Prevailing Party: Can You Contractually Define “Prevailing Party” In A Fees Clause?

Answer – Not Tested In California, But We Provide You Some Clauses Defining The “Prevailing Party” And A Guess On The Result.

            Generally, the language of a contractual attorney’s fees provision can be critical as far as the ambit of fee entitlement.  California Civil Code section 1717 allows the “prevailing party” in contractual actions to recover fees under a written fees clause but also voids any waiver of section 1717 protections. 

            In an Internet article entitled “Prevailing party attorneys’ fees:  Some challenges” authored by J. Kent Holland, he recommends that contracting parties objectively define “prevailing party” status in their fees clauses.  Examples:  prevailing parties are those that “net 51% of its affirmative claim, after any offsets for claims or counterclaims by the other party.”  Other examples up the recovery to 67% or 75% of recovery for prevailing party status, but Mr. Holland actually gives some specific contractual language in various contexts.

            So, are these types of prevailing party limitations clauses enforceable in California?  Answer:  There is no published decision specifically addressing this issue.  However, based on CCP § 1021 [measure and mode of compensation of attorneys left to the parties’ agreement] and 511 S. Park View, Inc. v. Tsantis, 240 Cal.App.4^th Supp. 44 (2015) [validating contractual cap in written fees clause], we would hazard a guess that a prevailing party contractual limitation might well be enforceable.