FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AGK SIERRA DE MONTSERRAT,

L.P., 

Plaintiff-Appellee, 

 v. 

COMERICA BANK, 

Defendant-Appellant.

No. 23-15290

D.C. No. 2:15-cv01280-DAD-DB

OPINION

Appeal from the United States District Court

for the Eastern District of California

Dale A. Drozd, District Judge, Presiding

Argued and Submitted February 13, 2024

San Francisco, California

Filed July 19, 2024

Before: Eric D. Miller, Bridget S. Bade, and Lawrence 

VanDyke, Circuit Judges.

Opinion by Judge VanDyke;

Concurrence by Judge Miller
2 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

SUMMARY*

California Law / Attorneys’ Fees 

The panel reversed the district court’s award of attorney 

fees associated with litigating a first-party breach of contract 

suit enforcing an indemnity provision, and remanded. 

The district court determined that Comerica Bank 

breached its agreement to indemnify AGK Sierra De 

Montserrat, L.P. (AGK) in two underlying lawsuits and 

awarded attorney fees incurred in those underlying actions. 

In addition, relying on DeWitt v. Western Pacific 

Railroad Co., 719 F.2d 1448 (9th Cir. 1983), the district 

court awarded AGK damages for attorney fees associated 

with the present first-party breach of contract suit enforcing 

the indemnity provision. The panel held that DeWitt was 

only binding in the absence of any subsequent indication 

from the California courts that this Court’s interpretation 

was incorrect, and California appellate courts since DeWitt

have uniformly indicated that first-party attorney fees are not 

recoverable under an indemnity provision. Accordingly, the 

panel reversed the district court’s award of attorney fees for 

litigating the present action, and remanded for the district 

court to determine whether those fees were otherwise 

recoverable.

Concurring, Judge Miller wrote separately to explain 

why it was appropriate that the court apply a more flexible 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 3 

standard of intra-circuit stare decisis to questions of state law 

than to questions of federal law. 

COUNSEL

Reuben A. Ginsburg (argued), Timothy J. Gorry, JonJamison Hill, and Adam M. Korn, Michelman & Robinson 

LLP, Los Angeles, California; Gregory L. Maxim and 

Thomas G. Trost, Sproul Trost, Roseville, California; for 

Plaintiff-Appellee.

Ernest Slome (argued), Lann G. McIntyre, Jeffry A. Miller, 

and Daniel R. Velladao, Lewis Brisbois Bisgaard & Smith 

LLP, San Diego, California; Frank R. Perrott, Lewis 

Brisbois Bisgaard & Smith LLP, Sacramento, California, for 

Defendant-Appellant. 
4 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

OPINION

VANDYKE, Circuit Judge:

Following a bench trial, the district court determined that 

Comerica Bank (Comerica) breached its agreement to 

indemnify AGK Sierra de Montserrat, L.P. (AGK) in two 

underlying lawsuits and accordingly awarded damages for 

attorney fees incurred in those underlying actions. In 

addition, the district court, relying on our forty-year-old 

decision in DeWitt v. Western Pacific Railroad Co., 719 F.2d 

1448 (9th Cir. 1983), awarded AGK damages for attorney 

fees associated with the present first-party breach of contract 

suit enforcing the indemnity provision. But DeWitt is “only 

binding in the absence of any subsequent indication from the 

California courts that our interpretation was incorrect,”

Owen ex rel. Owen v. United States, 713 F.2d 1461, 1464

(9th Cir. 1983), and California appellate cases since DeWitt

uniformly indicate that first-party attorney fees are not 

recoverable under an indemnity provision. Therefore, we 

reverse the district court’s award of fees for litigating the 

present action. We remand for the district court to determine 

whether those fees are otherwise recoverable.

I.

In 2005, Westwood Montserrat, Ltd., began developing 

a residential subdivision in Loomis, California. Westwood 

obtained, and subsequently defaulted on, a construction loan 

from Comerica. Comerica then foreclosed on fifty-one lots 

in the development. Before the foreclosure, Westwood 

recorded a Declaration of Covenants, Conditions, and 

Restrictions and a Supplemental Declaration, which 

reserved certain rights for itself as the declarant. 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 5

In 2009, Comerica purchased the fifty-one lots at a 

trustee’s sale, and then in 2010, it agreed to sell the lots to 

AGRE.1 The Purchase and Sale Agreement (PSA) included 

a California choice-of-law clause and an attorney fees 

provision stating that:

In the event of any action between Buyer and 

Seller for enforcement or interpretation of 

any of the terms or conditions of this 

Agreement, the prevailing party in such 

action shall be entitled to recover its 

reasonable costs and expenses, including 

without limitation court costs and attorneys’ 

fees actually incurred, as awarded by a court 

of competent jurisdiction.

