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3250 Wilshire Boulevard Building v. Grace

filed: April 2, 1993.

THE 3250 WILSHIRE BOULEVARD BUILDING; THE 3250 WILSHIRE PARTNERS, PLAINTIFFS-APPELLANTS,
v.
W. R. GRACE & COMPANY; METROPOLITAN LIFE INSURANCE COMPANY, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Central District of California. D.C. No. CV-87-6048-WMB. William Matthew Byrne, Jr., District Judge, Presiding.

Before: James R. Browning, Procter Hug, Jr., and Alex Kozinski, Circuit Judges. Opinion by Judge Hug.

Author: Hug

HUG, Circuit Judge:

Appellants, the 3250 Wilshire Building and the 3250 Wilshire Partners (collectively "Wilshire"), appeal the district court's award of approximately $1.2 million in attorney's fees and expenses to appellee Metropolitan Life Insurance Company ("MetLife"). MetLife incurred these expenses in defense of Wilshire's unsuccessful diversity lawsuit for breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and fraudulent concealment under California law. The district court concluded that the attorney's fees were recoverable by MetLife under a Purchase and Sale Agreement between the parties. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I.

In 1969, Wilshire began building a 450,000 square foot high-rise office building in Los Angeles, California. A material known as Monokote, which contains asbestos, was applied throughout the building as a fireproofing material. In 1971, when the building was completed, Wilshire sold the building to MetLife, which in turn leased it back to Wilshire.

In 1986, Wilshire repurchased the building from MetLife pursuant to a "Purchase and Sale Agreement." After the sale, however, Wilshire learned that MetLife had instituted a policy against making long-term loans on buildings containing asbestos materials, and was attempting to divest itself of any such properties. Wilshire subsequently brought suit against MetLife alleging under California law: (1) breach of fiduciary duty, (2) breach of the implied duty of good faith and fair dealing, and (3) fraudulent concealment. The suit was originally filed in state court, but later removed to federal district court.

On a motion for summary judgment, the district court ruled in favor of MetLife. On a subsequent motion, the district court also held that MetLife was entitled to attorney's fees and expenses under a provision of the Purchase and Sale Agreement. Wilshire appealed both orders to this court, but did so before the district court had determined the amount of attorney's fees and expenses to which MetLife was entitled.

In 3250 Wilshire Blvd. v. W.R. Grace & Co. - Conn., Nos. 90-55323 and 90-55608 (9th Cir. May 21, 1991) (unpublished Disposition), we rejected Wilshire's appeal on the merits and dismissed as premature Wilshire's appeal from the district court's attorney's fees award, because the amount of the award had not been determined. We did, however, award MetLife those attorney's fees which it had incurred on appeal. On August 23, 1991, the district court concluded its proceedings on the issue of attorney's fees and expenses, and ordered Wilshire to pay MetLife approximately $1.2 million for the legal work performed in defense of Wilshire's lawsuit. Wilshire now appeals from that order.

On appeal, Wilshire argues (A) that attorney's fees are not recoverable by MetLife under California law, and (B) that even if they are, the attorney fee provision of the Purchase and Sale Agreement does not provide for attorney's fees in tort actions, which Wilshire asserts its lawsuit was. We disagree with both contentions.

A.

Wilshire's argument that attorney's fees are not recoverable by MetLife is based principally upon California Civil Code § 1717, which permits the recovery of attorney's fees by either party "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 . . . to one of the parties . . . ." Cal. Civ. Code § 1717 (West Supp. 1993). Wilshire argues that because its action against MetLife sounded in tort rather than contract, attorney's fees are not recoverable.

California Civil Code § 1717, however, is not the only statute governing the recoverability of attorney's fees by agreement. Indeed, the district court specifically relied on California Code of Civil Procedure § 1021 when it awarded attorney's fees to MetLife. The section provides:

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 ...


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