Lexon Insurance Co. v. Aziz Naser
781 F.3d 335
6th Cir.2015Background
- Aziz Naser was founder, co-owner (certified as 15%), and CEO of Michigan Orthopedic Services (MOS); MOS Holdings owned 80%.
- Medicare required surety bonds for billing locations; Lexon issued bonds after MOS and owners signed a one-page indemnity agreement.
- Naser signed the agreement twice: once as CEO under the applicant (Michigan Orthopedic Services) and again under the “undersigned owners” block without a corporate title (he added his SSN); MOS Holdings signed via an authorized officer.
- MOS later filed bankruptcy; CMS made claims on the bonds and Lexon paid $256,913.64 after giving Naser 30 days to contest or pay; Naser disputed the claims but provided no evidence.
- Lexon sued Naser for breach of the indemnity agreement; after a bench trial the district court entered judgment for Lexon (Apr. 16, 2014). Naser filed a Rule 59(e) motion (May 14), refiled a shortened motion (May 21) after the court struck the original for length, was denied (June 4), and appealed (filed July 7).
Issues
| Issue | Plaintiff's Argument (Naser) | Defendant's Argument (Lexon) | Held |
|---|---|---|---|
| Timeliness of appeal | May 21 amended Rule 59(e) was untimely; notice of appeal due June 16 | May 15 order striking motion disposed of the timely motion, so appeal deadline was June 16 | District court did not finally dispose until June 4; appeal timely (filed July 7) |
| Signature/ liability under indemnity | Second signature was corporate/clerical; Naser did not intend personal liability | Second signature signed as an individual owner; standard practice is officer signs twice for personal liability | Naser personally liable; court found signature and document language show individual, joint-and-several indemnity |
| Parol evidence to show intent | Affidavits say parties did not intend personal liability; Naser sold interest earlier | Agreement and MOS certification identified Naser as an owner; district court found parol evidence not credible | Parol evidence rejected; district court’s finding not clearly erroneous |
| Bad-faith payment defense | Lexon paid CMS without sufficient evidence; payment was in bad faith | Lexon followed regulation requiring payment within 30 days and asked Naser for counter-evidence; Naser provided none | Naser forfeited affirmative defense by failing to plead it; court found Lexon did not act in bad faith |
Key Cases Cited
- Bowles v. Russell, 551 U.S. 205 (Sup. Ct. 2007) (district courts may not extend Rule 59(e) deadline)
- Campbell Indus., Inc. v. Offshore Logistics Int’l, Inc., 816 F.2d 1401 (9th Cir. 1987) (appeal time runs from final disposition of tolling motion)
- Becker v. Montgomery, 532 U.S. 757 (Sup. Ct. 2001) (pleading form defects should not cause dismissal when curable; allow time to correct)
- Feldman v. Allstate Ins. Co., 322 F.3d 660 (9th Cir. 2003) (stricken but tolling Rule 59(e) motion can still toll appeal if refiled promptly)
- Shuler v. Garrett, 715 F.3d 185 (6th Cir. 2013) (local-rule form errors should not defeat timely Rule 59 filings)
- Smith v. Barry, 502 U.S. 244 (Sup. Ct. 1992) (notice of appeal may satisfy form requirements despite technical defects)