No. 2--03--0171

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

PRESIDING JUSTICE O'MALLEY delivered the opinion of the court:

Defendants, Szabo Contracting, Inc., Szabo Construction, LLC, Frank Szabo, Jr., James C.Szabo, Carla Szabo, and Carl F. Szabo appeal the order of the circuit court of Du Page Countygranting summary judgment in favor of plaintiff, the Mountbatten Surety Company, Inc., andawarding plaintiff a judgment totaling $763,544.31. Defendants argue that (1) plaintiff did notproperly plead and demonstrate that its right to be indemnified by defendants under a generalindemnity agreement (Agreement) had been triggered by a default on an underlying bond, (2) that theattorney fees awarded plaintiff by the trial court were not reasonable, and (3) that the trial courtabused its discretion in denying defendants leave to plead over and to file affirmative defenses. Weaffirm.

The following undisputed facts are taken from the record on appeal. In 1993, SzaboContracting, Inc. (SCI), began its business as a general contractor and focused on municipal projects. In 1998, defendants executed a general indemnity agreement with plaintiff whereby plaintiff was toprovide performance and payment bonds on various projects that SCI undertook for its municipalclients.

Plaintiff is a Pennsylvania insurance company that is authorized to transact insurance andsurety business in Illinois. Plaintiff issued a number of performance and payment bonds on behalf ofSCI and in favor of various state and municipal entities for public works projects in which SCI wasacting as a contractor. These projects included a contract with the Village of South Barrington, fourcontracts with the Village of Lombard, a contract with Du Page County, two contracts with the Cityof Aurora, a contract with the Village of Bloomingdale, a contract with the Illinois Department ofNatural Resources, and a contract with the Village of Melrose Park. The combined total of theperformance and payment bonds issued by plaintiff was over $16 million. On February 16, 1998, alldefendants separately and severally executed the Agreement. The Agreement provided:

"The Indemnitors [defendants] hereby jointly and severally covenant, promise andagree to exonerate, indemnify and save harmless the Surety [plaintiff] (and any surety theSurety procures to execute any Bond and any other surety with which Surety may act as co-surety on any Bond or other instrument) from and against any and all liability, loss, cost,damage and expense of whatsoever kind or nature (including but not limited to, interest, courtcosts and counsel, consulting, accounting and other professional fees) which the Surety maysustain, incur, be put to or to which it may be exposed (1) by reason of having executed anyBond or other instrument or any renewal, modification, continuation, substitution orextension thereof, (2) by reason of the failure of the Principal or any of the other Indemnitorsto perform or comply with the promises, covenants and conditions of this Agreement or, (3)in enforcing any of the promises, covenants or conditions of this agreement."

In addition, the Agreement provided:

"The liability of the Indemnitors [defendants] shall extend to and include the amountof all payments, together with interest thereon, from the date of such payments, made by theSurety [plaintiff] in good faith under the Surety's belief that (1) the Surety was or might beliable therefor, or (2) the payments were necessary or advisable to protect any of the Surety'srights or to avoid or lessen the Surety's liability or alleged liability."

Additionally, defendants agreed to collateralize any reserve established by plaintiff in the anticipationof a loss on any of the bonds it issued. If defendants failed to deposit sufficient collateral afterplaintiff made a collateral demand, then defendants' failure constituted a default under the Agreement,triggering plaintiff's rights under the Agreement to obtain injunctive relief to compel defendants todeposit sufficient collateral, or to obtain a judgment against defendants for the amount of thecollateral demanded plus costs and attorney fees.

Under the Agreement, defendants also agreed to assign, transfer, pledge, and convey toplaintiff as collateral security various rights of defendants in any and all sums due or to become dueunder any contract; all subcontracts and purchase orders; all interest in any contract, the work, ortools and supplies; and all other personal property. Paragraph 9 of the Agreement provided that therights defendants assigned to plaintiff could be exercised by plaintiff as follows:

"(E) The rights provided to the Surety [plaintiff] under the assignments hereingranted may be exercised by the Surety immediately on the occurrence of any one or moreof the following events or upon the [S]urety's reasonable apprehension that any one or moreof the following may occur:

(1) Any abandonment, forfeiture, or breach of, or failure, refusal orinability to perform, the terms and provisions of any contract with respect to whicha Bond or other instrument has been executed by Surety;

(2) The failure, delay, refusal or inability of the Principal to pay bills orother indebtedness incurred in, or in connection with, the performance of any contractwith respect to which a Bond or other instrument has been executed by Surety;

(3) The failure, refusal or inability of the Principal to satisfy any of theconditions of any such Bond or other instrument executed by Surety;

(4) The failure to perform, or comply with, any of the promises,covenants, and obligations of this Agreement;

(5) The failure to pay and discharge, when due, any other indebtedness ofthe Principal to the Surety;

(6) Any assignment by the Principal for the benefit of creditors, anyappointment or application for the appointment of a receiver or trustee, or anyvoluntary or involuntary filing of a petition under Title 11 of the United States Codeas to any Indemnitor whether insolvent or not;

(7) Any proceeding which deprives the Principal of the use or interfereswith the Principal's use of any supplies, tools, plant, machinery, equipment ormaterials required for the performance of any contract with respect to which Suretyhas issued any Bond; or

(8) The Principal's death, disappearance, incompetence, conviction of afelony, or imprisonment, if the Principal is an individual.