After signing the agreement, AGRE was concerned about 

the possibility of Westwood remaining the declarant despite 

the foreclosure and sale of the lots, which would give 

Westwood significant control over development. Comerica 

and AGRE extended and amended the PSA on several 

occasions, the last of which required Comerica to revoke the 

Supplemental Declaration and assign AGK all its rights as 

declarant. AGRE then assigned the PSA to AGK on June 

28, 2010. 

Comerica provided the required assignment of rights on 

June 29, 2010. Because AGK remained concerned about 

potential litigation arising from Westwood claiming to be the 

1 AGRE then formed a limited partnership with Kinetic Homes called 

AGK (the plaintiff in this case) for the purpose of developing the lots. 
6 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

declarant, the Assignment of Declarant Rights also included 

an indemnity provision. The provision stated that:

The undersigned agrees to indemnify, defend 

and hold Successor Declarant harmless from 

and against any and all loss, liability, claims 

or causes of action existing in favor of or 

asserted by any party arising out of the 

undersigned’s position as “Declarant” under 

the CC&Rs on or before the date first above 

written.

The parties closed the deal, and Westwood indeed 

commenced several actions against AGK, which Comerica 

refused to indemnify. AGK then sued Comerica for breach 

of the indemnity provision, and Comerica removed the case

to federal court. Following a nonjury trial, the district court 

found that the assignment, including the indemnity 

provision, was a valid and binding contract, and that 

Comerica breached the contract by failing to indemnify 

AGK in the suits with Westwood. That part of the district 

court’s ruling has not been appealed. 

The district court also determined that Comerica owed 

AGK for attorney fees and costs incurred in litigating the 

present breach of contract action—that is, the action to 

determine whether Comerica was obligated to indemnify 

AGK for its litigation with Westwood under the indemnity 

provision in the Assignment of Declarant Rights. The 

district court, relying on DeWitt, a 1983 Ninth Circuit case, 

determined that under California law “costs and attorney’s 

fees for prosecuting an indemnification claim may be 

included in the indemnification award.” 719 F.2d at 1453. 

Thus, in addition to the costs AGK experienced from the 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 7

Westwood actions, the district court also awarded AGK 

$1,146,337.24 plus prejudgment interest for costs and fees 

incurred in prosecuting the indemnity action against 

Comerica. The sole issue before us is whether this latter 

award of fees for litigating the indemnity obligation between 

the parties was contrary to California law. 

II.

“We review de novo the district court’s interpretation of 

state law.” Paulson v. City of San Diego, 294 F.3d 1124, 

1128 (9th Cir. 2002). The parties dispute the standard by 

which we reexamine circuit precedent interpreting state law. 

AGK suggests we “must apply binding precedent even when 

it is clearly wrong.” Silva v. Garland, 993 F.3d 705, 717 

(9th Cir. 2021). But that rule applies to precedent 

interpreting federal law, not state law. See id. (interpreting 

federal law). Precedent interpreting federal law is binding 

absent a decision of the Supreme Court or our court sitting 

en banc that “undercut[s] the theory or reasoning underlying 

the prior circuit precedent in such a way that the cases are 

clearly irreconcilable.” Miller v. Gammie, 335 F.3d 889, 900 

(9th Cir. 2003) (en banc). 

Interpretation of state law, however, is a different 

exercise. There, “[o]ur duty as a federal court ... is to 

ascertain and apply the existing California law.” Alvarez v. 

Chevron, 656 F.3d 925, 932 (9th Cir. 2011) (quoting 

Munson v. Del Taco, Inc., 522 F.3d 997, 1002 (9th Cir. 

2008)). “In the absence of a pronouncement by the highest 

court of a state, the federal courts must follow the decision 

of the intermediate appellate courts of the state unless there 

is convincing evidence that the highest court of the state 

would decide differently.” Owen ex rel. Owen, 713 F.2d at 

1464 (internal quotation marks omitted). In other words, we 
8 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

use our “own best judgment in predicting how the state’s 

highest court would decide the case.” T-Mobile USA Inc. v. 

Selective Ins. Co. of Am., 908 F.3d 581, 586 (9th Cir. 2018)

(quotation omitted). Circuit precedent interpreting state law, 

therefore, “is only binding in the absence of any subsequent 

indication from the California courts that our interpretation 

was incorrect.” Alvarez, 656 F.3d at 932 (quotations 

omitted).

III.

