Procedural Posture

Defendants, sought review of a decision of the Superior Court of the City and County of San Francisco (California), which denied their motion for attorney fees under Cal. Civ. Code § 1717, after defendants had obtained summary judgment in an action by plaintiffs, for a declaration of the rights of the parties under a contract.

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Overview

Following the financial collapse of a real estate investment project, plaintiffs brought an action against defendants, and others, alleging breach of contract, fraud, constructive fraud, and breach of covenant of good faith and fair dealing. Insofar as it related to defendants, plaintiffs sought declaratory relief concerning the rights of the parties under two notes and two deeds of trust which, on their face, appeared to have been signed by defendants. During discovery, it was established that defendants’ signatures had been forged. Defendants’ motion for summary judgment was granted, but the trial court denied their motion requesting attorney fees. Defendants sought review. The court reversed the decision of the trial court. The court held that Cal. Civ. Code § 1717, which provided for attorney fees in contract cases, applied to declaratory judgment cases, and that the statute was intended to apply to situations such as that of the defendants, who had prevailed by successfully arguing the nonexistence of a contract.

Outcome

The court reversed the trial court’s order denying the claim of defendants, for attorney fees, in an action by plaintiffs, for a declaration of the rights of the parties under a contract, because defendants were statutorily entitled to attorney fees for successfully proving the nonexistence of the contract as to them.