Kangarlou v. Progressive Title Co., Inc

In Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, the prevailing buyer in an action against the escrow holder for breach of fiduciary duty sought attorney's fees under the following provision of the escrow instructions: "In the event of failure to pay fees or expenses due you hereunder, on demand, I agree to pay the attorney's fees and costs incurred to collect such fees or expenses." (128 Cal.App.4th at pp. 1177.) The trial court denied attorney's fees. The appellate court reversed, reasoning that, since the clause gave the escrow company the right to recover fees if a party failed to pay escrow costs, it gave the buyer the right to recover fees in an action arising out of the contract. (Id. at p. 1178.) In short, the plaintiff bought a home and sued the escrow company that had participated in the transaction for breach of fiduciary duty, alleging that it had relied on unlicensed entities. (Kangarlou v. Progressive Title Co., Inc., supra, 128 Cal.App.4th at p. 1177.) The underlying contract obliged the plaintiff to pay any attorney fees the company incurred in collecting unpaid escrow costs. (Ibid.) The Court held that the plaintiff was entitled to a fee award pursuant to the second paragraph of section 1717, subdivision (a), even though the fee provision limited awards to the company in disputes involving the failure to pay escrow costs. (Kangarlou v. Progressive Title Co., Inc., at p. 1178.)