Construction, Section 1717: Defendant Prevailing On Only One Payment Withholding Issue Not Entitled To Fee Recovery Under Prompt Payment Statutes And Plaintiff Only Entitled To Reasonable Fees Under Contractual Fees Clause

Plaintiff’s Request For Full Fees Ignores That Section 1717 Only Allow For Recovery Of Reasonable Fees.

            Co-contributor Mike knew right away that McMahon Steel Co. v. Angeles Contractor, Inc., Case No. G054053 (4^th Dist., Div. 3 Dec. 3, 2018) (unpublished) was written by Acting Presiding Justice Bedsworth. Here is how it opens: “The most famous stadium in the United States is not the house that Ruth built. Hard as it is for baseball fans to admit, it is not even Fenway Park or Wrigley Field. It is, rather, the stadium that has dominated New Year’s Day since 1923, and continues to, even when national collegiate titles are often decided in other venues. It’s the Rose Bowl.”

            The appeal before the 4/3 DCA involved plaintiff subcontractor’s suit against defendant contractor arising out of a 2011 Rose Bowl refurbishment in preparation for soccer’s Gold Cup (won that year 4-2 by Mexico over the U.S.). Plaintiff obtained a net judgment of $533,000, although losing a prompt payment “funds wrongfully withheld” issue for statutory penalties based on the lower court’s finding that there was a good faith dispute between the parties.

The trial judge refused to award any fees to defendant for this one win, but she did award plaintiff $318,016.47 in fees out of a requested $422,221.01 as against defendant.

            Both sides appealed the fee rulings. Both sides gained nothing more on appeal.

            Defendant’s appeal of fee denial. The fee provisions allowing for collection of fees in funds wrongfully withheld cases, Civil Code section 8802 and Business & Professions Code section 7108.5, only allow them to the prevailing party in an “action.” Because defendant only prevailed on one issue and plaintiff obtained the net judgment in the overall action, fees were properly denied to the defense by the lower court.

         Plaintiff’s appeal of fee award, arguing all requested fees should have been awarded.

        Plaintiff argued that all of its requested fees should be awarded, because the contractual fees clause was worded to allow recovery of “all costs, including attorneys’ fees.” The Court of Appeal said no, because Civil Code section 1717 does not allow for inconsistent or contrary fees clauses to overcome section 1717’s requirement that the fees be reasonable in nature. The lower court did award reasonable fees to plaintiff, primarily after excluding some unrelated work against the City.