Source: http://www.calattorneysfees.com/cases_section_1717/
Timestamp: 2017-02-24 12:36:00
Document Index: 441903967

Matched Legal Cases: ['§ 1717', '§ 473', '§ 1021', '§ 1021', '§ 1132', 'sui generis', '§ 638', '§ 998', '§ 998', '§ 1021', '§ 1325']

CALIFORNIA ATTORNEY'S FEES : Cases: Section 1717 CALIFORNIA ATTORNEY'S FEES ABOUT
2008-2009-2010-2011-2012-2013-2014-2015 Marc Alexander & William M. Hensley Cases: Section 1717
Only Time Finite Fees On Trespass Claim Recoverable Under HOA Fee-Shifting Statute. In Hussein v. Driver, Case Nos. A144786/A145655 (1st Dist., Div. 4 Jan. 27, 2017) (unpublished), plaintiffs and defendants, homeowners in a common interest development as well as the parents of defendants, were drawn into a parking space dispute where slander of title, interference with contract, and trespass claims were involved. Defendants eventually prevailed either on the merits or some dismissals along the way, with the trial judge eventually awarding over $370,000 in attorney’s fees to the defendants based on Civil Code sections 1717 (contractual fee basis) and 5975 (HOA CC&R/Declaration enforcement actions). The appellate court reversed in major portions, favorably to the non-prevailing plaintiffs. Section 1717 did not apply because the claims were torts, not contract-based claims allowing for recovery. With respect to section 5975, the result was driven by the narrowness of the HOA Declaration provision stating that “[t]he Association or any Owner, shall have the right to enforce by any proceeding at law or in equity, all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration, and in such action shall be entitled to recover reasonable attorneys’ fees as are ordered by Court.” The reviewing court found that only the trespass claim fell within the ambit of this provision so as to be recoverable under section 5975, although a dismissal limited the time during which fees could be sought on remand.
No Written Contract—No 1717 Fees; Banks And Assignees—No Go Under 1717(c). In Professional Collection Consultants v. Brown, Case No. B270128 (2d Dist., Div. 6 Jan. 17, 2017) (unpublished), bank’s assignee (collection consultants) requested the trial judge to award it $148,792 in contractual attorney’s fees under Civil Code section 1717 or $800 in statutory fees under Civil Code section 1717.5 after it successfully obtained a compensatory award against a credit card account borrower to the tune of $16,153 (after winning a summary judgment and an appeal of that SJM win). The trial judge awarded zippo. 1968 Zippo. David J. Fred, author. Creative Commons Attribution-Share Alike 2.5 Generic license. Wikipedia. The appellate court affirmed based on a lack of fee entitlement. Bank’s assignee denied the existence of a written agreement, so the section 1717 fee basis went out. As far as much smaller statutory fees under section 1717.5(c), the 2/6 DCA concluded that bank’s assignee stood in the same position as the bank, which was precluded from obtaining fees under express language saying the statute “does not apply to any action in which a bank … is a party.” (§ 1717.5(c).)
Posted at 07:29 AM in Cases: Section 1717 | Permalink
However, Apportionment Was Required On Remand—Consideration Of Many Factors. In Bank of Southern California, N.A. v. D&D Goryoka, Inc., Case No. D069767 (4th Dist., Div. 1 Nov. 29, 2016) (unpublished), defendant/cross-complainant was denied a prevailing party fee request as against plaintiff/cross-defendant Bank to the tune of a $908,171.25 request (later reduced to $795,753). Defendant “defensed” Bank’s complaint, although Bank did win a judgment against some co-defendants represented by the same counsel who represented prevailing defendant. The lower court denied prevailing defendant’s fee request under the “unity of interest” principle. The appellate court reversed and remanded for an apportionment of work, if possible, between successful versus unsuccessful defendants. The 4/1 DCA agreed that the “unity of interest” principle was no longer valid based on legislative amendments, as confirmed by the 4/3 DCA’s analysis in Charton v. Harkey, 247 Cal.App.4th 730, 741-742 (2016) [discussed in our May 24, 2016 post]. The fee requesting defendant did prevail pursuant to contractual fee clauses, and it was an abuse of discretion for the trial court to not apportion fees between the work for successful versus unsuccessful defendants. However, the appellate court made it clear it was not shackling the trial judge in making apportionment decisions, including the fact that the successful defendant had dissolved and was in the process of winding up such that it was not an active entity for entity purposes. Finally, the reviewing court determined that the fee award belonged to the client, not the attorney—refusing to extend FEHA principles to the civil context of the fee award in this instance.
