Opinion ID: 3159383
Heading Depth: 2
Heading Rank: 3

Heading: Indemnity Provision

Text: In awarding defendants their attorney fees and costs, the district court relied on the indemnity provision in the license agreements, which provides, in relevant part: “Licensee shall further indemnify the Commission for any attorneys’ fees incurred in connection with, and/or staff attorneys’ salaries allocable to, any action the Commission takes to enforce this Agreement.” Aplt. App., Vol. 1, at 50. Plaintiffs argue this provision should not be enforced because it is both procedurally and substantively unconscionable. We are not persuaded. We review de novo issues relating to unconscionability of a contract provision. Figueroa v. THI of New Mexico at Casa Arena Blanca, LLC, 2013-NMCA-077, ¶ 23, 306 P.3d 480. To determine whether a contract is unconscionable, we apply state law. THI of New Mexico at Hobbs Center, LLC v. Patton, 741 F.3d 1162, 1169 (10th Cir. 2014). Under New Mexico law, a court may decline to enforce a contract provision if it is procedurally unconscionable, substantively unconscionable, or a combination of both. Strausberg v. Laurel Healthcare Providers, LLC, 2013-NMSC-032, ¶ 32, 304 P.3d 409. Procedural unconscionability depends on “the particular factual circumstances surrounding the formation of the contract, including the relative bargaining strength, sophistication of the parties, and the extent to which either party felt free to accept or decline terms demanded by the other.” Figueroa, 2012-NMCA-077, ¶ 22, 306 P.3d 480 (internal quotation marks omitted). Substantive unconscionability concerns “the legality and fairness of the contract terms themselves, including whether the contract terms are commercially reasonable 5 and fair, the purpose and effect of the terms, the one-sidedness of the terms, and other similar public policy concerns.” Id. (internal quotation marks omitted). Because unconscionability is an affirmative contract defense, the party alleging unconscionability has the burden of proving a contract provision is unenforceable on that basis. Strausberg, 2013-NMSC-032, ¶ 39, 304 P.3d 409. In support of their argument that the indemnity provision is procedurally unconscionable, plaintiffs state in their brief that by the time they were presented with copies of the license agreement containing the provision, their docks were already floating on Ute Reservoir at a cost of tens of thousands of dollars each, and thus plaintiffs were offered the license agreements on a take-it-or-leave-it basis. But plaintiffs point to no evidence in the record that they did not freely and willingly enter into the license agreements. Their conclusory assertion, devoid of factual support, is insufficient to prove procedural unconscionability. Plaintiffs’ argument concerning substantive unconscionability also is underdeveloped. Rather than arguing that the provision is unconscionable as applied to them in this case, they raise various arguments as to how it might be applied in a way that is one-sided and unconscionable, such as by billing them for the time spent drafting the termination letters. In the absence of any evidence that plaintiffs’ were actually billed for this time or that the indemnity provision was actually applied to them in an unfair manner, they have not met their burden of proving substantive unconscionability. 6 The appeal is dismissed in part, and the judgment is affirmed. Entered for the Court Timothy M. Tymkovich