Second District, Division 3 Finds No Incorporation of Other Fees Clauses to Sustain Award.
One side to a joint venture agreement was vindicated completely with a defense jury verdict and was then awarded attorney’s fees of $75,000 (300 hours at a $250 hourly rate, out of a fee request in the $210-240,000 range). The problem for the prevailing party was that the joint venture agreement had no fees clause. This infirmity resulted in a reversal of the award in Markoff v. Aaronoff, Case No. B204532 (2d Dist., Div. 3 May 12, 2009) (unpublished).
Although there were fees clauses in unsigned documents exchanged in joint venture negotiations, there was nothing to show an intent by the parties to be bound by the unsigned documents. (Contrast Pilcher v. Wheeler, 2 Cal.App.4th 352, 353-355 (1992) [attorney’s fees request denied where parties did not intend unsigned construction contract with fees clause to be part of the bargain] with Boyd v. Oscar Fisher Co., 210 Cal.App.3d 368, 378-380 (1989) [although commercial purchasing contract between merchants had no fees clause, subsequent invoices with fee clauses were binding based on UCC battle of the form principles].) Nothing demonstrated that the parties intended to incorporate the unsigned contract fees clause into the signed joint venture agreement, meaning there was no predicate for fee entitlement.
The Second District, Division 3 joined the majority view on the “estoppel” issue, determining that the losing parties’ prayer for fees did not create an estoppel when there was no fee entitlement basis to the contrary. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 898-899 (2008) [discussed in our May 18, 2008 post]; Sessions Payroll Management, Inc. v. Noble Construction Co., 84 Cal.App.4th 671, 674-675 (2000); see also our category “Estoppel” for discussion of the majority and minority viewpoints on this issue.)
Winning parties tried to use third party beneficiary and assignee theories, but nothing demonstrated that the purchase agreement between the losing parties and the property seller (which had a fees clause, but to which the winners were not signatories) was made for the benefit of the winners. With respect to the assignee argument, losers were not suing as the assignees of the purchase contract but under the joint venture agreement without a fees clause. These crucial factual distinctions made unavailing use of these other theories for fee recovery.
End result: $75,000 in fee recovery went POOF! based on the absence of a fee entitlement anchor in the contract that bound the litigants.