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CA Appeals Court Rules in Sec. 1717 Prevailing Party Case

January 4, 2011 | Posted in : Expenses / Costs, Fee Award, Fee Dispute, Fee Entitlement / Recoverability, Fee Issues on Appeal, Fee Jurisprudence, Fee Shifting, Prevailing Party Issues

A recent Metropolitan News story, “C.A. Upholds Fee Award Against Lawyer in Copier Dispute” reports that a California appeals court has rejected an Orange County attorney’s challenge to the $68,000 attorney fee award he was ordered to pay the prevailing party in a dispute over a photocopier he had leased.  In an unpublished decision, Ghods v. Citicorp Vendor Finance, Inc. (pdf), the court ruled that Mohammed Ghods’ grievances against the leasing company, Citicorp Vendor Finance Inc., were based on a contract between them which contained an attorney fee-shifting provision, and that the fee award was reasonable.

The attorney fee provision entitled Citicorp to charge Ghods “for all expenses incurred in connection with the enforcement of any of our remedies, including all costs of collection, reasonable attorney’s fees, and court costs” if he defaulted on his payments.  Ghods filed suit, alleging Citicorp had “breached their obligations to repair and maintain the copier as agreed.”  He sought $250,000 in damages, plus punitive damages, and attorney fees and costs.

The trial judge ruled in favor of Citicorp.  Citicorp then moved for attorney fees and costs and was awarded $68,960.  On appeal, Ghods argued Citicorp was not entitled to attorney fees because it was not a “party prevailing on the contract” entitled to recover it legal costs pursuant to California Code of Civil Procedure Sec. 1717(a) since he had not sought enforcement of the rental agreement, but to invalidate it.  Writing for the appellate court, Justice Kathleen O’Leary explained that Ghods’ claims fell within the scope of Sec 1717.  O’Leary further concluded that the fee award was not unreasonable based on the declarations submitted.