Civil Code Section 1717: Mutuality Of Remedy Means Winner Gets Fees Even If Winner Proves There Was No Valid Contract

Recent Case Illustrates Operation of this Mutuality Principle.

     In Silva v. Tong, Case No. A124903 (1^st Dist., Div. 4 Dec. 11, 2009) (unpublished), plaintiff sought to enforce a purchase offer with an attorney’s fees clause as an enforceable contract even though it was never signed by defendants. Defendants were granted summary judgment, and then sought to recoup attorney’s fees and costs. They requested $80,581 in fees and $3,978 in costs, but the lower court awarded defendants $53,721 in fees and $3,978 in costs. Plaintiff appealed.

     Although her appeal of the summary judgment grant was dismissed based as being untimely in nature, the Court of Appeal decided the merits of the fee award despite ignoring some appellate transgressions (namely, failing to cite to the record and filing a noncompliant appellant’s appendix).

     The appellate panel noted an important policy permeating Civil Code section 1717: mutuality of remedy, that doctrine making a unilateral fees clause bilateral in effect. The mutuality principle at issue in this case was that a party prevailing under section 1717 (an action involving a written fees clause in a contract) is entitled to fees even when it wins on the grounds that the contract was inapplicable, invalid, unenforceable or nonexistent, if the party losing the action would have entitled to fees had it prevailed. (Rainier National Bank v. Bodily, 232 Cal.App.3d 83, 86 (1991).) That principle cemented the fee determination in favor of defendants.

     Plaintiff did challenge the amount of fees awarded, but that was easily dispatched as not being an abuse of discretion (the relevant standard on appeal). After all, the awarded fees were $26,860 less than what was requested by defendants.

     Plaintiff also made an interesting argument that the fee award was out of whack with other fee awards rendered in Alameda County Superior Court. This argument was swatted down with this observation: “ . . . fee awards made in other cases are irrelevant in any event, because they have no bearing on the consideration of the particular factors relevant to the determination of fees in this case.” (Slip Opn., p. 4.)