California Appellate Law Blog

California Appellate Law Blog

News and Insights about Appellate Law

Contractual Attorney Fees in California: Which Statute Applies?

Posted in Appellate Practice, Civil Procedure, Recent Decisions

A recurring theme in my recent Daily Journal publications has been the rough doctrinal fit between operation of Civil Code section 1717 and Code of Civil Procedure section 1021 and section 1032. Section 1717 has been interpreted to apply to actions “on a contract” where such contracts contain an attorney fee provision. Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 523. And there is no problem when the only claims being litigated are contract claims. In such cases, it seems workable to ignore sections 1021 and 1032, and simply follow section 1717 with its reciprocity provision, definition of prevailing party (“the party who recovered a greater relief in the action on the contract”) and voluntary dismissal/settlement escape hatch. See, e.g., Hsu v. Abarra (1995) 9 Cal.4th 863. Section 1717′s odd placement in the substantive landscape of the Civil Code aside, it seems to work procedurally when only contract claims are litigated.

But while ”ignoring” Code of Civil Procedure sections 1021 and 1032 may seem logical when only contract claims are being litigated, those sections cannot be ignored when tort claims are being litigated and the contractual attorney fee provision is broadly worded to include recovery for torts. In those situations, the appellate decisions largely ignore section 1717 and instead, follow section 1032 to determine the prevailing party for attorney fee purposes. See, e.g., Maynard v. BTI Group, Inc. (2013) 216 Cal.App.4th 984. The rationale is that: 1) section 1021 was not superseded by section 1717; 2) section 1021 states that recovery of attorney fees is “left to the agreement, express or implied, of the parties”; 3) tort claims are not actions on a contract; and therefore, section 1032′s prevailing party definitions control and section 1717′s features–such as reciprocity–have no application. And most of the time, it seems to work. 

So if you just want to know the general lay of the land in contractual attorney fee cases and have limited time on your hands, Maynard provides a thorough explanation of the law usually applied when fee provisions embrace tort claims. And an older case, Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, demonstrates strict application of section 1717 based on an attorney fee provision limited to contract claim recovery. You could start with those cases.

But while the intermediate appellate courts have, for the most part, found a way to reconcile section 1717′s existence with that of sections 1021 and 1032–by going one way or the other–there are still decisions that seem to mix apples and oranges by allowing 1717 to apply in cases with broadly worded fee provisions and tort litigation. It’s these ‘tweeners’ that drive home the eternal tension between sections 1021 and 1717. For example, consistent with cases like Maynard, the Court of Appeal in Brown Bark III, L.P. v. Haver (2013) 219 Cal.App.4th 809, held that the presence of a broadly worded and unilateral fee provision meant that the successful defendant could not recover attorney fees for successfully defending tort claims (because 1717 does not control and therefore, its reciprocity provision had no application). But then the court also held that the defendant could recover fees for defeating the contract claims–because 1717′s reciprocity requirement applied to those claims. Such a result implies that Maynard and a myriad of other cases have overstated the either/or approach to sections 1717 and 1021. Only time and a California Supreme Court decision will ultimately resolve such statutory tension.

If you’re still with me, I recently discovered Justice Anthony Kline’s dissent in Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1160. If you have the luxury of time on your hands, and curiosity about the tension between sections 1717 and 1021/1032, you may find Justice Kline’s dissent enlightening, it is certainly provacative. Of course, Justice Kline’s interpretation of the much more limited legislative purpose behind section 1717 (only applicable in contracts of adhesion with unilateral attorney fee provisos) has not garnered support in the reported decisions, and an awful lot of water has flowed under the appellate bridge since then. But doctrinally speaking, Justice Kline was on to something.

 

Contractual Attorney Fee Provisions: Words Matter

Posted in Appellate Practice, Civil Procedure, Recent Decisions

This blog entry provides an analytical metric for double-checking assumptions about application of Civil Code section 1717 and contractual attorney fee awards.  As the case law demonstrates, it is easy to misapprehend how and when the statute actually operates. 

Section 1717(a) states that “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the prevailing party on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney fees in addition to other costs.”  Section 1717(b)(1) states that “[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.”  And section 1717(b)(2) states that “Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”

It sounds straight forward and if section 1717 applied to every single suit involving a contractual attorney fee provision, it would be.  But of course, it’s not that simple.  A two-step analysis of attorney fee provisions in contracts may be helpful in determining the applicability and reach of section 1717.

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‘Tis the Season for Social Host Liability

Posted in Recent Decisions

With Christmas just around the corner, the holiday season is well underway.  For many, this means that the next few weeks will be filled with buying and wrapping gifts, baking and decorating cookies, listening to festive holiday tunes, and of course, hosting and attending parties.  It’s fitting, then, that earlier this month the California Supreme Court heard oral arguments in Ennabe v. Manosa, a case that presents some unanswered questions about social host liability.  

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Mandatory Relief from Summary Judgment? Courts Are Still Split.

Posted in Civil Procedure, Recent Decisions

Code of Civil Procedure section 473, subdivision (b) requires a court, under certain circumstances, to grant relief from default or dismissal that results from counsel’s mistake, inadvertence, surprise, or neglect.  In a recently-published opinion, Las Vegas Land & Development Co. v. Wilkie Way (2013) 219 Cal.App.4th 1086, 1090, Division Three of the Second Appellate District reminded us that California appellate courts are currently split on whether this mandatory provision applies to summary judgment.  There, the court joined the majority and held that it does not.  (Id. at p. 1091.)

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Thriller?

Posted in Appellate Practice, Appellate Procedure, Civil Procedure, Recent Decisions

The verdict is in.  AEG Live is not liable in the Michael Jackson wrongful death suit.  An appeal is a foregone conclusion.  But will an appeal be a "Thriller?" 

