Bret Broaddus v. Kevin Shields , 665 F.3d 846 ( 2011 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-1117
B RET A. B ROADDUS,
Plaintiff-Appellant,
v.
K EVIN S HIELDS,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 08-cv-4420—Amy J. St. Eve, Judge.
A RGUED O CTOBER 19, 2011—D ECIDED D ECEMBER 21, 2011
Before F LAUM and M ANION, Circuit Judges, and M AGNUS-
S TINSON, District Judge.Œ
M AGNUS-STINSON, District Judge. This is an appeal from
three district court orders in a dispute between former
business partners. Plaintiff-appellant Bret A. Broaddus
Œ
The Honorable Jane E. Magnus-Stinson, District Judge for
the United States District Court for the Southern District of
Indiana, is sitting by designation.
2 No. 11-1117
sued Defendant-appellee Kevin Shields for breach
of fiduciary duty, and Mr. Shields counterclaimed for
indemnification. Ultimately, the district court granted
summary judgment in favor of Mr. Shields on
Mr. Broaddus’ claim for breach of fiduciary duty,
granted summary judgment in favor of Mr. Shields on
his indemnification claim, and awarded Mr. Shields
$798.619.16 in attorney’s fees. After reviewing each of
the district court orders at issue, we affirm.
I. Background
A. Mr. Broaddus’ and Mr. Shields’ Business Rela-
tionship
Will Partners, LLC (“Will Partners”), was organized in
1998 to acquire and improve real property in Monee,
Illinois. Mr. Shields was the managing member of Will
Partners. Between 1998 and 1999, Will Partners financed
and facilitated the construction of a 700,200 square foot
warehouse to serve as the central distribution facility
for World Kitchen, Inc. (“WKI”). WKI paid rent to
Will Partners each month.
On November 2, 2000, Mr. Broaddus entered into a
written agreement for a 10% membership interest in
Will Partners (the “November 2000 Agreement”). Mr.
Broaddus’ share garnered approximately 45% of Will
Partners’ net cash flow.
In November 2001, Mr. Broaddus was involved in a
serious car accident. He suffered significant bodily injury
No. 11-1117 3
and a traumatic brain injury. A legal guardian was ap-
pointed for him on February 15, 2002. In September 2002,
Mr. Broaddus requested that the guardianship be termi-
nated and represented that he “ha[d] recovered suf-
ficiently from his injuries to manage his own affairs.” The
guardianship was terminated.
In late 2002, Mr. Shields contacted Mr. Broaddus, and
they discussed the fact that WKI was in bankruptcy.
Mr. Shields informed Mr. Broaddus that Will Partners
would need to make a capital call in order to pay WKI’s
real estate tax installment. Mr. Broaddus alleges that
Mr. Shields also told him that WKI was delinquent on
its rent of approximately $45,000 per month. Mr. Shields
denies making that representation.
Sometime after this discussion, Mr. Broaddus and
Mr. Shields discussed the sale of Mr. Broaddus’ interest
in Will Partners. The parties have different recollections
of the relevant conversations. Mr. Shields attests that in
October or November 2002, Mr. Broaddus asked him to
purchase Mr. Broaddus’ interest in Will Partners so
that Mr. Broaddus could move to Florida. According to
Mr. Shields, Mr. Broaddus demanded $800,000 for
his interest, and Mr. Shields countered at $400,000.
Mr. Broaddus contends, however, that Mr. Shields ap-
proached him in March 2003 and offered to buy his
interest in Will Partners so that Mr. Broaddus would not
have to put more money into the company.
The parties agree that in March 2003, Mr. Shields pur-
chased Mr. Broaddus’ interest in Will Partners for
$600,000. Between March 26 and March 30, 2003,
4 No. 11-1117
Mr. Broaddus executed at least two assignments in con-
nection with the transaction (the “March 2003 Assign-
ments”). In both assignments, Mr. Broaddus represented
and warranted that he “has had an opportunity to ask
questions and receive answers regarding the terms and
conditions of the sale . . . and has had full access to
such other information concerning [Will Partners] as he
has requested, including an opportunity to examine
the books and records of [Will Partners] and to discuss
the condition of [Will Partners].”
Mr. Broaddus alleges that he only sold his interest in
Will Partners because Mr. Shields allegedly told him
that WKI—Will Partners’ only tenant—was not paying
rent. Documents produced during discovery show that
WKI was, in fact, paying rent during the relevant
time. Mr. Shields emphasizes that Will Partners sent
Mr. Broaddus a copy of the February 2003 and March 2003
income statements to Mr. Broaddus’ office, indicating
that WKI had paid its rent. Mr. Broaddus asserts that
he did not receive those statements because he was re-
covering from the car accident and was not traveling to
his office during the relevant time. Mr. Broaddus
admits, however, that he received the distribution
deposits reflected on the financial statements and
that Will Partners could not have made a distribu-
tion unless WKI was paying its rent. Nevertheless,
Mr. Broaddus claims that he could not have reasonably
discovered that WKI was paying its rent until the
summer of 2003.