(F) In the event the assignments become operative as provided above, in additionto any other remedies the Surety may have, the Indemnitors authorize and empower theSurety in its sole discretion and to the extent it deems appropriate, but without any obligationto take action:

(1) To assert, pursue, prosecute, compromise or settle in whole or in partat the Indemnitors' expense all of the rights, actions, causes of action, claims anddemands assigned, and

(2) To take possession of all or any part of the work (together will allassociated supplies, tools, plant, machinery, equipment, materials, job books, records,drawings and plans), at the Indemnitors' expense to complete all or any part of thework, or to relet or consent to the reletting or completion of the contract or contractssecured by any Bond."

The Agreement further provided that the contract funds were to be treated as trust funds:

"If any of the Bonds or other instruments are executed by the Surety in connectionwith the performance of a contract, the entire contract price or other consideration to bereceived by the Principal, whether received as payments or loans, shall be dedicated to thesatisfaction of the conditions of the Bond(s) or other instrument(s). All consideration,including all funds paid, due or to become due and all securities, warrants, checks or otherevidence of indebtedness and the proceeds thereof, given upon or under any contract inconnection with which the Surety shall have issued a Bond shall be impressed with a trust infavor of laborers, materialmen, suppliers, subcontractors and the Surety for the exclusivepurpose of satisfying the conditions of the Bonds. Upon demand of the Surety for the deposittherein of all funds or the proceeds of all consideration received or to be received from anycontract referred to in any Bond."

Early in 1999, plaintiff became aware of claims submitted by SCI's subcontractors fornonpayment and the Village of South Barrington's complaint regarding SCI's performance. OnFebruary 23, 1999, HMS Dreadnought, an entity related to plaintiff, wrote to the Village of SouthBarrington acknowledging receipt of the Village's complaint and other claims made against thepayment bond. HMS Dreadnought "demand[ed], on behalf of the Surety [plaintiff] that [the Villageof South Barrington] release no further funds under the above-referenced contract without the in-advance written consent and direction of the Surety or HMS Dreadnought, Inc." HMS Dreadnoughtmade the demand "to protect the Surety's rights of subrogation and to enable the Surety to protectits interests under its Bonds furnished for this project." On March 11, 1999, R.W. DuntemanCompany, a subcontractor in the Lombard project, filed suit against SCI for failing to pay it sums dueunder its contract with SCI. On March 23, 1999, plaintiff sent letters to the other municipalities thathad outstanding contracts with SCI, insisting that contract funds be escrowed and sent to plaintiff'sdesignated disbursing agent. These letters also indicated that plaintiff was proceeding to exercise itsrights as afforded by the Agreement.

On April 1, 1999, Frank Szabo met with representatives of plaintiff and HMS Dreadnoughtat plaintiff's offices in Pennsylvania. According to Frank Szabo's affidavit, plaintiff and he reachedan accord by which plaintiff would retract the letters sent to the various public owners and withdrawits demand for escrowing amounts paid in on the other bonded jobs. No such written agreementappears in the record; the Agreement specifies that its provisions may be waived or modified only inwriting, and not orally. On April 19, 1999, plaintiff's corporate counsel, Gerald Carozza, againadvised defendants that plaintiff had received notice of claims, reminded defendants that the variouscontract funds were considered trust funds under the Agreement, and advised defendants that plaintiffhad set up a $500,000 reserve for which it was demanding a deposit of collateral security.

Plaintiff further requested that defendants arrange to deposit all of the funds into a separatetrust account and to escrow the contract funds for the purpose of paying the subcontractors andsuppliers. Defendants neither created nor agreed to create an escrow for the contract funds or aseparate trust account. On April 28, 1999, plaintiff filed suit. In count I, plaintiff sought exoneration,specific performance, and indemnity. In count II, plaintiff alleged quia timet and sought injunctiverelief. Concurrently with the complaint, plaintiff filed a motion for a temporary restraining order.

On May 4, 1999, defendants filed a counterclaim for injunctive relief, alleging that plaintiffhad unjustifiably interfered with defendants' contracts. Also on that date, the trial court wasscheduled to hear plaintiff's motion for a temporary restraining order. However, the parties agreedto the entry of an order providing that defendants' counsel would set up a segregated trust accountinto which the contract funds would be deposited and paid out to SCI's subcontractors and supplierswho made requests. If the parties were unable to agree upon a payout, then they were to bring anappropriate motion before the trial court. Additionally, the agreed order provided that plaintiff wasto rescind its notices to the various municipalities demanding that they make payments directly toplaintiff, advise them of the agreed order, and direct them to make the payments into the trust accountcreated by the agreed order.

Thereafter, the terms of the agreed order were implemented. Further, on June 15, 1999,pursuant to a motion by plaintiff that alleged that the payables to subcontractors and suppliersexceeded receivables for several projects, the terms of the agreed order were extended by stipulationof the parties.

