EXXESS ELECTRONIXX v. HEGER REALTY CORPORATION

Jun 08, 1998

OUTCOME: Decision reversed in favor of my client

After entering into a standard commercial lease, Exxess Electronixx (“Lessee”) discovered several defects in the premises that interfered with its use of the property to conduct business. Lessee ... sued Heger Realty Corporation (“Broker”) for declaratory relief, constructive fraud, breach of fiduciary duty, and equitable relief, alleging that Broker should have disclosed the defects before the lease was executed. Eventually, the action was settled and dismissed. Broker then moved for attorneys’ fees pursuant to a provision in the lease which provided that “[i]f any Party or Broker brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party . . . or Broker . . . shall be entitled to reasonable attorney’s fees.” The trial court awarded fees to Broker. Lessee appealed the award. I represented Lessee during the appeal process. The California Second Appellate District concluded that Civil Code section 1717 precludes an award of attorneys’ fees on the contract claim (declaratory relief) and that the contractual attorneys’ fee provision does not authorize an award of fees on the tort claims (constructive fraud and breach of fiduciary duty) or the claims for equitable relief. Accordingly, California Second Appellate District reversed its decision in favor of my client.