Article Highlights Possible Division on Contractual Claim Partial Dismissals Under Section 1717.
Robert Freitas and Siddhartha Venkatesan, in a February 16, 2011 article entitled “Recovering Attorneys Fees” in The Recorder (e-newsletter available through Law.com), have written a nice, short article on recovering attorney’s fees under Civil Code section. Among under topics, they discuss fee recovery, prevailing party determinations, fee reasonableness, and practical considerations.
One particular part of the article caught our attention, so we share it with you.
Civil Code section 1717(b)(2) provides: “Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.” The authors note that there may be a division in appellate thinking on the breadth of this carve-out. One published section 1717 decision, Ford Motor Credit Co. v. Hunsberger, 163 Cal.App.4th 1526, 1532 (4th Dist., Div. 1 2008), held that the entire action did not have to be voluntarily dismissed, but that section 1717(b)(2) applied even if other causes of action remained against a party or if other parties remained in the wake of a voluntary dismissal of a potential fee-entitling contractual claim. However, in a non-section 1717 context, Carver v. Chevron U.S.A., Inc., 97 Cal.App.4th 132, 151 (4th Dist., Div. 1 2002), the same appellate court found that dismissal of only one cause of action intertwined with the defense of other actions carrying potential fee entitlement did not trigger (b)(2) because the “entire action” was not dismissed. See also Huang v. Shyan, 2003 WL 1016917 at * (2d Dist., Div. 5 Mar. 11, 2003) (unpublished) [following Carver in section 1717 context; failure to dismiss entire action meant fees were allowable]. As the authors of the article suggest, some care must be given to “pruning”
claims from the case if the goal is to avoid fee exposure under Civil Code section 1717(b)(2).
BLOG UNDERVIEW--Justice Huffman wrote Carver and concurred in Hunsberger, such that it will be interesting to see how the 4/1 appellate court lines up on this particular issue in the future.
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