Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and orders of the Superior Court of Los Angeles County No. BC379920, David L. Minning, Judge.
Law Offices of Ronald W. Ito and Ronald W. Ito for Plaintiffs and Respondents.
Linton & Associates, Tanya K. Linton and Vladimir A. Bogorad for Defendants and Appellants.
MANELLA, J.
After the trial court granted summary judgment in favor of appellants Nandor Kiss, Pamela Kiss, Nina Skopinsky, and Anatoly Skopinsky, it denied their request for an award of attorney fees. Appellants challenge this denial on appeal. We reverse and remand for further proceedings.
RELEVANT PROCEDURAL AND FACTUAL BACKGROUND
Appellants owned some real property in Lancaster, and operated a pawn business on it. In early 2005, they sold the business to respondents The Trading Post Loan Co., Inc. and Mark Kirzner, together with Sophia Kirzner. Appellants thereafter leased the property to respondents, and on October 1, 2005, Nandor Kiss and Mark Kirzner executed a form agreement entitled “Lease with Purchase Option” (Lease Agreement) which included a ten-year lease with an option to purchase.
Although Sophia Kirzner originally participated with respondents as a plaintiff in the underlying action, she died prior to the grant of summary judgment, and Mark Kirzner was named as her successor in interest in the action. Our references to respondents shall encompass her unless the context requires that she be separately mentioned.
Pertinent here are two provisions in the Lease Agreement. Paragraph 26, entitled “Default,” stated: “If any default is made in the payment of rent, or any part thereof, at the times hereinbefore specified, or if any default is made in the performance of or compliance with any other term or condition hereof, this lease, at the option of Lessor, shall terminate and be forfeited, and Lessor may re-enter the premises and remove all persons therefrom. Lessee shall be given written notice of any default or breach, and termination and forfeiture of the lease shall not result if, within ____ days of receipt of such notice, Lessee has corrected the default or breach or has taken action reasonably likely to effect such correction within a reasonable time. Lessee shall pay all reasonable attorneys’ fees necessary to enforce Lessor’s rights.”
Paragraph 32 of the Lease Agreement, entitled “Purchase Option,” gave respondents, as lessees, the option to buy the underlying property for $350,000, with a down payment of $50,000 “payable upon exercise of said purchase option, and with a closing date no later than 180 days thereafter.” Paragraph 32 further stated: “This purchase option must be exercised in writing no later than March 01, 2006, but shall not be effective should the Lessee be in default under any terms of this lease or upon any termination of this lease.”
On February 23, 2006, the parties executed a form Commercial Property Purchase Agreement and Joint Escrow Instructions (Purchase Agreement) for the sale of the property. The terms of the Purchase Agreement provided for a $10,000 deposit, a $350,000 purchase price, and a 45-day escrow period. The Purchase Agreement contained an attorney fee provision that stated: “In any action, proceeding or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller....” On May 15, 2006, the parties executed escrow cancellation instructions that contained a mutual release of liability relating to the escrow. In July 2006, appellants sold the property to Vladislav Shulga and Victoria Shulga Shapiro (the Shulgas).
In October 2007, respondents initiated the underlying action against appellants and the Shulgas. Respondent’s first amended complaint contained claims against appellants for inter alia, breach of the Lease Agreement, breach of the implied covenant of good faith and fair dealing, unjust enrichment, declaratory and injunctive relief, specific performance, and a constructive trust. The first amended complaint alleged the following facts: On or about February 23, 2006, respondents exercised the option to buy the property contained in the Lease Agreement by submitting a timely written offer to buy the premises for $350,000. The offer was accepted, and escrow was opened. On May 4, 2006, respondents told appellants that they were prepared to obtain a loan within 60 days. At the same time, the Shulgas offered to buy the property for $400,000. Appellants told respondents that they would not wait for 60 days to close escrow, served a written notice of cancellation of escrow, and sold the property to the Shulgas. The first amended complaint asserted that appellants had breached the option to buy in the Lease Agreement by denying respondents the opportunity to close escrow within the 180-day period following February 23, 2006.
