Prevailing Party, Section 1717: Only One True Prevailing Party Can Exist Under Civil Code Section 1717

One Litigant Cannot Partially Prevail At Trial, And Another On Appeal, For Purposes Of Ultimate Prevailing Party Determination Under Section 1717.

            The Sixth District in Gambord v. Galli Produce Co., Case No. H043872 (6^th Dist. June 28, 2019) (unpublished) faced an interesting issue based on a contractual fees clause under Civil Code section 1717:  Can there be more than one prevailing party based on partial success at trial and on success on a later appeal?  The answer:  No.

            What happened here is that landlord won on unpaid rent award of a little over $45,211 against tenant although it was much less than its claim of more than $200,000.  Landlord appealed the damages calculation, but the trial court award was affirmed.  Later, landlord moved for attorney’s fees of $78,931.75 under the lease agreement fees clause, for efforts pre-lawsuit through trial/posttrial.  Tenant opposed on the basis that it was the prevailing party at trial based on landlord only obtaining less than 20% of its unpaid rent claim.  The lower court ruled that landlord was the prevailing party, awarding it $67,161.75 (about a $10,000 reduction).  Tenant then brought a motion to recoup attorney’s fees of $27,481 for “winning” on appeal, because it believed the lease fees clause (talking about fees “on trial or appeal”) allowed for a dual prevailing party result.  The lower court did not buy it, and the appellate court agreed.

            First, Civil Code section 1717 does not authorize parties to agree to more than one prevailing party “on the contract,” with the final resolution dictating who is the true prevailing party.  (Dispute.Suite.com, LLC v. Scoreinc.com, 2 Cal.5^th 968, 977 (2017) [our Leading Case #21].)  Specifically, “section 1717 does not support an award to the prevailing party on appeal, but only the prevailing party in the lawsuit.”  (Wood v. Santa Monica Escrow Co., 176 Cal.App.4^th 802, 808 (2009).)  Second, in order to come to the 1717 prevailing party “end” determination, the lower court must engage in a comparative analysis, and its determination here that landlord obtained the greater relief justified denying appellate fees to tenant.  Third, tenant relied greatly on dicta in Snyder v. Marcus & Millichap, 46 Cal.App.4^th 1099, 1104 n. 1 (1996) suggesting that the parties could agree that a prevailing party could be based on fees clause language allowing that result for a successful partial appeal.  The Sixth District disagreed with this dicta in no uncertain terms, finding it would be inconsistent with contrary reasoning in DisputeSuite.com.