IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

April 13, 2000 Session

OLD REPUBLIC SURETY COMPANY v. MORRIS ESHAGHPOUR

Appeal from the Circuit Court for Davidson County

No. 98C-1087 Walter C. Kurtz, Judge

No. M1999-01918-COA-R3-CV - Filed November 30, 2001

The defendant purchased a building permit bond from the plaintiff surety company and executed an

indemnity agreement to hold the surety harmless against all loss, liability and expenses the company

might sustain on the bond. A claim was made against the bond regarding a home built by the

defendant. The surety company notified the defendant, investigated the claim, and eventually settled

with the claimant. In this lawsuit to collect under the indemnity agreement, the trial court granted

summary judgment to the surety. The defendant argues that summary judgment was inappropriate

because the motion was not properly supported according to the Rules of Civil Procedure and,

alternatively, the issue of whether the surety acted reasonably and in good faith in settling the claim

precludes summary judgment. We disagree and affirm the summary judgment on the issue of

liability, but remand for proof on total damages.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Affirmed in part, Vacated in part and Remanded

PATRICIA J. COTTRELL J., delivered the opinion of the court, in which WILLIAM C. KOCH, JR., and

WILLIAM B. CAIN, JJ., joined.

Todd E. Panther, Nashville, Tennessee, for the appellant, Morris Eshaghpour.

Melissa Kurtz, Nashville, Tennessee, for the appellee, Old Republic Surety Company.

OPINION

The Defendant/Appellant, Morris Eshaghpour, is the owner of Morris Eshaghpour

Construction Company (“MECC”). Plaintiff/Appellee, Old Republic Surety Company, issued a

surety bond on behalf of MECC in 1990. The permit bond was required by the Metropolitan

Government of Nashville and Davidson County; the government, specifically, the Department of

Codes Administration, was the obligee, and the bond was “for the benefit of the Metropolitan

Government, and for the benefit of the owners of property on which work is performed by the

Principal pursuant to a permit issued under this bond . . . .” Mr. Eshaghpour executed an indemnity
2

agreement in which he agreed, inter alia:

(2) To indemnify the Company [Old Republic] and hold it harmless against all loss,

liability, costs, claim damages, and expense, internal or external of whatever kind and

nature including but not limited to investigative, accounting, engineering, the fee and

disbursement of counsel whether salary, retainer or otherwise which the Company

may sustain or incur for or by reason of said Company writing said bond(s);

(3) If requested, to place the Company in funds immediately to meet any claim or

demand before the Company shall be required to make payment

. . . .

(7) To authorize the Company to adjust, settle or compromise any claim, demand,

suit or judgment upon said bond(s) and defend such suit and appeal such judgment

or at its election to have the case, cross-action or proceeding, or any part of it or them

dismissed or any appeal, writ of error, certiorari or any part thereto dismissed . . . .

. . . .

(11) In the event of any payment by the Company, Indemnitors agree to pay the

Company interest at the prime rate plus 2% (unless prohibited by law, then at the

maximum rate allowed) charged at a major bank located in the State in which

Indemnitors reside.

A claim was made against the permit bond by Ms. Moyer who bought a house built by

MECC. The Department of Codes Administration, the obligee under the permit bond, inspected Ms.

Moyer’s property, notified Old Republic of the deficiencies and directed Old Republic, as surety,

to make the necessary repairs. After a series of communications, set out later in this opinion, the

final result was that Old Republic paid for the repairs to Ms. Moyer’s house and sued Mr.

Eshaghpour for reimbursement under the indemnity agreement. 

The trial court granted summary judgment to Old Republic in the amount of $17,220.88 plus

attorneys fees of $2,237.50. Mr. Eshaghpour appeals and argues that the summary judgment should

not have been granted because the motion was not properly supported and because the issue of Old

Republic’s good faith involves factual questions which are inappropriate for summary judgment.

I.

Because of the nature of Mr. Eshaghpour’s arguments, analysis of the issues in this appeal

is best approached by first identifying the facts which are material to the question of whether Old

Republic is entitled as a matter of law to judgment. Which facts are relevant depends, of course, on

the legal questions presented. 
1

In Tenn. Code Ann. § 47-1-201(19), Tennessee adopted the Uniform Commercial Code’s definition of

good faith, “honesty in fact in the conduct or transaction concerned.” 

