“Losing Party” Not Entitled to Fee Under Most Contractual Fee Clauses, Muses Appellate Court.
The fee claimant in Vail Lake Rancho California, LLC v. Abreu, Case No. D061892 (4th Dist., Div. 1 Mar. 7, 2014) (unpublished) somewhat flummoxed the appellate court on review in challenging a denial of fee recovery under two contractual fee clauses in certain trust deeds.
In the lower court, plaintiff had lost some fraudulent transfer claims based on the 7 year statute of repose, while the defendant lost a bid to have some inflated defense fees expended in the action added to a couple of notes secured by trust deeds. In the end, the lower court found it was a draw (or “give give” situation)—plaintiff lost the fraudulent conveyance action, but defendant lost in the effort to add inflated fees to the notes. Based on that, no attorney’s fees were awarded to defendant under Civil Code section 1717—there was no prevailing party.
Defendant appealed, claiming that the trust need fee clauses spoke for themselves and did not require a prevailing party determination.
The appellate court was not impressed with this argument. Actually, it believed that Civil Code section 1717 did apply to the claims (among them, note/trust deed cancellation) defensed by defendant, so the prevailing determination was in force even though defendant was a “non-assuming grantee.” (Saucedo v. Mercury Sav. & Loan Assn., 111 Cal.App.3d 305, 315 (1980).) Beyond that, however, the reviewing court believed that a prevailing party determination was still required under the fees clauses—after all, why should a losing party be entitled to recover fees under contractual clauses? Fee denial affirmed.