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Quote of the Day - It makes a discussion of winners and losers hard. The fact is, not everyone will get tax cuts, because someone has to pay it back. - Leonard Berman
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Employee Can't Recover Attorneys Fees In Employment Dispute For Tort Claims

In England, life for litigants is a bit tough:  the loser pays the winner's attorneys fees.  In contrast, here across the big pond, we split the baby:  if you sue based on a contract that contains an attorneys fees provision, then the loser pays, just like in England.  Where we part company, however, is in tort claims - those claims based not on contracts, but instead on a civil wrong or breach of duty to another person. 

So what happens when someone sues you for both?  Well, it depends on a lot of things.  Typically you don't get both tort and contract relief in a judgment, but there are some circumstances where it can happen.  Check your local listings for more information.

Here in California, an employee can do just that - win or lose on both tort and contract claims.  When the employee sues the employer on a breach of contract claim, the employee will end up paying the employer's attorneys fees and costs when the employer wins.  The opposite is equally true.

But a recent case, Casella v. SouthWest Dealer Services, Inc., gave us the answer to the question posed above.  Zachary Casella sued his former employer, SouthWest Dealer Services Inc., for wrongful termination, fraud, and fraudulent inducement of employment. SouthWest filed a cross-complaint against Casella for breach of employment agreement.

Now here's where it gets a bit tricky.  Take a look again at Casella's claims.  They're all based in tort.  He didn't sue for breach of contract.  His employer, however, did.  So now we get to add one more consideration into the mix.

Under California Civil Code section 1717, once one party invokes a contract claim for attorney fees in a lawsuit, the loser pays - virtually no matter what (absent some other considerations not in play in this case). 

But hold on a minute here, I can hear you saying.  Didn't I say before that where there are tort claims alleged there are no attorneys fees paid at the end of the suit?

Yes, I said that, and it's still true.  Don't you just love the conundrums the law presents?

That conundrum was exactly the problem that led to the appeal between Casella and Southwest.  Before the appeal, however, let's go over what happened.  Casella won on his Complaint.  He got $480,000 in tort damages against Southwest for wrongful termination and fraud, both torts.  He also defeated Southwest's breach of contract claim in the company's Cross-complaint.

So the trial judge did what I pointed out above.  The judge didn't award any attorneys fees or costs to Casella for winning the tort claims, but parceled out his fees and costs attributable to successfully defending the contract claim, and awarded those attorney fees and cost to him.  The judge gave him $12,500 - nowhere near the attorneys fees and costs he actually incurred in the entire lawsuit, but those that related to the contract claim.

So even though the headline made it appear the business won, it essentially lost. 

Apart from this scenario allocating attorneys fees between the parties, if you've ever wondered about how car dealerships sell cars and the markups, profit margins and the "leg" or "payment packing" techniques, then the beginning of this opinion is a tell-all that may change your next car-buying experience.  The opinion's Introduction and Summary of Facts are all you need to read to gain an understanding, and they're a quick read at that. 

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Sunday, December 16, 2007 at 23:00 Comments Closed (0) |
 
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