Only Fees Attributable To Nonsignatory’s Defense, To The Extent Severable From Defense Work On Behalf Of Prevailing Signatory, Are To Be Omitted In Second Fee Proceeding.
The 4/3 DCA’s opinion in Zaffarkhan v. Domesek, Case No. G054997 (4th Dist., Div. 3 May 18, 2018) (unpublished), as even the appellate court observed in a footnote, is a reminder to carefully think about what an appeal may get you. Although plaintiff won a partial reversal and remand, the earlier conclusions of the trial judge and math in the case might mean that actually more could be awarded on remand. Be careful what you wish for – as footnote 3 of the opinion observes – in the words of an old, time-honored adage.
The trial judge awarded two defendants a reduced portion of requested fees after they prevailed against plaintiff in a situation where there was a fees clause in a shareholder agreement and where only tort claims were involved. The lower court awarded a net sum of $130,213.13 in fees to both defendants (out of a requested $221,471), after reducing for inadequate billing substantiation, fees charged by another firm, and work attributable to an unsuccessful cross-complaint. Plaintiff nonetheless appealed.
The appellate court did reverse because one of the defendants was not a signatory to the shareholder agreement such that any fee recovery under Civil Code section 1717 was unwarranted because it was not “on the contract.” An agreement among particular contracting parties to extend the right to fees to include those incurred in asserting or defending tort claims in any event does not extend to nonsignatories. Section 1717’s reciprocity principles will allow nonsignatories in certain situations to recover related to contract causes of action but has not been applied to tort claims. (Topanga and Victory Partners v. Toghia, 103 Cal.App.4th 775, 783 (2002).)
However, despite reversing and remanding to omit fees that were attributable to the nonsignatory’s defense to the extent they could be severed, the appellate court did note that the trial judge had already discounted the fee request quite a bit, a harbinger that the remand result might not be as good as the first discounted award.
Justice Goethals was the author of the 3-0 panel decision.