, 2012). Pursuant to Rule 4(d) of the Federal Rules of Civil Procedure, “[a]n
individual, corporation, or association that is subject to service under Rule 4(e), (f), or (h) has a
duty to avoid unnecessary expenses serving the summons” and therefore, may execute a waiver
of service. Greaves-Walker and Agostinelli are citizens of Alabama within the judicial district
of the Southern District of Alabama and subject to service under Rule 4(e) and (h). They have
executed their respective Waivers. (Docs. 5, 6) Therefore, the Court has personal jurisdiction
over Greaves-Walker and Agostinelli.
V. Notice to Greaves-Walker and Agostinelli
In addition to execution of the Waivers of service of the summons and complaint,
Companion served Greaves-Walker and Agostinelli with a copy of the motion for entry of
default and the motion for entry of default judgment by first class mail to Agostinelli and
Greaves-Walker at the address supplied in the Waivers. (Docs. 11, 15) Thus, the Court
concludes that no further notice is warranted.
Generally, in the Eleventh Circuit, “there is a strong policy of determining cases on
their merits and we therefore view defaults with disfavor.” In re Worldwide Web Systems, Inc.,
328 F.3d 1291, 1295 (11th Cir.2003). Thus, “there must be strict compliance with the legal
prerequisites establishing the court’s power to render” the default judgment. Varnes v. Local
91, Glass Bottle Blowers Ass‘n, 674 F.2d 1365, 1369 (11th Cir.1982). Overall, the district
court “has the authority to enter default judgment for failure to prosecute ... or to comply with
its orders or rules of procedure.” Wahl v. McIver, 773 F.2d 1169, 1174 (11th Cir. 1985).
Rule 55 of the Federal Rules of Civil Procedure provides that the Clerk of Court shall
enter default if a party fails to plead or otherwise defend an action brought against it. Fed. R.
Civ. P. 55(a). If a defendant has been defaulted for failure to appear, plead or otherwise
defend, then upon request by the plaintiff, the Clerk shall enter judgment for the amount sought
if it is “for a sum certain or for a sum which can by computation be made certain.” Fed. R. Civ.
P. 55(b)(1). Otherwise, the party entitled to default judgment must apply to the district court.
Fed. R. Civ. P. 55(b)(2). Also, the district court may hold a hearing to enter or effectuate a
judgment if the court needs to “(A) conduct an accounting; (B) determine the amount of
damages; (C) establish the truth of any allegation by evidence; or (D) investigate any other
matter.” Fed. R. Civ. P. 55(b)(2).
In this action, a hearing is not necessary because Companion seeks a sum certain
ascertainable from the affidavit of counsel and the allegations in the complaint. Securities and
Exchange Commission v. Smyth, 420 F.3d 1225, 1231-1232 (11th Cir. 2005) (“Judgment of
default awarding cash damages could not properly be entered without a hearing unless the
amount claimed is a liquidated sum or one capable of mathematical calculation) (internal
quotes and citations omitted); Id. at n.13 (noting that an “evidentiary hearing is not a per se
requirement; indeed, Rule 55(b)(2) speaks of evidentiary hearings in a permissive tone. . . . We
have held that no such hearing is required where all essential evidence is already of record.”).
A. Count One
Companion brings Count One of its complaint against Greaves-Walker, its principal, for
common law indemnity under the laws of Alabama. However, there is a general line of cases
wherein the courts have found that common law indemnity or implied theories of indemnity are
not available when the parties have a specific indemnification agreement, such as the GAI that
was executed by Greaves-Walker. See Ohio Cas. Ins. Co. v. Holcim (US), Inc., 2007 WL
2807570, *11 (S.D. Ala. Sept. 25, 2007) (collecting cases) (rev'd on other grounds, 589 F.3d
1361 (11th Cir. 2009)); RBC Bank U.S. v. Holiday Isle, LLC. 2010 WL 447403, *1 (S.D. Ala.
