Allocation, Section 1717: $125,000 Fee Award To A Defendant Winning At The Pleading Stage Affirmed On Appeal

This Decision Has A Nice Discussion Of The Policies Underlying Civil Code Section 1717.

            There is a nice discussion of the policies underlying Civil Code section 1717 and the claims which trigger fee exposure under this statute in Engage BDR, LLC v. Amobee, Inc., Case No. B309263 (2d Dist., Div. 8 July 7, 2022) (unpublished).

            There, a Master Agreement formed the backdrop for plaintiff’s contract, usury, and declaratory relief claims, with that Agreement containing a fees clause which had no recitation that each party to the contract was represented by counsel.  The trial judge sustained demurrers and entered judgment in favor of defendant, later awarding about $125,000 in attorney’s fees and declining to apportion the fees.

            The 2/8 DCA, in an opinion authored by Justice Wiley, affirmed. 

            Initially, the panel explored how Civil Code section 1717 expands a contractual attorney’s fees clause: (1) the first way is reciprocity, with a unilateral fees clause deemed to apply to both parties; and (2) the second way is “broadened scope,” which means a narrow fees clause applies to the entire contract unless the contract specifies that counsel represented the parties; and, if not, section 1717 broadens the fees provision absent the recitation.

            It then examined whether plaintiff’s claims were “on the contract,” determining that the contract breach claims obviously were, the usury/restitution claims were (Del Mar v. Caspe, 222 Cal.App.3d 1316, 1335 (1990)), the economic duress claim relating to entry into the contract were, and the declaratory relief claims related to the contracts (City and County of San Francisco v. Union Pacific Railroad Co., 50 Cal.App.4^th 987, 999-1000 (1996)). 

            The fees clause was broadened because there was no specific recitation that the parties were represented by counsel.  Although there were some other more amorphous references, section 1717 requires that parties of roughly equal power need to make this recitation to demonstrate legal sophistication so that the fees clause is narrowed in scope.  The “broadened scope” rationale applied.

            No apportionment was required because all of plaintiff’s claims involved shared common issues.  Also, because plaintiff did not specifically identify what attorney billings were duplicative until a supplemental brief which was filed too late and not entertained, plaintiff waived its challenges to the reasonableness of the fees requested by defendant.

            BLOG OBSERVATION—Although appellate jurists are good writers, we will note that Justice Wiley has a distinctive writing style.  We would put him in company, on that front, with his contemporaries such as Justices Manella, Ashmann-Gerst, Perluss, Gilbert, Yegan, and Bedsworth.