The existence of an attorneys’ fees provision in a contract may deter a party from pursuing an action where their claim of breach of contract is questionable or potentially defensible. However, as the California Court of Appeals points out in
its April 17, 2018 decision in Shapira v. Lifetech Resources, a voluntary dismissal with prejudice of the suit before a decision is rendered will prevent the defendant from recovering attorneys’ fees.
In Shapira, the Plaintiff dismissed its case with prejudice after four full days of trial, but, before a decision was rendered. Lifetech moved for, and was awarded, a six figure attorneys’ fee award. Shapira appealed and the award was reversed. The Court of Appeals relied on Code of Civil Procedure section 581(e) that permits a plaintiff to voluntarily dismiss with prejudice at any point during trial so long as the trial has not been completed and establishes as a matter of law that there is then no prevailing party in the litigation. Thus, no award of attorneys’ fees can be made where the contract calls for attorneys’ fees to be paid by the loser.
If you have a questionable or potentially defensible contract claim there should be no fear that you may have to pay the opposing parties attorneys’ fees if you are willing to voluntarily dismiss the case if before the trial is over it looks like you may lose. Your own attorneys’ fees are entirely another matter. That is why you should consult with competent legal counsel and outline your strategy before you commence litigation.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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