First District, Division 2 Determines Fee Clause Only Allows For Recovery of Fees in Arbitration Proceeding.
Unless there is ambiguity or mistake, courts are generally charged with enforcing contracts as written. This applies equally to fee clauses in contracts, as the next unpublished decision illustrates.
In Quraishi v. Delta Pools and Patios, Inc., Case No. A120697 (1st Dist., Div. 2 Mar. 13, 2009) (unpublished), plaintiff pool company recovered a default judgment for $42,582.50 in compensatory damages, $2,640 in prejudgment interest, $14,325.90 in attorney’s fees, and $618 in costs against the owners of the property where the pool was being installed. Property owners appealed. Although they lost the challenge to the broader default judgment, they did gain a reduction in compensatory damages and elimination of the fee award in entirety.
The fee award had to be eliminated because the fee clause in the swimming pool contract between the parties stated: “Both parties agree that the non-prevailing party of any arbitration shall pay all costs associated with said arbitration, including attorney’s fees.” Victorious pool company, of course, did not proceed to arbitration such that the attorney’s fees incurred in the litigation were not recoverable under the express language of the contract between the parties. As such, pool company could not recover fees, because the fee clause was limited to recovery in arbitration proceedings—something that did not occur in light of the default judgment in the court action. (See Pearl, Cal. Attorney Fee Awards (2d ed. 2008) sec. 6.1, p. 167, citing Kalai v. Gray, 109 Cal.App.4th 768 (2003).)