Court Opinion

ID: 6498543
Source: CourtListenerOpinion
Date Created: 2022-07-07 20:02:32.700529+00
Date Added: 2024-06-11T08:51:17.741006
License: Public Domain

Filed 7/7/22 Engage BDR v. Amobee CA2/8
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION EIGHT

 ENGAGE BDR, LLC,                                                 B309263

           Plaintiff and Appellant,                               Los Angeles County
                                                                  Super. Ct. No. 19SMCV01261
           v.

 AMOBEE, INC.,

           Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of
Los Angeles County, Harry Jay Ford, III, Judge. Affirmed.

     Bushell Law, Daniel A. Bushell; The Law Office of Thad M.
Scroggins and Thad M. Scroggins for Plaintiff and Appellant.

     Sheppard, Mullin, Richter & Hampton, Martin D. Katz and
Bridget J. Russell for Defendant and Respondent.
                       ____________________
       The trial court correctly awarded the contractual attorney
fees at issue.
       A firm called Engage BDR, LLC entered a Master
Agreement requiring it to remit payments to Amobee, Inc. When
Engage repeatedly failed to pay, the parties entered a succession
of five more agreements that gave Engage more time to pay but
increased its debt to Amobee. Engage paid most of what it owed
but then sued Amobee, claiming Amobee breached the Master
Agreement and used the follow-on agreements to charge usurious
interest rates. Engage maintained it was entitled to rescind the
later agreements because it entered them only under financial
duress.
       The trial court sustained Amobee’s demurrers and granted
it attorney fees. In 2021, we affirmed the court’s judgment on the
demurrers. (Engage BDR, LLC v. Amobee, Inc. (July 15, 2021,
B305770) [nonpub. opn.].) Now we confront Engage’s separate
attack on the fees award to Amobee. This attack fails. Engage
sued Amobee on contracts containing attorney fees provisions.
Civil Code section 1717 makes these provisions reciprocal as well
as broad in scope. By suing on these contracts, Engage assumed
the burden of paying Amobee’s attorney fees if Amobee prevailed,
which it has. We again affirm.
                                   I
       A series of six sequential agreements comprise this case.
We label these six as follows:
          1. the Master Agreement,
          2. the Agreement,
          3. the Amendment,
          4. the Settlement,
          5. the Stipulated Judgment, and

                                2
          6. the Forbearance Agreement.
       Under the Master Agreement, Engage was to sell Amobee’s
advertising space to advertisers, earn a commission, and pay
Amobee the balance it invoiced from advertisers. The Master
Agreement contained a limited attorney fees provision. Engage
would pay attorney fees Amobee incurred in collecting
undisputed amounts that were over 30 days past due. The
Master Agreement did not say whether counsel represented the
parties, which is a recitation Civil Code section 1717 makes
significant, as we shall explain.
       When Engage failed to remit nearly $850,000, the parties
entered the Agreement for Engage to pay its balance. This was
their second contract. If a party breached the Agreement, the
Agreement provided attorney fees for the “prevailing party,” “in
accordance with” the Master Agreement’s provision. The
Agreement noted the parties had the “opportunity to consult
their attorneys.”
       Engage still did not pay in full. The parties entered an
Amendment to the Agreement that kept the Agreement intact
but altered its deadlines and the amounts due. The Amendment
did not say counsel represented the parties. Engage lacked
counsel, according to the pleadings in its later lawsuit.
       Amobee then sued to enforce the Amendment. The parties
resolved this lawsuit by entering a Settlement and a related
Stipulated Judgment. The Settlement specified the parties were
“represented by counsel” and contained a mutual general release
of claims. Under the Stipulated Judgment, the parties, with
counsel, agreed the court could enter judgment in accordance
with the Settlement.

                               3
       Last came the Forbearance Agreement, which was silent
about attorney fees and about representation.
       After Engage satisfied the agreements, less one contested
payment, Engage sued Amobee. Engage filed a complaint and
two amended complaints. Engage attached the agreements to its
complaints and sought attorney fees for all causes of action.
       The pleadings are pertinent to this attorney fees case. We
detail them.
       The complaint alleged six causes of action that fit into four
categories.
       The first category is breach of contract and a related breach
of the implied covenant of good faith and fair dealing. These
claims were about Amobee’s alleged breach of a term in the
Master Agreement that capped liability at $1 million.
       Second is usury and unjust enrichment from usury.
Engage alleged the increase in payment amounts in the
Agreement and Amendment constituted usurious interest rates.
       Third is economic duress. Engage alleged it had been
suffering financial difficulties and Amobee wrongfully coerced it
to enter the Amendment, Settlement, Stipulated Judgment, and
Forbearance Agreement.
       Fourth was declaratory relief, which alleged a controversy
about “the agreements.”
       Engage’s first amended complaint largely mirrored the
complaint. It added allegations about the Settlement to the
usury claims. It renamed the unjust enrichment claim
“Restitution” but the underlying basis for the claim—unjust
enrichment due to usury—remained. Engage deleted its
economic duress cause of action.

