On July 12, 2023, Justice Masley of the New York County Commercial Division issued a decision in Five Towns Pediatrics, P.C. v. Billet, Feit & Preis, P.C., 2023 NY Slip Op. 32328(U), holding that an indemnification provision must be unmistakably clear before it can be found to authorize an award of attorneys’ fees in a suit between contracting parties, explaining:
The long-standing American rule precludes the prevailing party from recouping legal fees from the losing party except where authorized by statute, agreement or court rule.. For an indemnification clause to serve as an attorney’s fees provision with respect to disputes between the parties to the contract, the provision must unequivocally be meant to cover claims between the contracting parties rather than third-party claims.
The September 2015 and 2016 and April 2017 engagement letters provide,
the Company agrees to indemnify and hold us harmless from and against any and all liabilities and costs (including, but not limited to, legal fees and costs of legal counsel) that we might incur that in any way arise out of, are connected with or caused by a knowing misrepresentation made to us by a member of the Company’s management, regardless of whether or not such person was acting in the Company’s interest.
This broad provision makes no explicit mention that MWE may recoup attorneys’ fees and costs if sued by plaintiff client. Nothing
(Internal quotations and citations omitted).
in the provision nor the agreement as a whole makes unmistakably clear that the parties intended to permit recovery for attorney’s fees in an action between them on the contract. Absent an unmistakably clear intent, this court will not expand this provision to waive the American Rule. Thus, the MWE Defendants’ motion for partial summary judgment on their counterclaim is denied.