There Can Only Be One Prevailing Party Under Civil Code Section 1717

by Hinshaw & Culbertson LLP
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In Frog Creek Partners LLC v. Vance Brown Inc., 2012 DJDAR 6905 (2012), the California Court of Appeal for the First Appellate District decided a novel prevailing party case under Civil Code Section 1717. That statute governs the award of attorney fees based on a contract. It generally allows the award to the prevailing party where there is a fee provision in the agreement.

Two parties entered into a contract that contained an arbitration clause and a separate attorney fee provision. However, the plaintiff and defendant signed different versions of the contract. A dispute arose between the contracting parties. A lawsuit was filed by the plaintiff and the defendant petitioned to compel arbitration.

The trial court denied the defendant’s motion to compel arbitration. The defendant sought appellate review of the trial court’s decision and the court of appeal affirmed the ruling, concluding that the parties had not signed the same contract. The defendant filed a renewed petition to compel and the court reversed its previous decision and sent the dispute to arbitration.

The defendant prevailed at the arbitration. The defendant brought a motion to recover attorney fees under the provisions of the agreement. The plaintiff also moved for attorney fees in connection with its previous successful opposition to the defendant’s motion to compel arbitration.

The trial court ruled in favor of the defendant, concluding it was the prevailing party in the arbitration. However, the trial court also ruled that the plaintiff was the prevailing party on the initial petition to arbitrate and awarded attorney fees to that party too.

The court of appeal reversed the decision of the trial court. The court of appeal noted that there can only be one prevailing party on a contract in a case. The court of appeal concluded that the prevailing party was the defendant. After an extensive analysis, the court concluded that although there were two versions of the same contract, there was only one contract. Because the defendant won on the substantive merits, there could only be one fee award, which went to the defendant.

 

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