Civil Code Section 1717: Ninth Circuit Holds Tenants Winning On Preemption Issue Entitled To Fees Because Issue Arose “On The Contract”

 

Federal Court of Appeals Sustains $180,029.50 Fee Award to Tenants.

     In Barrientos v. 1801-182 Morton LLC, Case No. 07-56697 (9^th Cir. Oct. 9, 2009) (certified for publication), tenants won summary judgment and permanent injunctive relief with respect to illegal notices of eviction served by a landlord arguing that Los Angeles Rent Stabilization Ordinance requirements governing such notices were preempted by HUD’s “good cause” regulation in 24 C.F.R. section 982.310(d)(1)(iv). The district judge also awarded tenants $180,029.50 in attorney’s fees based on fees clauses in the leases under California Civil Code section 1717(a). Landlords appealed.

     The fee awards were affirmed. The leases with fees clauses were hardly peripheral to the dispute, ruled the Court of Appeals. The merits issues concerning all tenants were so factually interrelated such that no apportionment could be practically carried out. No evidentiary hearing on the fees issue was required because landlord failed to challenge the reasonableness of the sought-after fees. Finally, landlord waived the argument that the Legal Aid Foundation of Los Angeles was not entitled to fees because of a statutory prohibition on such fees (see 45 C.F.R. section 1642.3), because the issue was not raised before the district court.