Posted at 03:32 PM in Cases: Allocation, Cases: Section 1717 | Permalink
However, Defense Was Entitled To Open Book Account Fees Under Civil Code Section 1717.5. c1880. Library of Congress. Defendants, the putative buyers of a restaurant business known as Bosco’s Bones & Brew in Sunol, CA, were sued by plaintiffs/putative sellers in Alevamare, Inc. v. Truong, Case A144337 (1st Dist., Div. 5 Oct. 31, 2016) (unpublished). Defendants prevailed on a breach of oral contract, open book account, accounting, and implied contractual indemnity suit which the defense eventually won after the lower court determined that there was no consummated restaurant purchase. The defense motions for fee recovery against plaintiffs under Civil Code sections 1717 and 1717.5 were denied. The appellate court affirmed the 1717 fee denial, but reversed the failure to grant fees under section 1717.5. Defendants’ 1717 fee motion was premised upon the fact that there was a lease for the underlying restaurant property between landlord and plaintiffs, even though defendants were not signatories to the lease. The appellate court determined that the verbal contract claim did not give rise to 1717 fee entitlement by the defense because there was no proof there was a fees provision connected with the oral agreement. Beyond that, defendants were never parties to a lease never materializing with landlord such that entitlement could not be hinged on that basis. The reviewing court did determine it was error not to grant fees under the open book fees provision of section 1717.5, expressly applicable to agreements not having a fees clause. In 2016, fee recovery was allowable under this statute for the lesser of $1,200 or 25% owed under the contract for commercial open book accounts, although section 1717.5 in operation at the time of the dispute was limited to $1,000 for the same situation. So, the matter was remanded for a small recovery by the prevailing defendants.
Posted at 04:52 PM in Cases: Section 1717, Cases: Special Fee Shifting Statutes | Permalink
Reversed Denial of Fees; However, Denial Of Costs Award Was Proper In “Mixed” Case Involving Nondiscretionary And Discretionary Cost Categorical Results. Chima v. Chima, Case No. C075602 (3d Dist. Oct. 31, 2016) (unpublished) is a situation where children beneficiaries under a trust, as plaintiffs/cross-defendants, prevailed in a suit where their father’s step-wife, on behalf of defendants/cross-complainants, transferred 66 acres of land out of a trust benefiting the children to herself and then to her parents. Children basically quieted title to the 66 acres and had to win a declaration of what limited partnership agreement governed as far as determining their rights to the 66 acres. Children then moved to recover $52,973.76 in routine costs and $861,688.60 in attorney’s fees based on a broadly-worded attorney’s fees clause in the limited partnership agreement which was found to be operative when children prevailed in the litigation. The lower court denied both requests. On appeal, a “split verdict”—the costs denial was affirmed, but the fee denial was reversed and remanded to have the lower court award reasonable fees to victorious children. The costs denial, although seemingly erroneous because children beat back the cross-complaint (making them costs winners on a mandatory basis), had a twist because they prevailed under their own complaint by recovering “other than monetary” relief making them costs winners only in the discretion of the trial judge. The Third District observed: “The parties have not cited and we have not found a case dealing with the type of mixed situation presented here.” (Slip Opn., p. 7.) In the absence of such authority, the appellate court believed that this case did give the trial judge discretion to find that children were not entitled to costs as a matter of right, especially where the other side’s cross-complaint was fundamentally defensive in nature. However, a different result did occur on the fee denial. Under Civil Code section 1717, “on the contract” is construed liberally, with both the primary and cross-actions centrally involving the parties’ rights under the LLC operating agreement, which issues were actually adjudicated by the lower court. Children won, such that they were entitled to an award of fees in a reasonable amount. The opposing side argued that the 66 acres had “dubious value” so as to divest children of fee entitlement, but the appellate court rejected this argument by saying this only was relevant in fixing the amount of fees (not upon divesting fee entitlement altogether). BLOG UNDERVIEW—Interesting enough, although children will likely still get a hefty fee award, the trial judge at the fee hearing—before ultimately denying fees altogether—did give some indication that the lodestar would be reduced 50% plus lowered another 20% through an across-the-board rate reduction. This might indicate what happens on remand. However, given that the lower court on the first go-around denied fees altogether, the “moot” lodestar analysis was not a ripe subject for review at all. Posted at 04:14 PM in Cases: Costs, Cases: Section 1717 | Permalink