Between May and September 1999, a substantial amount of the contract funds was receivedinto the trust account and disbursed to SCI's subcontractors and suppliers on the various projects. During that time, plaintiff filed a motion to strike and dismiss defendants' counterclaim, anddefendants filed a motion to dismiss count II of plaintiff's complaint. On September 9, 1999, the trialcourt entered an agreed order extending the terms of the May 4, 1999, order establishing thesegregated trust account. The trial court also took the motions directed at the pleadings underadvisement. The trial court also allowed defendants to voluntarily dismiss their counterclaim. Alsoon September 9, 1999, defendants filed a new counterclaim, alleging a racketeering violation, aconsumer fraud violation, intentional injury, and breach of the covenant of good faith and fair dealing. This counterclaim was later consolidated with plaintiff's complaint.

On October 12, 1999, SCI executed a trust agreement and assignment for the benefit ofcreditors with William A. Brandt, Jr., of Development Specialists, Inc. On October 13, 1999, Brandtadvised plaintiff of the assignment and stated that "all work on jobs in progress has stopped and willnot be completed by [SCI], Szabo Construction LLC or Coral Leasing." On October 20, 1999,plaintiff filed a motion to terminate the joint-control trust account created by the May 4, 1999, orderand to otherwise modify the terms of the preliminary injunction, as a result of defendants' assignmentfor the benefit of creditors. Plaintiff further contended that defendants had abandoned their variousbonded projects, which constituted a default under paragraph 9(E)(1) of the Agreement. On thisdate, plaintiff also filed a motion for restitution against defendants on the basis that defendants hadacted fraudulently and in violation of the Mechanics Lien Act (770 ILCS 60/0.01 et seq. (West 2002))by obtaining funds from Du Page County with false contractor affidavits and requiring subcontractorsto provide lien waivers without actually receiving payment. Plaintiff also filed a motion to dismissdefendants' new counterclaim.

On October 20, 1999, the trial court granted leave to intervene to West Suburban Bank andBrandt. West Suburban Bank made loans to SCI and claimed a priority interest in all of SCI'saccounts receivable, including the segregated trust account. West Suburban filed a response toplaintiff's motion to terminate the joint-control trust account and also a cross-complaint fordeclaratory judgment, asserting the priority of its interest in those funds. Subsequently, Du PageCounty was allowed to intervene and filed a cross-complaint for declaratory judgment, alleging thatSCI stopped working on the Du Page County project on October 12, 1999, and that Brandt, asassignee for the benefit of creditors, gave notice that he would not complete the project. Du PageCounty acknowledged that plaintiff gave notice of its intent to fulfill its obligations under the bondfor the project, and acknowledged that there was a competing interest in the contract funds by WestSuburban under a security agreement with SCI. Du Page County sought an adjudication of thepriority of the various parties in interest.

Plaintiff moved to dismiss West Suburban's cross-complaint, asserting that, because of SCI'sdefaults under the Agreement, including its assignment for the benefit of creditors, its interest in theremaining contract funds on the bonded projects had priority over the bank's interests. However, onJanuary 20, 2000, activity in this case was stopped following SCI's filing for bankruptcy. InNovember 2000, the bankruptcy court granted plaintiff relief from the automatic stay and allowedplaintiff to "collect all contract proceeds on projects bonded by it," and "to utilize said funds tocomplete bonded obligations or to otherwise direct said public owners to use said funds to dischargeobligations, under the bond." At that point, Brandt, as assignee, withdrew from the litigation. Thetrial court thereafter held a pretrial conference, at which plaintiff provided a list of all outstandingclaims on the projects.

On February 16, 2001, the trial court granted plaintiff's motion to dismiss West Suburban'scross-complaint. The trial court specifically found that the surety's interests in the bonded contractaccounts receivable and the court-ordered trust account were superior to the bank's interest underthe Uniform Commercial Code (810 ILCS 5/1--101 et seq. (West 2000)). Also on February 16,2001, the individual Szabo defendants retained new counsel following the death of their originalcounsel while the case was inactive under the automatic bankruptcy stay. On February 20, 2001, thetrial court entered an agreed order allowing the funds held in the segregated trust account to bedisbursed to the claimants from the various projects, with the remaining amount to be disbursed toplaintiff as partial reimbursement for claims it had already paid.

West Suburban appealed the dismissal of its cross-complaint. Thereafter, West Suburbanvoluntarily dismissed its appeal.

SCI continued to insist that the contract funds be sent to West Suburban. On April 9, 2002,plaintiff filed a motion to enjoin SCI from interfering with the collection of the funds. The Villageof Lombard joined in plaintiff's motion. The trial court granted the motion.

Also on April 9, 2002, plaintiff filed its motion for summary judgment. Plaintiff itemized theclaims paid to SCI's subcontractors and suppliers under the payment bond. Plaintiff further detailedits takeover agreement with Du Page County to complete the contract. Plaintiff also settled claimsfrom the Villages of Bloomingdale and Lombard and paid the claims of certain subcontractors. Finally, plaintiff detailed its expenses, including attorney fees. In all, plaintiff claimed that it was dueover $1 million.

Defendants sought and received leave to take additional discovery depositions before theirresponse to the motion for summary judgment was due. Although defendants issued subpoenas tovarious witnesses, their depositions never occurred because defendants ultimately failed to complywith the trial court's scheduling order on the additional discovery. Defendants then filed theirresponse to the motion for summary judgment, supported by the affidavit of Frank Szabo. Plaintifffiled its reply and a motion to strike Frank Szabo's affidavit on the ground that it was conclusory.