Appellants sought summary judgment or adjudication, contending that respondents’ claims relied exclusively on the theory that appellants had breached the option to buy in the Lease Agreement. Their motion challenged the central premise of the theory, namely, that the subsequently executed Purchase Agreement had triggered the option to buy in the Lease Agreement. In support of the motion, appellants submitted evidence that when respondents were unable to pay the $50,000 deposit needed to exercise the option to buy, the parties entered into an “alternative agreement,” that is, the Purchase Agreement. After the option to buy expired on March 1, 2006, the parties cancelled the transaction governed by the Purchase Agreement and executed a mutual release of liability.
In granting summary judgment, the trial court made the following determinations: “[Respondents] did not properly exercise the option to buy the Subject Property pursuant to the terms of the option because they did not tender a $50,000 down payment as required by the terms of the option. The option expired March 1, 2006. [¶] Prior to the option expiring, [respondents] entered into a purchase agreement... with a $10,000 deposit. In May 2006, [respondents] canceled escrow on this sale.... ¶]... [¶]... [A]fter the time for exercising the option to purchase expired on March 1, 2006, and [respondents] cancelled escrow on the sale in May 2006, [appellants] were no longer under any obligation to sell [respondents] the Subject Property.”
Appellants requested an award of attorney fees, and submitted a proposed judgment that provided for such an award. In entering judgment, the trial court denied the request. Appellants renewed their request in a motion to vacate the judgment, which the trial court again denied. This appeal followed.
DISCUSSION
Appellants contend they are entitled to a fee award under paragraph 26 of the Lease Agreement and the fee provision of the Purchase Agreement. For the reasons explained below, we conclude that the trial court erred in denying an award under the Lease Agreement, but not under the Purchase Agreement.
A. Award Under Lease Agreement
We begin by examining appellants’ request for an award pursuant to paragraph 26 of the Lease Agreement, which describes the lessor’s rights upon the lessee’s failure to pay rent or comply with the lease, and states: “Lessee shall pay all reasonable attorneys’ fees necessary to enforce Lessor’s rights.” The crux of appellants’ contentions is that respondents are liable for a fee award under this provision by virtue of Civil Code section 1717.
We review the denial of the request de novo when, as here, no extrinsic evidence has been introduced to interpret the contractual fee provisions and the material facts are not in dispute. (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 1177.) Pointing to a dictum in Prickett v. Royal Ins. Co. Ltd. (1961) 56 Cal.2d 234, 237, respondents suggest that under these circumstances, we must accept the trial court’s interpretation of the fee provision, provided that it is reasonable. We disagree. Prickett was clarified in Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, in which our Supreme Court affirmed the following rule: “‘An appellate court is not bound by a construction of the contract based solely upon the terms of the written instrument without the aid of evidence [citations], where there is no conflict in the evidence [citations]....” Regarding Prickett, the court explained: “Such statements are not in conflict with [the rule], if they are interpreted, as they should be, to mean only that an appellate court must determine that the trial court’s interpretation is erroneous before it may properly reverse a judgment. [Citation.] They do not mean that the appellate court is absolved of its duty to interpret the instrument.” (Parsons v. Bristol Development Co., at p. 866.) The court added: “[I]t is only when conflicting inferences arise from conflicting evidence... that the trial court’s resolution is binding.” (Id. at p. 866, fn. 2.)
All further statutory citations are to the Civil Code.
Subdivision (a) of section 1717 provides in its first paragraph: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce 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 party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” As our Supreme Court has explained, this provision “was originally enacted to establish mutuality of remedy when a contract makes recovery of attorney fees available only for one party and to prevent the oppressive use of one-sided attorney fees provisions.” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1090-1091.)
In denying a fee award, the trial court apparently concluded that an award under paragraph 26 was properly limited to fees incurred in connection with disputes about defaults in rent payments and similar matters. We disagree. The second paragraph of section 1717, subdivision (a), states: “Where a contract provides for attorney’s fees,... that 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.”
