*Local Rule 47.5 provides: "The publication of opinions that

have no precedential value and merely decide particular cases on

the basis of well-settled principles of law imposes needless

expense on the public and burdens on the legal profession."

Pursuant to that Rule, the Court has determined that this opinion

should not be published.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 94-20618

(Summary Calendar)

TRANSAMERICA INS. CO.,

Plaintiff-Appellee,

versus

PAUL R. AVENELL and GAYLE AVENELL,

Defendants-Appellants.

Appeal from the United States District Court

For the Southern District of Texas

(CA-H-93-2789)

August 17, 1995

Before DUHÉ, WIENER, and STEWART, Circuit Judges:

PER CURIAM*:

This appeal arises from an indemnity dispute between

Defendants-Appellants Gayle and Paul R. Avenell and PlaintiffAppellee Transamerica Insurance Company (Transamerica).

Transamerica filed suit and moved for summary judgment, contending

that the Avenells had breached their obligations under an indemnity
2

contract. The Avenells responded that (1) all conditions precedent

to the contract had not been met, (2) the indemnity contract was

unconscionable, and (3) the indemnity contract was void as against

public policy. We find the Avenells contentions devoid of merit

and affirm the district court.

I.

FACTS AND PROCEEDINGS

The following facts are not in dispute. Mr. Avenell is the

President and owner of Tacon Mechanical Contractors, Inc. (Tacon).

Transamerica, acting as surety, provides payment and performance

bonds to contractors and subcontractors in connection with

construction projects. Tacon subcontracted to perform the heating,

ventilating, and air conditioning work for Cahaba Construction

Company (Cahaba) in the construction of New Caney High School (NCHS

job). In turn, Tacon sub-subcontracted with Grant Sheet Metal,

Inc. (Grant) for the fabrication and installation of the duct work

on the NCHS job. Transamerica issued a performance bond and a

labor and material payment bond to secure Tacon's obligations under

its subcontract with Cahaba. As part of Transamerica's

consideration for issuing these bonds on behalf of Tacon, Mr.

Avenell executed an agreement (Indemnity Agreement) obligating both

Tacon and the Avenells, personally, to indemnify Transamerica

against any loss Transamerica might incur under the NCHS bond.

A dispute arose between Tacon and Grant over payment and

performance at the NCHS job. Tacon dismissed Grant from the NCHS

job and secured other contractors to complete the work. Grant
 

1 Tacon Mechanical Contractors, Inc. v. Grant Sheet Metal,

1993 WL 331790 (Tex.App.--Houston [14th Dist.] 1993).

3

filed suit (Grant litigation) against Tacon and Cahaba's surety,

Seaboard Surety Company (Seaboard). In January 1993, the 55th

Judicial District Court of Harris County, Texas entered final

judgment on the jury verdict in favor of Grant, casting Tacon and

Seaboard in judgment. In March 1993, Cahaba made demand on Tacon

to pay the judgments. Tacon, however, had filed for bankruptcy and

could not pay the judgment. Cahaba notified Transamerica that, as

Tacon's surety, it was responsible for the judgment. 

Tacon and Seaboard appealed from the judgment in the Grant

litigation. In September 1993, however, Cahaba and Seaboard

decided to settle with Grant and secured dismissal of Seaboard from

the appeal.1 Not interested in settlement, Tacon elected to

continue the appeal alone and wrote to Transamerica demanding that

it make no payments on any claims arising from the Grant

litigation. But as Tacon neither requested Transamerica to conduct

the appeal nor posted a security bond to obtain Transamerica's

assistance in the appeal, Transamerica proceeded to settle with

Cahaba and Seaboard, paying them $79,000.00 and $241,000.00,

respectively.

Having paid on the bonds, Transamerica looked to the Avenells

for indemnification, but they refused to indemnify Transamerica.

In September 1993, Transamerica filed this lawsuit against the

Avenells in federal district court, basing jurisdiction on

diversity and alleging breach of the Indemnity Agreement. In March
 

2 See Tacon Mechanical Contractors, Inc. v. Grant Sheet Metal,

Inc., 889 S.W.2d 666 (Civ.App.--Houston [14th Dist.] 1994, writ

requested). 

