Earlier, The Fee Recovery Went POOF!, But Restored After A Rehearing.
President Grant at his cottage by the sea. c1872. Library of Congress.
We have posted before in our February 21, 2016 post on U.S. Grant Hotel Ventures, LLC v. American Property Management Corp., a Fourth District, Division 1 appeal where each side got a divided decision in the trial court: plaintiff won $1.35 million on the merits and $4.2 million in fees (total of about $5.55 million), while defendants on a cross-complaint won $3.2 million on the merits and $3.35 million in fees (total of about $6.55 million). However, in the earlier appeal, the 4/1 DCA said plaintiffs’ $4.2 million fee award was unjustified under Code of Civil Procedure section 1021 based on the wording of a fees clause in an Operating Agreement.
Plaintiffs moved for rehearing in the same matter, Case No. D066490 (4th Dist., Div. 1 May 11, 2016) (unpublished), arguing Civil Code section 1717 did support the fee award previously overturned in the first appeal. That was a very astute move.
Plaintiffs obtained a restoration of its $4.2 million fee win, yet a second reversal of fortune in this contentious hotel dispute.
The Court of Appeal determined that the Operating Agreement fees clause, based on separate fee entitlement under Civil Code section 1717, was broad enough to cover plaintiffs’ conversion/fiduciary duty breach claim wins given that plaintiff was a third party beneficiary of the Operating Agreement.