You Be the Judge . . . . But We Will Give You The Answer!
In our category “Indemnity,” we have explored many cases where appellate courts have scrutinized clauses where a winning party has claimed it is a true attorney’s fees clause, although cloaked in indemnity language, whereas the opposing side claims it is an third-party indemnification clause not meant to deal with first-party fee recovery.
The next case we look at involved this clause: “Independent Contractor shall and does hereby indemnify, defend and hold harmless [appellant] and [its] officers, directors, and shareholders from and against any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties, and reasonable attorney fees and costs, that [appellant] may incur or suffer and that result from, or are related to any breach or failure of Independent Contractor to perform any of the representations, warranties, and agreements contained in this Agreement.” To further tantalize things, there was no extrinsic evidence offered about the meaning of this clause.
So, did this clause give rise to fee recovery by appellant for breach of the contract with such a provision?
If you said “no, no recovery,” you are correct.
The First District, Division 4 in Radiant Skincare Clinic v. Moore, Case No. A122266 (1st Dist., Div. 4 Jan. 3, 2011) (unpublished) found, as did the trial court, that this clause was a true indemnity clause falling within the general rule that the inclusion of attorney’s fees as a loss item in a third-party claim indemnity provision does not constitute a fee provision in an action “on the contract” which is required to trigger to Civil Code section 1717. (Myers Building Industries, Ltd. v. Interface Technology, Inc., 13 Cal.App.4th 949, 971-973 (1993); Meininger v. Larwin-Northern California, Inc., 63 Cal.App.3d 82, 84-85 (1976); Campbell v. Scripps Bank, 78 Cal.App.4th 1328, 1336 (2000).) In reaching the conclusion to deny attorney’s fees, the appellate court attached weight to the fact that the clause was contained in a section entitled “Indemnification” rather than “Attorney’s Fees”–a nice drafting hint for our readers out there.