ANNAPOLIS, Md. (Legal Newsline) – The Maryland Court of Appeals has affirmed attorney fees be awarded in a first-party indemnification lawsuit.
A construction contract dispute between respondent White Flint Express Realty Group Limited Partnership LLLP and petitioner Bainbridge St. Elmo Bethesda Apartments LLC was closed in a July 18 ruling that affirmed attorney’s fees be awarded in a first-party indemnification suit that stems back to 2011.
Bainbridge decided to develop a 17-story high-rise in Bethesda on property adjacent to a White Flint property that leased space to a children’s dance studio and restaurant. To develop the property, a 50-foot-deep hole had to be excavated that would inevitably cause steel cables to jut under White Flint’s property.
Bainbridge sought an “under, over, across” easement from White Flint as well as easements to swing a crane and extend scaffolding “above” the property.
The two companies eventually entered into a Crane Swing, Tie Back and Swing Scaffold Easement Agreement with the clause if White Flint’s consultants identified any major damage of more than $25,000, Bainbridge could seek its own consultant for second opinion. That agreement was needed when the project caused damage to White Flint.
According to state's highest court, the indemnification clause of the contract that “Bainbridge hereby indemnifies, and agrees to defend and hold harmless White Flint,” was the most prevalent matter at hand and “the indemnification obligations set forth herein shall survive the termination of this agreement indefinitely."
After causing damage, Bainbridge attempted to settle with White Flint in a confidential settlement discussion on property repairs; however, White Flint said no. It argued "Article 19’s clear language and structure, along with the business context in which the agreement was reached, support the trial court and intermediate appellate court’s holdings that an award of attorney’s fees was proper under that clause,” according to the appeals court decision.
By 2013, the Circuit Court for Montgomery County granted “White Flint partial summary judgment on most claims and entered a declaratory judgment finding: that Bainbridge’s obligations survived the termination, that Bainbridge materially breached the agreement, and that Bainbridge had continuing duties to White Flint," according to the appeals court decision that said “the interpretation of a written contract is a question of law,” and “that the first exception to the American Rule, i.e., the parties have a contractual agreement to shift attorney’s fees.”
Noting that it “considered the question of whether the parties’ contract provision for indemnification included first-party attorney’s fees,” the appeals court also said in their decision “the question of whether first-party attorney’s fees are covered under the contract is determined by basic contract interpretation principles in order to determine the scope of the indemnification provision and whether the clause covers first party enforcement rights.”
“Our plain language interpretation that Article 19 is sufficient to entitle White Flint to first-party attorney’s fees is confirmed by the three clauses within the indemnification article,” the appeals court said in its decision, granting White Flint counsel compensation.