### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE April 13, 2000 Session
OLD REPUBLIC SURETY COMPANY v. MORRIS ESHAGH POUR

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 per mit bond from the plaintiff surety c ompany and executed an indemnity

agreement to hold the

surety harmless a

gainst all loss, liability and expenses the company might sustai n on the bon d. A claim was made against the bond reg arding a home built by the defenda nt. The surety c ompany

notified the defendant, investigated the claim, and eve ntually settled with the claimant. In this lawsuit to collect under the indemnity ag

reement, the trial court granted summary judgmen t to the surety . The def

endant a rgues t hat summar

y ju dgment w as inappr

opriate because the motion was not properly supported a ccording to the Rules of Civil Procedure and, al te rn at iv el y, the issue of whether the surety acted reasonably

and in good

faith in se

ttling the claim precludes summary judgme nt. We d isagree and affirm the summary judgment on the issue of liability , but rema

nd for pr oof on tota

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

Affirmed in part, Vacated in part and Remanded
P ATRIC IA J. C OTT RELL J., delivered the opinion of the court, in which W IL LI AM C. K OCH , J R ., and W ILLI AM B. C AIN , JJ., joined. Todd E. Panther, Nashville, Tennessee, for the appellant, Morr is Eshaghpour.
Me li ss a K ur tz , N as hv il le , T en ne ss ee , f or th e a pp el le e, Ol d R ep ub li c S ur et y Co mp an y.

OPINION
The Defendant/Appe l lant, Morris Eshaghpour, is the owner of Morris Eshag hpour Construction Company

(“MECC”) . Plain tiff/Appe llee, Old Republic Surety Company , issued a surety bond on behalf of MECC in 1990. The p ermi t bond was required by the Metropolitan Government

of Nashville and Davidson County; the g overnment, specifically , the Depart ment of Codes Adm inistration, was the obligee, and the bond was “for the benefit of the Metropolitan Governm ent, a nd for the b enefit of the owners of property on which work is performed by the Principal pursuant to a

permit issued under this bond . . . .” Mr. Eshag hpour exec

uted an indemnity2

agreement in which he ag reed, inter alia : (2) To indemni fy

the Compan

y [Ol d Republic ] and hold it harmlessagains t all loss, li ab il it y, costs, claim damages, a nd exp ense, internal or external of whatever kind and nature inclu ding b ut no t lim ited t o inv estiga tive, accoun ting, engineering, the fee and disbursement

of counsel whether salary , retainer or otherwise which the Company may sustain or incur for

or by rea son of said Company writing sa id bond(s); (3) If re quested, to place

the Compan

y in funds imme diately

to meet an

y c laim o r demand before the Company shall be required to make pay ment

. . . . (7) To authorize the Company to adjust, settle or compromise a n y claim, d emand, suit or judg

ment upon s aid bond( s) and defend such suit and appeal such

judgment or at its ele ction tohave the

case, c ross-action or pr

oceeding, or a

ny p art of it

or them dismissed or any appea

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

. . . . (11) In the event of any

payment by

the Com pany, I

ndemnitors agree to pay

the Company interest at th e prime r ate plus 2% (unless prohibited by law, then a t the maximum rate allowed) charged at a major bank located in the Stat e in whi ch Indemnitors reside.
A claim was made against the per mit bo nd by Ms. Moy

er who bought a house built by MECC. The Department of Codes Administration, the obligee under the permit bond, insp ected Ms

. Moyer’sproperty, n ot if

ie d O ld Re pu bl ic of

th e d ef ic ie nc ie s a nd di re ct ed Ol d R ep ub li c, as su re ty, to make the necessary

repairs. After a series of communications, set out later in this opinion, t h e fina l result wa s that Old Re public pa id for the

repair s to Ms. Moy

er’s hou se and sued Mr

. Eshaghpour for reimbursement under the inde mnity agre

ement.
The trial court

granted summary

judgmen t to Old Republic in the amount of $17,220.88 plus at to rn eys fees of $2,237.50. Mr. Eshaghpour appeals and argue s that the s ummary

judgmen t should nothave been granted bec ause the motion was not properly supported and because

the issue of Old Republic’ s good f

aith involves fact

ual quest ions which

are ina ppropria te for su mmary judgmen t.
I.
Because of the

nature of Mr. Eshaghpour’s argume nts, analysis of the issues in this appeal is best appr

oached by f irst ident ifying the f

acts whic h are ma terial to th e questio n of whet

her 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 t he Unifor m Comm erci al Code’s defi niti on of good f ait h, “ hones

ty i n fac t i n the condu ct o r t rans acti on con

cern ed. ” 3 It is undisput

ed th at M r. Eshaghpour executed the indemnity agreement attached to the complaint and quote d earlie

