Fee Clause Interpretation, Prevailing Party: $290,000-Plus Fee Award To Cross-Complainant Engineering Firm Affirmed On Appeal Because Fees Clause Was Broad Enough To Encompass Quantum Meruit Claims

Adverse Party Should Have Paid Around $57,000 To Other Side, And, If So, It Would Have Been The Prevailing Party!

            Tristar Realty Group, LLC v. Koury Engineering & Testing, Inc., Case No. B294535 (2d Dist., Div. 8 May 14, 2020) (unpublished) is a result demonstrating how the prevailing party determination in a case, where a discretionary call is at issue, many times turns on the equities of the matter.

            In this one, engineering firms and a real estate developer hiring the firms got into a dispute over a “not to exceed” contract even though some of the testimony showed that the developer orally agreed and by some conduct intended to pay the engineering firms for post-Thanksgiving work of between $57,000-$59,000.  In the end, engineering firms obtained a $46,609.91 net judgment after offset of a small recovery to the developer under a quantum meruit theory. The lower court then determined that engineering firms were the prevailing parties, awarding them something north of $290,000 in attorney’s fees under a contractual fees clause.  Developer appealed.

            The 2/8 DCA affirmed.

            The pertinent fees clause encompassed any legal action or other proceeding, including a declaratory relief action, brought to enforce the contract “or because of an alleged dispute, breach, default or misrepresentation in connection with this Agreement.”  This broad language allowed for recovery on both contract and noncontract claims, such as under the quantum meruit theory.  (Maynard v. BTI Group, Inc., 216 Cal.App.4^th 984, 993 (2013).). The appellate court also found helpful the discussion on the “in connection with” language contained in Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 3 Cal.5^th 744, 758-760 (2017).  Engineering firms were the prevailing parties because they defeated developer’s $477,000 damages claims, even though developer did defeat firms’ $290,000 contract claims.  To developer’s rhetorical argument that it should just have paid the $290,000 “extortionistic” claim given that the eventual fee award was higher, the 2/8 DCA panel responded that if the developer had paid for the $57,000 in post-Thanksgiving work, it would have been the prevailing party.