KELEMEN CONSTRUCTION INC v. AMERICAN CITY BANK (1985)

Defendants appeal from a judgment awarding attorney fees against them.   We affirm.

This is a case of first impression on liability of a successful litigant for attorney fees.   We conclude that the award was proper.

Plaintiff was a construction subcontractor on a building being erected for defendant, 824–830 Haveford, Ltd.   Defendant, American City Bank, was the construction lender on that contract.¹  Not having been paid, plaintiff stopped work on the building, filed a mechanic's lien on the property and served a stop notice on the bank.   A lawsuit followed, resulting in a money judgment against the owner (less a setoff for some poor work), foreclosure of the mechanic's lien and the stop notice was ordered and the trial court awarded $25,000 attorneys fees to plaintiff.

Defendants have appealed from the judgment, but, on this appeal, attack only the award of attorneys fees.   We affirm.

I

 It is well settled that a party served with a statutory stop notice who successfully resists that notice is entitled to attorneys fees incurred in that defense as part of the “damages” provided for by statute.   (Flintkote Co. v. Presley of Northern California (1984) 154 Cal.App.3d 458, 201 Cal.Rptr. 262;  Systems Investment Corp. v. National Automobile & Casualty Ins. Co. (1972) 25 Cal.App.3d 1057, 102 Cal.Rptr. 378.)   It is the theory of the order herein under attack that the winner in an action to enforce a stop notice should have an equivalent right to its attorneys fees incurred in prosecution and enforcing the stop notice.   We agree.

 The briefs discuss at some length the concept that section 1717 of the Civil Code is applicable to the case at bench.   Taken literally, the contention is in error.  Section 1717 applies only to cases wherein a contract expressly provides for attorneys fees;  no such express contractual provision exists in cases of a stop notice.   However, although section 1717 literally applies only to an obligor,² the courts have held that principles of equity required that a successful alleged obligor also be entitled to its fees incurred for a successful defense.³  We conclude that that same reasoning applies in reverse to a successful obligee under a stop notice.   The principle which we extract from the section 1717 cases is that, where one party to litigation is, by contract or by statute, given an exception to section 1021 of the Code of Civil Procedure,⁴ the other party is equally entitled to an exception.   If it is sound public policy to discourage an improper resort to a stop notice by the imposition of attorney's fees, it is equally sound policy to discourage noncompliance with such notice by the same imposition of attorney's fees.

II

The bank contends that, since a release bond was filed, under section 3171 of the Civil Code an award of attorney's fees against it was improper.   We do not pass on that issue since it was not raised in the trial court and, therefore, cannot be raised for the first time on this appeal.

The judgment is affirmed.

FOOTNOTES

1.   The bank is now in receivership and appears here by the receiver, the Federal Deposit Insurance Corporation.

2.   Civil Code section 1717:  “(a) In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the prevailing party, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements.  [¶ ] Where a contract provides for attorney's fees, as set forth above, such provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.”

3.   Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 158 Cal.Rptr. 1, 599 P.2d 83.

4.   Code of Civil Procedure section 1021:  “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties;  but parties to actions or proceedings are entitled to costs and disbursements, as hereinafter provided.”

KINGSLEY, Associate Justice.

WOODS, P.J., and BRECKENRIDGE, J.,* concur.