r in this opinion. I

n this lawsuit, Old R epublic seeks to enforce the agreement

to reimburse it for expenses related to claims against the bond. Gene rally, 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 set

tle in go od faith o

r (2) tha t the sure ty did not act in a reasonable and prudent manner. John Hinchey, Surety’s Performance Over Protest of Principal : Considerations and Risks , 22 T ORT & I NS . L.J. 13 3, 148 (19 86). Jurisd ictions va ry in whether o nly the lack of g ood faith defense is available or whether the sur ety is also held to a reasona bleness standard. Id. Tenness ee law r equiresthat, in or

der for a surety to recover under an indemnity

agree ment, the surety must act both reasonably

and in good

faith. Feld Truck Leasing v. ABC Transnational Transp. , 681 S.W.2d 554 , 556 (Te nn. Ct. App . 1984); Central Towe rs Apartmen ts, Inc. v. M

artin , 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 i ndem nity agr

eement is subject to the general law of c ontracts, and every contract contains an implied obligation of good faith and fair dea ling in its performan c e and en forcem ent. 2 P ERILLO AND B ENDER , C ORBI N ON C ONTRAC TS § 5.27, at 139 (rev . ed. 1995 ). Thus, “ [t]here is no doubtthat, in performance of its duty to indemnify the insured, the insur er is bound to exerc ise “good faith” a nd to act f

airly in the inte

rest of th e insu red.” 3 A RTHUR L. C ORB IN , C ORBI N ON C ONTRAC TS § 572A, at 355 (1960).
Our Supreme C ourt has d

efined t he scope of the g ood faith

obligat ion in other commercial setting s. In Lane v. John Deere Co. , 767 S.W.2d 138 (Tenn. 1989), the Court stat ed, “The good fa ith requirement

[in the UCC’s acceleration of a debt pro visio n] . . . imposes‘an hone st intentio n to abstain from t aking any un conscientious advantage of another, e ven through the forms and technicalities of the law.’” Id . at 140 (citations omitted). Additionally, a s the tria l court he rein noted, the Court in another commercial context has accepted tha t “bad faith ca

n 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 A nn. § 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 def inition:
The Second Restatement of Contra cts de fines g ood faith in essent ially the same terms as the UCC. One port

ion of the comment to

Restatem ent of Con

tracts § 205 explains that “[g]ood faith performance or enforc ement of a contract emphasizes faithful ness4

to an agr eed comm

on purpos e and consistency with the justified expectations of the other party ; it exclude s a varie

ty of types of conductcharacterized as involving ‘bad faith’ because they

violate community standards of dece ncy, fairness or reasonableness.” The invocation of community standar ds of rea sonablenes s sugg ests good faith necessarily

incorporates an objective, almost tortlike measure, not withstanding the ostensibly subjective ( “honesty in fact”) language of the A rticle 1 definition. And the Re st a tement of Contract s comment c onfirms th at a reasonableness analy sis is appropriate.
P ETER A. A LCES , THE L AW OF S URETYSHI P AND G UARANT Y ¶ 3.0 1[2][ a][ii] ( 1997) (footnotes omitted).
Es se nt ia ll y, a surety

has a duty

to reaso nably

investig ate the c laim, countercla im and all possible defenses and act in good faith in settling a c laim. Southern Fire & Cas. Co. v. Norris, 35 Tenn. App. 657, 668, 250 S.W.2d 785, 790 (Tenn. Ct. App. 1952); United States of A m. for the use of the Trustee of the Elec. Workers Local Pension Fund v. D Bar D Enter., I nc. , 772 F. Supp. 1167, 1170 (D. Nev. 1991). Th

e indemnitor has the conco mitant duty to fully coopera te with th e s ur et y. Southern Fire & Cas. , 35 Tenn. App. at 66 8, 250 S.W.2d at 790; Safeco Ins. Co. of Am. v. Criterion Inv. Corp. , 732 F. Supp. 834, 842 (E.D. Ten n. 1989) ( defenda

nts’ failure

to deal wi

th the cla imants under the bond after the surety’s re peated requests that it do so was “precisely ” what made the surety’s conduct reasonable).
As the party see

king 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 ra

ises it. Association of Owners of Regency Park Condo. v. Thomasson , 878 S.W.2d 560 (Tenn. Ct

. App. 199 4). Thus, Mr. Eshag hpour bor

e the bur den of de monstrating that O ld Republic acted in bad faith or unreasonably in settling the cl aim. G ulf Ins. Co. v. Construx, Inc. , 2001 WL 8402

