United States District Court, D. Nevada
U.S. BANK, NA, Plaintiff,
RECOVERY SERVICES NORTHWEST, INC., d/b/a CUSTOM RECOVERY, et al., Defendants.
ORDER (ECF NOS. 67, 74, 81, 82, 102, 105, 106, 109,
112, 113, 115, 119, 127, 137)
P. GORDON UNITED STATES DISTRICT JUDGE
Bank, NA (“US Bank”) and Recovery Services
Northwest, Inc. (“Custom”) entered into several
agreements whereby Custom performed repossession services for
U.S. Bank. Each agreement obligated Custom to (1) reimburse
U.S. Bank for any costs or expenses it incurred as a result
of Custom's (or its subcontractor's) repossessions,
and (2) defend U.S. Bank should it ever be sued over
something Custom or its subcontractors did. U.S. Bank was
sued by one of its customers over a repossession. U.S. Bank
then brought this separate case seeking reimbursement from
Custom of its litigation costs incurred in that suit.
now moves for summary judgment, arguing there is no triable
issue as to either Custom's liability for U.S. Bank's
litigation costs or the amount of those costs. Custom opposes
on one narrow ground: It fulfilled its indemnification
obligation by hiring U.S. Bank an attorney in the underlying
action; thus, it cannot be liable for the expenses U.S. Bank
incurred when it decided to hire its own attorney.
undisputed evidence shows that U.S. Bank incurred litigation
costs as a direct result of Custom's subcontractor's
repossession, so Custom is liable whether or not it provided
U.S. Bank with an attorney. This is reason enough to find
Custom liable as a matter of law.
there are at least two other independent reasons that Custom
is liable under the parties' agreements. First, U.S. Bank
had the express right to hire its own counsel and bill Custom
for the fees under the agreement that was in effect at the
relevant time. Second, Custom breached its duty to defend by
failing to provide U.S. Bank with an adequate defense.
short, under multiple theories, any of which is enough on its
own, there is no genuine dispute that Custom is liable for
the litigation expenses that U.S. Bank incurred in the
underlying case. That leaves only damages. Custom does not
oppose U.S. Bank's evidence or its damage calculations,
so there is no triable issue of fact left for a jury. I
therefore grant summary judgment in favor of U.S. Bank.
Custom has also filed its own motion for summary judgment, a
motion for judicial estoppel, and motions challenging two of
Magistrate Judge Foley's orders. None of Custom's
motions has any merit, so I deny them.
U.S. Bank hires Custom to repossess cars, and the two parties
enter into an indemnification agreement.
2008, U.S. Bank entered into a contract with Custom calling
for Custom to repossess cars for U.S. Bank. This 2008
agreement also obligated Custom to “defend, indemnify
and hold [US Bank] harmless” for all “costs and
expenses (including reasonable attorney's fees)”
relating to Custom's repossessions (or any of its
subcontractors' repossessions). This obligation was
“notwithstanding any other provision” in the
agreement. However, if U.S. Bank was sued for one of
Custom's repossessions, Custom had the right to
“control . . . [the] defense and settlement
negotiations” in the case.
U.S. Bank is sued because Custom's subcontractor
allegedly botches a repossession of a BMW, and Custom takes
over U.S. Bank's defense.
of 2011, U.S. Bank was sued for claims arising from
Custom's repossession services. Custom's
subcontractor repossessed a BMW from one of U.S. Bank's
customers and a fight broke out. The BMW's owner sued
U.S. Bank, the subcontractor, and the subcontractor's
notified Custom of the lawsuit, but Custom did not
immediately take up U.S. Bank's defense. So while Custom
decided what to do, U.S. Bank hired its own counsel to defend
it. U.S. Bank's counsel successfully litigated a portion
of the lawsuit. Custom later decided it would defend U.S.
