Standing in the shoes of a third party? Plan to pay the attorney fees.

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In Apex LLC v. Korusfood.com, 2014 DJDAR 248 (2014), the California Court of Appeal for the Fourth Appellate District affirmed an attorney fee award rendered by the trial court. The court of appeal concluded that a third party who “stands in the shoes” of the contracting party can be liable for fees to the same extent as the original contracting party.

The plaintiff sued Sharing World Inc. (“SW”) and Felix & Sons Inc. (“Felix”), alleging the parties failed to pay for seed that it ordered. Felix later became Korusfood.com (“Korusfood”). The trial court first ruled in favor of SW and Korusfood, but later reversed its ruling.

Following its appellate victory, Apex moved for contractual attorney fees. The defendants argued that Apex could not recover attorney fees from Korusfood, because Korusfood was separate from SW and was not a party to the contract. The trial court granted Apex’s request for attorney fees against both of the entities.

The court of appeal affirmed the trial court’s decision. The court held that even a party who has not signed an agreement may still be bound to an attorney fees provision in a contract if it “stands in the shoes of a party to the contract.” The nonsignatory party can be held liable for a fee award, if it would have been entitled to attorney fees as the prevailing party. This is a commonsense conclusion. Here, even though Korusfood was not a party to the contract, it stood in the shoes of Felix. Thus, the trial court correctly ordered both Korusfood and SW to pay Apex’s attorney fees.

 

Topics:  Attorney's Fees, Contractors, Third-Party Liability

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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