Rel: May 16, 2025
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA OCTOBER TERM, 2024-2025
_________________________
SC-2024-0528 _________________________
Joy Goodwin Adams
v.
Tiffany Rudd Atkinson, Katherine M. Rudd, Goodwin Capital Partners, Ltd., and KATISAM, Inc.
Appeal from Jefferson Circuit Court (CV-23-904346)
MITCHELL, Justice.
Joy Goodwin Adams sued Tiffany Rudd Atkinson, Katherine M.
Rudd ("Kate"), Goodwin Capital Partners, Ltd., and KATISAM, Inc. ("the SC-2024-0528
defendants"), demanding that they reimburse her for attorneys' fees she
had paid to a third party. The Jefferson Circuit Court dismissed her suit
with prejudice, and Joy appealed. At issue here is whether the terms
"hold harmless" and "indemnify" are synonymous when those terms
appear on their own in a contract. We hold that they are. The parties'
agreement requires the defendants to "hold Joy … harmless" against a
third party's demand for attorneys' fees in certain circumstances. And
because Joy's complaint plausibly establishes that she may be entitled to
indemnification for fees she paid to a third party, the circuit court erred
in dismissing her suit. We therefore reverse the judgment of dismissal
and remand the case for further proceedings.
Facts and Procedural History
This case involves three trusts and two agreements. We discuss
each of the trusts and agreements and then review relevant prior
litigation, including this case's procedural history. 1
1Because this matter is before us on appeal from a judgment granting a motion to dismiss, we construe all facts in Joy's favor. Nance v. Matthews, 622 So. 2d 297, 299 (Ala. 1993). 2 SC-2024-0528
A. The Trusts and Agreements
We begin by summarizing the three trusts involved in this
litigation. Joy's parents created two of them. In 1986, they created one
for Joy's benefit ("the Shares trust"), which was operated as two separate
trusts that were sometimes called "the Shares I trust" and "the Shares II
trust." In 1987, they created the other trust ("the Grandchildren's trust")
for the benefit of Joy's two daughters, Tiffany and Kate.
In 1989, Joy created the third trust at issue: the Joy Goodwin Rudd
Irrevocable Trust ("the 1989 trust"). Both the Shares trust and the 1989
trust allowed the trustees to distribute income to Joy on a regular basis
and to distribute the principal for her "health, education, support and
maintenance." During her lifetime, Joy was the sole beneficiary of those
trusts. If Joy died, however, any remaining assets from the Shares II
trust and the 1989 trust would flow to the Grandchildren's trust -- and
thus to Tiffany and Kate.
In later years, Joy executed two separate agreements. The first was
a 2011 release-and-indemnification agreement ("the 2011 agreement")
between Joy and a co-trustee of the Shares trust, Branch Banking &
Trust ("BB&T"). In that agreement, Joy and BB&T agreed to terminate
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the Shares trust because, in their view, its value did not justify the cost
of managing it. See § 19-3B-414, Ala. Code 1975. In doing so, Joy
promised to "indemnify" BB&T "against any and all liability, loss or
expense (including, but not limited to reasonable counsel fees) that may
be incurred as a result of any claim arising from the administration and
termination of the [Shares trust]."
The second agreement arose after Tiffany and Kate sued Joy along
with several trusts and two corporate trustees. Tiffany and Kate alleged
various breaches of fiduciary duties, contending that Joy had improperly
accessed money from the Shares trust and the 1989 trust. Goodwin
Capital Partners and KATISAM were also parties to the lawsuit, but
BB&T was not. To resolve the dispute, Joy and the defendants executed
a settlement agreement ("the 2013 agreement").
Two relevant sections of the 2013 agreement are excerpted below.
The first section, under the header "E. Survival of Representations and
Warranties; Remedy" ("the indemnity provision"), states, in relevant
part:
"3. Indemnity. Joy shall indemnify Tiffany and Kate from and against any damages suffered ('Damages') by Tiffany and Kate as a result of any material breach of the representations
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and warranties made by Joy in paragraph C of Article II of this Agreement …."
Under the 2013 agreement, Joy warranted that, among other things, an
attached catalogue for Goodwin Capital Partners and KATISAM
accurately reflected then-current assets, liabilities, and pending
litigation.
