Tuesday, November 26, 2002
Attorney Fees Awardable for Breach of Oral Contract, C.A. Rules
By a MetNews Staff Writer
The Court of Appeal for this district ruled yesterday that where a plaintiff brings suit on an oral contract and seeks attorney fees, and loses, it must be assumed that the contract provided for such fees, and the prevailing defendant therefore has a right to recover them.
No previous published decision has proclaimed the applicability to oral contracts of Civil Code Sec. 1717, which requires an award of attorney fees to the prevailing party if a contract “specifically provides” for it. Despite the issue being one of first impression, the opinion was not certified for publication.
Justice Steven Perren of Div. Six wrote the opinion in the case, Caughell v. Cook, B155509.
The plaintiffs, Rodney E. Caughell and others, had sued in Santa Barbara Superior Court for specific performance of an alleged oral contract to convey a parcel of real property. They lost, owing to the statute of frauds which requires that such contracts be in writing.
Judge Denise deBellefeuille denied attorney fees in favor of the defendant, Florence Cook, and Cook appealed. In reversing, Perren said:
“We conclude that, although the contract was unenforceable, Cook is entitled to recover attorney fees under Civil Code section 1717 because respondents sued on a contract which allegedly provided for their recovery.”
Perren dismissed the plaintiffs’ suggestion that Sec. 1717 only applies to contracts in writing, explaining:
“Section 1717 requires an ‘action on a contract, where the contract specifically provides’ for an award of attorney fees. (§ 1717, subd. (a), italics added.) A contract may be created by written terms or an oral expression, and attorney fee provisions in both written and oral contracts may be enforced pursuant to section 1717.”
Two earlier Court of Appeal decisions denied attorney fees to prevailing parties to oral contracts because of the absence of an agreement that the victor would receive such an award — the underlying assumption being that in a proper case, fees could be awarded though the contract was oral. However, the issue of whether oral contracts are contemplated by the code section had not previously been directly addressed in a published decision.
The complaint in the case was comprised of a single cause of action. Although there was no reference to attorney fees in the body of the complaint, the prayer did seek such an award.
Perren rejected the contention that the inclusion of a bid for attorney fees in the prayer did not amount to a factual allegation that the parties had orally agreed to an award of fees to the prevailing party in the event of litigation. The jurist said:
“The prayer is a statement of entitlement to the requested relief, which, in this case, included recovery of attorney fees….Even if a prayer does not establish the character of an action, it must be interpreted consistently with the alleged facts, and cannot be disregarded unless it seeks relief that is clearly beyond the scope of the allegations of the body of the complaint.”
The plaintiffs cannot deny that there was an oral attorney fee provision, Perren said, declaring:
“Here, the complaint makes that claim. A plaintiff cannot challenge the content of the allegations and prayer in the plaintiff’s own complaint.”
Santa Barbara attorney James P. Ballantine, who represented the defendant, said yesterday the court reached “the right result.” His client spent “in the neighborhood of $50,000” at the trial court level, he noted, adding that she is a woman in her 70s who lives in Canada and had to make several trips here after “getting sued by these people in California.”
Ballantine said she was the executrix of the estate of her sister, and had the duty of selling her home.
The plaintiffs’ attorney, Charles J. LeBeau of Solvang, could not be reached for comment.
Copyright 2002, Metropolitan News Company