3

It is undisputed that Mr. Eshaghpour executed the indemnity agreement attached to the

complaint and quoted earlier in this opinion. In this lawsuit, Old Republic seeks to enforce the

agreement to reimburse it for expenses related to claims against the bond. Generally, there are two

recognized defenses an indemnitor can raise when a surety seeks reimbursement for claims settled

over the principal’s protest: (1) that the surety did not settle in good faith or (2) that the surety did

not act in a reasonable and prudent manner. John Hinchey, Surety’s Performance Over Protest of

Principal: Considerations and Risks, 22 TORT & INS. L.J. 133, 148 (1986). Jurisdictions vary in

whether only the lack of good faith defense is available or whether the surety is also held to a

reasonableness standard. Id. Tennessee law requires that, in order for a surety to recover under an

indemnity agreement, the surety must act both reasonably and in good faith. Feld Truck Leasing v.

ABC Transnational Transp., 681 S.W.2d 554, 556 (Tenn. Ct. App. 1984); Central Towers

Apartments, Inc. v. Martin, 61 Tenn. App. 244, 262, 453 S.W.2d 789, 799 (Tenn. Ct. App. 1969);

Gulf Ins. Co. v. Construx, Inc., No. M1999-02803-COA-R3-CV, 2001 WL 840240, at *17 (Tenn.

Ct. App. Jul. 26, 2001) (no Tenn. R. App. P. 11 application filed). 

An indemnity agreement is subject to the general law of contracts, and every contract

contains an implied obligation of good faith and fair dealing in its performance and enforcement.

2 PERILLO AND BENDER, CORBIN ON CONTRACTS § 5.27, at 139 (rev. ed. 1995). Thus, “[t]here is

no doubt that, in performance of its duty to indemnify the insured, the insurer is bound to exercise

“good faith” and to act fairly in the interest of the insured.” 3 ARTHUR L. CORBIN, CORBIN ON

CONTRACTS § 572A, at 355 (1960).

Our Supreme Court has defined the scope of the good faith obligation in other commercial

settings. In Lane v. John Deere Co., 767 S.W.2d 138 (Tenn. 1989), the Court stated, “The good faith

requirement [in the UCC’s acceleration of a debt provision] . . . imposes ‘an honest intention to

abstain from taking any unconscientious advantage of another, even through the forms and

technicalities of the law.’” Id. at 140 (citations omitted). Additionally, as the trial court herein

noted, the Court in another commercial context has accepted that “bad faith can be defined as a

knowing or reckless disregard of a customer’s rights.” Glazer v. First Am. Nat’l Bank, 930 S.W.2d

546, 550 (Tenn. 1996). In its opinion in that case, the Court acknowledged that Tenn. Code Ann.

§ 47-1-201(19), the UCC’s definition of good faith,1 makes a party’s “good faith” dependent upon

its “honesty.” The Court found, however, that “the word ‘honesty,’ which is not defined in the code,

is susceptible to more than one definition.” Id. at 549.

As our Supreme Court did in Glazer, courts have sometimes sought guidance in defining

good faith in the Uniform Commercial Code’s definition. With regard to that definition:

The Second Restatement of Contracts defines good faith in essentially the same terms

as the UCC. One portion of the comment to Restatement of Contracts § 205 explains

that “[g]ood faith performance or enforcement of a contract emphasizes faithfulness
4

to an agreed common purpose and consistency with the justified expectations of the

other party; it excludes a variety of types of conduct characterized as involving ‘bad

faith’ because they violate community standards of decency, fairness or

reasonableness.” The invocation of community standards of reasonableness suggests

good faith necessarily incorporates an objective, almost tortlike measure, not

withstanding the ostensibly subjective (“honesty in fact”) language of the Article 1

definition. And the Restatement of Contracts comment confirms that a

reasonableness analysis is appropriate.

PETER A. ALCES, THE LAW OF SURETYSHIP AND GUARANTY ¶ 3.01[2][a][ii] (1997) (footnotes

omitted).

Essentially, a surety has a duty to reasonably investigate the claim, counterclaim and all

possible defenses and act in good faith in settling a claim. Southern Fire & Cas. Co. v. Norris, 35

Tenn. App. 657, 668, 250 S.W.2d 785, 790 (Tenn. Ct. App. 1952); United States of Am. for the use

of the Trustee of the Elec. Workers Local Pension Fund v. D Bar D Enter., Inc., 772 F. Supp. 1167,

1170 (D. Nev. 1991). The indemnitor has the concomitant duty to fully cooperate with the surety.

Southern Fire & Cas., 35 Tenn. App. at 668, 250 S.W.2d at 790; Safeco Ins. Co. of Am. v. Criterion

Inv. Corp., 732 F. Supp. 834, 842 (E.D. Tenn. 1989) (defendants’ failure to deal with the claimants

under the bond after the surety’s repeated requests that it do so was “precisely” what made the

surety’s conduct reasonable).

