CALIFORNIA ATTORNEY'S FEES

Private Attorney General: Property Owner’s Proposition 218 Win Over Water Rates Justified $89,500 Attorney’s Fees Award Under CCP § 1021.5

Fee Award Was Less Than Requested $188,806.50.

            Miner’s Camp, LLC v. Foresthill Public Utility District, Case No. C088828 (3d Dist. June 23, 2022) (unpublished) demonstrates how private attorney general awards will be allowed even where the litigant has some self-interest in the fight, as long as an award is not disproportionate and benefits others.

            What happened in this one was that plaintiff, a property owner in the unincorporated community of Foresthill, CA, successfully challenged a water district’s rate increase under Proposition 218.  After the win, plaintiff moved for $188,806.50 in private attorney general fees, with the lower court awarding $89,500. 

            The water district’s appeals of the merits determination and fee award were unsuccessful.  Plaintiff’s win had benefited all the district’s customers, not just plaintiff, through the abandonment of its deficient rate structure—a significant nonpecuniary benefit to others.  Then, district argued that plaintiff had a self-interest in paying less while continuing to take eight cabins’ worth of water every month.  However, a litigant’s pecuniary interest in the litigation outcome is not disqualifying, only if the expected value of the plaintiff’s own monetary award exceeds by a substantial margin the actual litigation costs.  In fact, the primary effect test for purposes of a plaintiff’s personal economic interest is really confined to catalyst issues, not rising to disqualification automatically outside of those situations.  Finally, the necessity of private enforcement prong was cleared because nothing indicated the district was going to voluntarily change its water rate structure to comply with Proposition 218—especially given that the district rejected plaintiff’s government claim and refused to change its rate structure.  Fee award affirmed. 

Family Law: No Abuse of Discretion In Trial Court’s Denial Of Need-Based Fees To Mother Where Clear Disparity Existed Between The Parties’ Ability To Obtain Counsel

Family Code Section 2030 Is Controlled By Section 2032, And Financial Resources Are Only One Factor To Consider In Determining Whether An Award Under Section 2030 Would Be Just And Reasonable.

            The trial court denied a $33,000 need-based attorney fees and costs request made by mother in a child custody dispute where it found a clear disparity existed between mother’s and father’s access to legal representation – with father having greater ability to pay for representation.  Mother appealed in Marriage of Rogers, Case No. G059810 (4^th Dist., Div. 3 June 20, 2022) (unpublished) – claiming that once the trial court found a disparity between the parties’ access to funds to retain counsel, it was required under Fam. Code section 2030 to make an attorney fee award in her favor, and that the trial court was punishing her for her personal shortcomings and relying on improper factors – her conduct that led to an emergency change in custody, the fact that father was the prevailing party, and whether the parties acted in good faith.

            In a 3-0 opinion authored by Presiding Justice O’Leary, the 4/3 DCA affirmed.  While section 2030 aims to ensure parity between the parties in family law actions in their ability to obtain counsel, it does not mandate that a trial court simply redistribute funds of the party with greater financial resources.  As has always been the case, section 2030 is controlled by section 2032, and financial resources are not the only factor for a trial court to consider in determining whether to make a section 2030 award.  Section 2032 requires that a fees award under section 2030 be “just and reasonable under the relative circumstances of the respective parties.” 

            Here, the appellate panel found, the trial court properly considered the totality of the circumstances in denying mother’s fee request – including the nature of the litigation, which father pursued for the protection of the well-being of the parties’ minor children, mother’s lack of compliance with the trial court’s orders, and the expenses brought about as a result of the litigation.  Although mother had less financial resources than father, her financial resources combined with her new husband’s resources afforded her the ability to pay her own attorney fees. She was able to retain counsel and to have competent legal representation throughout the proceedings.  Additionally, father carried the greater financial burden in this litigation – paying for mother’s alcohol evaluator, partial child custody investigation, the children’s attorney fees and therapist, and the costs of the monitor for mother’s visitations in addition to his own attorney fees.

