A ft erexami ni ng t he br i efs and appe l l at e r ecor d, t hi s panel has det erm i ned * unani m ous l yt o gr antt he part i es ’ r eques tfora dec i s i on on t he br i efs w i t houtor al a rg u m e n t. See F ed . R . A p p . P . 3 4 (f); 10 th C ir . R . 3 4 . 1 (G ). T h e c ase is th ere fo re (c o n tin u e d ...) FI LED Unite d St at e s C ourt o f Appe als

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### S e p t e m b e r 26, 2007 Elisab eth A. Shumaker Clerk of Court UNI TED S TATES CO URT O F AP PEALS F O R T H E T E N T H C IR C U IT HARTF ORD FI RE I NSURANCE CO M P ANY, P lai n ti ff-C o u n terD efe ndant - A ppel l ee, v. P & H C A T T L E C O M P A N Y , IN C .; EM PO RI A LI V ESTO CK SA LES, I N C . ; O L MA V . P E A K ; V E L MA M. P E AK; AM BY S CO T T P E AK; V I RG I N I A L. M O RR I S; CH RY SAN NE M . HA SELHOR ST, T rus t ees of the O l m a V . Peak and V e lm a M . P e a k Irre v o c a b le T ru st; O L MA V . P E A K A N D V E L MA M. PEAK I RREV OC AB LE TRUST,

D efen d an ts- C o u n terC l ai m ants -A pp el l ants , and T I M R E E C E , doi ng bus i nes s as R e e c e C a t t l e C o m p a n y,

D efen dan t -C ross D e fe n d a n t. N o. 07- 3010 ( D . C . N o . 0 5 - C V - 2 0 0 1 - D J W) 451 F. Supp. 2d 1262 ( D . K an. 2006)

ORDE R AND J UDGM EN T *( . . . cont i nued) * or der ed s ubm i t t ed w i t houtor al ar gum ent . T hi s or derand j udgm enti s notbi ndi ng pr ece dent , exce ptundert he doctr i nes of l aw of the ca s e, r es j udi cat a, and col l at er al es t oppel . I tm aybe ci t ed, how ever , fori t s per s uas i ve val ue cons i s t ent w i t h Fed. R . A pp. P. 32. 1 and 10th C i r . R . 32. 1. In a sep ara te ord er the d istri ct co u rtce rt ifi ed it s aw ard o f su m m ary 1 j udgm enti n favorof H ar t for d on i t s contr actual i ndemni t ycl ai m as a fi nal jud g m en t un d er F ed . R . C iv. P. 54 (b). -2- B efor e P O R F IL IO , AN DE RS ON , and BA LD OCK , C i rcui tJudg es.

A p p e lla n ts P & H C a ttle C o m p a n y , In c .; E m p o ri a L iv e s to c k S a le s , In c .; O lm a V . P e a k ; V e lm a M . P e a k ; th e O lm a V . P e a k a n d V e lm a M . P e a k Irre v o c a b le T ru st; a n d A m b yS c o tt P e a k , V irg in ia L . M o rris, a n d C h ry sa n n e M . H a se lh o rst, T rustee s, (co ll ec ti v elythe P ea k s), ap p ea l th e d istri ct co u rt ’s gra n t of su m m ary j udgm enti n favorof H ar t for d Fi r e I ns ur ance C om panyon i t s contr actual i n d e mn i t yc l a i m. W e h a v e j u r i s d i c t i o n u n d e r2 8 U. S . C. § 1 2 9 1 a n d we a ffi r m. 1 P u rsua n t t o the P ac k ers a n d S tock y ard s A ct, 1 9 2 1 , 7 U . S . C . § 2 0 4 , H artfo rd i s s u e d a b o n d l i s t i n g i t s e l f a s s u r e t ya n d P & H C a t t l e a s t h e p r i n c i p a l ( P & H B ond) . P & H C at t l e, E m por i a Li ves t ock Sal es , O l m a Peak, and V el m a Peak ( col l ect i vel yI ndemni t or s ) s ubs equent l yexec ut ed a G ener al I ndemni t yA gr eement ( G I A ) w i t h H ar t for d. H ar t for d defe nded and ul t i m at el ys et t l ed a c l ai m undert he P & H B ond byA ar on W i l ki e ( W i l ki e C l ai m ) for$75, 000. H ar t for d t hen fi l ed t hi s act i on s eeki ng i ndemni fi cat i on undert he G I A fort he s et t l ementamount and-3-

i t s a t t o rn e y ’ s fe e s a n d c o s t s e x p e n d e d i n d e fe n d i n g a n d s e t t l i n g t h e W i l k i e Cl a i m, as w ell as it s att o rne y ’s fe es a n d co sts i n b ri n g ing this acti o n . T h e d istri ct co u rt grant ed H art ford sum m aryj ud gm ent on i t s contr actual i nd em nitycl ai m against t he I ndemni t or s and aw ar ded H ar t for d i t s r eques t ed r el i ef. In th is ap p ea l, the P ea k s raise three claim s o f e rror: ( 1 ) th e d istri ct co u rt l acke d j ur i s di ct i on overt hi s act i on under28 U . S. C . § 1332( a) beca us e the amount i n contr over s ydi d notexce ed $75, 000; ( 2) H ar t for d’ s l os s es i n defe ndi ng and s et t l i ng t he W i l ki e C l ai m ar e notr ecove r abl e undert he t erm s of the G I A ; and ( 3) H ar t for d cannotr ecove rat t or ney ’ s fee s orcos t s undert he G I A . T he fa ct s , as th e yre late to th e se c laim s o n a p p e a l, are n o t d isp u ted a n d a re se t fo rth in d e tail in th e d is tr ic t c o u rt ’s d e c is io n . See Har t f or d F i r e Ins . C o. v. P & HC at t l e C o. , 451 F. Supp. 2d 1262, 1265- 71 ( D . K an. 2006) . W e w i l l notr epea tt hem her e, excep tas theyrel at e t o the ar gu m ents rai sed byt he P eaks. Standards of

