Negligence And Subrogation Claims Did Not Give Prevailing Cross-Defendant Bank Entitlement To Fee Recovery.
Under our category “Fee Clause Interpretation,” we have surveyed many decisions which really demonstrate that the wording of a fees clause actually determines if fee recovery is possible for tort clams or possible against losing contractual non-signatories. The Fifth District’s decision in Ins. Co. of the West v. United Security Bank, Case No. F068649 (5th Dist. Mar. 21, 2016) (unpublished) is a good example of how these principles operate in the real world.
There, a cross-defendant Bank obtained a summary judgment against a cross-complainant, which was not a signatory under a construction loan agreement with a narrow fees clause relating only to the loan agreement. Bank nonetheless argued that cross-claims based on negligence and subrogation were “disguised” contract claims worthy of fee entitlement, but the trial judge denied any fee recovery to Bank.
The Fifth District affirmed. The negligence claim was not “on the contract” because it did not encompass tort claims, plus it was unilateral and did not allow fee recovery either for or against another litigant such as non-prevailing cross-complainant. The subrogation claim, although potentially applicable to non-signatories, did not give rise to fee entitlement because nothing allowed cross-complainant to step in the shoes of any party to the construction loan agreement—so, if cross-complainant could not recover for fees, Bank could not either under either contractual interpretation or Civil Code section 1717 reciprocity principles.