Can We Collect Our Attorneys Fees If We Win Our Case?
Recovery of Attorney’s Fees in Contract and Other Business Disputes
Under the “American Rule” each party to a lawsuit is responsible for their own attorney’s fees. One of the largest exceptions to the American Rule is where attorney’s fees are authorized by contract. California Civil Code Section 1717 functions to make “one-sided” attorney fee provisions reciprocal. Therefore, if a prevailing Plaintiff in a contract case can recover its attorney’s fees, so can a prevailing defendant.
In practice, however, when a Defendant can receive attorney’s fees under Section 1717 is not always so clear. Ultimately whether a Defendant can recover its attorney’s fees under section 1717 depends on the pleadings, the evidence produced at trial, and the nature of the defense.
When a Defendant Can Recover Attorney Fees
A defendant can receive attorney fees under section 1717 if they prevail in a breach of contract action, and there is no dispute that the contract contains an attorney fee provision. The most common example of this is where the parties agree that a contract with an attorney fee provision exists, and only dispute whether or not the contract was breached.
Further, Civil Code Section 1717 allows a defendant to recover attorney’s fees in a lawsuit on a contract even where the defendant prevails by proving that no contract exists. Therefore, if the evidence at trial shows that the alleged contract did have an attorney fee provision, but the defendant prevails by proving the contract didn’t exist or was otherwise invalid, it may recovery its attorney’s fees.
There is another exception called the “tort of another” doctrine, which is the subject of another post. Just click here.
When a Defendant Cannot Recover Attorney’s Fees
A defendant cannot recover attorney’s fees under section 1717 if there is no attorney fee provision in the contract. This is true even where the Plaintiff claims entitlement to attorney’s fees in its complaint. Thus, if the evidence at trial shows that there was no attorney fee provision in the contract, neither party can recover their fees even if the Complaint says otherwise.
When Recovering Attorney’s Fees is Less Obvious
What happens if the Plaintiff alleges in its Complaint that the Defendant breached a contract with an attorney’s fee provision, and that attorney’s fee provision is later called into question?
In this situation a party claiming fees under section 1717 must establish that the opposing party actually would have been entitled to receive fees if they had been the prevailing party. Courts have been clear that this does not require a second “mini-trial” on the issue of attorney fees. Rather, if a Plaintiff pleads a right to attorney’s fees, attempts to prove they are entitled to attorney’s fees, and loses, a Defendant can recover their fees.
Getting Legal Help
Brown & Charbonneau, LLP represents individuals as well as large and small companies in cases involving all forms of contract and business disputes. If you are involved in a contract dispute or a business dispute, or would like to learn about your rights and how to protect them, we can provide you with the information you need. Contact us or call today at 714-505-3000 to schedule a consultation and learn more about how we can help you.
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