Section 1717 Was Not Preempted By Business And Professions Code Section 809.1, With Plaintiff’s Wife Not Liable For Fees And With Reductions In Fees Sustained On Appeal.
A plethora of fee issues were addressed in Sujan v. UHS Corona, Inc., Case No. E084185 (4th Dist., Div. 2 Sept. 16, 2026) (published) after the lower and appellate courts concluded that a losing plaintiff physician was liable for contractual attorney’s fees under the medical center’s bylaws which allowed him admitting privileges to the center. Physician’s wife was held non-liable for fees, with the lower court’s award of reduced fees from the $892,417 “ask” being affirmed on appeal.
Plaintiff physician filed a lawsuit alleging medical center and three individual physician defendants tried to defame him and conspired to summarily suspend his admitting privileges. Physician’s wife sued for loss of consortium. Physician lost a summary judgment based on failure to exhaust principles, which also took care of wife’s action. He had reached a settlement on the privileges issue by which no 805 report had to be filed because the suspension was not more than 14 days. Defendants moved for attorney’s fees under a contractual prevailing party provision, seeking $892,417 in fees against plaintiffs. After issuing a tentative by which the fee request was reduced and wife was held not liable (a tentative not challenged by the defense, including the lower court’s sua sponte objection to awarding for work performed by prior attorneys based on the inadequacy of a current attorney’s declaration not having been made with personal knowledge), the lower court awarded defendants $313,830 as against physician plaintiff. Both sides challenged the fee award, but the merits judgment and fee award were affirmed on appeal.
Physician argued that the contractual by-law provision was effectively preempted by Business and Professions Code section 809.1, dealing with an award of fees in a peer review proceeding where frivolity/bad faith needed to be shown. However, that statutory provision did not control based on physician’s conduct in evading the 805 report and an over 14 days suspension for business reasons. Although assuming the by-laws constituted a contract of adhesion, the appellate court found justification for the contractual fee provision so that physicians could not fail to exhaust remedies and then attempt to bypass fee exposure by circumventing the peer review procedures.
Defendants’ cross-appeal arguments did not persuade the appellate court either. Wife was not liable for fees because, under the by-law provision, defendants would not have been liable to fees under a nuanced non-signatory analysis by the Court of Appeal. The defense failed to contest the lower court’s tentative ruling or challenge its sua sponte objection on prior work of attorneys, such that the argument was forfeited and was correct on the merits because the attesting attorney did not have personal knowledge about the work effort of prior attorneys not affiliated with her firm as the current attorneys of record. Finally, the hourly rate reductions by the lower court for two senior attorneys—from $875 to $650 or $550—was no abuse of discretion because (1) the trial judge can use his/her knowledge of the Riverside County market with respect to reasonableness of hourly rates; and (2) although a strict “four corners” county venue approach is not required, the lower court has discretion in determining what geographical parameters for venue work prevail, especially given that the defense did not show why it had to use Los Angeles rather than available Riverside attorneys having lower hourly rates.