No. 11-1117 5
B. Mr. Broaddus’ Breach of Fiduciary Duty Claim
Against Mr. Shields
On May 30, 2008—five years and two months after
selling his interest in Will Partners—Mr. Broaddus, an
Illinois citizen, filed a Complaint in state court against
Mr. Shields, a California citizen, for breach of fiduciary
duty. Mr. Shields removed Mr. Broaddus’ action to
federal court on the basis of diversity jurisdiction. The
parties agree that Illinois law governs Mr. Broaddus’
claim and that a five-year statute of limitations applies.
Early in the case, on December 29, 2008, Mr. Shields
filed a motion for summary judgment, arguing that the
five-year statute of limitations barred Mr. Broaddus’
claim. In response, Mr. Broaddus attested that Mr. Shields
had told him that WKI was not paying its rent to Will
Partners and that he was not able to verify that WKI
was actually paying its rent until the summer of 2003
when Ed Hayes confirmed that information. The dis-
trict court denied Mr. Shields’ request for summary
judgment, in part, because of Mr. Broaddus’ representa-
tions about the Hayes conversation. The court also con-
cluded that although it was possible for Mr. Broaddus to
discover his injury in March 2003, the parties had offered
no evidence regarding any knowledge Mr. Broaddus
should have possessed at that time. The district court
also lifted a previously imposed stay of discovery.
On February 8, 2010, Mr. Shields filed a renewed
motion for summary judgment, again raising the statute
of limitations. Mr. Shields challenged the admissibility
of the earlier evidence submitted by Mr. Broaddus to
6 No. 11-1117
support application of the discovery rule. On reply,
Mr. Shields also noted critical discrepancies between
Mr. Broaddus’ declaration and his deposition.
In response to Mr. Shields’ renewed summary judg-
ment motion, Mr. Broaddus admitted that Mr. Hayes
had no personal knowledge regarding whether WKI was
paying its monthly rent during the relevant time period.
Nevertheless, Mr. Broaddus submitted an amended
affidavit containing many of the same representations
from his prior affidavit, including his representation
that he was not able to verify that WKI was paying its
rent until the summer of 2003 when Mr. Hayes con-
firmed that information.
The district court ultimately granted Mr. Shields’ re-
newed motion for summary judgment. After analyzing
the Illinois discovery rule, the district court concluded
that Mr. Broaddus could not rely on his self-serving
affidavit to create an issue of material fact when
his deposition testimony directly contradicted his repre-
sentations regarding any conversation with Mr. Hayes.
Because Mr. Broaddus made no attempt to explain the
discrepancy, and the district court found that his attesta-
tions regarding the alleged conversation with Mr. Hayes
were not based on personal knowledge, the district
court concluded that Mr. Broaddus had not met his
burden to invoke application of the discovery rule. Con-
sequently, the district court held that Mr. Broaddus’
breach of fiduciary duty claim was barred by the statute
of limitations. Mr. Broaddus appeals that decision.
No. 11-1117 7
C. Mr. Shields’ Indemnification Counterclaim
In response to Mr. Broaddus’ Complaint, Mr. Shields
filed a counterclaim for indemnification, seeking to
enforce a contractual indemnity provision and two con-
tractual fee-shifting provisions.
After the district court granted summary judgment
in favor of Mr. Shields on Mr. Broaddus’ breach of fidu-
ciary duty claim, Mr. Shields moved for summary judg-
ment on his indemnification claim. The district court
addressed each of the contracts at issue and determined
that each afforded Mr. Shields a basis for indemnity by
Mr. Broaddus.
Mr. Broaddus appeals the district court’s order
granting summary judgment in favor of Mr. Shields on
each of the contracts related to the indemnification coun-
terclaim.
D. Attorney’s Fees Award
On September 15, 2010, Mr. Shields filed a fee petition
requesting $966,696.21 in attorney’s fees. As of the date
of that filing, Mr. Shields had paid $932,629.19 of that
amount. Mr. Broaddus challenged the reasonableness of
the fee request and argued that Mr. Shields’ business,
Griffin Capital, actually paid the fees. Mr. Broaddus
further argued that Mr. Shields’ counsel overstaffed
the case and had incurred unnecessary expenses
reviewing unrelated litigation in which Mr. Broaddus
was involved.