40, at *20 ; Greene County Bank v. Southeast ern Prope rties, Inc ., No. 03A01-9604- CH-00124 , 1996 WL 4714 69, at *2 (Tenn. Ct App. Aug. 21, 1996) (no Tenn. R. App. P. 11 application filed) (burden of proving affirmative def ense to deficiency

action of failure to exercis e good faith was on defendant). For purposes of de fe ating 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 re levant to his defe nse of la ck of g ood faith

are thos e facts de

tailing O ld Republic’s actions a

nd effor ts and his r

esponse ; th e merits of whether he was responsible for the repairs performed on

Ms. Moyer’s house we

re not beforethe trial court on the motion and are not before us.
II.
The relevant

facts br eak down into three

categ ories: (1 ) those

alleged and sworn to by

Mr. Eshaghpour

and not disputed by Old Republic; (2) those alleg ed by Old Republic and a dmitted or provedby Mr. Eshag

hpour; and (3) those alleged by Old Republic which Mr. Eshaghpour asserts are not supported by proof in the record.5

(1) Mr . Esha ghpour assert s, and Old R epubl ic has not d ispu ted, t he fol lowi ng:
In August 1994 MECC entered into a contract for the sale of residential real estate to Joy Ann Moyer. The Depa

rtment of Codes Administratio n of Metr opolitan N ashville a

nd Davids on County issu ed a let ter of

occup ancy on Nov ember 2 , 1994 , stat ing
Th rough routine inspections and visual observations, we have determined that the work performed substantially c omplies with the requirements of the applicable codes and ordinances . . . . However, granting of this F inal Use and Occupancy

in no way relieves the contr

actor of its responsibility for

any work pe

rformed not in accordance with appli cable c odes and ordinanc es.
In December of 1994, Ms. Moyer began experiencing a nd noting problems and complained to Mr. Eshag

hpour, who denied a

ll respon sibility

for the problems. Specifically, Mr . Eshaghpour stated that the problems were due to alterat ions and changes that Ms. Moyer had made to the topography

of the land a fter she moved in and to drainage problems caused by other construction taking place at the top of the hill behind her home.
Old Republic w as notified of the pr oblems by

Ms. Moy er, and i t n otified Mr . Eshaghpour of Ms. M oye

r’s clai m i n a letter dated June 28, 1995. In addition to setting forth the c laim and reminding

Mr. Eshag

hpour of t he indemn

ity a greem ent, Old Re

public sta ted in per tinent pa rt:
You have the primary

responsibility to resolve this problem. I t is requestedthat you advise usas to your positio n relativ e to this cl aim.

. . . . It is reque sted that y

ou contact the unde

rsigne d imm ediately and

advise us of your intentions

. Failure to do so ca n result in cancellation of y our bond and the revocation of y our Metr

opolitan Governme

nt Permit.
Mr. Eshaghpour responded to this letter on July 12, 1995, by

denying all responsibility and explaining why he wa s not re spons ible. He onl y addresse d the e xces s wate r or dra inage issue and not the other problems complained of by Ms. Moyer. Thereafter, on July

24, 1995, O ld Republic

wrote ba ck to Mr. Eshaghpour

and told him that it would require Ms. Moye r to pr ov e her cl aim or els e it would b e denied , but that O ld Republic would “c ontinue to

look to you

r compan y to indemnify

Old Republic Surety Company should the claimant persist in her claim.” (2) Old Republic alleges and Mr. Eshaghpour ha s admitted or proved, as explained, other fa cts:2 The li st co

ntai ned vi olati ons i ncludi ng:
1. Correct the l ocation of t he positive

drain to re

move crawl s

pace drai nage to dayl ight . Grav el as neces sary t he foundat

ion wal ls t

o creat e posi tiv e fl ow to crawl space dr ain. 2. Slope landscap e so as to provi de drai nage away fro m the house. Remove earth as needed to corr ect gr ade

to cons truct ion pr ovis

ions . Cur b area ac

ross foundat ion unde

r HV AC supp ly ducts and unit

where st

orm water dr ains

to cr awl space

area. 3. Complete i nstal li ng two approv ed colu mns whe re tri butar

y be am is not su ppo rted at inte rvals provided by the p rovisions. 4. Correc t floor und ulation in k itchen a rea w here n eede d to level o ut floor. 5. Repai r nai l pops

and seam cra

cks i n sheet

rock where

needed. 6. Repai r el ectri cal l ight and outl et to operate as per National Elect

ric al Code. 6 In support of its Motion for Summary Judgment, Old Republic filed a Statement of Material Facts. Attached to that Statement and referenced the rein were several documents. A lthough Mr. Eshaghpour

denied mo st of the st

atementso f fact on the basis that they wer e not supported by specific citation to the record, the following facts wer e includedin both Old Republic’s Statement of Materia l Facts a nd in Mr. Es haghpour’s Resp ons e and Memorandum in Opposition to the summary judgme