Fees, Civil Rights, Employment: USDC Central District Judge Awards Full Freight Fee Award In Waiting-Time Penalties Case

Judge Finds That Fee Award Of $342,782.50 Is Reasonable In Waiting-Time Penalties Case.

        On June 17, 2022, the Hon. R. Gary Klausner issued a fee award to the prevailing plaintiff in a waiting-time penalties case. Caley Rae Pavillard v. Ignite International, Ltd. et al., USDC Central District No. 2:21-cv-01306-RGK-Ex.

        Though the fee award is not part of a published opinion, it is interesting in several respects. 

        First, this case arose out of what should have been a payment of $3,000 to plaintiff for her modeling work during a photo shoot. The court describes the factual background: "The shoot took place on October 5, 2018. However, despite Plaintiff's request for payment, Defendant did not pay her wages until May 22, 2020 -- nearly two years later. On that date, Defendant wired $3,000 to Plaintiff's agent, LA Models, who took a 20% cut and sent the remaining amount to Plaintiff." 

         Second, while it would seem unusual for a $3,000 case to generate $342,782.50 in fees, keep in mind that thirty days of waiting time penalties could amount to $3,000 X 30 = $90,000 -- and here, payment was not made immediately after 30 days, but rather made only after more than 1 1/2 years. And the Labor Code provided a basis for awarding attorney's fees.

        Third, Judge Klausner considered the bases for the award: the legal basis for fee entitlement and the reasonableness of the request: reasonableness of hourly rates, reasonableness of hours expended, and reasonableness of a lodestar multiplier of 1.5. A request for a lodestar multiplier was rejected by the judge.

        Fourth, the judge considered that the case lasted 2 years, proceeded to a jury trial, and plaintiff "achieved complete success."

        COMMENT: Defendant could have had a better outcome by timely paying $3,000. Indeed, Defendant would have had a better outcome if the waiting-time penalties had been paid, without proceeding to a jury trial. If the fee award is upheld on appeal, Defendant will be on the hook for the fee award, and will have likely incurred significant attorney's fees defending itself. While an attorney's fees award can be appealed by a defendant, it may well be an uphill battle when an experienced judge who has participated in a jury trial considers and analyzes the factors that support a fee award, and incidentally, denies plaintiff's request for a lodestar multiplier. And appeals to the 9th Circuit are not inexpensive.

        

Prevailing Party, Section 1717: Performance Bond Surety Protecting Contractor Was Not The Prevailing Party Under Civil Code Section 1717 Where City Defensed Contractor’s Contract Claims And Surety Held City’s Contractual Recovery To Just $1.00

Lopsided Results May Make One A Prevailing Party, But The Outcome Was Mixed So The Lower Court Had Discretion To Determine No Side Prevailed.

            In the Civil Code section 1717 area, a prevailing party is one which has only “good news” as far as prevailing in litigation.  Anything else, unless a result is overwhelmingly lopsided, means the lower court has discretion to determine what side prevailed or to determine no one prevailed.

            Whether the outcome was “lopsided” was the prime issue considered on appeal in City of Los Angeles Dept. of Airports v. U.S. Specialty Ins. Co., Case No. A162183 (1^st Dist., Div. 5 June 15, 2022) (published). 

            What happened is that contractor basically claimed that L.A. city was at fault in breaching a contract with contractor (although performance bond surety was protecting contractor’s interest as it had to under the performance bond).  In turn, city claimed contractor was at fault and independently sought $3.4 million in damages under its own contract claim against contractor.  At the end of the day, contractor lost its claims, and city won its contract claim to the nominal tune of $1.00.  After a prior appeal determined that a contractual provision was a real fees clause rather than an indemnity provision, both sides moved for fees.  The lower court denied both requests, determining the outcome was mixed so that no one prevailed.

