Section 1717: If You Claim A Redlined Draft Agreement Is The Contract And You Lose, Fee Exposure Can Occur

4/1 DCA Affirms Fee Award Where Pleadings Made It Clear That Redlined Draft Agreement Was The Operative Contract By Losing Plaintiff.

            Plaintiff lost a demurrer without leave founded upon contractual breach, duty to negotiate in good faith, and promissory estoppel claims, a determination affirmed on appeal because the letter of intent made it clear there was no agreement until a formal contract was agreed to and signed and because there was a draft redlined agreement with multiple changes which was never accepted.  The lower court then awarded $104,545 in attorney’s fees, the full request, based on a contractual fees clause in the redlined draft and under Civil Code section 1717.

            The fee award was upheld by the 4/1 DCA in Evans v. Bosa Development California II, Inc., Case Nos. D078272/D078818 (4^th Dist., Div. 1 July 27, 2022) (unpublished).  The LOI showed there was no duty to negotiate in good faith, although the redlined draft agreement showed that this did take place.  Defendant beat the contractual breach and derivative promissory estoppel claims such that it proved the nonexistence of the contract, entitling the defense to fees under section 1717.  (Hom v. Petrou, 67 Cal.App.5^th 459, 465 (2021).