nt motion or in his affidavit supporting that Reponse.
Ms. Moyer then made a comp laint to the Departm ent of Cod

es Adminis tration, w

hich, in turn, m ade an inspection and notified Old Republic to make the necessary repairs as surety . In a letter da ted Octob er 2, 199 5, the Code s Depar tment stat ed:
The items listed in the attached sheet 2 have not been completed so as to comply with the requirements of the Metropolitan Building Codes. The contra ctor is unwilling to comply with these

require ments. Therefore, in accordance with the terms and conditions of the bond and Metropolitan Code of La

ws, we hereby

notify y ou to secure the services of a licensed a nd bonded contractor

to make the necessary

repair s to this pro

perty to bring it into compliance with Metr opolitan Co de of Laws. Upon receiving this letter, Old Republic s ought to have MECC make the repairs on the enclosedlist. Old Republic sent a copy of the letter and code violations list to Mr. E shaghp our with a letter stating “It i s requested that y ou take immediate steps to resolve this situation. As we have previous ly

advised, we will look

to y our compa

ny t o indemnif

y O ld Republic

Surety Company

from any loss, cost or

expense.” In his affidavit, Mr. Eshag hpour testifies that

he received this letter on October 18, 1995. He does not st ate that he r

esponde d in any

way to the lett

er. Rathe r, he ass erts,
The October

18, 1995 le

tter fro m Old Repub lic Surety Company requested tha

t I take imme diate

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 notMECC’s responsibility. I had explained to Ms. Moyer that these items were notMECC’s re sponsibilit y in Decemb er 1994, and I

gave th is explana

tion to Old7

Republic Surety Company in my July

21, 1995 letter. Thus, Mr. Eshag

hpour re sted his po sition on hisJuly 1 995 respo nse to Ms . Moy er’s complain ts. He did not

reply to the new correspondence that included a c laim from the obligeeof the permit bond, Metro Codes Administration, or that department’s itemization of the way s in which the house did not mee

t building codes. (3) Old Republ

ic all eges, and Mr. Eshaghpour claims the allegations ar e unsupported, additional facts, as explained below:
Old Republ ic a lso included the following in its Statement of Material Facts and attached document s suppor tin g the statements. Mr. Eshaghpour did not factua lly dispute the following assertio ns; he offered no contrary testimony in hi s affida

vit. However, in hi s respons e to Old Republic’s Statemen

t of Mater

ial Fac ts, he den

ied the f ollowing sole ly on thebasis that the statements were not supported by specific citation to the record.
After Old Republic received

no response

from Mr. E shaghp our to its O ctober l etter, it again wrote to hi m on De cember 21, 19 95, st ating:
We have been advised by the Metropolitan Government of Nashville and Davidson County of Tennessee

that the c ode viola

tions . . . ha

ve still not been co

rrected. 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 pro perty

to bring it into compliance with the Metropolitan code of laws. . . .
Since we have written to y ou sev e ral timesregar ding thismatter, w e are g oing to proceed in fulfilling our obligationunder your bond. I want to assure you, how ever, that we fully intend to take leg al action against y ou to recover any and all lo ss, cost and expense th

is compan

y incurs pur suant to the bond ap plicati on and indemnity agreement that y

ou executed on January 26, 1990. . . .
Unless we hear

from you within five days of receipt of this letter, we shall proceed ac co rd in gl y. 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 bear ing what is purported to be Mr. Eshaghpour’s sig nature.
Old Republic’ s Statement of Fac ts furthe r states t hat, rec eiving no respons e from ME CC, Old Republic authorized Ms. Moyer to hire a n independent third party to inspec t the pre mises and provide an opinion

and a bid. Old Republ

ic attached a let

ter to its St

ateme nt of Fac ts which was from i t to the independent inspector, Donald Estes of Ray Bell Construction, and enclosed in that letter was the October

2 letter f rom Metro

Codes and

Mr. Eshag

hpour’s Jul

y letter explaining why he was not liable. Mr. Estes provided a report that concurred with the Octobe r 2 letter and provided8

an estimate

to repair the listed items. Old

Republic t

hen rea ched a se ttlement w ith Ms. Moyer, hired the contractors to make the necessa ry repair s, paid tho se contr

actors a nd Ms. Moyer, and the

n sought indemnification from Mr. Eshaghpour.
III. In granting

Old Republic’s motion for summary judgment, the trial court stated:
The Court find s, that in th

e face of the le tters wr itten to the defe

ndant 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 condu ct by

Old Republic that could not be interpreted as bad faith. The def

endant in his contr

act with O ld Republic

had ag reed “t o auth orize the compa

ny t o 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 Gla ze r v. First American National Bank , 930 S.W.2d 546, 549-50 (Tenn. 1996). There the Cour

