One Can Recover Under Section 1717 And The Other Side Can Recover Based On Fees Clause Breadth Under Civil Code Section 1021.
Stadium Promenade, LLC v. Auld Irisher, Orange, LLC, Case No. G051513 (4th Dist., Div. 3 July 15, 2016) (unpublished) is a case which illustrates that both sides in a case can be the prevailing party for fee recovery if the “stars so align,” as Acting Justice Bedsworth found on behalf of a 3-0 panel (although he said it more elegantly, “under this peculiar constellation of circumstances”).
In this particular case, landlord sued for unpaid rent against tenant, which cross-complained for breach of lease and nuisance (with the nuisance claim based on allegations of a pervasive smell of sewage that drove customers away). Landlord won on the contract-based claims, but tenant won on the tort-based nuisance claims—with fee clauses potentially allowing recovery for both sides. At the end of the game, after offsets, tenant was ahead by about $13,000. However, the lower court denied fees to landlord but awarded tenant fees of $352,922. Landlord wisely appealed.
Our local appellate court found that landlord indisputably won on the contract claims and tenant won on a tort claim which was encompassed by a broad fees clause allowing for recovery. Thus, both parties had their positions substantially upheld, meaning that it was erroneous for landlord not to be awarded its fees for recovering on the contract claims. “We have found nothing in the legislative history to suggest that the Civil Code [section 1717] takes precedence over the Code of Civil Procedure [section 1021] or vice versa when the conditions for applying each attorney fee statute are met.” The 4/3 DCA panel also noted that tenant’s $13,000-plus award would have to be reduced by any fees awarded to landlord on a “re-do” under Civil Code section 1717(c).