Second District, Division 8 Case Illustrates Lesson, Although Finds Trial Court Erred In Not Awarding Routine Costs to Assignee.
Because lawsuit claims and judgments are usually considered choses in action, they are generally assignable (except for some personal claims in the real estate, malpractice, and personal injury/likeness misappropriation areas). However, the next case reinforces a simple but expensive lesson: assignees of lawsuits needs to make sure that the assignment includes documents that have proper attorney’s fees clauses so that recovery is allowable under Civil Code section 1717. Otherwise, like the litigant in the next case, fee recovery will not be forthcoming.
In The Vons Companies v. Parks, Case No. B208335 (2d Dist., Div. 8 Aug. 17, 2009) (unpublished), Vons (owner) and contractor entered into a construction contract with a fees clause, with contractor also giving owner a separate warranty for work that did not contain a fees clause. Vons sold the shopping center to Mock Ranch, assigning the separate warranty but not the construction contract to Mock. Mock later sued Vons and contractor for certain property conditions, with Vons also cross-complaining against contractor. Mock settled with Vons, with all of its claims assigned to Vons as part of the settlement. Vons eventually was awarded $35,556 in damages by a jury as against contractor. Vons then sought routine costs, which was denied by the trial court. Vons also filed a motion to recoup $1,509,364 in attorney’s fees against contractor, a request that was denied.
Vons appealed, with the Second District, Division 8 (in a 3-0 decision authored by Judge Helen Bendix, sitting by assignment) affirming the fee denial but remanding for a determination of costs awardable to Vons.
The costs denial order was reversed because a prevailing party is entitled as a matter of right to costs. Even though Vons was a prevailing party based on the claims assigned to it by Mock, nothing demonstrated why—as a matter of assignment law—Vons was not entitled to an award of its mandatory costs. (Civ. Code sec. 1084 [an assignment carries with it all rights of the assignor].)
With respect to the fee denial, the appellate panel determined that Vons never assigned rights under the construction contract to Mock, but only a separate warranty with no fees clause. This limited assignment was fatal to Vons’ attempt to recoup fees because nothing was assigned to Mock that gave it entitlement to fee recovery in the secondary lawsuit assignment. So, if you are assignee, make sure you obtain assignment of rights in documents that allow for fee entitlement … or be bitterly disappointed when a limited assigned is enforced such that fee recovery is denied to you.
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