Tuesday, July 28, 2026
Page 6
Perspectives
Court of Appeal Fails to Apply ‘Bedrock Principle of Contract Law’
By Roger M. Grace
“[I]f there is one thing which more than another public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contract, and that their contracts when entered into freely and voluntarily shall be held sacred, and shall be enforced by courts of justice.”
Those words appear in the 1992 California Supreme Court opinion in Carma Developers Inc. v. Marathon Development California, Inc. (in which seven members of courts of appeal acted in the stead of self-recused members of the high court). The language was taken from the 1894 California Supreme Court decision in In re Garcelon which, in turn quoted an 1875 ruling by England’s High Court of Chancery, penned by Master of the rolls, George Jessel.
A 2013 Court of Appeal decision from the First District’s Div. Two, in Series AGI West Linn of Appian Group Investors DE, LLC v. Eves, terms the policy expressed by Sir Jessel and in the state high court opinions as a “bedrock principle of contract law” that has “always” been followed in California.
But it was not adhered to last week in a Court of Appeal opinion from this district’s Div. Five, authored by retired Los Angeles Superior Court Judge Sanjay Kumar, sitting on assignment.
★
A clause in attorney-client retainer agreement provided that in the event of litigation of a fee dispute, “the prevailing party shall be entitled to reasonable attorney’s fees together with costs of their collection.” It spelled out:
“CLIENT hereby acknowledges and agrees that attorney’s right to recover reasonable attorney’s fees and costs as an attorney representing himself in propria persona in any action or in the preparation of any documents or pleadings in an action to enforce the provisions set forth in this Agreement, which shall not be in anyway limited, denied or waived pursuant to Civil Code Section 1717 or under the ruling in Trope v. Katz (1992) 11 Cal. 4th 274, or any other case or code, which provides that an attorney who chooses to litigate in propria persona rather than retain another attorney to represent him or her in an action to enforce a contract containing an attorney fee provision cannot recover reasonable attorney’s fees under Civil Code Section 1212.”
The provision continues:
“CLIENT further acknowledges and agrees that if ATTORNEY is the prevailing party in any Court proceeding involving CLIENT, the Court shall grant to ATTORNEY, in propria persona, its attorney’s fees and costs based on the time that ATTORNEY has spent at his then prevailing rate to enforce the terms set forth in this Agreement and treat said time as if said time was incurred as and for attorney’s fees and costs.”
Notwithstanding unambiguous contractual language, Los Angeles Superior Court Judge Thomas D. Long, on May 8, 2025, refused to order an attorney-fee award to the Sherman Oaks Law Firm of Fox and Fox although it had prevailed in an action against ex-client Miguel Arteaga for fees. Div. Five affirmed in an opinion filed last Thursday and publicly released the following day.
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The California Supreme Court, in its 1995 opinion in Trope v. Katz, did hold that a self-represented lawyer is not entitled to an attorney-fee award despite a fee-shifting clause in a contract. Justice Stanley Mosk, a preeminent jurist (now deceased), pointed to Civil Code §1717(a) which says:
“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.”
Mosk reasoned that an attorney who has been self-represented in litigation has not “incurred” fees, and declared:
“[W]e hold that an attorney who chooses to litigate in propria persona and therefore does not pay or become liable to pay consideration in exchange for legal representation cannot recover ‘reasonable attorney’s fees’ under section 1717 as compensation for the time and effort he expends on his own behalf or for the professional business opportunities he forgoes as a result of his decision.”
The opinion also concludes that it would be inequitable to allow a pro per attorney to collect attorney fees while a pro per litigant without a bar license can’t.
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In Thursday’s opinion affirming Long’s order, Kumar set forth:
“A holding that the waiver provision in plaintiffs retainer agreement was effective would require us to (1) contradict Trope in that we would have to find an attorney ‘incurs’ section 1717 fees when he or she, in propria persona, litigates a lawsuit to recover money owed by a client, and (2) ignore Trope’s assessment of, and reliance on, the purpose behind section 1717 of supporting mutuality of remedy and reciprocal agreements. We are not at liberty to controvert the dictates of our Supreme Court.”
The jurist went on to say:
“Trope was decided over two decades ago and, over the years, the Legislature has not seen fit to amend section 1717 to counteract its holding or give any impression that self-represented attorneys should be permitted to recover attorney fees. The parties did not have the authority to assume the role of the Legislature and redefine what it means to incur attorney fees pursuant to section 1717.”
