Although The Dispute Concerned Contractual Rights, The Contractual Attorney Fees Provision Relied Upon In Issuing Award Did Not Apply Because There Was No Breach Of Contract.
In McAlister Investments, Inc. v. Thomas, Case No. G056330 (4th Dist., Div. 3 Sept. 30, 2019) (unpublished), neighboring land owners got into a dispute pertaining to a 99-year lease entered into in 1951 between prior owners of the two properties. This lease allowed defendants, who operate a citrus orchard, to access a parcel of plaintiff’s property to drill for and develop water for irrigation purposes.
When plaintiff tried to sell its property in 2014, the buyer wanted an amendment to the 99-year lease precluding defendants from building structures on the leased parcel. Defendants refused and plaintiff’s sale fell through.
Plaintiff then filed suit to invalidate the lease. The trial court entered judgment in favor of plaintiff – finding the lease had not been assigned to defendants and that defendants were not successors to the lease merely because they had bought the land. Based on Civ. Code section 1717’s statutory reciprocity of attorney fee agreements, its finding that plaintiff’s declaratory relief action was based on the lease, and because plaintiff would have been liable for defendants’ attorney fees had they prevailed, the trial court awarded plaintiff $169,534.60 in fees after some reduction.
In an opinion authored by Justice Ikola, the 4/3 DCA reversed – finding the dispute between the parties involved contractual rights – not a breach of any covenant or agreement in the lease. Therefore, the attorney fees provision contained in the lease – which entitled the prevailing party to fees “[i]n the event of the breach of any covenant and or agreement herein contained . . . presented to any Court . . .” – was never triggered. And with that, plaintiff’s fee award went POOF!
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