As this court has explained, “[t]he Legislature amended section 1717 in 1983 by adding the second paragraph [of subdivision (a)]. The express purpose of this amendment was to overturn Sciarotta v. Teaford Custom Remodeling, Inc. (1980) 110 Cal.App.3d 444. [Citations.] In that case, property owners sued a contractor for breach of contract to build a house in a workmanlike manner. [Citation.] After prevailing on their claims, the property owners sought attorney fees under the following provision in the written contract: ‘“In the event that default should occur in the payment of the Contract price or of any part thereof, Owner agrees to pay Contractor’s reasonable attorney's fees and court costs incurred by Contractor to enforce payment herein.”’ [Citation.] The court denied plaintiffs’ request because ‘the contractual language was clear, explicit and unambiguous in limiting attorney’s fees to a certain kind of action,’ and the suit was not over the failure to pay the builder’s contract price. [Citation.] The Legislature disagreed, and amended the law ‘to provide complete mutuality of remedy where a contractual provision makes recovery of attorney fees available to one party.’ [Citation.] Thus, parties may not limit recovery of attorney fees to a particular type of claim....” (Paul v. Schoellkopf (2005) 128 Cal.App.4th 147, 152-153, fn. omitted.)
Instructive applications of this principle are found in Kangarlou v. Progressive Title Co., Inc., supra, 128 Cal.App.4th 1174 and Harbor View Hills Community Assn. v. Torley (1992) 5 Cal.App.4th 343. In Kangarlou, the plaintiff bought a home and sued the escrow company that had participated in the transaction for breach of fiduciary duty, alleging that it had relied on unlicensed entities. (Kangarlou v. Progressive Title Co., Inc., supra, 128 Cal.App.4th at p. 1177.) The underlying contract obliged the plaintiff to pay any attorney fees the company incurred in collecting unpaid escrow costs. (Ibid.) This court held that the plaintiff was entitled to a fee award pursuant to the second paragraph of section 1717, subdivision (a), even though the fee provision limited awards to the company in disputes involving the failure to pay escrow costs. (Kangarlou v. Progressive Title Co., Inc., at p. 1178.) Again, in Harbor View Hills Community Assn., a homeowners’ association sued a group of homeowners, alleging that they had violated architectural restrictions in the governing covenants, conditions, and restrictions (CCRs). (Harbor View Hills Community Assn. v. Torley, supra, 5 Cal.App.4th at p. 345.) The CCRs provided for fee awards only in disputes involving the nonpayment of assessments. (Ibid.) The appellate court nonetheless held that the homeowners’ association was entitled to a fee award as prevailing party under the second paragraph of section 1717, subdivision (a). (Harbor View Hills Community Assn. v. Torley, at pp. 345-349.)
Here, the fee provision in the Lease Agreement obliged respondents, as lessees, to “pay all reasonable attorneys’ fees necessary to enforce” appellants’ rights as lessors. The Lease Agreement does not state that the parties were represented by counsel, and respondents did not attempt to rebut appellants’ evidence that no attorneys were involved in the negotiation of the Lease Agreement. Under the circumstances, subdivision (a) of section 1717 established full mutuality of remedy regarding fees in “action[s] on a contract” involving any provision of the Lease Agreement, including the option to buy. In the underlying action, respondents’ key claim was one for breach of the Lease Agreement’s option to buy, and appellants prevailed on every claim against them. Accordingly, appellants were entitled to a fee award, insofar as they were “the party prevailing on the contract” (§ 1717, subd. (a)).
Respondents contend that the trial court’s ruling was correct on several alternative grounds. First, they assert that the fee provision falls outside the scope of section 1717 because it does not employ the specific language of the first paragraph of section 1717, subdivision (a). We disagree. As the court explained in International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1183-1185, “[t]here is no legislative form language required by section 1717, so long as the agreement authorizes an award of fees incurred to enforce the contract.” That is the case here.
Next, respondents contend that the fee provision in paragraph 26 does not encompass disputes regarding the option to buy in paragraph 32, notwithstanding the second paragraph of section 1717, subdivision (a). They argue that their contention is that the Lease Agreement contains two different contracts, and the option to buy is a distinct agreement severable from the remaining provisions, which constitute a lease.
