[00:00:15] Speaker 04:
Mr. Ginsburg.

[00:00:16] Speaker 02:
Good morning.

[00:00:17] Speaker 02:
My name is Ernest Sloan.

[00:00:18] Speaker 02:
I represent the Appellant Comerica Bank in this matter.

[00:00:23] Speaker 02:
I'd like to reserve three minutes for rebuttal.

[00:00:26] Speaker 04:
Please keep an eye on the clock.

[00:00:29] Speaker 02:
In the 50 years since this court decided to do it, every California Court of Appeal that has addressed the issue has concluded contrary to the holding and do it.

[00:00:40] Speaker 02:
that attorney fees are not recoverable for the successful prosecution of an indemnity action.

[00:00:46] Speaker 00:
Excuse me.

[00:00:46] Speaker 00:
Could you push the microphone up a little bit?

[00:00:48] Speaker 00:
I'm having a hard time hearing you.

[00:00:50] Speaker 02:
Is that better?

[00:00:50] Speaker 00:
That's much better.

[00:00:51] Speaker 00:
Thank you.

[00:00:51] Speaker 00:
Thank you.

[00:00:52] Speaker 02:
Thank you.

[00:00:55] Speaker 02:
Starting with the Meininger v. Lawin case in 1976 through the Al-Qaeda Partners v. DB Funds case in 2016, at least eight California courts have made the same determination.

[00:01:09] Speaker 02:
Courts hold that a provision allowing attorney's fees as an item of loss in an indemnity agreement is not a provision allowing attorney's fees as an item of damage in an action to enforce the indemnity.

[00:01:25] Speaker 02:
Multiple California courts have expressly rejected the holding in Dewitt, noting that California courts do not follow Dewitt.

[00:01:33] Speaker 02:
A provision in an agreement that requires the indemnitor to indemnify and hold harmless, which is the language used in this indemnity agreement, is interpreted by the California courts to require the indemnitor to reimburse the indemnity for the damage that the indemnity suffers.

[00:01:52] Speaker 02:
but not to reimburse the indemnity for a claim on a contract as between the indemnitor and indemnity for attorney fees.

[00:02:00] Speaker 04:
May I ask, what do you think is the standard for reconsidering our circuit precedent on a question of state law?

[00:02:10] Speaker 02:
Suppose we agree with... I'll just leave it at that.

[00:02:15] Speaker 02:
The law of the circuit doctrine is what governs that.

[00:02:19] Speaker 02:
And under the law of the circuit doctrine,

[00:02:22] Speaker 02:
the court was required to follow, do it, absent subsequent indications by the California courts that it was wrongly decided.

[00:02:36] Speaker 02:
And in applying that standard, applying that test, federal courts look to intermediate court of appeal decisions unless there is compelling evidence that the California Supreme Court would decide the case differently.

[00:02:51] Speaker 02:
Here, the compelling evidence is the reverse.

[00:02:55] Speaker 02:
In 50 years since Dewitt, not a single California case has followed it.

[00:02:59] Speaker 02:
All of the courts reject it.

[00:03:02] Speaker 02:
And it's consistent with ordinary California law.

[00:03:05] Speaker 02:
And the California law, a party who successfully sues on a breach of contract claim, isn't entitled to attorney fees.

[00:03:13] Speaker 02:
A claim for indemnity is nothing more than a claim for a breach of a contractual obligation to indemnify.

[00:03:23] Speaker 03:
Let me, if I can ask a follow-up question, you know, we have, I don't know if you're familiar with the Miller v. Grammy cases in our online, but, you know, if we've got a precedent about a federal issue, and then the Supreme Court comes out with a case, and let's say everybody could agree that, you know, as an original matter,

[00:03:42] Speaker 03:
If I had that Supreme Court case when that precedent was made, we may have reached a different result in that precedent.

[00:03:49] Speaker 03:
But Miller v. Graham, I think, requires that it be clearly irreconcilable.

[00:03:55] Speaker 03:
Otherwise, a three-judge panel is bound to follow that precedent, which I've always thought is a little bit odd, because in theory, you can have this, you can have the, you know, everybody could kind of agree that, well, we probably wouldn't reach that result today, but we still have to follow that result unless it's clearly irreconcilable.

[00:04:12] Speaker 03:
What is your view as to how that affects state law?

[00:04:18] Speaker 03:
Is it something like a clearly irreconcilable standard, or is it something less than that?

[00:04:24] Speaker 02:
My understanding is that the law of the circuit doctrine is what governs the determination of applicability of it.

[00:04:32] Speaker 02:
of adherence.

