Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00079/USCOURTS-casd-3_17-cv-00079-5/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0078m(a) Securities Exchange Act

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3:17-cv-00079-H-LL

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

ENSOURCE INVESTMENTS, LLC, a 

Delaware limited liability company,

Plaintiff,

v.

MARK A. WILLIS, et al.,

Defendants.

Case No.: 3:17-cv-00079-H-LL

ORDER DENYING DEFENDANT

WILLIS GROUP, LLC’S MOTION 

FOR ATTORNEY’S FEES

[Doc. No. 168.]

On January 2, 2020, Defendant Willis Group, LLC (“Defendant”) filed a motion for

attorney’s fees. (Doc. No. 168.) On January 17, 2020, Plaintiff Ensource Investments, 

LLC (“Plaintiff”) filed a response in opposition to Defendant’s motion (Doc. No. 174), and 

Defendant filed a reply on January 27, 2020. (Doc. No. 183.) For the reasons below, the 

Court denies Defendant’s motion for attorney’s fees.

Background

This case arises out of Plaintiff EnSource Investment, LLC’s purchase of securities 

in a start-up company, the Hopewell – Pilot Project, LLC (“Hopewell”). On March 28, 

2016, Hopewell was formed to use title searching technology to identify unleased lands in 

Texas containing oil and gas interests, purchase those leases, and use or flip those leases 

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for a profit. (Doc. Nos. 136-2, Willis Decl. ¶¶ 2, 4; 136-5, Ex. T.) As part of its business 

activities, Hopewell contracted with several other entities to carry out its goals, including

the Willis Group, LLC (“Willis Group”), a company that provided staffing services. (Doc. 

No. 136-2, Willis Decl. ¶ 3.) 

On January 13, 2017, Plaintiff filed a complaint in this Court alleging that 

Defendants involved in Hopewell, including the Willis Group, defrauded Plaintiff. (Doc. 

No. 1.) On December 27, 2018, Plaintiff filed an amended complaint, claiming that 

Defendants defrauded Plaintiff in violation of the Securities Exchange Act, 15 U.S.C. 

§ 78j, and California’s unfair competition law, California Business & Professions Code 

§ 17200. (Doc. No. 93.) Plaintiff also alleged that Defendants committed common law 

conversion and intentional misrepresentation. (Id.) 

On December 6, 2019, the Court issued an order granting summary judgment in 

favor of Defendants Beyond Review, LLC, Image Engine, LLC, and Willis Group, LLC

on all of Plaintiff’s claims. (Doc. No. 159 at 25–26.) 

Defendant Willis Group now seeks an award of attorney’s fees under the terms of 

the company agreement that Defendant signed with Plaintiff. (Doc. No. 168.) When 

Plaintiff agreed to invest in Hopewell, Plaintiff and Defendant both signed a company 

agreement, which contains the following indemnification provision:

Section 13.10 Indemnification. To the fullest extent permitted by law, each 

Member shall indemnify the Company, and each other Member and hold them 

harmless from and against all losses, costs, liabilities, damages, and expenses 

(including, without limitation, costs of suit and attorney’s fees) they may incur 

on account of any breach by that Member of this Agreement or on account of 

any business activities conducted by that Member or its affiliates prior to the 

Effective Date of this Agreement.

(Doc. No. 168-3, Ex. A at 28.) Defendant argues that this provision requires Plaintiff to 

indemnify Defendant for the costs of attorney’s fees. (Doc. No. 168-1 at 5–7.)

/ / /

/ / /

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Discussion

Under the “American Rule,” “‘[e]ach litigant pays his own attorney’s fees, win or 

lose, unless a statute or contract provides otherwise.’” Baker Botts L.L.P. v. ASARCO 

LLC, 135 S. Ct. 2158, 2164 (2015); see Hensley v. Eckerhart, 461 U.S. 424, 429 (1983);

see also Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975)

(“In the United States, the prevailing litigant is ordinarily not entitled to collect a reasonable 

attorneys’ fee from the loser.”). Here, Defendant argues that the indemnification provision 

in the Hopewell company agreement requires Plaintiff to indemnify Defendant for the costs 

of attorney’s fees for this litigation. (Doc. No. 168-1 at 5–7.) Defendant is incorrect. The 

indemnity provision does not apply in this case because Texas law generally prevents 

indemnity agreements from applying to claims between the parties to the indemnity 

agreement.

In Texas,

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the “general rule [is] that indemnity agreements do not generally apply to 

claims between the parties to the agreement.” Claybar v. Samson Expl., LLC, No. 09-16-

00435-CV, 2018 WL 651258, at *3 (Tex. App. Feb. 1, 2018), review denied (Mar. 1, 2019); 

Nat’l City Mortg. Co. v. Adams, 310 S.W.3d 139, 144 (Tex. App. 2010); Wallerstein v. 