Court Of Appeal Determines Neither Narrow Clauses Nor Tort Claims Triggered Fee Entitlement. In the area of fee recovery, a claimant must show fee entitlement, which generally focuses on a precise analysis of the fee clause wording and the claims upon which fees are sought. The 2/1 DCA decided that a nonsignatory defendant did not show a basis for fee recovery after engaging in such an analytical review of the operative fee clauses and substantive lawsuit claims. Richards v. Silva, Case No. B267486 (2d Dist., Div. 1 Oct. 20, 2016) (unpublished) was an unusual situation where a nonsignatory defendant sued under numerous theories was granted a motion to vacate a default judgment 22 years later (yes, you read this right) based on a lack of service, with the plaintiff never prosecuting the suit and allowing it to be dismissed (after all, plaintiff died sometime earlier). Prevailing nonsignatory defendant then moved to recover fees and costs, a motion denied by the trial court. The 2/1 DCA, in a 3-0 opinion by Justice Johnson, affirmed. Generally, a nonsignatory to a contract with a fees provision can obtain recovery where (1) the nonsignatory stood in the shoes of a party to the contract, or (2) the nonsignatory was a third party beneficiary of the contract. (Cargill, Inc. v. Souza, 201 Cal.App.4th 962, 966 (2011).) In Richards, nonsignatory was not sued for breach of the purchase agreement, but for misrepresentations concerning a promissory note and for being the alter ego of one signatory of a contract. However, the overarching problem was that plaintiff did not sue the signatory for which alter ego liability was hinged under the purchase agreement, but only for liability under the promissory note. That took the appellate court to the issue of whether fee recovery was allowable based on the fees clause in the promissory note. The defect on this ground was that plaintiff was never intended to be a third party beneficiary under the promissory note, because she was never a note holder and the note was never transferred to her. The note fees clause only applied to actual signatories to the note, containing very limiting language not applicable to non-note holder plaintiff. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 893, 896 (2008).) Although there was legal analysis supporting the denial of fees, we would mention that the equities obviously factored in this decision—the plaintiff died and nonsignatory defendant vacated a default judgment 22 years later, meaning he had already obtained a lot of grace already by the lower court and there was no plaintiff to continue prosecution of the long-ago resolved lawsuit.
Posted at 04:37 PM in Cases: Section 1717 | Permalink
Damages Were A Little Over $180,000. Just to illustrate that attorney’s fees under Civil Code section 1717 do not have to be proportional to the awarded compensatory damages, we now post on Pec v. Brackenbury, Case No. A142104 (1st Dist., Div. 1 Sept. 20, 2016) (unpublished). There, residential property purchasers/plaintiff prevailed on tort claims, but not a contract-based claim, in a case alleging that sellers/defendants failed to make disclosures which resulted in plaintiffs overpaying for the property. The lower court in a bench trial awarded compensatory damages of a little over $180,000 to plaintiffs on tort claims, but rejected the contract claim against defendants. Then, the trial judge awarded plaintiffs $345,539.19 (out of a requested $371,000) in costs and attorney’s fees based on a broadly-worded fees clause in the land sale contract (applying to “any action … arising out of this Agreement” in favor of the prevailing party). The appellate court affirmed the fee award in plaintiffs’ favor. The “bottom line” was that the fees clause was broad enough to authorize an award of fees and costs to the plaintiffs prevailing on a claim related to the contract, whether sounding in contract or in tort. Although losing the contract claim, plaintiffs won the “contract-related” tort claims such that fee recovery was justified. (Maynard v. BTI Group, Inc., 216 Cal.App.4th 984, 992, 994-995 (2013).) No apportionment was necessary because the fee claim was inextricably linked to non-fee claims. (Id. at 992.)