[00:04:33] Speaker 03:
So we don't have to conclude that this is clearly irreconcilable in order with our, that our Dewitt case is clearly irreconcilable with what California law is?

[00:04:44] Speaker 02:
I think with respect, it doesn't really matter because even if that is the standard, it is clearly irreconcilable with California law.

[00:04:51] Speaker 02:
Not a single California case in the last 50 years has followed Dewitt.

[00:04:56] Speaker 02:
Several cases expressly reject the holding of Dewitt, noting that California courts do not follow it.

[00:05:01] Speaker 03:
I hear your point on all that.

[00:05:03] Speaker 03:
The problem is, of course, we don't have a California Supreme Court decision.

[00:05:06] Speaker 03:
If we did, you guys would have settled or something.

[00:05:09] Speaker 03:
We wouldn't even be in front of it.

[00:05:11] Speaker 03:
So if it is something like a clearly reconcilable, even under the circumstances you're talking about, since it's a predictive exercise for us to predict what we think the California Supreme Court would do, and we can rely on these court of appeals decisions.

[00:05:26] Speaker 03:
And I don't know if the clearly reconcilable standard could ever be met.

[00:05:29] Speaker 03:
I'm not sure if I agree with you.

[00:05:31] Speaker 03:
I agree that this case would maybe make it a close case, but that's why it kind of matters, I feel like, this question that I'm asking about.

[00:05:40] Speaker 03:
Is it a Millervy-Grammy type standard?

[00:05:42] Speaker 02:
I don't believe it is, because the case law is that the law of the circuit doctrine is applicable to this court's

[00:05:51] Speaker 02:
adherence to a wrongly decided case that California courts have rejected.

[00:05:56] Speaker 02:
I believe that's the standard.

[00:05:57] Speaker 02:
But again, even if it's not the standard, it is difficult to conceive how this could not meet even the highest standard.

[00:06:04] Speaker 02:
In 50 years, not one case has followed DeWitt, and every case is ruled contrary to DeWitt's holding.

[00:06:11] Speaker 02:
It is inconceivable that the California Supreme Court would rule differently, particularly since it's consistent with ordinary general principles of California law.

[00:06:20] Speaker 02:
General principles of California law.

[00:06:22] Speaker 02:
For example, a creditor who sues a surety for performance or payment of the funds guaranteed and who prevails isn't entitled to attorney fees.

[00:06:33] Speaker 02:
There's no conceivable reason why the rule for indemnities should be any different.

[00:06:39] Speaker 02:
It isn't different.

[00:06:40] Speaker 02:
I think what the district court here did was it erred and what the district court should have...

[00:06:48] Speaker 03:
You know, when I first looked at this case and looked at it, I thought, well, it does seem just consistent with the concept of indemnity provisions in a sense that you would include attorney's fees, because you can imagine if you and I contracted and I contracted with you to identify me for something.

[00:07:05] Speaker 03:
But if we don't include, you know, and it turns out that there's going to be something that's going to cost a couple thousand dollars, and clearly you contracted to identify me, but if we don't include that I'll get my attorney's fees if I pursue that,

[00:07:17] Speaker 03:
You might just say, no, I'm not going to follow that.

[00:07:19] Speaker 03:
And I have no, it'll cost me more to pursue getting legal recourse to get you to identify me if we don't include attorney's fees as part of that.

[00:07:28] Speaker 03:
So in some ways, it seems like public policy, or at least would seem that the default rule would be that you would include attorney's fees.

[00:07:38] Speaker 02:
I don't agree with that because it's nothing more than a breach of contract.

[00:07:50] Speaker 03:
That would be true of every breach of contracting.

[00:07:53] Speaker 02:
Exactly.

[00:07:53] Speaker 02:
And in every breach of contract case, attorney fees are not recoverable under California law.

[00:07:58] Speaker 02:
But just to go back to the point.

[00:07:59] Speaker 03:
And if you want them, you contract around.

[00:08:02] Speaker 03:
You include that as a contract provision.

[00:08:04] Speaker 02:
And if you do it, exactly.

[00:08:07] Speaker 02:
The parties have the ability to include that in the contract provision.

[00:08:09] Speaker 02:
And if they do, then that governs.

[00:08:11] Speaker 02:
We don't have that here.

[00:08:12] Speaker 02:
So, that's true.

[00:08:14] Speaker 02:
But just to go back to the earlier point that you made as to whether we should follow the rule that the Supreme Court reiterated, we're dealing here with California law, and to not rule that attorney's fees are not recoverable means

[00:08:34] Speaker 02:
an acknowledgement that California law holds that such fees aren't recoverable, but that in a federal court applying California law, they're going to be held recoverable.