8 No. 11-1117
The district court rejected most of Mr. Broaddus’ con-
tentions concerning the reasonableness of the fees and
determined there was no evidence that Mr. Shields had
not paid the fees as represented. The district court
agreed with Mr. Broaddus, however, that Mr. Shields’
defense had been overstaffed and that time spent re-
viewing and monitoring Mr. Broaddus’ other litigation
was unrelated and not compensable. The district court
reduced Mr. Shields’ request by $168,077.05 and awarded
him $798,619.16 in attorney’s fees. Mr. Broaddus
appeals the district court’s fee award.
II. D ISCUSSION
As indicated previously, Mr. Broaddus appeals three
of the district court’s orders: (1) the order granting sum-
mary judgment in favor of Mr. Shields on Mr. Broaddus’
breach of fiduciary duty claim; (2) the order granting
summary judgment on Mr. Shields’ indemnification
counterclaim; and (3) the order awarding Mr. Shields
$798,619.16 in attorney’s fees.
We are exercising diversity jurisdiction over this ac-
tion. When addressing a question of state law while sit-
ting in diversity, “our task is to ascertain the sub-
stantive content of state law as it either has been deter-
mined by the highest court of the state or as it would be
by that court if the present case were before it now.”
Thomas v. H&R Block Eastern Enters., 630 F.3d 659, 663
(7th Cir. 2011).
No. 11-1117 9
A. Mr. Broaddus’ Claim for Breach of Fiduciary Duty
The parties agree that Mr. Broaddus’ claim against
Mr. Shields accrued in March 2003 and that Mr. Broaddus
did not file suit against Mr. Shields until May 2008—five
years and two months later. Although Mr. Broaddus
does not dispute that Illinois’ five-year statute of limita-
tions applies to his claim, 735 Ill. Comp. Stat. 5/13-205,
he contends that the statute was tolled for at least two
months due to an alleged legal disability stemming
from a severe car accident or, alternatively, due to the
discovery rule.
We review the district court’s grant of summary judg-
ment de novo, construing all facts and inferences in the
light most favorable to the non-movant, Mr. Broaddus,
in determining whether a genuine issue of material fact
exists that would preclude summary judgment. Bus. Sys.
Eng’g, Inc. v. Int’l Bus. Machs. Corp., 547 F.3d 882, 886
(7th Cir. 2008).
i. Mr. Broaddus’ Alleged Legal Disability
Mr. Broaddus argues that a genuine issue of material
fact exists regarding whether he was legally disabled at
the time his cause of action against Mr. Shields accrued.
In support of his argument, Mr. Broaddus directs us to
Illinois’ legal disability statute, which provides that a
person entitled to bring an action who is under a legal
disability at the time that action accrues can bring the
action within two years after the disability is removed.
735 Ill. Comp. Stat. 5/13-211.
10 No. 11-1117
Mr. Broaddus conceded in his reply brief and at oral
argument that he did not raise the issue of his legal dis-
ability to the district court in response to Mr. Shields’
motion for summary judgment.
“[I]t is axiomatic that an issue not first presented to the
district court may not be raised before the appellate
court as a ground for reversal.” Econ. Folding Box Corp. v.
Anchor Frozen Foods Corp., 515 F.3d 718, 720 (7th Cir. 2008).
Reversing a district court on grounds not presented to
it “would undermine the essential function of the
district court.” Id. Therefore, arguments raised for the
first time on appeal are waived. LaBella Winnetka, Inc. v.
Vill. of Winnetka, 628 F.3d 937, 943 (7th Cir. 2010).
Mr. Broaddus attempts to circumvent our well estab-
lished waiver rule by arguing that issues regarding his
legal disability were generally raised in other aspects of
the litigation and that a “miscarriage of justice would
result absent this court’s review” because the true gravity
and extent of his disability were not evident until after
summary judgment. Significantly, Mr. Broaddus raises
this claim purely by way of argument and provides no
evidentiary support to support this contention.
We reject Mr. Broaddus’ request for us to address his
alleged legal disability for the first time on appeal. It was
Mr. Broaddus’ choice not to raise that issue in response
to Mr. Shields’ summary judgment motion invoking the
No. 11-1117 11
statute of limitations.1 Courts rely on the parties to
know what is best for them and to advance the facts and
arguments that entitle them to relief. See Greenlaw v.
United States, 554 U.S. 237, 243-44 (2008) (“[W]e rely on
the parties to frame the issues for decision and assign to
courts the role of neutral arbiter of matters the parties
present . . . . Our adversary system is designed around
the premise that the parties know what is best for them,
and are responsible for advancing the facts and argu-
ments entitling them to relief.”).