Feb. 5, 2010) (“[A] clear majority of courts have found that a party is proscribed from
recovering on an implied indemnity theory where the parties executed an express written
indemnity agreement.... This Court joins the myriad authorities cited above and finds that
parties' rights to common law indemnity are cut off where those parties enter into an express
indemnity agreement, through which they themselves delineate when and under what
circumstances an indemnification obligation will arise.”) (quoting Ohio Casualty Insurance
Co., 2007 WL 2807570 at *11 and finding that “no construction of the complaint will support a
cause of action for implied indemnity.”)
In Hanover Ins. Co. v. Hudak & Dawson Const., - - - F. Supp. 2d - - -, 2013 WL
2248166 (N.D. Ala. May 20, 2013), the district court stated that “[u]nder Alabama law, a
surety's right of reimbursement from its principal for losses incurred on bonded obligations is
established in a number of ways—by common law, contract, and statute.” Id. at *6. However,
the district court further explained that “because the parties entered into Agreements of
Indemnity, [Hanover, the surety] may not rely on a common law theory of indemnification. . .
[Hanover’s] right to reimbursement, if any, arises under the Agreements of Indemnity.” Id.2
The Court of Appeals for the Eleventh Circuit has explained that the entry of default “is
As discussed in section C, the parties’ indemnity agreement contains a choice of law
provision applying Georgia law. Even under Georgia law, a common law indemnity claim
gives way to the indemnity agreement. Fidelity and Deposit Co. of Maryland v. C.E. Hall
Const., Inc., 2012 WL 1100658, *6 -7 (S.D. Ga. Mar. 30, 2012) (granting dismissal of the
common law indemnity claim on plaintiff’s request because defendant conceded that it had
entered into an indemnity agreement).
not treated as an absolute confession by the defendant of his liability and of the plaintiff's right
to recover,’ but a defaulted defendant is deemed to ‘admit the plaintiff's well-pleaded
allegations of fact.’ ” Tyco Fire & Sec., LLC, 218 Fed. at 863 (quoting Nishimatsu Constr. Co.
v. Houston Nat’l. Bank, 515 F. 2d 1200, 1206 (5th Cir. 1975) (citations and internal quotations
omitted). However, the defendant “is not held to admit facts that are not well-pleaded or to
admit conclusions of law.’” Id. Therefore, “before entering a default judgment for damages, the
district court must ensure that the well-pleaded allegations of the complaint, which are taken as
true due to the default, actually state a substantive cause of action and that there is a
substantive, sufficient basis in the pleadings for the particular relief sought.” Id. (italics in
original). Assuming for purpose of this motion for default judgment that Alabama law applies,
Companion’s claim for common law indemnity may not be a viable cause of action3 because
Companion and Greaves-Walker entered into an indemnity agreement. Accordingly, default
This may be a distinction without a difference. In North Alabama Electric Co-op. v.
New Hope Telephone Co-op., 7 So.3d 342 (Ala. 2008), the Alabama Supreme Court discussed
whether to address an appeal from the trial court’s grant of summary judgment as to plaintiff’s
common-law indemnity claim, but denial as to the contractual indemnity claim. The Court
stated that “claims that are mutually exclusive or that reflect alternative claims for the recovery
of damages should not be split for appellate review by way of Rule 54(b).” Id. at 344. The
Court then explained that plaintiff’s “cross-claims for contractual indemnity and common-law
indemnity fall squarely within this category of intertwined claims” because “[t]he basis for
indemnity is restitution, and the concept that one person is unjustly enriched at the expense of
another when the other discharges liability that it should be his responsibility to pay.” Id. The
Court held that although plaintiff “pleaded different theories of indemnification recovery, i.e.,
contract and common law, by definition it may still receive only one recovery for
indemnification” and decided that adjudication of plaintiff’s “common-law indemnity crossclaim is not appropriate for certification under Rule 54(b).” Id. Thus, even if default judgment
were granted, Companion would “receive only one recovery for indemnification”. See also
Lloyd Noland Foundation, Inc. v. Tenet Health Care Corp., 483 F. 3d 773, 781 (11th Cir. 2007)
(finding that a Rule 54(b) certification did not make final and appealable the district court’s
order on summary judgment which addressed the contractual indemnification but did not
address the common law indemnity claims).
judgment is DENIED as to Count One.