“Generally speaking, the test of whether a contract is divisible is that if the consideration is single, the contract is entire, but if the consideration is apportioned, the contract may be regarded as severable.” (Simmons v. Cal. Institute of Technology (1949) 34 Cal.2d 264, 275; accord, Howell v. Courtesy Chevrolet, Inc. (1971)16 Cal.App.3d 391, 404; see Lowy v. United Pacific Ins. Co. (1967) 67 Cal.2d 87, 91-92.) Here, paragraph 32 of the Lease Agreement provides that the option to buy “shall not be effective should the Lessee be in default under any terms of this lease or upon any termination of this lease.” The option to buy was thus expressly predicated on the lessee’s payment of rent and compliance with the other terms of the lease. In Prichard v. Kimball (1923) 190 Cal. 757, 764, our Supreme Court held that a lease containing an option to buy constituted a single contract, as the option “was conditioned on the faithful carrying out of the terms of the lease by the lessees and... was to run only during the term of the lease.” We reach the same conclusion here.
We recognize that the Lease Agreement contains a severability clause, which states: “If any portion of this lease shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this lease is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed and enforced as so limited.” As respondents do not suggest that the option to buy or any other portion of the Lease Agreement is unenforceable, we make no such determination. Moreover, the severability clause does not establish that the option to buy is a severable agreement, as the consideration for the option is inextricably intertwined with that of the lease. (Selten v. Hyon (2007) 152 Cal.App.4th 463, 471.)
Finally, respondents contend that appellants Pamela Kiss, Nina Skopinsky, and Anatoly Skopinsky may not recover their fees under section 1717 because they did not sign the Lease Agreement. Respondents argue that Pamela Kiss and the Skopinskys, as nonsignatories to the Lease Agreement and defendants in the action, may obtain their fees under section 1717 only if respondents were entitled to their fees under the fee provision had they been the prevailing parties. Respondents thus assert that the nonsignatory appellants cannot obtain a fee award, as respondents could not have recovered their fees as prevailing parties (and, in fact, made no fee request in their first amended complaint).
We conclude that respondents’ contention relies on a misapprehension regarding the case authority interpreting section 1717. As our Supreme Court has explained, the purpose of section 1717 is to ensure “mutuality of remedy” to fee claims under contractual fee provisions. (Santisas v. Goodin (1998) 17 Cal.4th 599, 610.) The primary situation in which section 1717 “makes an otherwise unilateral right reciprocal, thereby ensuring mutuality of remedy, is ‘when the contract provides the right to one party but not to the other.’ [Citation.] In this situation, the effect of section 1717 is to allow recovery of attorney fees by whichever contracting party prevails, ‘whether he or she is the party specified in the contract or not’ [citation].” (Santisas v. Goodin, supra, at pp. 610-611.)
The courts have also identified other circumstances in which section 1717 establishes a mutuality of remedy. (Santisas v. Goodin, supra, 17 Cal.4th at p. 610.) Pertinent here are situations in which section 1717 permits a recovery of attorney fees in actions between so-called “signatories” and “nonsignatories” of a contract containing the fee provision. The principal case regarding such situations is Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124 (Reynolds Metals). There, the plaintiffs sued two corporations and their principals for failure to repay two promissory notes, which contained fee provisions. (Id. at pp. 126-127.) Although the defendant principals had not signed the notes, the plaintiffs alleged that the corporations were the principals’ alter egos. (Id. at p. 127.) Following a bench trial, the trial court rejected the alter ego theory, rendered judgment in favor of the principals, and granted their fees. (Ibid.)
In determining that the principals were entitled to a fee award, our Supreme Court noted with approval a prior decision holding that section 1717 “include[s] persons who had not signed the contract but were sued on the note and found not to be parties to it.” (Reynolds Metals, supra, 25 Cal.3d at p. 129.) The Supreme Court concluded: “Had plaintiff prevailed on its cause of action claiming defendants were in fact the alter egos of the corporation [citation], defendants would have been liable on the notes. Since they would have been liable for attorney's fees pursuant to the fees provision had plaintiff prevailed, they may recover attorney’s fees pursuant to section 1717 now that they have prevailed.” (Ibid.)