Posted at 09:59 AM in Cases: Allocation, Cases: Section 1717 | Permalink
Litigant Basically Elected Its Remedies. Havasu Lakeshore Investments, LLC v. Fleming, Case No. G051963 (4th Dist., Div. 3 Sept. 14, 2016) (unpublished) is a case where a litigant prevailed solely on a jury submitted tort constructive fraud claim, obtaining both compensatory and punitive damages on the fraud count. Then, that litigant tried to shoehorn into a fee recovery based on some contractual fees clauses in an Operating Agreement and Admission Agreement. Neither the trial nor appellate courts would allow any fee recovery based on this theory. It was clear litigant won on a tort theory, electing to seek punitive damages at trial but then trying to shift to a contractual theory for purposes of fee recovery. This cacophony did not resound with any of the Cacophonie. 1878. Library of Congress. courts considering the case, resulting in an affirmance of the fee denial in a 3-0 decision authored by Justice Ikola. Posted at 04:35 PM in Cases: Section 1717 | Permalink
Inhabitability Suit Indeed Was “On The Contract” For 1717 Purposes. SUMMER AMUSEMENT. BUG HUNTING. 1782. Isaac Cruikshank, artist. Library of Congress. Plaintiffs/tenants sued landlord after having to vacate an apartment because of a bedbug infestation. They won a jury verdict, and then moved to recoup $326,475 in attorney’s fees under Civil Code section 1717. The trial court awarded all of the request, a result affirmed by the appellate court in Hjelm v. Prometheus Real Estate Group, Inc., Case No. A142723 (1st Dist., Div. 2 Sept. 9, 2016) (unpublished). The lease had fees clauses encompassing a holdover tenancy provision/broad violations of use and broad indemnification costs clause all unilaterally in favor of landlord—but which are made reciprocal under section 1717. Landlord’s principal argument was that no contract claim was asserted by tenants. However, the breach of inhabitability claim is “on the contract” for purposes of section 1717. (Erlach v. Sierra Asset Servicing, LLC, 226 Cal.App.4th 1281, 1299 (2014).) Also, the constructive eviction claim was “on the contract.” (Beeman v. Burling, 216 Cal.App.3d 1586, 1608 (1990).) Nothing showed that tenants elected only tort remedies over the contract-based claims. Fee award affirmed.
Technical Challenges To Fee Award Did Not Work. In Vilela v. Rodriguez, Case No. B262442 (2d Dist., Div. 6 June 22, 2016) (unpublished), plaintiff lost a case against various defendants on both torts and a declaratory relief count, with a fees clause in a subscription agreement broadly covering fees “in defending against an action” brought by a plaintiff. Based on this broad provision, the lower court awarded the defendants $239,825 in attorney’s fees. This stood up on appeal, despite numerous challenges except for a transparent reduction of $4,400 more than defendants even requested for fees. Plaintiff challenged the fee request was filed 60 days after the notice of entry of judgment, but the lower court did not abuse its discretion by granting a CCP § 473 motion when counsel incorrectly calendared by adding, inappropriately, 5 additional days for mailing. Next, plaintiff argued that the causes of action sounded in tort, but the problem was plaintiff really was seeking to pursue rights under the subscription agreement and the fees clause clearly encompassed the declaratory relief action, including a defense of any legal action brought by a plaintiff. No excessive fees were sought, because the fees were “within the realm of reason” and block billing was neither chronic nor deceptive in nature.
Neither Section 1717 Nor CCP § 1021 Permitted Fee Recovery. In Ruballos v. Ruballos, Case No. B268343 (2d Dist., Div. 8 May 26, 2016) (unpublished), a lease non-signatory prevailed in a nasty lease dispute, based on a fraud-based controversy. The lower court awarded $16,880 in attorney’s fees based on a contractual fees clause. The appellate court reversed the fee award. The infirmity was that the recovery was based on a tort (fraud) such that the result was not grounded “on the contract” so as to allow a fee recovery under Civil Code section 1717. In fact, the prevailing party’s own pleadings made the case, because she alleged she was not a party to the lease, but a stranger such that only tort claims were at play. With respect to CCP § 1021 (which is based on the actual fees clause in the lease), it only operated unilaterally in favor of landlord; this was the death knell to recovery under this provision to a party which was not the landlord. Posted at 06:07 PM in Cases: Fee Clause Interpretation, Cases: Section 1717 | Permalink
Followed In Unpublished Opinion Issued On April 26, 2016. On August 21, 2014, we first posted on Kaufman v. Diskeeper Corp., 229 Cal.App.4th 1, 8-9 (2014), which held that a costs memorandum did not have to be filed as a condition precedent for purposes of a litigant being able to seek recovery of attorney’s fees. Instead, CRC 3.1702 only requires the filing of a timely motion. We can now report that the Fourth District, Division 1 has followed Kaufman in an unpublished opinion, Campman v. Neborsky, Case No. D068357 (4th Dist., Div. 1 Apr. 26, 2016) (unpublished), where a litigant won $14,000 in attorney’s fees after a motion for reconsideration brought Kaufman before the lower court’s consideration.