            Surety appealed the fee denial, but that determination was affirmed on appeal by the 1/5 DCA.  Keeping in mind that contractor and performance bond surety were “lockstep” in the litigation, no abuse of discretion was committed by the lower court.  After all, contractor lost its claims while city vindicated that it was not at fault as well as won on its contract claim, albeit only gaining a $1 pyrrhic victory.   Even though surety did beat back the $3.4 million damages claim by city, surety did not vindicate contractor’s claims.  The results were mixed; this specific case was not “lopsided” under the circumstances to dictate a legal determination that surety prevailed for section 1717 purposes. 

            We will note that the lower court did a good job of defining surety’s litigation objectives so that the appellate court had a nice compass to use when deciding the case.  This counsels litigation practitioners to develop a good record and aid the lower court in articulating the litigation objectives when a prevailing party contest is at issue—this will provide a “road map” for jurists considering the issue at all levels of judicial scrutiny.

Landlord/Tenant: Reversal Of A Directed Verdict Claim Meant Costs Award Was Reversed

However, Fee Award On A Withdrawn Claim Was Not Challenged On Appeal And Not Impacted By The Directed Verdict Reversal.

            In Pennypacker v. Yuen, Case Nos. A157680/A157985 (1^st Dist., Div. 2 June 15, 2022) (unpublished), tenant asserted tort, inhabitability, San Francisco administrative code claims, and a UCL claim against landlord.   Landlord made a pretrial CCP § 998 offer for $15,000, which tenant did not accept.  Tenant withdrew an administrative code claim bearing fee exposure on the first day of trial.  The lower court directed a verdict on the other administrative code claim, but the tenant won an award of $13,000 from the jury based on tort/inhabitability claims.  Given that the jury verdict was less than the $15,000 § 998 offer, the lower court awarded landlord costs of $51,507.09 and attorney’s fees of $9,495.72 as the prevailing party.

            Tenant’s appeal produced a reversal of the directed verdict order, which meant that the $51,507.09 costs award had to be vacated to see what happens on remand.  However, the fee award stood up for two reasons: (1) tenant never challenged it on appeal; and (2) it was not impacted by the reversal of the directed verdict because it dealt with a voluntarily withdrawal of a claim not involved in the directed verdict ruling.

Appealability, Deadlines: Co-Defendant’s Failure To Appeal Judgment Or Fee Denial Order Was Fatal To Appellate Consideration Of The Fee Denial Challenge

Co-Defendant Could Not “Hitch” Onto Appeals By Other Defendants.

            In Greenfield LLC v. Kandeel, Case No. B297194 (2d Dist., Div. 5 June 14, 2022) (unpublished), a co-defendant was denied attorney’s fees and argued that denial was incorrect in an appellate case filed by other defendants.  The appellate court held it had no jurisdiction to consider co-defendant’s challenge because co-defendant did not appeal either the judgment or the fee denial order.  That party could not take advantage of appeal notices by other defendants in the overall appellate case. 

Costs: Where Successor Trustee Had To Join Parties Ultimately Dismissed To Obtain Possession Of Premises, Routine Costs Were Properly Awarded To Trustee For Activities Relating To the Dismissed Defendants

Prevailing Party Determination Is Pragmatic On Costs Awards As Well.

            Successor trustee in Sutherland v. Arent, Case No. A161411 (1^st Dist., Div. 1 June 14, 2022) (unpublished) was awarded costs after she finally obtained possession to a rental cabin by including dismissed defendants, with the dismissed defendants relinquishing possession to the trustee.  The primary defendants argued that they should not be saddled with routine costs relating to activities associated with the dismissed defendants.  The appellate court disagreed, holding that costs associated with a dismissed defendant are recoverable against remaining defendants where the remaining defendants’ actions made it necessary to add the dismissed defendants as parties.  (Transamerica Title Ins. Co. v. Green (1970) 11 Cal.App.3d 693, 704; Davis v. Wilde (1961) 197 Cal.App.2d 855, 857.)