On October 31, 2002, the trial court held a hearing on plaintiff's motion for summaryjudgment. First, the trial court ruled on the motion to strike Frank Szabo's affidavit. The trial courtstruck certain paragraphs of the affidavit, ruling that they were conclusory and not supported by facts. The trial court then proceeded to rule on plaintiff's motion for summary judgment. The trial courtfirst noted that plaintiff had demanded that defendants deposit collateral, but that defendant failed todeposit any of the collateral demanded. The trial court determined that, under paragraph 6 of theAgreement, this constituted a default. The trial court also noted that plaintiff had received a noticeof cancellation of SCI's workers' compensation insurance. The trial court further noted that, underthe Agreement, plaintiff was entitled to exercise its rights if it had a reasonable apprehension thatdefendants would be unable to perform. The trial court stated that the cancellation of the workers'compensation insurance gave rise to a reasonable apprehension that defendants would not be able toperform. The trial court concluded that, under the agreement, defendants had defaulted in at leasttwo instances: the failure to comply with the demand for collateral and the notice of cancellation ofthe workers' compensation insurance.

The trial court considered defendants' argument that plaintiff had not acted in good faith. Itconcluded that the undisputed facts did not demonstrate that plaintiff had acted fraudulently or in badfaith, and that defendants had failed to make the necessary showing to prevail on that argument.

The trial court also concluded that plaintiff did not need to show that defendants breached aperformance and payment bond in order to bring this action. It held that proving a default under theAgreement was sufficient. The trial court therefore entered summary judgment in favor of plaintiffand against defendant. With regard to attorney fees, the trial court found no dispute regarding thereasonableness of the rate charged by plaintiff's attorneys and determined that the documentationprovided by plaintiff was sufficient and represented a very reasonable amount. The trial court alsoordered that defendants deposit collateral in the amount of $600,000 to offset the outstanding liabilityto plaintiff on certain of the bonds. In the event that defendants did not comply, the court authorizedan additional judgment of $600,000. The trial court also permitted plaintiff to file a petition foradditional attorney fees.

On December 2, 2002, following defendants' failure to make the $600,000 collateral deposit,plaintiff moved for entry of the additional judgment and filed a petition for additional attorney fees. On that date, defendants also filed a motion to reconsider the ruling on summary judgment. OnJanuary 17, 2003, the trial court denied defendants' motion to reconsider. On March 7, 2003, the trialcourt ruled on the pending motion for entry of the additional judgment and the petition for additionalattorney fees. The court entered an additional judgment in the amount of $545,020.19 and allowedadditional attorney fees in the amount of $47,278.27. Defendants timely appeal.

On appeal, defendants identify four primary issues. First, defendants contend that the trialcourt erred in holding that plaintiff was not required to plead and prove a breach of the performanceand payment bond as a condition precedent to bringing a claim under the Agreement. Next,defendants assert that several material issues of fact preclude the entry of summary judgment. Thesefactual issues include whether plaintiff had a reasonable apprehension of or actual exposure to a claimunder one of the performance and payment bonds, whether plaintiff's own actions caused claims tobe made under the bonds, and whether plaintiff acted in good faith in paying the claims for which itis seeking indemnification. Third, defendants also complain that the trial court's award of attorneyfees was not reasonable. Last, defendants contend that the trial court abused its discretion in notallowing defendants to replead and raise affirmative defenses.

Before we consider defendants' issues on appeal, we must first address a number of motionswe ordered to be taken with the case. Initially, plaintiff filed a motion to strike portions of defendants'brief on appeal, contending that defendants based one of their arguments on several letters authoredby Marc Roth that were not a part of the appellate record. Defendants failed timely to reply toplaintiff's motion. Thereafter, defendants filed a motion for leave to file a response to plaintiff'smotion to strike along with a motion to supplement the record on appeal with the transcripts of threehearings in the trial court and the deposition of Marc Roth. This court allowed defendants' motionto supplement the record on appeal. Plaintiff thereafter filed objections to defendants' motion forleave to file a response to plaintiff's motion to strike. Upon examining the supplemental record, wefind that it contains copies of the letters authored by Marc Roth that are referred to in defendants'argument on appeal. Accordingly, we deny plaintiff's motion to strike and defendant's motion forleave to file a response to plaintiff's motion to strike.

Before addressing defendants' substantive arguments on appeal, we briefly rehearse thestandards governing our review of the trial court's grant of summary judgment. Summary judgmentis a drastic means of disposing of a case; consequently, we must construe the record strictly againstthe moving party and liberally in favor of the nonmoving party. Jackson v. TLC Associates, Inc., 185Ill. 2d 418, 423-24 (1998). Summary judgment will be granted if "the pleadings, depositions, andadmissions on file, together with the affidavits, if any, show that there is no genuine issue as to anymaterial fact" (735 ILCS 5/2--1005(c) (West 2002)) and "the moving party's right to judgment isclear and free from doubt" (Jackson, 185 Ill. 2d at 424). Where there is a dispute regarding a materialfact, or where reasonable persons could draw different inferences from the undisputed fact, thensummary judgment is improper, and the issue must be decided by the trier of fact. Jackson, 185 Ill.2d at 424. Our review of the trial court's grant of summary judgment is de novo. Jackson, 185 Ill.2d at 424.