Posted at 07:15 AM in Cases: Deadlines, Cases: Section 1717 | Permalink
Multiple Challenges By Losing Buyer Rejected By 2/6 DCA. Real estate seller in Weinstock Porter Development, LLC v. Teixeira Farms, Inc., Case No. B253455 (2d Dist., Div. 6 Apr. 25, 2016) (unpublished) defeated buyer’s rescission claim based on environmental contamination where the record showed the parties entered into a release of claims because seller decreased the purchase price by $200,000 and buyer agreed to purchase environmental contamination insurance. After winning, seller received $95,707 in attorney’s fees and $1,406.50 in costs against losing buyer based on a fees clause in the Purchase and Sale Agreement. Buyer’s multiple challenges to the fees/cost award were rejected on appeal. First, buyer claimed that the lower court had no jurisdiction to award fees after the notice of appeal was filed. Wrong. (See Bankes v. Lucas, 9 Cal.App.4th 365, 368-369 (1992).) Second, buyer argued that the fee clause in the release agreement did not encompass the rescission dispute, but the appellate court disagreed because the rescission claim was within the scope of the PSA fees clause. It also noted that there was no need to weigh in on the issue of whether raising a contract permutation as an affirmative defense gave rise to fees, noting this issue has divided different divisions of the Second District as far as the proper result. Third, the hourly rates claimed by defending counsel, after the insurance carrier withdrew its defense at lower hourly rates, did not offend the appellate court given the fact that negotiated counsel – carrier rates are much lower in nature than normal “market” rates. Finally, it did not matter if the fees were covered by an insurance carrier given the broad definition of “incurred” for fee shifting purposes under Civil Code section 1717. Fees/costs award affirmed.
Also, Two Defendants Entitled To Fee Recovery Based On Alter Ego Allegations And Plaintiff’s Failure To Ever Dismiss/Abandon The Theory. In Kern Health Systems v. Allied Mgt. Group Special Investigation Unit, Inc., Case No. B258326 (2d Dist., Div. 7 Apr. 25, 2016) (unpublished), plaintiff lost contractual and tort claims after a jury trial against three defendants, but the lower court still awarded $1.38 million on a negligent misrepresentation claim against all defendants based on its perception that the jury intended to award recovery on this claim in its special verdict. The trial judge also denied all three defendants’ requests for an award of attorney’s fees for defeating plaintiff’s contractual claim where a fees clause was involved in an audit engagement agreement. (One defendant requested recovery of $2.385 million in fees, while two other defendants—alleged to be “alter egos” of the first defendant--asked for a total of $1.245 million in fees.) Defendants won a clean sweep on appeal, with the compensatory award going away and with a remand to allow them to seek fee recovery again. Defendant #1 was denied fees because the lower court did not believe that it satisfied a so-called contractual condition precedent for court fee recovery “if a legally binding mediation does not resolve legal disputes,” although indicating that it would have apportioned some fees and lowered the requested attorney hourly rates but for its ruling on the mediation language. The appellate court did not view this quoted contractual language as a binding condition precedent, because (1) it was not worded strongly enough to be one, (2) construing it as such made no sense given that a binding mediation result is equivalent to an arbitration award such that no litigation would ever be needed giving rise to fees (an oxymoronic result under the circumstances), and (3) plaintiff’s own pre-dispute conduct in praying for fees in the suit tended to bolster that mediation was not a precondition for recovery of court fees. As far as the other two defendants were concerned, plaintiff never voluntarily dismissed the alter ego allegations and actually beat back an oral nonsuit motion relating to these allegations. This gave rise to Civil Code section 1717 fee recovery under Reynolds [one of our Leading Cases, see home page on upper left hand side]. However, in remanding, the reviewing court left it up to the trial judge to decide whether to apportion as it indicated it might do with respect to any of the defendants (especially defendant #1).
However, Subcontractor Not Entitled To Fee Recovery From Homeowners Dismissing Assigned Contractor Cross-Claims Based On Voluntary Dismissal Of Contractually-Based Claims After Presentation Of Trial Evidence. In Mulitz v. L.A. Stucco, Inc., Case Nos. B260314/B262387 (2d Dist., Div. 4 Apr. 7, 2016) (unpublished), homeowners sued both contractor and stucco subcontractor for a defective home renovation, with contractor cross-claiming against subcontractor based on contractual and indemnity/contribution noncontractual theories (with sub’s insurer eventually intervening to protects sub’s interests after it went out of business). Contractor settled with homeowners and assigned its cross-claims against the subcontractor to the homeowners. Sub’s counsel admitted at trial that sub had done a “bad” stucco job. The jury awarded homeowners $403,827 on the contract and negligence claims, which was reduced by the $110,000 contractor settlement. Then, homeowners sought Civil Code section 1717 fees based on the contractor-subcontractor contract with a fees clause, with the trial judge awarding over $566,000 in fees to homeowners. The lower court also denied subcontractor insurer’s request for attorney’s fees against homeowners after homeowners dismissed the cross-claims after presentation of evidence at trial. Subcontractor’s appeal of the two fee rulings was not successful. The fees to homeowners based on the contractor-subcontractor contract were justified because they were third party beneficiaries under the agreement entitled to enforce the fees clause. (Loduca v. Polyzos, 153 Cal.App.4th 334, 343-344 (2007).) With respect to the denial of fees, the appellate court reasoned that the dismissal of the fees was voluntarily made by homeowners because they did not need to press the cross-claims in light of the earlier settlement with contractor. The Santisas rule barred recovery due to the dismissal of the contractual cross-claims, given that a voluntary dismissal even after commencement of trial will trigger the bar. (D & J, Inc. v. Ferro Corp., 176 Cal.App.3d 191, 1193-1194 (1986).) Subcontractor waived claiming any entitlement to noncontractual fees for the cross-claims dismissal, but the reviewing court also found that there was no argument presented that any fees were actually expended in litigating these claims. That meant that subcontractor’s insurer lost the bid to mitigate through a recovery of requested fees of $302,769.46 from homeowners.