4

1994, Transamerica filed a motion for summary judgment on all

claims, supporting its motion with proper affidavits and exhibits.

The Avenells responded, contending that (1) all conditions

precedent to the Indemnity Agreement had not been met, (2) the

Indemnity Agreement was unconscionable, and (3) the Indemnity

Agreement was void as against public policy. In support of their

contentions, the Avenells presented the district court with (1) an

affidavit by Paul Avenell, (2) a copy of their brief to the Texas

Court of Appeals in the Grant litigation, and (3) a photocopy of

the letter to Transamerica, demanding that it not pay any claims

arising out of the Grant litigation. 

In May 1994, the district court granted summary judgment in

favor of Transamerica, concluding that the Avenells had failed to

produce evidence that would allow a reasonable juror to find in

favor of the Avenells. The Avenells timely appealed. 

In December 1994, during the pendency of this appeal, the

Texas Court of Appeals for the Fourteenth District affirmed the

judgment in the Grant litigation, but declined Grant's request to

assess the Avenells a frivolous appeal penalty.2 Tacon then filed

an application for writ of error with the Texas Supreme Court.

That court has ordered Grant to respond. As of this writing, the

Texas Supreme Court has yet to act on this writ.
 

3 Berry v. Armstrong Rubber Co., 989 F.2d 1408, 1412 (5th Cir.

1993); Fraire v. City of Arlington, 957 F.2d 1268, 1273 (5th

Cir.)(citations omitted), cert. denied, -- U.S. --, 113 S.Ct. 462,

121 L.Ed.2d 391 (1992).

 

4 Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.

1988.

 

5 Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548,

2558, 91 L.Ed.2d 265 (1986)

 

6 Id. at 322, 106 S.Ct. at 2553-54; see also, Moody v.

Jefferson Parish School Board, 2 F.3d 604, 606 (5th Cir. 1993);

Duplantis v. Shell Offshore, Inc., 948 F.2d 187, 190 (5th Cir.

1991).

5

II.

ANALYSIS

A. STANDARD OF REVIEW

We review the district court's grant of a motion for summary

judgment de novo, applying the same standard as the district court

applied.3 Questions of law are decided just as they are outside of

the summary judgment context: de novo.4 

B. BURDENS OF PROOF

When seeking summary judgment, the movant bears the initial

responsibility of demonstrating the absence of a genuine issue of

material fact with respect to those issues on which the movant

bears the burden of proof at trial.5 For any matter on which the

non-movant would bear the burden of proof at trial, however, the

movant may merely point to the absence of evidence and thereby

shift to the non-movant the burden of demonstrating by competent

summary judgment proof that there is an issue of material fact

warranting trial.6 Only when "there is sufficient evidence

favoring the nonmoving party for a jury to return a verdict for
 

7 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106

S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

 

8 See generally, Ford v. Aetna Ins. Co., 394 S.W.2d 693 (Civ.

App.--Corpus Christi 1965, writ ref'd n.r.e.)(discussing the

enforceability of indemnity agreements under Texas law).

6

that party" is a full trial on the merits warranted.7 

C. BREACH OF CONTRACT

Despite its complex factual and procedural history, this case

presents a straight-forward breach of contract claim. To prevail

at the summary judgment stage, Transamerica's evidence must

establish every element of its claim. Under the Texas law of

indemnification, Transamerica must establish five elements: (1) a

contractual indemnity agreement existed between the Avenells and

Transamerica, (2) the agreement obligated the Avenells to indemnify

Transamerica in the event claims were made on the bonds issued to

Tacon, (3) claims were made on the bonds issued to Tacon, (4) all

conditions precedent for recovery had occurred, been performed,

waived, or excused; an (5) Transamerica has been damaged.8

The Avenells contest only the fourth element, arguing that all

conditions precedent have not occurred. In particular, the

Avenells contend that a final judgmentSQno longer appealable and

currently executorySQin the Grant litigation is a condition

precedent to Transamerica's recovery for breach of contract.

According to the Avenells, until the Grant litigation is thus final

and executory, Transamerica is premature in seeking to recover on

the Indemnity Agreement. In addition to this basic premise, the
 

9 We deliberately use the procedurally ambiguous term

"corollaries," rather than more precise procedural language such as

"affirmative defense", "counter-claim", or "motion to dismiss", as

it is unclear to us how the Avenells regard these arguments. In

their answer and response to motion for summary judgment, these

corollaries are labelled affirmative defenses. In their brief to

us, the Avenells refer to these same corollaries as counter-claims.