As the party seeking to avoid enforcement of the indemnity agreement, Mr. Eshaghpour pled

bad faith as an affirmative defense. The burden of proof for an affirmative defense is placed upon

the party who raises it. Association of Owners of Regency Park Condo. v. Thomasson, 878 S.W.2d

560 (Tenn. Ct. App. 1994). Thus, Mr. Eshaghpour bore the burden of demonstrating that Old

Republic acted in bad faith or unreasonably in settling the claim. Gulf Ins. Co. v. Construx, Inc.,

2001 WL 840240, at *20; Greene County Bank v. Southeastern Properties, Inc., No. 03A01-9604-

CH-00124, 1996 WL 471469, at *2 (Tenn. Ct App. Aug. 21, 1996) (no Tenn. R. App. P. 11

application filed) (burden of proving affirmative defense to deficiency action of failure to exercise

good faith was on defendant). For purposes of defeating the motion for summary judgment, Mr.

Eshaghpour was required to demonstrate the existence of a dispute of fact that was material to the

legal issue. The only facts relevant to his defense of lack of good faith are those facts detailing Old

Republic’s actions and efforts and his response; the merits of whether he was responsible for the

repairs performed on Ms. Moyer’s house were not before the trial court on the motion and are not

before us.

II.

The relevant facts break down into three categories: (1) those alleged and sworn to by Mr.

Eshaghpour and not disputed by Old Republic; (2) those alleged by Old Republic and admitted or

proved by Mr. Eshaghpour; and (3) those alleged by Old Republic which Mr. Eshaghpour asserts are

not supported by proof in the record.
5

(1) Mr. Eshaghpour asserts, and Old Republic has not disputed, the following:

In August 1994 MECC entered into a contract for the sale of residential real estate to Joy Ann

Moyer. The Department of Codes Administration of Metropolitan Nashville and Davidson County

issued a letter of occupancy on November 2, 1994, stating 

Through routine inspections and visual observations, we have determined that the

work performed substantially complies with the requirements of the applicable codes

and ordinances . . . . However, granting of this Final Use and Occupancy in no way

relieves the contractor of its responsibility for any work performed not in accordance

with applicable codes and ordinances.

In December of 1994, Ms. Moyer began experiencing and noting problems and complained

to Mr. Eshaghpour, who denied all responsibility for the problems. Specifically, Mr. Eshaghpour

stated that the problems were due to alterations and changes that Ms. Moyer had made to the

topography of the land after she moved in and to drainage problems caused by other construction

taking place at the top of the hill behind her home. 

Old Republic was notified of the problems by Ms. Moyer, and it notified Mr. Eshaghpour

of Ms. Moyer’s claim in a letter dated June 28, 1995. In addition to setting forth the claim and

reminding Mr. Eshaghpour of the indemnity agreement, Old Republic stated in pertinent part: 

You have the primary responsibility to resolve this problem. It is requested that you

advise us as to your position relative to this claim.

. . . .

It is requested that you contact the undersigned immediately and advise us of your

intentions. Failure to do so can result in cancellation of your bond and the revocation

of your Metropolitan Government Permit.

Mr. Eshaghpour responded to this letter on July 12, 1995, by denying all responsibility and

explaining why he was not responsible. He only addressed the excess water or drainage issue and

not the other problems complained of by Ms. Moyer. 

Thereafter, on July 24, 1995, Old Republic wrote back to Mr. Eshaghpour and told him that

it would require Ms. Moyer to prove her claim or else it would be denied, but that Old Republic

would “continue to look to your company to indemnify Old Republic Surety Company should the

claimant persist in her claim.”

(2) Old Republic alleges and Mr. Eshaghpour has admitted or proved, as explained,

other facts:
2The list contained violations including:

1. Correct the location of the positive drain to remove crawl space drainage to daylight. Gravel

as necessary the foundation walls to create positive flow to crawl space drain.

2. Slope landscape so as to provide drainage away from the house. Remove earth as needed

to correct grade to construction provisions. Curb area across foundation under HVAC supply

ducts and unit where storm water drains to crawl space area.

3. Complete installing two approved columns where tributary beam is not supported at intervals

provided by the provisions.

4. Correct floor undulation in kitchen area where needed to level out floor.

5. Repair nail pops and seam cracks in sheetrock where needed.

6. Repair electrical light and outlet to operate as per National Electrical Code.

6

In support of its Motion for Summary Judgment, Old Republic filed a Statement of Material

Facts. Attached to that Statement and referenced therein were several documents. Although Mr.

Eshaghpour denied most of the statements of fact on the basis that they were not supported by

specific citation to the record, the following facts were included in both Old Republic’s Statement

of Material Facts and in Mr. Eshaghpour’s Response and Memorandum in Opposition to the

summary judgment motion or in his affidavit supporting that Reponse.

