Section 1717: Lower Court Improperly Awarded Attorney’s Fees To Plaintiffs Under A Post-Dismissal Settlement Agreement Because Easement Dispute Was Contractual, Not Based On Tort Theories

Santisas Controlled The Result In This One.

            In Cho v. Hamilton Court, LLC, Case No. B282399 (2d Dist., Div. 4 Nov. 13, 2018) (unpublished), parties reached a settlement agreement with a fees clause relating to any action or arbitration “to enforce the terms or conditions [of the easement agreement],” after dismissing a breach of easement agreement and negligence case.   Plaintiffs moved for fees of $145,802.97 (based on a 1.5 multiplier), with the defense arguing that plaintiffs could only recover for easement contractual breach claims. The lower court disagreed, awarding plaintiffs $95,215.30 in fees based on the easement agreement fees clause which it deemed applied to tort claims.

            The appellate court reversed the fee award as a matter of law.

            Civil Code section 1717 does not apply to tort and other noncontractual claims, but contractual language on what claims can gain fee recovery is left to the language chosen by the parties.   The narrow nature of the “terms or conditions of the easement agreement” language did not include tort claims such that it was erroneous to award fees to plaintiffs.