Fourth District, Division 3 Reaffirms the Principle in Recent Unpublished Opinion.
Day to day, our intermediate appellate courts confront controversies involving application of Civil Code section 1717, the statutory provision that allows for enforcement of contractual fees clauses in favor of prevailing parties. However, the wording of the fees clauses themselves, for solely contractual claims, cannot trump the actual limitations of or discretion allowed to trial judges under section 1717. Our local Court of Appeal made this clear in the next unpublished decision that we examine.
In LQNN, Inc. v. Lanvesco, Case No. G040998 (4th Dist., Div. 3 Apr. 28, 2009) (unpublished), a commercial tenant did prevail in a lease dispute with landlord on an amended rescissionary claim. Naturally, the lease had a broadly-worded attorney’s fees clause allowing a grant of fees to the party who prevails “on trial or appeal.” Even though the lower court had found there was no prevailing party even though ruling in favor of tenant (because no side was awarded damages), tenant lost its bid to obtain an award of appellate fees under the lease clause after landlord lost its appeal of the rescissionary decision. Tenant appealed, and also lost its second bid for fees in a 3-0 decision authored by Justice Aronson on behalf of the Fourth District, Division 3.
Aside from the fact that the same Court of Appeal affirmed the prior determination about there being no prevailing party, tenant’s position was flawed on the merits.
Unfortunately for tenant, section 1717 is mandatory in nature and cannot be altered by contract. (Exxess Electronixx v. Heger Realty Corp., 64 Cal.App.4th 698, 707 (1998); Jackson v. Homeowners Assn. Monte Vista Estates-East, 93 Cal.App.4th 773, 785 n. 6 (2001); Fairchild v. Park, 90 Cal.App.4th 919, 929 (2001).) Because the lower court found there was no prevailing party and that determination was affirmed on appeal, the wording of the lease clause could not be used to “trump” the operation of section 1717.