Plumbers and pipefitters union local 525 health and welfare trust
Before the Court En Banc.1 Schreck Brignone Godfrey and Andrew S. Brignone, Michael V. Infuso and Adam P. Segal, Las Vegas, for appellant. Alverson Taylor Mortensen Nelson & Sanders and David J. Mortensen and Christian Z. Smith, Las Vegas, for respondents.
OPINION
This case arises out of a surety bond dispute involving union worker benefits. The district court denied the union trustees’ (Joint Trust) request for attorney’s fees because the award would exceed the criminal bond limit. The district court reasoned that our decision in Basic Refractories v. Bright 2 precluded such recovery. The joint trust appeals, arguing that Basic Refractories is distinguishable from the case at bar. We agree. In Basic Refractories, we determined that a bond cannot be ordered to pay attorney’s fees that, in addition to the judgment, exceed the amount of the bond when those fees arose in a separate action between the secured entity and a third party.
Here, the surety may be ordered to pay attorneys’ fees even if the award in conjunction with the judgment would exceed the amount of the bond because the surety had direct litigation over the bond. Therefore, we vacate the order of the district court and remand this case for determination of attorney’s fees.
FACTS AND HISTORY OF THE PROCEDURE
The joint trust is a group of non-profit organizations formed to provide pension, health and other benefits to pipefitters Union Local No. 525 (Pipefitters). P & P Plumbing, a unionized plumbing company, entered into a contract with Pipefitters that required P & P to contribute to the Joint Trust for employee pension, health and welfare benefits. Pursuant to the contract, P & P posted a bond with Developers Surety, an indemnity company, to protect the interests of the employees in the event that P & P failed to make the required benefit contributions. The bond covered “all reasonable expenses incurred by [Pipefitters] . in the recovery of any amount due under the terms and conditions of said employment contract,” including accounting, bookkeeping, administrative and professional fees related to the recovery of the bond. The initial bond amount was $5,000. On October 8, 1999, the Joint Trust and P & P, allegedly without the consent of Developers Surety, increased the value of the bond to $20,000.
P & P failed to pay $30,853.57 in required employee contributions and filed for bankruptcy. After the bankruptcy, Pahor Air Conditioning took over some of the general contractor projects and P & P’s receivables. However, P & P’s general contractors refused to pay the receivables until Pahor provided a release for outstanding employee benefit contributions. The joint trust refused to issue a statement until it had received payment for the benefit contributions. To resolve the issue, Pahor agreed to pay $10,853.57, the portion of P & P’s delinquencies in excess of the $20,000 bond value. In exchange, the Joint Trust promised to provide the release and litigate the bond.
On May 21, 2001, the Joint Trust filed a complaint against Developers Surety to recover the $20,000 bond. On June 19, 2001, the Joint Trust made an offer of judgment in the amount of $19,200, including fees and costs. The Surety developers declined the offer and responded to the complaint. The district court assigned the case to a mandatory, court-connected arbitration program.
Prior to the arbitration hearing, the Joint Trust noted the deposition of Roger Smith, Developers Surety’s “Person Most Knowle.” The developers of Surety unsuccessfully applied for an emergency protective order. Developer Surety also unsuccessfully challenged the arbitrator’s decision to deny the motion. Allegedly, Developers Surety intentionally prevented the joint trust from obtaining any material testimony at the deposition.
While the arbitration was still pending, the Joint Trust filed a motion for summary judgment in the district court to recover the face amount of the bond.3 Developers Surety filed an opposition/countermotion for summary judgment. The court granted the Joint Trust’s motion and entered judgment in its favor for $20,000, the penalty amount of the bond. The court denied Developers Surety’s motion for summary judgment.
The joint trust then sought attorney’s fees and costs on the following grounds: (1) as the prevailing party pursuant to NRS 18.010(2)(a); (2) for Developers Surety’s alleged bad faith dispute pursuant to NRS 18.010(2)(b); and (3) for submitting an offer of judgment and later obtaining a more favourable judgment pursuant to NRS 17.115 and NRCP 68. The district court granted the Joint Trust’s request for interest and costs, but declined to award attorney’s fees. The court declined to address the merits of the Joint Trust’s recovery claims, stating that Basic Refractories precluded an award of attorney’s fees in excess of the bond’s criminal limit. This appeal followed.
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