[00:08:46] Speaker 02:
There's an inconsistency there that's improper, that's wrong.

[00:08:50] Speaker 01:
Why shouldn't we certify this to the California Supreme Court?

[00:08:54] Speaker 01:
Because we don't have precedent from the California Supreme Court.

[00:08:58] Speaker 01:
We're making what you call the eerie guess, right, based on what the courts of appeals have done.

[00:09:05] Speaker 01:
You know, why do we do that to overrule our precedent rather than asking the California Supreme Court to weigh in?

[00:09:12] Speaker 02:
Because that's exactly what the courts have said you should do.

[00:09:14] Speaker 02:
In the Inray Watts case, this court determined that it was bound to follow

[00:09:21] Speaker 02:
two intermediate Court of Appeal decisions that conflicted with a prior decision by this Court interpreting California law.

[00:09:29] Speaker 02:
And there have been numerous other cases in which this Court has recognized that its prior decisions are inconsistent with California law, and the Owens case

[00:09:37] Speaker 02:
instructs the court to do that if the circumstances are, as I've just described, namely that California courts have made clear that this court's interpretation is wrong.

[00:09:49] Speaker 02:
And that's exactly what this court did in the Watts case.

[00:09:54] Speaker 01:
So you're just saying it's unnecessary?

[00:09:55] Speaker 01:
Exactly.

[00:09:57] Speaker 01:
Is there any reason not to do it other than you think we don't have to?

[00:10:01] Speaker 02:
There is no reason to have it certified.

[00:10:09] Speaker 02:
In the White's case, there were two cases, and this court said, well, we're bound to follow those two cases, and we were wrong earlier.

[00:10:15] Speaker 02:
There are eight cases here.

[00:10:16] Speaker 02:
In 50 years, not a single case has followed.

[00:10:19] Speaker 02:
Do it.

[00:10:21] Speaker 02:
It's not a guess.

[00:10:23] Speaker 02:
It's not speculated to say what the California Supreme Court is going to do.

[00:10:27] Speaker 02:
It's consistent with ordinary principles of California law.

[00:10:31] Speaker 01:
court concluded that there was a split in California authority obviously you're concluding that they're yes wrong yes so I'm assuming the district court was relying on to wit and Jones Hamilton yes

[00:10:46] Speaker 01:
Refresh my recollection.

[00:10:48] Speaker 01:
Did they cite any California cases to substantiate this split?

[00:10:50] Speaker 02:
Two California cases, neither of which actually ruled that attorney's fees were recoverable as an item of damage in a indemnity case, but they did cite two.

[00:11:02] Speaker 02:
But that was in 1974.

[00:11:04] Speaker 02:
There's not a case since then that's ruled differently.

[00:11:11] Speaker 02:
If there ever was a split, that split

[00:11:16] Speaker 02:
ended in 1972 or 1974, in 50 years since then, at some point one has to say, well there may have been a split, but there sure isn't one now, and all the courts have ruled, and it's not just one California Court of Appeal, the courts of appeal throughout California have ruled that attorney's fees are not recoverable for a breach

[00:11:36] Speaker 02:
of an indemnity provision, absent a provision in the agreement specifically requiring it.

[00:11:42] Speaker 01:
Okay, so your argument here is that there is no such provision in the agreements between the parties.

[00:11:47] Speaker 01:
Should we resolve that in the first instance?

[00:11:50] Speaker 01:
I don't think the district court reached that issue.

[00:11:53] Speaker 02:
The question is to whether there's an agreement.

[00:11:55] Speaker 02:
The district court didn't reach that because it was waived.

[00:11:58] Speaker 02:
And because even if there was, even if the district court reached that agreement...

[00:12:05] Speaker 03:
And to have the judge raise the question, should we reach the waiver question or, I mean, if we were to send this back, would we just, would you send it back, just send back to the district court, say, is this waived, and if it's not, you know, address it?

[00:12:15] Speaker 02:
Well, well, well, no, because even if you reach the, even if you conclude that it's not waived, there is no attorney fee provision here that addresses the.

[00:12:24] Speaker 03:
No, I think, I think you're, I think, but the question is, why would we determine whether it's waived or not?

[00:12:28] Speaker 03:
Why wouldn't the district court, why wouldn't we leave it to the district court to determine whether it's waived?

[00:12:32] Speaker 02:
Well, if it wasn't raised, let me just back up.

[00:12:37] Speaker 02:
The complaint in this action asserts a breach of the indemnity provision.

[00:12:42] Speaker 02:
It doesn't assert or even address the purchase and sale agreement.

[00:12:47] Speaker 02:
There's nothing in the complaint that alleges that the purchase and sale agreement was violated.