Reviews: Co-Contributor Marc Has Article In Daily Journal About Waiver Of The Right To Arbitrate

The Article Is Entitled, "The United States and the California Supreme Courts are not on the same page."

        Several years ago, colleagues Mike and Marc of this blog litigated the issue of waiver of the right to arbitrate in the 9th Circuit. Their client prevailed in the case, but lost the skirmish arguing about whether their client had waived the right to arbitrate. Now, Marc has an article in the June 10, 2022 online edition of the Daily Journal, contrasting the United States and California Supreme Courts' divergent views about waiver of the right to arbitrate. Accessing the Daily Journal online requires a subscription.

Costs: 9th Cir. Reverses FRCP 41(d) Fees As Costs Award For No Statutory Entitlement and No Allegations/Proof Of Bad Faith – Determining Fees Are Not Automatically Costs, But Majority Refuses To Determine If Allowed For Bad Faith/Forum Shopping

Partially Concurring/Dissenting Justice Would Vacate Costs Award And Remand To Determine If Bad Faith Existed, Wanting Ninth Circuit To Join Sister Circuits Finding That Bad Faith Can Be A Predicate For A Fees As Costs Award.

            Moskowitz v. American Savings Bank, F.S.B., No. 20-15024 (9^th Cir. June 10, 2022) (published) involved an interesting “attorney’s fees as costs” issue which drew a split decision.

            The plaintiff in a Telephone Consumer Protection Act case (which has no statutory basis for fees to a prevailing party) lost on a successful summary judgment motion by the defense after voluntarily dismissing a previous case against defendant in Connecticut (the dismissal being without prejudice and without costs).  The Ninth Circuit affirmed the summary judgment grant.  Defendant moved for routine costs and then attorney’s fees as additional costs under Federal Rules of Civil Procedure, rule 41(d), which were awarded by the district judge.  The Ninth Circuit majority, in a decision authored by Circuit Judge Bea, affirmed the routine costs award but reversed the “fees as costs” award.  Circuit Judge Wardlaw, in partial concurrence and in partial dissent, would have vacated and remanded the “fees as costs” award rather than reverse it outright.

            The Ninth Circuit, across the board, agreed that attorney’s fees are not automatically costs; rather, there must be a statutory basis for fees (none existed under the TCPA) or there must be allegations/proof of bad faith conduct, including forum shopping.  The majority found that bad faith was neither alleged nor proven, such that a reversal of the “fees as costs” award should occur.  In dissent, Circuit Judge Wardlaw would have vacated the “fees as costs” award and remanded to determine if there was bad faith, writing that the Ninth Circuit should join sister circuits to reach consensus that rule 41(d) did allow fees as costs where bad faith was shown. 

Ethics, Reasonableness Of Fees: 2/8 DCA Justice Wiley Suggests That Ethical Games And Unprofessionalism Will Justify A Fee Recovery Denial Or Reduction

Case Did Not Involve Fees, But His Lesson Should Be Paid Attention To.

            Although the opinion in Field v. U.S. Bank National Association, Case No. B309111 (2d Dist., Div. 8 June 9, 2022) (published) is not an attorney’s fees decision per se, an observation early on in the opinion, authored by Justice Wiley, should be paid attention to.  He notes that ethical gamesmanship and unprofessionalism can give rise to denial of an attorney’s fees request or a reduction.  He cites Karton v. Ari Design & Construction Inc., 61 Cal.App.5^th 734, 747 (2021) [discussed in our March 10, 2021 post] for that proposition, an opinion he also authored and which does support that point.

SLAPP: Appellate Court’s Reversal Of SLAPP Denials Meant That Fee Denial Had To Be Reversed And Remanded For A Fee Determination

Even If Construed As A “Partial” SLAPPback, No Authority Cited To Preclude Fee Recovery.