B. Count Two
Companion brings Count Two for statutory indemnity against Greaves-Walker pursuant
to Ala. Code § 8-3-2 and § 8-3-5. Companion alleges that it paid $50,000 to settle the litigation
with LaSalle in addition to costs and attorney’s fees and that pursuant to the Alabama statutesit
should be substituted for Greaves-Walker’s creditors and subrogated to all rights and remedies
Ala. Code § 8-3-2 identifies certain rights of sureties who have paid debts of the
principal and states that
A surety who has paid his principal's debt is entitled to a transfer of the original
and collateral security which the creditor holds; he has all the rights to realize
thereon and to reimburse himself to the same extent as the creditor might have
done before the surety paid him, whether paid before or after judgment; and he
shall be substituted for the creditor and subrogated to all his rights and remedies;
in effect, he shall be a purchaser of the debt and all its incidents.
Ala. Code § 8-3-2. Ala. Code § 8-3-5 provides that when a surety has paid a debt of the
principal, the surety may “proceed immediately against his principal for the sum paid, with
interest thereon, and all legal costs to which he may be subjected by the default of the
The Court is not convinced that Alabama statutory law applies. This action is before the
Court on basis of diversity jurisdiction. Therefore, the Court “is required to apply the laws, . . .
of the state in which the federal court sits.” Manuel v. Convergys Corp., 430 F.3d 1132, 1139
(11th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). When
there is a contract, the Alabama courts have applied the principle of lex loci contractus and held
that the laws of the state where the contract is made will govern, unless the parties choose a
specific state's laws. Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 506 (Ala. 1991).
Companion and the Indemnitors including Greaves-Walker agreed that the GAI would “be
interpreted and governed in all respects in accordance with the laws of the State of Georgia.”
(Doc. 1, p. 16) Companion’s right to indemnification by Greaves-Walker for the losses it
sustained in the LaSalle litigation arises out of the GAI. Accordingly, default judgment is
DENIED as to Count Two of the complaint.
C. Count Three for Contractual Indemnity
Companion brings Count Three for contractual indemnity to enforce the
indemnification provision of the GAI executed by Greaves-Walker and Edward Agostinelli in
his individual capacity. The GAI also provides that it “shall be interpreted and governed in all
respects in accordance with the laws of the State of Georgia.” (Doc. 1, p. 16) Since this action
is before this Court on basis of diversity jurisdiction, the Court “[i]n determining which law
applies . . . must apply the choice of law rules of the forum state.” Trumpet Vine Inv., N.V. v.
Union Capital Partners I, Inc., 92 F.3d 1110, 1115 (11th Cir.1996) (citing Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941).
Applying the principle of lex loci contractus, Alabama courts have held that the laws of the
state where the contract is made will govern, unless the parties choose a specific state's laws.
Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 506 (Ala. 1991). The parties have
chosen the law of the State of Georgia.
“When interpreting indemnity agreements under Georgia law, [the court must] apply
the ordinary rules of contract construction.” Travelers Cas. and Sur. Co. of America v.
Winmark Homes, Inc., 518 Fed.Appx. 899, 902 (11th Cir. 2013) (citing Anderson v. U.S.
Fidelity & Guaranty Co., 267 Ga.App. 624, 600 S.E.2d 712, 715 (2004)) (bracketed text
added). “No construction is required or even permissible when the language employed by the
parties in the contract is plain, unambiguous and capable of only one reasonable interpretation.”
Id. (citing Reliance Ins. Co. v. Romine, 707 F. Supp. 550, 552 (S.D.Ga.1989) (“Under Georgia
law, where the language of a contract is definite and unambiguous, a court must give it
effect.”), aff'd, 888 F.2d 1344 (11th Cir.1989) (per curiam)). Additionally, the “words” of the
GAI must be construed strictly against Companion as indemnitee. Jimenez v. Gilbane Bldg.
Co., 303 Ga. App. 125, 693 S.E.2d 126 (2010).
