Cross-complainant builder appealed from a judgment of the Superior Court of San Diego County (California), which awarded cross-defendant subcontractors attorney fees and nonstatutory costs in an action brought by homeowners against the builder for construction defects in the homes. The jury had returned special verdicts finding that only the builder was negligent in its work in the subdivision.
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Overview
The subcontractors each agreed to indemnify the builder against claims connected with the performance of the subcontracts unless due solely to the builder’s negligence. The court held that the unilateral attorney fee clause was subject to the reciprocity principles set forth in Cal. Civ. Code § 1717. Because the contractual provision was not included as an item of loss or expense under the indemnity agreement, but instead separately provided for the recovery of attorney fees incurred in enforcing the indemnity agreement, § 1717 applied and authorized the prevailing subcontractors to recover attorney fees so incurred. By contrast to the general provisions requiring the subcontractors to indemnify the builder in the event of third party claims, the attorney fee clauses unambiguously contemplated an action between the parties to enforce the indemnity agreements. Where the subcontractor was required to prove its lack of fault in defending against a claim under the indemnity, it was entitled to recover the fees incurred therefor. Remand was necessary, however, because some of the fees and costs awarded were unrelated to the enforcement of the indemnity agreements.
Outcome
The court reversed the judgment insofar as it granted the subcontractors attorney fees and nonstatutory costs. The court remanded the matter for further proceedings as to the amount of such fees and costs that the subcontractors were entitled to recover under the attorney fee provisions in the indemnity agreements. The court affirmed the judgment in all other respects.