To phrase our ruling simply, we invoke a common idiom:
Mr. Broaddus cannot change horses in midstream. He
chose his defense strategy in response to Mr. Shields’
summary judgment motion and is bound by that choice
on appeal. See Econ. Folding Box Corp., 515 F.3d at 721(finding an argument raised for the first time on appeal
to be waived because the party must “accept the conse-
quences of [its] decision” to present its claims under one
legal theory instead of another). Allowing Mr. Broaddus
1
Mr. Broaddus successfully represented to another court six
months before the business transaction at issue that he “ha[d]
recovered sufficiently from his injuries to manage his own
affairs” and no longer needed a legal guardian. Asserting the
legal disability argument in response to Mr. Shields’ summary
judgment motion may have implicated the judicial estoppel
doctrine. See United States v. Christian, 342 F.3d 744, 747 (7th
Cir. 2003) (emphasizing that the doctrine of judicial estoppel
is intended to protect the integrity of the judicial process
by preventing a party who prevails on one ground in a
lawsuit from repudiating that ground in another lawsuit).
12 No. 11-1117
to raise his legal disability as a defense to the statute
of limitations summary judgment motion for the first
time on appeal would undermine the essential function
of the district court to adjudicate the issues the parties
present. Therefore, we find Mr. Broaddus’ arguments
regarding his alleged legal disability to be waived.
ii. The Discovery Rule
Mr. Broaddus did raise the Illinois discovery rule to
the district court in response to Mr. Shields’ renewed
summary judgment motion invoking the statute of lim-
itations. The district court held that Mr. Broaddus had
not met his burden to invoke the discovery rule and
granted summary judgment in favor of Mr. Shields.
Although Mr. Broaddus raised the discovery rule to the
district court, he did not present that argument in his
appellant’s brief. Consequently, Mr. Shields argues that
Mr. Broaddus has waived the discovery rule argument on
appeal. In his reply brief, Mr. Broaddus concedes that
he omitted the argument from his appellant’s brief but
urges this Court to address the merits of the discovery
rule because the omission was “a simple mistake.” 2
2
After Mr. Shields pointed out that Mr. Broaddus failed to
raise the discovery rule in his appellant’s brief, Mr. Broaddus
filed a motion to file an amended appellant’s brief to include
the omitted section. Mr. Broaddus’ motion was denied with
the remark that “[a]ny argument regarding the proposed
amendment can be made in the appellant’s reply brief.”
(continued...)
No. 11-1117 13
Mr. Broaddus also argues that Mr. Shields waived his
waiver argument by not supporting it with relevant legal
authority.
Once again, we invoke our well established waiver
jurisprudence: arguments raised for the first time in a
reply brief are waived. Mendez v. Perla Dental, 646 F.3d 420,
423-24 (7th Cir. 2011). We reject Mr. Broaddus’ argument
that Mr. Shields waived the waiver argument because,
in fact, Mr. Shields cited legal authority to support his
position and appropriately raised the argument at his
first opportunity. Additionally, we are capable of ob-
serving that Mr. Broaddus raised this issue for the
first time in his reply brief. For these reasons, we con-
clude that Mr. Broaddus has waived his argument re-
garding the discovery rule on appeal.
Waiver notwithstanding, even if we were to forgive
Mr. Broaddus’ “mistake” and address the merits of his
belated discovery rule argument, we would still affirm
the district court’s decision. We review statute of limita-
tions determinations de novo. Dexia Crédit Local v. Rogan,
629 F.3d 612, 626 (7th Cir. 2010). Illinois follows the
general rule that tort claims arising from a contract
accrue when the contract is breached. In re marchFIRST Inc.,
2
(...continued)
Mr. Broaddus contends that the order authorizes him to
substantively raise the discovery rule issue in his reply brief.
We find that reading to be overbroad. Mr. Broaddus was
authorized to respond to Mr. Shields’ waiver argument on
reply, but how to resolve the issue was left to the panel.
14 No. 11-1117
589 F.3d 901, 903 (7th Cir. 2009). But Illinois also
recognizes the discovery rule, which “tolls the running of
the limitations period with respect to claims that would
have put a reasonable person on notice of the need to
investigate whether actionable conduct is involved.” Price
v. Philip Morris, Inc., 848 N.E.2d 1, 22 (Ill. 2005). “[I]n
Illinois, the party seeking to utilize the discovery rule
bears the burden of proving the date of discovery.” In re
marchFIRST Inc., 589 F.3d at 904. Although application
of the discovery rule may be an issue of fact, the question
becomes one of law that can be resolved on summary
judgment where it is apparent from the undisputed facts
that only one conclusion can be drawn. Cathedral of Joy
Baptist Church v. Village of Hazel Crest, 22 F.3d 713, 719
(7th Cir. 1994); see also Kremers v. Coca-Cola Co., 712 F. Supp.
