Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Alameda County Super. Ct. No. RG06260324
Jones. P.J.
Ken Menasco doing business as Westland Real Estate appeals from a postjudgment attorney fee order. He contends the trial court erred when it required him to pay his opponent’s fees. We agree and will reverse.
I. FACTUAL AND PROCEDURAL BACKGROUND
Respondent Samuel Nagel owns a house located on Virginia Street in Berkeley. Nagel wanted to sell the house. In February 2005, he signed an exclusive residential listing agreement with Madison Hunter, a real estate broker. The agreement anticipated that Madison Hunter would list Nagel’s house on the multiple listing service and that any cooperating broker would receive a share of the sales commission.
Appellant is a real estate broker. He learned about Nagel’s house through the multiple listing service and found buyers who were interested. The buyers made three written offers to Nagel, all of which were rejected.
Appellant believed he had produced ready, willing, and able buyers and that he had earned his share of the sales commission. In March 2006, he filed a complaint against Nagel seeking $19,750 under breach of contract, and third party beneficiary breach of contract theories. As is relevant here, the complaint alleged, on information and belief, that the written listing agreement between Nagel and Madison Hunter included an attorney fee clause and that appellant was entitled to fees under that clause.
The case was tried before a judge who ruled in favor of Nagel.
Nagel then filed a motion seeking the attorney fees he had spent litigating the suit. The trial court granted the motion and awarded Nagel $17,387.50 in attorney fees reasoning that because appellant had asked for fees in his complaint, Nagel was entitled to fees when he prevailed.
II. DISCUSSION
Appellant contends the trial court erred when it ordered him to pay Nagel’s attorney fees.
The legal basis for an award of attorney fees is a question of law that we review de novo on appeal. (Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677 (Sessions).)
We turn first to the reason the court cited for its award: Nagel was entitled to fees because appellant had asked for fees in his complaint.
As a general rule, each party to a lawsuit must pay its own attorney fees except where a statute or contract provides otherwise. (Code Civ. Proc., § 1021.) However, some courts have developed an exception to this general rule. Applying equitable principles, those courts have ruled that a party who claims fees in his complaint based on language in a contract, can be forced to pay his opponent’s attorney fees even if the contract would not otherwise have permitted an award of fees. Jones v. Drain (1983) 149 Cal.App.3d 484 (Jones), is an example. The Jones court stated: “We believe that it is extraordinarily inequitable to deny a party who successfully defends an action on a contract, which claims attorney’s fees, the right to recover its attorney’s fees and costs simply because the party initiating the case has filed a frivolous lawsuit. As a consequence, we find that a prevailing defendant sued for breach of contract containing an attorney’s fees provision and having had to defend the contract cause of action is entitled to recover its own attorney’s fees and costs therefor, even though the trial court finds no contract existed.” (Id. at pp. 489-490; see also Cano v. Glover (2006) 143 Cal.App.4th 326, 331-332.)
A second, and we believe, better reasoned line of authority rejects the conclusion that fees may be imposed against a party simply because he or she requests fees. As a recent decision explained, “To visit a losing claimant’s own demands upon him might appeal to a sense of playground justice, but it has no basis in our law. We see no reason to treat attorney fees differently from any other form of relief for these purposes. We know of nothing in our law that justifies awarding such fees to a party merely because his opponent asked for them.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 899.) This district has adopted the latter view. (See Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1306-1307.) Consistent with the second line of authority, we conclude the court could not validly order appellant to pay Nagel’s fees simply because appellant sought an award of fees in his complaint.
Our conclusion of this point does not finally resolve the issue of whether an award of fees was proper here. As we have stated, each party to a lawsuit must pay its own attorney fees except where a statute or contract provides otherwise, (Code Civ. Proc., § 1021) and the contract between Nagel and Madison Hunter included a fee clause. It states: “In any action, proceeding or arbitration between Seller and Broker regarding the obligation to pay compensation under this Agreement, the prevailing Seller or Broker shall be entitled to reasonable attorney fees and costs from the non-prevailing Seller or Broker . . . .” Therefore, the next question we must address is whether Nagel could be awarded fees under this language. We conclude the answer is no.
The contract states the prevailing “Seller or Broker” is entitled to reasonable fees from the “non-prevailing Seller or Broker.” However, the contract then goes on to define Nagel as the seller and Madison Hunter as the buyer. Nagel may well be a prevailing “seller” under this language, but appellant indisputably is neither a “Seller” nor “Broker” as those terms are defined. Therefore, an award of fees against him would not be permitted under the express language of the clause itself.
