Litigation

Contractual Attorney Fee Awards When There's No Jurisdiction over the Defendant

By Bruce Nye

I'm still trying to finish my three-part series on attorneys' fees.  Soon, I promise.  But I keep seeing new cases.  Since part of the audience for this blawg is non-California companies who find themselves ensnared in litigation here, this story with a happy ending for an out-of-state litigant might be of interest.

I previously blogged here about contractual attorneys' fees.  The fundamental principal is in Civil Code section 1717:  if the contract says Party "A" gets fees if he wins, and Party "B" wins instead, the law makes the contractual provision mutual:  Party "B" gets fees, even if the contract only addresses party "A's" rights.

Which brought us, yesterday, to Profit Concepts v. Griffith  (2008) ___ Cal.App.4th ___ (4th District, G039077).  Profit Concepts was a California corporation with an ex-employee, Griffith,  residing in Oklahoma.  It sued him for breach of contract, trade secrets violations and for an injunction (perhaps not a wise idea in general, but that discussion is for another day).   Griffith moved to quash service on the ground that the California courts had no jurisdiction over him.  Profit Concepts filed a "statement of non-opposition," and now I really don't know what the company, or its lawyers, were thinking.  So the motion to quash was granted.

Now comes the attorneys' fees part.  There was an employment contract, which provided that if Griffith breached the contract, Profit Concepts could get an injunction, damages and attorneys' fees.  In other words, the contractual right to fees was unilateral in Profit Concepts' favor. 

The parties agreed that the unilateral language had to be enforced mutually under section 1717.  (What was this employer doing here, anyway?)  But Profit Concepts contended that Griffith wasn't a "prevailing party" just because he got the case dismissed for lack of jurisdiction.

Wrong.  Fees awarded to Griffith, the non-California resident.  The case was going no further, he was dismissed, so he was the prevailing party.  Oh, and the amount of the fees and costs?  $3,400.78.  That's what was at stake in this appeal.  What was this employer thinking?

Full post as published by CalBizLit on May 07, 2008 (boomark / email).