The standards of review tend to reduce the possibility of drama, and also deflate the charged emotions attendant during trial.  For example, the pivotal factual dispute–was AEG Live negligent in its retention or supervision of Dr. Murray–will be subject to the substantial evidence standard of review.  Despite its name, the substantial evidence standard is not about quantity.  Rather, the substantial evidence standard asks if there is any credible evidence sufficient to support the verdict.  If there is, the jury’s resolution of the factual issue stands. 

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Abracadabra

Posted in Appellate Practice, On Being a Lawyer, Recent Decisions

Misdirection is a form of deception employed by magicians to focus the attention of an audience on one thing in order to distract its attention from another. For example, a magician announces that he is going to make a donkey appear behind a curtain in the middle of the stage. While his beautiful assistant distracts the audience by making a sudden, scantily-clad appearance, the magician does something very ordinary—leads a donkey onto the stage. A moment later, the magician drops the curtain to the ground, revealing a real live donkey. The audience is amazed. Because its attention was focused on the beautiful assistant, the audience did not notice what would otherwise be an obvious act. Thus, thanks to misdirection, the magician was able to lead his audience to draw the false conclusion that the donkey had “magically appeared.” 

In a recently-published decision, Rayii v. Gatica (2013) 218 Cal.App.4th 1402, one party attempted to use this same technique to lead the Court of Appeal to draw the false conclusion that the jury’s finding was not supported by sufficient evidence. The Court of Appeal, however, was not amazed.  Rayii reminds us that, unlike a magician’s audience, the Court of Appeal is not easily distracted. The decision is also a reminder that on appeal, the standard of review matters.  

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Reconsideration: A Possible Side Effect of Depublication

Posted in Civil Procedure, Recent Decisions

Under the California Rules of Court, rule 8.1125(c), the Supreme Court has the discretionary power to depublish an opinion at any time. Recently, the California Court of Appeal held that, when this happens, depublication can constitute “a change in the law” sufficient to warrant reconsideration under Code of Civil Procedure section 1008. Farmers Insurance Exchange v. Superior Court (Wilson) (2013) 218 Cal.App.4th 96, 105 (Farmers). And in the unusual circumstances presented by Farmers, it necessarily did. 

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Sign Here

Posted in Appellate Practice, Appellate Procedure, Civil Procedure, On Being a Lawyer, Recent Decisions

In 2006 the Legislature amended Code of Civil Procedure section 998 to state that "The written offer shall include . . . a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted."  In 2013, we are still seeing cases in which failure to include the acceptance provision invalidates an otherwise successful 998 offer.  The latest is Boeken v. Philip Morris, decided on July 9.  In Boeken, failure to comply with the statute cost the plaintiff 10% interest from the date of the 998 offer–on a $12.8 million award.  The decision does not elaborate on when the offer was made, but with that size of award, we’re probably talking real money here. 

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Flag on the Play

Posted in Appellate Practice, Appellate Procedure, Civil Procedure, On Being a Lawyer

Archer Norris welcomes Tiffany J. Gates to the appellate practice team and is pleased to present her first blog entry:

Flag on the Play

Football coach Vince Lombardi famously opined that, “Winning isn’t everything; it’s the only thing.”  This mantra captured the public’s imagination during Lombardi’s reign as coach of the Green Bay Packers in the 1960s, becoming a basic tenet of American sports.  But in Interstate Specialty Marketing, Inc. v. ICRA Sapphire, Inc., 2013 Cal.App.LEXIS 513, the Fourth District Court of Appeal recently made it clear that the “Vince Lombardi” approach to law practice can draw the yellow flag.  As explained below, this is particularly true where a modicum of professional courtesy could obviate a summary judgment motion, the imposition of sanctions, and an appeal.

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Multiple 998 Offers: First? Last? Any?

Posted in Appellate Practice

Earlier this week, the state Supreme Court decided Martinez v. Brownco Construction Co. Inc., S200944.  The issue was when it comes to two or more valid CCP section 998 offers, each of which is exceeded by the amount of the judgment, which offer shifts costs/fees?  The state’s high court affirmed the Second District’s decision that the earliest offer can shift fees.  The Supreme Court rejected application of a bright line rule holding that the last valid offer is always the operative offer.

In Martinez, the plaintiff made a valid 998 offer for $250,000, which expired without being accepted. Much later, the plaintiff made another valid offer for $100,000, which was also not accepted. The plaintiff obtained a $250,000 judgment. Then the plaintiff sought expert witness fees from the date of the earlier 998 offer. (The swing between the two 998 offers was no small matter: $188,000.) Applying what is known as the "last offer rule," the trial court decided that the plaintiff’s second offer "extinguished the first for all purposes" such that fees could only shift from the later offer.  The Court of Appeal reversed, holding that when a plaintiff makes two or more reasonable 998 offers all of which are valid and expire by operation of law, the plaintiff can shift expert witness fees based upon the earliest offer.

The Supreme Court granted review in light of the contradiction between the "last offer rule" and the earliest offer result in Martinez. In deciding Martinez, the Court rejected automatic application of the "last offer rule" to multiple valid offer cases such as Martinez. But the Court also appeared to embrace the "last offer rule" in a different kind of situation, those in which the earlier 998 offer hits and the later 998 offer misses. As the Court put it, "[F]or present purposes we may assume the propriety of applying the last offer rule where . . . an offeree obtains a judgment or award less favorable than a first section 998 offer but more favorable than the later offer." 

Now that Martinez has been decided, what is the current state of multiple 998 offer case law?

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