Contractual Attorney Fees Conundrum

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Explore:  Attorney's Fees

Appearances can be deceiving, and plain, statutory language is no exception.  Take Civil Code section 1717, for example, which governs contractual attorney fees.  Notwithstanding section 1717’s seemingly straightforward language, cases applying that statute demonstrate just how complicated this area of the law can be.  In his recent Daily Journal article, “Contractual Attorney Fees Conundrum,” Gary Watt explores some of these wrinkles and proposes a two-step approach to determining when section 1717 applies in litigation involving contracts with attorney fees provisions.

The first step, proposes Watt, is to examine the scope of the fee provision.  If the language of the fee provision is narrow—for example, it says something like “actions on the contract” or “any action to enforce the contract”—then, generally speaking, section 1717 applies and your inquiry is at an end.  If, on the other hand, the fee provision is broadly worded—for example, it says something like “arising out of” or “relating to” the contract—then the applicability of section 1717 depends on the second step of Watt’s proposed two-step approach: asking whether noncontract claims, such as torts, are being litigated.  If the answer is “no,” then section 1717 still governs.  But if the answer is “yes,” then, according to Watt, that’s when “things get tricky.”  As if they weren’t already!

This article was originally published in the Daily Journal and subscription-based Daily Journal website at www.dailyjournal.com.

Topics:  Attorney's Fees

Published In: Civil Remedies Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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