Bank and took over the defense. Custom-through a
subcontractor's insurer-substituted in Eugene Wait as
U.S. Bank's counsel.
point Custom washed its hands of U.S. Bank's case. Custom
admits that it had no involvement, whatsoever, in managing
Wait or ensuring that he provided an adequate defense for
U.S. Bank. Custom viewed its obligation to provide a
defense as fulfilled once it hired an attorney.
The parties enter into a new indemnification agreement
mid-litigation and U.S. Bank becomes unhappy with
months after Wait took over the defense, U.S. Bank and Custom
entered into a new agreement that “supersede[d] and
replace[d]” the 2008 agreement. This 2011 agreement
similarly obligated Custom to pay any losses U.S. Bank
suffered as a result of Custom's
repossessions. But the 2011 agreement took away
Custom's exclusive right to control the defense of any
lawsuits and gave U.S. Bank the right to retain its own
counsel at any time at Custom's expense.
the following ten months, U.S. Bank became increasingly
dissatisfied with Wait's representation-and for good
reason. Wait never disclosed any witnesses for U.S. Bank in
the case. He did not inform U.S. Bank about
important case events. He did not allow U.S. Bank to review
any draft pleadings or motions before they were
filed. Wait filed an answer on U.S. Bank's
behalf without ever actually showing it to U.S. Bank (or, for
that matter, telling U.S. Bank that an amended complaint had
been filed in the case). Wait then told U.S. Bank, his own
client, that U.S. Bank could not provide him with
instructions related to its own defense.
U.S. Bank substitutes new counsel in and wins on summary
told Custom that it was concerned about Wait's
representation, but Custom admits it did nothing in
response. It did not contact Wait or the insurer
to investigate U.S. Bank's complaints about its
defense. When the other defendants in the
case-who were also represented by Wait-started receiving
sanctions because of Wait's representation, U.S. Bank
fired him and hired its own counsel. U.S. Bank's new
counsel took over the case, resolved outstanding discovery
issues, and won a summary judgment motion that removed U.S.
Bank from the case without any liability.
continued to represent U.S. Bank's co-defendants. He lost
his motions for summary judgment filed on behalf of the other
defendants, and several more sanctions were entered against
the remaining defendants for failing to timely provide
discovery responses, failing to comply with the court's
orders, and failing to produce documents. The court at
one point noted that Wait “engaged in unnecessary
gamesmanship, which [resulted] in noncompliance with [the
court's] order.” The court imposed liability
against the remaining defendants, who ended up settling for
$300, 000 along with an assignment of malpractice claims
Summary judgment standard
judgment is appropriate when the pleadings and discovery,
“together with the affidavits, if any, show there is no
genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.” For summary
judgment purposes, the court views all facts and draws all
inferences in the light most favorable to the nonmoving
moving party demonstrates the absence of any genuine issue of
material fact, the burden shifts to the nonmoving party to
“set forth specific facts showing that there is a
genuine issue for trial.” The nonmoving party
“must do more than simply show that there is some
metaphysical doubt as to the material
facts.” She “must produce specific
evidence, through affidavits or admissible discovery
material, to show” a sufficient evidentiary basis on
which a reasonable fact finder could find in her
must support or refute the assertion of a fact with
admissible evidence. As the summary judgment procedure is the
pretrial functional equivalent of a directed-verdict motion,
it requires consideration of the same caliber of evidence
that would be admitted at trial. Thus, it is insufficient
for a litigant to merely attach a document to a summary
judgment motion or opposition without affirmatively
demonstrating its authenticity.
There is no triable issue of fact remaining as to whether
Custom is liable for U.S. Bank's litigation expenses in
the underlying lawsuit.
