Breadth of Clauses Are the Determinative Factors.
By way of summary adjudication, nonsuit, and directed verdict, defendants beat contract and tort claims brought by plaintiffs, with the two defendants (Mr. Sun and C2) seeking postjudgment attorney’s fees awards but only C2 garnering a $120,000 fee award for prevailing on an implied covenant contract claim. Mr. Sun appealed the outright fee denial, C2 appealed the denial of fees on the tort claims, and plaintiff appealed the fee award in favor of C2.
All lost in Digital Video Systems, Inc. v. Sun, Case Nos. H034970/H035198 (6th Dist. Mar. 29, 2011) (unpublished).
The breadth of the fees clause really determined the appeals of Mr. Sun and plaintiff.
Sun’s employment agreement was not broad enough to cover fiduciary duty or tort claims, because these disputes were not brought “in connection with [the] Agreement.” A license agreement clause covering actions “necessary to enforce or interpret” the terms of the agreement was narrow, not encompassing the defense of tort claims.
That left defendant’s appeal of the fee award to C2 on the contract claim. The main challenge was that C2 did not prevail because it won through a summary adjudication motion. Wrong, said the appellate court. “There can be no doubt that C2 obtained a simple unqualified win on the contract cause of action. Civil Code section 1717 does not require that the win follow a trial.” (Slip Opn., p. 28.)