NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

GUARANTEE COMPANY OF NORTH AMERICA USA, a Michigan corporation,

Plaintiff

- Appellee,

v. FALCONE BROTHERS & ASSOCIATES, INC., an Arizona corporation; et al.,

Defendants

- Appellants. No. 20

- 15317
D.C. No. 4:18

- cv - 00157

- FRZ

MEMORANDUM *

Appeal from the United States District Court for the District of Arizona Frank R. Zapata, District Judge, Presiding Submitted February 4, 2021 * * Phoenix, Arizona Before: W. FLETCHER, MILLER, an d HUNSAKER, Circuit Judges. In this diversity action, Falcone Brothers & Associate s , Inc. and related
entities (collectively, Falcone) app eal the district court’s order granting summary judgment to plaintiff Guarantee Company of North America USA (GCNA)

.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). 

# FILED

FEB 22 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

GCNA issued surety bonds to help Falcone secure public construction projects
with the c ity of Tucson, Arizona . When Falcone failed to pay its suppliers, GCNA became liable to pay them , and GCNA sought reimbursement from Falcone under an indemnity provision in the ir contract

. See A.R.S. § 34

- 222(A)(2). The district court awarded GCNA its full costs and attorney ’s fees associated with paying the suppliers and defending related lawsuits , including one brought by Cemex Construction Materials South, LLC . We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. The district court correctly awarded GCNA its costs and fees. Falcone
admits that it is liable to GCNA but argues that because the indemnity provision is “general” and not “specific” under Arizona law, GCNA may not recover losses caused by its “active ” negligence

. Pioneer Roofing C o. v. Mardian Constr. Co ., 733 P.2d 652 , 671

– 72 ( Ariz. Ct. App. 19 86). W e need not decide whether the provision is general or specific because Falcone has not presented material facts showing that GCNA committed any active negligence

. Falcone’s first theory is that GCNA was actively negligent when it provided
its certification to Tucson to release the final payment to Falcone, even though GCNA knew about Cemex ’s pending claim. But Falcone points to no authority showing that GCNA had a d uty to refrain from providing that certification, or that
the certification was a representation that the project was claim

- free. The statute3

that requires Arizona municipalities to with hold a retention pending project completion , A.R.S. § 34

- 221(C), says nothing of the sort

. GCNA’s certification
also does not say the project is claim

- free; it simply indicates that Falcone should receive its final payment. And F alcone does not claim that it failed to fully perform under its contract with Tucson , such that the certification might have been false. Falcone points only to a declaration from its president to show that it relied on GCNA’s certification as an assurance that there were no outstanding claims

. However, that declaration does not show that GCNA had a duty to refrain from providing the certification and therefore breached that duty. Falcone invokes a surety’s duty to act in good faith to wards its principal, see Dodge v. Fid

. & Deposit
Co ., 778 P.2d 1240, 124 2

– 4 3 (Ariz. 1989) (in banc) , but i t would be anomalous for that duty to require GCNA to take actions to prevent Falcone from being paid for its work. The contract between the parties, which “significantly influences” the
extent of GCNA’s duty, Diaz v. Phoenix Lubrication Serv., Inc ., 230 P .3d 718 , 722 ( Ariz. Ct. App. 2010), contains no such indication. Even if Falcone could establish a duty, it cannot show that GCNA’s certification caused GCNA’s losses. Falcone says that it relied on GCNA’s certification that there were no pending claims, but as Falcone concedes, it knew about Cemex’s claim

— it just believed it had a defense to that claim. Falcone says that if GCNA had not provided its certification , the “ retention would not have been4

released by the City of Tucson and a fund would exist from which Cemex could recover if it proved the validity of its claim.” But a fund did exist

— Falcone possessed it. Last, Falcone says that “GCNA was convinced that Cemex’s claim was invalid and participated in the Cemex Litigation,” and thereby accrued years
of costs. But the premise of Falcone ’s defense in that lawsuit

— Falcone’s lack of
notice

— had nothing to do with GCNA , which tendered its defense to Falcone

. S ee Cemex Constr. Materials S., LLC v. Falcone Bros. & Assocs., Inc ., 2017 WL 5054218 (Ariz. Ct. App. Nov. 3, 2017) (unpublished)

. N o evidence su ggests that
the certification is what legally caused GCNA’s losses. Falcone’s second theory is that GCNA should hav e unilaterally paid off the Cemex claim instead of allowing it to go to litigation. But as with its first theory, Falcone provides no evidence that GCNA had any obligation to do so, or that this decision legally caused the relevant losses. Falcone had equa l authority to settle the
claim : I t initially owed the amount due; it contrived the legal theory that ultimately lost; and it conducted the litigation throughout those six years. Even if GCNA ’s
decision not to intercede in Falcone ’s legal defense could be considered negligent,
it would be only “passive” negligence tantamount to a “failure to discover a dangerous condition” or “take adequate precautions” against the prospect that Cemex would prevail. See Estes Co. v. Aztec Const r ., Inc ., 677 P.2d 939, 942 (Ariz. Ct. App. 1983). GCNA is entitled to full recovery.5

2. The district cour t did not abuse its discretion in awarding GCNA its
full attorney ’s fees. See Charles I. Friedman, P.C. v. Microsoft Corp. , 141 P.3d 824, 830 (Ariz. Ct. App. 2006)

. Under Arizona law, if a surety incur s an expense , “the only way in which it can be attacked by the indemnitor is through a plea and proof of bad faith in the payment.” J.D. Halstead Lumber Co. v. Hartford Acc ident
& Indem. Co. , 298 P. 925 , 928 ( Ariz. 1931). Falcone does not allege bad faith in
connectio n with GCNA’s attorney ’s fees , n or does it dispute that GCNA is entitled to recover them. Rather, without contesting the validity of any specific payments, Falcone argues that GCNA’s fees are generally unreasonable because GCNA
tendered its defense in the Cemex litigation to Falcone. “The general rule is that attorney’s fees and costs are recoverable as part of the indemnification.” Schweber Elecs. v. Nat’l Semiconductor Corp ., 850 P.2d 119, 125 (Ariz. Ct. App. 1992). While the district court had discretio n to limit any such
award to a reasonable amount , Geller v. Lesk , 285 P.3d 972, 976 ( Ariz. Ct. App. 2012), as amended (Sept. 26, 2012) , abrogated in part on other grounds by
Am erican Power Prods. , Inc. v. CSK Auto, Inc. , 396 P.3d 600 , 604 (Ariz. 2017) , Falcone has failed to prove that GCNA’s fees were unreasonable

. Just because GCNA tendered its defense to Falcone does not mean that GCNA could not represent its interests in a lawsuit in which it was a named defendant. Given that the litiga tion lasted more than six years and included two trials, two appeals, and a6

petition for certiorari, we discern nothing clearly excessive about GCNA’s total
fees , especially considering the adversarial aspects of GCNA and Falcone’s joint
defense.
AFFIRMED
.