R eview T he Peaks i ni t i al l ycl ai m t hatt he di s t r i ctcour tdi d nothave s ubj ect - m at t er ju risd ictio n u n d e r § 1 3 3 2 . “T h e u lti m a te q u e stio n o f w h e th e r d iv e rsity j ur i s di ct i on exi s t s i s a mi xed ques t i on of l aw and fa ctt o be r evi ew ed de novo , w i t h anyfac tual fi ndi ngs of the di s t r i ctcour tr evi ew ed forcl earerr or . ” E lli o tt Indus . Ltd. P ’s hi

p v. B P A m . P r od. C o. , 4 0 7 F .3 d 1 0 9 1 , 1 1 0 5 (1 0 th C ir . 2 0 0 5 ). T he Peaks ’ r emai ni ng t w o cl ai m s of err oraddr es s t he di s t r i ctcour t ’ s gr antof s um m aryj udgm enti n favorof H ar t for d. “W e r evi ew t he di s t r i ctcour t ’ s gr antof-4-

su m m a ryju d g m e n t de novo , appl y i ng t he s ame l egal s t andar d us ed byt he di s t r i ct co u rt . W e a lso rev iew the d istri ct co u rt ’s i n terpretati o n o f [ a c o n tr ac t] de novo . ” O ld R epubl i c Ins . C o. v. D ur ango A i rSer v. , Inc. , 2 8 3 F . 3 d 1 2 2 2 , 1 2 2 5 (10 th C ir . 2 0 0 2 ) (cit ati o n o m itted). A n d w e re v iew d e n o v o the d istri ct co u rt ’s in te rp re ta tio n o f

K a n s a s la w . S e e R ey n o lds v . Sc h . D is t. No . 1 , 69 F. 3d 1523, 1 5 3 6 (10 th C ir . 1 9 9 5 ). D i vers it y Jur is di cti on I n i t s compl ai nt , H ar t for d al l eged feder al cour tj ur i s di ct i on exi s t ed under § 1332. W her e ther e i s di ver s i t yof ci t i zens hi p of the part i es , § 1332( a) gi ves d istric t co u rts o rig in a l ju risd ictio n o v e r “ a ll civ il ac tio n s w h e re th e m a tter in contr over s yexce eds t he s um orval ue of $75, 000, excl us i ve of i nt er es tand cos t s . ” H ar t for d’ s compl ai nts oughta t ot al s um i n exce s s of $117, 000, i ncl udi ng t he $75, 000 s et t l ementamount on t he W i l ki e C l ai m , pl us at t or ney ’ s fee s , cos t s , and i nt er es t . N onethel es s , t he Peaks ar gue that , underK ans as l aw , at t or ney ’ s fee s and cos t s ar e notr ecove r abl e undert he G I A , and w i t houtt he addi t i onal s um s for a tto rn e y ’s fe e s , c o s ts a n d in te re s t, th e a m o u n t in c o n tr o v e rs yw a s o n ly $ 7 5 ,0 0 0 . T h ere fo re, th eyasse rtthat the d istri ct co u rtsh o u ld h av e d ism issed H artfo rd’s cl ai m forl ack of

s ubj ect - m at t erj ur i s di ct i on. T hi s ar gum enti gnor es al t ogethert he di s t r i ctcour t ’ s bas i s forconcl udi ng th e re w a s ju risd ictio n u n d e r § 1 3 3 2 . T h e c o u rt su m m a riz e d th e “ leg a l ce rta in ty ru le” fo r d e ter m in in g w h e th e r th e a m o u n t-in -c o n tro v e rsy req u ire m e n t is sa tisfied :-5-

“ U n d e r th e leg a l ce rta in tyru le, p lea d in g d a m a g e s in e x c e ss o f th e a m o u n t in contr over s yr equi r ementi n t he compl ai nti s s uffi ci entt o s at i s fyt he j ur i s di ct i onal re q u ire m e n t u n les s it a p p e a rs to a leg a l ce rta in tyth a t th e p lain tiff in g o o d fa ith cannotcl ai m t hatamount . ” Hart f ord F i re Ins. , 451 F. Supp. 2d at1272 ( ci t i ng St . P aulMer cur

y Indem . C o. v. R ed C ab C o. , 3 0 3 U .S . 2 8 3 , 2 8 8 -8 9 (1 9 3 8 )) . R athert han addr es s i ng appl i cat i on of the l egal cert ai nt yrul e, t he Peaks i ns t ead ar gue the mer i t s of thei rcont ent i on t hatK ans as l aw pr ecl udes r ecove r yof at t or ney ’ s fee s and cos t s undert he G I A . T hei rar gum entapt l yi l l us t r at es t he l ack o f leg al ce rt aintyreg ard ing that v eryq u esti o n . W e c o n clud e tha t th e d istri ct co u rt corr ect l ydet erm i ned thatH ar t for d’ s pr ay erforj udgm enti n an amountexce edi ng $ 7 5 , 0 0 0 w as su ffici en t t o m ee t th e jurisdicti o n al req u ir em en t un d er § 1 3 3 2 (a). Inter pretation of th e GIA T he Peaks cont end thatt he t erm s of the G I A do notpr ovi de for i ndemni fi cat i on of the l os s s us t ai ned byH ar t for d i n defe ndi ng and s et t l i ng t he W i l ki e C l ai m beca us e none of t he I ndemni t or s w er e i nvol ved i n t he under l y i ng tra n sa c tio n th a t g a v e rise to th a t cla im . S o m e b a c k g ro u n d is n e c e ss a ryto under s t and thi s ar gum ent . A s des cr i bed byt he di s t r i ctcour t , t he s peci fi cs of the W i l keyt ransact i on w ere as foll ow s:

O n F e b ru a ry1 4 , 2 0 0 1 , A a ro n W ilk e yd /b /a A & W C a ttl e C om pany( “W i l key ”) s ol d 225 head of fatcatt l e for$186, 780. 39, w hi ch w er e s hi pped fr om t he H y - pl ai ns Feedy ar d t o I ow a B eef P roc esso rs i n E m p o ri a, K an sas fo r sl au g h ter. T h e c att le w ere ul t i m at el ypur chas ed byH ol m es L i ves t ock, w ho i s s ued a c heck i n t he“ O th e r r e g is tr a n ts ” c o u ld b e a d d e d to C la u s e 3 o f th e P & H B o n d b yri d e r. 2 C l aus e 3 pr ovi ded thatt he bond w as “appl i cabl e” a nd “r emai n[ed] i n ful l for ce and vi r tue” [i ] f the s ai d Pr i nci pal , act i ng as a cl ear i ng agenc yr es pons i bl e fort he fi nanci al obl i gat i ons of otherr egi s t r ant s engage [d] i n buy i ng l i ves t ock, . . . ori f s uch otherr egi s t r ant s , s hal l [fa i l t o] ( 1) payw hen d u e to th e p e rso n o r p e rso n s e n tit led th e re to th e p u rc h a se p ric e o f a ll l i ves t ock pur chas ed bys uch otherr egi s t r ant s fort hei row n acc ount o r fo r th e a c c o u n ts o f o th e rs [ o r] (2 ) sa fe lyk e e p a n d p ro p e rly di s bur s e al l funds comi ng i nt o t he hands of s uch Pr i nci pal ors uch ot herr egi s t r ant s fort he purpos e o[f] pay i ng forl i ves t ock pur chas ed for t he acc ou nts of o t hers. A pl ee. Supp. A pp. at89. -6- amount of $186, 780 pay abl e t o T i m R eec e. U pon r ece i vi ng t he chec k fr om H ol m es L i ves t ock, T i m R eec e’ s w i fe e ndor s ed the che ck and s enti tt o W i l key ’ s bank. T he che ck w as di s honor ed forpaym ent du e t o insuffi ci ent fund s. Hart f ord F i re Ins. , 451 F. Supp. 2d at1267. A ft erfai l i ng t o r ece i ve paym entfor hi s catt l e, W i l keym ade a cl ai m undert he P & H B ond, w hi ch l i s t ed “Ti m R eec e D B A R eec e C at t l e C om pany ” as an “otherr egi s t r ant [] ” and “ C L E A R E E . ” See A pl ee. Supp. A pp. at 89, 95. H ar t for d deni ed the cl ai m and W i l keyt hen fi l ed an 2 act i on agai ns tP & H C at t l e, as pr i nci pal , and H ar t for d, as s ur ety , t o r ecove ron t he P & H B ond. H a rtfo rd in iti a llyre sis ted th e W ilk e yC laim o n th e b a sis th a t P & H C a ttl e di d notactas a cl ear i ng agenc yunderC l aus e 3 i n t he W i l keyt r ans act i on. B ut H a rtfo rd u lti m a telyc o n c lu d e d th e re w a s a su b sta n tial risk th a t ita n d P & H C a ttl e co u ld b e h eld liable o n the P & H B o n d , ev en tho u g h P & H C att le w as n o t aw are-7-

of and di d notpar t i ci pat e i n t he tr ans act i on w i t h W i l key . H ar t for d s et t l ed the W i l keyC l ai m for$75, 000. I tt hen fi l ed thi s act i on agai ns tt he Peaks , s eeki ng r ecove r yundert he G I A of the s et t l ementamount and i t s cos t s and att or ney ’ s fee s e x p e n d e d i n d e fe n d i n g t h e W i l k e yCl a i m. T he I ndemni t or s fi l ed a c ount er cl ai m agai ns tH ar t for d, as s er t i ng t hat H a rtfo rd w a s n e g lig e n t in se ttl in g th e W ilk e yC laim . F u rth e r, in re sp o n se to H ar t for d’ s s um m aryj udgm entm ot i on, t he I ndemni t or s cont ended theyw er e not l i abl e undert he G I A beca us e the W i l keyC l ai m w as nota val i d cl ai m on t he P & H B o n d . B u t th e d istric t co u rt c o n c lu d e d th a t H a rtfo rd w a s n o t re q u ire d to s h o w th a t th e b o n d c la im w a s v a lid in o rd e r t o e n fo rc e th e G IA . Hart f ord F i re Ins. , 4 5 1 F . S u p p . 2 d a t 1 2 8 1 -8 2 . It h e ld th a t H a rtfo rd n e e d o n lysh o w th a t it act ed r eas onabl yi n s et t l i ng t he W i l keyC l ai m , and i tconcl uded thatH ar t for d had d e m o n s tr a te d its c o n d u c t w a s re a s o n a b le . Id. at1279. T he courtal s o gr ant ed s um m aryj udgm enti n H ar t for d’ s favoron t he I ndemni t or s ’ negl i gence c o u n te rc la im . Id. at1285–86. O n appea l , t he Peaks do noti dent i fyanyerr ori n t he di s t r i ctcour t ’ s rul i ng t hatH ar t for d act ed r eas onabl yi n s et t l i ng t he W i l keyC l ai m . N orhave they a p p e a led th e d istric t co u rt’s d ism iss a l o f th e In d e m n ito rs’ n e g lig e n c e c laim ag ains t H artfo rd. B u t th eyarg u e tha t H artfo rd c an n o t r ec o v er u n d er th e G IA beca us e none of

t he I ndemni t or s w as aw ar e of orpar t i ci pat ed i n t he tr ans act i on w i t h W i l key . T heyr es tt hei rar gum enton Sect i on I I of the agr eement , w hi ch-8-

pr ovi des , i n r el evantpar t : “Thi s A gr eementappl i es t o al l B onds exec ut ed byt he Sur ety( 1) on w hi ch anyI ndemni t orei t heract s s ol el yoras a mem berof a par t ner s hi p ora j oi ntventur e, or( 2) i n connec t i on w i t h w hi ch anyI ndemni t or a c ts a s a s ile n t p a rt n e r o r a s ile n t jo in t v e n tu re r.” A p le e . S u p p . A p p . a t 1 0 0 . B efor e rul i ng on H ar t for d’ s s um m aryj udgm entm ot i on, t he di s t r i ctcour tas ked t he part i es foraddi t i onal br i efi ng on w hethert hi s s ect i on l i m i t s orqual i fi es t he G I A ’ s appl i cabi l i t yt o “al l B onds ” exe cut ed byH ar t for d. Focus i ng s ol el yon t he under l y i ng t r ans act i on w i t h W i l key , t he Peaks ar gued thatt he G I A does not p rov ide in d em n ifi ca ti o n fo r th e W il k eyC lai m b ec au se n o n e o f th e In d em n it o rs act ed s ol el yi n t hatt r ans act i on, oract ed i n t hatt r ans act i on as a part nerorj oi nt ventur er , s i l entorot herw i s e, w i t h T i m R ees e. T he Peaks quot ed the l anguage of S e c tio n II a n d a ss e rte d th a t it s p lain m e a n in g is c lea r. B u t th e yp ro v id e d n o b a sis forr eas onabl yi nt erpr et i ng i ti n t he mannert hatt heypr opounded. H ar t for d di s agr eed w i t h t he Peaks ’ i nt erpr et at i on, cont endi ng t hatSect i on I I does notaddr es s t he I ndemni t or s ’ act i vi t y , orl ack ther eof, i n anyunder l y i ng tra n sa c tio n . H a rtfo rd a rg u e d th a t itc o u ld re c o v e r u n d e r th e G IA fo r su m s it e x p e n d e d in c o n n e c tio n w ith th e W ilk e yC laim b e c a u se P & H C a ttl e a c ted so lely i n pr ocur i ng t he P & H B ond fr om H ar t for d. T her efor e, H ar t for d cont ended that the P & H B o n d fa ll s w ith in the ap p li ca ti o n o f th e G IA b ec au se, un d er S ec ti o n II, t he agr eementappl i es notonl yt o B onds i s s ued att he r eques tof an I ndemni t or act i ng s ol el y , butal s o w hen theyr eques tB onds as a mem berof a pa r t ner s hi p or-9-