t ackn owled ge d that “ba d faith” is a term t

hat not onl

y includes “instances of outright deception and untruthfulness,” but also incl ude s “actions in knowing or reckless disreg ard of customers contractual rights.”
The Court is of the opinion, however, the plaintiff’s actions here show not only an absence of dish on esty , but cannot be inte rprete d as showing a kno wing or reckle ss disregard of Mr. E shag hpour’s r

ights. Th

e defendant conf

uses the g ood 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 r elati on to the Uniform Commercial Code, at 47-1-201(19) as “honesty in fa ct in the con duct or transaction concerned.” The touchstone case in Tennessee on “good f aith” re lated to a settleme nt is Southern

Fire and Casualty v. Norris , 35 Tenn. App. 657, 250 S.W.2d 785 (Tenn. App. 1952). The Courtemphasized that it would look to the reasonableness of the investigation so that an informed j udgm ent could be made and it emphasized that a mere mistake of judgment would not constitute bad faith. See also Perry v. United Sta tes Fidel ity and Guaranty , 359 S.W.2d 1, 6-7 (Tenn. App. 1962). Here, the plaintiff investigated t he claim, hired an independent evaluator, kept the defendant informed and settled the claim. The plaintiff wrote one respon se (the July 1995 letter) and then i gnore d all the su bs equent correspondence. Even taking the evidence in th e light mos t favora ble to the defenda nt the Cour

t finds tha

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

We agree with the trial

court’s basic analy sis. Although the trial court relied upon facts that Mr. Eshaghpour contends could not be considered, we conclude that the grant of summary judgme

nt on the is sue of liability is supported by the facts proved or undisputed by Mr. Eshaghpour . Ol d Republic s ued on the basis of the indemnity ag reement which Mr. Eshaghpour admitted that he executed. Mr. Eshaghpour’s claims that he was not lia

ble beca use Old Re

public had not se

ttled in good faith were raised as a defe nse. 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 Octob er lette

r from Ol d 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 Repu b lic or to pr ovide inf ormation t

o Old Republic with which to dispute the claim after receiving this lette r. In stead, he

continue d to rely on his July letter

responding to complaints from Ms. Moy er. As the trial court stated, Mr. Eshaghpour “cannot rely upon his July

1995 resp onsein order to make Old Republic’s decision to settle one of bad faith.” In essence , Mr. Eshaghp our wo uld have u s hold that a surety cannot se

ttle a cla im in good faith in the face of silence fr om the indemnitor. That is not the law.
In reviewing this gra

nt of summa

ry judgmen t, we must view the e

vidence in the lig ht most favora ble to Mr. Eshaghpour and must also draw all reasonable inferences in his fa vor. Robinson v. Omer , 952 S.W.2d 4 23, 426 (T enn. 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 reaso nably support one conclu sion - that the movant is entitled to a judgment as a matter of law. McCall v. Wilder , 91 3 S.W.2d 150, 1 53 (Tenn . 1995); Carvell v. Bottoms , 900 S.W.2d 23, 26 (Tenn. 1995).
Mr. Eshagh

pour has a sserted

that summa

ry judgmen t was not a

ppropria te because

good fa ith is a question of fact to be determined after trial. We ag ree that as a general rule, g ood faith, or the lack thereof, as well as reasonable ness, should be determined in the context of the specific factual situation involved. “What is g ood faith depends , it

is obvious, upon the facts andcircumstances of eachcase.” Criterion Inv. Corp. , 732 F. Supp. a t 841; see also Lane , 767 S.W.2d at 142 (any evidence tending

to show other than g ood faith basis for the actio n is mater

ial); Central Towe rs , 61 Tenn. App. at 26 7, 453 S.W.2d at 7 99 (cour

ts must look to all the facts of the case to determine whether it was re asonably

necessa ry for the s urety

to so act in its own defense, and whether the surety acted in good faith toward the principal).
That is not to say , howeve

r, that su mmary judgmen t is never a

vailable when the question of good faith or reasonableness is a determinative issue. Tothe contrary , summary judgme nt is proper in virtually any

civil case that can be resolved on legal issues alone, Tomlinson v. Kelley , 969 S.W.2d 402 (Tenn. 1 997), an d is availa ble in all civil cases, Owen v. Stanley , 739 S.W.2d 7 82 (Tenn . Ct. App. 1987). See als o Perry v. United States Fidelity & Guar. Co. , 49 Tenn. App.662, 678, 359 S.W.2d 1, 8 (1962) (directed verdict appropriate w here there was no competent proof that insuror acted in bad faith in refusal to set tle) . 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. Thr oug h his own responses and a ffidavit , Mr. Esha ghpour establish ed the exis tence of

