Orien v. Lutz, B277323

Background

In 2003 Orien and defendants Lutz and Howells each received an undivided one-third interest in two residences as a gift from their mother.
In 2006 the parties executed a settlement agreement resolving a probate claim; paragraph 11.1 said the parties may sell by agreement but that the provision “shall not prevent any one or more of the parties from filing a partition action” if they cannot unanimously agree to sell.
Paragraph 21.1 of the settlement agreement provided attorney fees to the prevailing party for actions to enforce or prevent breach of any provision of the agreement.
In 2013 Orien filed a partition-by-sale complaint referencing the settlement agreement and seeking attorney fees; the trial court entered interlocutory partition judgment for Orien and awarded her all contractual attorney fees under Civ. Code § 1717 (treating the partition as an action on the contract).
Defendants appealed; the Court of Appeal reversed, holding the partition action was not an enforcement of a contractual provision and thus the contractual fee clause did not apply; the matter was remanded for fee apportionment under the partition statutes if appropriate.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the settlement agreement’s attorney-fee clause (¶21.1) and Civ. Code §1717 apply to Orien’s partition action	Orien: the partition complaint referenced and relied on the settlement agreement; because the action “involved” the contract, it is an action on the contract and she is entitled to contractual fees	Defendants: the statutory right to partition existed independently; ¶11.1 merely preserved that right (did not create or make partition a contract provision enforceable under the fee clause)	The court held ¶11.1 preserved a statutory right and did not convert partition into a contractual provision; the contractual fee clause did not apply and §1717 did not entitle Orien to all fees
Whether attorneys’ fees should be apportioned under partition statutes (Code Civ. Proc. §§874.010, 874.040) and whether contested litigation can be deemed for the common benefit	Orien (trial court): fees were incurred for the common benefit so award all fees to plaintiff under the contract; on remand plaintiff sought allocation in her favor	Defendants: contested partition was adversarial and harmed defendants; fees should not be treated as for the common benefit or, if apportionment applies, defendants’ reasonable fees should be considered and shared proportionally	The court held contested proceedings can produce fees "for the common benefit"; trial court abused its contract-based award but may on remand apportion reasonable fees (including defendants’ fees) under §§874.010 and 874.040 in proportion or as equity requires

Key Cases Cited

LEG Investments v. Boxler, 183 Cal.App.4th 484 (Cal. Ct. App.) (co-owner has an absolute right to partition unless waived)
Capuccio v. Caire, 215 Cal. 518 (Cal. 1932) (fees for services in contested partition suits may be for the common benefit)
Riley v. Turpin, 53 Cal.2d 598 (Cal. 1960) (defendant’s fees in resisting partition can be for the common benefit and allocable)
Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858 (Cal. Ct. App.) (liberal construction of "on a contract" for §1717 when action relies on the contract)
Exxess Electronixx v. Heger Realty Corp., 64 Cal.App.4th 698 (Cal. Ct. App.) (fee clause limited to actions enforcing the agreement does not necessarily reach noncontractual claims)
Forrest v. Elam, 88 Cal.App.3d 164 (Cal. Ct. App.) (apportionment of attorneys’ fees under partition statute where defendants’ services benefited determination of interests)
Lin v. Jeng, 203 Cal.App.4th 1008 (Cal. Ct. App.) (court may equitably apportion partition costs and deny fees to parties who caused unnecessary litigation)
Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (broad fee clauses can reach noncontractual claims where language and context so indicate)