j oi ntventur e. T hus , H ar t for d ar gued thatSect i on I I notonl ydoes notl i m i tt he I n d e m n i t o r s ’ l i a b i l i t y u n d e rt h e G I A , b u ta c tu a l l y expa nds t he def i ni t i on of w hi ch B o n d s a re c o v e re d . H a rtfo rd c o n ten d e d th a t it s c o n stru c tio n o f S e c tio n II is cons i s t entw i t h t he fourcorner s of the G I A , addr es s i ng var i ous ot herpr ovi s i ons o f th e a g re e m e n t. T h e d istri ct co u rtco n side red the m ea n ing o f th e w o rd “ ac ts” i n S ec ti o n II, n o tin g th e p a rties ’ d iffe rin g in terp re tatio n s a n d th e c o n se q u e n c e o f e a c h w ith re g a rd to w h e th e r H a rt fo rd c o u ld re c o v e r o n its c la im . Hart f ord F i re Ins. , 4 5 1 F . S u p p . 2 d at 12 7 7 . T h e c o u rtco n stru ed “‘a cts’ t o m ea n the in d em n it o r’s act s of pr ocur i ng a bond fr om t he s ur ety ” and i l l us t r at ed w hyi t s i nt erpr et at i on w a s c o n s is te n t w ith o th e r p ro v is io n s o f th e G IA . Id. at1277- 78. T hen, c o n c lu d in g th a t itc o u ld re a so n a b lyin fe r th a t o n e o f th e In d e m n ito rs a c ted to p ro c u re th e P & H B o n d o n b e h a lf o f P & H C a ttl e , ith e ld th a t th e G IA a p p lied to th a t b o n d . Id. at1278. Str i ctConstr ucti on A gainstthe D r af ter T h e P e a k s first a rg u e th a t th e d istric t co u rt e rre d in fa ili n g to stric tly cons t rue the G I A agai ns tH ar t for d, as t he dr aft er , beca us e the G I A i s bot h an in d e m n itya g re e m e n t an d a n a d h e sio n c o n tra c t. T h e yc o n ten d th a t u n d e r th is ru le of co nst ruct i on t he d i stri ctcou rthad no op t i on bu tt o sel ectt he P eaks’ i nterpret at i on of the G IA . W e dis agree. T he rul e requi ri ng con struct i on against t he dr aft erdoes notcome i nt o pl ayunl es s and unt i l a courtr eac hes t he conc l us i on-10-

th a t a n a g re e m e n t is a m b ig u o u s . See Mo. P ac. R . R . v. C i t y of Topeka , 518 P. 2d 372, 376 ( K an. 1974) ( “D oubt s ar i s i ng fr om ambi gui t yorobs cur i t yi n t he lan g u a g e u se d [ in th e in d e m n itya g re e m e n t] a re to b e re so lv e d a g a in st th e p a rty p re p a rin g th e c o n tra c t.”); St . Fr ancis Hos p. & Sc h. of

Nurs i ng, Inc. v. E ckm an , 510 P. 2d 175, 177 ( K an. 1973) ( not i ng rul e of c ons t ruct i on appl i cabl e t o adhes i on co n tr ac ts ap p li es o n lyaf ter find ing v ag u en ess o r un ce rt aintyin co n tr ac t’ s m ea n ing ). T he Peaks do notar gue thatt he G I A i s ambi guous ; i ndeed, t heycont end that the lan g u ag e o f S ec ti o n II i s clea r. B u t th eyasse rtthat the d istri ct co u rt co n clud ed the G IA is am b igu o u s. W e find n o su ch h o lding in the d istri ct co u rt ’s d e c i s i o n . An d we n o t e t h a ti tc o n fi n e d i t s a n a l y s i s t o t h e fo u rc o r n e r s o f t h e GI A, a s is a p p ro p ri a te in c o n s tru in g a n u n a m b ig u o u s a g re e m e n t. See Hart f ord F i re Ins. , 4 5 1 F . S u p p . 2 d a t 1 2 7 7 -7 8 ; se e a lso C la rkv . Wa lla c e C o u n ty C o -O p . E q u ity Exch. , 986 P. 2d 391, 393 ( K an. C t . A pp. 1999) ( hol di ng cour tm us ti nt erpr et u n am b igu o u s co n tr ac t w ith in it s fo u r co rne rs). M o reo v er, th e c o u rt ’s acknow l edgmentof the part i es ’ di ffe r i ng i nt erpr et at i ons does notcons t i tut e a fin d in g th a t th e G IA is a m b ig u o u s . See Al l i ed Mut . Ins . C o. v. Moeder , 48 P. 3d 1, 4 ( K an. C t . A pp. 2002) ( “The fac tt hatt he part i es do notagr ee ove rt he meani ng o f th e te rm s d o e s n o t in a n d o f its e lf p ro v e th a t th e c o n tr a c t is a m b ig u o u s .” ). T hus , i n t he abs ence of a hol di ng t hatt he G I A i s ambi guous , w e conc l ude thatt he-11-

