Court of Appeal Affirms Substantial Fee Award, But Reverses CCP Section 128.7 Sanctions.
As our Mission Statement warns, attorney’s fees can make or break a litigant given the high costs of taking a case to verdict or decision. The next litigant learned this message all too well, when a substantial fee award was affirmed on appeal after he refused to sell a house after lengthy negotiations with buyers who did not give up on obtaining the residence.
Bell v. Pierce, Case No. B196230 c/w B198961 (2d Dist., Div. 7 Feb. 26, 2009) (unpublished) involved a wild set of facts, but boiled down to a home seller who reneged on selling a residential property, bringing meritless eviction proceedings as well as attempting to record sham liens and a Trustee’s Deed to evade any sale (if you believe the facts credited by the lower court and sustained by the Court of Appeal). Disgruntled purchasers brought a specific action, won, and obtained a $226,577.74 fee award grounded on a fees clause in the purchase agreement.
Seller lost on appeal, such that the property was ordered sold to purchasers—who also recouped fees.
First, the appellate panel did vacate a previous sanctions award against seller under Code of Civil Procedure section 128.7. The reason: seller was not provided with the 21 day “safe harbor” waiting period to withdraw or correct his challenged claim, a mandatory requirement based on due process grounds. (In re Marriage of Reese & Guy, 73 Cal.App.4th 1214, 1220, 1220 n. 3 (1999).)
Second, the fact that the purchase agreement consisted of numerous documents—a base CAR agreement modified by counteroffers (but with both parties signing a third counteroffer from seller)—did not affect the impact of the fees clause. In a contract consisting of multiple documents, a fees provision can be enforced if it is in any one of the documents. (See, e.g., Ganey v. Doran, 191 Cal.App.3d 901, 912 (1987); Boyd v. Oscar Fisher Co., 210 Cal.App.3d 368, 379 (1989).)
Last, an outside trust was assessed with fees in favor of purchasers. However, the Court of Appeal vacated this award because the trial court found that seller actually controlled the trust, such that any liability for attorney’s fees should pragmatically be attributed only to seller.
The lesson here is to litigate carefully and hold to your bargains. Otherwise, the fee sword mentioned in our Mission Statement may come home to gore you, making you feel as if you are pursued by a Samurai warrior, chickens, and a bull.
circa 1880 Photographer: Kusakabe Kimbei
hand-painted print
Above two prints: Library of Congress
