Pacificorp, an Or. Corp. v. Simplexgrinnell, LP

• Decision Date: 15 May 2013
• Docket Number: 090303793,A148167.
• Parties: PACIFICORP, an Oregon corporation, Plaintiff–Respondent, v. SIMPLEXGRINNELL, LP, a Delaware limited partnership, Defendant–Appellant.
• Court: Oregon Court of Appeals

256 Or.App. 665

303 P.3d 949

PACIFICORP, an Oregon corporation, Plaintiff–Respondent,

v.SIMPLEXGRINNELL, LP, a Delaware limited partnership, Defendant–Appellant.

090303793; A148167.

Court of Appeals of Oregon.

Argued and Submitted Sept. 11, 2012.

Decided May 15, 2013.

Charles C. Eblen, Missouri, argued the cause for appellant. With him on the briefs were Anna S. Raman and Preg O'Donnell & Gillett PLLC, and Shook, Hardy & Bacon LLP, Missouri.

Bruce L. Campbell, Portland, argued the cause for respondent. With him on the brief were Jeffrey T. Sagalewicz and Miller Nash LLP.

Before SCHUMAN, Presiding Judge, and WOLLHEIM, Judge, and NAKAMOTO, Judge.

NAKAMOTO, J.

Defendant SimplexGrinnell, LP, appeals a supplemental judgment and money award denying its motion for attorney fees, litigation expenses, and other reasonable costs. Plaintiff PacifiCorp brought this action alleging that defendant, while performing electrical work for plaintiff's power plant, breached its contract to perform fire inspection services, which caused property damage and loss of business. The parties' contract contained an indemnity clause in which defendant agreed to indemnify and defend against any type of damage, “including attorneys' fees and/or litigation expenses, brought or made against or incurred by” plaintiff. Defendant prevailed at trial and sought attorney fees under ORS 20.096, which makes reciprocal a one-sided “prevailing party” attorney fee provision. The trial court denied defendant's motion. Because the indemnity clause did not grant a right to attorney fees in actions to enforce the contract between plaintiff and defendant, we affirm.

The procedural facts are undisputed. Defendant agreed to perform certain fire-system inspection services at plaintiff's Currant Creek Power Plant in Mona, Utah. While defendant was performing inspection services, an explosion occurred at the plant, causing plaintiff to sustain equipment damage and loss of power generation. Plaintiff commenced this action for breach of contract, and the jury found that defendant had breached its contract with plaintiff but had not caused plaintiff's damages. Following entry of judgment, defendant moved for an award of attorney fees, prevailing-party fees, litigation expenses, and other reasonable costs. Defendant argued that it was entitled to attorney fees under ORS 20.096(1), which provides:

“In any action or suit in which a claim is made based on a contract that specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the party that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, without regard to whether the prevailing party is the party specified in the contract and without regard to whether the prevailing party is a party to the contract.”

If a contract provision of the type specified provides for reasonable attorney fees for one party and not the other party, then ORS 20.096 makes the attorney fee provision reciprocal and provides both parties a right to attorney fees.

There was no provision in the parties' contract that expressly provided for an award of attorney fees to the prevailing party in the event of an action, or other dispute between the parties, for a breach of the contract. However, defendant contended that the indemnification clause in the contract comes within ORS 20.096 and entitles plaintiff to attorney fees against defendant, because the indemnification clause specifically states that defendant agrees to indemnify plaintiff for all costs and damages, including attorney fees arising out of the performance or nonperformance of the contract. That indemnification clause provides:

“[Defendant] specifically and expressly agrees to indemnify, defend, and hold harmless [plaintiff], its officers, directors, employees and agents (hereinafter collectively ‘Indemnitees') against and from any and all claims, demands, suits, losses, costs and damages of every kind and description, including attorneys' fees and/or litigation expenses, brought or made against or incurred by any of the Indemnitees to the extent resulting from or arising out of any negligence or wrongful acts of [defendant], its employees, agents, representatives or subcontractors of any tier, their employees, agents or representatives in the performance or nonperformance of [defendant's] obligations under this Contract or in any way related to this Contract. The indemnity obligations under this Article shall include without limitation:

“a. Loss of or damage to any property of [plaintiff], [defendant] or third party;

“b. Bodily or personal injury to, or death of any person(s), including without limitation employees of [plaintiff], [defendant] or its subcontractors of any tier; and

“c. Claims arising out of Workers' Compensation, Unemployment Compensation, or similar such laws or obligations applicable to employees of [defendant] or its subcontractors of any tier.

