Court Opinion

ID: 9861447
Source: CourtListenerOpinion
Date Created: 2023-09-25 00:03:02.497283+00
Date Added: 2024-06-11T11:28:29.307449
License: Public Domain

TAMURA, Acting P.
I respectfully dissent. The majority’s restrictive construction of Civil Code section 1717 will enable the contracting party with the superior bargaining strength to thwart the salutary purposes sought to be achieved by the statute.
The fundamental rule of statutory interpretation is ascertainment of legislative intent and effectuation of the purpose of the law. (Moyer v. Workers’ Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230 [110 Cal.Rptr. 144, 514 P.2d 1224]; Select Base Materials v. Board of Equalization (1959) 51 Cal.2d 640, 645 [335 P.2d 672].) Section 1717 was intended to create a reciprocal right to attorney fees when the contract accords that right to one party (usually the one with superior bargaining power) but not to the other (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128 [158 Cal.Rptr. 1, 599 P.2d 83]; International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 223 [145 Cal.Rptr. 691, 577 P.2d 1031]), and to prevent one-sided attorney fee provisions from being used as instruments of oppression to exact settlements of dubious or unmeritorious claims (Coast Bank v. Holmes (1971) 19 Cal.App.3d 581, 596-597 [97 Cal.Rptr. 30]). Reciprocity was designed to place the parties on an equal footing in the event either party finds it necessary to pursue judicial remedies in the enforcement of his or her respective contractual rights.
In the case at bench, the contract consists of defendant’s one-page standard printed form in which the contractor agrees to perform the work “in a substantial and workmanlike manner” for a specified sum to be paid by the owner. The attorney fee provision of the contract reads: “In the event that default should occur in the payment of the contract price or any part thereof, Owners agree to pay Contractor’s reasonable attorney’s fees and court costs incurred by Contractor to enforce payment herein.”
Plaintiffs sued defendant for damages for failure to perform the work in a workmanlike manner. Although plaintiffs prevailed in the action, the majority holds that they are nevertheless precluded from recovering attorney fees because the contract only provided for attorney fees incurred by the contractor to enforce payment of the contract price. This holding, if permitted to stand, will effectively destroy the reciprocity the Legislature intended to achieve by enacting section 1717.
*455If the contract had provided that the owners agree to pay reasonable attorney fees in the event the contractor brings an action “to enforce the provisions of the contract,” there could not be the slightest doubt but that plaintiffs would have been entitled to attorney fees under section 1717. The distinction between the phrase “to enforce the provisions of this contract” and “to enforce payment herein” is purely one of semantics insofar as reciprocity under section 1717 is concerned. The promise for which the contractor agreed to perform was the owners’ promise to pay; insofar as the contractor is concerned enforcement of that promise is the equivalent of the enforcement of the contract. Accordingly the reciprocity accorded by section 1717 requires payment of attorney fees in an action by the owners against the contractor to enforce the promise for which they agreed to pay—the promise to perform the work in a workmanlike manner. The reciprocity mandated by the statute is not limited to attorney fees incurred in defending an action brought by the party in whose favor the attorney fee clause is drawn. Section 1717 extends reciprocity to “any action on a contract” where the contract contains an attorney fee clause in favor of one of the parties. (System Inv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 162-164 [98 Cal.Rptr. 735]; see Barber v. LeRoy (1974) 40 Cal.App.3d 336, 340 [115 Cal.Rptr. 272] [counterclaim]; Coast Bank v. Holmes, supra, 19 Cal.App.3d 581 [cross-complaint]; see also Schoolcraft v. Ross (1978) 81 Cal.App.3d 75, 82 [146 Cal.Rptr. 57]; italics supplied.)
Our Supreme Court has held that section 1717 “reflects legislative intent that equitable considerations must prevail over both the bargaining power of the parties and the technical rules of contractual construction.” (International Industries, Inc. v. Olen, supra, 21 Cal.3d 218, 224.) The majority’s approach that section 1717 “was meant to have only a selective and literal application” (ante, p. 449) is completely at odds with the above interpretative guideline prescribed by the Supreme Court and which has been consistently followed by reviewing courts in applying section 1717. For example, in one of the earliest cases arising under the section, this court applied the statute to preexisting contracts in order to effectuate the remedial purpose of the statute. (Coast Bank v. Holmes, supra, 19 Cal.App.3d 581, 597.) This court also held that a lessee was entitled to attorney fees under section 1717 even though it successfully defended an action by the lessor by proving there never was a valid or enforceable lease. (Care Constr., Inc. v. Century Convalescent Centers, Inc. (1976) 54 Cal.App.3d 701, 707 [126 Cal.Rptr. 761].) Similarly, in its most recent decision involving the section, the Supreme Court held that section 1717 provided a recip*456rocal remedy for a nonsignatory defendant who was sued on a contract as if he were a party to it. (Reynolds Metals Co. v. Alperson, supra, 25 Cal.3d 124, 128.)