In relevant part, the GAI provides as follows:
The Indemnitors agree and bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally, to indemnify and
save harmless Surety from and against any and all liability, loss, costs, damages
or expenses of whatever nature or kind and arising out of or in any way
connected with such Bonds, including but not limited to fees of attorneys and
other expenses, cost and fees of investigation, adjustment of claims, procuring or
attempting to procure the discharge of such bonds and attempting to recover
losses or expenses from Indemnitors or third parties, whether the Surety shall
have paid or incurred same, as aforesaid.
(Doc. 1, p. 14, ¶ 2). The GAI also provides that Companion would have the “right in its sole
discretion to determine whether any suits or claims shall be paid, compromised, defended,
prosecuted, or appealed and to pay out such sums as it deems necessary to accomplish any of
those purposes and its determination as to whether such suit or claim should be settled or
defended shall be binding and conclusive on Indemnitors.” Id.
The definite and unambiguous terms of the GAI, construed against Companion,
establish that Greaves-Walker and Agostinelli agreed to indemnify Companion from the loss,
costs, damages and expenses including attorney’s fees and other expenses, arising out of or in
connection with the subcontract performance bond issued on the LaSalle project. Therefore, the
Court finds that the GAI is effective and enforceable against Greaves-Walker and Agostinelli.
Kueffer Crane, etc., Inc. v. Passarella, 247 Ga.App. 327, 330(3), 543 S.E.2d 113 (2000) (“The
test of an enforceable contract is whether it is expressed in language sufficiently plain and
explicit to convey what the parties agreed upon.”) (citations and footnote omitted.) Moreover,
the Court further finds that the facts alleged in the complaint, which are taken as true because
of the default, are sufficient to establish a cause of action for breach of the indemnity
agreement against Greaves-Walker and Agostinelli pursuant to Georgia law and sufficient to
form a legitimate basis for an award of damages. See Anheiser Busch, Inc. v. Philpot, 317 F. 3d
1264, 1266 (11th Cir. 2003). Accordingly, default judgment is GRANTED in favor of
Companion as to Count Three of the complaint.
1) Sums paid to complete the project
Companion alleges that it has “sustained a loss by virtue of having paid $50,000 for
completion” of the bonded project and $1,617.00 for consultant services to investigate and
evaluate the default. (Doc. 1) The GAI bound Greaves-Walker and Agostinelli to indemnify
Companion for all losses and costs including fees for investigation of claims. In support,
Companion provides its counsel’s affidavit stating that the total claim is “$133,277.15 plus
interest, costs and attorney’s fees incurred in this action.” (Doc. 15, p. 2)
The GAI provides that “[i]n any claim or suit hereunder, an itemized statement of
aforesaid loss and expense, sworn to by an officer or agent of Surety, or the vouchers or other
evidence of disbursement by Surety, shall be prima facie evidence of the fact and extent of the
liability hereunder of Indemnitors.” (Doc. 1, p. 14, ¶ A) Companion did not provide an
itemized statement sworn to by an officer or vouchers evidencing disbursement. However,
Companion set forth this specific loss and consultant expense in its complaint and
Companion’s counsel, arguably an “agent”, provided a sworn statement as to the total amount
claimed by Companion. See Hanover, - - - F. Supp. 2d - - -, 2013 WL 2248166, at *8 (finding
that defendants agreed to accept “vouchers or other evidence of payment by the Surety” as
“evidence of the fact and amount of such liability. . .”) (italics added). The well-plead
allegations of the complaint may be accepted as true due to Greaves-Walker and Agostinelli’s
default. Accordingly, damages are awarded in the amount of $50,000 for completion of the
bonded project and $1,617.00 for the consultant’s services.