Spirt, 8 S.W.3d 774, 780 (Tex. App. 1999).2 For example, in National City Mortgage 

Company v. Adams, the Texas Court of Appeals stated, “because both NCM and Carolyn 

are parties to the indemnity agreement, the agreement, as a matter of law, does not obligate 

Carolyn to pay NCM its attorneys’ fees incurred in defending itself against Carolyn’s 

claims and in prosecuting its counterclaim against Carolyn.” 310 S.W.3d at 144. 

 

1 The agreement contains a choice of law provision specifying that the agreement shall be read under 

Texas law (Doc. No. 168-1, Ex. A at 25), and this Court has already determined that Texas law governs 

the state-law claims at issue in this case. (Doc. Nos. 15 at 8–10; 159 at 26 n.8.) 

 

2 A federal court applying Texas law “look[s] first to the decisions of the Texas Supreme Court.” 

Ironshore Europe DAC v. Schiff Hardin, L.L.P., 912 F.3d 759, 764 (5th Cir. 2019) (internal citations 

omitted). Where “the Texas Supreme Court has not ruled on an issue,” a federal court should “treat state 

intermediate courts’ decisions as the strongest indicator of what a state supreme court would do, absent a 

compelling reason to believe that the state supreme court would reject the lower courts’ reasoning.” Id. 

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The parties to an indemnity agreement can overcome the general rule barring the 

indemnification of claims between the parties to the agreement, but they can do so only by 

including “specific language” to that effect. Claybar, 2018 WL 651258, at *3 (citing 

Ganske v. Spence, 129 S.W.3d 701, 708 (Tex. App. 2004)). In Claybar v. Samson 

Exploration, LLC, Claybar entered into a construction agreement with Samson, which 

included the following indemnity provision: 

[Samson] shall indemnify [Claybar] against any claims, damages, demands, 

liabilities, and costs (including reasonable attorneys’ fees) to the extent arising 

from or related to the negligence or misconduct of [Samson] or its employees, 

agents, contractors, or invitees in the course of their exercise of rights granted 

by this instrument, but not to the extent caused by [Claybar], or its employees, 

agents, contractors, or invitees.

2018 WL 651258, at *3. Claybar subsequently sued Samson for damage to Claybar’s 

property, and Claybar argued that the indemnity provision required Samson to indemnify 

Claybar for the costs of Claybar’s suit against Samson. Id. at *2. Though the indemnity 

provision broadly covered “any claims . . . and costs . . . arising from or related to the 

negligence or misconduct of [Samson],” and Claybar sued Samson due to Samson’s alleged 

misconduct, the Texas Court of Appeals held that the provision’s language was not 

sufficiently specific to “show that the parties intended for Samson to indemnify Claybar 

for attorney’s fees and costs in pursuing claims against Samson . . . .” Id. at *3. In other 

words, “[i]f Samson and Claybar had intended to include claims between them, they would 

have had to specifically add such language to the Agreement.” Id. Thus, even where an 

indemnity provision offers language broad enough to sweep in the suit at issue, such 

language is insufficient to indemnify costs of litigation for a suit brought by one party to 

the agreement against another. To indemnify the costs of claims between the parties to the 

agreement, the indemnity provision must state that it specifically covers those types of 

claims. Id.; see also Nat’l City Mortg. Co., 310 S.W.3d at 144 (indemnity provision where 

plaintiff agreed to indemnify defendant “from any and all actions, claims, demands, 

damages, costs, expenses, and other liabilities, including without limitation attorney’s fees” 

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did not apply to costs of lawsuit brought by plaintiff against defendant, since both were 

“parties to the indemnity agreement”). 

The indemnity provision at issue here does not contain specific language stating that 

the parties would indemnify each other from claims brought by one party to the agreement

against another. The Hopewell company agreement states that each Member3 who signed 

the agreement shall indemnify each other Member “from and against all losses . . . 

(including, without limitation, costs of suit and attorney’s fees) they may incur on account 

of any breach by that Member of this Agreement or on account of any business activities 

conducted by that Member or its affiliates prior to the Effective Date of this Agreement.” 

(Doc. No. 170-1 at 36.) This language is similar to that of the indemnity provision in 

Claybar, indemnifying parties for a broad range of claims arising out of “any business 

activities,” but it fails to specify that the provision indemnifies each Member for the costs 

of suits brought by one Member to the Agreement against another. Thus, like Claybar, the 

indemnity provision here does not provide sufficiently specific language to cover the costs 

of legal claims brought by Plaintiff against Defendant.4 Consequently, the indemnity 

provision does not provide grounds to award Defendant attorney’s fees. 

Conclusion

For the reasons above, the Court denies Defendant’s motion for attorney’s fees.

IT IS SO ORDERED.

DATED: February 19, 2020

 

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

 

3 The Hopewell company agreement defines “Member” as any person or entity executing the 

company agreement. (Doc. No. 168-1, Ex. A at 3.)

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If anything, the fact that Members of the Hopewell company agreement are mutually indemnifying 

each other suggests that the indemnity provision was not meant to apply to claims between the Members 

of the agreement. If it did, the provision would produce the odd outcome where both parties would have 

to indemnify each other in the event that one sues another, canceling out the effect of the indemnity 

provision.

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