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 The rationale is that: 1) section 1021 was not superseded by section 1717; 2) section 1021 states that recovery of attorney fees is “left to the agreement, express or implied, of the parties”; 3) tort claims are not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.