[00:12:51] Speaker 02:
It's limited to the indemnity agreement.

[00:12:58] Speaker 02:
The briefing, in the 94-page findings of fact and conclusions of law by the district court, the issue isn't even raised, and it's not addressed or raised because it wasn't raised in the briefs.

[00:13:12] Speaker 02:
AGK didn't argue before the district court that there is an attorney fee provision that requires adherence, that requires the court to award its attorney fees.

[00:13:23] Speaker 02:
No such argument was made.

[00:13:24] Speaker 02:
But even if it was made,

[00:13:26] Speaker 02:
There isn't an attorney fee provision that governs this.

[00:13:29] Speaker 02:
The attorney fee provision in the purchase and sale agreement is limited to claims that seek to interpret or enforce a term or condition of that agreement.

[00:13:39] Speaker 02:
Those are the words.

[00:13:40] Speaker 02:
Enforce or interpret a term or condition.

[00:13:44] Speaker 02:
The third amendment to the purchase and sale agreement contained a term and condition requiring Comerica to provide an assignment of declarant rights, which it did.

[00:13:56] Speaker 02:
This action doesn't seek to interpret or enforce that obligation to provide an assignment.

[00:14:06] Speaker 02:
We provided the assignment.

[00:14:07] Speaker 02:
The assignment of declarant rights is the product of compliance with the term and condition, but it isn't itself a term and condition.

[00:14:16] Speaker 02:
And the attorney fee provision in the purchase and sale agreement is limited only to claims

[00:14:24] Speaker 02:
that seek to enforce or interpret a term and condition.

[00:14:27] Speaker 02:
The assignment of declarant rights and the indemnity agreement contained therein is neither.

[00:14:37] Speaker 04:
Did you want to reserve some time?

[00:14:38] Speaker 02:
I would like to reserve the rest of my time.

[00:14:39] Speaker 02:
Thank you.

[00:14:50] Speaker 05:
Good morning, may it please the court, Ruben Ginsburg for Appellee AGK Sierra de Montserrat.

[00:14:57] Speaker 05:
DeWitt is directly on point.

[00:14:59] Speaker 05:
The Ninth Circuit in DeWitt held that attorney fees incurred to litigate an indemnity claim are recoverable as damages in the indemnity action.

[00:15:09] Speaker 05:
The court in DeWitt considered a split of authority in the California Courts of Appeal and decided to follow one line of authority.

[00:15:15] Speaker 05:
The rule from DeWitt is the law of the circuit.

[00:15:19] Speaker 04:
It's pretty clear that if we didn't have DeWitt and we were just looking at what California courts have done, we would not come to the same conclusion that DeWitt did, would we?

[00:15:34] Speaker 05:
I'm not sure that I can answer that question, Your Honor.

[00:15:37] Speaker 04:
There is... Well, I mean, I guess what I mean is, like, you know, in the absence of DeWitt, we would look at controlling authority from the California Supreme Court, and there isn't any, and we would look at... we would then look at decisions from the California Court of Appeal, and there's lots and lots of them specifically rejecting DeWitt and going the other way, right?

[00:15:56] Speaker 05:
I will acknowledge that the weight of recent authority is not in favor of DeWitt.

[00:16:01] Speaker 05:
But the question when considering whether to reconsider the law of the circuit, the question is not whether this court agrees with the prior precedent by the Ninth Circuit.

[00:16:10] Speaker 05:
Even if that prior decision was clearly erroneous, this court should not reconsider the law of the circuit unless there is intervening controlling authority.

[00:16:19] Speaker 05:
And as has been pointed out here, there is no intervening controlling authority because the California Supreme Court has not decided.

[00:16:25] Speaker 03:
So your position, the answer to my question that I was asking, your position would be it is something like a military Grammy standard, that it has to be clearly reconcilable and that that clearly reconcilable standard is impossible to meet unless you've got, you know, a California, because the California Supreme Court basically is like the US Supreme Court or an en banc decision would be in a case involving federal law.

[00:16:49] Speaker 03:
For state law, it has to be actual on-point California Supreme Court authority or we're just bound to continue applying state law incorrectly.

[00:17:00] Speaker 03:
Is that your position?

[00:17:02] Speaker 05:
Right up to the end, Your Honor.

[00:17:04] Speaker 05:
I won't say that you're applying state law incorrectly.

[00:17:09] Speaker 03:
I'm not asking you to agree to that, but I'm just saying

[00:17:14] Speaker 03:
You know, if that was the rule, then we would have to, in some other case, apply, even if it was pretty clearly incorrect, we'd have to apply it unless we had, I mean, that's what we have to do in the federal context.

