Opinion ID: 6982540
Heading Depth: 2
Heading Rank: 2

Heading: Did the court have discretion to deny attorney’s fees under the agreement?

Text: Anderson argues that even if Melwani was the prevailing party, the court had discretion to deny attorney’s fees. We agree. In DeBlasio Constr. Inc. v. Mountain States Constr. Co., 588 F.2d 259, 263 (9th Cir.1978), we stated that the court could refuse to enforce a contractual attorney’s fees provision if an award of fees would be “inequitable and unreasonable.” We held that the court did not err in denying fees where both parties were to blame for the dispute. See id. Other circuits have adopted the Mountain States formulation. See, e.g., McDonald’s Corp. v. Watson, 69 F.3d 36, 45-46 (5th Cir.1995); Loman Dev. Co., 817 F.2d at 1537 n. 7; C.J.C., Inc. v. Western States Mechanical Contractors, Inc., 834 F.2d 1533, 1548 (10th Cir.1987). The court’s discretion is not unlimited. The general rule is that a court “abuses its discretion if it awards contractually-authorized attorney’s fees under circumstances that make the award inequitable or unreasonable or fails to award such fees in a situation where inequity will not result.” Watson, 69 F.3d at 45. Melwani does not seriously contend that the court lacked discretion to deny his claim for attorney’s fees. Instead, he argues that the court abused its discretion in doing so. He observes that it failed to explain how enforcing the attorney’s fees provision here would be “inequitable and unreasonable.” Melwani is correct. We remand for the court to determine whether an award of fees is appropriate under the Mountain States standard, and, if so, to award reasonable fees.