IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

HARTFORD CASUALTY INSURANCE )

COMPANY, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 09-0514-WS-M

 )

SHIRLEY FAYE JENKINS, etc., et al., )

 )

Defendants. )

ORDER

This matter is before the Court on the motion of plaintiff Hartford Casualty

Insurance Company (“Hartford”) for summary judgment with respect to defendant

Shirley Faye Jenkins (“Shirley”). (Doc. 72). Hartford and Shirley have filed briefs and

evidentiary materials in support of their respective positions, (Docs. 73-75, 85-92, 105),

and the motion is ripe for resolution. After carefully considering the foregoing, the Court

concludes that the motion is due to be granted in part and denied in part.

BACKGROUND

According to the complaint, (Doc. 1), Hartford issued a payment bond on behalf of

defendant Mark IV Constructors, Inc. (“Mark IV”) in connection with the construction of

Gulf Shores High School (“the Project”). Third-party defendant Richard Jenkins

(“Richard”) was the principal in Mark IV. Some time previously, Richard and his thenwife Shirley executed a general indemnity agreement (“the Agreement”). 

McCorvey Construction Corporation (“McCorvey”), a subcontractor on the Project, sued

Mark IV and Hartford for non-payment for labor and materials. Based on the jury’s

verdict, a final judgment was entered against Mark IV and Hartford. Hartford also

received judgment on its crossclaim against Mark IV, and third-party claim against

Case 1:09-cv-00514-WS-M Document 112 Filed 06/09/10 Page 1 of 16
1

Hartford also sues defendants Scott Jenkins and Michele Guyton, the children of

Richard and Shirley, for avoidance of an allegedly fraudulent transfer. Shirley sues

Richard and Mark IV for indemnity or contribution. (Doc. 23). 

2

Shirley does not deny executing the Agreement. Instead, she “do[es] not recall”

having done so. (Jenkins Affidavit, ¶ 2; Doc. 85 at 5, ¶ 16; id. at 19, ¶ 58; id. at 20, ¶ 60). 

She does not thereby create a genuine issue of material fact as to whether she signed the

Agreement, especially given that the signature “Shirley Faye Jenkins” appears on the

Agreement and that this signature was notarized by a witness who confirmed that Shirley

at the time acknowledged that she executed the Agreement. (Doc. 75, Exhibit A at 3). 

Moreover, Shirley admits that, on or about February 18, 1980 (the date reflected on the

Agreement), Richard requested her to execute documents to assist Mark IV in obtaining a

surety, (Doc. 23, ¶ 6), which is precisely the purpose of the Agreement. (Doc. 75, Exhibit

A at 1). Courts routinely hold that a party’s lack of recollection cannot create a genuine

issue of material fact in such circumstances. See, e.g., Brown v. St. Paul Travelers

Companies, 331 Fed. Appx. 68, 70 (2nd Cir. 2009) (“We agree with the District Court that

‘[p]laintiff’s statement, that she has no recollection or record of receiving the employee

handbook and arbitration policy, despite the fact that it was distributed on at least six

occasions during her employment, is ... not sufficient to raise a genuine issue of material

fact.’”); Tinder v. Pinkerton Security, 305 F.3d 728, 735-36 (7th Cir. 2002) (plaintiff’s

testimony that she “does not recall seeing or reviewing” a brochure “does not raise a

genuine issue of material fact” in light of affidavits that the brochure was sent to her);

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Richard. Hartford sues Shirley for indemnity under the Agreement.1 

DETERMINATIONS OF UNCONTROVERTED FACT

The Agreement provides in pertinent part as follows:

The Indemnitors will indemnify the Surety against any and all liability, 

losses, and expenses of whatsoever kind or nature (including, but not 

limited to, interest, court costs and counsel fees) which the Surety may 

sustain or incur (1) by reason of having executed any Bond issued hereunder, 

(2) by reason of the failure of the Principal or any of the other indemnitors to

perform or comply with the covenants and conditions of this Agreement or 

(3) in enforcing any of the covenants or conditions of this Agreement.

(Doc. 75, Exhibit A at 1, ¶ V). 