The second section, titled "G. Hold Harmless Agreement" ("the
hold-harmless provision"), states, in relevant part:
"[The defendants] … agree to hold Joy and any trust or other entity which is a Party to this Agreement and which has custody of any assets for Joy's benefit, harmless against any claim, demand, action, or liability by any corporate trustee sued by or at the instance of Tiffany and/or Kate for attorneys' fees incurred by such trustee in its successful defense of any claim or suit arising from its administration of the Share II Trust, the 1989 Trust, and the Marital Trust which was asserted against it by Tiffany, Kate, or by any other entity at Tiffany or Kate's instance."
B. Relevant Prior Litigation
After the parties executed the 2013 agreement, Tiffany and Kate
sued BB&T and another corporate trustee for negligence. They alleged
that those corporations had permitted Joy to breach fiduciary duties that
were owed to Tiffany and Kate under the Shares trust and the 1989 trust.
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The case was eventually removed to the United States District Court for
the Northern District of Alabama.
In federal court, BB&T filed a summary-judgment motion as to
Tiffany and Kate's negligence claim and asserted a third-party claim
against Joy. Citing the 2011 agreement's indemnification provision,
BB&T demanded that Joy reimburse it for past and future attorneys' fees
relating to its defense against Tiffany and Kate's suit. In response, Joy
sought summary judgment in her favor on this claim.
The federal district court ultimately granted BB&T's summary-
judgment motion on Tiffany and Kate's negligence claim, and it denied
Joy's motion on BB&T's indemnification claim.
Shortly thereafter, Joy demanded that the defendants pay the
attorneys' fees that had been sought by BB&T, citing the 2013
agreement's hold-harmless provision. They refused. Joy then settled
BB&T's claim for attorneys' fees for $614,791.62.
C. The Parties' Present Dispute
Joy filed this action in the Jefferson Circuit Court, requesting that
the court enforce the 2013 agreement's hold-harmless provision and
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require the defendants to pay her $614,791.62, plus interest and other
costs.
The defendants moved to dismiss Joy's suit. In support, they made
two principal arguments. First, they argued that the 2013 agreement's
"hold … harmless" language does not mean to "indemnify." Rather, they
argued, it means that they would not hold Joy responsible if (1) a
corporate trustee successfully defended itself in a suit initiated by Tiffany
and Kate and (2) later exercised its statutory right to reimbursement of
attorneys' fees out of the trust property under § 19-3B-709, Ala. Code
1975. Second, they argued that, even if the 2013 agreement's "hold …
harmless" language means that they must "indemnify" Joy against some
claims, it does not extend to claims arising out of Joy's separate
contractual obligation under the 2011 agreement to "indemnify" BB&T
for attorneys' fees.
The circuit court granted the defendants' motion and dismissed
Joy's suit with prejudice. Joy then appealed to our Court.
Standard of Review
We review de novo dismissals under Rule 12(b)(6), Ala. R. Civ. P.
Snider v. Morgan, 113 So. 3d 643, 649 (Ala. 2012). We construe all factual
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allegations in the plaintiff's favor; dismissal is appropriate only when it
appears that no set of circumstances would entitle her to relief. Id.
Analysis
We must determine here whether "hold … harmless" as used in the
2013 agreement is synonymous with "indemnify." Our analysis begins
with the relevant history of the meaning of these terms. Next, we
interpret the 2013 agreement's hold-harmless provision. Finally, we
address the defendants' counterarguments.
A. History of the Phrase "to Indemnify and Hold Harmless"
In the law as in life, we usually resort to common understandings
of words and phrases when we communicate. But the word "indemnify"
and the phrase "hold harmless" are not common. They are instead what
lawyers call "legal terms of art." And these terms often appear together
-- i.e., "to indemnify and hold harmless" -- in a unit known as "doublet."
See Bryan A. Garner, Garner's Dictionary of Legal Usage 294-96 (3d ed.
2011). A doublet refers to a pair of synonyms that both "amplif[y]" the
intended meaning and "maximize" the reader's understanding. Id. at
294. Familiar examples are "aid and abet," "have and hold," and "part
and parcel." Id. at 295.
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Our Court has encountered variations of the "indemnify and hold
harmless" doublet on a number of occasions. Indeed, all of the
defendants' cited indemnification cases involve this doublet. And we
have never noted a distinction between the terms. See Mobile Infirmary
Ass'n v. Quest Diagnostics Clinical Lab'ys, Inc., 381 So. 3d 1133, 1134
(Ala. 2023) (describing an agreement in which a party agreed "to
indemnify, defend and hold … harmless"); Holcim (US), Inc. v. Ohio Cas.