[00:17:28] Speaker 03:
If we have a precedent that I think is just really, really wrong, I'm bound by it, right, unless the Supreme Court or our court en banc comes out and says otherwise.

[00:17:37] Speaker 03:
But is that essentially the same standard we have to apply on the state?

[00:17:40] Speaker 05:
Precisely.

[00:17:41] Speaker 05:
And I'll quote from Silva versus Garland, a 2021 decision by this court.

[00:17:46] Speaker 05:
In our circuit, a three-judge panel must apply binding precedent even when it is clearly wrong.

[00:17:52] Speaker 05:
A three-judge panel can reconsider the law of the circuit

[00:17:56] Speaker 03:
only when, quote, the relevant court of last resort, end quote, has, quote, undercut the theory or reasoning underlying the prior circuit precedent in a way... Is that talking about applying state, when we're sitting in a, you know, in diversity action, applying state law, or is this talking about federal, when we're playing, you know, because the law, the circuit is...

[00:18:16] Speaker 05:
The Court of Last Resort, Your Honor, and this applies in either circumstance, whether it's the U.S.

[00:18:21] Speaker 05:
Supreme Court or a state Supreme Court.

[00:18:24] Speaker 04:
If that was the case, what are you reading from?

[00:18:26] Speaker 05:
It's Silva versus Garland.

[00:18:28] Speaker 05:
And if I may finish the quote, because it's quoting the words that you used, underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.

[00:18:37] Speaker 05:
It's the same standard.

[00:18:39] Speaker 05:
the court of last resort.

[00:18:41] Speaker 03:
And just to be clear, it's the Silver versus Garland case.

[00:18:43] Speaker 03:
It doesn't sound like that's applying state law, given that it has the name Garland in it.

[00:18:48] Speaker 03:
Right.

[00:18:48] Speaker 03:
But that seems to me that that's the Miller v. Graham standard that's applicable when we're talking about federal law.

[00:18:56] Speaker 03:
But do you have a case that says that's the standard for state law?

[00:19:00] Speaker 03:
I'm thinking that can't be right because otherwise why would we have cases like, I forget the name of the case that the other side was citing that had two intermediate court of appeals, California cases, why would we have cases like that?

[00:19:11] Speaker 05:
What's lacking is any case where this court has reconsidered the law of the circuit based on an intervening decision by an intermediate state appellative court where there was a split of authority on the state appellate court.

[00:19:24] Speaker 01:
Well, wait.

[00:19:25] Speaker 01:
Is there a split of authority?

[00:19:26] Speaker 01:
You said earlier that you would acknowledge that the weight of the authority went against your position.

[00:19:33] Speaker 01:
But is there any California appellate decision that supports your position?

[00:19:39] Speaker 00:
DeWitt?

[00:19:39] Speaker 01:
It seems like there is.

[00:19:40] Speaker 01:
Well, not DeWitt.

[00:19:41] Speaker 01:
DeWitt's the Ninth Circuit decision.

[00:19:43] Speaker 01:
I mean, DeWitt cited two cases that don't address the issue.

[00:19:46] Speaker 01:
So since DeWitt, has any single California Court of Appeals decision gone your way?

[00:19:53] Speaker 05:
There has been no decision by the California Court of Appeal in our favor since DeWitt.

[00:19:58] Speaker 05:
DeWitt, which I'll say again, it's the law of the circuit, DeWitt concluded that there were California appellate opinions on both sides of the issue.

[00:20:06] Speaker 05:
It cited Schachman as one.

[00:20:10] Speaker 05:
And Nicholson.

[00:20:11] Speaker 01:
Even if at that time, even if DeWitt correctly addressed those cases and there were a split at that time, it doesn't seem that there's a split now.

[00:20:19] Speaker 05:
The split hasn't gone away until it's been resolved by the state Supreme Court.

[00:20:23] Speaker 05:
So DeWitt acknowledged that there were cases on both sides of the issue.

[00:20:26] Speaker 05:
California appellate opinions have acknowledged that there was a split of authority.

[00:20:30] Speaker 05:
Hillman, which was the first case to disagree with DeWitt, acknowledged that there was a split of authority.

[00:20:35] Speaker 05:
Those more recent California appellate opinions are not stating that there's no longer a split of authority.

[00:20:41] Speaker 05:
They're only saying that they agree with one line of authority.

[00:20:43] Speaker 03:
Yeah, I agree with you that if, you know, if there was cases, you know, 200 years ago, they went the other way, and there's a thousand cases from the California Courts of Appeals that all disagree with that, they're still in theory a split, you know, because the split has never been resolved.