Turning to the substantive issues raised by defendants, defendants first contend that the trialcourt erred in interpreting the Agreement not to require, as a condition precedent, the breach of theprovisions of any of the performance and payment bonds to entitle plaintiff to exercise its rights underthe Agreement. Defendants point only to the provision of the Agreement that obligates them toindemnify plaintiff if it incurs or is exposed to liability, loss, or damage "by reason of having executedany [performance and payment] bond" on behalf of defendants. Defendants suggest that this is theonly provision in the Agreement that will trigger their indemnity obligation to plaintiff. Because therewas no allegation or evidence presented by plaintiff that any of the municipalities claimed a defaultunder any performance and payment bond, defendants conclude that their obligations under theAgreement never sufficiently ripened to allow plaintiff to take any of the actions allowed by theAgreement. We disagree.

We note, initially, that an indemnity agreement is a contract and is subject to the rules forinterpreting contracts. Hanover Insurance Co. v. Smith, 182 Ill. App. 3d 793, 796 (1989), aff'd, 137Ill. 2d 304 (1990). In construing a contract (or an indemnity agreement), the cardinal rule is to giveeffect to the intention of the parties. Hanover Insurance, 182 Ill. App. 3d at 796. The intent of theparties is discerned from the language used in the contract, which will be given its plain and ordinarymeaning unless it is ambiguous. United States Fidelity & Guaranty Co. v. Klein Corp., 190 Ill. App.3d 250, 254 (1989) (hereinafter, USF&G).

Here, defendants do not contend that the Agreement is in any way ambiguous; to the contrary,defendants argue that it clearly requires the breach of one of the underlying bonds as a conditionprecedent to allow plaintiff to enforce the obligations of the Agreement. Defendants' argument,however, misrepresents the nature of the obligations that they undertook. Defendants' claim that abreach of the provisions of an underlying bond is the only manner by which their obligations andplaintiff's rights under the Agreement may be triggered ignores the fact that it is only one of threeexplicit alternatives. Stated in full, the Agreement provides that defendants will indemnify plaintifffor:

"any and all liability, loss, cost, damage and expense of whatsoever kind or nature (includingbut no limited to, interest, court costs and counsel, consulting, accounting and otherprofessional fees) which the Surety may sustain, incur, be put to or to which it may beexposed (1) by reason of having executed any Bond or other instrument or any renewal,modification, continuation, substitution or extension thereof, (2) by reason of the failure ofthe Principal or any of the other Indemnitors to perform or comply with the promises,covenants and conditions of this Agreement or, (3) in enforcing any of the promises,covenants or conditions of this agreement." (Emphasis added.)

The Agreement expressly provides that a breach of an underlying bond, or a default under or breachof the terms of the Agreement itself, is sufficient to allow plaintiff to exercise the rights specified inparagraph 9 of the Agreement. Thus, the trial court rightly concluded that a default under the termsof the Agreement itself, without a breach of an underlying bond, triggered plaintiff's rights toindemnification from defendants. Accordingly, we reject defendants' assertion that "[o]nly if[plaintiff] is exposed to liability under the [performance and payment] bonds does the [d]efendants'obligation under the [Agreement] get triggered." Further, we note that plaintiff demanded a collateraldeposit and defendants did not comply, which constituted a default under the Agreement, therebyallowing plaintiff to invoke its rights and remedies under paragraph 9 of the Agreement.

Moreover, defendants' argument fails on its face. Defendants quote provisions from theperformance and payment bonds that state that, in order to trigger the surety's obligation under thebond, an owner-municipality must have declared a contractor default, or a subcontractor or supplier(or a subcontractor of a subcontractor) must have made a claim under the bond against the contractor(defendants). Defendants continue to assert that plaintiff did not prove that any owner-municipalitydeclared a contractor default. This again ignores the alternate basis to trigger plaintiff's obligationsunder the bond, that a subcontractor or supplier made a claim under the bond. Plaintiff alleged thatsubcontractors and suppliers had made claims under the bonds and it provided documentary supportin its motion for summary judgment. In their response to the motion for summary judgment,defendants side-stepped the question of whether a claim had been made and argued only that plaintiffhad not received a notice of default. Defendants did not dispute that plaintiff received claims underthe bonds. Under the provisions quoted by defendants, receiving a notice of a claim is sufficient totrigger plaintiff's obligations under the bond. Therefore, the undisputed evidence in the record showsthat plaintiff was "exposed" to "liability, loss, cost, damage and expense of whatsoever kind" "byreason of having executed any bond" pursuant to the terms of the Agreement. Thus, even under theground defendants choose to raise, plaintiff was exposed to liability on a bond, and this validlytriggered defendants' obligations under the Agreement.

Defendant also attempts to suggest that a factual issue exists regarding plaintiff's receipt ofa notice of cancellation of defendants' workers' compensation insurance policy. Defendants assertthat they always maintained workers' compensation insurance by securing replacement coverage uponreceiving the notice of cancellation. Even if an issue of fact exists on this specific ground, ouranalysis above shows that plaintiff was exposed to liability as a result of issuing bonds on behalf ofdefendants by virtue of the claims made by the subcontractors and suppliers, and that defendantsdefaulted under the terms of the Agreement. Thus, because the notice of cancellation of workers'compensation insurance was not the only basis for triggering defendants' obligations under theAgreement, the existence of a factual issue, if any, regarding the notice of cancellation of defendants'workers' compensation policy would be insufficient to preclude the entry of summary judgment.

