Parties’ Fee Provision Encompassed Tort and Statutory Causes Of Action Commenced “Because Of” An Alleged Breach Of Contract.
In San Francisco CDC LLC v. Webcor Construction L.P., Case Nos. A156669/A157650 (1st Dist., Div. 1 March 19, 2001) (published), plaintiff paid defendants approximately $144 million for the construction of a hotel in San Francisco. Eight years after defendants’ completion of the hotel and plaintiff’s final payment, plaintiff sued defendants under Bus. & Prof. Code § 7031(b) for disgorgement – alleging defendants were not properly licensed during construction and had concealed licensing violations through a series of mergers. However, finding plaintiff’s claims had accrued at the time of final payment and were time-barred under a one-year statute of limitations (Code Civ. Proc. § 340(a)), the trial court sustained defendants’ demurrer to plaintiff’s third amended complaint without leave to amend – a result affirmed on appeal by the 1/1 DCA.
After defeating plaintiff’s claims on demurrer, defendants successfully moved for $231,834 in Civil Code § 1717 attorney fees. On appeal, plaintiff challenged the fees award by arguing that the trial court erred in its interpretation of the attorney fee provision in the parties’ construction agreement. Plaintiff asserted that the fee provision excluded noncontract claims such as an action for statutory disgorgement – that fees were available only in an action for breach of contract. The appellate panel concluded otherwise.
The fee provision in the parties’ contract stated fees were recoverable “[i]f either party commences an action against the other to enforce any of the terms of the Contract Documents or because of the breach by either party of any of the terms of the Contract Documents . . .” As the “because of” language in the provision did not include a limiting qualifier such as “solely” or “exclusively because of,” the appellate panel concluded that it permitted the recovery of fees if the action was at least in part due to an alleged breach of contract – including an action brought “because of” a breach of contract without being an action for breach of contract.
Although plaintiff sued to assert a statutory disgorgement claim, the trial court’s conclusion that plaintiff’s action was at least in part “because of” an alleged breach of contract was fully supported by the record. Plaintiff’s pleadings repeatedly claimed defendants breached their contractual obligations to be licensed, and plaintiff also argued before the trial court that its disgorgement claim arose out of a contractual obligation.