Prevailing party cannot seek attorney fees under Civil Code Section 1717 unless claim arose out of contract or party was intended beneficiary of contract. Hyduke’s Valley Motors v. Lobel Financial Corporation, et al., (No. G042816 California Courts of Appeal, Fourth Appellate District, Division Three, October 21, 2010).
Each party to litigation must bear its own attorneys fees unless otherwise provided by statute or contract. California Civil Code Section 1717 permits recovery of attorneys’ fees only of the party prevails an action on the contract. In this case, plaintiff sued finance companies for the recovery of the purchase price, and not an action arising out of a conditional sales contract. Hence, the trial court denied the plaintiff’s motion which was appealed. Plaintiff also claimed that it was an intended beneficiary under the agreement; however, the appeals court determined that the plaintiff was not a beneficiary of this conditional sales contract and thus not entitled to attorneys fees.
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