Ms. Moyer then made a complaint to the Department of Codes Administration, which, in

turn, made an inspection and notified Old Republic to make the necessary repairs as surety. In a

letter dated October 2, 1995, the Codes Department stated: 

The items listed in the attached sheet2 have not been completed so as to comply with

the requirements of the Metropolitan Building Codes. The contractor is unwilling

to comply with these requirements.

Therefore, in accordance with the terms and conditions of the bond and Metropolitan

Code of Laws, we hereby notify you to secure the services of a licensed and bonded

contractor to make the necessary repairs to this property to bring it into compliance

with Metropolitan Code of Laws.

Upon receiving this letter, Old Republic sought to have MECC make the repairs on the

enclosed list. Old Republic sent a copy of the letter and code violations list to Mr. Eshaghpour with

a letter stating “It is requested that you take immediate steps to resolve this situation. As we have

previously advised, we will look to your company to indemnify Old Republic Surety Company from

any loss, cost or expense.” In his affidavit, Mr. Eshaghpour testifies that he received this letter on

October 18, 1995. He does not state that he responded in any way to the letter. Rather, he asserts,

The October 18, 1995 letter from Old Republic Surety Company requested that I take

immediate steps to resolve the situation. However, the items identified in the

October 2, 1995 letter from the Department of Codes Administration were items that

were not MECC’s responsibility. I had explained to Ms. Moyer that these items were

not MECC’s responsibility in December 1994, and I gave this explanation to Old
7

Republic Surety Company in my July 21, 1995 letter.

Thus, Mr. Eshaghpour rested his position on his July 1995 response to Ms. Moyer’s

complaints. He did not reply to the new correspondence that included a claim from the obligee of

the permit bond, Metro Codes Administration, or that department’s itemization of the ways in which

the house did not meet building codes.

(3) Old Republic alleges, and Mr. Eshaghpour claims the allegations are unsupported,

additional facts, as explained below:

Old Republic also included the following in its Statement of Material Facts and attached

documents supporting the statements. Mr. Eshaghpour did not factually dispute the following

assertions; he offered no contrary testimony in his affidavit. However, in his response to Old

Republic’s Statement of Material Facts, he denied the following solely on the basis that the

statements were not supported by specific citation to the record.

After Old Republic received no response from Mr. Eshaghpour to its October letter, it again

wrote to him on December 21, 1995, stating:

We have been advised by the Metropolitan Government of Nashville and Davidson

County of Tennessee that the code violations . . . have still not been corrected. We

have been advised by the building inspector to secure the services of a license[d] and

bonded contractor to make the necessary repairs to this property to bring it into

compliance with the Metropolitan code of laws. . . .

Since we have written to you several times regarding this matter, we are going to

proceed in fulfilling our obligation under your bond. I want to assure you, however,

that we fully intend to take legal action against you to recover any and all loss, cost

and expense this company incurs pursuant to the bond application and indemnity

agreement that you executed on January 26, 1990. . . .

Unless we hear from you within five days of receipt of this letter, we shall proceed

accordingly.

Attached to Old Republic’s Statement of Material Facts was a copy of this December letter

and a copy of a receipt for the letter bearing what is purported to be Mr. Eshaghpour’s signature.

Old Republic’s Statement ofFacts further states that, receiving no response from MECC, Old

Republic authorized Ms. Moyer to hire an independent third party to inspect the premises and

provide an opinion and a bid. Old Republic attached a letter to its Statement of Facts which was

from it to the independent inspector, Donald Estes of Ray Bell Construction, and enclosed in that

letter was the October 2 letter from Metro Codes and Mr. Eshaghpour’s July letter explaining why

he was not liable. Mr. Estes provided a report that concurred with the October 2 letter and provided
8

an estimate to repair the listed items. Old Republic then reached a settlement with Ms. Moyer, hired

the contractors to make the necessary repairs, paid those contractors and Ms. Moyer, and then sought

indemnification from Mr. Eshaghpour.

III.

In granting Old Republic’s motion for summary judgment, the trial court stated:

The Court finds, that in the face of the letters written to the defendant in both October

and December, 1995, that the defendant cannot rely upon his July 1995 response in

order to make Old Republic’s decision to settle one of bad faith. The record before

the Court indicates a course of conduct by Old Republic that could not be interpreted

as bad faith. The defendant in his contract with Old Republic had agreed “to

authorize the company to adjust, settle or compromise any claim, demand or suit for

judgment upon said bonds. . . .”

