Fee Clause Was Also Broad In Scope, But Nonsignatory Individuals Were Not Party To The Underlying Agreement.
In Mayhew Plaza Woodland Hills II, LLC v. Kelsey, Case No. G054435 (4th Dist., Div. 3 Aug. 6, 2018) (unpublished), plaintiff dismissed an individual defendant in his capacity as representative of an estate in an action alleging only tort claims, with the individual defendant later awarded $9,000 in attorney’s fees under a broad fees clause in a purchase agreement. The fees clause broadly stated: “In any litigation, arbitration, or other legal proceeding which may arise between any of the parties hereto, including Agent, the prevailing party shall be entitled to recover its costs, including costs of arbitration, and reasonable attorneys’ fees in addition to any other relief to which such party may be entitled.”
The 4/3 DCA, in an opinion authored by Justice Bedsworth, reversed. The problem was that “Agent” was specifically defined to be a broker in the transaction. Another flaw was that none of the individuals named in the action were “parties,” as distinct from the signatories (such as a limited partnership). The general partner was not liable for fees simply because he signed a contract on behalf of a limited partnership. “Nothing in this agreement indicates that the parties intended an already wide-ranging fee provision would apply to anyone who happened to get swept up in litigation between the contracting parties.” (Slip Op., p. 9.) Similarly absent was any showing that the agreement was intended to benefit the general partner individual defendant. (Whiteside v. Tenet Healthcare Corp., 101 Cal.App.4th 693, 709 (2002).)