 

10 See Ford, 394 S.W.2d at 697-98; English v. Century Indemnity

Co., 342 S.W.2d 366, 369 (Civ.App.--San Antonio 1961, no writ).

7

Avenells advance two corollaries.9 In the first, they contend

that, as the finality of the Grant litigation was a condition

precedent, Transamerica acted in bad faith by settling the Grant

litigation. In the second, they reason that, as the Grant

litigation precludes the instant action, the district court erred

in not granting the Avenells' plea in abatement. We disagree with

both the general premise and the corollaries derived therefrom.

1. Condition Precedent 

Among its summary judgment exhibits, Transamerica submitted an

authenticated copy of the Indemnity Agreement. Provision 13 of the

Indemnity Agreement, entitled "Settlements," provides:

[Transamerica] shall have the right to adjust, settle or

comprise any claim, demand, suit or judgment upon the

Bonds, unless [Tacon] and the [Avenells] shall request

[Transamerica] to litigate such a claim or demand, or

defend such suit, or to appeal from such judgment, and

shall deposit with [Transamerica], at the time of such

request, cash or collateral satisfactory to

[Transamerica] in kind and amount, to be used in paying

any judgment or judgments rendered or that may be

rendered, with interest, costs, expenses and attorneys'

fees, including those of [Transamerica]. 

Under Provision 13, Transamerica had no duty to seek Tacon's or the

Avenells' approval before paying claims on the bonds.10 To the

contrary, that provision imposes a two-prong condition precedent on
8

the Avenells: If they wanted to preclude any such action by

Transamerica, the Avenells had to (1) request litigation or

defense, and (2) post security. They did neither.

The Avenells admit in their brief that they neither asked

Transamerica to oppose the claims nor posted security to cover

Transamerica's exposure. Although the Avenells demanded that

Transamerica not settle the case, absent compliance with their own

conditions precedentSQan affirmative request for defense and

adequate securitySQthat demand was legally ineffectual. The

Indemnity Agreement does not obligate Transamerica to hear, much

less honor, such a demand unless it is accompanied by security.

Neither does it proscribe payment or settlement of claims if such

claims are being litigated. Consequently, we hold that under the

terms of the Indemnity Agreement, the finality of the Grant

litigation was not a condition precedent to Transamerica's right to

settle and, to the contrary, that a request for defense and the

posting of security by Tacon were conditions precedent to its right

to prevent Transamerica from settling. Thus Tacon's unaccompanied

demand that Transamerica make no payments in settlement could notSQ

and did notSQdefeat Transamerica's claim or preclude summary

judgment in this case. 

2. Other Conditions Precedent

The Avenells have identified no other conditions precedent

that would prevent summary judgment. Transamerica presented the

affidavit of Rona Endicott, detailing Transamerica's action

preceding settlement and averring that all conditions precedent to
9

the contract have been met. The Avenells have failed to identify

in their answer to the complaint, their response to Transamerica's

motion for summary judgment, or their brief to us, any putative

condition precedent (other than the Grant litigation) that might

prevent summary judgment. Neither have the Avenells offered any

summary judgment evidence to support their conclusionary

declaration that all conditions precedent have not been performed

or occurred, or have been waived. Therefore, we hold that

Transamerica has established that no conditions precedent remain

unfulfilled to preclude the grant of summary judgment in this case.

Moreover, as the Avenells dispute no other element of

Transamerica's indemnity claim, Transamerica has discharged its

initial burden as the party moving for summary judgment. We find

no genuine issue of material fact with respect to those issues on

which Transamerica bears the burden of proof. Only if the Avenells

can raise an issue of fact on one of their corollaries can summary

judgment be averted.

3. The Corollary Arguments

As mentioned above, the Avenells derive two corollaries from

their basic argument that the Grant litigation is a condition

precedent. Although the Avenells affix many different and

incorrect procedural labels to each of these subsidiary arguments,

both the general premise and the corollaries have the same theme:

the Grant litigation somehow precludes Transamerica's breach of

contract claim. As we disagree with the premise, it follows, as

the night the day, that we disagree with the corollaries derived
 

11 Black's Law Dictionary 1151-52 (6th ed. 1990).

 

12 28 U.S.C. § 2072 (West 1994).