The Supreme Court of Tennessee recently addressed the definition of good faith-bad

faith in Glazer v. First American National Bank, 930 S.W.2d 546, 549-50 (Tenn.

1996). There the Court acknowledged that “bad faith” is a term that not only

includes “instances of outright deception and untruthfulness,” but also includes

“actions in knowing or reckless disregard of customers contractual rights.”

The Court is of the opinion, however, the plaintiff’s actions here show not only an

absence of dishonesty, but cannot be interpreted as showing a knowing or reckless

disregard of Mr. Eshaghpour’s rights. The defendant confuses the good faith

obligation of the plaintiff with an argument that the plaintiff could have been more

diligent or negotiated a better result. A better result is not an absence of good faith.

Tennessee law defines good faith, in relation to the Uniform Commercial Code, at

47-1-201(19) as “honesty in fact in the conduct or transaction concerned.” The

touchstone case in Tennessee on “good faith” related to a settlement is Southern Fire

and Casualty v. Norris, 35 Tenn. App. 657, 250 S.W.2d 785 (Tenn. App. 1952). The

Court emphasized that it would look to the reasonableness of the investigation so that

an informed judgment could be made and it emphasized that a mere mistake of

judgment would not constitute bad faith. See alsoPerry v. United States Fidelity and

Guaranty, 359 S.W.2d 1, 6-7 (Tenn. App. 1962).

Here, the plaintiff investigated the claim, hired an independent evaluator, kept the

defendant informed and settled the claim. The plaintiff wrote one response (the July

1995 letter) and then ignored all the subsequent correspondence. Even taking the

evidence in the light most favorable to the defendant the Court finds that the facts

could not support a finding of bad faith on the part of the plaintiff.
9

We agree with the trial court’s basic analysis. Although the trial court relied upon facts that

Mr. Eshaghpour contends could not be considered, we conclude that the grant of summary judgment

on the issue of liability is supported by the facts proved or undisputed by Mr. Eshaghpour. Old

Republic sued on the basis of the indemnity agreement which Mr. Eshaghpour admitted that he

executed. Mr. Eshaghpour’s claims that he was not liable because Old Republic had not settled in

good faith were raised as a defense. Thus, Mr. Eshaghpour had the burden of establishing disputed

facts relative to that issue. See Third Nat’l Bank in Nashville v. Azalea City Motels, Inc. No. 01A01-

9011CH00420, 1991 WL 148027, at * 5 (Tenn. Ct. App. Aug. 7, 1991). He admitted receiving and

introduced into the record the October letter from Old Republic along with the enclosed letter and

list of code deficiencies from the Department of Codes. He presented no facts or factual allegations

regarding any steps he took to communicate with Old Republic or to provide information to Old

Republic with which to dispute the claim after receiving this letter. Instead, he continued to rely on

his July letter responding to complaints from Ms. Moyer. As the trial court stated, Mr. Eshaghpour

“cannot rely upon his July 1995 response in order to make Old Republic’s decision to settle one of

bad faith.” In essence, Mr. Eshaghpour would have us hold that a surety cannot settle a claim in

good faith in the face of silence from the indemnitor. That is not the law. 

In reviewing this grant of summary judgment, we must view the evidence in the light most

favorable to Mr. Eshaghpour and must also draw all reasonable inferences in his favor. Robinson

v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997); Mike v. Po Group, Inc., 937 S.W.2d 790, 792 (Tenn.

1996). We will uphold a summary judgment only when the undisputed facts reasonably support one

conclusion - that the movant is entitled to a judgment as a matter of law. McCall v. Wilder, 913

S.W.2d 150, 153 (Tenn. 1995); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995).

Mr. Eshaghpour has asserted that summary judgment was not appropriate because good faith

is a question of fact to be determined after trial. We agree that as a general rule, good faith, or the

lack thereof, as well as reasonableness, should be determined in the context of the specific factual

situation involved. “What is good faith depends, it is obvious, upon the facts and circumstances of

each case.” Criterion Inv. Corp., 732 F. Supp. at 841; see also Lane, 767 S.W.2d at 142 (any

evidence tending to show other than good faith basis for the action is material); Central Towers, 61

Tenn. App. at 267, 453 S.W.2d at 799 (courts must look to all the facts of the case to determine

whether it was reasonably necessary for the surety to so act in its own defense, and whether the

surety acted in good faith toward the principal). 

That is not to say, however, that summary judgment is never available when the question of

good faith or reasonableness is a determinative issue. To the contrary, summary judgment is proper

in virtually any civil case that can be resolved on legal issues alone, Tomlinson v. Kelley, 969 S.W.2d

402 (Tenn. 1997), and is available in all civil cases, Owen v. Stanley, 739 S.W.2d 782 (Tenn. Ct.