After Reynolds Metals, courts have also held that a “‘nonsignatory’” plaintiff may obtain a fee award from a “‘signatory’” defendant if, for example, the plaintiff shows that it was entitled to enforce the pertinent terms of the contract, including the fee provision, as a third party beneficiary. (Whiteside v. Tenet Healthcare Corp. (2002) 101 Cal.App.4th 693, 706-708; Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 380-383.) The decisions following Reynolds Metals have relied on several rationales, not all of which have won general acceptance. (See Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 896-902 [discussing cases]; Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677-682 [discussing cases].)
Respondents contend that appellants Pamela Kiss, Nina Skopinsky, and Anatoly Skopinsky may not recover their fees under section 1717 on the basis of the cases applying and extending Reynolds Metals. However, these cases are inapposite. As explained below, appellants fall within the primary situation for a fee award under section 1717, as “contracting parties” to the Lease Agreement. (Santisas v. Goodin, supra, 17 Cal.4th at pp. 610-611.) Accordingly, they need not establish their entitlement to a fee award as “nonsignatory defendant[s]” under the principles flowing from Reynolds Metals, supra, 25 Cal.3d at p. 128.
The record establishes that Pamela Kiss and the Skopinskys are parties to the Lease Agreement as lessors. As Witkin explains, when an agent executes a contract on behalf of a principal, the contract binds the principal if disclosed or the evidence demonstrates that “the undisclosed principal is in fact the party for whom the contract was made.” (3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 158, pp. 202-203.) Moreover, “the principal, whether disclosed or undisclosed, may claim the benefit of the contract and sue in his or her own name.” (Id., at pp. 204-205.)
Here, the Lease Agreement was executed solely by Mark Kirzner and Nandor Kiss. Appellants’ motion for summary judgment asserted that Kiss had signed the Lease Agreement on behalf of himself and the other defendants, who collectively owned the property; in addition, the motion presented evidence in support of this statement. In opposing summary judgment, respondents did not purport to dispute that all of the appellants were parties to the Lease Agreement as lessors. Nor have they done so on appeal.
Respondents’ brief asserts: “[Respondents] have never stated that the nonsignatory parties were not the parties to the [lease] agreement. This is why said parties were sued by [respondents] for breach of the agreement.”
As appellants are contracting parties to the Lease Agreement, they need not show their entitlement to a fee award under Reynolds Metals and its progeny. Subdivision (a) of section 1717, by its plain language, states that “the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees....” Nothing in the statute requires that a contracting party be a signatory to the contract. Accordingly, section 1717 encompasses Pamela Kiss and the Skopinskys, who were parties to the Lease Agreement as lessors and, in this capacity, parties to the underlying action. They were thus entitled to a fee award under section 1717.
The misapprehension upon which respondents’ contention relies is traceable to a remark in Reynolds Metals. The Supreme Court, in addressing whether section 1717 applied to the defendants in that case (who had not signed the contract and were not parties to it), noted that the terms “‘party’” and “‘parties’” in section 1717 are ambiguous, as “[i]t is unclear whether the Legislature used the terms to refer to signatories or to litigants.” (Reynolds Metals, supra, 25 Cal.3d at p. 128.) Because persons may be parties to a contract without being signatories, the Supreme Court’s remark, viewed in context, appears to mean only that the term “party” in section 1717 may sometimes refer to a party to the action, as opposed to a party to the contract. It does not suggest that only a signatory may be considered a party to the contract within the meaning of section 1717. (Ginns v. Savage (1964) 61 Cal.2d 520, 524, fn. 2 [“Language used in any opinion is of course to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered.”].)
Before the trial court, respondents asserted other objections to a fee award. They argued (1) that not all the claims upon which appellants prevailed were “on [the] contract” within the meaning of section 1717, (2) that they were entitled to substantial offsets against the fee award as the result of improvements they had made on the property, and (3) that the requested fee award was excessive. None of these objections, in itself, bars a fee award, although their resolution -- which is consigned to the trial court’s discretion -- may affect the amount of the award. (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111 [trial court has discretion not to apportion fees between claims within scope of section 1717 and other claims when the claims are intertwined]; Hunt v. Fahnestock (1990) 220 Cal.App.3d 628, 633 [trial court has discretion to make equitable adjustments in section 1717 fee award]; PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095 [trial court has discretion to determine value of legal services in ordering section 1717 fee award].) As the trial court did not exercise its discretion regarding these matters in denying a fee award, we decline to address them on appeal.
