2/5 DCA Found Carr Decision’s Discussion Instructive.
Under our category “Indemnity,” we have posted on many cases which address the issue of whether an indemnity clause is a true indemnity provision or it also can allow for fee recovery. If you face this issue, we suggest you consult Carr Business Enterprises, Inc. v. City of Chowchilla, 166 Cal.Ap0.4th 14, 20-23 (2008), as did the 2/5 DCA when resolving Wei v. Culture Escrow, Case No. B285327 (2d Dist., Div. 5 Nov. 26, 2018) (unpublished).
Wei involved a plaintiff trustee who lost a fraud/breach of fiduciary duty action against defendants escrow company and escrow officer related to a real estate transaction between plaintiff’s mother and stepfather. The trial judge awarded fees to the winning defendants, under the escrow agreement’s indemnity clause to which all the parties were signatories.
Plaintiff, obviously not happy with the result, appealed. The 2/5 DCA affirmed. It found that Carr was enlightening as far as the distinction between an indemnity qua indemnity clause and a mixed indemnity/fees provision. Usually, an indemnity clause uses language such as “indemnify” and “hold harmless,” contrasted with a fees clause using language such as fees Incurred “in an action between the parties to enforce their agreement” or “on account of any breach of the agreement.” Here, the fees clause read as follows: “If the parties do not pay any fees, costs or expenses due [e]scrow [h]older under the escrow instructions or do not pay for costs and attorney[] fees incurred in any litigation, administration action and/or arbitration, on demand, they each agree to pay a reasonable fee for any attorney services which may be required to collect such fees or expenses, whether attorney[] fees are incurred before trial, at trial, on appeal or in arbitration.” This language in the escrow indemnity clause meant it was a mixed indemnity/fees clause, so that fees were recoverable under the cases discussed in Carr.