The Agreement is executed by Hartford, Richard and Shirley. (Doc. 75, Exhibit A

at 2-3).2

Case 1:09-cv-00514-WS-M Document 112 Filed 06/09/10 Page 2 of 16
Dickey v. Baptist Memorial Hospital, 146 F.3d 262, 266 n.1 (5th Cir. 1998) (“The mere

fact that Dr. Washington does not remember the alleged phone conversation, however, is

not enough, by itself, to create a genuine issue of material fact [as to whether it

occurred.]”); Robnett v. Blodgett, 1992 WL 280980 at *2 (9th Cir. 1992) (“A current lack

of recollection” does not create a genuine issue of material fact, because “[a]bsence of

proof is not proof of absence”).

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Hartford issued a bond under the Agreement covering the Project. McCorvey, a

subcontractor on the Project, made a claim on the bond. (Id., ¶ 4). Hartford paid

McCorvey $190,000 in settlement of the claim. Shirley has not repaid Hartford. (Doc.

75, Mahler Affidavit, ¶¶ 3, 4, 8; Mahler Deposition at 44). 

CONCLUSIONS OF LAW

The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. Venue is

proper in this district pursuant to 28 U.S.C. §§ 1391(b). 

Summary judgment should be granted only if “there is no issue as to any material

fact and the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c). The party seeking summary judgment bears “the initial burden to show the district

court, by reference to materials on file, that there are no genuine issues of material fact

that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.

1991). 

“When the moving party has the burden of proof at trial, that party must show

affirmatively the absence of a genuine issue of material fact: it must support its motion

with credible evidence ... that would entitle it to a directed verdict if not controverted at

trial. [citation omitted] In other words, the moving party must show that, on all the

essential elements of its case on which it bears the burden of proof, no reasonable jury

could find for the nonmoving party.” United States v. Four Parcels of Real Property, 941

F.2d 1428, 1438 (11th Cir. 1991) (en banc) (emphasis in original); accord Fitzpatrick v.

City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

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“If the party moving for summary judgment fails to discharge the initial burden,

then the motion must be denied and the court need not consider what, if any, showing the

non-movant has made. [citation omitted] If, however, the movant carries the initial

summary judgment burden ..., the responsibility then devolves upon the non-movant to

show the existence of a genuine issue of material fact.” Fitzpatrick, 2 F.3d at 1116.

In deciding a motion for summary judgment, the Court is required to view the

evidence and the reasonable inferences therefrom in the light most favorable to the nonmovant. McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243 (11th Cir. 2003). 

“There is no burden upon the district court to distill every potential argument that

could be made based upon the materials before it on summary judgment.” Resolution

Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995). Accordingly, the

Court’s review is limited to those legal arguments the parties have expressly advanced.

I. Liability.

Hartford’s claim is for breach of a contract of indemnity. “The elements of a

breach-of-contract claim under Alabama law are (1) a valid contract binding the parties;

(2) the plaintiff’s performance under the contract; (3) the defendant’s nonperformance;

and (4) resulting damages.” Shaffer v. Regions Financial Corp., 29 So. 3d 872, 880 (Ala.

2009) (internal quotes omitted).

The uncontroverted facts establish that the Agreement is a valid contract existing

between Hartford and Shirley; that Hartford has performed under the contract by paying

McCorvey; that Shirley has not performed her agreement to pay Hartford; and that

Hartford has been damaged by Shirley’s non–payment. Hartford has thus met its initial

burden on motion for summary judgment, shifting to Shirley the burden of showing the

existence of a genuine issue of material fact.

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II. Defenses.

Shirley floats an armada of arguments (which she terms affirmative defenses) why

the plaintiff should be denied recovery: (1) res judicata; (2) laches; (3) release; (4)

executory contract; (5) unilateral mistake; (6) disproportionate bargaining power; (7) bad

faith; (8) negligence; and (9) estoppel. The Court examines these in turn.

