12 Cal. App. 5th 1214
Cal. Ct. App. 5th2017Background
- Monster LLC and founder Noel Lee partnered with Dre and Iovine; a 2009 amended licensing agreement gave Beats a post-change-of-control termination right and Lee a 5% interest.
- HTC bought 51% of Beats (2011); Beats terminated the licensing agreement and Monster and Beats executed a Termination Agreement (2012) containing mutual releases and an attorney-fees provision for actions to "enforce or affect" the agreement.
- Lee sold portions of his Beats units in 2012 and 2013 under repurchase agreements that also contained broad release and indemnity clauses (2013 agreement included fees for breaches).
- Monster sued Beats and HTC in 2015 for fraud and related torts alleging the HTC transaction was a sham to oust Monster; Beats moved for summary judgment relying on the release provisions and obtained dismissal of Monster’s claims.
- Beats cross-claimed for breach of the Termination Agreement and the 2013 repurchase agreement, alleging Monster/Lee’s suit breached the releases and caused Beats to incur attorney’s fees as damages. Beats asked the court to fix fees by noticed motion under Civ. Code §1717; Monster demanded a jury trial on fees because Beats pleaded them as contract damages.
- The trial court ordered fees to be determined by noticed motion (court), Monster petitioned for writ; the appellate court granted the writ and required a jury trial on fees sought as damages.
Issues
| Issue | Plaintiff's Argument (Monster) | Defendant's Argument (Beats) | Held |
|---|---|---|---|
| Whether Civ. Code §1717 permits the court to determine attorney's fees that defendant seeks as damages on a breach-of-contract cross-claim (thus denying jury) | Fees pleaded as damages must be proven at trial and decided by a jury (right to jury on contract damages) | §1717 says reasonable attorney's fees "shall be fixed by the court" and thus courts should determine fees even when sought as contract damages; practical concerns about post-trial fees | The court held Monster is entitled to a jury trial on attorney's fees pleaded and sought as damages; §1717 does not displace the jury when fees are an element of damages. |
Key Cases Cited
- Shaw v. Superior Court, 2 Cal.5th 983 (Cal. 2017) (extraordinary writ appropriate to secure jury trial right)
- Raedeke v. Gibraltar Sav. & Loan Assn., 10 Cal.3d 665 (Cal. 1974) (breach of contract damages actions ordinarily entitle parties to jury trial)
- Dorsey v. Barba, 38 Cal.2d 350 (Cal. 1952) (assessment of damages is ordinarily a fact question for the jury)
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (scope of Civ. Code §1717 reciprocity principles)
- Brandt v. Superior Court, 37 Cal.3d 813 (Cal. 1985) (where attorney fees are recoverable as damages, the trier of fact must determine them unless parties stipulate otherwise)
- Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668 (Cal. 1982) (distinguishing fees as costs versus fees as damages; fees as damages must be pleaded and proved at trial)
- Hsu v. Abbara, 9 Cal.4th 863 (Cal. 1995) (prevailing-party determination under §1717 waits until final resolution of contract claims)