Fee Clause Interpretation: “Arising Out Of” Contractual Fee Clause Language Was Broad Enough To Allow A Prevailing Party On A Related Statutory Claim To Obtain Fee Recovery

Trial Court Denied Fee Motion, So It Was Remanded For A Rehearing To Fix Reasonable Fees.

            “Arising out of” language in a contractual fees clause can indeed give rise to fee exposure even where a prevailing party succeeded on a related statutory claim rather than a contract qua contract claim.  Varney Entertainment Group, Inc. v. Avon Plastics, Inc., Case No. G060870 (4^th Dist., Div. 3 Jan. 17, 2023) (unpublished), authored by Justice Goethals, came to that conclusion in reversing a fee denial and remanding for a rehearing to fix reasonable fees.

            There, the contract clause stated: “In the event of any arbitration or litigation, including breach, enforcement or interpretation, arising out of this Agreement, the prevailing party of such litigation shall be entitled to recover reasonable attorneys’ fees, costs, and expenses, including pre-litigation and appellate attorneys’ fees and costs.”  The issue on appeal was whether Avon’s previous unsuccessful appeal arose out of the endorsement agreement by which Avon used Mr. Varney’s name and likeness without his permission.  In the prior appeal, Avon unsuccessfully appealed a trial court’s denial to it of attorney’s fees under Civil Code section 3344’s likeness misappropriate statute.  However, after doing a survey of cases recognizing that “arising out of” contractual language is broad in scope, the panel concluded that the prior appeal did arise out of the Avon-Varney endorsement contract such that fees should not have been denied outright.