di s t r i ctcour tdi d noterri n fai l i ng t o cons t rue the agr eements t r i ct l yagai ns tt he d raf ter. Con struction of Un am biguo u s Term s T he Peaks ar gue i n t he al t ernat i ve thatt he di s t r i ctcour terr ed i n cons t rui ng t he unambi guous t erm s of the G I A . W e r evi ew t he di s t r i ctcour t ’ s i nt erpr et at i on o f th e a g re e m e n t d e n o v o . See O ld R epubl i c Ins . C o. , 283 F. 3d at1225 . T he par t i es agr ee thatt he G I A s houl d be cons t rued underK ans as l aw . I n Missouri P aci f i c Rai lr oad , the K a n sa s S u p re m e C o u rt m a d e “ a fe w o b se rv a tio n s a s to i ndemni t y ”: T h e w o rd is g e n e ra llyd e fin e d a s a n o b lig a tio n re stin g o n a p a rtyto m ake g oo d an yl oss another has i ncu rr ed w hil e act i ng athis request orforhi s benef

i t ; i ti s a r i ghtw hi ch i nur es t o a per s on w ho has f u lfill e d a n o b lig a tio n o w e d b yh im b u t w h ich a s b e tw e e n h im se lf an d an o ther p erso n sh o u ld h av e b ee n d isch arg ed b ythe o ther. In cons t rui ng a contr actof i ndemni t yand det erm i ni ng t he r i ght s and l i abi l i t i es of the part i es t her eunder , t he i m por t antques t i on t o be det erm i ned i s t he i nt ent i on of the part i es , and effec ts houl d be gi ven t o t hati nt ent i on i f s uch ca n be done c ons i s t ent l yw i t h l egal pri ncipl es. 518 P. 2d at375- 76 ( ci t at i on om i t t ed) . Fur t herm or e, “[r ] eas onabl e r athert han unr eas onabl e i nt erpr et at i ons of contr act s ar e fa vor ed. ” Kan . Stat e B an k & Trust C o. v. D eLor ean , 64 0 P . 2d 34 3, 34 9 (K an. C t . A pp . 19 82 ). A nd a cou rtm ust c o n stru e e a c h se c tio n in th e c o n tex t o f a n d c o n sis ten t w ith th e e n tire a g re e m e n t, ra th e r t h a n c ri tic a lly a n a lyzi n g a s in g le p ro v is io n . S e e Zu ke lv . Gr e a tW. Man ag e rs , LLC , 78 P . 3d 48 0, 48 4 (K an. C t . A pp . 20 03 ). A cou rt ’s “j ob i s t o u se-12-

comm on s ens e and nott o s t r ai n t o cr eat e an a m bi gui t yi n a w r i t t en i ns t rum ent w hen one doe s notexi s t . ” A l l i ed Mut . Ins . C o. , 4 8 P .3 d a t 4 . I n t hi s cas e, t he di s t r i ctcour tl ooked fi r s tatt he l anguage of the i ni t i al p a ra g ra p h o f

th e G IA . See Hart

f ord F i re Ins. , 4 5 1 F . S u p p . 2 d at 12 7 7 . It provides: O ne orm or e of the under s i gned, her ei n cal l ed I ndemni t or s , has r eques t ed orm ayr eques tH ar t for d Fi r e I ns ur ance C om panyoranyof its in su ra n c e c o m p a n ya ffili a tes , h e re in in d iv id u a llya n d c o llec tiv e ly cal l ed Sur ety , t o furni s h, pr ocur e orcont i nue contr act s of s ur ety s hi p, guar antyori ndemni t y , orot herobl i gat or yi ns t rum ent s , her ei n cal l ed B on ds, on beh al f of

anyon e or m ore of the I nd em nit ors. A p le e . S u p p . A p p . a t 1 0 0 . T h is la n g u a g e b ro a d ly d e fin e s th e te rm “ B o n d s ,” w hi ch i s us ed thr oughoutt he G I A , t o i ncl ude numer ous di ffe r entt ypes of in stru m e n ts. F u rth e r, su c h B o n d s m a yb e re q u e ste d b ya n yIn d e m n ito r “ o n b e h a lf of anyone orm or e of the I ndemni t or s . ” The di s t r i ctcour tal s o cons i der ed the s e c o n d p a ra g ra p h o f

th e G IA . See Hart

f ord F i re Ins. , 4 5 1 F . S u p p . 2 d a t 1 2 7 7 -7 8 . T hat par agraph provides: B yth e e x e c u tio n o f

th is A g re e m e n t, th e In d e m n ito rs e x p re ss ly w a rra n t th e ir m a ter ial o r b e n e ficia l in ter e st in su c h B o n d s, a n d in cons i der at i on of the furni s hi ng, pr ocur i ng orcont i nui ng of s uch B o n d s, an d o ther g o o d an d v alua b le co n side rati o n , the In d em n it o rs h e re b yjo in tly a n d s e v e ra lly a g re e to th e fo llo w in g [ .] A pl ee. Supp. A pp at100. T hi s pr ovi s i on i ndi cat es t hatH ar t for d’ s “furni s hi ng, p ro c u rin g o r c o n tin u in g o f su c h B o n d s” is th e c o n sid e ra tio n fo r th e a g re e m e n ts m ad e b ythe In d em n it o rs i n the G IA . O n e su ch ag ree m en t i s in S ec ti o n III :-13-