                                 4
      Engage styled its second amended complaint as a request
for declaratory relief. It alleged economic duress and undue
influence when it entered the Amendment, Settlement,
Stipulated Judgment, and Forbearance Agreement. It sought to
rescind these four agreements.
      The trial court sustained demurrers and entered judgment
in Amobee’s favor. It awarded Amobee attorney fees of about
$125,000 and declined to apportion the fees. Engage appeals this
fees award.
                                  II
      The fees award was proper.
      We review an award of attorney fees for an abuse of
discretion, but we independently review its legal basis.
(Mountain Air Enterprises, LLC v. Sundowner Towers, LLC
(2017) 3 Cal.5th 744, 751.)
      We begin by explaining why Civil Code section 1717 applies
to Engage’s pleadings and to the fees provisions in the
agreements. Then we explain why the size of the fees is
reasonable. Undesignated statutory citations are to the Civil
Code.
                                   A
      Under the American rule, each party bears its own attorney
fees. The Legislature codified this rule in Code of Civil Procedure
section 1021. (Santisas v. Goodin (1998) 17 Cal.4th 599, 607, fn.
4 (Santisas).) Absent a conflicting statute, parties are free to
allocate attorney fees by contract. (Code Civ. Proc., § 1021.) To
ensure these contractual provisions are not unfairly one-sided,
the Legislature enacted section 1717. (Santisas, at p. 602.)
      Section 1717, subdivision (a) provides: “In any action on a
contract, where the contract specifically provides that attorney’s

                                5
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 the party specified in the
contract or not, shall be entitled to reasonable attorney’s fees . . . .
[¶] Where a contract provides for attorney’s fees, as set forth
above, that provision shall be construed as applying to the entire
contract, unless each party was represented by counsel in the
negotiation and execution of the contract, and the fact of that
representation is specified in the contract.”
       We restate and summarize: section 1717 can expand a
contract’s attorney fees provision in two pertinent ways. The
first way is reciprocity: a unilateral attorney fees clause applies
to both parties. The second way is broadened scope: a narrow
attorney fees clause applies to the entire contract, unless the
contract specified that counsel represented the parties. This is
the contractual recitation we mentioned earlier. With the
recitation, the statute permits the fees provision to be narrow.
When the contract lacks the recitation, however, the statute
broadens the fees provision.
       Further, an action is “on a contract” under section 1717 if it
(1) “involves” an agreement, meaning it arises out of or relates to
an agreement by, for example, seeking to interpret its terms or to
determine a party’s rights under the agreement; and (2) the
agreement has an attorney fees clause. (Douglas E. Barnhart,
Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 242.)
       We take these two requirements in turn. Then we address
apportionment.

                                   6
                                   1
       First, we determine which claims were “on a contract” and,
if any were, to which contract or contracts they related. We
examine Engage’s pleadings to make this determination. (See
Hyduke’s Valley Motors v. Lobel Financial Corp. (2010) 189
Cal.App.4th 430, 435 [consider pleaded theories of recovery to
identify legal basis of prevailing party’s recovery].)
       This analysis is straightforward.
       The breach of contract and breach of implied covenants
claims were on the Master Agreement. Engage asserted Amobee
breached a term of that agreement and it sought to enforce its
rights under that term. The breach claims were therefore on the
Master Agreement.
       The usury, unjust enrichment from usury, and related
restitution claims were on the Agreement, the Amendment, and
the Settlement. (See Winnett v. Roberts (1986) 179 Cal.App.3d
909, 923 [party attacking promissory note as usurious may rely
on note’s attorney fees provision as basis for fees]; Del Mar v.
Caspe (1990) 222 Cal.App.3d 1316, 1335 [same; resolution of
usury claim necessarily involved determination of validity of
interest provisions in note].)
       The economic duress claim was on the Amendment, the
Settlement, the Stipulated Judgment, and the Forbearance
Agreement. Because Engage challenged its duties under these
contracts based on the alleged duress, its action was on these
contracts.
       The declaratory relief claims were on all the agreements.
Engage first sought a general declaration of rights based on
them. Later, it alleged economic duress and undue influence
when it entered the Agreement, the Amendment, the Settlement,

