Lyndon Property Insurance Co. v. Price, 5:12-cv-00343

Lyndon Property Insurance Co. seeks summary judgment on indemnification for fees, expenses, and interest under a General Agreement of Indemnity tied to a bond procured for George Construction.
Defendants Perry Gene Price, Brenda Price, George Construction, LLC, and Pecatoda, Inc. executed the indemnity in June 1999; Lyndon procured the bond from Cumberland Surety.
Lyndon issued a bond in July 1999; Five Star Lodging, Inc. sued George Construction and Lyndon in state court and obtained a judgment in Lyndon’s favor on liability.
The Agreement requires the Indemnitors to exonerate and indemnify the Surety for losses, expenses, and costs, including counsel fees, upon demand.
Lyndon incurred $198,192.56 in attorneys’ fees, interest, and expenses in the state litigation and in this action.
The court grants summary judgment in Lyndon’s favor, awarding the asserted costs and interest and dismissing the case.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Lyndon is entitled to indemnification for fees and costs under the Agreement	Lyndon argues the Agreement plainly requires indemnification of fees, costs, and expenses	Defendants claim lack of evidence of reasonable belief and foreseeability of liability	Yes; indemnification for fees and costs is required under the Agreement.
Whether Lyndon acted reasonably in incurring the fees and expenses	Lyndon contends it acted reasonably given the large suit and need for counsel	No specific challenge to reasonableness is presented by defendants	Yes; the fees and expenses were reasonably incurred.
Whether prejudgment interest on the indemnified amounts is recoverable	Lyndon seeks prejudgment interest on costs and fees	Not contested beyond statutory entitlement	Yes; interest awarded on the insured costs pursuant to applicable law.
Whether Lyndon can recover fees and costs incurred in enforcing the Agreement in this action	Agreement covers fees and costs for enforcing covenants and conditions	Normal rule is each party bears own costs unless contract provides otherwise	Yes; the Agreement authorizes recovery of fees and expenses in this action.

Nat’l Sur. Corp. v. Prairieland Const. Inc., 354 F. Supp. 2d 1032 (E.D. Mo. 2004) (indemnity and attorney-fee recovery allowed under similar terms)
Fallon Elec. Co., Inc. v. Cincinnati Ins. Co., 121 F.3d 125 (3d Cir. 1997) (attorneys’ fees recoverable where indemnity covers such costs)
Napier Elec. & Constr. Co., Inc., 571 S.W.2d 644 (Ky. Ct. App. 1978) (indemnity limits and good faith/reasonableness considerations)
Safeco Ins. Co. of Am. v. Criterion Inv. Corp., 732 F. Supp. 834 (E.D. Tenn. 1989) (recovery of expenses under indemnity where good faith)