“[Defendant's] indemnity obligation under this Article shall not extend to any liability caused by the sole negligence of any of the Indemnitees.”

(Emphasis added.)

Plaintiff countered that the indemnification clause applies only to attorney fees that it may incur while defending third-party claims due to defendant's negligence and does not grant plaintiff attorney fees from direct actions between plaintiff and defendant. In other words, plaintiff argued, the indemnification clause is not a fee-shifting provision. After hearing oral argument, the trial court ruled in plaintiff's favor, denying defendant's request for attorney fees.

On appeal, defendant renews its argument that, because the indemnification provision is a one-sided attorney fee provision, ORS 20.096 applies. Plaintiff counters that the indemnification provision provides for attorney fees only when a third party files a claim against plaintiff, not when the claims are between plaintiff and defendant. There is no dispute that ORS 20.096 applies if the indemnification clause would have allowed plaintiff to receive an award of attorney fees if plaintiff had prevailed on its breach of contract claim against defendant. The only issue is whether the indemnification provision contains a prevailing-party clause that would have allowed plaintiff to recover attorney fees. If so, then the reciprocal attorney fee provision under ORS 20.096 applies, and defendant is entitled to its fees. Therefore, our task is to determine whether the indemnification clause grants plaintiff the right to recover attorney fees from defendant when plaintiff successfully prevails on a breach of contract claim against defendant.

We review a party's entitlement to attorney fees based on the trial court's interpretation of a contract for legal error. Squier Associates, Inc. v. Secor Investments, LLC, 196 Or.App. 617, 622, 103 P.3d 1129 (2004). When interpreting a disputed contract provision, we follow the three-step analysis described in Yogman v. Parrott, 325 Or. 358, 361–65, 937 P.2d 1019 (1997). First, we examine the text of the disputed provision in the context of the document as a whole, and if the text is unambiguous, our analysis ends. Id. at 361, 937 P.2d 1019;ORS 42.230.¹ “Whether a provision is ambiguous is a question of law, as is the meaning of an unambiguous provision.” Williams v. RJ Reynolds Tobacco Co., 351 Or. 368, 379, 271 P.3d 103 (2011). Second, if the text is ambiguous, we examine extrinsic evidence to determine the parties' intent, including the parties' practical construction of the provision. Yogman, 325 Or. at 363–64, 937 P.2d 1019. Finally, if the first two steps do not resolve the ambiguity, we resort to appropriate maxims of construction. Id. at 364, 937 P.2d 1019.

We begin with whether the indemnity clause is ambiguous. “A contract provision is ambiguous if it is susceptible to two or more plausible interpretations—that is, two or more sensible and reasonable interpretations [.]” Emmert v. No Problem Harry, Inc., 222 Or.App. 151, 157, 192 P.3d 844 (2008). Accordingly, we examine each party's interpretation to determine whether it is plausible.

Plaintiff's interpretation that the indemnity clause refers only to third-party actions is a plausible construction. The services agreement between the parties contained an indemnification clause, titled in bold, underlined capital letters, “INDEMNIFICATION.” As plaintiff notes, there is no express language purporting to give either party a right to an attorney fee award in direct actions against each other. Instead, the provision provides that defendant agrees to “indemnify, defend, and hold harmless” plaintiff “against and from any and all claims, demands, suits, losses, costs and damages of every kind and description, including attorneys' fees and/or litigation expenses” incurred by plaintiff arising from the contract. That type of broad language suggests that defendant is required to indemnify plaintiff against third-party claims.

In addition, we have held that a general indemnity clause contained in a lease agreement, without express language regarding claims between the parties, was insufficient to allow one contracting party to recover from the other. In Boise Joint Venture v. Moore, 106 Or.App. 83, 86, 89, 806 P.2d 707 (1991), the plaintiff leased a motel building to the defendant and sought to recover its $600,000 investment in the property when defendant discontinued lease payments. The plaintiff relied on the indemnity clause in the lease agreement to argue that the defendant was required to indemnify the plaintiff for its loss. The indemnity clause provided:

“ Tenant's Covenants of Indemnity. Tenant further covenants and agrees to protect, indemnify and forever save harmless the...