$20,041.50 Defense Fee Award Under Section 1717 Reversed As A Matter Of Law.
In Shetty v. Doshi, Case No. B321391 (2d Dist., Div. 4 Aug. 17, 2023) (unpublished), plaintiff brought an action claiming he overpaid on a promissory note and was subject to a usurious interest, although also bringing Financial Code and unfair competition claims grounded on the same theories. Plaintiff dismissed the complaint without prejudice, with the defense moving for attorney’s fees under a note fees clause stating “[i]n any action to enforce the Note, the prevailing party shall receive attorney fees.” The lower court awarded the defense $20,031.50 in fees under Civil Code section 1717.
The 2/4 DCA reversed as a matter of law for two reasons: (1) plaintiff’s claims were “on the contract” given the gist of the claims and liberal construction of section 1717’s “on the contract” language such that their dismissals prevented the defense from being eligible to recover 1717 fees (Barnhart, Inc. v. CMC Fabricators, Inc., 211 Cal.App.4th 230, 241-242 (2012); Shadoan v. World Savings & Loan Assn., 219 Cal.App.3d 97, 100-101, 107, 109 (1990)); and (2) the fee clause “to enforce the Note” language was narrow and would not encompass any noncontractual claims if they were characterized as not being “on the contract” anyway (Gil v. Mansano, 121 Cal.App.4th 739, 742-744 (2004); Exxess Electronix v. Heger Realty Corp., 64 Cal.App.4th 698, 709 (1998)).