 

13 See Fed.R.Civ.P. 7(c).

 

14 See Fed.R.Civ.P. 12(b) & 41.

10

therefrom. In the interest of completeness, however, we shall

briefly address the corollaries. 

a. Plea in Abatement: Same Song, Second Verse

The Avenells contend that the district court erred by failing

to grant their "plea in abatement." We disagree. The plea in

abatement is an archaic common law pleading which, "without

disputing the merits of the plaintiff's claim, objects to place,

mode, or time of asserting it."11 With the adoption of the Federal

Rules of Civil Procedure in 1938, and pursuant to the Rules

Enabling Act,12 the Supreme Court abolished the plea in abatement13

and replaced it with motions to dismiss under Federal Rules of

Civil Procedure 12(b) or 41.14 We therefore assume that the

Avenells' plea is an attempt to have this case dismissed until the

Grant litigation achieves finality. As we stated above, however,

absent a Provision 13 request and security from the Avenells, the

Grant litigation presents no bar, procedural or substantive, to

this litigation. We affirm the district court's denial of the

Avenells' plea in abatement. 

b. Bad Faith: Last Verse, Same as The First

In their second corollary, the Avenells argue that

Transamerica, by settling prior to the finality of the Grant

litigation, acted in bad faith. We again disagree. As discussed
 

15 See Firemen's Fund Ins. Co. v. Commercial Standard Ins. Co.,

490 S.W.2d 818, 824 (Tex. 1972)(settling indemnitee can recover

upon proof of his "potential liability" as well as the

reasonableness of the settlement between himself and the third

party); H.M. Ford v. Aetna Ins. Co., 394 S.W.2d 693 (Tex.Civ.App.--

Corpus Christi 1965)(purpose of indemnity contract is to protect

surety; surety was not precluded from recovering on indemnity

contract on ground that it had not acted in good faith in paying

various sums under the performance and payment bonds insured by

it).

 

16 Krim v. BancTexas Group, Inc. 989 F.2d 1435, 1441-42 (5th

Cir. 1993)(citations omitted); Mayo v. Tri-Bell Indus., Inc., 787

F.2d 1007, 1012 (5th Cir. 1986).

11

above, the Indemnity Agreement unambiguously and unequivocally

spelled out for the Avenells the necessary steps to take if they

wanted to prevent Transamerica's settling with the bond obligees.

The Avenells did not take these steps. Neither have the Avenells

offered any summary judgment evidence supporting their

conclusionary allegations of bad faith. According to

Transamerica's uncontroverted summary judgment evidence, it

exercised its rights under the Indemnity Agreement in good faith

and settled with Grant on behalf of its bond beneficiaries,

Seaboard and Cahaba.15 We find no factual support for the Avenells'

allegations of bad faith, the burden of proof for which they bear.

In an effort to excuse the absence of such evidence, the

Avenells contend that the district court should have granted a

continuance for additional discovery. The standard by which we

review the district court's denial of a continuance for additional

discovery is abuse of discretion, and we will affirm that denial

unless it is arbitrary or clearly unreasonable.16 The district
 

17 See Tex. Const. art. XVI, §§ 50-52.

12

court did not abuse its discretion. The only unreasonable conduct

that we discern here is the neglect and inattention exhibited by

the Avenells. Summary judgment was rendered nine months after this

suit was filed and two months after the motion for summary judgment

was filed; yet, during this entire time the Avenells made no

attempt to conduct discovery. Our review of the district court

docket reveals that, despite having notice of all discovery

deadlines since the suit was filed, the Avenells failed to comply

with the district court's discovery plan in any respect. The

Avenells failed to depose -- indeed, they failed even to request to

depose -- a single Transamerica agent or employee. The Avenells

had more than sufficient time in which to develop evidence of

Transamerica's alleged bad faith, but failed to exercise their

rights in a timely manner. As the only barrier to discovery was

the Avenells' lack of diligence, we see no abuse of discretion by

the district court and affirm its denial of the continuance.