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While Kumar, who long served on the Los Angeles Superior Court’s Appellate Division, is respected for his juridical skills, the call he made in that case is irreconcilable with the “bedrock” principle that parties are free, through contract, to make their own rules.
The Court of Appeal, to reverse Long’s order, would not need to contradict the holding (and truism) expressed in Trope that an attorney who has acted in pro per has not “incurred” an obligation to pay fees, nor would it have to repudiate Mosk’s notion (one of debatable validity) that it would be inequitable to allow attorney fees to pro pers who are lawyers while denying them to pro pers who are laypersons.
Accepting the soundness of all that was said in Trope, as a court of appeal must, it was not axiomatic that there be an affirmance. What Trope doesn’t say is that parties may not, by contract, agree that attorney fees may be garnered by the lawyers who prevail and act pro se.
The fact that the Legislature has not amended §1717 to abrogate Trope is irrelevant to the question of whether the parties may do so through mutual agreement.
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And why should they not be able to do so?
As Div. One of this district’s Court of Appeal said in the 1975 case of Vernon v. Drexel Burnham & Co. (along the lines of Sir Jessel’s view):
“[T]here is perhaps no higher public policy than to uphold and give effect to contracts validly entered into and legally permissible in subject matter….The sanctity of valid contractual agreements in a free society, such as ours, is of paramount importance and is rooted in both the United States and California Constitutions….”
Innumerable cases have affirmed the parties’ prerogative, where public policy does not preclude it, to circumvent law that would otherwise apply. For example, under Court of Appeal decisions, parties may, “by contract”…
• “alter the statutory limitations period for claims between them.” Hensel Phelps Construction Co. v. Superior Court (2020);
• “limit the remedies available to them in the event of breach.” San Pasqual Band of Mission Indians v. State of California (2015);
• “allow themselves to do acts which would otherwise contravene the implied good faith covenant. AB Group v. Wertin (1997).
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Illustrative of opinions recognizing the power of individuals to render statutes inapplicable to their transactions, through agreement, is the 2023 Court of Appeal decision in Castaic Studios, LLC v. Wonderland Studios LLC, by then-Presiding Justice Laurence D. Rubin (now retired). He headed this district’s Div. Five, the division on which Kumar is now sitting, on assignment.
Castaic Studios, LLC, owned commercial property; under a written agreement, Wonderland Studios, LLC, was permitted to utilize portions of that property; an agreement specified that a license was created, not a lease; and it provided that the arrangement was governed by contract principles, “not by the landlord tenant laws.” Wonderland failed to make rent payments; Castaic brought an action in unlawful detainer; Los Angeles Superior Court Judge Melvin D. Sandvig sustained a demurrer without leave to amend, finding that Castaic had “waived its right to pursue the remedy of unlawful detainer”; Div. Five affirmed.
Rubin wrote:
“Although Castaic argues at length that the agreement was in fact a lease despite its express designation to the contrary, we need not decide this issue to resolve the appeal. Even assuming the agreement contains some elements of a lease, its express terms show the parties’ intent to waive any rights afforded by the landlord-tenant laws, including a landlord’s remedy of unlawful detainer. That is what the trial court concluded, and we agree.”
He added:
“On appeal, Castaic urges that the parties may not ‘elect to contract around particular statutory protections.’ But Castaic does not cite a single authority that supports this position. Nor does Castaic argue that the parties’ election to disavow the applicability of landlord-tenant laws violates any public policy.”
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Kumar brings up “public policy” in rejecting the contention by Fox and Fox that Trope doesn’t apply because the firm sought fees not under §1717 but, rather, pursuant to Code of Civil Procedure §1021 which reads:
“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties….”
Kumar responded that “the public policy ramifications of permitting a self-represented attorney to recover attorney fees but precluding a self-represented nonlawyer from recovering fees are concerns that also exist if a self-represented attorney is entitled to recover fees pursuant to section 1021.”
He noted that the same conclusion was reached last year in Honchariw v. PMF CA REIT, LLC. Then-Presiding Justice Lee Edmon of this district’s Court of Appeal Div. Three (now retired) authored that opinion. Review has been granted by the California Supreme Court.
