Contracts

Attorney’s Fees May be Recoverable in Absence of Damages. In an action "on a contract", the prevailing party for purposes of an award of attorney’s fees under Civil Code section 1717 is the party who recovers the greater relief "on the contract", even if that relief results in a smaller damages award than recovered by the other party, or even no monetary award at all. Here, the plaintiff paid, under protest, $112,000 to the defendant pursuant to a personal guarantee executed in connection with the lease of real property. After making the payment, the plaintiff sued to recover the $112,000, contending that the guarantee was invalid and/or the defendant’s damages were less than the amount paid. After a trial on the contract issues, the trial court held the plaintiff liable on the guarantee, but ordered the defendant to refund $67,829.46 to plaintiff because the defendant’s damages were less than the $112,000 paid. Despite plaintiff’s having recovered a greater amount in damages, the defendant was awarded its attorney’s fees under Section 1717. The Court of Appeal affirmed the award holding that the party recovering greater relief on the contract for purposes of Section 1717 is "not necessarily . . . the party receiving the greater monetary judgment." Instead, the prevailing party under Section 1717 is the party who achieved its litigation objectives, as revealed by the pleadings, trial briefs, and the like, with respect to the contract issues irrespective of the monetary award made in the case. (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136.)


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