No Indemnity Clause Truly Involved, With 1717 Reciprocity Principles Governing the Construction of the Fees Clause.
Here is another one to add to our category “Indemnity,” which deals with the issue of whether a true indemnity clause gives rise to fee exposure (not!) or whether a true fees clause does (you bet!).
Faryab v. Pinn Bros. Fine Homes, Inc., Case No. B218283 (2d Dist., Div. 4 Oct. 26, 2011) (unpublished) involved a defendant winning a failed real estate development dispute against plaintiffs, although the trial court denied attorney’s fees requested by defendant under an assignment agreement with a clause sounding in indemnity and otherwise.
Defendant sought fees under a clause which read it would “‘save and hold harmless, indemnify and defend’ the assignors for all costs and fees ‘including but not limited to, attorney’s fees,’ ‘arising from, concerning, relating to and pertaining to (i) [Pinn Brothers’s] breach or default with respect to its payments, duties and obligations under this Agreement, . . .’” The trial court ruled that this was a classic indemnity clause not giving rise to fees.
On appeal, this determination was reversed. Based on Civil Code section 1717 reciprocity principles and the ending fees language, defendant was entitled to obtain fees because this was more in the nature of a fees clause rather than indemnity clause only. Goes to show you that appellate courts will reverse erroneous contractual interpretation disputes where there is no conflicting extrinsic evidence–after all, the appellate jurists are lawyers and can interpret the clauses anew when the need arises.