Section 1717: Defendants’ Successful Defense That Plaintiff Failed To Prove The Existence Of Two Contracts Allowed Them To Obtain Contractual Fees Under Section 1717

Section 1717 Does Not Mandate That The Alleged Contract Be Entered Into Evidence.

            Civil Code section 1717 is a fee shifting statute that renders unilateral fee clauses bilateral under its mutuality-based principles.  This statute likely has the most jurisprudence of any fee shifting statute in California published and unpublished decisions.  It applies where a party proves that a contract is inapplicable, invalid, unenforceable, or nonexistent.  (Hsu v. Abbara, 9 Cal.4^th 863, 870-871 (1995) [our Leading Case No. 2].)

            Plaintiff in JHM Ventures v. Cavalier Closeouts, Inc., Case No. B305724 (2d Dist., Div. 3 June 1, 2022) (unpublished) felt the sting of section 1717 after defendants “defensed” its claims upon a determination that plaintiff failed to prove the existence of two of the alleged contracts, although there was a written agreement with a fees clause.  Because plaintiff would have been entitled to fees had it recovered, the lower court awarded defendants $110,920 in attorney’s fees.  On appeal, the 2/3 DCA sustained the fee award.  Hsu controlled, as well as the earlier opinion in Jones v. Drain, 149 Cal.App.3d 484, 489-490 (1983).  Losing plaintiff suggested that section 1717 mandated that a copy of the alleged contract be entered into evidence, but that suggestion was rejected because it contains no such mandate and it would gut section 1717’s applicability to both written and oral contracts.