However, That Defendant’s Assertion Of A Contract As An Affirmative Defense Required Some Paring Back of Fees Under Recent Mountain Air Decisio
On August 1, 2017, we posted on Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 2017 WL 3222520 (Cal. Supreme Court 2017). A panel of the 2/4 DCA delayed submission of a matter based on the pendency of Mountain Air and has now applied it in Morrison v. Morrison, Case No. B269435 (2d Dist., Div. 4 Aug. 23, 2017) (unpublished).
The case involved a fairly nasty dispute between two children, a grandson, and companies associated with them relating to adult bookstore companies left behind by the father of the children and grandfather of grandson, complete with one of the children apparently entering into transactions to avoid tax evasion repercussions. After a fairly complex bench trial, plaintiff Michael and a one of the companies basically lost all claims, but the appellate court reversed on certain claims and remanded to see that they be decided on the merits. They were, with plaintiff Michael and the company still losing except for one claim relating to a defendant entity. Defendant Mindey, who prevailed on all claims, moved to recover $96,273.83 in attorney’s fees under Civil Code section 1717 based on fees clauses in a promissory note and a stock repurchase agreement (SRA), although the SRA was raised as an affirmative defense to Michael’s claims. The trial judge awarded Mindey $54,402 for promissory note work (not apportioning any due to the overlapping nature of the issues with other claims) and $14,897 for work relating to the SRA defense work (for a total award of $69,299).
The appellate court affirmed the first component, but reversed the $14,897 component.
The first component was justified based on the promissory note fees clause, with no apportionment necessary because the issues in all causes of action overlapped. However, the fee recovery based upon enforcement of contract in defense was foreclosed by Mountain Air given that the SRA fees clause only encompassed fee recovery “in any legal action or other proceeding brought by either party to enforce or interpret the terms of the Agreement”—which did not cover affirmative defense work. That being said, the partial affirmance and reversal did put to rest the fee battle between some of the parties.