Section 1717 Reciprocity Principles Applied.
Charlie Price Realtor donkey statue, Routes 62 & 82. John Margolies, photographer. 1993. Library of Congress.
In Impact Realty, Inc. v. Ortega, Case No. B272040 (2d Dist., Div. 1 June 14, 2017) (unpublished), real estate brokers sued a seller for breach of contract as well as sued a seller and two alleged agents–a co-conspirator outside broker and escrow company–for fraud based on seller’s purportedly reneging on a listing agreement. In the listing agreement, there was a fees clause stating “in any action … between Seller and Broker regarding the obligation to pay compensation under this Agreement, the prevailing Seller or Broker shall be entitled to reasonable attorney fees and costs from the non-prevailing Seller or Broker ….” Co-conspirator outside broker prevailed in plaintiff brokers’ action and was awarded $25,073 in contractual attorney’s fees.
The fee awarded was sustained on appeal. Losing plaintiff claimed that it sued winning co-conspirator outside broker for fraud, such that Civil Code section 1717 did not allow for fee recovery. The appellate court disagreed, relying primarily on Kahn v. Shim, 7 Cal.App.5th 49, 55-56 (2016), by finding that the wording of a particular provision may afford a defendant a contractual right to fees which was satisfied here—after all, the fraud claim did involve a dispute regarding “the obligation to pay compensation” under the listing agreement.