A. Res Judicata. 

Hartford named Shirley as a third-party defendant in the McCorvey litigation. The

trial judge dismissed Shirley sua sponte at the commencement of trial for lack of personal

jurisdiction, because Shirley had not been served with process. (Shirley Affidavit,

Exhibit E at 1-2). Shirley argues that these facts establish that Hartford’s claim for

indemnity is barred by res judicata. (Doc. 85 at 7, ¶ 26; id. at 21, ¶ 65).

Shirley offers no law in support for her position other than an Alabama case listing

the well-known elements of res judicata, one of which is a prior judgment rendered on the

merits. (Doc. 85 at 15, ¶ 49). As Hartford points out, (Doc. 105 at 8), there has been no

adjudication on the merits of Hartford’s claim against Shirley. Under the Alabama law

she invokes, “a dismissal without prejudice does not constitute an adjudication on the

merits.” Hundley v. J.F. Spann Timber, Inc., 962 So. 2d 187, 192 (Ala. 2007) (internal

quotes omitted). When the order of dismissal is silent as to whether it is with prejudice, it

must be presumed that it is without prejudice and therefore without res judicata effect.

USA Petroleum Corp. v. Hines, 770 So. 2d 589, 591 (Ala. 1999). Moreover, as a matter

of law, a dismissal for want of personal jurisdiction is not an adjudication on the merits

and will not support an assertion of res judicata. Great American Lines, Inc. v. Burks,

631 So. 2d 907, 908 (Ala. 1993); Evers v. Taylor, 437 So. 2d 1271, 1273 (Ala. 1983)

(“According to the rule, the dismissal of a complaint due to lack of in personam

jurisdiction will not generally act as an adjudication on the merits ...”). 

Here, Shirley’s own evidence establishes that her dismissal from the McCorvey

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3

Shirley’s authorities also hold that when an appellant dismisses his appeal without

prejudice, but the time to file a new appeal has expired, the dismissal of the appeal is

effectively with prejudice. That unremarkable proposition has nothing to do with whether

the trial court ruled on the merits of Hartford’s claim.

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litigation was based on lack of personal jurisdiction, and Alabama law precludes her from

successfully asserting res judicata in that situation. Because Shirley did not offer the

McCorvey judge’s order of dismissal, the Court cannot assume that he nevertheless

dismissed her with prejudice. Indeed, Shirley does not assert that his order used such

language. Instead, she suggests that her dismissal became one with prejudice when

Hartford failed to appeal the dismissal. (Doc. 85 at 15, ¶ 50; id. at 21, ¶ 65). All that her

authorities hold, however, is that a ruling on the merits becomes final once an appeal from

that ruling is dismissed. The question, however, is not whether the trial court’s dismissal

of Shirley is final but whether it was a ruling on the merits of Hartford’s claim against

her. As discussed above, it plainly was not.3

 As a matter of law, Hartford’s claim for

indemnity is not barred by res judicata.

B. Laches. 

The McCorvey litigation was filed in 2000. (Shirley Affidavit, Exhibit F; Richard

Affidavit, ¶ 14). Shirley complains that, by waiting until 2009 to sue her, Hartford is

guilty of delay constituting laches. (Doc. 85 at 17, ¶ 55). However, as Hartford points

out, (Doc. 105 at 5), laches can apply only to equitable claims. “This court has held that

laches is an equitable principle and is a defense only to suits in equity, ... or to those

proceedings at law which are controlled by equitable principles such as a mandamus

proceeding.” Ex parte Sasser, 730 So. 2d 604, 605 (Ala. 1999) (internal quotes omitted);

accord MacWillie v. Southeast Alabama Gas District, 539 So. 2d 245, 248 (Ala. 1989)

(“The MacWillies’ trespass action is an action at law, and laches is not a defense.”). 

Because Hartford asserts no equitable claim against Shirley but only a legal claim for

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4

For reasons unexplained, Shirley cites federal cases discussing the federal law of

laches in actions based on federal question. (Doc. 85 at 11, ¶ 43). Because jurisdiction

over this action is founded exclusively on diversity of citizenship, Alabama law of laches

controls. Mile High Industries v. Cohen, 222 F.3d 845, 858 (10th Cir. 2000); Nemkov v.