2d 759, 766-67 (N.D. Ill. 2010) (collecting cases).
Mr. Broaddus’ discovery rule argument on appeal
consists of two parts. First, he argues that the district
court erred by concluding that he failed to meet his
burden. He believes that Mr. Shields failed to meet his
initial burden with respect to the statute of limitations,
so no burden ever shifted to Mr. Broaddus.
We find otherwise. Mr. Shields’ summary judgment
motion raised the statute of limitations based on the
undisputed evidence that the business transaction at
issue occurred in March 2003 and that Mr. Broaddus
did not file suit until May 2008—two months after the five-
year statute of limitations ran. In response, Mr. Broaddus
sought to invoke the discovery rule to toll the statute
of limitations. It was thereafter Mr. Broaddus’ burden to
No. 11-1117 15
prove the date of discovery or to present evidence to
create an issue of material fact regarding the same. If he
did not, the issue is a matter of law that can be resolved
against the party seeking to utilize the discovery rule at
summary judgment. See, e.g., Cathedral of Joy Baptist
Church, 22 F.3d at 719. Mr. Broaddus’ argument that he
did not bear a burden on summary judgment ignores
the applicable law and, accordingly, must be rejected.
Second, Mr. Broaddus argues that the statute of limita-
tions did not begin to run until at least June 2003
because he could not have reasonably discovered his
injury before that time. The only evidence he relies upon
is his affidavit attesting that he was not able to verify
that WKI was paying its rent until the summer of 2003
“when Ed Hayes and others confirmed this information.”
That evidence, however, is both unreliable and inad-
missible. Mr. Hayes testified that he did not speak with
Mr. Broaddus about WKI, that he did not have personal
knowledge of the lease between WKI and Will Partners,
and that he had no knowledge whether or not WKI
was paying its rent during the relevant time. And
Mr. Broaddus testified at his deposition that he did not
actually recall any conversations he had with Ed Hayes
about WKI during the summer of 2003.3 Mr. Broaddus also
3
On appeal, Mr. Broaddus scolds Mr. Shields for presenting
Mr. Broaddus’ deposition testimony for the first time in his
reply supporting summary judgment. Mr. Broaddus com-
pletely ignores, however, that his deposition was taken after
(continued...)
16 No. 11-1117
admitted that Mr. Hayes had no personal knowledge
whether WKI was paying its monthly rent during the
relevant time period.
We have repeatedly held that self-serving affidavits
without factual support in the record will not defeat a
motion for summary judgment. Albiero v. City of Kankakee,
246 F.3d 927, 933 (7th Cir. 2001). Affidavits signed under
oath “when offered to contradict the affiant’s deposi-
tion are so lacking in credibility as to be entitled to
zero weight in summary judgment proceedings unless
the affiant gives a plausible explanation for the discrep-
ancy.” Beckel v. Wal-Mart Assocs., 301 F.3d 621, 623 (7th
Cir. 2002).
We also agree with the district court that Mr. Broaddus’
deposition testimony establishes that he did not ac-
tually recall any conversations he had with Ed Hayes
about WKI during the summer of 2003. Mr. Broaddus
therefore lacks personal knowledge to support the sole
statement that forms the basis for him to invoke the
discovery rule. Mr. Broaddus did not attempt to
explain this discrepancy to the district court, and he
3
(...continued)
Mr. Shields filed his summary judgment motion and pursuant
to a district court order. Therefore, the first time Mr. Shields
could have presented Mr. Broaddus’ deposition testimony
was on reply. Mr. Broaddus neither moved to strike that
testimony nor filed a surreply. For these reasons, we reject
Mr. Broaddus’ argument that the district court should not have
considered his deposition testimony on summary judgment.
No. 11-1117 17
maintains this silence on appeal. Because Mr. Broaddus
does not cite any other evidence on which to invoke the
discovery rule, we conclude that even if he had not
waived the argument on appeal, he failed to meet his
burden as a matter of law on summary judgment. There-
fore, we affirm the district court’s judgment with respect
to Mr. Shields’ motion for summary judgment on the
statute of limitations.
B. Mr. Shields’ Indemnification Counterclaim
In response to Mr. Broaddus’ Complaint, Mr. Shields
asserted counterclaims seeking to enforce a contractual
indemnity provision and two contractual fee-shifting
provisions. The district court granted summary judgment
in favor of Mr. Shields on his counterclaims, which
Mr. Broaddus appeals.
