Fee Clause Interpretation, Retainer Agreements, Section 1717: Postjudgment Order Awarding Attorney $1,232,735 In § 1717 Fees And Costs Incurred Defending Against Former Client’s Tort And Contractual Claims And Cross-Claim For Unpaid Fees Affirmed

Retainer Agreement’s Broadly-Worded Fee Provision Allowed For Recovery Of Fees For Attorney’s Defense Of All Claims By Former Client, Including Tort Claims – The Defense Of Which Were Necessary To Defeat The Contractual Claim.

            In Singh v. Molnar, Case No. B303366 (2d Dist., Div. 7 April 30, 2021) (unpublished), defendant attorney was awarded $1,232,735 in Civ. Code § 1717 fees and costs in a postjudgment order after prevailing against former client’s numerous contractual and tort claims and in his cross-claim against former client for unpaid fees.  Former client’s tort claims were based on attorney taking possession of a 10-year-old Mercedes (offered to former client as part of a settlement of another case) as an offset for fees owed by former client. 

            On appeal, former client argued that attorney improperly sought fees for attorneys who worked at his own firm defending against the tort claims, and that fees incurred in defense of the tort claims were not “on a contract” as required by § 1717.

            The 2/7 DCA affirmed. 

            Although tort and noncontract claims are generally not subject to § 1717 and its reciprocity principles, it does not prevent parties from contracting to allow for recovery of fees in tort actions.  Therefore, the question before the panel was not whether former client’s tort claims were “on the contract,” but whether the fees incurred in defending against those claims were covered by the retainer agreement.  The appellate panel found that former client’s tort claims fell within the scope of the broadly-worded fee provision because he sought a declaration of whether he owed money under the retainer agreement, or whether attorney owed money after taking the offset for the fees owed.  Agreeing with the trial court, the panel concluded that attorney’s defense of the tort claims was necessary to succeed on the breach of contract claim – and that the parties’ communications about the Mercedes/offset underscored that their disagreement was directly related to their dispute about contractual payment obligations under the retainer agreement.