Reformation Cross-Claim Was “On The Contract,” Apportionment Was Unnecessary, And Awarding Against Cross-Defendant Only Was No Abuse Of Discretion.
Modern civil litigation is an expensive, draining process, whether at the state or federal levels. Where there is fee shifting at play, it becomes even more risky for litigants, as demonstrated by Favilli v. Tung, Case Nos. B331263 et al. (2d Dist., Div. 2 Dec. 3, 2025) (unpublished). Earlier risk analysis of fee-shifting is crucial these days.
Plaintiff/cross-defendant Andrea lost a reformation cross-claim against two cross-complainants where there was a residential purchase agreement having a broad attorney’s fees clause involved. The lower court made an unchallenged factual determination that Andrea was a party to the purchase agreement and further awarded contractual attorney’s fees of $547,587 to two cross-complainants prevailing on their reformation cross-claim.
The 2/2 DCA affirmed the fee award, rejecting Andrea’s appellate arguments as follows: (1) section 1717 construes “on the contract” liberally for fee clause interpretative purposes; (2) a litigant does not need to plead or pray for fees, because the relevant contract was attached as an exhibit to the complaint; (3) reformation was an equitable remedy to enforce the true intent of the purchase agreement such that it was covered by the broad contractual fees clause—with Andrea found to be a party to the contract; (4) no apportionment between cross-claims was needed because the reformation facts were intertwined with the facts relating to the other claims; and (5) it was no abuse of discretion to award fees only against Andrea versus other cross-defendants, because the other cross-defendants stipulated to reformation while Andrea did not (preferring to litigate and not prevailing).