Wong v. Thrifty Corp.

Opinion

REARDON, Acting P. J. The attorney fee provision at issue in this case provided for payment of reasonable fees to lessor in an enforcement action in which it was “determined” that lessees were in default. Judgment below was entered in favor of appellant Harda Wong, successor lessor under a commercial lease, after he accepted lessees’1 Code of Civil Procedure section 998 (section 998) offer to compromise. He challenges the trial court’s denial of his attorney fees, arguing that the contractual fee provision conflicts with the purposes and provisions of Civil Code section 1717 (section 1717). We agree and accordingly reverse the judgment.

[263]I. Background

In June 1979 Rite Aid, as tenant, entered into a 20-year lease with Arthur and Gladys Nearon for retail space in the shopping center located at 122 Peabody Road, Vacaville. Wong ultimately succeeded as lessor under the lease when he purchased the property in 1996.2

Rite Aid vacated the premises and in August 1999 the parties’ joint inspection of the property revealed substantial damages. Wong submitted a letter to Rite Aid detailing $73,188.59 in repairs. Upon receiving Rite Aid’s offer of $8,794.09, Wong sued for breach of contract and breach of statutory duty.

Wong included a prayer for attorney fees in his complaint. The lease specifically provided: “If Lessee shall be in default in the performance of any of its obligations under this lease and an action shall be brought for the enforcement thereof in which it shall be determined that Lessee was in default, Lessee shall pay to Lessor the expenses incurred in connection therewith including reasonable attorneys’ fees.”

Thereafter, Rite Aid served Wong with a statutory offer to compromise in the amount of $35,000. The offer included costs and attorney fees. Rejecting the offer, Wong informed Rite Aid that his attorney fees alone exceeded the amount of the offer.

Rite Aid served a new offer in the amount of $43,600. That offer was silent as to fees and costs. Wong accepted and judgment was entered accordingly.

The trial court entered a tentative ruling awarding Wong $131,062.50 in fees and $6,145.75 in costs, but ultimately denied Wong’s motion for attorney fees. This appeal followed.