T he I ndemni t or s w i l l i ndemni fyand hol d t he Sur etyharm l es s fr om al l l os s , l i abi l i t y , damages and expe ns es i ncl udi ng, butnotl i m i t ed t o, c o u rt c o s ts , in te re s t a n d a tto rn e y ’s fe e s , w hi ch t he Suret y i ncurs or s us t ai ns ( 1) be c aus e of hav i ng fur ni s he d any Bond . . . .” Id. ( emphasi s added) . T hi s pr ovi s i on br oadl ydefi nes t he s cope of t he I ndemni t or s ’ l i abi l i t yt o ext end t o al l l os s es H ar t for d i ncur s “bec aus e of ha vi ng f u rn is h e d a n yB o n d .” A s th e d is tr ic t c o u rt o b s e rv e d , see Harf ord F i re Ins. , 451 F. Supp. 2d at 1 2 7 8 , o th e r re fe re n c e s in th e G IA su p p o rt th e c o n c lu sio n th a t itis in ten d e d to coveral l B onds exec ut ed byH ar t for d, att he r eques tof and on be hal f of one or m or e of the I ndemni t or s . Forexampl e, Sect i on X V s t at es , “Thi s i s a cont i nuous A gr eementw hi ch r emai ns i n ful l for ce a nd effectas t o everyB ond i s s ued byt he S u re ty .” A p lee . S u p p . A p p . at 1 0 1 . S e c tio n X IV re q u ire s th e In d e m n ito rs to i m m edi at el ypr ovi de H ar t for d w i t h w r i t t en not i ce of anydemand oract i on “r el at i ng t o anyB ond. ” Id. at 10 0 . T h at sec ti o n p rov ides fu rth er tha t H artfo rd “mayadj us t , s et t l e orcompromi s e anycl ai m , demand, s ui torj udgm entupon any B onds . ” Id. at101. W e n o te a s w e ll th a t th e G IA in c lu d e s p lain ly -sta ted re fe re n c e s to under l y i ng t r ans act i ons , i ncl udi ng pr ovi s i ons r egar di ng act i ons byt he In d e m n ito rs a n d o th e rs w ith re sp e c t to th o se tra n sa c tio n s. S e c tio n I re fe rs to “B onds r equi r ed i n connec t i on w i t h t he per form ance of a c ont r act . ” Id. a t 1 0 0 . Sect i on V I r efe r s t o “the s t atus and condi t i on of w or k underanycontr act s bei ng-14-

per for m ed byanyI ndemni t orand the fi nanci al s t atus of s uch contr act s . ” Id. Sect i on V I I l i kew i s e r efe r s t o “[a ] n I ndemni t or ’ s abandonment , for fei tur e or br eac h of, orfai l ur e, r efus al ori nabi l i t yt o per form , a contr actguar ant eed byany B ond. ” Id. A nd Sect i on X pr ovi des t hatt he I ndemni t or s w ai ve not i ce of

“ [ d ]e fa u lts u n d e r c o n tra c ts o r a n ya c ts w h ich m ig h t re su lt eith e r in c laim s, o r in l i abi l i t i es of the Sur etyunderanyB onds . ” Id. F inally , w e o b serv e tha t th e o ther p rov isi o n in S ec ti o n II of the G IA ex p an d s, rathe r th an li m it s, the In d em n it o rs’ l iabili ty . Itp rov ides that, “[ i] f [H ar t for d] pr ocur es t he exe cut i on of B onds byot hers ur et i es , orexec ut es B onds w i t h cos ur et i es , t he pr ovi s i ons of thi s A gr eements hal l i nur e t o t he bene fi tof s uch ot hers ur et i es orcos ur et i es as t hei ri nt er es t s m ayappea r . ” Id. A g a in st th is b a c k g ro u n d , w e c o n sid e r w h a t itm e a n s to “ a c t” “ o n ” o r “ in c o n n e c tio n w ith ” a “ B o n d ,” a s th o se w o rd s a re u se d in S e c tio n II. A c c o rd in g to t he P eaks, act i ng on or i n co nn ect i on w i t h a B on d refers t o the I nd em nit ors’ a c tio n s in a n u n d e rl y in g tr a n s a c tio n th a t r e s u lts in a c la im u n d e r t h e B o n d . T her efor e, undert hei rcons t ruct i on, t he G I A w oul d onl ys om et i m es appl yt o t he P & H B ond, dependi ng on w hetheran I ndemni t orpar t i ci pat es i n t he under l y i ng t r ans act i on t hatgi ves r i s e t o a cl ai m undert hatbond. P & H C at t l e made es s ent i al l yt he s ame ar gum enti n defe ndi ng t he W i l keyC l ai m , byas s er t i ng t hat t he P & H B ond di d notcovert he W i l keyC l ai m beca us e P & H C at t l e di d not par t i ci pat e i n t he W i l keyt r ans act i on. B ut , aft erdet erm i ni ng t her e w as a good-15-

chanc e thatdefe ns e w oul d nots ucce ed, H ar t for d s et t l ed the W i l keyC l ai m . T he d is tr ic t c o u rt ru le d in th is a c tio n th a t H a rt fo rd a c te d re a s o n a b ly in d o in g s o . Hart f ord F i re Ins. , 4 5 1 F . S u p p . 2 d a t 1 2 7 9 . A s w e h a v e in d ica ted , the P e a k s d id notappea l t hatrul i ng. N onethel es s , t heys eek t o ext end thei rar gum entr egar di ng l ack of par t i ci pat i on i n t he under l y i ng t r ans act i on t o t he cons t ruct i on of the s cope o f t h e i rl i a b i l i t yt o i n d e mn i f yHa r t fo r d u n d e rt h e GI A. T h e P e a k s’ p ro p o se d in ter p re tatio n im p ro p e rlylo o k s a t S e c tio n II in is o la tio n , ra th e r t h a n in h a rm o n yw ith th e re s t o f th e a g re e m e n t. See Zuke l , 78 P. 2d at484. A s w e have not ed, t heyfai l ed t o anal y ze i n t he di s t r i ctcour tw hy th e irin te rp re ta tio n is re a s o n a b le a n d c o n s is te n t w ith th e o th e r t e rm s o f th e G IA . N ordo t heym ake a nyeffor tt o do s o on appea l . T heyal s o pr ovi de no expl anat i on w hyH ar t for d w oul d acc eptl i abi l i t yas s ur etyundera B ond r eques t ed b ya n d fo r th e b e n e fit o f o n e o r m o re In d e m n ito rs, y e t li m it i ts a b ili tyto o b tain i ndemni fi cat i on fr om t he I ndemni t or s undert he G I A forcl ai m s on t hatB ond t hat i treas on ablyset t l es. W e concl ude t hat t he G I A appl i es t o al l B onds exec ut ed byH ar t for d att he r eques tof one orm or e of the I ndemni t or s , w hetheran I ndemni t oract s al one, oras a mem ber , s i l entorot herw i s e, of a pa r t ner s hi p orj oi ntventur e, i n m aki ng a req u est t o H artfo rd to fu rnish , p roc u re, or co n ti n u e a B o n d . T h e In d em n it o rs agr eed unde rt he G I A t o m ake good the l os s es H ar t for d i ncurr ed bec aus e of havi ng furni s hed a Bond att hei rr eques t . T her efor e, t hi s i nt erpr et at i on of Sect i on-16-

I I i s al s o cons i s t entw i t h t he gene r al m eani ng of i ndemni t yas “an obl i gat i on re stin g o n a p a rtyto m a k e g o o d a n ylo ss a n o th e r h a s in c u rre d w h ile a c tin g a t h is r eques torforhi s benef i t . ” Mo . Pa c . RR. , 5 1 8 P .2 d a t 3 7 5 . W e c o n c lu d e th a t itis t h e o n l y re a so n a b le i nt erpr et at i on.