Ins. Co., 38 So. 3d 722, 724 (Ala. 2009) (describing an agreement as one
to "indemnify and hold harmless"); Royal Ins. Co. of Am. v. Whitaker
Contracting Corp., 824 So. 2d 747, 748 (Ala. 2002) (involving an
agreement in which a "[party] covenant[ed] to indemnify and save
harmless"); Stone Bldg. Co. v. Star Elec. Contractors, Inc., 796 So. 2d
1076, 1078 (Ala. 2000) (involving an agreement in which a "[party]
covenant[ed] to indemnify and save harmless"); Nationwide Ret. Sols.,
Inc. v. PEBCO, Inc., 161 So. 3d 1141, 1144 (Ala. 2014) (involving an
agreement in which a party agreed "to indemnify and hold harmless");
City of Montgomery v. JYD Int'l, Inc., 534 So. 2d 592, 593 (Ala. 1988)
(citing an agreement in which the lessee promised "to indemnify, save
and keep free and harmless" and also "[t]o save … harmless and to
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indemnify"); Industrial Tile, Inc. v. Stewart, 388 So. 2d 171, 175 (Ala.
1980) (citing an agreement in which a party agreed "to indemnify and
hold harmless").2
Alabama legal authorities similarly treat these terms as
interchangeable. See, e.g., Jenelle Mims Marsh, Alabama Law of
Damages § 10:7 (6th ed. 2012) ("Such indemnification agreements or
'hold harmless' provisions are found in leases, subcontracts, bonds, and
other contractual provisions." (footnotes omitted)); 2 Terry A. Moore,
Alabama Workers' Compensation § 19:48 (2d ed. 2013) (summarizing an
Alabama case as one in which the "owner sought indemnification
pursuant to a hold harmless agreement"); 1 Angela K. Upchurch,
Alabama Personal Injury and Torts § 1:30 (2023 ed.) (describing an
Alabama case involving a suit for "indemnity" in which the agreement at
2While one cited case does not neatly follow this trend, it nonetheless confirms the rule. That case involved an agreement requiring a party "to defend and indemnify" and another agreement that used the doublet language, providing that one party "defend and indemnify … and hold … harmless" the other. Doster Constr. Co. v. Marathon Elec. Contractors, Inc., 32 So. 3d 1277, 1280, 1281 (Ala. 2009). Our Court did not attribute a separate meaning to these phrases.
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issue contained a clause obligating one party "to defend, indemnify, and
hold the owner harmless ….").
Alabama's treatment of this doublet aligns with the majority view
that "hold harmless" and "indemnify" are synonymous. Garner, supra,
at 443-45 (collecting examples from dictionaries ranging from 1707 to
1970 demonstrating this understanding). According to lexicographer
Bryan Garner, "[t]he evidence is overwhelming that indemnify and hold
harmless are perfectly synonymous." Id. at 444. For our purposes, a good
working definition of "indemnify" is "[t]o reimburse (another) for a loss
suffered because of a third party's or one's own act or default." Black's
Law Dictionary 918 (11th ed. 2019).
But a minority of other jurisdictions say that these terms have
distinct meanings, even when they appear in the doublet form. For
instance, a California court contended that " '[i]ndemnify' is an offensive
right -- a sword -- allowing an indemnitee to seek indemnification. 'Hold
harmless' is defensive: The right not to be bothered by the other party
itself seeking indemnification." Queen Villas Homeowners Ass'n v. TCB
Prop. Mgmt., 149 Cal. App. 4th 1, 9, 56 Cal. Rptr. 3d 528, 534 (2007); see
O'Connell v. Walt Disney World Co., 413 So. 2d 444, 446 (Fla. Dist. Ct.
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App. 1982). Under this understanding, an "indemnification" provision
means that Party A seeks to put someone else, which may be Party B, on
the hook for liability arising from Party A's future negligent conduct. In
contrast, a "hold harmless" provision means that Party A is personally
asking Party B to release him from liability for his future negligence.