2) Attorney’s fees, costs and other expenses incurred in the LaSalle and QBE actions
Companion seeks indemnification for the attorney’s fees, costs and other expenses
incurred in the LaSalle ($66,056.75) and QBE litigation ($15,603.40). In that regard, GreavesWalker and Agostinelli agreed to indemnify Companion for “any and all . . . expenses . . .
including fees of attorneys” that arose out of or were connected with the subcontract
performance bond. (Doc. 1, p. 14, ¶ 2) Under Georgia law, this provision binds GreavesWalker and Agostinelli to indemnify Companion for these expenses because they were incurred
as a result LaSalle’s claims against the subcontract performance bond. See Buckeye Cellulose
Corp. v. Sutton Const. Co., Inc. 907 F.2d 1090, 1095 (11th Cir.1990) (finding that the
attorney’s fee provision in the GIA required Sutton to indemnify its principal “for expenses,
including attorney’s fees incurred in recovering losses from Sutton and third parties”) (citing
City of Lawrenceville v. Heard, 194 Ga.App. 580, 391 S.E.2d 441 (1990) for the premise that
“[a]ttorney's fees are recoverable when authorized by contract.”). In Rhodes v. Amwest Surety
Ins., Co., the Georgia Court of Appeals upheld an award of attorneys fees as an “expense
incurred as a result of claims under the surety bonds.” 207 Ga. App. 441, 442, 428 S. E. 2d 581,
583 (Ga. App. 1993) (“trial court did not err in allowing the jury’s consideration of evidence
relating to expenses incurred for legal services in managing claims under the surety bonds.”)
As evidence of the attorney’s fees, costs and other expenses incurred, the Court has only
the affidavit of counsel as to the total sum due and Companion’s allegations in the complaint.
However, as previously stated, the GAI provides that “[i]n any claim or suit hereunder, an
itemized statement of aforesaid loss and expense, sworn to by an officer or agent of Surety, or
the vouchers or other evidence of disbursement by Surety, shall be prima facie evidence of the
fact and extent of the liability hereunder of Indemnitors.” (Doc. 1, p. 14, ¶ A). Thus, the
Court will accept the sworn affidavit and the undisputed factual allegations in the complaint,
deemed true by Greaves-Walker and Agostinelli’s default, as evidence of the expenses
incurred, including attorney’s fees and costs, in the LaSalle and QBE litigation. Accordingly,
damages are awarded in favor of Companion in the amount of $66,056.75 and $15,603.40,
3) Attorney’s fees, costs and expenses incurred in this litigation
Companion also seeks an unspecified amount for attorney’s fees, costs and expenses
incurred to enforce the terms of the GAI. Companion’s motion for default judgment does not
further explain or support that request. In the GAI, Greaves-Walker and Edward Agostinelli
agreed as follows:
Surety shall have the right to reimbursement of its expenses, premiums and
attorneys’ fees hereunder, irrespective of whether any Bond loss payment has
been made by Surety. If the Surety has cause to enforce the terms of this
Indemnity Agreement by filing suit against Indemnitors to recover sums due
under this Agreement, it is understood by the Principal and Indemnitors that the
Surety may recover its further expenses of such litigation, accrued interest and
25% of such sums as attorneys’ fees. Any debt accrued by the Surety, on behalf
of Principal and Indemnitors will accrue interest at 12% per annum.
(Doc. 1, p. 14)
Arguably, the “sums due” that Companion seeks to recover is $133,277.15 and twentyfive (25%) of “such sum” would be $33,319.29. However, in regard to an award of attorney’s
fees under Georgia law in this context, O.C.G.A. § 13-1-11 may apply. The statute provides, in
relevant part, as follows:
(a) Obligations to pay attorney's fees upon any note or other evidence of
indebtedness, in addition to the rate of interest specified therein, shall be valid and
enforceable and collectable as a part of such debt if such note or other evidence of
indebtedness is collected by or through an attorney after maturity, subject to
subsection (b) of this Code section and to the following provisions:
(1) If such note or other evidence of indebtedness provides for attorney's fees in
some specific percent of the principal and interest owing thereon, such provision
and obligation shall be valid and enforceable up to but not in excess of 15 percent
of the principal and interest owing on said note or other evidence of indebtedness;
(3) The holder of the note or other evidence of indebtedness or his or her attorney
at law shall, after maturity of the obligation, notify in writing the maker, endorser,
or party sought to be held on said obligation that the provisions relative to
payment of attorney's fees in addition to the principal and interest shall be
enforced and that such maker, endorser, or party sought to be held on said
obligation has ten days from the receipt of such notice to pay the principal and
interest without the attorney's fees. If the maker, endorser, or party sought to be
held on any such obligation shall pay the principal and interest in full before the
expiration of such time, then the obligation to pay the attorney's fees shall be void
and no court shall enforce the agreement. The refusal of a debtor to accept
delivery of the notice specified in this paragraph shall be the equivalent of such
Under the statute, a different result would prevail, and Companion would be entitled to
an attorney’s fee of fifteen (15%) percent, or $19,991.58. Also, Companion would need to
establish that it gave Greaves-Walker and Agostinelli the requisite statutory notice to pay
Companion. O.C.G.A. 13-1-11(a)(3).
