Award of Over $477,000 in Fees/Costs Went POOF!
In Fong v. Sheridan, Case Nos. A144286/A14522 (1st Dist., Div. 1 Apr. 21, 2016) (unpublished), buyers of seaside property sued seller and a dual broker agent for breach of contract, intentional misrepresentation, negligent misrepresentation, and rescission after dual agent told buyers at a pre-sale stage that foul odors in the house were attributable to “sea air,” when instead they emanated from a post-sale discovery of a buried oil and septic tank on the property.
Dual agent settled for $275,000, which was confirmed as a good faith settlement. After a bench trial, seller prevailed on the contractual and intentional misrepresentation claims, but was found vicariously liable on the negligent misrepresentation claim for the misrepresentations of the dual agent. The trial court awarded $91,635 to buyers, but found nothing was owed after offsetting the $275,000 settlement with dual agent. The lower court then found that seller was the prevailing party and awarded him $456,032.50 in attorney’s fees and $21,057.35 in costs based on a fees clause in the real estate purchase agreement.
Buyers appealed, and obtained a reversal/remand on appeal.
The lower court’s statement of decision was deficient in not identifying why it awarded what it did in compensatory damages to buyers on the negligent misrepresentation claim. However, buyers also claimed they were the prevailing parties for fee award purposes. With respect to the contractual fee win by seller, the appellate court agreed that buyers could not be the prevailing parties. With respect to the negligent misrepresentation claim, buyers might be the prevailing parties based on a broad fees “arising out of” fees clause depending on what the trial court does on remand as far the damages recalculation. So, the damage “redo” also meant that the lower court had to do a revisit of which side prevailed after some remand work.