Next, defendants assert that there were other material issues of fact that should haveprecluded the entry of summary judgment. First, defendants again assert that a genuine issue ofmaterial fact exists regarding whether plaintiff was exposed to a claim by virtue of issuing a bond,because plaintiff did not prove that an owner-municipality declared a contractor default or that asubcontractor or supplier made a claim under a bond. Even accepting that such material issue of factexists, defendants' analysis once again incorrectly assumes that being exposed to a claim arising fromthe issuance of a bond is the only manner available to trigger defendants' obligations under theAgreement. As we have seen above, defendants' default or breach of the Agreement is also anoccurrence that will trigger defendants' obligations under the Agreement. Plaintiff has shown anddefendants do not deny that defendants failed to make a collateral deposit pursuant to plaintiff'srequest, which constitutes a default under the Agreement sufficient to trigger defendants' obligationsand plaintiff's rights under paragraph 9. Thus, the existence of an issue of material fact about whetherplaintiff was exposed to liability as a result of executing a performance and payment bond on behalfof defendants will not preclude the entry of summary judgment, as there are other, independentgrounds to sustain summary judgment.

Defendants also assert there is an issue of fact regarding whether plaintiff's receipt of thenotice that defendants' workers' compensation insurance would be cancelled was sufficient to placeplaintiff in reasonable apprehension that defendants would be unable to perform their obligations. According to defendants, reasonable minds could differ about the legal effect on the surety of thereceipt of the notice of cancellation. We have carefully examined the record and conclude that anyissue regarding defendants' workers' compensation insurance is insufficient to preclude summaryjudgment.

Defendants claim that their workers' compensation insurance never lapsed because they wereable to obtain workers' compensation insurance from another carrier. Consequently, defendantscontend that the notice of cancellation was not sufficient to place plaintiff in reasonable apprehensionabout defendants' ability to perform its obligations. We note, however, that defendants did not raisethis argument until they filed their motion to reconsider the summary judgment. In addition,defendants filed proof of insurance for the first time with their motion to reconsider. Neither thiscourt nor the trial court is required to consider documents attached to a party's motion to reconsidera summary judgment where the party did not file the documents in response to the initial motion forsummary judgment. Sacramento Crushing Corp. v. Correct/All Sewer, Inc., 318 Ill. App. 3d 571,577-78 (2000). We find, therefore, that no genuine issue of material fact exists regarding workers'compensation insurance that is sufficient to preclude the entry of summary judgment.

Defendants also assert that an issue of fact exists regarding whether plaintiff's own conductled to the claims on the bonds that plaintiff used to justify its enforcement of its rights under theAgreement. Defendants argue that plaintiff's March 23, 1999, letters to the municipalities effectively"shut down" defendants and caused the various subcontractor and supplier claims to be filed. Wedisagree.

The record demonstrates that, on March 11, 1999, one of defendants' subcontractors, R.W.Dunteman, filed suit against defendants, alleging that they failed to pay it amounts earned under asubcontract. This claim, therefore, was outstanding before plaintiff sent its March 23, 1999, letters. Thus, the letters requiring the municipalities to pay plaintiff and not defendant were issued as a resultof at least this claim. In addition, we note that defendants do not bother to attempt to demonstratethe factual basis for their argument, either through citation to the record or even by reciting the datesat which their subcontractors and suppliers made claims for nonpayment. Therefore, we find no meritin defendants' argument.

Defendants next argue that there is a factual question regarding whether plaintiff acted ingood faith when it paid the claims for which it is seeking indemnity. Defendants, however, do notcite to any legal authority in support of their argument. Accordingly, as defendants have violatedSupreme Court Rule 341(e)(7) (Official Reports Advance Sheet No. 21 (October 17, 2001), R.341(e)(7), eff. October 1, 2001), we find that they have forfeited our consideration of this issue onappeal. La Salle Bank, N.A. v. DeCarlo, 336 Ill. App. 3d 280, 287 (2003). Waiver aside, defendants'argument is nevertheless without merit.

The gist of defendants' argument is that the issue of good faith involves a factualdetermination. In support, defendants rely on several letters written by Marc Roth about five of theprojects that defendants were contracting with various municipalities. Defendants conclude from theletters that plaintiff resolved liability issues with the municipalities without demanding the full amountdue from the municipalities, thereby depriving defendants of their full contractual entitlements. According to defendants, this failure to obtain a larger amount of money means that plaintiff wasacting in bad faith toward defendants. The upshot of defendants' argument is that plaintiff has notsufficiently accounted for the funds received under the contract for each project and may haveresolved disputes at an artificially low price so as to deprive defendants of moneys to which they areentitled.

