Defendant Defeating Plaintiff’s Contractual Claims Was Sole Prevailing Party, Reversing Fee Award To Cross-Defendant Prevailing On Usury Claim.
In Kelly v. Mayer, Case No. D071080 (4th Dist., Div. 1 June 23, 2017) (unpublished), plaintiff sued on a note and defendant defensively cross-claimed primarily upon fraud and usury grounds. After a 25-day jury trial, neither party received anything on their claims. The trial judge then entertained dueling attorney’s fees motions from both sides under Civil Code section 1717 based on contractual fee clauses. Defendant won $275,000 (out of a requested $750,000) and plaintiff/cross-defendant won $86,000 for defeating the usury cross-claim.
The 4/1 DCA affirmed the $275,000 fee award, but reversed the $86,000 fee award. The reason? Where a “defensive” cross-complaint is in play, there can only be one prevailing party in a contractual dispute, which in this case was the party prevailing on the contract (namely, the defendant/cross-complainant defeating plaintiff’s contract claim). (Hsu v. Abbara, 9 Cal.4th 863, 873-876 (1995) [one of our Leading Cases]; Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515, 539-540 (2012).) As far as reasonableness of the awarded fees sustained on appeal, the Court of Appeal affirmed the trial court’s conclusion that the requested blended rate of $450 was high for the San Diego venue so that a reduction to $275 per hour was no abuse of discretion.