Chicago Hare Corp., 592 F.2d 351, 354 & n.2 (7th Cir. 1979). At any rate, federal law

likewise refuses to apply laches in a lawsuit presenting purely legal claims. Id.

5

Richard was already sole owner of Mark IV and had been since before the

Agreement was entered. (Richard Affidavit, ¶ 4; Doc. 85 at 16). Thus, Hartford merely

wanted the status quo ante to continue. The status quo ante, of course, included Shirley

as an indemnitor. 

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contractual indemnity, laches is unavailable as a matter of law.4

C. Release. 

Shirley argues vaguely that there is evidence she and Hartford (or perhaps Richard

and Hartford) mutually and orally agreed that, upon her divorce from Richard, she would

be released from her obligations under the Agreement. (Doc. 85 at 22-23, ¶¶ 67-68). She

bases this argument on evidence that Preston Edwards, a representative of Hartford,

advised Richard — and later testified at the divorce trial — that Hartford would not

continue as surety for Mark IV unless Richard were awarded full ownership. (Id. at 4, ¶¶

9-10; id. at 23, ¶ 68). The trouble is that neither Shirley nor Richard asserts in affidavit

that any such release agreement was reached, and it is impossible to infer the existence of

such an agreement from the mere fact that Hartford was unwilling to serve as surety

except with Richard as sole owner.5

 Certainly Shirley has offered no explanation how

such an inference can reasonably follow, and the speculation she offers is legally

insufficient to avoid summary judgment. E.g., Cordoba v. Dillard’s, Inc., 419 F.3d 1169,

1181 (11th Cir. 2005) (“Speculation does not create a genuine issue of fact; instead, it

creates a false issue, the demolition of which is a primary goal of summary judgment.”)

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Shirley believes she has evidence that Hartford has released other indemnitors

without a written request for release. (Doc. 85 at 17, ¶ 54; id. at 23, ¶ 68). Perhaps she

does, but the question is not whether an oral release is possible but whether there is

evidence that it occurred in her case. As discussed in text, there is no such evidence.

The only case Shirley mentions in support of release, (Doc. 85 at 22, ¶ 67), does

not involve a release. Whatever case Shirley intended to cite, her discussion of it makes

clear that it does not support finding a genuine issue of material fact as to release in this

case.

Finally, Shirley asks (without answer or discussion), “Does the Hartford’s

knowledge of the divorce create a duty in the Hartford to release Shirley Jenkins from the

General Indemnity Agreement?” (Doc. 85 at 16, ¶ 53). Rhetorical questions do not an

issue make, and the Court will not consider whether Hartford had a duty to release Shirley

even absent an agreement to do so. See, e.g., Transamerica Leasing, Inc. v. Institute of

London Underwriters, 430 F.3d 1326, 1331 n.4 (11th Cir. 2005) (“[A] passing reference to

an issue in a brief [is] insufficient to properly raise that issue.”). 

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(emphasis and internal quotes omitted).6

D. Executory Contract.

Shirley notes that an executory contract may be modified by the parties without

any consideration other than mutual assent, and she argues that the Agreement was

executory. (Doc. 85 at 16, ¶ 52). As discussed in Part II.C, even if this is so Shirley has

no evidence that the parties mutually assented to relieving her of her obligations under the

Agreement. 

Shirley also asserts that the Agreement has no term for duration and is therefore

terminable at will by either party. (Doc. 85 at 16, ¶ 52). According to her single

authority, an indemnity contract “continues in force only during such time as is expressly

or impliedly provided for in the contract.” Henderson v. Croom, 403 F. Supp. 668, 671

(N.D. Ala. 1975) (internal quotes omitted). Only if no time is expressly or impliedly

provided for is the contract terminable at will. Id. Here, the Agreement provides that it

“is a continuing Surety Agreement which remains, unless cancelled in accordance with

the provisions hereof, in full force and effect as to all Indemnitors with respect to each

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7

Shirley wonders whether Hartford’s knowledge of her divorce from Richard can

be “considered a notice of cancellation of or modification to an executory contract which

has no time frame expressed in its terms?” (Doc. 85 at 17, ¶ 53). The Court does not

answer hypothetical questions, and Shirley presents no issue for review simply by asking

one. Transamerica Leasing, 430 F.3d at 1331 n.4. Nor has Shirley attempted to show

that even an agreement terminable at will can be terminated without any expression of

that will by the one desiring termination.