[00:20:59] Speaker 03:
So given that, since the only way that I can imagine under the way you're talking, the way you're presenting it, the only way it could be resolved is a California Supreme Court case.

[00:21:09] Speaker 03:
So your position seems to reduce to, and I think

[00:21:12] Speaker 03:
that it has to, until the California, once our court has interpreted what California law is, the subsequent panels are totally bound by that until the California Supreme Court speaks.

[00:21:25] Speaker 03:
That seems to be the implication of your position.

[00:21:28] Speaker 03:
And if that's the case, then why don't we have any cases that actually say that from our court?

[00:21:33] Speaker 03:
Our court, the cases I've seen treated as if

[00:21:37] Speaker 03:
Subsequent panels like ours can go and and look at the state of California law and see if it's changed and And they're not it's not just as matter of is there a California Supreme Court case.

[00:21:47] Speaker 05:
No, there's not So we're still bound by the earlier allow me to distinguish those cases the two cases that counsel cited and others cited in his brief Involved the Ninth Circuit issuing an opinion dealing with an issue of state law

[00:22:00] Speaker 05:
on a clean slate where there was no prior California appellate opinion, it's always California for some reason, on point.

[00:22:08] Speaker 05:
And then the California Court of Appeal comes and says the Ninth Circuit was wrong.

[00:22:12] Speaker 05:
That's what happened in Owen, that's what happened in Henry Watts.

[00:22:16] Speaker 05:
There was no split of authority.

[00:22:17] Speaker 05:
And then a later panel of the Ninth Circuit has to decide whether to treat the intermediate appellate court opinion as controlling precedent.

[00:22:29] Speaker 05:
And they treat it as controlling because there's no split.

[00:22:31] Speaker 03:
But aren't our cases, I thought our cases were pretty clear that it's never controlling.

[00:22:36] Speaker 03:
Intermediate California appellate court authority is never controlling precedent.

[00:22:40] Speaker 03:
We look to those cases to try to predict what the California Supreme Court would rule.

[00:22:45] Speaker 03:
So I'm not sure, I understand how you're explaining that those scenarios are different.

[00:22:51] Speaker 03:
Yes.

[00:22:52] Speaker 03:
But those scenarios, even in that scenario, let's say we made our best guess without any California

[00:22:59] Speaker 03:
appellate or Supreme Court authority.

[00:23:02] Speaker 03:
And then some California appellate court comes in and says, we think it's different.

[00:23:07] Speaker 03:
Since that's not binding on us, then it's not irreconcilable under the standard that you're applying.

[00:23:13] Speaker 03:
And I don't know why we wouldn't, if the standard you're saying is the correct standard, I don't know why we wouldn't be stuck with our ruling, even if 50 California appellate courts

[00:23:25] Speaker 03:
decisions come out until the California Supreme Court comes in and saves the day and actually explains that all those 50 rulings are correct.

[00:23:32] Speaker 05:
The difference is when there's a split of authority, there's no controlling authority.

[00:23:35] Speaker 05:
If the California appellate opinions all go in one direction and it's contrary to the Ninth Circuit, then that justifies the Ninth Circuit reconsidering, because all of the state authorities

[00:23:46] Speaker 05:
are on one side.

[00:23:47] Speaker 05:
And that's when this language comes up, unless there is convincing evidence that the highest state court would decide differently.

[00:23:53] Speaker 05:
So the Ninth Circuit should consider opinions by the intermediate state appellate court and should agree with that unless there's convincing evidence the highest court would decide differently.

[00:24:02] Speaker 04:
Why doesn't the fact that all the post-dubit cases go the same way constitute convincing evidence that if the Supreme Court confronted the question that they would do the same thing?

[00:24:12] Speaker 05:
We don't get to the convincing evidence until we first decide that there are state appellate court opinions deciding an issue all in a uniform manner.

[00:24:23] Speaker 05:
Because that's the situation in those cases.

[00:24:25] Speaker 05:
There's no split of authority.

[00:24:26] Speaker 05:
When there's a split of authority, how do you pick which side, you know?

[00:24:29] Speaker 04:
Why does it make sense for that to be the rule?

[00:24:31] Speaker 04:
I mean, in the federal law context, one can understand maybe the policy justifications for a strict rule like Miller against Gammie.

[00:24:42] Speaker 04:
But in the state law context, you know,

[00:24:46] Speaker 04:
We're, in any case where we're deciding state law, we're just doing our best to predict what the state courts would do.

[00:24:54] Speaker 04:
And it seems, isn't it kind of an imposition on the California Supreme Court that when we get it wrong, and when later developments in California authorities suggest that we've gotten it wrong, that we have to stick by it and force the California Supreme Court to be the one to correct our mistake?