App. 1987). See also Perry v. United States Fidelity & Guar. Co., 49 Tenn. App.662, 678, 359

S.W.2d 1, 8 (1962) (directed verdict appropriate where there was no competent proof that insuror

acted in bad faith in refusal to settle). Where there is no dispute as to material facts, summary

judgment is available if the movant is entitled to judgment as a matter of law. Through his own

responses and affidavit, Mr. Eshaghpour established the existence of his agreement to indemnify Old
10

Republic and some of the course of conduct between them after a claim was made. A motion for

summary judgment may be supported by admissions of the other party. Read v. Thomas, 679 S.W.2d

467, 469 (Tenn. Ct. App. 1984). Mr. Eshaghpour has failed to demonstrate the existence of any

disputed fact which legitimately calls into question Old Republic’s good faith settlement of the

claim. 

On appeal, Mr. Eshaghpour states: 

Prior to paying this disputed claim, Old Republic Surety Company never called upon

Mr. Eshaghpour to deposit funds to cover any potential liability associated with

asserting defenses to Ms. Moyer’s claim; and Old Republic never defended or gave

Mr. Eshaghpour the opportunity to defend against Ms. Moyer’s claim.

By paying Ms. Moyer’s claim over his strenuous objections, Old Republic Surety

Company denied Mr. Eshaghpour the opportunity to hire counsel and defend against

the claims for both himself and Old Republic Surety Company. Old Republic Surety

Company never tendered its defense of this case to Mr. Eshaghpour or allowed him

the opportunity to hire counsel to protect his interest and the interest of Old Republic

Surety Company. Old Republic Surety Company never asserted the defenses thatMr.

Eshaghpour had and was prepared to raise; and by paying Ms. Moyer’s claim over

his objections, Old Republic Surety Company denied Mr. Eshaghpour the

opportunity for a court to determine the merits of Ms. Moyer’s claim and his defenses

to that claim.

The indemnity agreement does not require Old Republic to request that the indemnitor

deposit funds as a prerequisite to its right to indemnity. Furthermore, the agreement grants Old

Republic the right to settle any claim. Mr. Eshaghpour was given opportunity to dispute the

allegations of code violations in the Department of Codes letter, but he does not allege that he

provided any such information to Old Republic after receiving that letter. The judgment of the trial

court that Old Republic settled the claim reasonably and in good faith, and is thereby entitled to

judgment for reimbursement of costs and expenses it incurred, is hereby affirmed.

IV.

Mr. Eshaghpour’s arguments regarding the lack of evidentiary support for Old Republic’s

motion for summary judgment, with regard to liability, is answered by the discussion above.

However, those arguments must also be considered in regard to the amount of the judgment. While

Mr. Eshaghpour had the burden of proving the defense he raised to liability, Old Republic had the

burden of proof with regard to its damages. Inman v. Union Planters Nat’l Bank, 634 S.W.2d 270,

272 (Tenn. Ct. App. 1982). 

We have already determined that Old Republic proved, through Mr. Eshaghpour’s

admissions and affidavit if not otherwise, the existence of the guaranty agreement. Additionally, Mr.
3At oral argument, there was some dispute on the specificity with which the issue may have been raised

at the hearing on the motion for summary judgment. It is unclear from the record before us whether Mr.

Eshaghpour’s problem with Old Republic’s evidentiary support for their motion was brought to the attention

of the trial court. We have no transcript of the argument, and the trial court did not allude to this issue in its

order. However, it is clear that Mr. Eshaghpour argued in his memorandum in opposition to summary judgment

that Old Republic, by failing to present sworn testimony in support of its motion, had failed to meet its burden

of proof and was not entitled to judgment.

11

Eshaghpour admitted receiving the October correspondence. Because he failed to assert facts to

support his good faith defense, Old Republic was entitled to judgment on liability. In addition to

the payments it made to resolve the claim, Old Republic requested an award of attorney fees as part

of the “loss, liability, costs, claims damages, and expense . . . including . . . the fee and disbursement

of counsel” against which Mr. Eshaghpour indemnified it. The request for and award of attorney

fees were supported by an affidavit claiming $2,237.50 in attorney fees.

With regard to the remainder of losses and expenses incurred by Old Republic by its issuance

of the bond and, therefore, the remainder of the recovery due under the indemnity agreement, Old

Republic alleged in its complaint that the balance due and owing as a result of the repairs pursuant

to the bond was $17,220.88 and that Mr. Eshaghpour had failed to pay the amount due despite

demand. In his answer, Mr. Eshaghpour admitted that Old Republic had made demand for payment,

but denied the remainder of the allegations. In its motion for summary judgment, Old Republic

alleged it suffered a loss of $17,220.88 and filed a Statement of Material Facts which stated that Old

Republic had paid that sum as settlement in full of all obligations for the original claim. Both

documents refer to an exhibit which included an estimate for repairs, copies of canceled checks, and

a release by Ms. Moyer acknowledging receipt of funds. The filings included no affidavit or other

sworn testimony.

