Appellate Court Decides That More Fees Would Be Unfair Because Half of Fees Paid By Another.
Courts do apply equitable principles in awarding fees to victorious litigants under Civil Code section 1717, even where the winner was a last minute add-on litigant. The next case is one illustration of how equities enter into the section 1717 equation.
Add-on litigant was actually added as a plaintiff on the first day of trial, eventually declared the winner along with another plaintiff in a lease assignment dispute. The lease had a written contract clause, with the lower court awarding add-on plaintiff $142,690.75 (out of a requested $240,000 in fees by both plaintiffs). Both plaintiffs challenged the fees awarded to add-on plaintiff in an appeal of the postjudgment order.
They lost in Sossikian v. Ennis, Case Nos. A119693 et al. (1st Dist., Div. 3 July 16, 2009) (unpublished), mainly on equitable grounds. Defendant argued that the award was not “on a contract” under section 1717, but that argument did not resonate because the statutory “on a contract” element is construed liberally and the implied-in-fact theory was accepted such that add-on plaintiff was found to be a party to the written lease. However, the lower court was correct in halving some pieces of the fees in crafting its award to add-on plaintiff given that its fees were being paid by other plaintiff. If another result were to occur, add-on would have essentially been awarded fees for work that was done when it was not a party to the litigation. That would be unfair, ruled the trial court, with the Court of Appeal seeing nothing wrong with this equitable reasoning.