First Intercontinental Bank v. Christina Ahn
798 F.3d 1149
9th Cir.2015Background
- In 2009 First Intercontinental Bank (Georgia) made a ~$1.94M loan to AEHCC (CO LLC, CA business) and Christina Ahn; Christina and her parents are California residents. The promissory note designated Georgia law and contained a non-reciprocal attorney’s fees clause in favor of the lender.
- The Bank later released Christina from the loan (Dec. 2009); Christina quitclaimed her interest to AEHCC and was removed as a borrower.
- AEHCC defaulted in 2011; the Bank sued AEHCC and the Ahns in the Central District of California for breach of contract and guaranty. The district court granted summary judgment for the Bank against AEHCC and the guarantors but granted summary judgment to Christina (release). No party appealed those merits rulings.
- Christina moved for attorney’s fees under California Civil Code § 1717(a) (which makes unilateral fee clauses reciprocal). The Bank argued Georgia law governed and § 1717 did not apply.
- The district court applied California law and awarded fees to Christina; the Bank appealed. The Ninth Circuit reviewed choice-of-law de novo and affirmed, holding California law (including § 1717) governed and justified the fee award.
Issues
| Issue | Plaintiff's Argument (Bank) | Defendant's Argument (Ahn) | Held |
|---|---|---|---|
| Which state’s law governs the attorney’s-fees dispute? | Georgia law governs under the contract’s choice-of-law clause. | California law applies because California has a greater interest and § 1717 protects its residents; California choice-of-law rules control. | California choice-of-law rules apply; California law governs. |
| Would California law apply absent the contract’s Georgia choice? | Georgia points to mixed contacts and unclear execution location; urges deference to chosen forum. | Ahn argues contacts support application of California law and Grove Properties precedent; judicial estoppel prevents Bank from contesting execution in CA. | Applying Restatement §188 and Grove Properties, California law would apply absent the clause. |
| Is California Civil Code § 1717 a fundamental policy that overrides the contract’s non-reciprocal fee clause? | Bank contends parties’ choice of law should be enforced; Georgia permits non-reciprocal clauses. | Ahn argues §1717 embodies California’s fundamental policy protecting residents from one-sided fee provisions. | §1717 reflects a fundamental California policy; Georgia’s rule is contrary to that policy. |
Key Cases Cited
- Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148 (Cal. 1992) (adopts Restatement §187 approach for contracts with choice-of-law clauses)
- Washington Mut. Bank, FA v. Superior Court, 15 P.3d 1071 (Cal. 2001) (discusses application of Nedlloyd principles)
- Grove Props. Co. v. ABF Capital Corp., 23 Cal. Rptr. 3d 803 (Ct. App. 2005) (applies §1717 policy to favor California law where CA resident litigates in CA)
- ABF Capital Corp. v. Berglass, 30 Cal. Rptr. 3d 588 (Ct. App. 2005) (contrasting decision applying non-CA law on similar facts)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (defines judicial estoppel doctrine)
- Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99 (1945) (federal diversity court as forum state for state law)
- Ins. Co. of N. Am. v. Fed. Express Corp., 189 F.3d 914 (9th Cir. 1999) (federal courts apply forum state’s choice-of-law rules)
- Pokorny v. Quixtar, Inc., 601 F.3d 987 (9th Cir. 2010) (de novo review of choice-of-law legal conclusions)
- Telco Leasing, Inc. v. Transwestern Title Co., 630 F.2d 691 (9th Cir. 1980) (distinguished; transferor forum law applied where case originated elsewhere)