Comerica appeals the district court’s award of fees 

incurred by AGK in litigating the present action, arguing 

that, contrary to AGK’s position in the district court, those 

fees are not covered by the text of the indemnity provision 

in the Assignment of Declarant Rights. AGK argues that, 

based on our precedent, first-party litigation costs like these 

are covered by standard indemnity provisions under 

California law. AGK also argues that those fees are 

otherwise recoverable under the attorney fees provision in 

the PSA. We address each of AGK’s arguments in turn.

A.

As the district court explained, in the 1983 DeWitt

decision, this court interpreted California law to provide that

“costs and attorney’s fees for prosecuting an indemnification 

claim may be included in the indemnification award.”

Dewitt, 719 F.2d at 1453. And in 1992, our court followed 

Dewitt’s interpretation, specifically noting the absence of 

any indication at that point from California courts that its 

interpretation was incorrect. See Jones-Hamilton Co. v.

Beazer Materials & Servs., 973 F.2d 688, 696 n.4 (9th Cir. 

1992).
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 9

The two California cases DeWitt relied on, however, 

contained essentially no reasoning, and no subsequent 

California cases have followed them. Instead, there have 

been a half-dozen California cases that have gone the other 

way, explaining in some detail their reasons for doing so and, 

in some of the cases, explaining why DeWitt or the two cases 

it relied on are wrong. Moreover, other California cases 

make clear that the DeWitt rule, if it were the correct 

interpretation of California law, would combine with other 

California rules in a way that would work a dramatic change 

in how indemnity provisions are interpreted in California. 

On balance, “subsequent indication[s] from the California 

courts” strongly suggest that DeWitt’s interpretation of 

California law was incorrect. Alvarez, 656 F.3d at 932 

(quotations omitted). We therefore conclude it does not bind 

us.

1.

To start, DeWitt relied on two California appellate cases 

nearly devoid of reasoning on the issue for which DeWitt

cited them. In DeWitt, a train conductor who worked for 

Western Pacific was injured in an accident on a spur line 

leading to a plant owned by the Flintkote Company. 719 

F.2d at 1450. Flintkote had agreed to indemnify Western 

Pacific for any liability arising from its failure to maintain 

the spur line. Id. at 1451–52. After awarding Western 

Pacific its attorney fees expended in defending the 

underlying negligence action between the train conductor

and Western Pacific, our court held that Flintkote was also 

required to pay for Western Pacific’s fees and costs incurred 

in prosecuting the indemnification action directly against 

Flintkote. Id. at 1452–53. DeWitt cited three cases of the 

California Courts of Appeal, two that it said supported its 

rule, see id. at 1453 (citing Schackman v. Universal Pictures
10 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

Co., 255 Cal. App. 2d 857, 863 (1967); Nicholson-Brown, 

Inc. v. City of San Jose, 62 Cal. App. 3d 526, 537 (1976), 

overruled on other grounds by Bullis v. Sec. Pac. Nat’l Bank, 

21 Cal. 3d 801, 815 n.18 (1978)); and one that “seem[ed] to 

be to the contrary, but ... cite[d] no authority,” id. at 1453 

(citing County of San Joaquin v. Stockton Swim Club, 42 

Cal. App. 3d 968, 973 (1974)). Our court in DeWitt then 

chose to follow the two cases that it characterized as 

supporting indemnification for first-party litigation costs.

But in fact, Schackman and Nicholson-Brown have little 

to no relevant analysis, while County of San Joaquin

explained why it declined to include first-party litigation 

costs in an indemnification award. First, Schackman

primarily concerned whether an indemnity provision 

covered losses caused by the combined negligence of both 

the plaintiff and the defendant. 255 Cal. App. 2d at 859. The 

California Court of Appeal spent only two sentences 

addressing first-party attorney fees. Id. at 863. After 

determining that the indemnity provision indeed covered the 

underlying negligence judgment, the court noted that 

“Respondent requests that if the judgment is affirmed, either 

this court receive testimony as to the attorneys’ fees that 

should be awarded counsel for respondent for representing 

him on this appeal or remand the case to the superior court 

for this purpose.” Id. The court concluded that “the latter 

procedure is more appropriate.” Id. So rather than 

explaining why the first-party litigation costs were 

recoverable under the indemnity provision, the court in 

Schackman simply sent the attorney fee question back to the 

trial court to decide in the first instance. The court did not 

address whether such an award would be appropriate, nor did 

it provide any basis for any such award—whether it be the 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 11

indemnity provision, a separate attorney fees provision in the 

contract, or some statute. Id.

