Mutuality Was There, Appellate Panel Rules.
Note co-maker sued another note co-maker regarding repayment of a $500,000 loan to Vineyard Bank. Plaintiff lost this suit to one of the non-settling co-makers, with loser basically arguing that the attorney’s fees clause in the note only really applied to a conventional lender versus note maker situation.
Not so narrow, said Presiding Justice O’Leary, in the 3-0 panel opinion in Kissen v. Runyon, Case No. G044778 (4th Dist., Div. 3 Feb. 27, 2012) (unpublished), when affirming a trial judge’s decision to award $25,780 in fees to winning co-maker.
The reason that Civil Code section 1717 mutuality principles applied stemmed from the nature of plaintiff’s theory: plaintiff co-maker argued he was subrogated to the rights of the lender, such that he would be entitled to collect fees if he won. Given this reality for the “goose,” the inverse was “sauce for the gander”–defendant co-maker was entitled to fees if he won, as he did. This especially followed from the fact that section 1717 was amended in 1983 to make sure it applied to the entire contract; one cannot pick and choose what will be applicable, as long as the fees clause is broad enough to encompass the claims (which it was here). Fee award affirmed.