Landlord Did Prevail, Entitled To Fee Recovery Based On Breadth Of Fees Clause.
Bush-Grant, LLC v. Hotel Astoria, Inc., Case No. A147456 (1st Dist., Div. 4 Aug. 29, 2017) (unpublished) demonstrates how a tort claim can still be compensable under a broad fees clause, even if Civil Code section 1717 is inapplicable because the action is not “on the contract.”
What occurred in this case was that an individual tenant with a long-term commercial lease subleased to tenant’s corporate affiliate and later assigned the sublease to another LLC affiliate, with individual filing for bankruptcy and with the bankruptcy court determining that the LLC’s interest in the lease was property of the bankruptcy estate needing to be relinquished to the bankruptcy trustee. Eventually, the bankruptcy trustee entered into any agreement with landlord by which individual tenant’s sublease rights were assigned to landlord. However, subtenant “held over” so as to prompt landlord to file a successful unlawful detainer action, obtaining contractual attorney’s fees under broad lease fees clauses. Subtenant’s appeal of the fees award failed.
Based on the bankruptcy trustee’s assignment of rights to landlord, landlord stepped into sublessor’s shoes so as to enforce the sublease provisions inclusive of the sublease fees clause. Nevertheless, the appellate court had to classify the nature of the unlawful detainer, namely, was it based on contract or tort. It concluded that the action was a tortious “hold over,” which meant fee recovery could not occur under Civil Code section 1717.
But this nusance did not matter. The fee clause was broad in nature, covering “any suit against Lessee … for recovery of possession of the demised premises.” Given this broad provision, fee recovery was allowable in the unlawful detainer action under Code of Civil Procedure section 1021, which provides the parties have the right to enter into agreements for the award of fees in litigation on their own terms, covering actions in contract, tort, or equity.
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