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and every Bond issued hereunder.” (Doc. 75, Exhibit A at 1, ¶ I). Shirley has not

attempted to show that an indemnity agreement with such language is terminable at will. 

Nor has she demonstrated that Alabama adopts the rule invoked in Henderson. Nor has

she offered evidence that she terminated her participation in the Agreement and that she

did so before her liability for the McCorvey dispute attached.7

 

E. Unilateral Mistake.

Shirley argues that she did not realize the Agreement would continue after her

divorce, and she concludes that this establishes a unilateral mistake. (Doc. 85 at 20, ¶

59). She provides no legal authority concerning unilateral mistake, and no argument save

the conclusory statement above. That alone is sufficient grounds to reject her position,

but there is more.

As best the Court can determine, unilateral mistake is a meaningful concept only in

the context of reformation, and even there it is an insufficient ground to support

reformation. When a contract does not truly express the intention of the parties, either

through fraud, mutual mistake, or mistake of one party which the other at the time knew

or suspected, the contract can be reformed to correct the error. Ala. Code § 8-1-2. But

unilateral mistake does not come within Section 8-1-2. EBSCO Industries, Inc. v. Royal

Insurance Co., 775 So. 2d 128, 131 (Ala. 2000).

F. Disproportionate Bargaining Power. 

According to Richard, he asked Shirley to sign various documents to “protect the

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Hartford in case I gave her money and she ran off with it.” According to Richard, Shirley

did not read or understand the documents he asked her to sign. (Richard Affidavit, ¶ 7). 

According to both, Shirley was not involved with Mark IV and was a “stay at home

mother for the majority of” her marriage to Richard. (Id., ¶ 8; Shirley Affidavit, ¶¶ 3, 4). 

Shirley argues that Richard acted as the agent of Hartford in procuring her signature, that

he used “disproportionate bargaining power” in doing so, and that she did not understand

what she was getting into. (Doc. 85 at 19, ¶ 58; id. at 21, ¶ 66). 

As with unilateral mistake, Shirley cites no legal authority for her argument, and

the Court will not supply the deficiency. The Court does note that, “[o]rdinarily when a

competent adult, having the ability to read and understand an instrument, signs a contract,

[s]he will be held to be on notice of all the provisions contained in that contract and will

be bound thereby.” Carraway v. Beverly Enterprises, Inc., 978 So. 2d 27, 32 (Ala. 2007)

(internal quotes omitted). Whatever the deficiencies of Richard’s explanation of the

Agreement, and whatever “bargaining power” he held over his wife, these cannot be

attributed to Hartford absent evidence that he served as Hartford’s agent, and Shirley

suggests no evidence to support this highly unlikely possibility.

G. Bad Faith.

“[I]ndemnitors can defeat a surety’s right to recover under indemnity provisions by

demonstrating either fraud of lack of good faith on the part of the surety in discharging its

obligations under the bond.” Frontier Insurance Co. v. International, Inc., 124 F. Supp.

2d 1211, 1214 (N.D. Ala. 2000). “In the suretyship context, lack of good faith carries an

implication of a dishonest purpose, a conscious doing of wrong, a breach of a duty

through motives of self-interest or ill will.” Id. (internal quotes omitted). The parties

agree this is a correct statement of Alabama law. (Doc. 85 at 12, ¶ 44; Doc. 105 at 6).

Shirley argues that the following evidences Hartford’s bad faith: (1) Hartford knew

of the divorce and that Richard was given full ownership of Mark IV; (2) Hartford did not

Case 1:09-cv-00514-WS-M Document 112 Filed 06/09/10 Page 10 of 16
8

United States v. 0.35 Acre of Land, 706 F. Supp. 1064, 1073 (S.D.N.Y. 1988);

accord Cook v. Home Depot U.S.A., Inc., 2007 WL 710220 at *5 (S.D. Ohio 2007). 

