Broader Clause Might Have Resulted In Different Result.
This next case shows that care must be taken in crafting the scope of a fees clause, especially in a settlement agreement. The party successfully enforcing a settlement agreement was denied fees given that the fees clause was not broad enough to allow for the requested recovery.
Lugris v. Full-Swing Golf, Inc., Case No. D065651 (4th Dist., Div. 1 Jan. 30, 2015) (unpublished) involved parties to a settlement agreement under which the parties would relinquish stock and execute documents to that effect and the defendants would pay a stipulated $1.6 million sum by a specified date. Importantly, the settlement agreement specified that a “breach of the agreement” would result in an award of attorney’s fees.
Defendant did not pay on the specified date, with both parties filing “dueling” motions to enforce the settlement agreement under Code of Civil Procedure section 664.6. The court granted the plaintiffs’ motion to enter judgment and ordered the defense to pay the stipulated amount, plus prejudgment interest from the hearing date. Plaintiffs then filed motions for an award of contractual attorney’s fees, with defendants paying the judgment before the hearing on the motion. The lower court then denied the plaintiffs’ fee motions based on the fact there was no finding of breach.
The appellate court affirmed. Given that entry of judgment under section 664.6 does not require a finding of breach (Hines v. Lukes, 167 Cal.App.4th 1174, 1185 (2008)), the lower court’s failure to find breach was fatal given the unambiguous narrowness of the fees clause covering only a “breach of the agreement.” The panel also insinuated that a different result might have occurred if the clause had been worded, for example, to provide fees in the event of any legal action, to enforce the provisions of the agreement, or any action in relation to the settlement agreement. Here was the final takeaway given the wording of the fee clause before the court: “Consistent with public policy, the ruling encourages parties to carefully consider the provisions to which they agree, especially knowing their agreements will be enforceable as written. Plaintiffs agreed to settle their claims against Defendants in exchange for a sum of money and the opportunity to recover attorney fees in case of breach. Plaintiffs were free to agree to alternative language, or to further negotiate the attorney fees provision prior to signing. They did not. Plaintiffs are not entitled to attorney fees without a finding of breach.” (Slip Op., pp. 8-9.)