Attorney Fees Prevailing Party Clause In California
With reference to contracts which contain an attorney's fees clause, Civil Code section 1717, subdivision (a) states in relevant part:
"In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs."
As to voluntary dismissals pursuant to settlement, Civil Code section 1717, subdivision (b) provides there shall be no prevailing party.
Section 1717 was enacted by the Legislature to ensure mutuality of remedy in the recovery of attorney's fees. (Trope v. Katz, supra, 11 Cal. 4th at p. 285.)
Thus, where a contract provides that only one party may obtain attorney's fees in litigation, the statute makes the right to such fees reciprocal, such that the "party prevailing on the contract" claim will be entitled to recovery of the fees, " 'whether he or she is the party specified in the contract or not.' " (Santisas v. Goodin (1998) 17 Cal. 4th 599, 610, 611 [71 Cal. Rptr. 2d 830, 951 P.2d 399]; International Industries, Inc. v. Olen (1978) 21 Cal. 3d 218, 223 [145 Cal. Rptr. 691, 577 P.2d 1031].)
Additionally, section 1717 allows attorney's fees to a party who successfully defends an action on a contract containing an attorney's fees clause by establishing the contract's invalidity, unenforceability, or nonexistence. ( Santisas v. Goodin, supra, 17 Cal. 4th 599; Reynolds Metals Co. v. Alperson (1979) 25 Cal. 3d 124, 128-129 [158 Cal. Rptr. 1, 599 P.2d 83].)
Code of Civil Procedure section 1033.5 itemizes those expenses of litigation that may be claimed as recoverable costs by the prevailing party. Included among those expenses are "Attorney fees, when authorized by . . . (A) Contract. (B) Statute. (C) Law." ( Code Civ. Proc., 1033.5, subd. (a)(10).)
The statute further provides that attorney's fees awarded under Civil Code section 1717 are treated as allowable costs under Code of Civil Procedure section 1032.