            In J.B.B. Investment Partners, Ltd. v. Fair, Case No. A160098 (1^st Dist., Div. 2 June 9, 2022) (unpublished), defendant attorneys filed an anti-SLAPP motion which was granted on an abuse of process count and denied on other counts brought by plaintiff.  The lower court also denied a fee request.  The 1/2 DCA reversed, finding the SLAPP motion should have been granted on the other counts so that the fee denial had to be reversed and remanded for a determination of reasonable fees.  It did not believe this was a “SLAPPback” situation, but similarly observed that no authority was cited for the proposition that fees were unwarranted for a “partial” SLAPPback.

Appealability, POOF!: Where Party Appealed A Judgment Which Was Later Amended To Allow One Side Fees And Costs, The Judgment Could Not Be Amended While The Appeal Was Pending

A $119,010 Fee Award Under An Amended Judgment Went POOF!

            Just to show you how the sequence of events can play a big part on appeal, we explain what happened in Kling v. Horn, Case No. B310164 (2d Dist., Div. 7 June 8, 2022) (unpublished).

            An original judgment in a matter stated that each side was to bear its own fees and costs.  Defendant filed a motion to amend the judgment to remove that provision in preparation for filing a motion for attorney’s fees.  Before any rulings on these motions, plaintiff filed a notice of appeal from the judgment.  The lower court eventually did amend the judgment to delete the “bear own fees/costs” language and issued an award of attorney’s fees in favor of defendant and against plaintiff/plaintiff entities to the tune of $119,010.  (In a prior appeal, the panel decided that the appeal stayed any attempt to add plaintiff entities as judgment debtors under CCP § 187.)

            The 2/7 DCA reversed.  It determined that the appeal of the original judgment did stay the attempts to amend the judgment such that the subsequent fees order was not collateral to the original judgment.  Although there are some exceptions, defendant failed to show any of them applied. 

Estoppel: Given That Prior Judgment Was Barred By Judicial Estoppel, Subsequent Fee Award Of $167,044 Based On Contractual Fees Clause Was Proper

“Law Of The Case” Doctrine Applied With Respect To Validity Of Prior Judgment.

            In Hume v. Hume, Case No. A161616 (1^st Dist., Div. 3 June 8, 2022) (unpublished), appellant tried to argue that a judgment was void even though, if it was valid, the judgment gave rise to fee exposure.  The trial court did not buy it, awarding the other side $167,044 in contractual attorney’s fees, with the adverse party not contesting the amount of the fees requested.  The Court of Appeal affirmed, largely on the “law of the case” doctrine which found the prior judgment proper based a judicial estoppel argument.  Once that occurred, the fee award was upheld given there was a contractual basis for fees and the other side did not contest the amount of requested fees. 

Civil Rights: Civil Rights Plaintiff Not Entitled To Attorney’s Fees For Just Defeating A Defense Qualified Immunity Motion Were The Case Was Proceeding To Trial

Prevailing Party Can Only Be Determined After A Trial On The Merits.

            In Senn v. Smith, Case No. 21-35293 (9^th Cir. June 8, 2022) (published), plaintiff brought an excessive force 42 U.S.C. § 1983 claim against certain defendants, obtaining a denial of the defense motion for qualified immunity—a determination affirmed on appeal.  Plaintiff moved for recovery of attorney’s fees under the § 1988(b) civil rights statute based upon being a “prevailing party” after the Ninth Circuit affirmed the denial of qualified immunity and remanded for trial in an unpublished disposition.  The Ninth Circuit denied the fee request as premature because no trial had yet been held so that a prevailing party determination could not be made.  Although plaintiff lived for another day, a merits determination needed to be made for purposes of determining prevailing party status. 

Appealability, Deadlines: County’s Failure To Appeal A Clerk-Served File Stamped Copy Of A Fee Order Within 60 Days Meant The Appeal Was Untimely

Decisions Show That Notice Of Entry Document Service Or File Stamped Order Service Will Trigger The 60 Days Appeal Deadline Time Period For Civil Unlimited Cases.