9

The 1979 indemnity agreement applies only to bonds “issued hereunder,” (Doc.

91, Mahler Deposition, Exhibit A at 1, ¶ 1), and Shirley has identified no evidence that

the bond on the Project was issued under the 1979 agreement. Nor has Shirley produced

evidence that the Woodsons were not relieved of any responsibilities under the 1979

agreement. She claims that the Woodsons “did not make a request, written or otherwise,

to be released” from the agreement, (Doc. 85 at 8, ¶ 28), but the evidentiary submissions

she cites do not remotely support that proposition. At most they show that Hartford has

retained no copy of a written request (which would now be over 30 years old) and that a

Hartford employee (whom she admits did not work for Hartford in 1980, (Doc. 85 at 20, ¶

62)) does not know if they sought release. Elsewhere, Shirley cites the testimony of a

Hartford representative who actually worked with Mark IV, (id. at 17, ¶ 54), but his

inability to recall a written request from the Woodsons for release some 30 years

previously is scarcely evidence that none was made, and it certainly does not rule out an

oral request. 

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pursue the co-indemnitors (the Woodsons) under a predecessor indemnity agreement

covering Mark IV; (3) Hartford allowed Mark IV to retain counsel and maintain its own

defense of the McCorvey litigation, and Hartford shared counsel with Mark IV for most

of the litigation; and (4) Hartford did not notify Shirley of the McCorvey claim or

litigation for nine years. (Doc. 85, ¶ 57). As discussed below, Shirley has not shown that

Hartford’s alleged conduct creates a genuine issue as to bad faith. 

As discussed in previous sections, that Shirley was divorced and that she had no

ownership in Mark IV (she never had) did not serve to remove her as an indemnitor, and

“[t]he desire to enforce a valid contract cannot be deemed bad faith.”8

 The failure to

pursue the Woodsons on the 1979 indemnity agreement is irrelevant, both because

Shirley has presented no authority holding that an indemnitee has a duty to every

indemnitor to pursue every other indemnitor, and because she has no evidence that the

Woodsons were potential indemnitors on the McCorvey claim.9

 That both Mark IV and

Hartford may have employed counsel to defend the McCorvey litigation does not reflect

Case 1:09-cv-00514-WS-M Document 112 Filed 06/09/10 Page 11 of 16
10See, e.g, Kilgore v. Union Indemnity Co., 132 So. 901, 902 (Ala. 1931) (“When a

surety is sued for the malfeasance of a principal, who asks to be allowed to defend with

his own counsel, the surety may need legal advice in the exercise of a wise and just

discretion in the matter.”). 

11See Western Surety Co. v. Bradford Electric Co., 483 F. Supp. 2d 1114, 1120-21

(N.D. Ala. 2007).

To the uncertain extent Shirley suggests that Hartford owed her a duty not to allow

Mark IV to represent its own interests in the lawsuit, her position is similarly

unsupported. On the contrary, “the surety has no duty to represent the interest of the

principal ....” Postlewait v. Personal Service Insurance Co., 1980 WL 351148 at *1

(Ohio App. 1980). 

12E.g., Travelers Indemnity Co. v. Harrison Construction Group Corp., 2008 WL

4725970 at *5 (E.D.N.Y. 2008) (“‘[A]bsent a specific provision in the indemnification

agreement, an indemnitee is not required to give notice of claims on the underlying surety

bond to the indemnitor’ in the first place.”) ( quoting Republic Insurance Co. v. Real

Development Co., 554 N.Y.S.2d 574, 575 (N.Y. App. Div. 1990) (emphasis in original);

United States Fidelity & Guaranty Co. v. Bilt-Rite Contractors, Inc., 2005 WL 1168374

at *7 n.16 (E.D. Pa. 2005) (“[C]ourts have found the fact that a surety made payments

without giving notice to the indemnitor is not evidence of bad faith.”). 

