United States District Court, D. Nevada
before the court is plaintiff Old Republic Insurance
Company's motion for sanctions. (ECF No. 92). Defendants
City Plan Development, Inc., Ernesto Savino and Cynthia
Wilson (collectively, “defendants”) filed a
response (ECF No. 95), to which plaintiff replied (ECF No.
before the court is plaintiff's motion for attorney's
fees. (ECF No. 143). Defendants filed a response (ECF No.
145), to which plaintiff replied (ECF No. 146).
before the court is defendants' motion for attorney's
fees. (ECF No. 130). Plaintiff filed a response (ECF No.
137), to which defendants replied (ECF No. 144).
before the court is defendants' motion for leave to file
a surreply. (ECF No. 147). Plaintiff filed a response (ECF
No. 148), to which defendants replied (ECF No. 149).
before the court is an unopposed motion to continue calendar
call. (ECF No. 113).
City Plan Development, Inc. (d/b/a Savi Construction) is a
construction contractor that is licensed and operates in the
state of Nevada. Defendant entered into a contract with Clark
County to serve as general contractor on a public works
project to construct a fire station. In connection with the
project, plaintiff entered into a general agreement of
indemnity(“GAI”) with defendant and
issued a labor and material payment bond on behalf of
defendant as principal and contractor in the sum of $4, 196,
contains an indemnification provision that reads as follows:
Indemnification - The Indemnitor shall
continually indemnify and save the Surety harmless from and
against every claim, demand, liability loss, cost and expense
which the Surety may pay, sustain or incur in consequence of
having executed or procured the execution of bond(s), or the
failure of the Indemnitor, to perform or comply with the
covenants and conditions of this Agreement to enforce the
right of the Surety to any collateral taken specifically or
otherwise, to enforce any and/or all obligations of the
Indemnitor under this Agreement, or to defend any action(s)
against the Surety arising out of the execution of any
bond(s) on behalf of the Principal of the Surety's
exercise of any rights under this Agreement.
(ECF No. 143-2 at 4).
also contains a settlement provision, granting the surety
discretion to settle and compromise bond claims:
The Surety shall have the exclusive right for itself, the
Principal and the other Indemnitors to determine whether any
claim, demand, suit or judgment brought against the Principal
and/or Surety upon bond executed by the Surety shall on the
basis of liability, expediency or otherwise, be paid,
settled, defended or appealed and its determination shall be
conclusive upon the Principal and/or Indemnitor. Payment
shall be made by the Indemnitor to the Surety for 1. all
loss, cost and expenses as soon as the Surety becomes liable
there for whether actually paid by the Surety in whole, any
part thereof, or not, and; 2. Interest on any payments made
by Surety referred to in 1. above from the date of payment by
Surety until Surety is reimbursed by Indemnitor. The
Indemnitor agrees to accept the voucher or other evidence of
such payment as prima facie evidence of the propriety
thereof, and of the Indemnitor's liability therefore to
(ECF No. 143-2 at 4).
the course of the project, plaintiff received claims against
the payment bond from subcontractors and suppliers, alleging
non-payment by defendant. (ECF No. 143). Plaintiff retained
counsel (Jennings, Strouss & Salmon, PLC) in order to
investigate the claims and fulfill plaintiff's bond
requested a subcontractor payables list. Id. On
October 18, 2016, defendant provided plaintiff with a list
detailing subcontractor payables for the project.
Id. The list showed how much defendant owed each
subcontractor that defendant believed had a valid claim for
payment. Id. On November 4, 2016, defendant provided
plaintiff with a document entitled “Fire Station #16
Liabilities, ” dated October 25, 2016. Id. The
document detailed Savi Construction's subcontractor
liabilities for the contract. Id.
this time, the parties were engaged in settlement
negotiations. Id. After receiving the “Fire
Station #16 Liabilities” list, plaintiff alleges that
it received payment demands from parties not on the list, and
from a party on the list for an amount in excess of the
amount listed. Id. Thereafter, settlement
negotiations broke down. Id. The parties were later
instructed to participate in a mandatory settlement
conference in front of Magistrate Judge Koppe. Id.
Plaintiff alleges that on the eve of the settlement
conference, it received a payment bond claim for $120, 369,
which was not contained in the previously mentioned
subcontractor payables lists. Id.
contends that it paid payment bond claims filed by
subcontractors of Savi Construction and incurred bond losses
totaling $272, 819.03. Id.
4, 2017, the parties reached a binding settlement agreement.
(ECF No. 106). The agreement created a system whereby bonded
contract funds held by Clark County would be distributed to
plaintiff, defendant City Plan and the subcontractors on the
contract. (ECF No. 143). Plaintiff reserved its
indemnification claim against defendants which seeks to
recover expenses (including attorney's fees and costs)
resulting from claims made against the payment bond and
plaintiff's enforcement of its rights under the GAI and
the resulting litigation. (ECF No. 143).
Motion for sanctions
11 is an extraordinary remedy, one to be exercised with
extreme caution.” In re Keegan Mgmt. Co., Sec.
Litig., 78 F.3d 431, 437 (9th Cir. 1996) (quoting
Operating Eng'rs Pension Trust v. A-C Co., 859
F.2d 1336, 1345 (9th Cir. 1988)). The purpose of Rule 11 is
to deter baseless filings and litigation abuses. See
Smith & Green Corp. v. Trs. of Constr. Indus. &
Laborers Health & Welfare Tr., 244 F.Supp.2d 1098,
1103 (D. Nev. 2003). Further, Rule 11 addresses two separate
problems: “first, the problem of frivolous filings; and
second, the problem of misusing judicial ...