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The Morrison Law Journal
April 2012
Volume VI, Edition 4

When 70 Percent Is Sufficient .... Court of Appeal Rules That Trial
Court Must Award Attorney's Fees In Breach Of Contract Action To
Party Which Achieved A Significant Majority Of The ReliefIt Sought

By: Edward F. Morriso n, Jr., Esq.
Larry A. Schwartz, Esq.

In a case which further delves into the limits of a Trial Court's discretion
to determine whether there is a "prevailing party" in a breach of contract case
where attorney's fees may be awarded, the California Court of Appeal, Fourth
District ruled in Reginald De La Cuesta v. Esther Benham (2011)DJDAR4606
("DeLa Cuesta Case") that, in a commerciallandlord dispute, where the landlord
was awarded approximately 70 percent of the damages sought and the tenant's
fraud defenses were rejected, the Trial Court was required to award attorney's
fees to the landlord as a prevailing party.

Under California Civil Code S 1717, attorney's fees are awardable in a
breach of contract case where the contract provides that the prevailing party is
entitled to fees. The important question, of course, is whether there is a
prevailing party in the first place. Civil Code S 1717(b)(1) provides some
guidance as to that issue in providing that:

"[t]he court .. ' shall determine who is the party prevailing on the
contract for purposes of this section, whether or not the suit
proceeds to final judgment .... the party prevailing on the contract
shall be the party who recovered a greater relief in the action on the
contract. The court may also determine that there is no party
prevailing on the contract for purposes of this section."

In 1995, the California Supreme Court in Hsu v. Abbara (1995) 9 Ca1.4th 863
("Hsu Case") provided further guidance in ruling that a Trial Court was required
to award attorney's fees where there was an "unqualified win". In the Hsu Case,
a real estate dispute between would be buyers and erstwhile sellers, the buyers
brought suit for specific performance and then lost at trial when the Trial Court
ruled that a new offer made by the prospective buyers after a purported
acceptance by the sellers had extinguished a prior counteroffer. The Supreme
Court, in that case, first ruled that attorney's fees must be awarded under Civil
S 1717 where one party has achieved an "unqualified" victory and then
awarded fees to the sellers. Insofar as cases where there is not an "unqualified


win", the California Supreme Court went on to comment that the Trial Court isto
examine the totality of the case and then compare the extent to which each party
has won and lost. Hsu Case, supra, 9 Cal.4th at 876.

In 2009, the California Court of Appeal in Silver Creek, LLCv. BlackRock
Realty Advisors, Inc.
(2009)173 Cal.App.4th 1533 ruled, in another real estate
transaction case, that where one party had achieved, by its calculations, an award
valued at $29,750,000.00,and the other party had achieved an award which was
valued at $1,130,000.00,the Trial Court had no discretion to withhold attorney's
fees from the party which obtained the greater relief.

The De La Cuesta Case sheds even more light.

In the De La Cuesta Case, another real ~state dispute, Richard De La
Cuesta rented five suites to Esther Benham and an entity she owned for
$15,000.00a month in Laguna Hills, California. In November 2008, Benham
stopped making rental payments and in December 2008 a three day notice was
served by De La Cuesta. An unlawful detainer complaint followed in January
2009,with a trial on the unlawful detainer matter being set for February 23, 2009.
Benham answered the unlawful detainer complaint and denied that she owed
any money on the basis that the rental value was zero due to sewer and water
leaks. The day before the unlawful detainer trial, Benham vacated the premises
and the matter was converted to an ordinary civil litigation matter, which went
to trial on November 30, 2009. At the trial, the Trial Court rejected all of
Benham's fraud claims. As for the landlord's damages, De La Cuesta had sought
$103,000,but the Trial Court reduced that amount to $69,500due to water leaks
and for overcharges in regard to common area charges. The Trial Court, in
ruling on a post-trial motion for attorney's fees, found that the judgment resulted
in a "good news/bad news situation" for both parties and awarded no attorney's
fees to either party.

On appeal, after reviewing Civil Code S 1717 and case law construing it,
including the Hsu Case, the Court of Appeal ruled that, because the tenant had
failed to obtain any relief on her fraud claims and that the .landlord had
recovered a solid majority of all sums which were sought in the litigation, the
Trial Court was required to find the landlord had prevailed for purposes of
entitlement to attorney's fees. Apparently important in its ruling, the Court of
Appeal noted that plaintiff's counsel often "err on the side of overstating the
extent of the claims" in an exercise of caution and should not be penalized for
doing so.


The De La Cuesta Case is important for counsel in evaluating breach of
contract cases inasmuch as the Trial Court may now well be compelled to award
attorney's fees to a "solid"but not unequivocal winner in court.

About the Authors: EdwardF. Morrison, Jr. is the founding partner and Larry A.
Schwartz is Of Counsel to The Morrison Law Group, a professional corporation.
Their biographies can be viewed at

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