Reasonableness Of Fees, Section 1717: $1,047,313.72 Contractual Fee Recovery To Defendants Was Not Excessive In Long-Running Litigation

Civil Code Section 1717 Has No “Obligation-To-Pay” Requirement.

            Defendants in Legendary Investors Group v. Niemann, Case No. B284736 (2d Dist., Div. 4 Jan. 16, 2019) (unpublished) prevailed in a long-running suit against plaintiff involving commercial loan and guaranty documents. Defendants, as prevailing parties, requested fees of $1,061,208.22, with the lower court awarding $1,047,313.72. Plaintiff primarily challenged the fees as excessive.

            The award was sustained on appeal. Plaintiff argued that defendants should have raised a pivotal standing issue earlier on to avoid fee accumulation, but the reviewing court observed that plaintiff had the burden to establish standing (not the defense) and that the standing issue was hotly litigated over numerous years of the litigation. The fees were adequately documented through detailed attorney declarations and billing entries. Plaintiff then argued that no fees should be awarded because other entities than the defendants were obligated to pay the fees. That argument was rejected on two grounds: (1) Civil Code section 1717 has no “obligation to pay” requirement engrafted into it (Dzwonkowski v. Spinella, 200 Cal.App.4^th 930, 938 (2011)); and (2) the operative provisions stated that the losing party would pay for reasonable, court-ordered fees, saying nothing about them needing to be “incurred.”