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Attorney Fees Can’t Be Denied Because Prevailing Party Is Not Payor—C.A.
By a MetNews Staff Writer
A prevailing party that is otherwise entitled to an award of attorney fees is not stripped of that right by virtue of an indemnity agreement under which payment of the fees is to be made by a third party, Div. Two of the Fourth District Court of Appeal has determined.
Its decision came Thursday in an opinion by Justice Marsha G. Slough countermanding an order by Riverside Superior Court Judge Craig Riemer. The trial judge determined that although Federal Insurance Company won in an action against it as the surety for a construction project, which normally would necessitate an award of attorney fees as costs pursuant to Civil Code §9564, no award was appropriate because Granite Construction Company was contractually obliged to pay any such fees, which amounted to $309,557.
Riemer declared, in granting a motion to tax costs:
“Having paid nothing in fees and costs, Federal has suffered no loss, and thus may not collect any compensation for the non-existent loss.”
Disagreeing, Slough wrote:
“Federal argue the trial judge erred in denying costs under the plain language of Code of Civil Procedure section 1032, subdivision (b), which says a prevailing party is ‘entitled as a matter of right to recover costs in any action or proceeding’ and Code of Civil Procedure section 1033.5, subdivision (c)(1), which explains ‘[c]osts are allowable if incurred, whether or not paid.’ We agree.”
She noted that Div. One of the Fourth District in its 2015 decision in Litt v. Eisenhower Medical Center declared that in a fee-shifting situation, “the actual payor is irrelevant.”
Slough reasoned:
“Federal incurred the legal liability to pay the litigation costs even though Granite agreed to indemnify them for their expenses….We see no reason to depart from the plain meaning of the statute or the construction given it by our sister court.”
The matter was returned to the trial court for a determination as to the reasonableness of the fees that were claimed.
The case is Cell-Crete Corporation v. Federal Insurance Company, 2022 S.O.S 4304.
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