However, in certain circumstances, a party who is not a party to a contract that contains a fee clause can still recover fees. This rule is founded on Civil Code section 1717. In Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128 (Reynolds), our Supreme Court stated that the purposes of Civil Code section 1717 require that it be “interpreted to . . . provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney’s fees should he prevail in enforcing the contractual obligation against the defendant.” The rational of Reynolds has been extended to actions by a nonsignatory plaintiff seeking to enforce a contract against a signatory defendant. (Brusso v. Running Springs Country Club, Inc. (1991) 228 Cal.App.3d 92, 108-111.) Therefore, the current rule can be distilled as follows: “in cases involving nonsignatories to a contract with an attorney fee provision . . . [a] party is entitled to recover its attorney fees pursuant to a contractual provision only when the party would have been liable for the fees of the opposing party if the opposing party had prevailed. Where a nonsignatory plaintiff sues a signatory defendant in an action on a contract and the signatory defendant prevails, the signatory defendant is entitled to attorney fees only if the nonsignatory plaintiff would have been entitled to its fees if the plaintiff had prevailed.” (Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 382, italics added.)
As is relevant, Civil Code section 1717, subdivision (a) states: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”
Thus, the pivotal question here is whether appellant would have been entitled to fees from Nagel if he had prevailed in the suit. Again, we conclude the answer is no. The fee clause at issue states that in any action between “Seller and Broker” the prevailing party is entitled to recover reasonable fees. However, the contract specifically defines Nagel as the seller and Madison Hunter as the broker. Appellant is simply not a party who would be entitled to recover fees under this language.
The only argument Nagel advances that might support the conclusion that appellant would have been entitled to recover fees, (and therefore under Real Property Services case that Nagel could recover fees from appellant) is that appellant was a third party beneficiary of the Nagel/Madison Hunter listing agreement. But, even if we were to assume that appellant was a third party beneficiary, appellant still could not have recovered his fees. Sessions, supra, 84 Cal.App.4th 671, is directly on point. There, Noble, a general contractor entered into a written contract with Mackey, a subcontractor. The contract included the following fee clause, “In the event it becomes necessary for either party to enforce the provisions of this Agreement . . . the prevailing party shall be entitled to recover from the other party all costs and expenses associated with such action . . . .” (Id. at p. 676.) Sessions, who was not a party to the Noble/Mackey contract, sued Noble for breach of contract under a third party beneficiary theory. The Sessions court framed the issue before it as follows: “When a contract contains an attorney fee provision and a nonsignatory plaintiff brings a third party beneficiary breach of contract action against a signatory defendant, can the signatory defendant as prevailing party recover attorney fees from the nonsignatory plaintiff.” (Id. at p. 677.) The Sessions court noted that Sessions as a third party beneficiary was only entitled to the benefits the contracting parties agreed to confer upon it. (Id. at p. 680.) According to the Sessions court, those benefits did not include a potential award of fees. “The contract . . . permits recovery of attorney fees ‘[i]n the event it becomes necessary for either party to enforce the provisions of this Agreement . . . .’ ‘[E]ither’ refers only to the two parties to the contract, Noble and Mackey. If they wanted to include someone else, their contract would have referred to ‘any’ party. Moreover, the word ‘party’ limits recovery of attorney fees to a ‘party’ to the contract, reflecting the intent of Noble and Mackey to exclude nonsignatories, such as Sessions, from the scope of the attorney fee clause.” (Id. at p. 681, fn. omitted.)
We reach the same conclusion here. The fee clause at issue states that in any action between the “Seller and Broker” regarding the obligation to pay compensation, the prevailing “Seller or Broker” shall be entitled to recover its attorney fees. As we have noted, the contract specifically defines Nagle as the “Seller” and Madison Hunter as the “Broker.” There is simply no evidence that Nagle or Madison Hunter intended to grant appellant the right to recover fees under their contract. Since appellant could not have recovered fees from Nagel if appellant had prevailed, Nagel is not entitled to recover fees from appellant. (Real Property Services Corp. v. City of Pasadena, supra, 25 Cal.App.4th at p. 382.)
We conclude the court erred when it awarded Nagel his fees.
Having reached this conclusion, we need not determine whether the court awarded an unreasonable amount of fees.
III. DISPOSITION
The award of fees is reversed.
We concur: Simons, J., Stevens, J.
Retired Associate Justice of the Court of Appeal, Division Five, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Appellant also appears to challenge the court’s award of costs. The order at issue indicates the court did not award costs. Appellant’s challenge lacks foundation.