his agr eement to indemnify

Old10

Republic and some o f the cou

rse of c onduct be

tween the m after a claim wa s made. A

mo tion for summary judgment may be

supported by admissions of the other party. Read v. Thomas , 679 S.W.2d 467, 469 ( Tenn. Ct. A pp. 1984). Mr. Eshaghpour has failed to demonstrate the e xistence of any disputed fact wh ich le gitimately ca lls into question Old Republic’s good faith settlement of the claim. On appea

l, Mr. Esha

ghpour states:
Prior to pay ing this d isputed c laim, Old

Republic Surety Company never called upon Mr. Eshaghpour t o dep osit funds to cover any potentia l liability associa ted with asserting defense s to Ms. Moy er’s cla im; and Old Republic never defended or g ave Mr. Eshag

hpour the opportuni

ty to defend a gainst M s. Moyer’s cla

im. By paying Ms. Moyer’ s claim over his s trenuousobjectio ns, Old Rep ublic Sure

ty Company deniedMr. Eshag

hpour the opportuni

ty to hire cou nsel and d efend a gainst the claims for both himself and Old Republic Surety Company

. Old Republ ic Surety Company never tendered its defense of this case to Mr. Eshag hpour or allowed h

im the opportuni

ty to hire counsel to protect his interest and the interest of Old Republ

ic Su rety Company . Old Repub lic Surety Company

never a sserted

the defe nses that Mr

. Eshaghpour

had and was prepared to raise; and by paying Ms. Moyer’s cla

im over his objections, Old R epubl ic Surety Company denied Mr. Eshaghpour the opportuni ty for a court to dete

rmine the merits of Ms. Moy er’s cla imand his defenses to that cla im.
The indemn ity

agreement does not require Old Republic to re quest that the indemnitor deposit funds as a prerequisite to its right to indemnity . Furthermore, the agr eement g rants 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 d oes not allege that he provided any

such info rmation to

Old Republ

ic after receiving that letter. The judgment of the trial court that O ld Rep ublic sett

led the c laim rea sonably

and in g ood faith , and is the reby entitled t o judgment for reimbursement of costs and expenses it incurred, is her eby aff irmed.
IV.
Mr. Esh aghpour’s arguments re garding the lack of evide ntiary 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 regar d to the am

ount of the

judgmen t. While Mr. Eshaghpour had

th e b ur de n o f p ro vi ng th e d ef en se he ra is ed to li ab il it y, Old Republic had the burden of proof with regard to its damage s. Inman v. Union Planters Nat’l Bank , 634 S.W.2d 270, 272 (Tenn. Ct. App. 1982).
We have already

determined that Old Republic prov ed, th rough Mr. Eshaghpour’s admissions and aff

idavit if not otherwise, the existence of the guaranty agreement. Additionally , Mr.3 At oral argume nt, there was som e dispute on the specificity with which t he is sue may have bee

n rai sed at the hear ing on the mot ion for sum ma ry judgm ent. It is unclea r from the reco rd befo re us w hethe r M r. Esha ghpo ur’s proble m w ith Old R epub lic’s evidentiary suppo rt for t heir motion was brought

to th e atte ntio n of the trial court. We have no trans cri pt of t

he argument, and the t ria l cour t di d not al lude

to this iss

ue in its order. Ho we ver, it is

clea r tha t M r. Esh agh pou r argu ed in his memorandum in opposi tio n to su mmary judgment that Old R epublic, by failing to present sworn testimony in support of its motion, had fai led t

o meet it

s burde n of proof and w as not entitled to judgmen t. 11 Eshaghpour

admitted receiving the October corr espondence. Because he f ai led to asser

t facts to support hi s good fa

ith defe nse, Old Republic w as entitle d to judgm ent on lia bility . In a

ddition to the pay ments it made to resolve the claim, Old Republic requested an awar d of attorney f

ees as part of the “loss, liability, costs, claims damage s, and expense . . . including . . . the fee and disbursement of counsel” agains t which Mr . Eshaghpour inde mnified it

. The reques t for and award of attorney fees we re suppor ted by an affi davit cla

iming $2, 237.50 in a

ttorney 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 r ecovery due unde r the inde mnity agree ment, Old Republic alleged in its complaint

that the balance due and owing as a result of the repairs pursuant to the bond w as $ 17,220.88 a nd that Mr . Eshaghpour ha d failed to pay the amoun

t due desp ite demand. In his answer, Mr. Eshaghpour admitted that Old Republic had made demand f or pay ment, butdenied th

e remainder of the alleg ations. I n its motion f

or summar

y ju dgme nt, Old Republic alleged it suffered a loss of $17,220.88 and filed a Statement of Mater ial Fac ts which st

ated tha t Old Republic had paid t

hat sum as settle m ent in full of all obli gationsfor the o rigina l claim. B oth document s refer

to an exhibitwhich included an estimate for repairs, copies of c anceled checks, and a release by

