Party Must Be an Intended Beneficiary of the Contract to Invoke the Reciprocity Provision of Civil Code Section 1717

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In Hyduke’s Valley Motors v. Lobel Financial Corp., 2010 DJDAR 16183 (2010), the court of appeal for the fourth district reiterated a fundamental prerequisite for a party seeking attorney fees under the reciprocity provision of Civil Code 1717.

Under CC § 1717 in any action or a contract which provides for a fee award to one party, Section 1717 makes the clause reciprocal as a matter of law. However, in order to be eligible, the litigant must be a party to the contract or an intended beneficiary of the agreement.

Hyduke’s Valley Motors (Hyduke’s) appealed from a post-judgment order denying its motion for attorney fees against Lobel Financial Corp. (Lobel).

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Published In: Civil Procedure Updates, 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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