Fee Clause Interpretation: “Arising Out Of This Transaction” Language In Attorney-Client Engagement Letter Is Broad Enough To Allow Fee Recovery For Legal Malpractice And Contract Win By Former Law Firm Against Suing Former Client

Failure To Specify To Whom Fees Were Paid Was Not Fatal Either.

            In Juarez v. Law Firm of Higbee & Associates, Case No. G054016 (4^th Dist., Div. 3 Feb. 28, 2019) (unpublished), former law firm won a summary judgment against a former client who sued for legal malpractice and breach of the engagement contract after law firm represented client in a marital dissolution action. Law firm then moved for fees based upon a provision in the engagement agreement, which read as follows: ““VENUE & COSTS. Disputes arising out of this transaction shall be adjudicated in Orange County Superior Court in the State of California. Losing party to pay attorney’s fees and court costs.” The lower court awarded law firm $32,645.50 in fees, prompting an appeal by the former client.

            The Fourth District, Division 3 affirmed in an opinion authored by Justice Fybel.

            Client argued that the failure to define “transaction” meant that the fee clause did not apply and that the failure to specify to whom fees paid made the clause hopelessly ambiguous. Because contracts are to be construed as a whole and in order to not render language surplusage in nature, the 4/3 DCA determined that it was contextually clear that the losing party would pay fees to the prevailing party and that “transaction” encompassed the contractually agreed-upon services rendered under the engagement letter when wording throughout was considered.