Shadoan v. World Savings and Loan Assn

In Shadoan v. World Savings and Loan Assn. (1990) 219 Cal. App. 3d 97, the plaintiffs brought an action alleging that the inclusion of a prepayment penalty provision in their loan agreement with the defendant bank constituted an unfair business practice under Business and Professions Code section 17200. No cause of action on the loan agreement was alleged. The plaintiffs sought to enjoin the defendant bank from collecting prepayment penalties from other borrowers and to recover the prepayment penalty the plaintiffs had already paid. The defendant bank successfully demurred and requested attorney fees. The trial court apportioned fees between the plaintiffs' private action for relief from their contract and the action for injunctive relief brought on behalf of themselves and others, and awarded fees only relating to the former action, pursuant to the attorney fees provision in the loan agreement. Both the plaintiffs and the defendants appealed. (Shadoan, supra, 219 Cal. App. 3d at pp. 100-101, 107.) On appeal, the Shadoan court made three rulings on the fee issue. First, it recognized the availability of an award under section 1717, even where no contract was pled. This analysis has no relevance to the instant case, where a cause of action on the contract was alleged. (Shadoan, supra, 219 Cal. App. 3d at p. 108.) Having concluded that the complaint permitted the recovery of fees on the contract, Shadoan also determined that the plaintiffs' action "extended far beyond the specific contract between the plaintiffs and the defendant bank." (Shadoan, supra, 219 Cal. App. 3d at p. 108.) The court then relied on Reynolds for the two conclusions relevant to our case: when fees result from a suit involving both contractual and noncontractual causes of action, the trial court has discretion to apportion and discretion to refuse to apportion when the two are inextricably interwoven. (Shadoan, supra, 219 Cal. App. 3d at pp. 108-109.)