Nicholson-Brown is similarly sparse on the relevant 

question. It notes that the indemnitee requested remand for 

the trial court to determine the amount of attorney fees that 

should be awarded for the costs of the appeal, and, citing 

only Schackman, said that “[i]n cases involving 

indemnification provisions this has been determined to be 

the proper procedure.” 62 Cal. App. 3d at 537. So both 

Schackman and Nicholson-Brown primarily address the 

procedural question of whether fees should be determined 

by the trial or appellate court, not the substantive question of 

whether an indemnity provision includes first-party 

litigation costs. And neither gives any reason why such fees 

would be appropriate.

County of San Joaquin, on the other hand, declined to 

follow Schackman, noting that the “allowance [of fees] was 

made in the Schackman case without any discussion.” 42 

Cal. App. 3d at 974 (italics added). Instead, the California

court chose “to follow the general rule that the defendant in 

a contract suit is not liable for his opponent’s attorney fees 

unless the contract expressly provides for it.” Id. It therefore 

declined to read first-party litigation costs into the indemnity 

provision, even where “[t]he language of the indemnity 

clause is sweeping.” Id. at 973. 

To summarize, DeWitt based its interpretation of 

California law on an arguable two-to-one split, where two 

cases were without analysis and did not even directly answer 

the question of whether an indemnity provision covered 

first-party fees, while the third conformed with the American 

rule by requiring attorney fees provisions in contract cases 

to be explicit. Of course, as the court in Jones-Hamilton
12 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

reasoned, if this remained the state of California law, we 

would nonetheless follow DeWitt’s questionable reading of 

California’s precedent “in the absence of any subsequent 

indication from the California courts that our interpretation 

was incorrect.” 973 F.2d at 696 n.4. But California 

appellate cases since DeWitt decisively and persuasively 

indicate that attorney fees for prosecuting indemnity actions 

are not recoverable under an indemnity provision absent 

specific language allowing for such fees.

2.

After DeWitt, California appellate courts have uniformly

rejected our court’s reasoning, instead following reasoning 

similar to that expressed in City of San Joaquin. In Hillman 

v. Leland E. Burns, Inc. the California Court of Appeal noted 

the “split of authority,” including DeWitt on one side, but 

decided to “follow[] the latter rule” from City of San 

Joaquin. 209 Cal. App. 3d 860, 869 (1989). It explained 

that “[a]n attorney fees provision would have been the 

proper subject for negotiation between the parties and 

possible inclusion in the indemnity agreement; but we 

decline to add, in the guise of interpretation, a provision 

which is not there.” Id. at 870. 

In Otis Elevator Co. v. Toda Construction of California, 

the court similarly acknowledged the split and determined 

the “second line of cases represents the better-reasoned 

authority.” 27 Cal. App. 4th 559, 566 (1994). “Because the 

indemnity agreement at issue [in Otis] did not explicitly 

provide for attorney fees incurred in pursuing an indemnity 

claim,” the appellee was not entitled to them. Id. 

One California court applied this same rule to statutory 

indemnity provisions in Jacobus v. Krambo Corp., 78 Cal. 

App. 4th 1096 (2000). Jacobus concerned a statute requiring 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 13

employers to indemnify employees for litigation arising 

from their duties. Id. at 1100. After determining that 

Jacobus was entitled to indemnification by his employer for 

an underlying sexual harassment suit against him, the court 

determined that the indemnification statute did not extend to 

attorney fees incurred in bringing the action for 

indemnification against the employer. Id. at 1104–06. The 

court analogized to the indemnity contract in Otis and 

followed the “established principle that a prevailing party is 

not entitled to recover attorney fees in the absence of a 

specific contract or statute.” Id. at 1105–06. It “decline[d] 

to read into the statutory phrase ... a specific provision 

allowing recovery of attorney fees to enforce its 

indemnification provisions.” Id. at 1106. The court 

acknowledged that the Ninth Circuit applied a different rule 

in DeWitt, but it explained that “the California appellate 

courts have not followed DeWitt and have concluded that 

unless an indemnity agreement specifically provides for 

attorney fees incurred in pursuing the indemnity claim, the 

indemnitee is not entitled to such fees.” Id. at 1105. 