The parties agree that Delaware law applies to each of
the contracts at issue. Delaware “has adopted traditional
principles of contract interpretation.” ConAgra Foods, Inc. v.
Lexington Ins. Co., 21 A.3d 62, 68-69 (Del. 2011). For exam-
ple, when a contract is clear and unambiguous, terms
and provisions are given their clear meaning. Id.i. March 2003 Assignments
Mr. Broaddus argues that the district court erred by
granting summary judgment in favor of Mr. Shields on
the indemnification claim stemming from the March 2003
Assignments.
18 No. 11-1117
The March 2003 Assignments, through which
Mr. Shields purchased Mr. Broaddus’ interest in Will
Partners for $600,000, contain identical indemnification
provisions:
[Broaddus] agrees to indemnify, defend and hold
harmless [Shields] and its agents, shareholders, mem-
bers, managers, directors, affiliates, employees, in-
surers, successors, heirs, representatives, attorneys
and assigns, from and against any and all losses
arising out of or due to a breach of any of the represen-
tations, warranties or covenants of [Broaddus] con-
tained herein.
Mr. Broaddus does not argue that any terms or provi-
sions in the March 2003 Assignments are ambiguous.
And Mr. Broaddus does not dispute that he breached
the assignments by filing suit against Mr. Shields or
that the clause at issue allows Mr. Shields to recover
attorney’s fees. Mr. Broaddus’ sole argument is that the
district court erred because indemnification clauses only
apply to actions by third parties, not to claims directly
between the indemnitor and indemnitee.
Delaware law is “more contractarian than that of many
other states” and “parties’ contractual choices are re-
spected.” GRT, Inc. v. Marathon GTF Technology, Ltd.,
2011 WL 2682898, at *12 (Del. Ch. July 11, 2011); see also
Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010) (“We
must . . . not rewrite the contract to appease a party
who later wishes to rewrite a contract he now believes
to have been a bad deal. Parties have a right to enter into
good and bad contracts, the law enforces both.”). The
No. 11-1117 19
term “indemnify” generally means “[t]o reimburse (an-
other) for a loss suffered because of a third party’s or one’s
own act or default.” B LACK ’ S L AW D ICTIONARY 784 (8th
ed. 2004) (emphasis added). Delaware trial courts
have enforced indemnification provisions between an
indemnitor and an indemnitee. See, e.g., Barker Capital
LLC v. Rebus LLC, 2006 WL 246572 (Del. Super. Ct. Jan. 12,
2006) (enforcing indemnification provision between
indemnitor and indemnitee). Moreover, in the context of
addressing the timeliness of an indemnification claim
where one party agreed to indemnify the other for dam-
ages arising from that party’s breach of contract, the
Delaware Supreme Court held that the term “indemnity”
has a “distinct legal meaning that permits the party
seeking indemnification to bring a separate cause of
action for indemnification after first bringing a
successful action for breach of the contract.” LaPoint v.
AmerisourceBergen Corp., 970 A.2d 185, 197-98 (Del. 2009).
Applying these principles, we agree with the district
court that the indemnification provision at issue is en-
forceable. The provision is broad and does not limit
recovery to actions by third parties against an indemnitor
or indemnitee. In fact, it expressly contemplates
Mr. Broaddus indemnifying Mr. Shields in the case of a
breach. Mr. Broaddus does not deny that he breached
the contract or that the provision at issue is unambiguous.
Therefore, like the district court, we will honor the par-
ties’ freedom to contract and affirm the decision
to grant summary judgment in favor of Mr. Shields
on his indemnification counterclaim related to the
March 2003 Assignments.
20 No. 11-1117
ii. Will Partners’ LLC Agreement
Will Partners’ LLC Agreement contains a prevailing
party fee-shifting provision that provides as follows:
In any action or proceeding between or among the
Members arising out of this Agreement, the unsuccess-
ful member shall pay the prevailing Member all costs
and expenses, including, without limitation, rea-
sonable attorneys fees incurred by the prevailing
Member in such action or proceeding whether or not
such action or proceeding is prosecuted to judgment.
Mr. Broaddus does not argue that any terms or provi-
sions in the LLC Agreement are ambiguous, and he does
not dispute that his action arises out of the LLC Agree-
ment or that Mr. Shields was the prevailing party. In-
stead, his sole argument on appeal is that the district
court erred by enforcing the fee provision of the LLC
Agreement because Mr. Broaddus never signed that
agreement. Mr. Broaddus did not present this argument
to the district court and, consequently, has waived it
on appeal. LaBella Winnetka, Inc., 628 F.3d at 943.
