10
Prometheus appeals, its fundamental argument being that section 1717 does not
apply, an argument with three sub-parts, described by Prometheus as follows:
“(1) The Hjelms asserted no contract claims, so section 1717 did not apply. . . .
“(2) The Hjelms elected—and accepted—a distinctive tort remedy (i.e., emotional
distress damages), so their action was not ‘on a contract’ under section 1717. . . .
“(3) The Lease contained three narrow attorney fee provisions that did not apply
to the Hjelms’ noncontract claims.”
Section 1717 and Its Application
Section 1717 provides in pertinent part: “In any action on a contract, where the
contract specifically provides that attorney’s fees and costs, which are incurred to enforce
that contract, shall be awarded either to one of the parties or to the prevailing party, then
the party who is determined to be the party prevailing on the contract, whether he or she
is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees
in addition to other costs.” (§ 1717, subd. (a).)
The primary purpose of section 1717 is “to establish mutuality of remedy when a
contractual provision makes recovery of attorneys fees available to only one party, and to
prevent the oppressive use of one-sided attorneys fee provisions.” (Trope v. Katz, supra,
11 Cal.4th at p. 285; Santisas v. Goodin (1998) 17 Cal.4th 599, 610.) The section
“reflects legislative intent that equitable considerations must prevail over both the
bargaining power of the parties and the technical rules of contractual construction.”
(International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 223–224.) So, to achieve its
goal, section 1717 “ ‘generally must apply in favor of the party prevailing on a contract
claim whenever that party would have been liable under the contract for attorney fees had
the other party prevailed.’ ” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103,
1113–1114; accord, Santisas, supra, at p. 611.) In short, section 1717 was enacted to
“avoid the perceived unfairness of one-sided attorney fee provisions.” (International
Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1182.)
Finally, and fundamentally, “California courts liberally construe the term ‘ “ ‘on a
contract’ ” ’ as used within section 1717. [Citation.] As long as the action ‘involve[s]’ a