                                7
and the Forbearance Agreement. Engage sought a declaratory
judgment to rescind these four contracts. By seeking to establish
the parties’ rights under contracts, these claims were on these
agreements for the purpose of entitlement to attorney fees. (See,
e.g., City and County of San Francisco v. Union Pacific Railroad
Co. (1996) 50 Cal.App.4th 987, 999–1000.)
       Each cause of action thus was on a contract. This is the
first step in our inquiry. Next we must turn to the string of
contracts in this case to determine which ones had attorney fees
provisions of binding relevance.
                                  2
       The first three agreements contained reciprocal and
expansive attorney fees provisions that entitled Amobee to
attorney fees.
       Amobee is entitled to attorney fees for claims on the Master
Agreement. Section 1717 makes the Master Agreement’s
attorney fees provision reciprocal. Because the Master
Agreement did not recite that counsel represented the parties,
section 1717 also broadens the scope of this provision to the
entire contract. Amobee thus gained the right to recover its
attorney fees for defending causes of action on the Master
Agreement.
       Amobee is also entitled to attorney fees for claims on the
Agreement and the Amendment. Neither agreement recited that
counsel represented the parties. The Agreement incorporated the
Master Agreement’s attorney fees provision. The Amendment
changed the deadlines and payment amounts but otherwise
maintained the provisions of the Agreement. Therefore the fees
provision in the Agreement applies equally to the Amendment.

                                8
Amobee earned attorney fees for defending causes of action on
the Agreement and the Amendment.
       Engage incorrectly contends the broadened scope portion of
section 1717 does not apply because the Agreement’s
“opportunity to consult” language means the parties were
represented by attorneys. Engage’s reading of the contract is
improperly imprecise. The broadened scope portion of section
1717 introduces an additional level of mutuality to the statute. It
furthers a notion of equity into situations of seemingly unequal
bargaining power. Parties of roughly equal power may, with
their lawyers’ help, draft their way around this part of the
statute by specifying in the contract the fact of “representation.”
To open this escape hatch, counseled parties must comply with
the statute’s literal requirements to instantiate their legal
sophistication.
       We ascribe meaning to the absence of language about
representation in the Agreement in part because the parties
deployed that language in a different agreement. The Settlement
said they were “represented by counsel.” Thus the parties knew
how to use the exact language the statute required and did so
when they were lawyered up for the settlement. The inexact
language in the Agreement does not satisfy the statute.
       Engage cites International Billing Services, Inc. v. Emigh
(2000) 84 Cal.App.4th 1175, but that case does not control.
There, a company and its employees entered a contract in which
the employees promised to “reimburse” the company for legal fees
in certain circumstances. After the company sued the employees
and lost, it tried to dodge attorney fees by arguing section 1717
did not apply because the contract lacked the statute’s exact
words “attorney’s fees” and “incurred to enforce” a contract. (Id.

                                 9
at pp. 1179–1180, 1182–1184.) The court explained section 1717
did not require form language to create an attorney fees provision
and held the agreement’s language sufficed. (Id. at pp. 1183–
1184.)
       The issue in the present case—of specifying the fact of
representation—is a different matter from the issue in
International Billing Services. And in that case, liberally
construing language that created a reciprocal fees provision
aligned to section 1717’s purpose of mutuality. The same is not
true for specifying representation because that would limit
section 1717’s reach.
       Amobee thus earned attorney fees for defending causes of
action on the Master Agreement, Agreement, and Amendment.
The remaining agreements lacked attorney fees provisions.
       Engage argues against the fees award because it says it
would not have earned fees if it had won. This argument is
incorrect. Engage sued on contracts with attorney fees clauses,
sought fees in its pleadings, and would have been entitled to fees.
A plaintiff’s bare allegation of entitlement to fees, alone, may be
insufficient to award fees in favor of a prevailing defendant. (See
Leach v. Home Savings and Loan Assn. (1986) 185 Cal.App.3d
1295, 1307.) A prevailing defendant, however, need not pursue a
minitrial to establish the merit of a losing plaintiff’s hypothetical
fees claim. (Linear Technology Corp. v. Tokyo Electron Ltd.
(2011) 200 Cal.App.4th 1527, 1538.) The difficulty in creating a
counterfactual where the plaintiff won and determining with
exactitude its hypothetical entitlement to fees is apparent in
cases like Engage’s, where the plaintiff pleaded several
interconnected causes of action across multiple complaints. We
therefore apply Engage’s pleadings at a broad level to consider

