Section 1717/Equity: Individual Defendant’s Recovery Of Fees Against Plaintiff Reversed Because Instrument Cancellation Claim Is Not “On A Contract”

 

Claim Is Equitable in Nature, Not Triggering Section 1717 Exposure.

     In Gibson v. Deutsche Bank National Trust Co., Case No. A133721 (1st Dist., Div. 4 Oct. 3, 2012) (unpublished), a lower court awarded attorney’s fees to an individual defendant on a cancellation of instrument claim based on the notion that it was an “on a contract” claim under Civil Code section 1717 (based, of course, on a fees clause in a trust deed and associated documents--although plaintiff sued to void instruments in equity).

     The $6,616.25 fee award in favor of individual defendant was reversed on appeal.

     The reason? The cause of action for cancellation of void instruments under Civil Code section 3412 was an equitable claim, not one “on a contract.” Given this fundamental reality, no broad “on a contract” construction could give rise to fees in this circumstance, even under Civil Code section 1717.