The Parties’ Leases Did Not Include Attorney Fees Provisions, And The Trial Court Erred In Finding That The Leases’ Third Party Indemnity Provisions Permitted Recovery Fees In A Direct Breach Of Contract Action
In Blackburn v. County of San Diego, Case No. D076904 (4th Dist., Div. 1 February 24, 2022) (unpublished), the trial court awarded $496,757.31 in attorneys’ fees to the prevailing landlord plaintiff in a breach of contract action against the County of San Diego – finding the language of the indemnity provisions in the parties’ leases to be so broadly worded that they allowed plaintiff to seek direct indemnity from tenant in the form of attorney fees.
Citing its previous decision in Alki Partners, LP v. DB Fund Services, LLC, 4 Cal.App.5th 574 (2016) [discussed in our October 24, 2016 post], the 4/1 DCA reversed – finding nothing in the indemnity provisions to suggest that the provisions were not limited to third party claims – nor anything that specifically addressed the issue of, nor expressly permitted, recovery of attorney fees in an action on the contract between the parties. “To find a right to attorney fees in a direct action under an ordinary indemnity provision, as here, would invest every agreement containing a standard third party indemnity clause with a prevailing party attorney fee clause. This is particularly inappropriate because section 1717, subdivision (a), which governs the award of contractual attorney fees, applies only when the contract ‘specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party . . . .’ The indemnity clause here does not ‘specifically’ refer either to actions to enforce the contract or to the prevailing party. Rather, it is a third party indemnity clause. The court erred in construing it otherwise.” (Alki Partners, supra, 4 Cal.App.5th at p. 606.)
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