Unpublished Disposition, 842 F.2d 335 (9th Cir. 1988)

MEMORANDUM^** 

Financial News Network^N, the defendant in the action below, appeals the district court's award of attorney fees.

In February 1982 New Vision, which owns the Baltimore-Washington-D.C. area television station WNUV, entered into an affiliation agreement whereby WNUV would become an affiliate of FNN, a supplier of financial news television programming. The terms of the agreement provided that in consideration for carrying FNN programming, New Vision was to be compensated 10% of FNN's Gross Advertising Revenue each calendar quarter. When FNN made no payments in two consecutive quarters of 1984 New Vision exercised its right to terminate the agreement and brought an action for breach of express contract in the district court alleging diversity jurisdiction. Seven months after filing the original complaint, an amended complaint was filed alleging in addition to breach of contract, causes of action for common law fraud, breach of implied contract and violations of the Racketeer Influences and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq. New Vision also sought attorneys' fees in conjunction with its RICO and breach of express contract causes of action.

Prior to trial the RICO, fraud, and breach of implied contract claims were abandoned by New Vision, leaving only the original breach of contract claim and the request for attorneys' fees. The parties stipulated that the issue of attorneys' fees would be resolved by the court and not by the jury.

Following a three-day trial the jury returned a verdict in favor of New Vision. Shortly thereafter counsel for New Vision moved to recover attorneys' fees on the basis of the contract at issue and California Civil Code Sec. 1717. Following a hearing on the issue of attorneys' fees the court ordered New Vision to delete from its request fees expended in pursuit of the abandoned claims. The ultimate award of fees, following the deletion, was $31,200.

California Civil Code Sec. 1717 is dispositive of the issue of attorneys' fees. That statute provides in relevant part that:

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. (Emphasis added).

New Visions argues that section 1717 does not apply in this case because section 13 of the affiliate agreement is an indemnification provision which provides for attorney's fees only in cases involving third parties. In Meininger v. Larwin-Northern California, Inc., 63 Cal. App. 3d 82, 135 Cal. Rptr. 1 (1976), the court held that section 1717 did not apply to an attorney's fee provision contained in an indemnification clause. The contract provision in Meininger differs from section 13. While both are labeled "indemnity" provisions, the provision in Meininger was specifically limited to third party tort claims involving personal injury or property damage. By contrast, section 13 covers "all damages, losses, expenses and liabilities (including but not limited to reasonable attorney's fees) arising from ... the material breach by AFFILIATE of the aforesaid representations and warranties or of the terms agreed to be performed by AFFILIATE in this agreement."

Thus the district court properly applied section 1717 to this action. Even though there is no mutual contract provision specifying that New Vision would be entitled to attorney's fees in the event of breach by FNN, the prevailing party language of section 1717, whether or not New Vision is the party specified in the contract to receive fees, makes the provision reciprocal, and entitles New Vision to attorney's fees.

The amount of the award of attorney's fees is within the discretion of the trial court. County of Madera v. Forrester, 115 Cal. App. 3d 57, 65, 170 Cal. Rptr. 896, 900. In reviewing an award this court may exercise its independent judgment to determine whether there was an abuse of discretion. Hadley v. Krepel, 167 Cal. App. 3d 677, 683, 214 Cal. Rptr. 461, 464 (1985).

We conclude that there was no abuse of discretion and that the award of attorney's fees was not excessive. The district court went to great lengths to assure the award of attorney's fees would not be excessive by ordering counsel for New Vision to omit from its requests fees for time expended in preparation of its RICO, fraud and breach of implied contract (quantum meruit) claims. By taking that measure the only fees that could be awarded were for that time expended by counsel in the successful prosecution of its breach of express contract claim. Nothing in the record before this court suggests that the district court's award exceeded the reasonable market value of counsel's services for hours reasonably spent in discovery, trial of the cause of action and the preparation of its fee claim. Serrano v. Unruh, 652 P.2d 985, 997, 999 (Cal.1982).

WE AFFIRM.