Nor do the cases cited by the majority support its conclusion. Stout v. Turney (1978) 22 Cal.3d 718 [150 Cal.Rptr. 637, 586 P.2d 1228] and McKenzie v. Kaiser-Aetna (1976) 55 Cal.App.3d 84 [127 Cal.Rptr. 275], were tort actions and hence did not satisfy the statutory requirement of “any action on the contract.” Meininger v. Larwin-Northern California, Inc. (1976) 63 Cal.App.3d 82 [135 Cal.Rptr. 1], involved an attorney fee clause which covered tort actions arising in connection with a contract, rather than a contract action.
The majority seeks to support its narrow view of section 1717 on the theory that the interpretation advocated by plaintiff would encourage frivolous and vexatious litigation. The majority’s concern is groundless. Section 1717 only permits the prevailing party to recover attorney fees, prevailing party meaning the party “in whose favor final judgment is rendered.” More importantly, as we noted in Coast Bank v. Holmes, supra, 19 Cal.App.3d 581, 597, at footnote 3: “Civil Code section 1717, is part of an overall legislative policy designed to enable consumers and others who may be in a disadvantageous contractual bargaining position to protect their rights through the judicial process by permitting recovery of attorney’s fees incurred in litigation in the event they prevail. (See e.g., Civ. Code, § 1811.1 [Installment Sales Contracts]; Civ. Code, § 2983.4 [Conditional Sales Contracts]; Civ. Code, § 1794.1 [Sale Warranties Of Consumer Goods]; Civ. Code, § 1812.94 [Health Studio Contracts]; Civ. Code, § 1732 [Swimming Pool Construction Contracts].)” The reciprocity required by section 1717 furthers the same legislative policy which led to the enactment of the consumer protection statutes noted above.
The majority asks the rhetorical question whether the owner would under the instant contract “expect to have to pay the contractor’s attorney’s fees as well as his own should the owner sue for failure to build in a workmanlike manner and lose?” (Ante, p. 451.) The significance of the question is not entirely apparent to me, but the answer is an obvious “Yes.” Section 1717 provides that in such actions the “prevailing party” shall be entitled to recover attorney fees. In the hypothetical posed by the majority, the contractor would be the prevailing party. The same would be true if the contractor sued to enforce collection of the price. If *457he lost, he would have to pay the owners’ attorney fees as well as his own.
The majority misreads Professor Slawson’s article (Mass Contracts: Lawful Fraud in California (1974) 48 So.Cal.L.Rev. 1) when it says that the author assumes the law to be in accord with the trial court’s resolution of the instant question, and inferentially with the majority opinion. (Ante, pp. 448, 450.) I fail to find such assumption in the article. Professor Slawson simply points out that a mass contractor who anticipates that he will be more likely to be suing the consumer than be in a position of being sued by the consumer will provide for recovery of litigation expenses in his standard contract form, but if he anticipates the opposite he will not. The commentator, thus, makes the point that despite section 1717, the consumer’s right to recover attorney fees will depend on whether or not the mass contractor decides to include an attorney fee clause in its standard contracts.
I respectfully conclude that the majority’s construction of section 1717 to the instant case will revive the evils of the one-sided attorney fee clauses which were intended to be remedied by the statute. Purveyors of standardized contracts will be able to avoid the reciprocity requirement of section 1717 simply by providing that in the event suit is brought to enforce payment of the contract price or any part thereof, the consumer agrees to pay reasonable attorney fees.
I would reverse the judgment with directions to award plaintiffs reasonable attorney fees incurred in the prosecution of this action in the court below and on appeal.
Appellants’ petition for a hearing by the Supreme Court was denied January 14, 1980. Tobriner, J., and Mosk, J., were of the opinion that the petition should be granted.