Court Opinion

ID: 9746183
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:06:38.133451+00
Date Added: 2024-06-11T07:25:10.369759
License: Public Domain

RAYE, J.
I concur in the result, but dissent from part I.C of the opinion.
Plaintiff International Billing Services, Inc. (IBS) sought attorney fees under a contractual provision, which, we have concluded, authorizes their award in lawsuits by IBS to prevent the wrongful disclosure of information by defendants (the Engineers). As the majority opinion properly concludes, while the contractual provision as written is one sided and restricts the award of fees to IBS as the prevailing plaintiff, the reciprocity provisions of Civil Code section 1717 operate in such a circumstance to permit the award of fees to the prevailing defendants—the Engineers—as well.
However, the majority opinion does not stop with this pronouncement. While claiming respect for the views of the legal commentator Bernard Witkin, it proceeds to commit a sin eschewed by him: “Have opinion, need case.” (See Witkin, Manual on Appellate Court Opinions (1977) Special Problems of Appellate Review, § 85, p. 155.) This case thus becomes the occasion to opine on an issue that, in light of our conclusion that the contract herein authorizes the award of fees to the prevailing party, is not dispositive.
I confess to the same temptation. The majority opinion accurately reflects our collective frustration with litigation over attorney fees. Nevertheless, I would prefer that we yield not to this temptation and, assuming we surrender, that we articulate a rule of reason. I fear the majority opinion fails on both accounts.
*1197In a series of cases cited in the majority opinion, appellate courts have considered the operation of Civil Code section 1717 where the contract containing the attorney fees clause is determined to be unenforceable or otherwise nonbinding on the defendant. In Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124 [158 Cal.Rptr. 1, 599 P.2d 83] (Reynolds), the court recognized that the individual defendants, though nonsignatories to a note with an attorney fees clause, were nevertheless entitled to recover attorney fees. The court reasoned that the defendants would have been liable for attorney fees had the plaintiff prevailed in establishing alter ego liability and thus were themselves entitled to an award of fees as the prevailing party.
The entitlement to attorney fees has been recognized “ ‘even when the party prevails on grounds the contract is . . . nonexistent, . . .’ [Citations.]” Hsu v. Abbara (1995) 9 Cal.4th 863, 870 [39 Cal.Rptr.2d 824, 891 P.2d 804] (Hsu). However, Hsu and other cases recognizing such an entitlement—Santisas v. Goodin (1998) 17 Cal.4th 599 [71 Cal.Rptr.2d 830, 951 P.2d 399] (Santisas); Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101 [51 Cal.Rptr.2d 286] (Abdallah); Care Constr., Inc. v. Century Convalescent Centers, Inc. (1976) 54 Cal.App.3d 701, 704-706 [126 Cal.Rptr. 761]—were all cases, like Reynolds, supra, 25 Cal.3d 124, in which claims for attorney fees were asserted under a contract containing an attorney fees clause.
In Hsu, the contractual document at issue contained an attorney fees provision that clearly would have applied. The dispute centered on whether the plaintiffs’ acceptance of a counteroffer was effective to break a binding agreement. The plaintiffs “appeared] to concede that the validity or existence of the contract alleged in their complaint [was] not a prerequisite to an award of attorney fees . . . .” (Hsu, supra, 9 Cal.4th at p. 870.) In Abdallah, supra, 43 Cal.App.4th 1101, the son of the contracting parties, who claimed to be their agent, sued for breach of contract and sought attorney fees under a provision that clearly provided for such an award. Similarly, in Santisas, supra, 17 Cal.4th 599, the existence of a valid attorney fees provision was not disputed.
These cases establish the principle that an attorney fees provision in a contract will be enforced even in litigation ending with a determination that the contract is not binding. They are not premised on estoppel principles and do not create a right to attorney fees where none would otherwise exist.
The opinion laments (maj. opn., ante, at p. 1187) the “wasteful consumption of judicial resources and client money” resulting from protracted litigation over whether a given provision is a fees provision. I question how much *1198money and resources are devoted to litigating such a narrow issue. There is certainly no indication the parties and courts involved in the present matter wasted an inordinate amount of resources in resolving a fairly simple issue of contract interpretation. In any event, would money and resources be any better spent bickering over judicial estoppel? If the present case is a portent, it appears the parties could well expend as much energy on the question of whether plaintiff really did assert a right to fees under the contractual provision (thereby invoking the newly minted estoppel doctrine) as on the question of what the provision really means.
The majority opinion observes (maj opn., ante, at p. 1189), “The point of an estoppel is to prevent a party from litigating an issue.” And therein lies the vice of applying the doctrine to disputes concerning the interpretation of a contractual provision. Not all litigation is bad. Rational disputes concerning the proper construction of a contractual provision should be litigated. A party asserting that a contractual provision authorizes the award of attorney fees takes a calculated risk that the court may agree the contract authorizes fees but nonetheless find in favor of the defendant on the underlying claim. That risk is a sufficient deterrent to reckless claims. Little purpose is served by foreclosing the plaintiff from altering a legal position once taken any more than the prevailing defendant should be foreclosed from altering its position and, upon winning a contractual dispute, agreeing fof the first time that a disputed provision does indeed authorize an award of attorney fees. In both instances, the court should determine the meaning of the contract independently as a matter of law although the previously expressed positions of the parties will not be ignored. The extreme sanction of estoppel is unnecessary.
The majority opinion invokes Reynolds, supra, 25 Cal.3d 124 for the proposition that “the mere threat of an attorney fees award alters the dynamics of litigation.” (Maj. opn., ante, at p. 1191.) However, the threat considered by the court in Reynolds only existed in the absence of reciprocity, as where a contract limits recovery of attorney fees to one of the contracting parties. That evil is solved by the provisions of Civil Code section 1717. The mere threat of attorney fees does not radically alter the dynamic of litigation where the attorney fees remedy is mutual.
Although acknowledging that parties are permitted to plead alternative and inconsistent theories, the majority opinion (maj opn., ante, at p. 1188) deplores the “in terrorem effect of uncertainty” which results when parties are uncertain about their liability for fees. Litigation, by its very nature, is risky and uncertain. The opinion offers no compelling reason why we should *1199abide uncertainty in the resolution of certain issues—even to the extent of permitting parties to plead inconsistent theories—while deploring uncertainty on the interpretation of contractual provisions relating to attorney fees.
We have properly concluded that the contract herein contains a provision authorizing the award of attorney fees to IBS in litigation brought to prevent the wrongful disclosure of information by the Engineers. This one-sided contractual right to attorney fees is made reciprocal by the provisions of Civil Code section 1717. As the prevailing party, the Engineers are thus entitled to recover attorney fees. No more need be said. The discussion of judicial estoppel is both unnecessary and ill-advised.