            This next case is a deadline warning for practitioners whose clients want to appeal a fee ruling, even one where the client is claiming the fees were not high enough.

            The appellant’s appeal of a case claiming a fee award was insufficient in amount was dismissed in County of Napa v. Wesner, Case No. A162794 (1^st Dist., Div. 1 June 8, 2022) (unpublished).  The reason was that the superior court clerk served a “file stamped” copy of the fee award on County (with no language indicating that anything else needed to be done such as preparation of a proposed order), with County not filing an appeal within 60 days after the order was served.  County argued that a “Notice of Entry” document had to be served relating to the order, but the appellate court rejected that argument because:  either a “Notice of Entry” document needs to be served or a file-stamped copy of an appealable order not bearing the “notice of entry” language.  (Russell v. Foglio, 160 Cal.App.4^th 653, 659-660 (2008).)  Further confusion did occur in this case because the trial court did allow the County to submit a further proposed judgment on the fee award, even though the file-stamped minute order contemplated no further action.  The appellate court determined that this new proposed judgment did not restart the deadline periods because the file-stamped order which was served triggered the 60-day period.  (Laraway v. Pasadena Unified School Dist., 98 Cal.App.4^th 579, 583 (2002).)  Appeal of the fee award dismissed on the jurisdictional ground of not timely appealing.

Homeowner Associations: $456,330 Fee Award Against Homeowner, Split Between Two HOA Attorneys, Was Affirmed On Appeal

And, At That, It Was 30% Less Than the HOA Request For Award Of Fees!

            If you visit our “Homeowner Associations” category, you can see a vast array of awards both in favor of homeowners and in favor of homeowner associations (HOAs).  We will just say this, the trial court decisions on who gets fees are affirmed on appeal in a majority of situations, whether in favor of homeowners or in favor of HOAs (even if reduced somewhat more).  So, that is a counseling point.  Not to mention that HOAs and HOA directors often bring anti-SLAPP motions, which carry their own fee-shifting allocations, most often in favor of HOAs and HOA Directors.

            An illustration of how a losing homeowner had to bear fees after losing a CC&R violation issue is shown in Loeffler v. Trabuco Highlands Community Association, Case No. G059753 (4^th Dist., Div. 3 June 7, 2022) (unpublished).  What happened here is that homeowner lost a CC&R enforcement action (including an HOA election violation theory not allowing for fees), but the problem was that the gravamen was to avoid property assessments—a classic CC&R enforcement case such that this technical challenge based on an election theory did not work.  Just to put things in context, the basic dispute was over a $17,000 assessment dispute, but homeowner lost—ouch!  Given that fee entitlement was not really at issue, HOA moved for $937,637.50 in fees for the efforts of two sets of attorneys representing the HOA, with one firm requesting an hourly rate of $240 and the other attorney requesting $400 (which was reduced by the trial court to $240 per hour, in line with the other firm).  The lower court could not stomach close to a seven-figure request by the HOA, after observing that the HOA would spare no expense on the case so “there is enough blame to go around.”  So, it reduced the total HOA fee request by 30% to $456,330 (after reducing the $400 hourly rate work larger amount to $240 per hour), to be split between the two sets of attorneys.

            That award was affirmed by a 4/3 panel, in a decision authored by Presiding Justice O’Leary.  Fee entitlement was not really at issue under the Davis-Stirling Act or under the CC&Rs fees provision.  Even after the trial court pared the $937,637.50 request to $651,900 after a reduction in the hourly rate factor, the 30% reduction to $456,330 was no abuse of discretion.  We give the details to show you how trial judges approach HOA fee requests, with the opinion demonstrating how they can be costly against the losing party even after a lower court exercises its discretion to reduce a large HOA requested fee request.   Beware!

