Date of Opinion: August 28, 2019
California Court of Appeal held that, under California Civil Code §1717, there may only be one prevailing party entitled to attorney fees on a given contract in a given lawsuit. An “action on a contract” refers to the entire lawsuit. When Party A prevails at trial, Party B’s subsequent success on appeal does not make Party B the prevailing party when it does not affect the trial determination.
Facts and Procedural History
As part of an agreement for William Greene to loan Karen de la Carriere $175,000 to help Carriere buy a home, Carriere executed a promissory note and deed of trust. Five years later, Greene demanded payment of the principal on the loan. Carriere refused and filed a complaint to void the note and trust deed. Greene filed a cross-complaint against Carriere claiming a breach of the note.
The trial court dismissed the Carriere claim and ruled in favor of the Greene cross-complaint, finding that Carriere did breach the note. The trial court awarded Greene attorney’s fees as the prevailing party under Civil Code Section 1717 and the outstanding principal but subtracted the outstanding interest payments from the principal because the interest rate was usurious.
Greene appealed, arguing the trial court erred in subtracting the outstanding interest payments from the principal owed. Greene eventually voluntarily dismissed his appeal. As a result, Carriere moved for attorney fees incurred on the appeal under Civil Code Section 1717, arguing her success on appeal made her the prevailing party, entitling her to attorney fees. The trial court granted the Carriere motion.
Carriere is not Entitled to Attorney Fees under Civil Code Section 1717
Greene appealed the trial court’s awarding of attorney fees to Carriere, arguing only he was entitled to attorney fees given he is the prevailing party in the action.
Section 1717(a) entitles reasonable attorney fees to the prevailing party on any action on a contract with an attorney fees provision. Section 1717(b)(1) defines a prevailing party as the party who recovered greater relief in the contract action. Section 1717 is interpreted as allowing “only one prevailing party entitled to attorney fees on a given contract in a given lawsuit.” Furthermore, “an action on a contract” refers to the entire lawsuit regarding the contract.
To determine whether Greene or Carriere was the prevailing party under Civil Code Section 1717, the Court turned to Wood v. Santa Monica Escrow Co. (2009) 176 Cal.App.4th 802. In Wood, the plaintiff dismissed his complaint with prejudice and the defendant moved for attorney fees. The trial court denied the motion for attorney fees, which was affirmed on appeal. Subsequently, the plaintiff moved for attorney fees incurred on appeal (pursuant to a contractual attorney fees provision), arguing he prevailed on the appeal. The trial court denied his motion, which was affirmed on appeal. Both courts agreed defendant was the prevailing party, given that the plaintiff’s claim was dismissed at trial, and that the plaintiff’s success on defendant’s claim to attorney’s fees on appeal did not change the fact that the defendant prevailed at trial.
Here, the Court reversed the trial court’s awarding of attorney fees to Carriere for the same reason. At trial, the Carriere claim was dismissed and the court awarded over $150,000 to Greene on his counter-claim, thereby making Greene the prevailing party. The Carriere success on the Greene claim to attorney fees on appeal did not affect Greene’s victory at the trial level. Therefore, under Section 1717, the trial court erred in awarding Carriere attorney fees because Greene was the prevailing party and there can only be one prevailing party in the lawsuit.
 Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal. App. 4th 515, 520 (2012).
For more information contact:
Richard J. Wittbrodt
Richard J. Wittbrodt is a partner at Gibbs Giden. His primary emphasis is in construction litigation, including prosecuting and defending claims of delay, disruption, defective construction, mechanics lien and stop notice foreclosure actions, for both public and private projects. Mr. Wittbrodt has experience representing large general contractors with multi-million-dollar complex hospital construction cases involving OSHPD, delay, design issues, breach of contract, warranty of plans and specifications, prompt payment requirements, contract interpretation issues, and lost profits. He is a member of the Governing Committee for the ABA Forum on Construction Law, which is the largest organization of construction lawyers in the world. In the commercial practice area, he has substantial experience in securing and defending preliminary remedies (including writs of attachment, possession, and injunctions) and secured transactions. He is also a frequent lecturer to many construction industry associations.