Well, geeze. I just don't know.
The Court of Appeal's holding definitely has some appeal. I unquestionably agree with the first part. Linear lost its warranty lawsuit at trial. The evidence supported the jury's verdict. Linear's claim that it was entitled to a j.n.o.v. lacks merit. Definitely right.
The harder part is the attorney fee question. The trial court granted $8 million-plus in attorney's fees against Linear pursuant to Section 1717, the reciprocal fee statute. And there's indeed some basis for that. Linear definitely asked for attorney's fees if it won. So arguably the other side's entitled to them as well. That's the whole point of reciprocity.
Linear argues that it waived its request for fees. But it didn't. Its counsel was being a typical attorney, and engaged in a tactical strategy that I'm sure seemed to made sense at the time. Linear stipulated to a certain thing (involving a battle-of-the-forms) prior to trial, but as part of that stipulation -- one that, as a practical matter, would probably mean it couldn't recover attorney fees -- the attorney piped up and said that this stipulation was without prejudice to seeking fees if they prevailed. In short, the attorney entered into a stipulation that effectively said his side couldn't get fees, but nonetheless said that he was not giving up the right to seek fees. No harm "preserving your rights," right?
Wrong. That's all fine if you win. But when you instead lose, the other side then hoists you on your own petards. Saying that since you still claimed to be entitled to fees, so are they. And, in this case, getting them. To the tune of over eight million dollars. And the Court of Appeal affirms.
Like I said, that makes a certain intuitive sense. You said you were entitled to fees, so the reciprocity provision means the other side's entitled to it as well.
But here's the problem. It's almost certain, in my view, that Linear was not entitled to fees. They may have said they were entitled to them, but the stipulation meant they weren't. That's its effect, and even if you say that X doesn't do Y, if it does, then Y's the rule. So Linear wasn't entitled to fees.
Given that fact, it seems bizarre to say that the reciprocity provision of Section 1717 means that the other side is entitled to fees when Linear isn't. Sure, when one side is entitled to fees, the other side should be entitled to them as well (as a matter of fairness), even if that side doesn't have an attorney fees provision in its contract. But when that side both doesn't have an attorney fee provision in its favor and the other side's attorney fee provision doesn't apply, how can fairness require that one side but not the other be entitled to attorney's fees pursuant to Section 1717, the entire purpose of which is to make things equal? That just seems not only bizarre, but the exact opposite of what the statute is designed to accomplish.
Justice Elia says -- in a response that makes some sense -- that Linear shouldn't be allowed to claim that its own request for fees was meritless in order to get out of paying the other side's fees. I surely understand that. It seems somewhat wrong to let you attack your own case once you lose. So I see the equities there.
But it's not like this is judicial estoppel or anything; none of the relevant prerequisites would be met. And the consequence of the Court of Appeal's holding is, again, to let fees be nonreciprocal; Linear would have to prove its entitlement to fees -- which it couldn't do -- if it had won, but the other side here doesn't have to prove its entitlement to fees. Which matters, since there's actually no applicable attorney fee provision.
As a doctrinal matter, this case seems no different than a garden-variety slip-and-fall case in which the plaintiff said, as part of a boilerplate complaint (as they often do), "I demand $50,000 plus attorney's fees," despite the fact that fees unquestionably aren't recoverable. I'm quite confident that the Court of Appeal would not hold that a defendant in such cases was entitled to fees if it prevails, notwithstanding Section 1717, because the plaintiff was not, in fact, entitled to fees, even though she had indisputably requested them. Why should there be a different result here? After all, the slip-and-fall plaintiff would be "disputing his own request" just as much as Linear is doing here.
So, as I said at the outset, I'm in a bit of a quandary. I understand the equities on both sides. But I come to the problem with a belief that (1) it's the moving party's burden to prove that they're entitled to fees, (2) the mere fact that the other side asked for fees themselves isn't sufficient to establish (1), and (3) the reciprocity provision of Section 1717 should care -- deeply -- about whether one of the parties was in fact entitled to fees. All those things seem to suggest that the Court of Appeal's holding here is erroneous.
At the same time, take a different case. Plaintiff files suit claiming that Defendant signed Contract, which contains an attorney fee provision. Plaintiff requests damages and attorney's fees. Defendant alleges that the signature is a forgery, and that Contract was never signed, and prevails at trial. I think that Defendant in that case is entitled to attorney's fees under Section 1717 even though Plaintiff was in fact not entitled to fees because the Contract was never signed. Plaintiff would have been entitled to them had she prevailed, so Defendant is also entitled to them. So the "reality" of whether the contract in fact entitles one side or the other to fees isn't always dispositive.
But this case is different, because unlike in the example above, here, even if Linear had prevailed -- even if the jury had agreed with its version of events -- Linear would still not have been entitled to attorney's fees. In short, given the stipulation, there were no factual findings that would have given rise to a legitimate claim for attorney's fees. Which means that the reciprocity provision shouldn't be used to change that already reciprocal state of affairs into something unequal. Sure, Linear could have filed a motion for fees and had it denied. So could Linear's opponent. But the holding here changes that, and means what while one side isn't entitled to fees when it prevails, the other side is.
I have tried to fashion an alternative rule to the Court of Appeal's along the lines of "you get reciprocal attorney's fees under Section 1717 when the other side has a colorable entitlement to attorney's fees on their side" in order to alleviate both the problem I see with its holding as well as the legitimate problems with allowing a party to attack the validity of its own request for fees once it loses. But I'm not sure I can come up with an intellectually consistent version of such a doctrine. Maybe brighter minds can do better.
The one thing I know is that the Court of Appeal's holding here -- while I totally get it -- nonetheless seems troubling. I'm just not sure you can do this. Or at least can do this and be right.
Which I care about.
The practical lesson nonetheless remains to be careful asking for attorney's fees when you're not sure you're going to obtain them. Because that can be profoundly counterproductive, and may -- as here -- even create a one-way ratchet. Heads you don't win, tails you lose. Which isn't good for you, and darn sure isn't good for your client. Especially when all you thought you were doing, as here, was "preserving" your client's rights.
And getting bit in the behind for eight million dollars as a result.