Fee Clause Interpretation And Allocation: Substantial Fee Award Affirmed Where Fees Clause Was Broad In Nature And All Claims Based On Same Operative Facts

Fourth District, Division 2 Sustains $382,233.25 Fee Award Under Code of Civil Procedure Section 1021.

     As we have reminded readers before, a broad fee clause will frequently give winning litigants a “big bonus” for fee recovery purposes: the broader the clause, the better the chances that noncontractual claims will be found to give rise to fee recovery. The next case we look at is an example of how a substantial fee recovery can flow from a broadly worded attorney’s fees clause.

     Roadway Construction Co., Inc. v. Hanson Enterprises, Inc., Case No. E046037 (4^th Dist., Div. 2 Nov. 19, 2009) (unpublished) involved a grading contractor which sued the former owner of the property subject to its construction for breach of contract, unjust enrichment, and declaratory relief, requesting attorney’s fees based on a fees clause in the grading contract. The clause read this way: “If any arbitration or legal action is commenced between the parties concerning the Contract Documents, or the rights and duties of any person in relation thereto, the party prevailing in such action shall be entitled to recover its attorney’s fees and costs in connection therewith from the losing party.” The trial court dismissed the unjust enrichment claim based on the two-year statute of limitations, which prompted contractor to dismiss the other claims with prejudice. Later, the lower court awarded former owner contractual attorney’s fees of $382,233.25, prompting an appeal by contractor.

     Contractor lost.

     Under Code of Civil Procedure section 1021, the parties can agree to pay attorney’s fees in both tort and contract cases. This means that a broad contractual provision for fees is not dependent on Civil Code section 1717. (Topanga and Victory Partners, LLP v. Toghia, 103 Cal.App.4^th 775, 787 (2002).) Because all of contractor’s claims related to grading work, successful defendant—the successor to the prior owner that was a signatory to the contract—was allowed to recoup fees under the broadly worded fees clause. Contractor could not rely on the Santisas voluntary dismissal immunity because the unjust enrichment claim—which was actually adjudicated—was covered by the broad fees clause. No apportionment of fees was necessary between claims because all were based on the same operative facts and issues. (Erickson v. R.E.M. Concepts, Inc., 126 Cal.App.4^th 1073, 1083 (2005).) Result: fee award affirmed.