Posted at 10:50 AM in Cases: Section 1717 | Permalink
Fee Activities Were Not Within the Purview Of Either Statute. Debtor/employer eventually “defensed” a bankruptcy nondischargeability action brought by certain employees arguing employer was an ERISA fiduciary for purposes of the “fiduciary” exception to bankruptcy discharge, a determination found to not legally be sustainable under a prior Ninth Circuit opinion (meaning employer was not an ERISA fiduciary for purposes of nondischargeability). Employer then moved to recover fees expended in defending the nondischargeability action from bankruptcy court through appellate court levels. The fee request was made before the Ninth Circuit, which denied it in Bos v. Board of Trustees, No. 13-15604 (9th Cir. Mar. 24, 2016) (published). California Civil Code section 1717 did not provide a fee entitlement basis because the nondischargeability action was not “on a contract” as required under the statute. The nondischargeability action only involved the Bankruptcy Code, and no determination was necessary on the enforceability of any contracts between the involved parties; in fact, any contract was only collateral to the overall dispute on nondischargeability. ERISA’s discretionary fee-shifting provision, 29 U.S.C. § 1132(g)(1), was not implicated because the nondischargeability action was not an “action under” ERISA, but was grounded only under the Bankruptcy Code given how the cause of action was framed. Posted at 11:40 AM in Cases: Bankruptcy Efforts, Cases: Section 1717, Cases: Special Fee Shifting Statutes | Permalink
Filing Amended Cross-Complaint Deleting Contract Cross-Claim Was Tantamount To A “Dismissal.” Although the procedural context was somewhat sui generis, a cross-complainant’s abandonment of a contract claim by filing an amended cross-complaint was tantamount to a dismissal so that no Civil Code section 1717 fees were recoverable, per the Santisas [one of our Leading Cases] rule. The trial judge in Samax Development, LLC v. Century Community Lending Co., LLC, Case No. B257652 (2d Dist., Div. 7 Feb. 16, 2016) (unpublished) did award prevailing cross-defendants apportioned attorney’s fees under Civil Code section 1717 of $213,688 (out of fees of $1,220,545) based upon loan documents with fees clauses after a CCP § 638 adverse ruling on the cross-complaint against a cross-complainant for the period of time between filing of the original cross-complaint and the filing of the amended cross-complaint. The appellate court came to the rescue by reversing the fee award. The reason? The amendatory cross-complaint superseded the original cross-complaint such that it was tantamount to a dismissal, with “no reason to require [nonprevailing cross-complainant] to file a formal request for dismissal of his breach of contract cause of action after withdrawing it by amendment.” (Slip Op., p. 26.) Posted at 06:13 PM in Cases: Section 1717 | Permalink
Plaintiffs Awarded Fees Had Compensatory Damages Of $252,000 And $558,000 After Factoring In Reversed Prejudgment Interest Awards. Attorney’s fees awards do not have to be proportionate under Civil Code section 1717. Park v. Nazari, Case No. B253685 (2d Dist., Div. 3 Feb. 2, 2016) (unpublished) is an apt illustration of this principle. There, plaintiffs/buyers prevailed on fraud claims to the tune of, after offsets, $252,000 and $558,000, arising of a failed sale of a truck business as against sellers. Various agreements had attorney’s fees clauses such that the trial judge awarded buyers $487,329 in fees plus costs, prompting an appeal by sellers. Nothing changed on appeal. An initial problem was that the appealing sellers failed to quote the attorney’s fees provisions at issue such that review was close to impossible. However, at least one fee clause was broad—relating to issues “arising out of this Agreement”---such that tort claims were covered based on section 1717 jurisprudence.