The first component of defendants' argument, that the issue of good faith generally presentsa factual issue, may or may not be true; defendants have presented no supporting authority for thisproposition. Significantly, however, the issue of a surety's good-faith resolution of underlying claimsagainst the indemnitor is susceptible to summary judgment. See, e.g., USF&G, 190 Ill. App. 3d at254-56 (existence of surety's good faith presumed, summary judgment properly granted). Indeed,USF&G offers controlling guidance in resolving defendants' argument. In USF&G, the defendant,a general contractor that filed for bankruptcy, argued that the plaintiff made payments to the ownerin bad faith. USF&G, 190 Ill. App. 3d at 252-53. The court noted that the plaintiff did notspecifically allege that it had made the payments in good faith and concluded that this "failure tospecifically allege good faith" did not "give[] rise to an inference that it acted in bad faith." USF&G,190 Ill. App. 3d at 255. The court then noted that the indemnity agreement gave the plaintiffdiscretion to demand indemnity if it might be liable for payments on an underlying contract. USF&G,190 Ill. App. 3d at 255. The court held that, absent an affirmative showing of fraud or bad faith, thegood faith of the plaintiff-surety would be presumed. USF&G, 190 Ill. App. 3d at 256.

Here, similarly to USF&G, the Agreement vests plaintiff with the discretion to demandindemnity if it has a good-faith belief that it might be liable for a payment on an underlying bond. Specifically, the Agreement provides:

"The liability of the Indemnitors shall extend to and include the amount of allpayments *** made by the Surety in good faith under the Surety's belief that (1) the Suretywas or might be liable therefor, or (2) the payments were necessary or advisable to protectany of the Surety's rights or to avoid or lessen the Surety's liability or alleged liability."

Thus, plaintiff is vested with the same discretion the court found in USF&G. USF&G, 190 Ill. App.3d at 254-55 (the defendant's liability is for " 'all amounts paid by [the plaintiff] in good faith underthe belief that: (1) [the plaintiff] was or might be liable therefor; (2) such payments were necessaryor advisable to protect any of [the plaintiff's] rights or to avoid or lessen [the plaintiff's] liability oralleged liability' "). This discretion gives rise to the presumption that plaintiff acted in good faith. Defendants have provided no evidence to demonstrate that plaintiff acted fraudulently or in bad faithin paying any of the claims. Defendants have not challenged the propriety or legitimacy of any of thepayments made to any of the recipients. In the absence of any evidence submitted by defendants tothe contrary, we find no merit to defendants' claims of bad faith on the part of plaintiff. USF&G, 190Ill. App. 3d at 256.

We also note that defendants refer to several letters written in June and July 1999 by MarcRoth, who was investigating the claims lodged by defendants' subcontractors, suppliers, and themunicipalities. Defendants overlook the fact that, at the time these letters were written, the partieshad, by an agreed order, established a jointly controlled trust account or escrow from which theseclaims were being paid. If defendants disputed a claim or payment, then they could have objected atthat time. No such objection appears in the record. Moreover, defendants' first attorney providedan accounting of the activity of the trust account or escrow and defendants did not challenge thataccounting. Our review of the letters and the record reveals no merit to defendants' contention.

Next, defendants contend that the trial court abused its discretion in awarding plaintiff the fullamount of the attorney fees it sought. Defendants assert that the time entries submitted by plaintiff'sattorneys are insufficiently detailed to allow the trial court to determine if the activities, and the timespent on them, were reasonable and necessary to the litigation. Defendants urge that the fees soughtby plaintiff be denied in their entirety.

It is well settled in Illinois that a trial court's award of attorney fees is a matter committed toits sound discretion and will not be disturbed absent an abuse of that discretion. Hanover Insurance,182 Ill. App. 3d at 797. The trial court will award only those fees that are reasonable, consisting ofreasonable charges for reasonable services. Kaiser v. MEPC American Properties, Inc., 164 Ill. App.3d 978, 983 (1987). The reasonableness of the fees is based upon:

" 'the skill and standing of the attorney employed; the nature of the cause and the novelty anddifficulty of the questions at issue; the amount and importance of the subject matter; thedegree of responsibility in the management of the cause; the time and labor required; the usualand customary charge in the community; and the benefits resulting to the client.' " HanoverInsurance, 182 Ill. App. 3d at 797, quoting Laff v. Chapman Performance Products, Inc., 63Ill. App. 3d 297, 307 (1978).

The trial court reviewed the petition for attorney fees and noted that defendants were notdisputing the rate charged for the services. Then the trial court held:

"I believe that the description of the individual entries of work performed by attorneys,although terse, and concise is adequate. There were some, in fact, underbillings which youwere honest enough to point out, Mr. Barber [defendants' attorney], but I believe that for 21lawsuits or claims that this represented a very reasonable amount of money, so I will awardthe fees."

Our review of the record convinces us that the trial court did not abuse its discretion inawarding plaintiff all of the fees it sought. We have carefully reviewed the supporting documentationattached to plaintiff's attorney's affidavit and find that it is sufficiently detailed to allow the trial courtto assess the reasonableness and necessity of the services rendered. The record shows that plaintiffseeks the recovery of attorney fees stemming from the issuance of numerous performance and paymentbonds, which led to 21 lawsuits, and a number of settlements negotiated on several projects. All ofthis legal action can be traced back to the bonds issued on behalf of defendants. Accordingly, we holdthat the trial court did not abuse its discretion in awarding plaintiff all of the attorney fees it sought.

Defendants specifically contend that a number of the entries were too terse to allow the trialcourt to discern the connection between the service depicted in the entry and the case. We havecarefully reviewed the record and find that the supporting documentation lists each attorney, the timespent performing the services, and a description of the services. The descriptions are adequate toinform both the client and the court of what the attorneys were doing. Defendants point to Kaiser andclaim that the entries here were similarly devoid of intelligible information. We disagree. In Kaiser,the attorney presented only a summary and related, by affidavit, that the underlying records had beendestroyed. Kaiser, 164 Ill. App. 3d at 985-86. As a result, we find that Kaiser is distinguishable anddoes not control our determination of this issue.

