However, Defense Was Entitled To Open Book Account Fees Under Civil Code Section 1717.5.
c1880. Library of Congress.
Defendants, the putative buyers of a restaurant business known as Bosco’s Bones & Brew in Sunol, CA, were sued by plaintiffs/putative sellers in Alevamare, Inc. v. Truong, Case A144337 (1st Dist., Div. 5 Oct. 31, 2016) (unpublished). Defendants prevailed on a breach of oral contract, open book account, accounting, and implied contractual indemnity suit which the defense eventually won after the lower court determined that there was no consummated restaurant purchase. The defense motions for fee recovery against plaintiffs under Civil Code sections 1717 and 1717.5 were denied.
The appellate court affirmed the 1717 fee denial, but reversed the failure to grant fees under section 1717.5.
Defendants’ 1717 fee motion was premised upon the fact that there was a lease for the underlying restaurant property between landlord and plaintiffs, even though defendants were not signatories to the lease. The appellate court determined that the verbal contract claim did not give rise to 1717 fee entitlement by the defense because there was no proof there was a fees provision connected with the oral agreement. Beyond that, defendants were never parties to a lease never materializing with landlord such that entitlement could not be hinged on that basis.
The reviewing court did determine it was error not to grant fees under the open book fees provision of section 1717.5, expressly applicable to agreements not having a fees clause. In 2016, fee recovery was allowable under this statute for the lesser of $1,200 or 25% owed under the contract for commercial open book accounts, although section 1717.5 in operation at the time of the dispute was limited to $1,000 for the same situation. So, the matter was remanded for a small recovery by the prevailing defendants.