Be Careful When Alleging Your Client's Right to Attorneys' Fees Because It May Come Back to Haunt You

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When a contract contains a one-sided prevailing party attorneys' fees provision, California Civil Code section 1717 makes that provision reciprocal. So if you allege your client is entitled to attorneys' fees due to the prevailing party contract clause -- even if it specifically states only your client is entitled to fees -- if the other party prevails it may be entitled to its fees instead.

A recent example can be found in Mepco Services, Inc. v. Saddleback Valley Unified School District (2010) 10 C.D.O.S. 13918, where the Fourth Appellate District affirmed an award of $366,916.63 in attorneys' fees. A contractor agreed to perform work for a school district, but the construction contract did not contain an attorneys' fees provision to the prevailing party in any dispute. The contract did, however, require the contractor to obtain a performance bond. The performance bond contained a one-way attorneys' fees provision, entitling only the school district to its attorneys' fees in the event of a claim for enforcement of the bond.

When a dispute arose between the contractor and the district, the district named the bonding company and alleged both the bonding company and the contractor had breached the terms of the performance bond. More importantly, the district alleged its entitlement to attorneys' fees under the bond.

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