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Cross-Complaints May Prohibit You From Collecting Attorney Fees

Construction & Contractor Disputes, Legal Update, and Real Estate Law by Peter N. Brewer, Esq.

Recently, there have been a series of decisions in California that have limited the recovery of attorney fees.  In my previous blog article titled, “Can you Really Get those Attorney Fees? ” I discussed the importance of complying with alternative dispute resolution provisions prior to filing suit.  Now, the California Court of appeal has held that a defendant who prevailed in a lawsuit could be barred from recovering attorney fees because he also  filed an unsuccessful  cross-complaint in the same action.

Facts of the Case

In Zintel Holdings, LLC v. McLean, Zintel Holdings, LLC, the landlord, sued two tenants, Lilo McLean and Mark Huth, to reform a 50-year lease.  In response, Lilo filed a cross-complaint for breach of the covenant of quiet enjoyment, elder abuse, and emotional distress.  Mark Huth did not file a cross-complaint.

Eventually, the court granted motions for summary judgment finding that both the complaint and the cross-complaint lacked merit.  After the dismissal of the complaint and cross-complaint, both tenants filed requests for attorney fees and were denied.  However, the Court did award both tenants their costs of approximately $2,500.

Holding

The appellate court reversed the denial of attorney fees as to Mark Huth but affirmed the denial as to Lilo McLean.  The Court found that McLean’s cross-complaint was an action on the contract so neither McLean nor Zintel were prevailing parties as neither achieved complete victory.  On the other hand, since Huth did not file a cross-complaint, he had achieved complete victory by successfully defeating Plaintiff’s suit and was entitled to attorney fees.

Takeaway

This case demonstrates that although many people file cross-complaints as a tactic to aggressively defend the case, that strategy may come back to haunt a defendant.  Before filing a cross-complaint, it is important to analyze if there is an attorney fee provision and the likelihood of success on the cross-complaint.

If you have any further questions regarding this article, feel free to contact Brewer Offord & Pedersen LLP at (650) 327-2900.  www.BrewerFirm.com

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