Hillman, Otis, and Jacobus reveal a broader rule 

regarding indemnity provisions in California, which is that 

such provisions are presumptively about covering costs 

incurred between one party to the contract and a third party, 

not about costs incurred between the two parties to the 

contract containing the indemnity clause. “Generally, 

indemnity is defined as an obligation of one party to pay or 

satisfy the loss or damage incurred by another party,” and 

does not include “attorney fees incurred in an action between 

the parties to the contract.” Alki Partners, LP v. DB Fund 

Servs., LLC, 4 Cal. App. 5th 574, 600 (2016) (quotation 

omitted). Only when specific language in the indemnity 

provision evinces an intent to include first-party attorney 
14 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

fees is that presumption overcome. Id. at 601–05 (detailing 

examples of such specific language). Based on this 

presumption, Alki Partners similarly determined that the 

indemnity clause in that contract did not include attorney 

fees. Id. at 606. 

Our court has already acknowledged this presumption in 

Epic Games, Inc. v. Apple, Inc., 67 F.4th 946 (9th Cir. 2023). 

There, Apple asserted that an indemnification provision in a 

contract between the parties required Epic to pay Apple’s 

attorney fees incurred in Epic’s suit against Apple. Id. at 

970. The court acknowledged that “California courts 

presume” that an indemnity clause “relates to third party 

claims, not attorney fees incurred in a breach of contract 

action between the parties to the indemnity agreement 

itself.” Id. at 1003 (quoting Alki Partners, 4 Cal. App. 5th 

at 600). 

Our court went on to explain that the presumption is 

rebutted “with language that ‘specifically provide[s] for 

attorney’s fees in an action on the contract.’” Id. (alteration 

in original) (quoting Alki Partners, 4 Cal. App. 5th at 600–

01). In that indemnity provision, Epic agreed to indemnify 

Apple for fees and costs incurred from Epic’s “breach of any 

certification, covenant, obligation, representation, or 

warranty in” the rest of the contract. Id. at 1004. Because 

Epic could “not identif[y] a single situation in which a thirdparty could possibly sue Apple pursuant to” that “breach” 

clause, the presumption was deemed rebutted, and the 

indemnity provision was interpreted as covering first-party 

costs associated with Epic’s breach of the contract. Id. But 

that was only because of specific language in that particular 

indemnity provision that would have been superfluous if it 

did not apply to first-party costs. We read Epic Games as 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 15

indirectly acknowledging that the DeWitt rule is inconsistent

with California law. 

3.

Finally, DeWitt’s holding is undermined by its 

implications for California Civil Code section 1717. Section 

1717(a) provides that:

In any action on a contract, where the 

contract specifically provides that attorney’s 

fees and costs, which are incurred to enforce 

that contract, shall be awarded either to one 

of the parties or to the prevailing party, then 

the party who is determined to be the party 

prevailing on the contract, whether he or she 

is the party specified in the contract or not, 

shall be entitled to reasonable attorney’s fees 

in addition to other costs. 

The statute then states that “[w]here a contract provides for 

attorney’s fees, as set forth above, that provision shall be 

construed as applying to the entire contract, unless each 

party was represented by counsel in the negotiation and 

execution of the contract, and the fact of that representation 

is specified in the contract.” Id. By operation of this statute, 

most attorney fees provisions in California contracts are 

reciprocal and apply to all provisions of a contract, even if 

they are not written that way. So even if parties attempt to 

write a contractual provision that purports to grant attorney 

fees to only one party or for only one particular part of the 

contract, under section 1717 that provision could 

immediately morph into a comprehensive attorney fees 

provision that grants all parties to the contract attorney fees 

if they prevail in any contract dispute.
16 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

This has obvious implications for the DeWitt rule. If 

DeWitt is correct that an indemnity provision provides 

attorney fees for first-party disputes over the indemnity 

clause, then many such indemnity provisions would 

automatically be converted into broad, reciprocal attorney 

fees provisions applying to the entire contract by operation 

of section 1717. In decisions issued after DeWitt, several 

California appellate courts have noted this exact problem.

First, in Appalachian Insurance Co. v. McDonnell 

Douglas Corp., McDonnell Douglas asserted that, though 

the contract at issue did not contain an explicit attorney fees 

provision, it contained a broad indemnity provision, which it 

argued included the present litigation. 214 Cal. App. 3d 1, 

42–43 (1989). Though the court ultimately determined that 

the indemnity provision did not apply to the litigation at 

issue, it noted that, had it applied to the litigation, it “might 

be sufficient to support an award of attorney’s fees to 

McDonnell Douglas.” Id. at 43. 

Similarly, in Myers Building Industries, Ltd. v. Interface 

Technology, Inc., Myers asserted it was entitled to attorney 

fees based on a provision in its contract which required 

Myers to indemnify Interface against claims relating to 

Myers’s performance as a contractor for Interface. 13 Cal. 

