Attorney’s Fees As Damages For Breach Of Contract? A Jury Must Decide

by Weintraub Tobin

Often times, contracts contain attorney’s fee provisions.  These terms allow the prevailing party in any action to enforce the contract to recover its attorney’s fees.  Under California Code of Civil Procedure section 1717, the prevailing party on these contract actions can simply file a motion and have the court award the fees as costs of suit.  But what happens when a party sues for breach of the contract and the only element of damages the party claims are the attorney’s fees it incurred as a result of the defendant’s breach?  Can that party still file a motion under section 1717 to have the Court award its fees?  Not according to a recent California appellate court opinion.  In Monster, LLC v. Superior Court of Los Angeles County, the court held that a jury must decide a claim for breach of contract alleging attorney’s fees as damages.  Confusing?  Let me explain.

The Case                                                 

Back in 2008, Monster, LLC (“Monster”) and its founder Noel Lee entered into a licensing agreement with music producer Jimmy Iovine and rapper Dr. Dre to manufacture and sell the duo’s “Beats By Dre”-branded headphones.  Dre and Iovine subsequently founded Beats Electronics (“Beats”), which entered into a new agreement with Monster superseding the 2008 agreement.  The new agreement gave Beats the right to terminate its licensing agreement with Monster should a third party acquire more than 50% of Beats.  As part of this subsequent agreement, Lee was given 5% equity in Beats.

In 2011, a third party, HTC, purchased 51% of Beats.  As a result, Beats exercised its termination rights on the licensing agreement with Monster.  Beats and Monster then entered into a termination agreement allowing the latter continued manufacturing rights through 2012 and royalty rights through 2013.  That termination agreement contained (1) a general waiver and release of all claims relating to the prior licensing agreements, expressly including fraud claims, and (2) a provision allowing the prevailing party to recover its attorney’s fees incurred in any action to enforce the contract.  Shortly thereafter, Lee entered into two agreements selling his 5% equity back to Beats.  Both of those agreements contained the same waiver/release and attorney’s fees provisions as set forth in the termination agreement between Monster and Beats.

Seven months after the parties executed the last of the above agreements, Apple acquired Beats for $3 billion.  Yes, billion.  Monster and Lee wanted a slice of that pie, so they sued Beats, alleging that Beats had engaged in fraudulent scheme to divest them of their business interests in the Beats by Dre line.  In defense, Beats argued that all of Monster’s and Lee’s claims were barred by the releases contained in the prior agreements.  Beats also filed a cross-complaint, alleging that Monster and Lee had breached those same agreements by even filing the lawsuit in the first place.  As damages on the cross-complaint, Beats cited only its attorney’s fees and costs incurred in defending Monster’s complaint.

The trial court entered summary judgment in favor of Beats on Monster’s complaint, agreeing that the fraud claims were released through the various agreements the parties had executed.  Beats then argued that the attorney’s fees it sought as damages on the cross-complaint should be awarded by motion under Code of Civil Procedure section 1717.  In contrast, Monster argued that, because Beats was pursuing a cross-complaint for breach of a contract, a jury must decide whether Beats was entitled to attorney’s fees as damages for the breach.  The trial court agreed with Beats and directed it to file a motion for fees under section 1717.  Before Beats could do so, Monster filed a writ of mandate asking the Court of Appeal to overturn the trial court’s ruling.

The Court of Appeal sided with Monster, directing the trial court to vacate its order and send Beats’ cross-complaint to a jury.  In doing so, the appellate court noted that “Beats did not seek to recover its attorney’s fees as the prevailing party on Monster’s fraud claims.  Instead, Beats sought to recover those fees as damages on its cross-claims for breach of contract.”  The court then recognized a long line of cases holding that, where attorney’s fees are sought as damages, the claim for attorney’s fees is part of the damage sought in the principal action.  Such claims, according to the court, are subject to California’s constitutional requirement that litigants be afforded the right to a jury on breach of contract actions.  The Court noted that Beats could have elected to wait until it was the prevailing party to pursue its attorney’s fees by way of a noticed motion.  Instead, Beats chose to seek those fees as damages by way of a cross-complaint.  Once it elected to do so, the fees became “part of the relief sought [and] must be pleaded and proved at trial … as any other item of damages.”


The Monster holding, while applicable in limited circumstances, is important.  Litigants should think carefully about how to recover attorney’s fees pursuant to contract.  Where the fees are sought by a prevailing party as an incident to the lawsuit, they will be recoverable via a post-judgment motion to the Court.  Where, however, the fees are sought as damages for breach of the contract, those damages will become part of the contract claim.  In the latter circumstance, a jury, rather than the court, will have to decide whether to award them.

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.

© Weintraub Tobin | Attorney Advertising

Written by:

Weintraub Tobin

Weintraub Tobin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.