Section 1717 Made Unilateral Clause Reciprocal, So Not Adhesive Even Though Escrow Company Won.
In 1500 Viewsite Terrace, LLC v. Pickford Escrow, Inc., Case Nos. B256246/B257166 (2d Dist., Div. 4 Sept. 28, 2017) (unpublished), plaintiff unsuccessfully sued a title company and escrow company, mainly under tort theories (although based on breach of escrow instructions) stemming from plaintiff’s purchase of an investment in a single-family residence even though plaintiff was aware of liens/encumbrances creating clouds on title. Escrow company obtained a summary judgment and then successfully moved for attorney’s fees under Civil Code section 1717 based on a broadly-worded fees clause allowing recovery to the escrow holder to a legal action “in any manner in connection with this Escrow.”
On appeal, plaintiff argued that this was a tort breach of fiduciary action not allowing for fee entitlement under section 1717 which only applies to contractual claims. The appellate court rejected this argument based on the reasoning of Kangarlou v. Progressive Title Co., Inc., 128 Cal.App.4th 1174, 1178-1179 (2005), which held that a breach of fiduciary claim against an escrow holder can be both a tort and breach of escrow instructions (contract claim). With respect to the argument that the escrow instructions fee clause was adhesive, this was obviated by the fact that section 1717 made this reciprocal to the other side such that it was not one-sided in application. Fee award affirmed in favor of the escrow holder.