Metropolitan News-Enterprise


Monday, January 3, 2011


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C.A. Upholds Fee Award Against Lawyer in Copier Dispute

Suit to Invalidate Agreement Was ‘On the Contract’ for Sec. 1717 Purposes, Panel Says


By SHERRI M. OKAMOTO, Staff Writer


The Fourth District Court of Appeal 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.

Div. Three ruled that Mohammed Ghods’ grievances against the leasing company, Citicorp Vender Finance Inc., were based on a contract between them which contained an attorney fee provision, and that the award was not excessive, in an unpublished decision Wednesday.

Ghods had negotiated the lease of a photocopier with an employee of Select Office Solutions Inc. in 2001, and signed two forms completing the deal. The first, entitled “Machine Order Form,” included a description of the photocopier and supporting equipment, plus a handwritten notation that the order included “service calls, toner, parts, labor, drums…etc. everything but paper and staples.” It was signed by Ghods and the Select representative. The second form was a standardized rental agreement between Citicorp, identified as the “owner” of the machine, and Ghods.

This rental agreement stated the equipment was rented “AS IS,”  and that Ghods “ha[d] entered into a separate agreement with the dealer or [e]quipment manufacturer for supplies and maintenance for the [e]quipment.” It also contained a provision which 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 claimed that Select serviced and maintained the copier for two years and then stopped. He said he continued to make lease payments to Citicorp for the remaining three years of the initial lease term, even though the machine was unusable. He asserted that he wrote a letter to Citicorp stating he did not wish to renew the lease when it expired, but Citicorp continued to send him bills requesting payment.

In 2007, Ghods filed suit, alleging, among other things, Select and Citicorp had “breached their obligations to repair and maintain the copier as agreed, made promises without intent to perform, concealed their true intentions regarding who was responsible for maintenance and supply of the copier, have extracted over $30,000 dollars for an inoperable copier and have caused substantial losses to [him,] by their negligent, fraudulent and otherwise wrongful conduct.” He sought $250,000 in damages, plus punitive damages, and attorney fees and costs.

Orange Superior Court Judge Jamoa A. Moberly entered a judgment of dismissal in favor of Citicorp after sustaining its demurrer to Ghods’s third amended complaint without leave to amend. 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 its legal costs pursuant to 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 since Ghods had alleged Citicorp breached all or part of rental agreement as an alternative theory of recovery in every version of his complaint.

She added that apportionment of the fee award between the time spent by Citicorp’s counsel defending against the contract claims and tort claims was unnecessary since Citicorp’s defense against Ghods’ tort claims was the same as its defense against the contract claims. 

O’Leary further concluded that the amount of the award was not unreasonable based on the declarations submitted by Citicorp’s attorneys providing a month by month description of the work performed, the hours spent, and the rates billed.

Joined by Justices Eileen C. Moore and Raymond J. Ikola, O’Leary granted Citicorp’s motion to recover its attorney fees on appeal as well.

The case is Ghods v. Citicorp Vendor Finance, Inc., G042251.


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