Indemnity: Plaintiff Winning Its Contract Action Properly Denied Fee Recovery Because The Purported Fee Clause Was Actually A Third-Party Indemnity Clause Not Allowing For Such Recovery In A Direct Action Between The Contracting Parties

1/1 DCA Found Alki Opinion To Be Persuasive.

               Clauses providing for indemnification against third party claims are frequently determined not to give rise to attorney’s fees recovery in an action involving the two contracting parties.  In determining if an indemnity versus a true fees clause is involved, courts not only look at the contractual language but the overall structure of indemnification/insurance provisions.

               Plaintiff in HR E&I, Inc. v. Ahn, Case No. A168047 (1^st Dist., Div. 1 Sept. 20, 2024) (unpublished) won a direct contract case and defeated defendant’s cross-claims, awarded almost $1.78 million after a four-week bench trial.  However, the lower court denied attorney’s fees to plaintiff, finding two indemnification provisions were not true fee clauses. 

               The 1/1 DCA affirmed.  It found that the language in the two provisions, coupled with the overall structure of indemnification/insurance clauses, demonstrated that fees were only recoverable for actions involving third party claims—finding persuasive the reasoning in Alki Partners, L.P. v. DB Fund Services, LLC, 4 Cal.App.5^th 574 (2016), which involved an indemnity clause with similar wording.