Would an award of attorney fees to Fox and Fox actually contravene public policy? Mosk, in Trope, quoted with approval an Idaho Court of Appeals opinion saying that “if both parties opt to litigate pro se, it would be palpably unjust for one of them (the lawyer litigant) to remain eligible for an attorney fee award, while the other becomes ineligible.” Yet, It is difficult to see how it would be “palpably unjust” to saddle ex-client Miguel Arteaga with an obligation to pay Fox and Fox attorney fees in enforcing the contract where it was set forth in that instrument, in a straightforward manner, that he would be so obligated if the firm had to sue to be paid for its services. The California Supreme Court in 1895 proclaimed in Stephens v. Southern Pacific Co.:
“It has been well said that public policy is an unruly horse, astride of which you are carried into unknown and uncertain paths, and here that horse would be carrying us beyond all limits ever reached before, if respondent’s position should meet with our approval. While contracts opposed to morality or law should not be allowed to show themselves in courts of justice, yet public policy requires and encourages the making of contracts by competent parties upon all valid and lawful considerations, and courts so recognizing have allowed parties the widest latitude in this regard; and, unless it is entirely plain that a contract is violative of sound public policy, a court will never so declare.”
Chief Justice Patricia Guerrero said last year in EpicentRx, Inc. v. Superior Court:
“In general, courts are reluctant to decline enforcement of contractual provisions on public policy grounds, especially where no statute or constitutional provision directly speaks to the issue.”
No statute or constitutional provision renders Trope unwaivable by a client.
★
It’s true that, as Kumar pointed out, “Trope was decided over two decades ago.” However, just as having many children does not mean that the progenitor is a fit parent, there are cases with numerous progeny that were badly decided. Trope, I submit, is one such case. Sec. 1717(a) says that if a contract specifies that one party, if prevailing in a dispute, is entitled to an award of attorney fees, the other party has like entitlement even though that’s not recited in the agreement. The contract between the law firm of Trope &Trope and client Bertram Bernard Katz provided:
“In the event it becomes necessary to file an action to recover the fees and costs set forth in this agreement, the Court may award reasonable attorneys’ fees for the recovery of said fees and costs.”
That expressly confers a right only on the part of the law firm. Had Katz—who was represented by the West Los Angeles law firm of Hart Jakle & Watters (now defunct) in the lawsuit brought against him by Trope & Trope—prevailed in court, §1717 would have come into play and, under that statute, he would have had entitlement to such fees as he had reasonably “incurred.”
But Trope & Trope won in court and there was no need to refer to §1717; the plaintiff had a right to attorney fees under the contract. independent of any statute. That contract did not limit the law firm to recovering fees which it had “incurred” an obligation to pay.
★
So far as the supposed inequity of Trope & Trope being entitled to fees while Katz would not have been eligible for fees had he been in pro per, the proposition ignores the fact that attorneys, by virtue of their licenses, may (and customarily do) charge for their services. The reasonable value is generally viewed as their customary rate.
A nonlawyer, on the other hand, may not charge anyone for legal services and such services, aside from being unlawful, would have no set value.
Had the fictional scenario been real—that Trope & Trope sued an unrepresented party—there would have been nothing unfair about requiring Katz to compensate the lawyers for their expenditure of time and utilization of resources in gaining enforcement of his obligation to them, though he could not have secured attorney fees if he had won, not being an attorney.
The irony is that Katz was, in fact, represented in the lawyers’ suit against him and, in light of §1717, if he had won, he would have received an award of attorney fees, yet, under Trope, Trope & Trope could not have obtained such an award. Kumar’s opinion in Trope expresses a desire to avoid “disparate treatment” of parties. But how can there not be “disparate treatment” where the defendant, represented by counsel, would have received an award of fees if he had prevailed, but the plaintiff, in winning, was barred from relief because the law firm it chose to represent it was itself?
Anyway, Trope, decided correctly or not, is binding on superior courts and courts of appeal. That is not to say, however, that parties may not, by contract, render it inapplicable to their transactions.
Kumar’s opinion in The Law Firm of Fox and Fox v. Arteaga, joined in by Acting Presiding Justice Carl H. Moor and Justice Dorothy C. Kim, cavalierly and irresponsibly defies the concept of freedom of contract.
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