Louie v. Pier 39 Limited Partnership

Background

The defendants moved for an award of attorney’s fees. The parties’ lease provides that, in a dispute-resolution proceeding or other proceeding covered by the lease, the prevailing party is entitled to costs, expenses, and reasonable attorney’s fees as determined by an arbitrator or court. The lease is governed by California law.

Judgment had been entered for the defendants on the federal discrimination claim. In an earlier order, however, the court dismissed the state-law claims for lack of jurisdiction. The opinion states that those claims remained unresolved.

Legal standard

The court explained that California law permits attorney’s-fee recovery under two provisions. California Civil Code section 1717 permits the prevailing party to recover fees incurred litigating claims based on a contract. Section 1021 permits parties to agree by contract to recover fees on tort or other noncontract claims; under that provision, the contractual language controls.

The defendants argued that section 1717 governed and limited their ability to recover fees at that point. Under section 1717, the prevailing party is the party that recovered greater relief in the contract action. The court stated that a court may determine the prevailing party only after final resolution of the contract claims. Moving a contractual dispute from one forum to another does not, by itself, make a party the prevailing party.

Ruling

Because the state-law claims had not been finally resolved, the court held that it was too soon to determine which party had prevailed under section 1717. The court denied the defendants’ motion for attorney’s fees.

The court added that, if the defendants prevail in state court, they may still be entitled to seek an award from that court that includes fees incurred in the federal proceedings.