Section 1717: Defendant Obtaining Reversal Of Interference Claim Because It Was Based Entirely On Contract Was Properly Awarded Section 1717 Fees

After The Successful Appeal, Defendant Awarded $604,700 In Fees.

               In the Civil Code section 1717 area, only contract-based claims are allowable for recovery purposes, with tort claims usually not qualifying.  However, that “usually” caveat has an important section:  where a tort is based on a duty created solely by a contract, enforcement of that contract does give rise to section 1717 exposure. 

               That is what happened in Drink Tank Ventures, LLC v. Real Soda in Real Bottles, Ltd., Case No. B328365 (2d Dist., Div. 2 Sept. 26, 2024) (unpublished).

               Plaintiff convinced a jury to award it $350,000 in compensatory damages on a prospective advantage interference claim premised entirely on a breach of contract, with the appellate court reversing it as a matter of law because there was no independent wrong other than just a breach of contract (which also vacated the lower court’s fee award of $280,700 to plaintiff).  Prevailing defendant sought section 1717 fees on remand, being awarded $604,700 (out of a $906,825 “ask”). 

               The 2/2 DCA affirmed.  Recognizing that tort actions generally are not compensable under section 1717, the gravamen of plaintiff’s contract instead was a tort claim resting on a duty created by contract such that fees were properly awarded to defendant.  (Artnz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4^th 464, 478-479.)