Fee Clause Interpretation, Prevailing Party: Defendant Properly Denied Attorney’s Fees Where Plaintiff Really Obtained All Of Its Relief As The Prevailing Party Under Broad Fees Clause

Defendant Was Denied Fees, But It Did Not Independently Appeal—Maybe Should Have!

            In MBK Properties LLC v. San Diego Beer Co., Inc., Case No. G055856 (4^th Dist., Div. 3 May 28, 2019) (unpublished), seller/plaintiff sold a commercial parcel to buyer/defendant under a written purchase and sale agreement (PSA) which had a contractual fees clause allowing fees to a party “that receives a desired remedy …. substantially equal to the relief sought in an action” or “determined to be the prevailing party by a court of law.”  Seller prevailed based on an equitable subrogation rationale adopted by the lower court.  The lower court determined that seller was the prevailing party, but it denied fees because the trial judge did not believe seller prevailed “on the contract” under Civil Code section 1717—a determination not appealed by seller.  However, the trial judge also denied buyer’s fee request based on the theory that buyer prevailed.

            The 4/3 DCA, in a 3-0 opinion authored by Justice Goethals, affirmed the fee denial by appealing buyer.  The seller, not buyer, prevailed in this action because the fees clause was broad and extended to noncontractual claims such as equitable subrogation.  So, buyer was out of luck because it did not prevail within the meaning of the fees clause.

            BLOG OBSERVATION—Too bad that seller did not appeal the fee denial; might have gotten relief despite the lower court fee denial!