Allocation, Appealability, Partition: $790,967 Postjudgment Fees And Environmental Remediation Award Against Some Partitioning Parties Affirmed On Appeal

Lower Court Retains Lots Of Discretion To Apportion Fees in Partition Action.

            DeMartini v. DeMartini, Case No. A160849 (1^st Dist., Div. 1 June 7, 2022) (unpublished) is a reminder that the partition statutes allow a trial judge broad authority to award and apportion fees to parties in a partition action.  In this one, the lower court did award fees and environmental remediation costs totaling $790,967 against some parties in a partition action.  That stood up on appeal.  As to the threshold appealability issue, merits partition adjudications and post-award fee recovery orders are appealable.   On the merits, the trial judge has great discretion to apportion fees under CCP §§ 874.040 and 874.110(a), such that the fee recovery award was no abuse of discretion.

Private Attorney General: Dept. of Water Resources Environmental Impact Cases Is Now Published.

Trial Court Applied The Incorrect Legal Standard In Determining Causal Link For Defendant Providing The Primary Relief Sought By Plaintiffs When It Denied Plaintiffs’ Request For Fees Under Code Civ. Proc., § 1021.5 Based On The Catalyst Theory.

            We discussed Dept. of Water Resources Environmental Impact Cases, Case No. C091771 (3d Dist., May 11, 2022), which was unpublished at the time, in our May 18, 2022 post. In it, the Third District reversed and remanded the trial court’s denial of attorney fees sought by Plaintiffs under Code Civ. Proc., § 1021.5 based on the catalyst theory – finding that the trial court applied the wrong legal standard where it treated a directive issued by the Governor as the superseding cause of the relief obtained without considering whether plaintiff’s lawsuits were a substantial factor in the Governor’s decision to issue the directive. We can now report that the opinion was certified for publication on June 3, 2022.

Family Law: Marriage of Nakamoto and Hsu Now Published

Section 2030 Needs-Based Trial and Appellate Fees Denied To Husband.

            On May 7, 2022, we posted on the then unpublished decision of Marriage of Nakamoto and Hsu, Case No. G059102 (4^th Dist., Div. 3 May 4, 2022).  It decided to deny some further section 2020 trial fees and appellate fees to husband for overlitigating the case and filing appellate briefing which was conclusory in nature.  We can now report that the opinion was certified for publication on June 2, 2022. 

Section 1717: Defendants’ Successful Defense That Plaintiff Failed To Prove The Existence Of Two Contracts Allowed Them To Obtain Contractual Fees Under Section 1717

Section 1717 Does Not Mandate That The Alleged Contract Be Entered Into Evidence.

            Civil Code section 1717 is a fee shifting statute that renders unilateral fee clauses bilateral under its mutuality-based principles.  This statute likely has the most jurisprudence of any fee shifting statute in California published and unpublished decisions.  It applies where a party proves that a contract is inapplicable, invalid, unenforceable, or nonexistent.  (Hsu v. Abbara, 9 Cal.4^th 863, 870-871 (1995) [our Leading Case No. 2].)

            Plaintiff in JHM Ventures v. Cavalier Closeouts, Inc., Case No. B305724 (2d Dist., Div. 3 June 1, 2022) (unpublished) felt the sting of section 1717 after defendants “defensed” its claims upon a determination that plaintiff failed to prove the existence of two of the alleged contracts, although there was a written agreement with a fees clause.  Because plaintiff would have been entitled to fees had it recovered, the lower court awarded defendants $110,920 in attorney’s fees.  On appeal, the 2/3 DCA sustained the fee award.  Hsu controlled, as well as the earlier opinion in Jones v. Drain, 149 Cal.App.3d 484, 489-490 (1983).  Losing plaintiff suggested that section 1717 mandated that a copy of the alleged contract be entered into evidence, but that suggestion was rejected because it contains no such mandate and it would gut section 1717’s applicability to both written and oral contracts.