R ecove ry of A ttorn ey’s Fees an d C osts Un der th e GIA T h e P e a k s’ th ird a n d fin a l cla im o f e rro r is th a t th e d istric t co u rt w ro n g ly c o n c lu d e d th a t H a rt fo rd c o u ld re c o v e r a tto rn e y ’s fe e s a n d c o s ts u n d e r t h e G IA . S e c t i o n I I I o f

t h e a g r e e m e n tp r o v i d e s fo rt h a tr e c o v e r y: T he Inde m nit ors w i l l i nd em nifyand ho l d the Su retyharm l ess fr om al l l oss, l i abil i t y , dam ages an d ex pen ses inc lud ing , b u t n o t l im it ed to, co u rt c o sts , in ter e st and att orney’s fees , w hi ch the Sur etyi ncur s ors us t ai ns ( 1) beca us e of ha vi ng furni s hed anyB ond, or( 2) beca us e of the fa i l ur e of a n In d e m n ito r to d isc h a rg e a n yo b lig a tio n s u n d e r th e A g re e m e n t, or (3 ) in e n fo rc in g a n yo f

th e p ro v isio n s o f

th is A g re e m e n t. A p lee. Su p p . A p p . at 10 0 (em p h asis ad d ed ). T h e d istri ct co u rth eld th at H artfo rd w as ent i t l ed t o r ecove ri t s at t or ney ’ s fee s and cos t s i ncurr ed i n defe ndi ng and s e ttlin g th e W ilk e yC la im a n d in e n fo rc in g th e G IA in th is a c tio n . Hart f ord F i re Ins. , 451 F. Supp. 2d at1286. B utt he Peaks cont end thatt he pr ovi s i on for r ecove r yof att or ney ’ s fee s and cos t s i n t he G I A i s nul l and voi d undera pr i or ver s i on of K an. St at . A nn. § 58- 2312. A tt he t i m e the G I A w as exec ut ed i n 1993, § 5 8 -23 1 2 p rov ided in relev an t part (em p h asis ad d ed ): H e r e a f t e ri ts h a l l b e u n l a w f

u l fo ra n y p e r s o n o rp e r s o n s , c o m p a n y, corporat i on or bank , t o co ntr actfor the p aym ent of at t orney ’s fees in any not e, bi l l of

exchan ge, bond or m ort gage ; and anys uch c o n tra c t o r stip u latio n fo r th e p a ym e n t o f a tto rn e y ’s fe e s s h a ll b e n u llT he s t atut e w as amended i n 1994, del et i ng t hi s l anguage and addi ng new 3 lan g u a g e p e rm itt in g p ro v isio n s in c re d it ag re e m e n ts fo r th e re c o v e ryo f c e rta in c o s ts o f c o lle c tio n , b u t th e a m e n d e d v e rs io n h a s n o t b e e n a p p lie d re tr o a c tiv e ly. See Ryco Packagi ng C or p. v. C hapel l e Int ’ l, Ltd. , 9 2 6 P .2 d 6 6 9 , 6 7 8 -8 0 (K a n . C t. A p p . 1 9 9 6 ). -17- and voi d; and thather eaf t erno cour ti n t hi s s t at e s hal l r enderany j udgm ent , or derordecr ee byw hi ch anyat t or ney ’ s fee s s hal l be all o w ed o r ch arg ed to the m ak er of any prom i s s ory n ot e, bi l l of ex ch an ge, b on d , m ortgag e, or o ther ev i d en ce of i n d eb tedn ess by w a yo f fe e s , e x p e n s e s , c o s ts o r o th e rw is e . . . .” 3 T h e q u e stio n is w h e th e r th e p re v io u s v e rsio n o f th is s tatu te a p p lied to i ndemni t yagr eement s . T he di s t r i ctcour tconcl uded i tdi d not , r el y i ng on t he r eas oni ng i n In r e D vor ak , 1 7 6 B .R . 9 2 9 (B a n k r. D . K a n . 1 9 9 4 ). See Hart f ord F i re Ins. , 451 F. Supp. 2d at1283- 84. I n D vor akt he courtdi s t i ngui s hed in d e m n ity a g re e m e n ts f ro m th e a g re e m e n ts lis te d in § 5 8 -2 3 1 2 . See 176 B . R . at 934. Si m i l art o t hi s cas e, t he i ndemni t ee i n D vor akw as t he s ur etyon a bond for w hi ch the i ndemni t orw as t he pr i nci pal . T he courthel d t hatt he bond and the i ndemni t yagr eementw er e di s t i nctand the i ndemni t yagr eementcoul d notbe “cha r act er i zed a s a bond. ” Id. It a lso re a so n e d th a t an in d e m n itya g re e m e n t is nota “not e” be caus e i ti s not“an unc ondi t i onal pr om i s e t o paya fi xed amountof m oney . ” Id. A nd i tconcl uded thatan i ndemni t yagr eementi s not“an e vi dence of i ndebt ednes s ” bec aus e, “[a ] tt he t i m e the i ndemni t yagr eementi s ent er ed i nt o, t her e i s no debt . ” Id. W e hav e fou nd no K ansas authori t ydir ect l yon po i nt and t herefore w e m ust pr edi cthow K ans as cour t s w oul d deci de the ques t i on w hethert he form erver s i on-18-

o f § 5 8 -2 3 1 2 a p p lie d to in d e m n ity a g re e m e n ts . See United S tates v. D eG asso , 369 F. 3d 1139, 1145 ( 10t h C i r . 2004) ( “I f the s t at e s upr eme cour thas not i nt erpr et ed a pr ovi s i on of the s t at e’ s s t atut or ycode, t he fe der al cour tm us tpr edi ct ho w t he co urtw ou l d int erpr ett he co de in l i gh tof st at e app el l at e cou rtop i nions, d e c isio n s f

ro m o th e r ju risd ictio n s, sta tu tes , an d tre a tise s.” (q u o tatio n a n d b ra c k e ts om i t t ed) ) . T he Peaks poi ntt o In r e Woer ner , 19 B . R . 708, 712 ( B ankr . D . K an. 1982) , w hi ch hel d t hat§ 58- 2312 appl i ed t o i ndemni t yagr eement s . T he Woer ner cour tconcl uded, w i t houtr at i onal e, t hat“a pr om i s e byt he pr i nci pal t o i ndemni fy t he s ur etyatt he t i m e the s ur etypay s m oni es t o t he pr i nci pal ’ s cr edi t or ” w as