Waiver notwithstanding, Mr. Broaddus admits that the
LLC Agreement controlled the relationships of its mem-
bers, including Mr. Broaddus and Mr. Shields. By not
contesting that his claim arises out of the LLC Agree-
ment, that the agreement controlled the relationship at
issue, and that Mr. Shields was the prevailing party,
Mr. Broaddus has given us no grounds on which to
decline to enforce the fee-shifting provision. The fact that
he did not sign the LLC Agreement is of no consequence
because by acquiring a membership interest in Will
No. 11-1117 21
Partners, Mr. Broaddus became bound by the LLC Agree-
ment, including the fee-shifting provision. Therefore, we
affirm the district court’s decision to grant summary
judgment in favor of Mr. Shields on his indemnification
counterclaim related to the LLC Agreement.
iii. November 2000 Agreement
Mr. Broaddus acquired his interest in Will Partners in
the November 2000 Agreement. That agreement contains
a prevailing party fee-shifting provision that provides
as follows:
Should it be necessary for any party to this Agree-
ment to initiate legal proceedings to adjudicate any
issues arising hereunder or under any document
executed pursuant hereto, the prevailing party in
such legal proceedings shall be entitled to reimburse-
ment of such party’s attorney’s fees, costs, expenses
and disbursements (including the fees and expenses
of expert witnesses) reasonably incurred or made in
bringing such proceedings.
Mr. Broaddus does not argue that any terms or provi-
sions of the November 2000 Agreement are ambigu-
ous. And again, Mr. Broaddus does not contest that
Mr. Shields is the prevailing party. He argues, instead,
that his action did not arise out of the November 2000
Agreement. This argument is unconvincing because
Mr. Broaddus obtained his membership interest in Will
Partners pursuant to the November 2000 Agreement.
The fee-shifting provision in that contract applies to “any
22 No. 11-1117
issues arising [under the November 2000 Agreement]
or under any document executed pursuant hereto.” The
March 2003 Assignments transferring Mr. Broaddus’
membership interest to Mr. Shields were undisputedly
executed pursuant to the November 2000 Agreement;
therefore, Mr. Broaddus’ action against Mr. Shields
arises out of both contracts.
Moreover, Mr. Broaddus actually attached the
November 2000 Agreement to his Complaint against
Mr. Shields. This further confirms that Mr. Broaddus’
action arises out of that agreement.
For these reasons, we affirm the district court’s
decision to grant summary judgment in favor of
Mr. Shields on his counterclaim related to the Novem-
ber 2000 Agreement.
C. Attorney’s Fee Award
Mr. Broaddus also challenges the district court’s
decision to award Mr. Shields $798,619.16 in attorney’s
fees.4 Mr. Broaddus does not dispute the legal standards
4
To be clear, the attorney’s fees award was Mr. Shields’ sole
recovery on the indemnification counterclaims. Mr. Broaddus
does not argue separate damages or elements of recovery
under any of the contractual provisions or contest that
Mr. Shields was entitled to recover attorney’s fees under any
of the three contracts. Therefore, upholding the district court’s
disposition of even one of the indemnification counterclaims
(continued...)
No. 11-1117 23
applied by the district court, request a line-by-line
review of Mr. Shields’ bills, or specifically challenge any
portion of the $168,077.05 reduction the district court
made from Mr. Shields’ initial fee request. Instead,
Mr. Broaddus argues that (1) he suspects that Mr. Shields’
business, Griffin Capital, paid Mr. Shields’ legal bills;
(2) Mr. Shields’ alleged “egocentric need to win” resulted
in a commercially unreasonable amount of fees; and
(3) the district court erred by failing to hold a post-ruling
evidentiary hearing on the fee request on reconsideration.
Our review of an award of attorney’s fees is highly
deferential. Gautreaux v. Chicago Hous. Auth., 491 F.3d 649,
659 (7th Cir. 2007). As we have previously noted, “[i]f
ever there were a case for reviewing the determinations
of a trial court under a highly deferential version of the
‘abuse of discretion’ standard, it is in the matter of deter-
mining the reasonableness of the time spent by a lawyer
on a particular task in a litigation in that court.” Id.i. Whether Mr. Shields Paid Fees
Although Mr. Broaddus argues that he provided “ample
evidence” for his speculative assertion that Mr. Shields’
business “might be paying his fees,” he fails to cite or
describe any of that evidence on appeal. As the district
court noted, Mr. Shields’ attorney confirmed under oath
4
(...continued)
entitles Mr. Shields to recover attorney’s fees under the cor-
responding contract.