Ms. Moyer

acknowl edging

receip t of funds . The fili ngs incl uded no a ffidavit or other sw or n t es ti mo ny.
In response to the portion of Old Republic’s Statem ent of Materia l Facts d ealing with pay ments in settlem

ent of the claim, Mr . Eshaghpour re plied, “Co ntrary

to Rule 56.03, this statement is not suppor

ted by a specif ic citation to the record. Accordingly , it is DENIED.” I n his brief, Mr. Eshaghpour

explains this somewhat cryptic statement: “Old Repub lic Surety Company made no citations to the record, because there wa s no record to cite to.” 3 Essentially, he arg ues that by failing to provide any swor

n evidence, Old Republic failed to meet its burden of proof and is not entitled to judgment.
Mr. Eshaghpour argues that bec ause Old Republic filed no sworn testimony, summar y judgment was not available under the term s of Tenn. R. Civ. P. 56.04 which provides that such judgment shall be g ranted “if the ple adings, depositio ns, 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 asser ts that Old Republic’s attachment

of unver ified doc uments to it s Statemen

t of Mater

ial Fac ts is insu fficien

t to establ ish materia l facts.
A party see

king summary

judgmen t has the burden of

demonstr ating th at its motion satisfies12

the requirements of Rule 56. Carvell v. Bottoms , 900 S.W.2d a t 25. The burden includes demonstrating that it is entitled to judgmentas a matter of law. Jones v. City of Joh nson City , 917 S.W.2d 687 (Ten

n. Ct. App. 1995). A p arty seeking damage s has the burden of proving them. Inman , 634 S.W.2d a

t 272. I n order t o 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 perfo rmance of its res ponsibiliti es under the indem

nity agree ment. Thus , Old Repub lic was not entitled to any particular judgment amount absent proof. The allegation of the amount of its lo ss wa s s up po rt ed on ly b y unsworn statements and unauthenticated copies of canc elled checks and other documents attached

to the State

ment of Ma

terial F acts. Such materia ls do not co nstitute proof suf ficient t o support j udgmen

t.
The types of

evidentiary mate

rial 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-judg ment motion. Only that portion of a deposition that would be adm issible i n e vi de nc e a t t ri al ma y be in tr od uc ed on a s um ma ryjudgment motion, however. . . .
Prior to 19 63, Rule 56 (c) did n ot specif ically permit the

use of an swers to interrogatories on a motion for summa

ry judgmen t, alth oug h courts g enerally permitted them to be presented. In 1963 this omission in the rule was corrected by an ame ndment expressly providing for the use of answers to interrogatories on a summary-judgment

motion as long as they sa tisfy the other requirements in Rule 56 and contain admissible material. . . .
Rule 56(c) a

lso permit s the cour

t 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 ar gument on the motion, have been made in connection with on e of the other discovery procedu res, 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 no t required by t he rule; they

are simpl y pe rmitted. T

he failu re to intr oduce a ffidavit s will notprevent summary judg ment 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 a

lso be considered. Indeed, Rule 56(e) requires that sworn or certifi ed copie s of all pa

pers referre d to in an affidavit must be attached to or served with that affidavit. . . . To be admissible,13

document s must be authenticated by a nd attached to an affidavit that meets the require ments of Rule 56 (e) and the aff ia nt must b e a person through whom the exhibits could hav e been a dmitted in

to evidenc e. Thus, a letter submitted for consideration under Rul e 56(e) must be attached to an affidavit and authenticate d by its author in the affidavit or deposition.
As is true of

other material introduced on a summary -judgment motion, uncertified or otherwis e inadmiss ible documents may be c onsidered by the c ourt if not challenged. The objection must be time ly o r it will be deemed to have been waived.
10A W RIGH T , M ILLER & K ANE , F EDERA L P RACTI CE AND P ROCEDURE : C IVIL § 2722 (3d ed. 1998) (footnotes omitted).
The statement of material facts which th e moving party contends are not disputed, as required by Tenn. R. Civ. P. 56.03, does not c onstitute p roof of t he fact s therein and does not substitute for such proo f. That r

ule provi des:
In order to assist the C ourt in as certain ing whe ther the re are any materia l facts in dispute, any motion for summary judgment made pur suant to Rule 56 of the Tennessee Rules of Civ

il Proced ure shall be acc ompanied by a se parate co ncise statement of the ma

terial f acts as to which the

moving pa

rty conte nds ther e is no genuine issue for

trial. Ea ch fact shallbe set

forth in a separate, numbered para graph. Each fact shall be supported by a specific citation to the record. Any party opposing

