Court Opinion

ID: 8045859
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:57:13.858225+00
Date Added: 2024-06-11T16:37:24.185112
License: Public Domain

Pickering, J.,
with whom Cherry, J., agrees, concurring:
I join the majority based on the particular attorney fees clause involved. The guaranty provided for the Bunches, as “Lender,” to recover fees the “Lender expends or incurs in collecting or compromising [the] indebtedness . . ."1 Fees spent to defend the borrower’s usury suit, which apparently did not involve any affirmative claims by the Bunches against the borrower, were not incurred by the Bunches “in collecting or compromising [the] indebtedness.” Unlike California, Cal. Civ. Code § 1717, Nevada permits one-sided attorney fees clauses, see Trustees, Carpenters v. Better Building Co., 101 Nev. 742, 746-47, 710 P.2d 1379, 1382 (1985), but the one-sided clause in favor of the lender in this case ended up being too restrictive to cover fees incurred defensively.
I write separately to emphasize that the outcome depends on the fee clause involved. If the clause here had been worded more broadly, fees incurred defensively might well have been recoverable, even though incurred in a separate suit. See Exchange Nat. Bank of Chicago v. Daniels, 763 F.2d 286, 294 (7th Cir. 1985) (upholding award of fees incurred to defend separate suits and counterclaims be*469cause the fee clause “authorize[d] fees for all work in both the ‘collection’ and the ‘enforcement’ of the note”); Thunderbird Investment Corporation v. Rothschild, 97 Cal. Rptr. 112, 118 (Ct. App. 1971) (upholding award of fees incurred to defend a note’s interest provisions against a usury challenge where the fee clause provided for fees “[i]f action be instituted on this note”); see also Towers Charter & Marine Corp. v. Cadillac Ins. Co., 894 F.2d 516, 524-25 (2d Cir. 1990) (discussing differences among various fee clauses and their application to fees incurred defensively).
While I join the majority’s sound opinion, including its recognition of the rule stated in the Restatement (Third) of Suretyship and Guaranty section 14 (1996), I except from my joinder its suggestion that we are adopting a special rule that requires us to “narrowly construe attorney fees obligations pursuant to guaranty agreements.” Ante at 466, citing First Nat. Park Bank v. Johnson, 553 F.2d 599, 602-03 (9th Cir. 1977); In re LCO Enterprises, Inc., 180 B.R. 567, 570-71 (B.A.P. 9th Cir. 1995); In re Wetzler, 192 B.R. 109, 119-20 (Bankr. D. Md. 1996). It is not clear to me that the cases cited establish this proposition,2 or that we need a special rule of construction to decide this appeal. But more importantly, by statute, Nevada allows agreements that require one party to pay the other party’s attorney fees, NRS 18.010(4), with particular reference to commercial agreements involving “money due or to become due on any contract.” See NRS 99.050 (providing that “parties may agree for the payment of any rate of interest on money due or to become due on any contract, for the compounding of interest if they choose, and for any other charges or fees” (emphasis added)). Perhaps because agreements allowing one side to recover its fees from the other depart from the normal “American Rule,” the court has historically examined the language the parties used to establish their right to fees to be sure there was, in fact, an agreement to pay fees that applies. Cf. First Commercial Title v. Holmes, 92 Nev. 363, 550 P.2d 1271 (1976), cited in Campbell v. Nocilla, 101 Nev. 9, 12, 692 P.2d 491, 493 (1985). But I do not see this as a special rule of construction, and if it is, our cases have applied it to all fee-shifting agreements, not just those in guaranties.

The language at the end of the fee clause saying it applies to a range of reorganization or insolvency proceedings doesn’t help. It is self-limiting, applying to fees incurred in “proceedings involving Guarantor which in any way affect the exercise by Lender of its rights and remedies hereunder.” The guarantor is Dobron, who was not a party to the usury suit, and the reference to the lender’s “rights and remedies hereunder” applies to the guaranty, not the note. The fees at issue here were incurred to defend the Bunches’ rights against the borrower under the note, not rights against Dobron under the guaranty.

First National Park Bank involved a guaranty fee clause that only applied to suits to collect the note, not to suits arising under the guaranty, 553 F.2d at 602-03, which differs from the clause here, which specified that it applied to both. LCO involved a fee clause in a lease, not a guaranty. 180 B.R. at 568-69. And Wetzler involved a dispute between co-guarantors asserting indemnity claims against each other for fees one co-guarantor incurred dealing with litigation by the lender, which the court found were not covered by the fee clause in the guaranty, which only apply to litigation involving “payment of any amount due under the Note or performance of the Guaranty.” 192 B.R. at 119.