Fourth District, Division Three Affirms Denial of Fee Award Where Trial Court Found No Bad Faith on the Part of Losing Plaintiff; Automobile Sales Finance Act Did Not Provide Basis For Fee Award Either.
Certain truisms abound in the California attorney’s fees area. Each side bears their own respective costs (including attorney’s fees) in the absence of a contract of statute dictating otherwise. The primary contractual fee authorization section, Civil Code section 1717, is imbued with mutuality—except in rare instances, one-sided attorney’s fees clauses are interpreted as reciprocal in nature. However, that same mutuality result does not necessarily occur with respect to statutory fee-shifting statutes. That depends on the legislative wording of the particular issue at stake. The next case illustrates the non-reciprocal nature of the fee-shifting provision of the Consumer Legal Remedies Act (CLRA), Civil Code section 1750 et seq.
In Olson v. Irvine Imports, Inc., Case No. G039692 (4th Dist., Div. 3 Sept. 24, 2008) (unpublished), plaintiff sued for CLRA violations. Defendants prevailed after a jury trial and moved to recover attorney’s fees. Under the CLRA, the fee-shifting provision is non-reciprocal by only awarding fees to prevailing defendants unless the plaintiff brought the CLRA claim in subjective bad faith. Otherwise, the fee-shifting provision is mandatory, albeit in plaintiff’s favor. (Civ. Code, sec. 1780(d); Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915, 924, 926 (2004).) The trial court denied the fee request, observing “there was really no bad faith with regard to bringing this action….I think it was a great case, both sides did a great job.” Defendants appealed the fee denial.
Justice Ikola, writing for a 3-0 panel of the Fourth District, Division Three, affirmed. Aside from not providing an adequate record to demonstrate an abuse of discretion in the ruling, defendants did not dispute that the plaintiff’s complaint survived summary judgment and that the jury vote was 9-3 for the defense. This demonstrated that plaintiff’s claims had “at least some merit.”
Defendants then argued that fee recovery should have been allowed under the Automobile Sales Finance Act (ASFA), Civil Code section 2981 et seq. ASFA awards attorney’s fees to the prevailing party in any action on a contract subject to ASFA, if the prevailing party actually prevailed on an ASFA claim. (Civ. Code, sec. 2983.4; Brown v. West Covina Toyota, 26 Cal.App.4th 555, 566 (1994).) This contention failed because (a) the complaint contained no ASFA claim; (b) ASFA does not allow for fee recoupment simply because an automobile sales contract was part of the backdrop of an action; and (b) the defense construction of ASFA “would nullify the CLRA’s non-reciprocal attorney fee provision whenever a plaintiff alleges a business misrepresented the terms of an automobile sales contract. Consumers buying cars would receive less protection under the CLRA than consumers buying other goods. Defendants offer no persuasive authority the Legislature countenanced this absurd result.” (Slip Opn., at p. 5.)
Beyond that, Justice Ikola cited authorities indicating that non-reciprocal fee shifting statutes usually prohibit an attorney’s fees award to the defense for successfully defending the statutory claim and non-statutory claims that overlap—with any other result superimposing a judicially declared principle of reciprocity on a non-reciprocal fee-shifting statute. (See Carver v. Chevron U.S.A., Inc., 119 Cal.App.4th 498, 504 (2004); Wood v. Santa Monica Escrow Co., 151 Cal.App.4th 1186, 1191 (2007).) Furthermore, the defense never demonstrated that any of the requested fees were solely allocable to non-CLRA claims, and the nature of the case showed that all claims seemed to “overlap” the CLRA cause of action.
In Olson, plaintiff lost the merits battle, but did not suffer fee exposure based on the non-reciprocal operation of the CLRA fee-shifting statute.