Even Though Losing Opponent Prayed for Fee Recovery in Complaint, Estoppel Theory Did Not Justify Awarding Fees Where Opponent Never Had Entitlement to Recover Fees.
The Sixth District Court of Appeal, in Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, Case No. H029980 (6th Dist. April 30, 2008), published a decision about an estoppel issue that frequently is raised during attorney’s fee motion proceedings.
Here is the estoppel issue as framed in most fee proceedings: even though a losing party never had a contractual basis for a fee award, can the winner still recover fees because the losing party prayed for recovery of fees in its Complaint?
There are appellate courts saying “yes.” See, e.g., Manier v. Anaheim Business Center Co., 161 Cal.App.3d 503, 505-507 (1984); Jones v. Drain, 149 Cal.App.3d 484, 489 (1983); International Billing Services, Inc. v. Emigh, 84 Cal.App.4th 1175, 1189 (2000).
There also are appellate courts saying “no.” See, e.g., Sessions Payroll Management, Inc. v. Noble Construction Co., 84 Cal.App.4th 671, 680-682 (2000); California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc., 96 Cal.App.4th 598, 608-609 (2002); Leach v. Home Savings & Loan Assn., 185 Cal.App.3d 1295, 1307 (1986).
The Sixth District solidly put itself in the “no” side of the debate on this issue. It concisely held: “We believe the better rule is the one stated in Leach, supra, 185 Cal.App.3d at page 1307: A party claiming fees under [Civil Code] section 1717 must ‘establish that the opposing party actually would have been entitled to receive them if he or she had been the prevailing party.’ (Italics in original.)” (Slip Opn., at pp. 48-49, footnote omitted.)
Blickman Turkus also engages in an extended discussion of why contrary decisions are wrongly decided, poorly reasoned, or indecipherable because the fee clause is not quoted. This case is must reading when it comes to parsing through the fee estoppel theory frequently raised in section 1717 fee disputes.