Breadth of Language Made the Difference in this One.
Here is an interesting one that confirms that the breadth of language in a fees clause can make a difference. It especially did here, where the parties waived arbitration rights but the fees clause, but the use of “proceeding” language was broad enough to allow recovery in normal court litigation (over and above any fees incurred in an arbitration).
The case is AmericaHomeKey, Inc. v. Powerhouse Associates, Inc., Case Nos. B224147/B226597 (2d Dist., Div. 5 Sept. 9, 2011) (unpublished), where plaintiff residential finance company won summary adjudication against mortgage brokers for $209,621.87 plus fees and costs when the parties litigated in court and waived contractual arbitraion rights. The court later awarded $81,316.43 is fees and $947.25 in costs, a total award of $82,263.68 to plaintiff as the as prevailing party under a contractual fees clause. Unhappy brokers appealed.
Unhappiness continued when the judgment and fees/costs award were affirmed.
Brokers claimed that the fees provision was limited to binding arbitration, so that no fee recovery could be had in normal court litigation. Not so, ruled the appellate court. The fees clause had broad “such proceeding” language, broad enough to encompass civil litigation. The parties’ waiver of an arbitration provision did not alter the result, because it left intact the broad fees clause allowing recovery in normal litigation The fees clause was severable and governed. Fee/costs award sustained on appeal.