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bad faith sufficient to preclude all indemnity,10 although it may raise questions as to the

recoverability of the duplicate fees.11 Finally, Shirley identifies no case imposing a duty

on the indemnitee to provide notice to indemnitors, and various cases reject the

proposition that failure to give notice to an indemnitor can constitute bad faith.12

H. Negligence.

Without elaboration, Shirley suggests that Hartford is guilty of “negligent breach

of duty,” (Doc. 85 at 11, ¶ 42; id. at 14, ¶ 48), and she cites the rule that “[a]n agreement

by one person to indemnify another for the other’s negligent conduct is enforceable only

if the indemnity provisions are unambiguous and unequivocal.” City of Montgomery v.

JYD International, Inc., 534 So. 2d 592, 594 (Ala. 1988). (Doc. 85 at 11, ¶ 42). The

problems with her argument are many.

First, Shirley fails to identify the conduct she considers to be negligent, and the

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13Shirley mentions two additional circumstances she dislikes, (id.), but they do not

reflect delay.

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Court will not engage in guesswork on her behalf. To the uncertain extent she relies on

the conduct made the basis of her bad faith claim, the discussion in Part II.G reflects her

failure to demonstrate the existence of any duty, the breach of which could constitute

negligence. 

Second, Shirley has not addressed the Agreement and explained how its language

fails to comply with JYD. Again, the Court will not undertake the exercise for her. 

Third, she has not shown that JYD applies in the context of indemnity agreements with a

surety. On the contrary, and as her own cited case reflects, “[t]he only exception [to a

surety’s recovery for payments made] arises when the payment has been made through

fraud or lack of good faith on the part of the surety,” and “even gross negligence cannot

support a finding of bad faith.” Frontier Insurance, 124 F. Supp. 2d at 1213-14 (internal

quotes omitted). This language would appear inconsistent with application of JYD, and

Shirley cannot avoid the ramifications of her own authority simply by ignoring it. 

I. Estoppel.

Shirley asserts that dragging out the McCorvey litigation for years, failing to settle

it before trial, and not giving her notice of the litigation, all increased the amount of the

eventual award in favor of McCorvey and the amount of Hartford’s indemnity demand

and therefore damaged her. She concludes that “Hartford’s delay” caused her this

damage and “leads to estopple [sic] of Hartford’s claim.” (Doc. 85 at 18, ¶ 56).13

Shirley omits all legal discussion of the requirements for an estoppel to arise, but it

is plain she cannot establish an estoppel here. “[F]or the doctrine of estoppel to apply, the

defendant must prove a change in position in reliance upon an act or omission of the other

party.” First Alabama Bank, N.A. v. Martin, 425 So. 2d 415, 424 (Ala. 1982). Because

Shirley has not even alleged that she changed her position in reliance on Hartford’s

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14Shirley suspects Hartford actually paid only $180,000 as full settlement, (Doc. 85

at 10, ¶ 39), but she has offered no evidence to prove the point. 

Shirley attacks Hartford’s payment of McCorvey only for lack of good faith. As

discussed in Part II.G, there is no genuine issue of material fact as to whether Hartford

paid McCorvey in good faith, and Shirley may not resist Hartford’s demand on that basis.

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alleged delay, much less presented evidence in support, her defense necessarily fails.

III. Damages. 

The McCorvey litigation ended in a judgment against Hartford and Mark IV in the

amount of $192,632.21. (Doc. 75, Mahler Affidavit, ¶ 4 & Exhibit B). In August 2009,

judgment was entered in favor of Hartford and against Mark IV and Jenkins in the

amount of $241,674.25. (Id., ¶ 6 & Exhibit C). Hartford says that, due to additional legal

expenses since August 2009, as of April 14, 2010, “the total loss, cost, and expense,

exclusive of interest, incurred by virtue of Hartford’s issuance of bonds on behalf of Mark

IV Constructors is $261,649.52.” (Id., ¶ 7). Hartford requests judgment in this amount,

plus post-judgment interest at 12%. (Doc. 72 at 2; id., Attachment at 2). In brief,

Hartford requests judgment in the amount of $261,649.22, “with leave of the Court to

approve additional loss, cost and expense resulting from this case.” (Doc. 73 at 8). This

is the entirety of Hartford’s treatment of damages.

