CCP 1717 – Getting Attorneys Fees (In re Penrod, 9th Circuit)

There was a recent published Ninth Circuit opinion re: the hanging paragraph in 1325(a).   In re Marlene A. Penrod, 13-16097, Ninth Circuit (2015)(Published).

However, to me, what was more interesting was the fight over whether the auto loan lender should pay debtor’s attorneys fees (about $250,000).   Court said yes.

The contract between the debtor-borrower and the lender said ‘in the event of a default, the borrower (debtor) was to pay the lender to collect what it was owed plus attorneys fees.”

California CCP 1717 makes reciprocal an otherwise unilateral contract obligation.  That means if the contract says the lender can get attorneys fees on the contract if it wins, then the borrower, by way of CCP 1717, can also get attorneys fees if he or she wins against the lender.

CCP 1717 says in part, that in an action on a contract, where the K provides for attorney’s fees to prevailing party, then the party who is determined to be the prevailing party, whether or not they are specified in the K, shall be entitled to attorney’s fees too.

For CCP 1717 to apply, three conditions must be met:

First — the attorney’s fees must be incurred on an “action on a contract.”   In Penrod, the litigation was about whether the hanging paragraph in 1325(a) applies or not.  Court said it did.

Second – the K must contain a provision that says attorney’s fees will be awarded to prevailing party.  In Penrod, the K contained this langauge.

Third – the party seeking fees must be prevailing party who won on the K.  In Penrod, the Debtor won and sought the fees.


See Opinion Here:


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