Bovard v. American Horse Enterprises, Inc

In Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal. App. 3d 832, the court held a contract for the sale of a drug paraphernalia manufacturing business was unenforceable because the consideration was against public policy and "illegal." (Id. at p. 838.) The court concluded the prevailing defendant could not obtain contractual attorney fees, explaining: "Ordinarily, in an action on a contract which provides for an award of attorney's fees, the prevailing party in the action is entitled to attorney's fees. This is so even when the party prevails on grounds the contract is inapplicable, invalid, unenforceable or nonexistent, if the other party would have been entitled to attorney's fees had it prevailed. The rationale for this rule is that an award of attorney's fees pursuant to Civil Code section 1717 is governed by equitable principles, and it would be inequitable to deny attorney's fees to a party who successfully defends an action based on a contract simply because the party initiating the case filed a frivolous lawsuit. "However, a different rule applies where a contract is held unenforceable because of illegality. . . .A party to a contract who successfully argues its illegality stands on different ground than a party who prevails in an action on a contract by convincing the court the contract is inapplicable, invalid, nonexistent or unenforceable for reasons other than illegality." (Id. at pp. 842-843.)