App. 4th 949, 962–64 (1993). Myers argued that the 

indemnity provision, which broadly covered “all claims, 

damages, losses and expenses, including but not limited to 

attorney’s fees, arising out of or resulting from the 

performance of the Work,” covered Interface’s attorney fees 

in any first-party litigation between Interface and Myers. Id. 

And because of section 1717, if Interface would have had the 

right to attorney fees should it have prevailed, then Myers 

argued it too was entitled to attorney fees if it prevailed. Id. 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 17

The court rejected this argument. It explained that “[a]n 

indemnitor in an indemnity contract generally undertakes to 

protect the indemnitee against loss or damage through 

liability to a third person,” id. at 968, and “[i]ndemnification 

agreements ordinarily relate to third party claims,” id. at 

968–69. To read a general indemnity provision “as covering 

‘actions on the contract[] would render it inconsistent with 

the balance of’” the provision. Id. at 970 (quoting Meininger 

v. Larwin-N. Cal., Inc., 63 Cal. App. 3d 82, 85 (1976)). In 

short, reading an indemnity provision to include first-party 

litigation costs would “defeat the purpose of an indemnity 

agreement,” which is “intended to be [a] unilateral 

agreement[],” not to be made reciprocal by operation of 

section 1717. Id. at 973. So, the court held that “[a] 

provision including attorney fees as an item of loss in an 

indemnity clause is not a provision for attorney fees in an

action to enforce the contract.” Id. at 971. 

Other cases cited by the parties follow Myers’s lead. See

Carr Bus. Enters., Inc. v. City of Chowchilla, 166 Cal. App. 

4th 14, 20, 23 (2008); Silverado Modjeska Recreation & 

Park Dist. v. County of Orange, 197 Cal. App. 4th 282, 310

n.21 (2011); Rideau v. Stewart Title of Cal., Inc., 235 Cal.

App. 4th 1286, 1296–97 (2015). Only where specific 

language overcomes the presumption, such as in Epic 

Games, and makes the provision applicable to first-party 

litigation costs is an indemnity provision interpreted that 

way, and when that happens section 1717 usually makes 

such a provision reciprocal and applicable to the entire 

contract. See Epic Games, 67 F.4th at 1004; see also Carr, 

166 Cal. App. 4th at 21–23 (comparing language in different 

provisions). Therefore, the way section 1717 would interact 

with third-party indemnity provisions if they were 
18 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

interpreted to include first-party attorney fees also cautions 

against DeWitt’s interpretation of California law.

4.

In short, cases since DeWitt clearly evince a presumption 

against reading first-party attorney fees into indemnity 

clauses, and that presumption reconciles the general purpose 

of indemnity clauses with section 1717. Therefore, in our 

“own best judgment,” we conclude the California Supreme 

Court would not agree with DeWitt. T-Mobile USA Inc., 908 

F.3d at 586 (quotation omitted). Instead, it would likely 

apply a presumption that indemnity provisions only apply to 

third-party losses. This presumption applies to even broad 

language in indemnity provisions, like “all claims ... arising 

out of or resulting from performance of the Work,” Myers, 

13 Cal. App. 4th at 964, and “all liability” relating to claims 

by “any person” for injuries “aris[ing] out of, or ... in any 

way connected with, or incidental to the performance of the 

work under this []contract,” Otis, 27 Cal. App. 4th at 561 

n.1. Put differently, indemnity provisions that cover “any, 

all, and every claim which arises out of the performance of 

the contract deal[] only with third party claims.” Alki, 4 Cal. 

App. 5th at 601 (internal citation and quotation marks 

omitted).

Only much more specific language that clearly evinces a 

desire to include first-party litigation costs is sufficient to 

overcome California’s presumption. For example, 

provisions that might defeat the presumption include those 

covering “attorney’s fees incurred in enforcing the

indemnity agreement,” “all losses whether or not arising out 

of third party Claims,” or losses from an “action or suit by 

or in the right of the corporation to procure a judgment in its 

favor.” Id. at 602–03 (emphases added) (internal quotation 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 19

marks and alterations omitted) (quoting Carr, 166 Cal. App. 

4th at 22–23; Dream Theater, Inc. v. Dream Theater, 124 

Cal. App. 4th 547, 556 (2004); Wilshire-Doheny Assocs. Ltd. 

v. Shapiro, 83 Cal. App. 4th 1380, 1395 (2000)).

Here, Comerica agreed to indemnify AGK against “any

and all loss ... asserted by any party arising out of the 

undersigned’s position as ‘Declarant’ ....” (emphasis 

added). This provision contains exactly the type of broad 

language that is presumed to only apply to third-party costs 

and fees, and it contains none of the specific language that 

would indicate an agreement to include first-party litigation 

costs. We therefore reverse the district court’s award of 

first-party attorney fees pursuant to the indemnity provision.

