Opinion ID: 2629304
Heading Depth: 1
Heading Rank: 4

Heading: The district court erred when it denied ICW an opportunity to pursue its indemnity claim

Text: As a surety company, ICW was entitled to pursue an indemnity claim against Gibson for costs incurred in enforcing the terms of the GIA. We have recognized that [s]ureties, unlike insurers, profit solely from the premiums they collect. Indemnification rights guard against potential losses, help reduce the surety's risk, and keep premiums relatively low. [1] Further, we have noted that the right to subrogation distinguishes suretyship from insurance, and such right is considered by the surety in arriving at the amount of bond premiums. [2] Therefore, a surety is entitled, under a GIA, to indemnity for costs incurred in defending an action brought against it on a bond, regardless of whether any payment is ultimately made by the surety. [3] We conclude that the order signed by the district judge incorrectly dismissed ICW's indemnity claim for attorney fees and costs in conjunction with the dismissal of claims related to the good-faith settlement. [4] ICW had the right to pursue its indemnification claim under the plain terms of the GIA. However, the district judge presiding over the hearing on ICW's motion for reconsideration erred when he concluded that because Gibson reached a good-faith settlement with the suppliers, ICW could no longer pursue an indemnity claim for attorney fees and costs. Even though ICW did not make any payment on the bond, it may have incurred costs in attempting to enforce the GIA's provisions. The district court should have allowed ICW's indemnity claim for these fees and costs to proceed to trial so that the jury could determine whether ICW was entitled to indemnification from Gibson and the type and extent of costs incurred. Therefore, the district court erred in dismissing ICW's indemnity claim against Gibson.