109 F.4th 1132
9th Cir.2024Background
- Comerica Bank sold residential development lots to AGK, with an indemnity provision in the assignment of declarant rights.
- Westwood, the former owner, initiated lawsuits against AGK claiming declarant rights, triggering the indemnity provision.
- Comerica refused to indemnify AGK in the Westwood litigation; AGK sued Comerica for breach of the indemnity agreement.
- The district court found Comerica breached the indemnity obligation and awarded AGK its attorney fees for both the Westwood litigation (third-party claims) and the present action enforcing indemnity (first-party claim).
- Relying on the Ninth Circuit case DeWitt v. Western Pacific R.R. Co., the district court awarded AGK attorney fees for the cost of prosecuting the present indemnity action.
- Comerica appealed, contesting the award of first-party attorney fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are first-party attorney fees recoverable under a general indemnity provision under California law? | AGK: Yes, citing DeWitt, indemnity provision includes fees for prosecuting the indemnification claim. | Comerica: No, California law (post-DeWitt) recognizes only third-party fee recovery unless the contract specifically includes first-party fees. | No: California law presumes indemnity only covers third-party fees unless the contract is explicit; DeWitt is no longer good law. |
| Should the district court's award of first-party attorney fees be upheld via any other contract provision? | AGK: Alternatively argues PSA's separate attorney fee provision allows recovery. | Comerica: AGK waived this alternative argument and PSA fee provision does not apply. | Remanded: District court must determine waiver and applicability of the PSA provision. |
Key Cases Cited
- DeWitt v. Western Pacific Railroad Co., 719 F.2d 1448 (9th Cir. 1983) (previous 9th Circuit precedent allowing first-party attorney fee recovery under indemnity provisions)
- Owen ex rel. Owen v. United States, 713 F.2d 1461 (9th Cir. 1983) (federal courts must follow current state law as indicated by state decisions)
- Jones-Hamilton Co. v. Beazer Materials & Servs., 973 F.2d 688 (9th Cir. 1992) (following DeWitt absent contrary California authority)
- Hillman v. Leland E. Burns, Inc., 209 Cal. App. 3d 860 (Cal. Ct. App. 1989) (indemnity clauses do not cover first-party fees without clear language)
- Otis Elevator Co. v. Toda Construction of California, 27 Cal. App. 4th 559 (Cal. Ct. App. 1994) (attorney fees for indemnity enforcement not recoverable absent specific provision)
- Jacobus v. Krambo Corp., 78 Cal. App. 4th 1096 (Cal. Ct. App. 2000) (statutory and contractual indemnity does not cover fees to enforce the indemnity promise)
- Alki Partners, LP v. DB Fund Servs., LLC, 4 Cal. App. 5th 574 (Cal. Ct. App. 2016) (third-party presumption for indemnity unless specific language rebuts)
- Epic Games, Inc. v. Apple, Inc., 67 F.4th 946 (9th Cir. 2023) (presumption rebuttable with specific contract language)
- Myers Building Industries, Ltd. v. Interface Technology, Inc., 13 Cal. App. 4th 949 (Cal. Ct. App. 1993) (contractual indemnity for third-party claims, not for actions between the parties)