Fee Clause Interpretation/Section 1717: Fourth District, Division 3, In Unpublished Decision Determines That Contractual “Actual Fees” Clause Subject To Civil Code Section 1717 Reasonableness Requirement

 

Earlier, Second District, Division 2 Came to Same Result in Unpublished Opinion.

     Reasonableness is one of those concepts finding wide application in the law, whether the “reasonable person” in tort or criminal law or what most judges like to see in the positions being taken by practitioners on behalf of their clients.

     In Zacadia Financial Limited Partnership v. Fiduciary Trust International of California, Case No. G047921 (4^th Dist., Div. 3 Jan. 8, 2014) (unpublished), our own local Santa Ana court faced an interesting challenge by a litigant winning substantial fees. The lower court awarded a successor trustee $2.5 million in fees based on an agreement with a one-way fees clause, although the trustee requested $3,131,429 in fees (or, as the opinion colorfully said, “somewhat north of $3.1 million”).

     On appeal, trustee claimed all of the requested fees should have been awarded, based on a one-way fees clause indicating that the eventual losing litigant would pay “actual attorneys’ fees” without limitation by how reasonable fees might be determined under statutory or decisional authority.

     Didn’t resonate on appeal, because the Civil Code section 1717 reasonableness requirement is a trumping and important element. (The 3-0 panel, whose author was Acting Presiding Justice Bedsworth, cited several analogous decisions in support.) So, the judge’s scaling back of the fee request in an award of reasonable fees was spot on.

     BLOG OBSERVATION—Zacadia Financial is no pariah in this area. In our May 8, 2011 post, we discussed Kleefeld v. Marrero, Case No. B224011 (2d Dist., Div. 2 May 5, 2011) (unpublished), which reached a similar result when confronting an “actual attorney’s fees” worded contractual clause.