Second District, Division 1 Affirms CCP § 1032 Fee Determination, But Reverses and Remands For Civil Code § 1717 Recovery Calculation.
As we have discussed under our category “Prevailing Party,” the determination of prevailing party focuses on the results reached on each distinctive claim by each distinct litigant, with different statutes governing the distinct results achieved in a particular lawsuit. Civil Code section 1717 and Code of Civil Procedure section 1032 are two of the best known “prevailing party” provisions, but each has different standards for determining who prevails—as the next case demonstrates.
In Isaian v. Madadian, Case No. B215897 (2d Dist., Div. 1 July 30, 2010) (unpublished), sellers sued brokers for a failed real estate deal, with cross-claims naturally flying from all sides. A jury found against sellers on their breach of fiduciary duty and negligence claims, while they also found against brokers on their intentional interference and breach of contract claims (expressly finding that brokers failed to perform their own obligations so as to be entitled to relief). Sellers sought recovery of fees under Civil Code section 1717 and Code of Civil Procedure section 1032, while brokers sought fees under CCP section 1032 based on a broad fees clause in the purchase agreement. The trial court found that brokers were prevailing parties under CCP section 1032(a)(4), but denied fees to sellers. Sellers appealed.
Split result on appeal.
The appellate court began its analysis by explaining the different standards that govern prevailing party analysis under CC § 1717 and CCP § 1032. Under that analysis, the seller clearly prevailed under the contractual fees clause because jurors found that brokers failed to perform contract-based obligations, such that it was error not to award fees to sellers. With respect to sellers’ fiduciary duty/negligence claims, however, the trial court correctly applied CCP § 1032 in favor of brokers. After all, the fee clause in the purchase agreement broadly encompassed tort claims, with the brokers prevailing because neither side obtained relief on these causes of action.
End result: brokers got their fees and, on remand, sellers get to recoup reasonable attorney’s fees for prevailing on the contract claim as against brokers. The thing we do not know is the amount of fees that were expended by both sides in this litigation, although we would guess they were substantial for the involved parties.