We also note that plaintiff urges that we hold, as a matter of law, that it receive all the attorneyfees it requested by virtue of the indemnity agreement itself. Plaintiff, citing to Transamerica PremierInsurance Co. v. Nelson, 110 Nev. 951, 878 P.2d 314 (1994), argues that to consider thereasonableness of the requested fees and to diminish the award if some of the fees were found to beunreasonable would frustrate the intent of the Agreement. Plaintiff urges that all of the fees shouldbe awarded as a matter of course because the Agreement's intent is to indemnify plaintiff for allexpenses incurred, including legal fees and costs. In light of our resolution of the issue above,however, we need not and do not address this argument.

Last, defendants argue that the trial court abused its discretion in refusing them leave to pleadover and to raise affirmative defenses. They first assert that they were misled by plaintiff's complaint. Specifically, defendants claim that plaintiff improperly mixed the concepts of exoneration andindemnity in a single count. Defendants argue that they reasonably assumed that plaintiff had to showsome violation of an underlying bond in order to claim exoneration or indemnity. Thus, defendantssuggest that they were somehow surprised when plaintiff argued that they had defaulted under theAgreement, in addition to claiming that subcontractors and suppliers had made claims under the bonds.

Defendants, however, did not attack plaintiff's complaint in any timely way in the trial court. Indeed, defendants first raised this contention in their motion to reconsider the entry of summaryjudgment. Further, the motion for summary judgment was raised after this case had activelyproceeded for at least two years and defendants were granted opportunities to take any discovery thatthey thought was necessary. In addition, plaintiff's motion for summary judgment clearly specified thegrounds by which it was proceeding, and defendants were even given leave to conduct any additionaldiscovery that they thought was necessary to respond to the motion for summary judgment. Defendants' argument is without merit.

To the extent that defendants claim that the motion for summary judgment exceeded the scopeof plaintiff's pleadings, we disagree. We note that plaintiff requested that the Agreement be enforcedand sought exoneration and indemnification. Further, plaintiff sought "such other and further reliefas this [trial] court deems just and equitable." While plaintiff specified certain bonds in the complaint,the motion for summary judgment added additional bonds and claims arising under them. These,however, fell within the "other and further relief" sought by plaintiff. Jiffy Lube International, Inc. v.Agarwal, 277 Ill. App. 3d 722, 726 (1996). Accordingly, we find no merit to defendants' contention.

Further, we note that defendants answered plaintiff's complaint and agreed to the entry of theMay 4, 1999, order creating the joint trust account or escrow. Upon the filing of the motion forsummary judgment, defendants did not raise confusion or misunderstanding of the relief sought or thebasis on which it was sought. Instead, they sought, and were given leave, to conduct discovery torespond to the motion, and they did respond. Only in their motion to reconsider did defendants firstcontend that plaintiff's complaint was somehow misleading. Based on these circumstances, defendantscannot complain that they were misled and prejudiced by the form of plaintiff's complaint. See Adcockv. Brakegate, Ltd., 164 Ill. 2d 54, 60-61 (1994) (a defendant's failure to attack pleading before theresolution of the case will preclude the defendant from later complaining about defects in thepleading).

The second part of defendants' argument on this issue is that they should have been permittedto replead in order to raise equitable defenses. We note that defendants did not include a copy of theproposed pleading. We also note that this action had been pending for three years at the timedefendants sought leave to once again raise affirmative defenses. (Defendants filed affirmativedefenses initially, but voluntarily dismissed them when they filed their cross-complaint.) Section 2--616(a) of the Code of Civil Procedure (735 ILCS 5/2--616(a) (2002)) permits a party to amend itspleadings to include an affirmative defense at any time before final judgment. Horwitz v. Bankers Life& Casualty Co., 319 Ill. App. 3d 390, 397 (2001). We review the trial court's decision whether toallow the amendment for an abuse of discretion. Horwitz, 319 Ill. App. 3d at 397. Our review of therecord convinces us that the trial court did not abuse its discretion in denying defendants leave toamend their answer to add affirmative defenses.

Moreover, defendants assert that they would raise the defenses of unclean hands and equitableestoppel. Defendants offer no facts or argument to show a factual basis suggesting any deceit or unfairmeans by which plaintiff asserted its rights under the Agreement. Likewise, defendants offer no factsor argument to show a factual basis by which plaintiff should have been estopped from asserting itsrights under the Agreement. Specifically, it is undisputed that plaintiff demanded a collateral depositand defendants failed to make such a deposit. Additionally, it is undisputed that claims were madeunder the bonds. Plaintiff did not prevent payments from being made to subcontractors and suppliersand the record shows that defendants in fact agreed to various payments made to subcontractors andsuppliers. As defendants have not demonstrated any factual basis sufficient to support the defensesthey attempt to assert, we discern no abuse of discretion in the trial court's decision to refuse to allowdefendants the opportunity to replead and raise affirmative defenses following the entry of summaryjudgment.

For the foregoing reasons, the judgment of the circuit court of Du Page County is affirmed.

Affirmed.

GROMETER and CALLUM, JJ., concur.