Although the judgment was for $192,632.21, McCorvey agreed to take an even

$190,000 in full settlement. (Mahler Deposition at 44). Hartford’s right to recovery from

Shirley is uncontroverted to this extent. However, it is impossible to tell from Hartford’s

presentation whether the other figures it utilizes have been reduced to reflect the

difference between the judgment amount and the amount Hartford paid in settlement.14

Hartford has not established the basis of the judgment in its favor against Mark IV

and Richard. While it likely represents the amount of the McCorvey judgment, plus

interest, fees and costs, without record evidence Hartford has not met its burden. 

Shirley concentrates most of her fire on the reasonableness of the fees and

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15Since Shirley was not a participant in the McCorvey litigation, it is doubtful she

could be bound by any express or implicit determination of reasonableness by the state

judge who entered the judgment against Mark IV and Richard.

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expenses demanded by Hartford. 

In sum, an indemnity agreement is not a blank check; it does not 

entitle the surety company to reimbursement for legal expenses which are

unreasonable or unnecessary. ... Thus, the weight of authority allows

reimbursement for legal costs under the terms of an indemnity contract 

only if it is necessary for the surety to retain separate counsel, if the 

amount of the fees claimed is reasonable, and if the surety has acted in 

good faith toward the bond principal.

Jackson v. Hollowell, 685 F.2d 961, 966 (5th Cir. 1982); accord Western Surety Co. v.

Bradford Electric Co., 483 F. Supp. 2d 1114, 1120-21 (N.D. Ala. 2007). The usual

scrutiny of fees and expenses must also be employed. Id. at 1121. Shirley invoked these

principles, (Doc. 85 at 12-13, ¶ 45), Hartford did not respond, and the Court adopts them

for use in this case.

Hartford has not met its burden under these principles. As noted, Hartford has not

even established what its judgment against Mark IV and Jenkins represents. If

$192,632.21 reflects the McCorvey judgment, that leaves almost $50,000 for interest, fees

and expenses. Since the second judgment came within three months of the first, interest

cannot be high, so the lion’s share is probably fees and expenses. Even if Hartford was

justified in hiring separate counsel at all, it has not shown that the amount of fees and

expenses it incurred in the McCorvey litigation was reasonable.15

Shirley does not dispute that Hartford may recover its fees and expenses in this

litigation, but she repeats that Hartford must first show that those fees and expenses were

reasonable. (Doc. 85 at 21, ¶¶ 63-64). The Court agrees, and Hartford has not attempted

to do so.

Shirley also questions whether the interest Hartford is charging is reasonable. 

(Doc. 85 at 21, ¶ 63). Since the Court has not been advised of the amount of interest

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16Hartford’s motion to strike, (Doc. 106), is denied as moot, because the Court did

not rely on some of the challenged testimony and relied on other sources with respect to

the balance, and because the challenged testimony did not result in aa ruling for Shirley in

any event. Likewise, Shirley’s motion to strike, (Doc. 109), is denied as moot, because

the Court did not rely on the evidence the motion challenges.

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Hartford is charging, the rate charged, or the basis of the rate (the Agreement appears to

be silent), it cannot evaluate the propriety of Hartford’s claim of interest. 

The burden is on Hartford to establish the amount of its payment to McCorvey and

the amount and reasonableness of the legal fees and expenses it has incurred in the

McCorvey litigation and this case. Hartford has met this burden with respect to the

$190,000 it has paid McCorvey, but not otherwise. 

CONCLUSION

For the reasons set forth above, Hartford’s motion for summary judgment is

granted with respect to Shirley’s liability and granted with respect to damages in the

amount of $190,000. The motion is in all other respects denied.

16

By virtue of the Court’s rulings, this case has shrunk to one concerning the amount

of fees, expenses and interest Hartford should recover from Shirley. Hartford and Shirley

are ordered to confer in good faith for the purpose of resolving the issue of fees,

expenses and interest and to file a joint report on the results of their conference on or

before June 24, 2010.

DONE and ORDERED this 9th day of June, 2010.

s/ WILLIAM H. STEELE

CHIEF UNITED STATES DISTRICT JUDGE

Case 1:09-cv-00514-WS-M Document 112 Filed 06/09/10 Page 16 of 16