[00:25:11] Speaker 05:
Well, it's extraordinary to be asking the California Supreme Court.

[00:25:15] Speaker 05:
That's not going to happen.

[00:25:16] Speaker 04:
Typically what the law of the circuit doctrine... If that doesn't happen, then we just keep on persisting in error, which creates the sort of forum shopping problems that Yuri is concerned with, right?

[00:25:28] Speaker 05:
There's an institutional reason for that.

[00:25:30] Speaker 05:
adhering to law of the circuit.

[00:25:32] Speaker 05:
It's to provide more certainty and consistency to the law as applied in this circuit.

[00:25:38] Speaker 04:
If instead... No, I agree with that, but I guess in the state law context, it seems like that goal is undermined because it doesn't promote inconsistency and predictability to have different rules of state law in federal court and in state court, right?

[00:25:54] Speaker 04:
It creates uncertainty.

[00:25:56] Speaker 05:
It would create uncertainty in the Ninth Circuit if we were to have a split of authority here the same way that there's a split of authority in the California courts.

[00:26:04] Speaker 03:
It would only create the same kind of uncertainty that would come about if the California Supreme Court actually issued a decision.

[00:26:09] Speaker 03:
and we changed our mind.

[00:26:11] Speaker 03:
The only uncertainty is, yeah, we made a prediction in DeWitt and we got it wrong, but that happens whenever we're making predictions about state courts.

[00:26:20] Speaker 03:
I don't understand how that creates an uncertainty that's not already inherent in the fact that we're not applying our own law.

[00:26:28] Speaker 03:
We're applying another body's law and we're doing the best we can to predict what that

[00:26:32] Speaker 05:
I'd like to respond briefly to that point and then get onto a couple of other points before my time is up.

[00:26:37] Speaker 05:
But certainly there's uncertainty when the Ninth Circuit for the first time addresses an issue of state law.

[00:26:43] Speaker 05:
Once it has addressed an issue of state law, there is certainty until there's intervening controlling authority.

[00:26:48] Speaker 05:
And the benefit of the law of the circuit is that there will be certainty until there's intervening controlling authority.

[00:26:54] Speaker 05:
And that language that I'm quoting, intervening controlling authority, is from FDIC versus McSweeney.

[00:26:58] Speaker 01:
So why shouldn't we certify this to the California Supreme Court?

[00:27:01] Speaker 05:
Because there's an alternative ground to affirm the judgment.

[00:27:04] Speaker 01:
So you want to go to the contract, but I don't want to go to the contract yet.

[00:27:07] Speaker 01:
We want to resolve this.

[00:27:08] Speaker 01:
We don't want to keep applying California wrong incorrectly, assuming you're correct and we're bound to do so.

[00:27:13] Speaker 01:
Why can't we end this, send it to the California Supreme Court, and get an answer?

[00:27:17] Speaker 05:
Again, I think it's an extraordinary measure.

[00:27:19] Speaker 05:
There's nothing wrong with it.

[00:27:20] Speaker 01:
It's not extraordinary.

[00:27:21] Speaker 01:
It's in the rules.

[00:27:22] Speaker 01:
It's in the rules.

[00:27:22] Speaker 01:
It has to be dispositive, and it would be.

[00:27:24] Speaker 05:
The rules say that you can certify an issue for the California Supreme Court when a decision by the California Supreme Court could determine the outcome.

[00:27:31] Speaker 01:
Right, and you're saying it couldn't because you believe that the contract provisions allow the attorney's fees for enforcing the indemnity provision.

[00:27:39] Speaker 05:
I believe this court could affirm the judgment because those same fees are recoverable as costs, or if this court wouldn't make that decision in the first instance, the district court could award those fees as costs under the attorney fee provision.

[00:27:51] Speaker 01:
Why should we not conclude that that argument was waived because it wasn't raised in the district court?

[00:27:56] Speaker 05:
that issue wasn't waived because there was no reason for AGK to file a motion for attorney fees.

[00:28:02] Speaker 05:
First, it would have been premature to file a motion for attorney fees as cost before trial because you need a decision on the merits before you can file that motion.

[00:28:10] Speaker 05:
After trial, well, the court had awarded those same attorney fees as damages, so there was no opportunity to file a motion for the

[00:28:16] Speaker 05:
to get those fees as cost, that would have been duplicative because it would have been premature to file the motion and there was no opportunity to file it after trial.

[00:28:25] Speaker 05:
There was no waiver by not filing the motion.