In response to the portion of Old Republic’s Statement of Material Facts dealing with

payments in settlement of the claim, Mr. Eshaghpour replied, “Contrary to Rule 56.03, this statement

is not supported by a specific citation to the record. Accordingly, it is DENIED.” In his brief, Mr.

Eshaghpour explains this somewhat cryptic statement: “Old Republic Surety Company made no

citations to the record, because there was no record to cite to.”3

 Essentially, he argues that by failing

to provide any sworn evidence, Old Republic failed to meet its burden of proof and is not entitled

to judgment. 

Mr. Eshaghpour argues that because Old Republic filed no sworn testimony, summary

judgment was not available under the terms of Tenn. R. Civ. P. 56.04 which provides that such

judgment shall be granted “if the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a mater of law.” He asserts that Old Republic’s

attachment of unverified documents to its Statement of Material Facts is insufficient to establish

material facts.

A party seeking summary judgment has the burden of demonstrating that its motion satisfies
12

the requirements of Rule 56. Carvell v. Bottoms, 900 S.W.2d at 25. The burden includes

demonstrating that it is entitled to judgment as a matter of law. Jones v. City of Johnson City, 917

S.W.2d 687 (Tenn. Ct. App. 1995). A party seeking damages has the burden of proving them.

Inman, 634 S.W.2d at 272. In order to be entitled to judgment in a specific amount, a plaintiff must

prove the amount of loss. Herein, Mr. Eshaghpour did not admit to the amount of the loss by Old

Republic in performance of its responsibilities under the indemnity agreement. Thus, Old Republic

was not entitled to any particular judgment amount absent proof. The allegation of the amount of

its loss was supported only by unsworn statements and unauthenticated copies of cancelled checks

and other documents attached to the Statement of Material Facts. Such materials do not constitute

proof sufficient to support judgment.

The types of evidentiary material which can be relied upon to support a summary judgment

have been discussed in a well-known treatise:

In addition to the pleadings, Rule 56(c) expressly provides that the court may make

use of depositions on a summary-judgment motion. Only that portion of a deposition

that would be admissible in evidence at trial may be introduced on a summaryjudgment motion, however. . . .

Prior to 1963, Rule 56(c) did not specifically permit the use of answers to

interrogatories on a motion for summary judgment, although courts generally

permitted them to be presented. In 1963 this omission in the rule was corrected by

an amendment expressly providing for the use of answers to interrogatories on a

summary-judgment motion as long as they satisfy the other requirements in Rule 56

and contain admissible material. . . .

Rule 56(c) also permits the court to consider any “admissions on file.” The quoted

words make it clear that the admissions need not be pursuant to Rule 36; they may

have emerged at the pretrial conference, have occurred during the oral argument on

the motion, have been made in connection with one of the other discovery

procedures, or have their roots in a joint statement or stipulation by counsel. . . . The

admission must be in a form that is admissible in evidence.

One of the most common forms of evidence used on a summary-judgment motion

is affidavits. Affidavits in support of or in opposition to a Rule 56 motion are not

required by the rule; they are simply permitted. The failure to introduce affidavits

will not prevent summary judgment if the prerequisites for granting the motion have

been satisfied in some other fashion. . . .

. . . .

Exhibits that have been properly made a part of an affidavit may also be considered.

Indeed, Rule 56(e) requires that sworn or certified copies of all papers referred to in

an affidavit must be attached to or served with that affidavit. . . . To be admissible,
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documents must be authenticated by and attached to an affidavit that meets the

requirements of Rule 56(e) and the affiant must be a person through whom the

exhibits could have been admitted into evidence. Thus, a letter submitted for

consideration under Rule 56(e) must be attached to an affidavit and authenticated by

its author in the affidavit or deposition.

As is true of other material introduced on a summary-judgment motion, uncertified

or otherwise inadmissible documents may be considered by the court if not

challenged. The objection must be timely or it will be deemed to have been waived.

10A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL § 2722 (3d ed. 1998)

(footnotes omitted). 

The statement of material facts which the moving party contends are not disputed, as required

by Tenn. R. Civ. P. 56.03, does not constitute proof of the facts therein and does not substitute for

such proof. That rule provides:

In order to assist the Court in ascertaining whether there are any material facts in

dispute, any motion for summary judgment made pursuant to Rule 56 of the

Tennessee Rules of Civil Procedure shall be accompanied by a separate concise

statement of the material facts as to which the moving party contends there is no

genuine issue for trial. Each fact shall be set forth in a separate, numbered paragraph.