“ c le a rl y ” a p ro m is s o ry n o te o r e v id e n c e o f in d e b te d n e s s . Id . W e fi nd t he r eas oni ng i n D vor akm o re p e rsu a siv e o n th a t p o in t. T h eyalso arg u e tha t § 5 8 -23 1 2 p rec lud es H artfo rd’s rec o v eryo f a tt o rne y ’s fee s and cos t s beca us e the l os s H ar t for d s eeks t o r ecove rfori s bas ed upon a b o n d . H a rtfo rd c o u n ter s th a t th e a tto rn e yfe e p ro v isio n it so u g h t to e n fo rc e is in t he G I A , r athert han the P & H B ond. W e agr ee w i t h H ar t for d t hat§ 58- 2312 nul l i fi ed pr ovi s i ons fort he paym entof att or ney ’ s fee s and cos t s “i n” bonds , but did not br oad l yprohibi tt he recov eryof att orney ’s fees and cost s ot herw i se re la te d to b o n d c la im s . C f . Wi ngr ove v . P eopl e’s Nat ’ lB ank , 275 P. 150, 150- 51 ( K an. 1929) ( uphol di ng j ur yver di ctaw ar di ng at t or ney ’ s fee s unders et t l ement ag ree m en t r elated to m o rt g ag e fo rec losu re, de sp it e p roh ibit ion in § 5 8 -23 1 2 ).-19-

Fi nal l y , t he Peaks ar gue thatt he pr i orver s i on of § 58- 2312 appl i ed t o t he G IA b e c a u se it i s a su re tyo r g u a ra n tya g re e m e n t, rath e r th a n a n in d e m n ity a g re e m e n t. W e a g re e th a t § 5 8 -2 3 1 2 a p p lie d to s u re ty an d g u a ra n ty ag re e m e n ts . See Iol a Stat e Bank v. B iggs , 662 P. 2d 563, 575 ( K an. 1983) ( concl udi ng obl i gat i ons of s ur et i es and guar ant or s ar e s ubs t ant i vel yt he s ame and hol di ng t hat guar antyagr eementi nvol vi ng uncondi t i onal pr om i s e t o pays um cert ai n upon d efau lto f p ri n cipa l fell w ith in term s o f § 5 8 -23 1 2 ). B u t w e d isag ree that the G IA is a su re tyo r g u a ra n tya g re e m e n t. T h e K a n sa s S u p re m e c o u rt d e sc rib e d a su re ty orguar antyr el at i ons hi p as “a c ont r actual r el at i on r es ul t i ng fr om an agr eement w her ebyone per s on, t he s ur ety[orguar ant or ] , engage s t o be ans w er abl e fort he debt , defa ul t , orm i s carr i age of another , t he pr i nci pal . ” Id. at574 ( quot at i on om i t t ed) . M or eover , a s ur ety ’ s orguar ant or ’ s “obl i gat i on t o t he cr edi t oror pr om i s ee of

t he pr i nci pal i s s ai d t o be di r ect , pr i m ary , and abs ol ut e; i n ot her w or ds , he i s di r ect l yand equa l l ybound w i t h hi s pr i nci pal . ” Id. at575 ( quot at i on om i t t ed) . A l t hough t he Peaks poi ntoutt hatnei t herO l m a Peak norV el m a Peak s i gned bond agr eement s w i t h H ar t for d, t heydo notexpl ai n w hyt hatfac tm akes t he G I A a guar antyors ur etyagr eement . I ts how s onl ythatt her e i s no pr i nci pal a n d s u re ty re la tio n s h ip b e tw e e n th e m a n d H a rt fo rd in a s e p a ra te b o n d a g re e m e n t. A n d th e yid e n tifyn o se n se in w h ich O lm a P e a k o r V e lm a P e a k sta n d in th e ro le o f s u r e t yo rg u a r a n t o ro f a p r i n c i p a l ’ s o b l i g a t i o n s u n d e rt h e GI A.-20-

A s not ed byt he K ans as Supr eme C our ti n Iol a Stat e Bank , ind e m n ity agreem ents are di st i ng uis hab l e from suretyand gu arantyagreem ents becau se “[a ] n i ndemni t oragr ees t o m ake w hol e the i ndemni t ee w ho i n tur n had t o payt he obl i gee. ” Id. ; s e e a ls o Mo . Pa c . R. R. , 5 1 8 P .2 d a t 3 7 5 (“ [ In d e m n ity ] is g e n e ra lly defi ned as an obl i gat i on r es t i ng on a part yt o m ake good a nyl os s anotherhas i ncurr ed w hi l e ac t i ng athi s r eques torforhi s benef i t . ”) T he G I A i s cl ear l yan in d e m n ifica tio n a g re e m e n t. F u rth e rm o re , alth o u g h th e K a n sa s S u p re m e C o u rt d id notdi r ect l yhol d i n Iol a Stat e Bankt hatt he pr evi ous ver s i on § 58- 2312 w as i nappl i cabl e t o i ndemni t yagr eement s , t he fa ctt hati texpr es s l ydi s t i ngui s hed them fr om s ur etyand guar antyagr eement s i n t hatpr eci s e cont extl eads us t o concl ude that itw o u ld so h o ld. T h ere fo re, w e reject th e P ea k s’ claim that the d istri ct co u rt e r r e d i n a wa r d i n g Ha r t fo r d i t s a t t o r n e y ’ s fe e s a n d c o s t s u n d e rt h e GI A. Conclusion T h e j u d g me n to f

t h e d i s t r i c tc o u r ti s AF F I RMED . E n tered fo r th e C o u rt

St ephen H . A nder s on C i r cui tJ udge