the motion for summary judg ment must . . . . file a re sponse to eachfact set forth b y the movant e ither (i) agree

ing that the fac t is undispu

ted; (ii) agreeing that the fact

is undisputed for purposes of ruling on the motion for summary judgment only; or (iii) demonstrating tha t the fact is disputed. Each disputed fact m ustbe sup ported by spec ific citation to the record. Such response shall be filed with the pa

pers in op position to t

he motion f

or summar

y ju dgment.
As the Advisory

Commission Co mment to thi s rule mak es clea r, its purp ose is to assist the court in “focusing on thecrucia l portions o f the re cord.” Tenn. R. Civ. P. 56 Advisory Commission c m t. [1997]. The statement is for the benefit of the court in deciding motions for summary judgmen t. 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 state ment doesnot itself

introduce factual information into the record; instead, it dire cts the court to the location of facts established elsewhere by evidentiary materials complying

with Rule 56.
Fi na ll y, the unverified documents attached to the Statement of Material Facts co uld b e cons ideredin support of the Motion if Mr. Eshaghpour waived any objection. We agree wi th Ol d Republic that the failure to provide sworn testimony regarding the payments could have been4 As described earlier, Old Repu blic’s cl aim for attorney fees w as s uppo rt ed by an affida vit, and M r. Eshaghpour

filed no response or objection to that affid avit. Thus, t here i s evi dence i n the r ecord t o affi rm that porti on of the judgment awarding

attor ney fees

and, t herefor e, to aff

irm tha t Old Republ ic s

uffer ed damages under the indem nity agreem ent. 14 remedied with the fi ling of an app ropriate affidavit in the trial court, and that Mr. Eshag hpour’s response to the Statement of Material Facts could have made the deficiency clear er. His denial of the statements of

fact on the basis they

were not accompanied

by a citation t o the rec ord was n ot a clear objectio n to the ad

missibil ity of t

he supporting attachments. However, in his memorandum in opposition to summary judgment, he clea rly voiced his objection and the basis for it.
The Court should also de ny s umm ary judgm ent because the Plaintiff has not presented a properly

supported motion. . . . In this case, the Plaintiff has produce d no sworn tes timony

to support its motion. It has merely re stated its allegations in the Complaint and made a con clu sory statemen t that the D efenda

nt is liable . Beca

use the Plaintiff has put forth no sworn testimony to support its position, the Plaintiff has failedto meet its burden o f demonst rating that ther e are no disputed material

facts creating a ge

nuine issu e for tri al. Therefore, Mr. Eshaghp our d id timely object to the admissibility of the unverified and unauthenticated

documents filed as attachments to the Motionand the Statemen t of Mater ial Fac ts, including the canceled

checks a nd other d ocumentsrelating

to the amounts paid t

o repair the house in question.
This court’s role in re

vie w of the g

rant of s ummary

judgmen t is well se

ttled. Our

task is confinedto reviewing the record to determine whether the requ irementsof 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 ligh

t most favo

rable to the nonmov

ing par ty

. Id. In our review of the record we find no evidence substantiating or establishing the amount of losses an d expensesOld Republ ic incur red to repair Ms. Moyer’s house or

otherwise because of

its obligations under the bond. 4 We are una ble to affirm j udgmen

t on the am

ount of recovery

under the indemnity

agree ment bec ause the

re is simply no proof of the total amount of loss or ex pen ses in the record . Where pr

oof of da mages i s inadequate, but liability established, re mand is appropriate. Lane , 767 S.W.2d at 142. Therefore, we vacate the award of da mages and remand

t o the trial court for proof, which may be by affida vit or swor

n verific atio n of the amount s paid by Old Republ

ic due to t

he claim herein a nd, there fore, owing unde

r the inde mnity agree ment.
V.
For the reasons stated herein, we affirm the tria l court’s grant of summary judgment on the issue of liability and the awar d of attorney f

ees. However, this cause is remanded to the trial court5 Th is court ’s a

sses sment of costs on a ppe al in

no way prevents the trial court from awa rding such costs paid by O ld Repub lic as part of it s total loss and expenses, upon a ppropriate mo tion and proof.

15 for furth er proc eedin gs regarding the amount of the total loss, liability, costs, and expenses incurred by Old Republ

ic by reason o f its issua

nce of th e bond. Cos ts of this a

ppeal ar e taxed eq

ually be tw ee n A pp el la nt an d A pp el le e, fo r w hi ch ex ec ut io n m ay i ss ue if ne ce ss ar y. 5

______________________________ PATRICIA J. COTTREL L, JUDGE