Each fact shall be supported by a specific citation to the record. 

Any party opposing the motion for summary judgment must . . . . file a response to

each fact set forth by the movant either (i) agreeing that the fact is undisputed; (ii)

agreeing that the fact is undisputed for purposes of ruling on the motion for summary

judgment only; or (iii) demonstrating that the fact is disputed. Each disputed fact

must be supported by specific citation to the record. Such response shall be filed

with the papers in opposition to the motion for summary judgment.

As the Advisory Commission Comment to this rule makes clear, its purpose is to assist the

court in “focusing on the crucial portions of the record.” Tenn. R. Civ. P. 56 Advisory Commission

cmt. [1997]. The statement is for the benefit of the court in deciding motions for summary

judgment. Selvy v. Vinsant, No. 03A01-9903-CV-00081, 1999 WL 894435, at *1 (Tenn. Ct. App.

Oct. 13, 1999); Butler v. Diversified Energy, Inc., No. 03A019804CV00146, 1999 WL 76102, at *3

(Tenn. Ct. App. Jan. 28, 1999). The statement does not itself introduce factual information into the

record; instead, it directs the court to the location of facts established elsewhere by evidentiary

materials complying with Rule 56.

Finally, the unverified documents attached to the Statement of Material Facts could be

considered in support of the Motion if Mr. Eshaghpour waived any objection. We agree with Old

Republic that the failure to provide sworn testimony regarding the payments could have been
4As described earlier, Old Republic’s claim for attorney fees was supported by an affidavit, and Mr.

Eshaghpour filed no response or objection to that affidavit. Thus, there is evidence in the record to affirm that

portion of the judgment awarding attorney fees and, therefore, to affirm that Old Republic suffered damages

under the indemnity agreement.

14

remedied with the filing of an appropriate affidavit in the trial court, and that Mr. Eshaghpour’s

response to the Statement of Material Facts could have made the deficiency clearer. His denial of

the statements of fact on the basis they were not accompanied by a citation to the record was not a

clear objection to the admissibility of the supporting attachments. However, in his memorandum

in opposition to summary judgment, he clearly voiced his objection and the basis for it. 

The Court should also deny summary judgment because the Plaintiff has not

presented a properly supported motion. . . . In this case, the Plaintiff has produced

no sworn testimony to support its motion. It has merely restated its allegations in the

Complaint and made a conclusory statement that the Defendant is liable. Because

the Plaintiff has put forth no sworn testimony to support its position, the Plaintiff has

failed to meet its burden of demonstrating that there are no disputed material facts

creating a genuine issue for trial.

Therefore, Mr. Eshaghpour did timely object to the admissibility of the unverified and

unauthenticated documents filed as attachments to the Motion and the Statement of Material Facts,

including the canceled checks and other documents relating to the amounts paid to repair the house

in question. 

This court’s role in review of the grant of summary judgment is well settled. Our task is

confined to reviewing the record to determine whether the requirements of Tenn. R. Civ. P. 56 have

been met. Staples v. CBL & Assoc., 15 S.W.3d 83, 88 (Tenn. 2000). We must view the evidence

in the light most favorable to the nonmoving party. Id. In our review of the record we find no

evidence substantiating or establishing the amount of losses and expenses Old Republic incurred to

repair Ms. Moyer’s house or otherwise because of its obligations under the bond.4

 We are unable

to affirm judgment on the amount of recovery under the indemnity agreement because there is simply

no proof of the total amount of loss or expenses in the record. Where proof of damages is

inadequate, but liability established, remand is appropriate. Lane, 767 S.W.2d at 142.

Therefore, we vacate the award of damages and remand to the trial court for proof, which

may be by affidavit or sworn verification of the amounts paid by Old Republic due to the claim

herein and, therefore, owing under the indemnity agreement.

V.

For the reasons stated herein, we affirm the trial court’s grant of summary judgment on the

issue of liability and the award of attorney fees. However, this cause is remanded to the trial court
5This court’s assessment of costs on appeal in no way prevents the trial court from awarding such costs

paid by Old Republic as part of its total loss and expenses, upon appropriate motion and proof.

15

for further proceedings regarding the amount of the total loss, liability, costs, and expenses incurred

by Old Republic by reason of its issuance of the bond. Costs of this appeal are taxed equally

between Appellant and Appellee, for which execution may issue if necessary.5

______________________________

PATRICIA J. COTTRELL, JUDGE