However, Matter Remanded To Examine If Litigant Entitled To Fees Under Partition Fee-Shifting Provisions.
Orien v. Lutz, Case No. B277323 (2d Dist., Div. 8 Nov. 3, 2017) (published) is a situation demonstrating how contractual fee provisions, interpreted de novo, can lead to reversal of a fee award. However, the victory may not be complete if there is an independent basis for fee recovery which may have to be addressed on remand, as Orien shows.
In this one, the parties having undivided proportionate interests in real property reached a settlement agreement confirming that no one waived the right to partition and that any dispute to interpret/declare rights under the settlement agreement would give rights to recover fees to the prevailing party. One of the parties did seek to partition, which resulted in an interlocutory judgment for partition by sale, with the trial court awarding $81,700.50 (out of a requested $108,934) in fees based on the fees clause (under Civil Code section 1717) to the prevailing litigant. Curiously, although recognizing that the partitioning litigant incurred fees for the “common benefit” of others under the partition fee-shifting provisions (Code Civ. Proc., §§ 874.010, 874.040), the trial judge declined to apportion fees as required under the partition statutes and awarded them all of the awarded fees to the partitioning litigant under section 1717. That inspired an appeal.
The appeal was successful.
On the issue of fee entitlement under section 1717, the 2/8 DCA panel determined that the settlement agreement language did not create a new right, but only confirmed there was no waiver of a partition right. Given this construction of the agreement, the fee clause did not encompass fee recovery for the partition action because that independent action really was not encompassed within the ambit of the settlement agreement fee provision.
That was not the end of the story, however. Fees in favor of a partitioning litigant, in a contested partition proceeding, can indeed be for the common benefit such that on remand the trial judge needed to exercise discretion under the partition fee-shifting provisions to consider an allocation of fees “to the extent they are reasonable and incurred for the common benefit.”
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