This doctrinal shift from treating "indemnify" and "hold harmless"
as synonyms to distinct terms having independent meaning likely arose
from lawyers aggressively applying the interpretive canon against
"surplusage." See Garner, supra, at 444. That canon instructs
interpreters to prefer readings that do not render a word meaningless or
redundant. See Sullivan, Long & Hagerty v. Southern Elec. Generating
Co., 667 So. 2d 722, 725 (Ala. 1995) ("Terms of a written instrument
should be construed in pari materia and a construction adopted that gives
effect to all terms used."); Antonin Scalia & Bryan A. Garner, Reading
Law: The Interpretation of Legal Texts § 26, at 174 (Thomson/West
2012). As Garner colorfully puts it, however, this canon is "not a bad rule
when legal drafters abstain from larding their contracts with surplusage,
but it's a horrible rule when they do." Garner, supra, at 444.
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B. "Hold Harmless" as Used in the 2013 Agreement
This history informs our analysis of the core issue in this case,
which is one of first impression for our Court: what do the terms
"indemnify" and "hold harmless" mean if they are split into separate
contractual provisions? While our Court has encountered provisions
featuring "hold harmless" standing on its own, we have not squarely
faced a case that hinged on that term's particular meaning. See, e.g.,
Reece v. Finch, 562 So. 2d 195, 197-98 (Ala. 1990) (" 'The undersigned
hereby releases and agrees to hold harmless all persons or organizations
releasing the information … from any liability arising out of the release
or use of [it] ….' "); First Nat'l Bank of Montgomery v. Fidelity & Deposit
Co. of Maryland, 145 Ala. 335, 338, 40 So. 415, 416 (1906) (noting in the
reporter's summary that the agreement at issue stated that " 'the
undersigned agree to secure and hold harmless the [bank] against all
contracts, claims, and demands ….' "); see also Martin v. Republic Steel
Co., 226 Ala. 209, 212, 146 So. 276, 279 (1933) (describing a contractual
provision as one to "hold … harmless" that indemnified a defendant from
future injury claims arising from either the plaintiff or third parties).
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The 2013 agreement does just that. The indemnity provision states
that "Joy shall indemnify Tiffany and Kate from and against any
damages suffered … by [them]," while the hold-harmless provision states
that "[the defendants] agree to hold Joy … harmless against any claim,
demand, action, or liability …." (Emphasis added.)
We hold that these terms are synonymous. As shown above, our
Court and various Alabama authorities treat them as synonyms,
particularly when they appear together. And while it is true that our
Court presumes that a word or phrase bears the same meaning
throughout a text and that "a material variation in terms suggests a
variation in meaning," that rule is unsuitable for synonyms. Cf. Scalia
& Garner, Reading Law § 25, at 170 (describing the "presumption of
consistent usage" canon); accord Ex parte Smiths Water & Sewer Auth.,
982 So. 2d 484, 488 (Ala. 2007) (applying this canon in the statutory
context). Absent indications that a term is used in a special or technical
sense, we presume that the parties intended it to have its ordinary
meaning. See Ex parte Warren Averett Cos., 368 So. 3d 827, 835 (Ala.
2022). And nothing in the record before us indicates that the parties used
a peculiar definition of "hold harmless."
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1. "Hold Harmless" is Synonymous with "Indemnify" as Used in the 2013 Agreement
A parsing of the hold-harmless provision demonstrates that the
defendants agreed to reimburse Joy for a portion of the fees she paid to
BB&T. For clarity's sake, we break up that provision's various clauses
into a digestible list. It provides that:
(1) The defendants agree to "hold Joy … harmless against any
claim, demand, action, or liability"
(2) "by [BB&T]"
(3) "sued by or at the instance of Tiffany and/or Kate"
(4) "for attorneys' fees incurred by [BB&T] in its successful defense
of any claim or suit"
(5) "arising from its administration of the Share II Trust, the 1989
Trust, and the Marital Trust"
(6) "which was asserted against it by Tiffany, Kate, or by any other
entity at Tiffany or Kate's instance."
In other words, if Tiffany or Kate later sued BB&T for its actions as
trustee, and BB&T successfully defended itself, the defendants agreed to
"hold Joy … harmless against any claim … by [BB&T] … for attorneys'
fees." 15 SC-2024-0528
The litigation described above satisfies each condition for
indemnification. In 2013, Tiffany and Kate sued BB&T for its alleged
negligence arising from the administration of the Shares trust and the
1989 trust. After the case was removed to federal court, BB&T
successfully defended itself and prevailed on summary judgment. And
the court denied Joy's summary-judgment motion seeking to dismiss
BB&T's third-party claim against her for attorneys' fees. Joy paid those
fees (per the 2011 agreement) and then demanded that the defendants
reimburse her.