[00:28:28] Speaker 05:
Moreover, the parties and the court were aware that AGK was pursuing attorney fees as damages or AGK had two alternative remedies, either attorney's fees as damages or attorney's fees as costs.

[00:28:43] Speaker 05:
And AGK made that point in his closing argument.

[00:28:45] Speaker 05:
Comerica responded in its closing argument.

[00:28:48] Speaker 05:
And that's at 3ER 329 and 335.

[00:28:53] Speaker 05:
Both parties acknowledged in the joint pretrial statement that the prevailing party would seek attorney's fees in this case, attorney's fees as cost.

[00:29:02] Speaker 05:
So there was no waiver.

[00:29:04] Speaker 05:
The parties in the court were aware of the issue.

[00:29:06] Speaker 05:
The issue is not coming up for the first time now.

[00:29:10] Speaker 05:
I'd like to address the disposition, if I may briefly.

[00:29:14] Speaker 03:
You said that we could send it back and have the district court decide.

[00:29:17] Speaker 03:
I don't know how we would send it back if without reaching the other question we've been talking about, because we have to say something like, well, we're not going to say whether we agree or disagree with your district court on that issue, but can you address this other issue in hopes that it would make this other issue go away?

[00:29:32] Speaker 05:
I'd like to briefly address that.

[00:29:35] Speaker 05:
So what we're asking for is a full affirmance.

[00:29:38] Speaker 05:
If the court doesn't agree with us on the attorney fee issue,

[00:29:44] Speaker 05:
If the disposition is anything other than a full affirmance, and if it goes back to the district court, we would request that the disposition make it clear that AGK has an opportunity to file a motion for attorney's fees as costs on remand.

[00:29:57] Speaker 05:
For example, if you were to reverse the judgment in part,

[00:30:01] Speaker 05:
That would leave the original judgment standing and our time to file a motion for fees would have passed.

[00:30:06] Speaker 05:
So to overcome that, we would ask that you explicitly provide that we may file a motion for fees as cost on remand, if that were to happen.

[00:30:14] Speaker 05:
And second,

[00:30:16] Speaker 05:
If the disposition is anything other than a full affirmance, we would ask that this court address the issue of interest, because Comerica is not challenging the majority of the damages awarded by the district court.

[00:30:27] Speaker 05:
Interest should accrue on those damages from the date of the original judgment.

[00:30:32] Speaker 05:
Rule 37B, the federal rules of the procedure, state that if the court modifies or reverses a judgment and directs a new money judgment be entered on remand, it must address the interest, the issue of interest.

[00:30:46] Speaker 05:
The rate of interest is a matter of this court's discretion.

[00:30:50] Speaker 05:
It can be either pre-judgment interest or post-judgment interest on the amount of damages it survives.

[00:30:56] Speaker 05:
We would request pre-judgment interest under California Civil Code 3289, which is 10%, because that more fully compensates the prevailing party.

[00:31:07] Speaker 05:
But again, our primary argument, we're requesting a full affirmance based on DeWitt because there's no intervening controlling authority and the law of the circuit should be adhered to.

[00:31:18] Speaker 04:
Thank you, counsel.

[00:31:19] Speaker 05:
Thank you.

[00:31:21] Speaker 04:
Mr. Sloan.

[00:31:30] Speaker 02:
Just briefly.

[00:31:33] Speaker 02:
The question as to whether this court must wait until the California Supreme Court rules on the issue is inconsistent with this court's prior holding in the Owens case.

[00:31:43] Speaker 02:
In the Owens case, the court established the standard for law of the circuit doctrine, which is that the court follows intermediate court of appeal decisions unless there is compelling evidence that the California Supreme Court would rule differently.

[00:31:58] Speaker 02:
After all, we may never get a ruling from the California Supreme Court.

[00:32:02] Speaker 02:
Does that mean that another 20 or 30 or any number of infinite number of cases holding that consistent with California law, attorney fees are not recoverable, are to be ignored by this court when it addresses the issue?

[00:32:16] Speaker 02:
This court is applying California law, and it makes no sense for this court to say, well, in this court, California law is you can recover those costs, but in California, the law is different.

[00:32:29] Speaker 02:
That makes no sense.

[00:32:30] Speaker 02:
This court is required to apply California law, and the Owen case sets the standard, and the standard is adequately met here.

[00:32:39] Speaker 02:
and the court should reverse and with directions to the district court to reverse the award of attorney fees and interest on that award.

[00:32:50] Speaker 04:
Thank you.

[00:32:52] Speaker 04:
Thank both counsel for their arguments in this case and the case is submitted and we are adjourned.

[00:33:17] Speaker 00:
Report for this session stands adjourned.