Bank's motion for summary judgment outlines its
relatively simple breach-of-contract theory and why no
triable issues remain in this case: (1) the indemnification
provisions in both the 2008 and 2011 agreements expressly
state that Custom must pay for all of U.S. Bank's losses
related to a lawsuit arising from Custom's repossession
services, and (2) U.S. Bank was sued for Custom's
repossession services and incurred attorney's fees and
costs. U.S. Bank supports its motion with evidence
establishing the terms of these agreements and the expenses
it paid its attorneys.
largely agrees with U.S. Bank's positions. Custom does
not dispute that U.S. Bank incurred costs in defending
against the underlying lawsuit, it does not dispute that the
underlying lawsuit arose from Custom's repossession
services, and it makes no real effort to dispute the extent
of U.S. Bank's expenses. Instead, Custom relies on a
single argument: the only agreement that U.S. Bank can sue
under is the 2008 agreement-and Custom fulfilled its
obligations under the 2008 agreement by providing U.S. Bank
with an attorney. Custom's argument fails for several
reasons, each enough on its own to warrant judgment for U.S.
U.S. Bank has established Custom's liability under the
repeatedly argues that the 2008 agreement governs U.S.
Bank's claims, but I disagree. U.S. Bank sued under the
2011 agreement, and Custom provides no analysis or authority
as to why U.S. Bank should be barred from doing so. The 2011
agreement expressly gives U.S. Bank the right to hire its own
counsel and bill Custom for the costs. Custom argues that its
obligations should be governed by the 2008 contract (which
was in existence at the time the underlying lawsuit was
filed) rather than the 2011 contract (which was in existence
at the time U.S. Bank elected to hire new counsel). But
Custom provides no authority for its argument either in the
language of the contracts or under governing
in the 2011 agreement suggests that the parties intended that
it not apply to lawsuits that had already been filed at the
time the 2011 agreement was signed. The language of the 2011
agreement suggests that the parties intended its terms to
apply to all lawsuits, existing or future ones. The agreement
explicitly states that it “supersedes and
replaces” the 2008 agreement in its entirety,
suggesting that the parties wanted the 2011 agreement to
govern all aspects of the parties'
relationship. The 2011 agreement also contains a
merger clause stating that it “supersedes all
prior” agreements and understandings between the
parties “without limitation.” The 2011
agreement uses broad language to obligate Custom to pay for
“any” of U.S. Bank's losses related to
“any third party claim.” There is no language
limiting Custom's obligations to only future cases, and
there is no language limiting U.S. Bank's right to select
its own counsel to only future cases. Custom provides no
other reason to think that the parties meant to carve out an
exception so that U.S. Bank's right to elect new counsel
would not apply to ongoing lawsuits. Because Custom has
failed to establish that the 2011 agreement does not govern
the parties' dispute here-and because Custom solely
relies on terms in the 2008 agreement to oppose U.S.
Bank's motion-this is enough to rule in favor of U.S.
2. U.S. Bank has established Custom's liability under
the 2008 agreement.
I were to agree that U.S. Bank must base its breach of
contract claim on the 2008 agreement alone, it would still be
entitled to summary judgment for at least two independent
reasons. First, regardless of whether Custom breached its
duty to defend U.S. Bank, Custom breached its duty to
indemnify U.S. Bank for its expenses resulting from
Custom's acts, which included U.S. Bank's
attorney's fees in the underlying litigation.
Custom's obligation to indemnify and hold harmless U.S.
Bank, and U.S. Bank's obligation to allow Custom to
control the defense of its lawsuits, are two separate
assumes that by complying with the duty to defend it has
per se complied with its duty to indemnify, but not
so. The duty to defend and the duty to indemnify are
distinct. The 2008 agreement states that
“notwithstanding any other provision” in the
agreement, Custom agreed to pay for all of U.S. Bank's
“costs and expenses (including reasonable
attorney's fees)” that arise from Custom's
repossessions. Nothing in the agreement suggests that
Custom's obligations to pay are contingent on U.S. Bank
not interfering with Custom's right to control the
defense. Perhaps Custom could have argued that U.S.
Bank's damages should be offset by any damage U.S. Bank
caused in breaching Custom's rights-but Custom never made
that claim, either in its ...