Judge Barbara M. Scheper, Case 21STCV25510 2022-10-27 Tentative Ruling

Judge: Barbara M. Scheper, Case: 21STCV25510, Date: 2022-10-27 Tentative Ruling

Case Number: 21STCV25510 Hearing Date: October 27, 2022 Dept: 30

Dept. 30

Calendar No.

Gallagher vs. Ygrene Energy Fund California, LLC, et. al., Case No. 21STCV25510

Tentative Ruling re: Defendant’s Motion for Attorney’s Fees

Defendant Ygrene Energy Fund California LLC (Ygrene) moves for an award of attorney’s fees and costs against Plaintiff Andrew Gallagher (Plaintiff). The motion is denied.

On October 3, 2022, the Court sustained Ygrene’s demurrer to Plaintiff’s Second Amended Complaint (SAC) and ordered dismissal for Ygrene.

Plaintiff’s SAC asserted causes of action against Ygrene for Violation of CLRA (Civ. Code § 1770); Violation of UCL (Bus. & Prof. Code § 17200); Breach of Covenant of Good Faith and Fair Dealing; Recission; and Unjust Enrichment. Plaintiff’s claims arose primarily out of allegations that Ygrene’s representative made misrepresentations to Plaintiff regarding a Clean Energy Program (CEP) loan program administered by Ygrene, and that contractors hired by Ygrene for a construction project at Plaintiff’s home performed deficient work. (SAC ¶¶ 17, 25-35, 49-52.)

Ygrene seeks to recover reasonable attorney’s fees and costs pursuant to the “Unanimous Approval Agreement” (UAA) entered into between Plaintiff and Golden State Finance Authority, and assigned to Ygrene. (SAC, Ex. 3 [110, 126].) The UAA contains the following provision:

To the maximum extent permitted by law, the Owner [Plaintiff] shall indemnify, defend, protect, and hold harmless the Authority, the Authority Parties, and the Program Administrator, from and against all liabilities, claims, demands, damages (including consequential damages), and costs (including all reasonable out-of-pocket litigation costs and reasonable attorneys’ fees through final resolution on appeal) that are related directly or indirectly to, or arise in any way out of, or in connection with, any fact, circumstance, or event related to the approval of the Disbursement Amount or the payment to the Owner of the Disbursement Amount, including any of the following: the Contract Documents; the Owner’s performance of (or failure to perform) its obligations under the Contract Documents; the Owner’s breach or Default (see section 17) under the Contract Documents; disbursement of the Disbursement Amount; the selection, acquisition, installation, operation, or maintenance of the Improvements; the levy and collection of the Special Tax; and the imposition of the Special Tax lien. The Owner’s obligations under this section 14(b) apply whether they accrue or are discovered before or after the disbursement of the Disbursement Amount to the Owner or the Owner’s designee.

(SAC Ex. 6, p. 5 ¶ 14(c) [114].)

Ygrene is identified in the UAA as the “Program Administrator.” (SAC, Ex. 3, p. 1 [110].) Plaintiff’s claims against Ygrene fall within the broad scope of the indemnification provision, as they are “related directly or indirectly to, or arise in any way out of, or in connection with . . . the approval of the Disbursement Amount or the payment to the Owner of the Disbursement Amount, including . . . the selection, acquisition, installation, operation, or maintenance of the Improvements.”

Plaintiff argues that Ygrene is not entitled to fees under this provision because it is not a prevailing party on the contract. Ygrene argues that it is not required to prevail on the contract to recover attorney’s fees, because this is an indemnification provision rather than an attorney’s fee provision. The Court agrees with Ygrene that this is an indemnification provision rather than one for attorney’s fees, but finds that Ygrene is not entitled to recovery of attorney’s fees pursuant to the provision.

“[T]he question whether an indemnity agreement covers a given case turns primarily on contractual interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury and the language of the contract; of necessity, each case will turn on its own facts.” (Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1024–1025.)

“A clause which contains the words ‘indemnify’ and ‘hold harmless’ is an indemnity clause which generally obligates the indemnitor to reimburse the indemnitee for any damages the indemnitee becomes obligated to pay third persons. [Citation.] Indemnification agreements ordinarily relate to third-party claims. [Citation.]” (Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 969.) “Courts will not infer the parties intended an indemnification provision to cover attorney fees between the parties if the provision ‘does not specifically provide for attorney's fees in an action on the contract...’ ” (Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 604.) “[A]n indemnification clause in which one party promised to ‘indemnify’ the other from ‘any, all, and every claim’ which arises out of ‘the performance of the contract’ [Citation] deals only with third party claims, and cannot support an award of attorney fees in an action for breach of contract between the parties to the agreement. (Id. at 601.)

Here, the language of Paragraph 14(c) – providing that Plaintiff “shall indemnify, defend, protect, and hold harmless” the indemnitees – indicates that the provision is intended to provide for indemnification of third-party claims, not claims made by the indemnitor (Plaintiff) against the indemnitees (Ygrene). The indemnification provision

“does not even contain the phrase ‘prevailing party’ or refer to an action between the parties for breach of the agreement.” (Alki Partners, LP, 4 Cal.App.5th at 604.) The fact that the following section of the UAA provides for Plaintiff’s waiver of all claims against the indemnitees further supports the conclusion that Plaintiff’s duty to indemnify under Paragraph 14(c) was not intended to encompass claims made by Plaintiff against Ygrene. (SAC Ex. 6, p. 5 ¶ 15 [114].) The UAA does not support Ygrene’s contention that Plaintiff agreed to indemnify Ygrene for attorney’s fees in an action between the parties.