D. VOID AS AGAINST PUBLIC POLICY

The Avenells assert that the Indemnity Agreement was against

public policy and therefore void, as it requires them to waive

their homestead rights in violation of the Texas Constitution.17

Transamerica counters that the following provision of the Indemnity

Agreement, an "invalidities clause," protects against nullity of

the entire contract:

[i]n case any of the parties mentioned in this agreement

fail to exercise the same, or in case the execution

hereof by any of the parties be defective or invalid for
 

18 Panasonic Co. v. Zinn, 903 F.2d 1039, 1041 (5th Cir. 1990).

 

19 See, e.g., Temple-Eastex v. Addison Bank, 672 S.W.2d 793

(Tex. 1984). 

13

any reason [such as where a state's laws might cause the

Agreement to be otherwise invalid], such failure, defect

or invalidity shall not in any manner affect the validity

of this Agreement or the liability hereunder of any of

the parties executing the same, but each and every party

executing shall be and remain fully bound and liable

hereunder to the same extent as if such failure, defect

or invalidity had not existed.

Transamerica explains that this clause is so designed that, if any

provision of the contract violates a specific state law, the

offending provision is automatically stricken from the agreement as

though never written therein, and the rest of the contract remains

in full effect, albeit free of the offending provision. On the

other hand, the Avenells contend that the invalidities clause

applies only when execution by one of the parties is defective and

is thus inapplicable here. 

Transamerica's reading of the invalidities clause is correctSQ

and the Avenells' incorrectSQfor two reasons: First, "where the

subject matter of the contract is legal, but the contract contains

an illegal provision . . . the illegal provision may be severed and

the valid portion of the contract enforced."18 This is especially

true when, as here, the contract itself expressly contemplates and

provides for the severance of an illegal provision. Second, a

basic tenet of contractual construction holds that, whenever

feasible, an agreement is to be interpreted in a manner that

renders performance possible rather than impossible.19 The

Avenells' construction would render the Indemnity Agreement
14

nugatory. Such a result cannot be what the parties intended. We

conclude that the invalidities clause severs the homestead waiver

provision from the Indemnity Agreement: No lien is created against

the Avenells' homestead, but neither is the entire agreement

invalidated by its presence. Thus the Indemnity Agreement is not

void under Texas law. We affirm the district court's construction

of the invalidities clause.

E. ATTORNEY'S FEES

Finally, the Avenells assert that the attorney's fee affidavit

submitted by Transamerica is insufficient to justify an award of

$69,983.05. Rule 56(e) requires that, when a motion for summary

judgment is made and supported, an adverse party may not rest on

mere allegations and denials; rather the adverse party's response

must, by competent summary judgment evidence, set forth specific

facts showing that there is a genuine issue of fact for trial.

The Indemnity Agreement expressly provides for attorneys' fees

and costs. Counsel for Transamerica submitted a detailed affidavit

listing his activities in preparation for the case, including the

number of hours worked, the number of hours he anticipated working

on the appeal, and his hourly rate. In their only reference to

Transamerica's attorney's fees, the Avenells state in response to

the motion for summary judgment that "[d]efendant should certainly

not be required to pay any attorney fees to Transamerica as

requested." We belabor the obvious: This bald assertion does not

create a genuine issue of material fact. The Avenells neither

disputed nor produced evidence questioning the contents of Mr.
 

20 Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992)

(Court of Appeal's inquiry is limited to summary judgment record

before trial court; parties cannot add exhibits, depositions, or

affidavits to support their position on appeal, nor may parties

advance new theories or raise new issue to secure reversal);

McQueen Contracting v. Fidelity & Deposit Co., 863 F.2d 1216, 1219

(5th Cir. 1989)(party may not wait until trial or appeal to develop

claims or defenses in response to summary judgment motion).

15

Ryman's affidavit. The Avenells' failure to contest any particular

aspect of Transamerica's attorney's fee award waives this issue on

appeal.20 Accordingly, we affirm the district court's award of

attorney's fees.

III.

CONCLUSION

For the foregoing reasons we find that each of the Avenells'

assertions of error is either devoid of merit or has been waived.

As a result, the judgment of the district court is, in all

respects, 

AFFIRMED.