os" of the corporations. One of the claims was based on unpaid promissory notes, signed by one corporation and endorsed by the other, which provided for the recovery of collection costs and attorney fees. Defendants had not signed the promissory notes. Defendants prevailed in the action and sought attorney fees pursuant to the terms of the notes. The Supreme Court held that defendants were entitled to recover their attorney fees under the reciprocity requirement of Civil Code section 1717. The Supreme Court reasoned that since plaintiff would have been entitled to recover its fees against defendants had plaintiff prevailed, defendants were likewise entitled to their fees since they had prevailed. The case was remanded for a redetermination of the amount of attorney fees to be recovered.
In Lewis v. Alpha Beta Co., supra, on the basis of their own lease, tenants sued their landlord and a cotenant to enforce a restrictive covenant assumed by the cotenant in its lease for the benefit of plaintiff. Each lease specifically provided for attorney fees. Plaintiffs prevailed against the cotenant. This appellate district held that plaintiffs were entitled to attorney fees under Civil Code section 1717 and the rationale of Reynolds Metal Co. v. Alperson, supra, 25 Cal. 3d 124; plaintiffs had enforced the essentially reciprocal restrictive covenants of the two leases, both of which contained mutual attorney fee provisions.
Similarly, the appellate court in Manier v. Anaheim Business Center Co., supra, 161 Cal.App.3d at pages 508-509, determined that a nonsignatory plaintiff who sued on a real estate purchase agreement containing an attorney fee provision, and who alleged entitlement to attorney fees under it, was liable for the attorney fees of the prevailing signatory defendant. In Manier, husband and wife sued the seller for breach of the real estate contract seeking specific performance or damages. Husband had signed the agreement, wife had not. The trial court determined the contract had never come [25 Cal. App. 4th 382] into existence and found in favor of seller. Nevertheless, the signatory defendant was awarded attorney fees for prevailing in the action on the contract.
In Brusso v. Running Springs Country Club, Inc., supra, 228 Cal. App. 3d 92, nonsignatory shareholders sued signatory defendants on behalf of the signatory corporation. The signatory defendants prevailed and sought attorney fees pursuant to the terms of the contract sued on by plaintiffs. The Court of Appeal found that defendants were entitled to their attorney fees because they would have been liable for such fees if the plaintiffs had prevailed.
Accordingly, in cases involving nonsignatories to a contract with an attorney fee provision, the following rule may be distilled from the applicable cases: 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.
[1c] Here, the facts establish the following: The lease between the City and BWC specifically provided for the award of attorney fees in an action to enforce the contract; RPS sued the City as a third party beneficiary of the lease for the City's breach; the fees were incurred by the City in an action under the contract; the City was the prevailing party; and RPS was not a signatory to the contract.
The order denying the City's motion for attorney fees is reversed. The case is remanded to the trial court to determine a reasonable attorney fee award, both at trial and on appeal. RPS shall bear the City's costs and attorney fees pursuant to Civil Code section 1717 on appeal.
FN 1. After the trial, the City also moved for dismissal of the case on the ground that it had fully complied with the terms of a settlement agreement negotiated between it and RPS. The trial court apparently granted its motion for dismissal. The statement of decision mentions the City's compliance with a settlement agreement between the parties and indicates that the motion to dismiss is granted. However, neither the minute order nor the judgment mentions that the City's motion to dismiss was granted. In addition, it appears from the record that the settlement agreement was never fully effectuated. One of the contemplated terms of the agreement was that the City would grant and expedite the approval process for permits for the benefit of RPS if RPS abandoned the instant lawsuit. Apparently, performance of this particular provision was never completed. As a result, the case was not settled and the matter proceeded to trial. The settlement agreement provided that the parties would bear their own attorney fees.
FN 7. We reject RPS's contention that the propriety of the denial of the attorney fee award is dependent upon the reason for the judgment. Any resolution of this action to enforce the original lease agreement must be accompanied by an award of reasonable attorney fees to the prevailing party. This is so whether the judgment is based upon the merits or lack of standing. In addition, we need not be concerned here with an unconsummated settlement agreement which provided that the parties were to bear their own attorney fees. Had the City sued or moved to enforce the settlement agreement, the City would still be entitled to an award of reasonable attorney fees, because the underlying suit was to enforce the lease. Moreover, any lack of standing by RPS to bring the lawsuit does not alter the fact that RPS sued the City to enforce the contract, thereby entitling the prevailing party to its attorney fees.
FN 8. We recognize that the issue regarding the payment of fees for Assistant City Attorney Ann H. Higginbotham is unresolved by this decision. Upon remand, the trial court is to determine whether an award of fees for Attorney Higginbotham's work as in-house counsel for the City warrants an award of fees in addition to those reasonably incurred for the services of retained counsel.Metal roofing continues to grow in popularity across America, for both homeowners and business owners alike. Roofing Contractor Magazine reports that metal roofing is one of the fastest-growing areas in the roofing industry, particularly in the residential sector. Some folks are simply drawn to the nostalgia of being able to hear raindrops fall on a metal roof, while many others are attracted to the numerous practical aspects of choosing metal as a roof covering. If you’re currently considering putting a durable metal roof on your home, you’re certainly in good company!
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