Yakima Company v. Lincoln General Insurance

MEMORANDUM

Yakima Company, Inc. (“Yakima”) appeals from the district court’s judgment dismissing its action asserting breach of contract and related causes of action against its former surety, Lincoln General Insurance Company (“Lincoln”). Yakima challenges the scope of its obligation to indemnify Lincoln for attorneys’ fees incurred by Lincoln in defending a lawsuit brought by a third party. We have jurisdiction under 28 U.S.C. § 1291 . We review de novo the district court’s ruling on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. AE ex. rel. Hernandez v. Cnty. of Tulare, 666 F.3d 631, 636 (9th Cir.2012). We affirm in part, reverse in part, and remand.

The district court erred when it dismissed Yakima’s breach of contract action because the General Indemnification Agreement (“GIA”) is ambiguous as to the scope of Lincoln’s entitlement to indemnification for attorneys’ fees. See Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1149 (9th Cir.1986) (holding that district court erred in dismissing a breach of contract claim where the contract was ambiguous). While the GIA does not expressly require that Lincoln’s attorneys’ fees…