Therefore, construing all the facts in her favor, Joy has plausibly
demonstrated that the defendants promised to indemnify her against the
portion of attorneys' fees that BB&T incurred in its "successful defense"
against claims relating to its "administration of the Share II Trust." Any
other construction of "hold … harmless" would be artificial and contrary
to the settled understanding of these terms.
2. The Defendants' Counterarguments Are Not Persuasive
Even so, the defendants contend that "hold harmless" means only a
first-party release, endorsing the view adopted by a minority of
jurisdictions. See, e.g., Queen Villas Homeowners Ass'n, 149 Cal. App.
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4th at 9, 56 Cal. Rptr. 3d at 534. In their view, the hold-harmless
provision merely requires that they "hold Joy harmless (i.e., not hold Joy
responsible for) from any liability that [the defendants] may incur as a
result of BB&T's statutory right for reimbursement of fees and expenses
should it prevail in the [federal case]." Defendants' brief at 22. They
bolster their argument by pointing to the separate indemnification
provision, which exclusively uses the word "indemnify," arguing that our
Court must give a different meaning to "hold … harmless" as used
elsewhere in the 2013 agreement.
We disagree. As discussed, the defendants' reading relies on a
peculiar meaning of "hold harmless" as only providing a release of first-
party claims. That definition has not been recognized by our Court. And,
even on its own terms, their reading of the hold-harmless provision is the
less natural one.
For instance, the hold-harmless provision plainly covers actions by
BB&T against Joy, which would not be the case if "hold … harmless"
merely meant that the defendants personally released Joy from liability.
Use of the word "against" later in the same provision confirms this. It
mentions "any claim or suit … which was asserted against [BB&T] by
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Tiffany [or] Kate." Earlier, it says that the defendants agree to "hold Joy
… harmless against any claim, demand, action, or liability by [BB&T]
…." The provision thus contemplates actions by BB&T against Joy, not
just actions by a third party against the defendants arising from BB&T's
statutory right to reimbursement from trust assets. In short, the
defendants cannot grant Joy a first-party release from a third-party
claim against her.
The 2013 agreement's indemnity provision confirms that these
terms are synonymous. That provision states: "Joy shall indemnify
Tiffany and Kate from and against any damages suffered … by [them] as
a result of any material breach of the representations and warranties
made by Joy." As described above, Joy made warranties and
representations about then-current assets, liabilities, and pending
litigation for Goodwin Capital Partners and KATISAM. Any "damages"
arising from a breach of those warranties and representations would then
arise either directly from Joy's conduct or from suits initiated by third
parties. As used in this provision, then, "indemnify" takes on its standard
meaning.
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The phrase "hold … harmless" does the same work in the 2013
agreement that the word "indemnify" does. Just as the parties agreed
that Joy would "indemnify" Tiffany and Kate "from and against"
damages, so too did they agree that the defendants would indemnify Joy
"against any claim, demand, action, or liability by [BB&T] … for
attorneys' fees." And, as stated earlier, the presumption that a material
variation in terms implies a variation in meaning is unsuitable for
synonyms. Cf. Smiths Water & Sewer Auth., 982 So. 2d at 488; Scalia &
Garner, Reading Law § 25, at 170. "Indemnify" and "hold … harmless"
are therefore synonymous as used in the 2013 agreement.
Conclusion
Our holding today is narrow. We confirm the settled understanding
that "indemnify" and "hold harmless" are synonyms when they appear as
a doublet. As shown above, this understanding naturally extends to
those terms when they appear separately and perform the same function.
And while it is possible that, in other agreements, "hold harmless"
appearing on its own may act as a first-party release, that should not be
the starting presumption.
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Because "hold … harmless" as used in the 2013 agreement is
synonymous with "indemnify," the circuit court erred in dismissing Joy's
suit with prejudice. We therefore reverse the circuit court's judgment
REVERSED AND REMANDED.
Wise and McCool, JJ., concur.
Stewart, C.J., and Sellers, J., concur in the result.