NICHOLSON v. THRIFTY PAYLESS INC (2019)

MEMORANDUM **

Brent Nicholson appeals the district court's judgment, on remand from this court, holding him personally liable for attorneys’ fees in a diversity action against Thrifty Payless, Inc., and Rite Aid Corp. We have jurisdiction under 28 U.S.C. § 1291. We review de novo questions of law concerning entitlement to attorneys’ fees, and we review the amount of fees for an abuse of discretion. PSM Holding Corp. v. Nat'l Farm Fin. Corp., 884 F.3d 812, 828 (9th Cir. 2018). We reverse and remand.

Under California and Washington law, Nicholson may not be held personally liable for attorneys’ fees under a fee provision in lease agreements to which he was not a party. See Cal. Civ. Code § 1717; Wash. Rev. Code § 4.84.330; Real Prop. Servs. Corp. v. City of Pasadena, 25 Cal.App.4th 375, 30 Cal.Rptr.2d 536, 539 (1994) (holding that, generally, “attorney's fees are awarded only when the ․ lawsuit is between signatories to the contract”); see also 4518 S. 256th, LLC v. Karen L. Gibbon, P.S., 195 Wash.App. 423, 382 P.3d 1, 12 (2016) (noting that “one must be a party to the contract” to be entitled to an award under § 4.84.330). Neither of two exceptions allowing a fee to be awarded to, or payable by, a non-party applies because Nicholson did not stand in the shoes of the limited liability companies that were parties to the leases, and he was not a third-party beneficiary of the leases. See Cargill, Inc. v. Souza, 201 Cal.App.4th 962, 134 Cal.Rptr.3d 39, 42 (2011) (setting forth exceptions); Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 76 Cal.Rptr.3d 325, 356 (2008) (noting that “a nonsignatory seeking relief as a third party beneficiary may recover fees under a fee provision only if it appears that the contracting parties intended to extend such a right to one in his position” (emphasis in original) ). We therefore reverse the district court's judgment finding Nicholson personally liable for attorneys’ fees.

We remand for the district court to address the disposition of funds held in escrow.

REVERSED and REMANDED.