No Need to Provide Declarations From Expert Witness Fee In Support Of Expense Request Under CCP § 998. What happened in Nations Title Co. of Calif. v. Security Union Title Ins. Co, Case Nos. B250490/B253840 (2d Dist., Div. 3 Jan. 25, 2016) (unpublished), was that defendants won a jury verdict on a breach of fiduciary duty and intentional interference with prospective relations claims. The trial judge denied fee recovery to the defense based on Civil Code section 1717 and California’s Uniform Trade Secret Act (Civil Code section 3426.4), as well as denying significant expert witness fees under CCP § 998. The denial of fees was affirmed, but the denial of expert witness fees was reversed. Section 1717 fees were properly denied because the fees clause only related to arbitration, which was not the adjudicative venue. CUTSA fees were properly denied because there was no evidence that plaintiff had a reasonable belief that the claim was other than meritorious, such that the subjective prong of fee recovery was not satisfied. However, on the 998 expert witness cost-shifting issue, the trial judge denied expert witness fees based on the lack of substantiating evidence from the expert versus counsel’s declaration on expert witness fees. The appellate court found that wholesale denial on this basis was prejudicial, with counsel’s proof being enough under the circumstances.
Posted at 12:26 PM in Cases: Intellectual Property, Cases: Section 1717, Cases: Section 998 | Permalink
Respondents Entitled To Appellate Fees For Prevailing Again. In Martin v. Park Sierra Apts., Case Nos. B242464/B244184 (2d Dist., Div. 4 Jan. 22, 2016) (unpublished), defendants won a case involving a lease agreement with a fees clause. Plaintiff appealed the merits decision and substantial fees/costs award of $142,853.25. Both determinations were affirmed on appeal. Plaintiff/appellant forfeited a challenge to the fees/costs award by never addressing it in his appellate briefing. The appellate court also agreed that respondents were entitled to appellate fees based on the lease fees clause, but in line with most other intermediate appellate courts, remanded to the trial judge to fix the amount of appellate fees due to respondents.
Posted at 09:12 AM in Cases: Section 1717 | Permalink
4/3 DCA Does It Succinctly And Well. Presiding Justice O’Leary, in a 3-0 unpublished decision by the Fourth District, Division 3, affirmed a $76,890 contractual fee award against a plaintiff unsuccessfully attempting to unwind a foreclosure sale in Melgar v. Deutsche Bank National Trust, Case No. G051225 (4th Dist., Div. 3 Jan. 4, 2016) (unpublished). In doing so, she provided a succinct, accurate roadmap to a contractual fee recovery under Civil Code section 1717: (1) whether the contract permitted fee recovery; (2) whether the winning side was a prevailing party for purposes of section 1717; and (3) whether the requested fees were reasonable. Nicely done. Justice O’Leary also indicated that (1) is a de novo appellate review issue, while (2) may be de novo or abuse of discretion under the circumstances, and (3) is scrutinized for abuse of discretion. Posted at 05:29 PM in Cases: Section 1717, Cases: Standard of Review | Permalink
Fee Request For $928,791.25 Never Happened As An Award. One must be careful on how one is positioned as far as status in attorney’s fees disputes, because nonsignatories must push the right “buttons” or they risk losing fees, which happened to the defendant/appellant in Seaport Village Ltd. v. Terramar Retail Centers, Case No. D066026 (4th Dist., Div. 1 Dec. 28, 2015) (unpublished). Plaintiff sued defendant/appellant on various tort theories, arguing defendant was a partner or affiliate of two other defendants, with plaintiff voluntarily dismissing the suit against defendant. However, that dismissed defendant seized upon a fees clause in an LLC operating agreement between plaintiff and parties other than defendant, seeking to recover fees as a nonsignatory. Defendant sought $928,791.25, only be shut out at both the trial and appellate court levels—even after a de novo review by the 4/1 DCA. Obviously, under Santisas (one of our Leading Cases), contractual recovery was barred. That left whether defendant could convince the courts that the tort claims were covered by a fees clause to which it was not a signatory, using Code of Civil Procedure section 1033.5 “attorney compensation is left to the agreement of the parties” provision. Too tall a task given the holding in Topanga and Victory Partners v. Toghia, 103 Cal.App.4th 775, 783-784, 786-787 (2002), which held that a prevailing party must be a signatory to the contract in order to recoup fees under section 1033.5. Because Civil Code section 1717 does not cover tort claims, this theory was also unavailing. Reynolds Metals (another of our Leading Cases) does not apply to non-section 1717 motions, and the fee claimant did not plead an alter ego claim. Dismissed defendant’s status, as plead and litigated, sealed the denial of fees in this case. Posted at 04:54 PM in Cases: Fee Clause Interpretation, Cases: Section 1717 | Permalink
Appellate Court Also Assessed $9,000 Against Appellant For Frivolous Appeal. Plaintiff sued to collect on a note with a fees clause, alleging that an individual defendant was the alter ego of the entity obligor. However, plaintiff’s case was dismissed for failure to prosecute it. The lower court then awarded fees of $125,000 out of a requested $731,340 to the prevailing defendant. That result was upheld on appeal in Ascarrunz v. Hsu, Case No. A143766 (1st Dist., Div. 2 Oct. 23, 2015) (unpublished). The leading case of Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (1979) allows Civil Code section 1717 fee recovery against a litigant losing an alter ego claim. Appellant never showed why this authority was not dispositive, as it was. Then, the appellate court assessed $9,000 against appellant as sanctions for a frivolous appeal, payable to the First District court clerk. It has a nice survey of frivolous appeal awards in the past few years for you readers out there who might need this type of information for a frivolous appeal sanctions motion.