The Supreme Court of Georgia explained that “the purpose of O.C.G.A. §13-1-11 is to
prevent a contractual provision for attorney’s fees from constituting a penalty for failure to pay
an indebtedness.” RadioShack Corp. v. Cascade Crossing II, LLC, 282 Ga. 841, 845, 653 S.E.
2d 680, 685 (Ga. 2007) (applying statutory cap to a lease). “In its current form, the statute
accomplishes this purpose in subsections (a)(1) and (2) by limiting the amount of attorney's
fees, and in subsection (a)(3) by giving the debtor notice and ‘an opportunity to meet his
obligation without incurring additional expenses in the nature of attorney['s] fees.’” Id.
(citations omitted). Ultimately, the court held that “the term ‘evidence of indebtedness,’ as
used in O.C.G.A. § 13–1–11, has reference to any printed or written instrument, signed or
otherwise executed by the obligor(s), which evidences on its face a legally enforceable
obligation to pay money. Such a definition ... does no violence to any of the statute's specific
provisions and accords well with its general purpose....” Id. at 845-846 (citation omitted).
At least one Georgia court has indicated that where the parties have entered into an indemnity
agreement attendant to surety bonds, attorney fees related to enforcement of the indemnity
agreement are subject to the statute even though attorney’s fees incurred as an expense are not.
Rhodes, 207 Ga. App. at 442, 428 S.E.2d at 583.
The Court cannot rely on Greaves-Walker and Agostinelli’s default to enter an award of
attorney’s fees, costs, and expenses in this action to enforce the indemnity agreement. See, e.g.,
Tyco, 218 Fed. Appx. at 863 (stating that a defaulted defendant “is not held to admit facts that
are not well pleaded or to admit conclusions of law”). Thus, in order for the Court to consider
whether to award the requested attorney’s fees, costs and expenses, Companion is ORDERED
to provide the Court with additional briefing on or before December 23, 2013.
4. Pre-judgment interest
Companion also seeks an award of interest on the sums paid. In that regard, the GAI
contains a provision that “[a]ny debt accrued by the Surety, on behalf of Principal and
Indemnitors will accrue interest at 12% per annum.” (Doc. 1, p. 14) Companion has not
provided the Court with any evidence, or legal argument under Georgia law, as to when the
“debt accrued” such that a calculation of interest could be made. Additionally, in Georgia,
prejudgment interest is only allowed on liquidated claims. See Scovill Fasteners, Inc. v.
Northern Metals, Inc., 303 Ga. App. 246, 252(3), 692 S.E.2d 840 (2010) (finding that the trial
court did not err in awarding contract-based pre-judgment interest of eighteen (18%) percent on
liquidated debt). Thus, in order for the Court to consider whether to award pre-judgment
interest and to calculate same, Companion is ORDERED to provide the Court with additional
briefing on or before December 23, 2013.
For the foregoing reasons, Companion’s motion for default judgment DENIED as to
Count One and Count Two and GRANTED as to Three.
Final default judgment shall be entered upon resolution of Companion’s claim for
attorney’s fees, costs and expenses in this litigation and its claim for pre-judgment interest.
The Clerk is directed to mail a copy of this order to Greaves-Walker and Edward
Agostinelli at their addresses of record.
DONE and ORDERED this the 10th day of December 2013.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
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