24 No. 11-1117
that Griffin Capital was not paying Mr. Shields’ legal fees,
and Mr. Shields testified that he was personally paying
his legal fees. Mr. Broaddus’ failure to acknowledge
this evidence or cite any evidence supporting his argu-
ment leads us to summarily reject his unsupported as-
sertion that Griffin Capital may have paid Mr. Shields’
attorney’s fees. See Fed. R. App. P. 28(a) (requiring
an appellant’s brief to contain an “appellant’s contentions
and the reasons for them, with citations to the authorities
and parts of the record on which the appellant relies”).
ii. Commercial Reasonableness
Mr. Broaddus next argues that the amount of fees the
district court awarded Mr. Shields was commercially
unreasonable. Mr. Broaddus bases his challenge on his
belief that Mr. Shields’ defense strategy was motivated
by a vindictive desire to drive up his own legal ex-
penses by overstaffing the case and ordering his at-
torneys to monitor Mr. Broaddus’ other legal disputes
“to destroy” Mr. Broaddus.
Mr. Broaddus’ characterization of Mr. Shields’ motiva-
tion, whether deserved or not, ignores that the district
court reduced Mr. Shields’ fee request by $168,077.05
for the same reasons that Mr. Broaddus presents on
appeal. Specifically, the district court reduced Mr. Shields’
fee request by $23,072.61 for attorney overstaffing
and by an additional $145,004.44 for time counsel
spent tracking Mr. Broaddus’ other legal matters that
were not directly related to the underlying litigation.
Mr. Broaddus does not argue that the district court im-
No. 11-1117 25
properly calculated the reductions or that it should have
made additional cuts. Therefore, we reject his narrow
challenge to the commercial reasonableness of the fee
award.
There is no doubt that Mr. Shields incurred a sig-
nificant amount of fees during the underlying litigation.
The district court, however, was in the best position to
assess the difficulty of this case and the reasonableness
of the requested fees. It determined that this “was not
an easy, straight-forward matter” and that Mr. Broaddus’
“tactics caused many of the delays and the resultant
costs in this matter.” We are not in a position to second-
guess that assessment, especially when Mr. Broaddus’
litigation strategy required Mr. Shields to engage in
discovery and file an additional summary judgment
motion after Mr. Broaddus submitted an affidavit for
which he later admitted he had no personal knowledge.
Moreover, as the district court noted, one of the best
indicators of commercial reasonableness is a willingness
to pay the fees without guaranteed reimbursement. See
Matthews v. Wis. Energy Corp., 642 F.3d 565, 573 (7th Cir.
2011). Mr. Shields paid approximately $850,000 of his
attorney’s fees before he knew that the contractual fee-
shifting provision would apply.
In light of our highly deferential standard of review,
the appropriate reductions the district court made to
Mr. Shields’ fee request, and the payment of fees with-
out guaranteed reimbursement, we reject Mr. Broaddus’
argument that the fees the district court awarded
were commercially unreasonable.
26 No. 11-1117
iii. Belated Request for Hearing
Mr. Broaddus argues for the first time in his reply brief
that the district court erred by failing to hold a post-
ruling evidentiary hearing on Mr. Shields’ request for
attorney’s fees. As we have already emphasized, it is well
established that arguments raised for the first time in a
reply brief are waived. Mendez, 646 F.3d at 423-24.
Waiver notwithstanding, Mr. Broaddus asked the
district court to hold an evidentiary hearing on Mr. Shields’
fee petition for the first time in a motion to reconsider.5
It is well established that a motion to reconsider is only
appropriate where a court has misunderstood a party,
where the court has made a decision outside the ad-
versarial issues presented to the court by the parties,
where the court has made an error of apprehension (not
of reasoning), where a significant change in the law has
occurred, or where significant new facts have been dis-
covered. Bank of Waunakee v. Rochester Cheese Sales, Inc.,
906 F.2d 1185, 1191 (7th Cir. 1990).
The entirety of Mr. Broaddus’ argument on appeal is
that the district court “decided Shields’ request for fees in
a summary fashion” and “did not hold an evidentiary
hearing.” We disagree with Mr. Broaddus that the
district court’s analysis and reductions were done in a
summary fashion. More importantly, Mr. Broaddus fails
5
Although Mr. Broaddus structured his motion as a motion
to amend judgment, final judgment had not been entered at
that time and his motion should have been framed as a
motion to reconsider the order awarding attorney’s fees.
No. 11-1117 27
to explain why his belated hearing request is one of
the limited circumstances where a motion to reconsider
is appropriate. Therefore, we conclude that the district
court did not err by not holding an evidentiary
hearing after Mr. Broaddus’ belated request.
For these reasons, we affirm the district court’s award
of attorney’s fees.
III. C ONCLUSION
We A FFIRM the district court’s judgment on each of
the three orders Mr. Broaddus challenges on appeal.
12-21-11