Despite County’s Breach of Completion Date, Continued Negotiations Waived Any Breach and Mixed Results Sustained Fee Denial.
Unless you have a clear win under a contractual fees clause, a trial judge has discretion to determine who the prevailing party is under Civil Code section 1717. We have blogged on many cases that underscore this truth, but the next case does it emphatically in the context of a settlement agreement with a clear fees clause.
Maddock v. County of Sonoma, Case No. A128600 (1st Dist., Div. 5 Dec. 30, 2010) (unpublished) is a case involving a settlement agreement (complete with a fees clause) between Healdsburg property owners and Sonoma County. County agreed to complete certain repairs with respect to a neighboring creek by a certain deadline of October 15, 2007, dubbed by the appellate court as "wildly optimistic." The parties continued to negotiate a resolution for two years later—yep, you heard right—with each side trading proposals but areas of disagreements remaining (including plaintiffs’ insistence on a delay liquidated damages clause). After plaintiffs filed a summary motion to enforce the settlement under CCP § 664.6, the trial court decided that construction must be completed by August 31, 2010, but denied other demands by plaintiffs (such as the liquidated damages deal point). The lower court also refused their request for fees, despite the existence of a fees clause in the settlement agreement. (Hence, the reason that we post on this case.)
Plaintiffs appealed – and lost.
Section 1717 gives the trial court discretion to award fees if no one got a clear victory. That was the case here. Neither side could agree on anything, with years of negotiations intervening such that the lower court could conclude that plaintiffs waived any breach by continuing negotiations and accepting performance by the County well past the October 2007 completion deadline. Because plaintiffs did not gain all of what they wanted, the substantial evidence rule accorded deference to the "no prevailing party" determination by the trial court—resulting in an affirmance of no fees in the case of the creek settlement agreement gone bad.