Case On Point
In this month's case, the court interprets an indemnity agreement.
Sage Systems, Inc. v. Liss
(N.Y. Ct. of App. 2022)
The parties entered into a partnership agreement obligating partners to defend the partnership and other partners from "any and all claims, demands, liabilities, costs, damages, expenses and causes of action of any nature" arising from partner actions taken outside the scope of their authority, in bad faith, fraudulent or otherwise wrongful. Plaintiff took the position that the indemnity clause include attorneys fees incurred in defending an unsuccessful dissolution action brought by defendant. The Court of Appeals disagreed, noting that the American rule is that parties bear the cost of their own attorneys fees absent an "unmistakeably clear" provision allowing the prevailing party to recover them. I often recommend such clauses to my clients to incentivize contract compliance and deter frivolous claims or defenses.