[co-author: Victoria Boyko]
In Mountain Air Enterprises LLC v. Sundowner Towers LLC, 2014 DJDAR 15552, the California Court of Appeal for the First Appellate District decided a complex contractual dispute. The litigation involved several different contracts, eventually resulting in an award of attorney fees.
Mountain Air Enterprises LLC (“Mountain Air”) had one member of a limited liability company. That member entered into two separate agreements involving a piece of real property. Under the first agreement, the defendant (“Sundowner”) agreed to sell the property to Mountain Air. Under the second contract, Sundowner agreed to repurchase the property (the “Repurchase Agreement”) from that same member. Mountain Air subsequently acquired the member’s rights under both agreements. Mountain Air also executed a written option agreement, granting the members of the Sundowner LLC the right to purchase the property during the option period.
Subsequently, Sundowner transferred the property to Mountain Air, but never repurchased the property pursuant to its contractual obligation under the Repurchase Agreement. Mountain Air then sued Sundowner and its members for breach of contract under the Repurchase Agreement. In response to the complaint, Sundowner asserted the affirmative defenses of “novation” and “illegality.”
In a bench trial, the trial court ruled in favor of Sundowner on both defenses, and entered judgment in its favor. Sundowner then moved for attorney fees but the trial court inexplicably rejected the fee petition in its entirety.
The court of appeal reversed the trial court’s rejection of the fee claim. The court of appeal reasoned that the trial court erroneously concluded that fees were simply unavailable under the Repurchase Agreement, which was incorrect. Because that conclusion was erroneous, it resulted in a reversal of the ruling and a remand of the case for further proceedings relating to the amount of fees which could be recovered.