                                 10
whether it would have been entitled to fees had it won. We
conclude it would have been so entitled.
       Engage’s main argument about why it would not have been
entitled to fees involves the Settlement’s waiver, but this waiver
would not have foreclosed attorney fees under Engage’s pleaded
theories. Engage says its pleadings “acknowledged” it entered
later agreements, including the Settlement. But Engage said it
entered the Settlement under duress and sought to rescind it.
Had Engage won on this issue, the rescinded agreement’s waiver
would not have been a barrier to fees.
       Engage incorrectly contests the fees award as inequitable.
This fees award, however, comports with section 1717 and the
cases interpreting it. When a party litigant prevails in an action
on a contract by establishing the contract is inapplicable or
unenforceable, section 1717 permits the party’s recovery of
attorney fees whenever the opposing party would have been
entitled to attorney fees under the contract had it prevailed.
(Santisas, supra, 17 Cal.4th at p. 611.) Amobee successfully
argued the Master Agreement did not control, for example, but
this rule still allows it to collect fees under that agreement.
       Brittalia Ventures v. Stuke Nursery Co., Inc. (2007) 153
Cal.App.4th 17 does not help Engage. There the plaintiff, a
walnut farmer, prevailed in his contract action against a supplier.
The plaintiff was not entitled to attorney fees under section 1717
because the contract on which he sued did not contain an
attorney fees clause. (Id. at pp. 20–23, 30–31.) As we have
explained, Engage sued on contracts with attorney fees clauses.
Furthermore, Brittalia considered equitable principles that do
not weigh in Engage’s favor. Our reasoning for affirming the fees
relies on Engage’s theories and the contracts Engage attached to

                                11
its complaints. Engage now must bear the consequence of its loss
by paying Amobee’s fees.
                                  3
       The court’s refusal to apportion fees was proper. Trial
courts are in the best position to resolve this issue. (Thompson
Pacific Construction, Inc. v. City of Sunnyvale (2007) 155
Cal.App.4th 525, 556.)
       Although section 1717 attorney fees pertain only to fees
incurred to litigate applicable contract claims (Santisas, supra,
17 Cal.4th at p. 615), attorney fees need not be apportioned
where causes of action in which fees are proper do share common
issues with causes of action in which fees are not allowed. (See
Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129–130;
Drouin v. Fleetwood Enterprises (1985) 163 Cal.App.3d 486, 493
[apportionment unnecessary where claims involve “common core
of facts or are based on related legal theories”].) This rule applies
where claims for relief are so intertwined that it would be
impractical or impossible to separate the attorney’s time into
compensable and noncompensable units. (Bell v. Vista Unified
School Dist. (2000) 82 Cal.App.4th 672, 687.)
       Engage’s causes of action each involved the Master
Agreement, the Agreement, or the Amendment. Some involved
more than one of those agreements. To the extent Engage’s
claims involved the later agreements that lacked an attorney fees
clause, the factual and legal issues were common with the former
agreements. The trial court acted within its discretion in
declining to apportion fees.
                                  B
       The court did not abuse its discretion in setting the amount
of the fees. It properly concluded Amobee’s request was

                                 12
reasonable given the three versions of the complaint, the two
rounds of demurrers, and the complex factual and legal issues.
       Engage says Amobee’s fees request had duplicative entries,
but Engage forfeited this argument by failing to support it with
facts in the trial court. In less than one full page of argument,
Engage’s opposition to Amobee’s fees request said the fees were
unreasonable because the case was neither novel nor complex
and “there appears to be duplicative efforts by defense counsel.”
The trial court noted Engage failed to identify specific time or
work that was improper or excessive. Engage later identified
time entries in a supplemental brief, but the trial court had not
authorized additional briefing on this point. Engage raises these
belated arguments again on appeal without an explanation for its
delay in the trial court. The court did not abuse its discretion by
declining to consider Engage’s late and unauthorized briefing on
this matter.
                           DISPOSITION
       We affirm the order granting the attorney fees and award
costs to Amobee, Inc.

                                           WILEY, J.

We concur:

             STRATTON, P. J.               HARUTUNIAN, J.*

*     Judge of the San Diego Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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