Burkhalter Kessler Clement & George, LLP v. Hamilton
G054337
| Cal. Ct. App. | Jan 8, 2018Background
- Burkhalter Kessler Clement & George LLP (Burkhalter) subleased office space to Eclipse Group LLP (Eclipse); the sublease contained a prevailing‑party attorney fee clause.
- Burkhalter sued Eclipse for breach of contract and named Eclipse managing partner Jennifer Hamilton as an alter‑ego defendant.
- Eclipse and Hamilton were jointly represented by Avyno Law. Burkhalter prevailed on the breach claim against Eclipse (summary judgment); Hamilton prevailed on the alter‑ego claim and was dismissed with prejudice.
- Trial court awarded contractual attorney fees to Burkhalter (against Eclipse) but denied Hamilton’s motion for attorney fees without explanation.
- Hamilton appealed the denial; she sought fees incurred by her counsel (Avyno) for defending her individually.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hamilton is a "prevailing party" under Civ. Code § 1717 entitled to contractual fees | Hamilton is not a prevailing party because Burkhalter ultimately recovered fees on the contract; only one prevailing party per contract suits | Hamilton obtained an unqualified victory on the alter‑ego claim and thus is a prevailing party as to that claim and entitled to fees | Reversed: Hamilton is a prevailing party as to Burkhalter’s alter‑ego claim and entitled to reasonable attorney fees under § 1717 |
| Whether more than one party can be a prevailing party on the same contract in multi‑defendant litigation | Section 1717 permits only one prevailing party per lawsuit on a single contract | Where multiple defendants face separate final determinations, more than one prevailing party may exist as to the contract | Court adopts Pueblo Radiology approach: finality as to each defendant can produce multiple prevailing parties in a multi‑defendant case |
| Whether Hamilton’s fee motion was premature | Burkhalter argued motion was premature before entry of formal judgment | Hamilton filed after dismissal with prejudice and gave notice; § 1717 allows determination whether or not suit proceeds to final judgment | Motion was timely; denials on prematurity ground rejected |
| Whether fees should be limited because Avyno represented interests of its firm or because fees were split | Burkhalter contended counsel represented firm interests and fees were improperly allocated | No record support that Avyno was a party or represented any firm interest adverse to Hamilton; Avyno split fees between clients | Remand to trial court to award reasonable fees incurred solely in Hamilton’s defense, subject to court’s discretion |
Key Cases Cited
- Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 3 Cal.5th 744 (California 2017) (general rule each party pays own fees absent contract; § 1717 framework)
- Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (California 1979) (nonsignatory sued on a contract may recover fees reciprocity under § 1717)
- Frog Creek Partners, LLC v. Vance Brown Inc., 206 Cal.App.4th 515 (Cal. Ct. App. 2012) (held only one prevailing party in a two‑party contract suit; court noted but did not decide multi‑party scenario)
- Pueblo Radiology Medical Group, Inc. v. Gerlach, 163 Cal.App.4th 826 (Cal. Ct. App. 2008) (where individuals obtained final favorable determination on alter‑ego claim, they were prevailing parties entitled to contractual fees)
- Ram v. OneWest Bank, FSB, 234 Cal.App.4th 1 (Cal. Ct. App. 2015) (finality can be determined separately as to each party in multi‑party litigation)