Court Opinion

ID: 9746914
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:44:40.5682+00
Date Added: 2024-06-11T07:25:18.210576
License: Public Domain

VARTABEDIAN, Acting P. J.
On March 11, 2003, Leamon and Herrera (hereafter Leamon, collectively) filed a petition for rehearing. Leamon argues this court mistakenly concluded the issue concerning attorney fees was one of first impression and we should modify our decision to avoid a conflict in the interpretation of Civil Code section 1717 (section 1717) with the First District's decision in Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261 [118 Cal.Rptr.2d 276] (Wong), a case Leamon cites for the first time.
In Wong, a landlord sued a tenant for damages discovered after the tenant had vacated the rented premises. The landlord accepted a Code of Civil Procedure section 998 (section 998) offer to compromise for an amount equal to about 60 percent of the alleged damage. The offer to compromise was silent as to attorney fees and costs. After judgment was entered, the landlord moved for attorney fees. The attorney fee language in the lease provided for payment of fees to the landlord in an enforcement action in which it was “determined” the tenant was in default of any obligation. The tenant argued the lease did not authorize an award of attorney fees because the section 998 judgment did not constitute a determination that it had defaulted on an obligation under the lease. The trial court agreed with the tenant’s analysis and denied the motion.
The First District reversed and held section 1717 entitled the landlord to attorney fees. The First District stated the conditions in section 1717 for an award of attorney fees had been met because (1) there had been an action on the contract, (2) the contract provided that fees incurred to enforce the contract were to be awarded to one of the parties, and (3) the landlord recovered greater relief in the action and therefore was the “prevailing party” for purposes of section 1717. (Wong, supra, 97 Cal.App.4th at p. 265.) The First District concluded the contractual language confining entitlement to attorney fees to a party who prevailed upon a “determination” of liability conflicted with the statutory definition of “prevailing party” and, as a result, the conflicting contractual language was void. (Ibid.) The court reasoned that *435allowing a contract to preclude the recovery of fees in an action that was settled instead of adjudicated would thwart the statutory purpose. (Wong, supra, 97 Cal.App.4th at p. 265.)
First, Leamon’s petition for rehearing asserts the Wong case “squarely addressed” the issue this court determined was one of first impression— namely, the question of whether or not contractual conditions precedent to an award of attorney fees apply to a litigant who prevails by establishing the contract is invalid. We reject this assertion because the Wong case did not involve a contract established to be invalid or the satisfaction of a condition precedent completely within the control of the party requesting attorney fees. At a secondary level, Wong also is distinguishable because it involved the interplay between Civil Code section 1717 and Code of Civil Procedure section 998 while the instant case concerns the interaction between section 1717 and the public policies favoring mediation. Finally, the attorney fees provision in Wong was unilateral while the provisions in the Agreement apply equally to the buyer and the seller.
Second, Leamon’s petition for rehearing asserts that the method of analysis and “the rationale of the Wong decision is compelling and should be adopted” in this case. We recognize that our methodology for applying section 1717 to the facts of this case appears to be different than the methodology applied by the First District in Wong, supra, 97 Cal.App.4th 261. However, it is not clear what arguments were presented or considered by the First District in Wong and therefore this apparent difference in methodology could be the result of a difference in how the cases were presented. Thus, the difference in methodology is not necessarily the result of conflicting views of the law and grounds exist for reconciling this decision with the Wong decision.
Leamon’s petition asserts “a mistake of law” in our conclusion that “the enforcement of the conditions precedent to the recovery of attorney fees does not conflict with the concept of mutuality of remedy under the facts of this case.” Leamon contends that because the Krajkiewczes would have recovered their attorney fees had they prevailed on the contract causes of action, section 1717 mandates that Leamon also is entitled to reasonable attorney fees.
The first sentence of section 1717, subdivision (a) provides: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is *436the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”
Leamon construes section 1717 to unambiguously award attorney fees to the prevailing party without requiring that party to satisfy any contractual restrictions or conditions precedent. Under this expansive construction of section 1717, once a contract opens the door for a prevailing party to recover attorney fees, the contract cannot close that door in a particular set of circumstances by including qualifications, restrictions or limitations on the right to attorney fees. This construction of section 1717 by Leamon of the phrase “specifically provides” would prohibit parties any flexibility in stating the precise circumstance in which attorney fees are recoverable.
To harmonize the language in the first sentence of section 1717, subdivision (a) with the other language in that subdivision, we construe the phrase “specifically provides” to permit parties to a contract to set forth with specificity the circumstances in which attorney fees are recoverable, provided any such specific contractual provisions do not otherwise conflict with the requirements of section 1717.
The foregoing construction of the phrase “specifically provides” is reasonable when considered in light of the legislative history of section 1717 as well as the public policy concerns, particularly the evils section 1717 was designed to remedy. (See Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744 [38 Cal.Rptr.2d 650, 889 P.2d 970].)
The public policies of establishing mutuality of remedy and eliminating one-sided attorney fees provisions are not necessarily served by construing section 1717 to void all contractual restrictions on attorney fees. Restrictions do not offend these public policies if they are mutual, do not favor one party over the other, and cannot be manipulated for tactical advantage in the litigation by one of the parties. Therefore, public policies underlying section 1717 would not be served by construing the phrase “specifically provides” in a manner that imposes a blanket prohibition on all restrictions or conditions that might be contractually imposed on an award of attorney fees to a prevailing party. Moreover, on the instant facts, public policies of section 1717 are served by contractual conditions encouraging parties to settle their disputes through mediation rather than proceeding to a lengthy, costly trial. We are satisfied that mutuality is served when both parties are subject to the same reasonable restrictions that do not inherently favor one party, as is the case here.
We need not elaborate upon our rejection of other belated bases claimed to justify rehearing. Failure of Leamon to satisfy a condition precedent does not *437amount to a waiver prohibited by section 1717, subdivision (a). (See Wells Fargo Bank v. Superior Court (2000) 22 Cal.4th 201, 211 [91 Cal.Rptr.2d 716, 990 P.2d 591].) Likewise, the claim that the Krajkiewczes are judicially estopped from contending Leamon’s entitlement to attorney fees is restricted by the Agreement because the prayer for relief of the Krajkiewczes included a demand for attorney fees is utterly meritless. (See Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183 [70 Cal.Rptr.2d 96].)
Therefore, we conclude Leamon is not entitled to a rehearing or to a modification of the opinion and disposition previously entered.
The petition for rehearing or modification of opinion is denied.
Levy, J., and Cornell, J., concurred.
A petition for a rehearing was denied March 25, 2003, and the petition of appellant Joyce Leamon for review by the Supreme Court was denied May 14, 2003.