B. Award Under Purchase Agreement
Appellants contend that they may also recover their fees under the fee provision in the Purchase Agreement. They argue that the Purchase Agreement is properly regarded as part of the transaction involving the Lease Agreement, and thus the fee provision in the Purchase Agreement encompasses the underlying action. The crux of their argument is that in the underlying action, respondents’ claims relied on the option to buy in the Lease Agreement, which -- respondents asserted -- had been exercised by the Purchase Agreement. For the reasons explained below, we disagree.
“Under section 1642 [], it is the general rule that several papers relating to the same subject matter and executed as parts of substantially one transaction, are to be construed together as one contract. [Citation.] Thus, a note, mortgage and agreement of sale constitute one contract where they are part of the same transaction. [Citation.] The documents need not be executed contemporaneously; it is a question of fact as to whether several writings comprise one transaction. [Citation.]” (Nevin v. Salk (1975) 45 Cal.App.3d 331, 338.) Because the trial court did not make express findings in denying the fee request on the basis of the Purchase Agreement, we presume that it found that the Purchase Agreement was not part of the transaction involving the Lease Agreement, and examine the record for substantial evidence to support this finding. (Ganey v. Doran (1987) 191 Cal.App.3d 901, 912.)
Section 1642 states: “Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.”
With respect to contract-based fee awards, the principle stated in section 1642 is inapplicable when the evidence establishes that the parties to a contract did not intend their transaction to be governed by the fee provisions of another contract. In Pilcher v. Wheeler (1992) 2 Cal.App.4th 352, 353-354, several parties entered into a limited partnership agreement for the purpose of constructing and selling condominium units. Under the partnership agreement, which contained no fee clause, the general partners were assigned sole authority to negotiate and execute a construction contract, which was mentioned in the partnership agreement. (Id. at p. 354.) After the general partners entered into the construction contract, the limited partners unsuccessfully sued them for breach of contract and fraud under the partnership agreement. (Id. at pp. 354-355.) When the general partners sought a fee award on the basis of the construction contract, which contained a fee provision, the trial court denied the request. (Ibid.) In affirming the denial, the appellate court concluded that the limited partners “did not intend to incorporate into their partnership agreement all the terms of a construction contract that was yet to be negotiated and over which they had little or no say.” (Id. at p. 356.)
Here, the parties did not incorporate the Purchase Agreement (and its fee provision) into the previously executed Lease Agreement, as the evidence establishes that the Purchase Agreement constituted a separate transaction from the operation of the option to purchase contained in the Lease Agreement. In seeking summary judgment, appellants asserted (1) that because respondents could not pay the $50,000 deposit needed to exercise the option to buy, the parties entered into the Purchase Agreement, which constituted an “alternative agreement,” and (2) that the option to buy expired (unexercised) on March 1, 2006. The trial court agreed with these contentions, and determined that there was no triable issue whether they were true. In view of these determinations, the trial court properly denied the fee request under the fee provision of the Purchase Agreement.
Appellants’ reliance on Acceptance Ins. Co. v. Syufy Enterprises (1999) 69 Cal.App.4th 321 and Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338 is misplaced, as these cases do not address the principle stated in section 1642. (See Acceptance Ins. Co. v. Syufy Enterprises, supra, at pp. 326-331 [discussing meaning of phrase “‘arising out of,’” as found in insurance policies]; Xuereb v. Marcus & Millichap, Inc., supra, at pp. 1340-1345 [discussing meaning of phrase, “‘If this Agreement gives rise to a lawsuit or other legal proceeding,’” as found in contractual fee clause].)
DISPOSITION
The orders and judgment are reversed solely with respect to the denial of a fee award under section 1717, and the matter is remanded for further proceedings in accordance with this opinion. Appellants are awarded their costs on appeal.
We concur: WILLHITE, Acting P. J., SUZUKAWA, J.