Fourth District, Division 3 Finds Section 1717 Cannot Be “Bootstrapped” Into Fee Entitlement For Breach of Contract With No Fees Provision.
Civil Code section 1717 focuses on mutuality of remedy for enforcement of contractual attorney’s fees clauses. However, it is not a statutory dragnet to enforce an oral settlement with no fees clause or to seek recovery under a written settlement agreement with a fees clause where that is not the object of an enforcement action.
Splain v. Hogard, Case No. G040895 (4th Dist., Div. 3 Apr. 28, 2009) (unpublished) dealt with this very issue, finding that a prevailing nonparty’s ultimate win did not allow for fee entitlement under a settlement arrangement.
One of the terms of the settlement required defendants to cause a nonparty to transfer an interest in a piece of real property to plaintiff. The nonparty refused, plaintiff sued for breach of an oral settlement placed on the record (with no fees clause), and nonparty—after prevailing on the transfer issue—moved for an award of attorney’s fees under a subsequent written settlement agreement with a fees clause (but to which nonparty was not a signatory). After winning, the trial court denied prevailing nonparty an award of fees. Nonparty was not happy, and appealed.
Justice Fybel, on behalf of a 3-0 panel of the Fourth District, Division 3, affirmed.
Relying on Brittalia Ventures v. Stuke Nursery Co., Inc., 153 Cal.App.4th 17, 21-22 (2007), the appellate panel initially determined that a party cannot champion a win on a contract action involving an agreement without an attorney’s fees clause, but shift course to claim a victory based on a different contract with a fee provision. Section 1717 “cannot be bootstrapped to provide for attorney fees for breach of a contract that has no attorney fees provision,” citing Brittalia, reasoned Justice Fybel.
Beyond that, the party seeking to enforce the settlement relied on the oral agreement without a fees clause, not the written agreement with the fees provision. This distinction was crucial with the Court of Appeal, because nonparty was never exposed to fees exposure based on the actual request of the settling parties.
Finally, nonparty argued judicial estoppel—after all, the party attempting to enforce the settlement prayed for “costs” on all causes of action. Not enough, because simply requesting fees based on the opponent’s request does not establish fee entitlement. (Hasler v. Howard, 130 Cal.App.4th 1168, 1171 (2005). (BLOG OBSERVATION—Although unpublished, this opinion would seem to put our local Court of Appeal in congruence with the majority of California intermediate appellate jurists on this issue. See our category “Estoppel” to see why.)