B.

AGK argues that this court should alternatively affirm 

the award of fees based on the attorney fees provision in the 

PSA. Comerica argues that AGK failed to properly raise this 

argument in the district court and therefore waived it, and 

that in any event the attorney fees provision in the PSA did 

not apply to litigation over the Assignment of Declarant 

Rights. Because this question was first raised in AGK’s 

answering brief and was not addressed by the district court, 

we remand for the district court to determine whether the 

argument has been waived or forfeited and, if not, whether

AGK is entitled to first-party attorney fees based on the PSA.

IV.

Notwithstanding our court’s forty-year-old precedent to 

the contrary, California law presumes that indemnity 

provisions do not cover the costs of litigation to enforce 

them. The indemnity provision here does not rebut that 

presumption, and therefore AGK is not entitled to attorney 
20 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

fees spent in litigating the present suit based on that 

provision. We therefore reverse the award of those fees and 

remand to the district court. 

REVERSED AND REMANDED.

MILLER, Circuit Judge, concurring: 

I join the court’s opinion in full. I write separately to 

explain why it is appropriate that we apply a more flexible 

standard of intra-circuit stare decisis to questions of state law 

than to questions of federal law. 

Generally, a panel of this court is strictly bound to follow 

circuit precedent. In Miller v. Gammie, we recognized a 

narrow exception to that rule, limited to cases in which “our 

prior decision [has] been undercut by higher authority to 

such an extent that it has been effectively overruled.” 335 

F.3d 889, 899 (9th Cir. 2003) (en banc). For that exception 

to apply, “the relevant court of last resort must have undercut 

the theory or reasoning underlying the prior circuit precedent 

in such a way that the cases are clearly irreconcilable.” Id.

at 900 (emphasis added). As we have repeatedly reaffirmed, 

“[t]his is a high standard.” Rodriguez v. AT & T Mobility 

Servs. LLC, 728 F.3d 975, 979 (9th Cir. 2013) (quoting Lair 

v. Bullock, 697 F.3d 1200, 1207 (9th Cir. 2012)). 

Our decision in Millerinvolved a question of federal law, 

and so have most of the cases applying it. In such cases, the 

Miller rule reflects a balance of the competing demands of 

adherence to vertical precedent (decisions of the Supreme 

Court) and horizontal precedent (decisions of this court). 

But not all our cases involve questions of federal law. In 

cases in which state law provides the rule of decision, Erie
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 21

requires us to apply—or, sometimes, to predict—the 

decisions of the courts of another sovereign. See 28 U.S.C. 

§ 1652; Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79–80 

(1938). More specifically, when tasked with applying state 

law, we must follow the decisions of the highest court of the 

State. Vestar Dev. II, LLC v. General Dynamics Corp., 249 

F.3d 958, 960 (9th Cir. 2001). And when there is no 

controlling decision from that court, then, so long as “there 

is no convincing evidence that the state supreme court would 

decide differently,” we are “obligated to follow the decisions 

of the state’s intermediate appellate courts.” Ryman v. Sears, 

Roebuck & Co., 505 F.3d 993, 995 (9th Cir. 2007) (quoting 

Vestar Dev. II, LLC, 249 F.3d at 960). In other words, the 

considered decision of an intermediate state appellate court 

is “a datum for ascertaining state law which is not to be 

disregarded by a federal court unless it is convinced by other 

persuasive data that the highest court of the state would 

decide otherwise.” West v. American Tel. & Tel. Co., 311 

U.S. 223, 237 (1940); see Estrella v. Brandt, 682 F.2d 814, 

817 (9th Cir. 1982).

State-law questions do not necessarily call for the same 

balancing of vertical and horizontal precedent that federal 

questions can require. Instead, they can implicate a balance 

between the deference that we owe to state courts on matters 

of state law and our duty to follow horizontal precedent. We 

have not provided a clear answer as to how to strike that 

balance. In particular, our cases do not specify what to do 

when subsequent decisions of intermediate state appellate 

courts run contrary to circuit precedent.

On the one hand, Miller’s reference to “the relevant court 

of last resort” might be taken to refer to a state high court, 

excluding intermediate state appellate courts. 335 F.3d at 

900. Similarly, from our post-Miller cases establishing that 
22 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

“some tension” between subsequent authority and circuit 

precedent is insufficient to justify departing from that 

precedent, one could infer that the decisions of intermediate 

state appellate courts—which, at best, can only be predictive 

of the decisions of state high courts—are insufficient to 

justify a departure from circuit precedent. Lair, 697 F.3d at 

1207 (quoting United States v. Orm Hieng, 679 F.3d 1131, 

1140 (9th Cir. 2012)).