Posted at 09:25 PM in Cases: Appeal Sanctions, Cases: Section 1717 | Permalink
$750 Contractual Fee “Cap” Honored In Lease Agreement. Senators comparing caps. Library of Congress. 1955. A trial judge in 511 S. Park View, Inc. v. Tsantis, No. BV031134 (L.A. Superior Court App. Div. Oct. 5, 2015) (published) awarded $12,375 in attorney’s fees to prevailing defendants after an unlawful detainer trial based on a fees clause in a lease agreement. Plaintiff, miffed at the result, appealed based on the fact the lease between the parties had a $750 contractual “cap” for fee recovery in the attorney’s fees clause, which the lower court found to be in contravention of Civil Code section 1717 mutuality principles. The Appellate Division of the Los Angeles County Superior Court reversed, finding that such a “cap” is perfectly valid because private parties can decide how they want to allocate fee entitlement and exposure. (Code Civ. Proc., § 1021.) With respect to the section 1717 argument, this was not found persuasive given the existence of ample case law recognizing that parties in a contractual setting may limit fee entitlement as they wish under their specific bargains.
“Hanging Paragraph” Claim Was “On The Contract” Under A Fees Clause. In In re Penrod, No. 13-16097 (9th Cir. Oct. 1, 2015) (unpublished), debtor was successful against a car lender in a “hanging paragraph” dispute under 11 U.S.C. § 1325(a)(*) [no typo here – because this subsection was not numbered after (a)(9) by the legislation] where lender argued the whole claim should be secured while debtor argued it should only be partially secured, with debtor beating lender’s objection to confirmation of the Chapter 13 plan. Debtor then moved to recover $245,000 in attorney’s fees based on a fees clause in the auto loan documents, which was unilaterally worded in favor of lender. The bankruptcy judge denied the fee request. The Ninth Circuit reversed. It found that the “hanging paragraph” dispute did arise from enforcement of the auto loan contract, such that it was compensable under Civil Code section 1717 given that the unilateral fees clause is construed reciprocally under California law. There is a nice discussion of why this matter was not one solely based on bankruptcy law, but involved nonbankruptcy/contractual interpretation allowing for recovery of fees. Reversed and remanded to entertain debtor’s fee request.
Escrow Holder Entitled to Fee Against Losing Broker. When it comes to contractual agreements not subject to any extrinsic evidence, appellate courts will construe them independently to see if fee entitlement was either properly granted or denied. In Nelson v. Peirce, Case No. B250609 (2d Dist., Div. 1 Sept. 29, 2015) (unpublished), the Second District, Division 1 reversed the denial of fees to a prevailing escrow holder when the panoply of closing documents—the escrow instructions, purchase agreement, and other papers—showed that escrow holder and losing broker were encompassed within the scope of an attorney’s fee provision. Given this contractual relationship, Civil Code section 1717 was triggered to give reciprocity, meaning the clause could not be limited to just certain escrow charges but encompassed attorney’s fees as well. (Kangarlou v. Progressive Title Co., Inc., 128 Cal.App.4th 1174, 1177-1178 (2005).) Reversed to have fees reassessed as to escrow holder.
Posted at 12:26 PM in Cases: Fee Clause Interpretation, Cases: Section 1717 | Permalink