Dissent Argues That Section 1717 Does Have Precedence In This Situation, So That Fees To Prevailing Party Should Be Determined Upon A Remand.
In City of Dinuba v. Universal Biopharma Research Institute, Inc., Case No. F072497 (5th Dist. Feb. 20, 2018) (unpublished), City of Dinuba filed an unlawful detainer action against two defendants, although the Biopharma defendant was not named as the tenant under the commercial lease. A jury found that Biopharma was a not a party to the lease and not liable to City. Biopharma moved for attorney’s fees as prevailing party (no one disputed this) to the tune of about $197,000 under a fees clause, but one which was “permissive” in nature, to wit: “In the event of any proceedings brought by either party against the other under this lease, the prevailing party may be entitled to recover the fees of their attorneys in such action or proceedings for such amounts as may be adjudged reasonable attorney’s fees.” The trial court, interpreting this clause as discretionary, denied fee recovery, prompting an appeal by Biopharma.
The Fifth District affirmed, but in a 2-1 decision drawing a lengthy dissent by Justice Meehan.
The majority concluded that CCP § 1021 allows the parties to craft their own conditions for an award of attorney’s fees such that Civil Code section 1717 does not apply to discretionary attorney’s fees so as to lead to a different result. Put another way, the majority believed section 1717 applied only to mandatory fee clauses.
Justice Meehan did not buy the majority reasoning in her dissent. In an extended discussion of jurisprudence under section 1717, in a situation she characterized as being a “case of first impression,” Justice Meehan concluded that (1) CCP § 1021 cannot override Civil Code section even for “permissive” fee clauses, and (2) the “may” language in the clause could be interpreted to only confirm that it does not apply to non-contract situations (the law under section 1717). She did argue that the “may” language was void and had to be replaced with the statutory terms required by section 1717. Here is her policy-based, bottom line reasoning: “Without the mandatory application of section 1717 to all contractual fees clauses to enforce the contract, parties are free to enter into unilateral agreements, craft their own definition of prevailing party and create their own requirements for reasonableness. Courts have no clear standards independent of section 1717 by which to resolve disputes on those matters. The statute’s goal of uniform and evenhanded treatment of attorney fees awards will be defeated and those in unequal bargaining positions will again be exposed to the deceptive and oppressive tactics the statute was designed to eliminate. This result is unwarranted ….”
(Dissenting Slip Op. at 4.) She would have remanded the matter to allow the trial judge to fix a reasonable fee award in Biopharma’s favor.