On the other hand, we have stated, albeit without 

explanation, that circuit precedent interpreting state law “is 

only binding in the absence of any subsequent indication 

from the [state] courts that our interpretation was incorrect.” 

Alvarez v. Chevron Corp., 656 F.3d 925, 932 (9th Cir. 2011) 

(emphasis added) (quoting Munson v. Del Taco, Inc., 522 

F.3d 997, 1002 (9th Cir. 2008)). That statement suggests a 

more permissive view—that a decision of an intermediate 

state appellate court could be a sufficient basis on which to 

depart from circuit precedent on a state-law question. See In 

re Watts, 298 F.3d 1077, 1081–83 (9th Cir. 2002). But see

id. at 1083–87 (O’Scannlain, J., concurring in the judgment). 

Although that description of our approach to precedent long 

predates Miller, we have never attempted to reconcile it with 

the Miller rule. See, e.g., Owen ex rel. Owen v. United States, 

713 F.2d 1461, 1464 (9th Cir. 1983).

Today the court correctly adopts the more permissive 

view, and it declines to follow our holding in DeWitt v. 

Western Pacific Railroad Co. that California law permits an 

award of first-party attorney’s fees in a breach-of-contract 

action to enforce an indemnity agreement. 719 F.2d 1448 

(9th Cir. 1983). Our decision in DeWitt is not contrary to any 

subsequent decision of the California Supreme Court, but, as 

the court explains, multiple decisions of the California Court 

of Appeal have made clear that DeWitt is not a correct 
AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK 23

statement of California law. Indeed, in one such decision, the 

California Court of Appeal expressly observed that “the 

California appellate courts have not followed DeWitt.” 

Jacobus v. Krambo Corp., 93 Cal. Rptr. 2d 425, 432 (Ct. 

App. 2000). Because it is our duty “to ascertain from all the 

available data what the state law is and apply it . . . however 

much the state rule may have departed from prior decisions 

of the federal courts,” I agree that we should follow the 

California decisions rather than DeWitt. West, 311 U.S. at 

237.

Adherence to precedent is “a foundation stone of the rule 

of law,” Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 

798 (2014), and it “promotes the evenhanded, predictable, 

and consistent development of legal principles,” Payne v. 

Tennessee, 501 U.S. 808, 827 (1991). By allowing a panel to 

depart from circuit precedent when a subsequent Supreme 

Court decision has abrogated that precedent, the Miller

approach recognizes that “the vertical obligation trumps the 

horizontal obligation.” Byran A. Garner et al., The Law of 

Judicial Precedent 38 (2016). And by insisting on a high 

standard for identifying abrogation—demanding that a 

subsequent decision be “clearly irreconcilable” with our 

precedent—it promotes predictability and uniformity within 

our circuit. Miller, 335 F.3d at 900.

But as explained above, the relevant balance is different 

when it comes to questions of state law. In resolving statelaw issues, we cannot achieve predictability and uniformity 

on our own because we are not the only forum in which 

parties can litigate those issues. If we were to persist in an 

approach that intermediate state appellate courts have 

rejected, we would undermine not only the values 

underlying Miller but also those underlying Erie, as we 

would create opportunities for forum shopping and leave 
24 AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK

parties uncertain about what law will govern their primary 

conduct. See Hanna v. Plumer, 380 U.S. 460, 468 (1965) 

(describing “the twin aims of the Erie rule: discouragement 

of forum-shopping and avoidance of inequitable 

administration of the laws”); Poublon v. C.H. Robinson Co., 

846 F.3d 1251, 1267 (9th Cir. 2017) (explaining that “state 

law should be applied consistently in federal and state courts, 

a goal that ‘would be thwarted if the federal courts were free 

to choose their own rules of decision whenever the highest 

court of the state has not spoken’” (quoting West, 311 U.S. 

at 236)). In so doing, we would defeat the purposes that 

adherence to precedent and deference to state courts on 

questions of state law advance. 

To be sure, we could correct the problem by sitting en 

banc, but resolving state-law questions is not generally an 

appropriate use of our limited en banc resources. Likewise, 

although a state high court could resolve the question, it is 

an imposition on our state-court colleagues to require a state 

high court to use its resources, which are also limited, simply 

to correct our mistakes.

Of course, we should not lightly depart from circuit 

precedent, even on issues of state law. But it is appropriate 

for us to do so when decisions of intermediate state appellate 

courts have shown that we are wrong.