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Court of Appeal:
No Jury Misconduct in Awarding Attorney Fees As Damages
Although Contract Did Not Contain a Fee-Shifting Provision, Jurors, in Boosting Award by $20,000—the Amount Cross-Complainant Testified He Paid Lawyers—Did Not Disregard Any Instruction, Opinion Says; Award Stands
By a MetNews Staff Writer
A jury did not commit misconduct by including attorney fees in an award of damages in a contract dispute because doing so did not contravene any instruction and the incurring of those fees was part of the detriment the plaintiff suffered by virtue of the breach, the Court of Appeal for this district held yesterday.
Despite the unusual nature of the opinion in approving an award of attorney fees in a contract dispute absent a provision in the contract that such fees would go to the prevailing party should a dispute arise, the opinion was not certified for publication.
The opinion, by Justice Kenneth Yegan of Div. Six, reverses an order by San Luis Obispo Superior Court Judge Ginger Garrett granting a new trial to cross-defendants Michael and Maria Cirovic. A jury had assessed damages against them for $27,688.50 on a cross complaint by Norholm Builders, Inc., a Pismo Beach construction company, and its president, Poul Norholm.
That award could not stand, Garrett determined, in light of a juror’s declaration that it was based on $7,688.50 for moneys owed and the $20,000 that Norholm testified he had spent on attorney fees. Including an unauthorized award of such fees, the judge found, was jury misconduct, under the California Supreme Court’s March 14, 1977 decision in Krouse v. Graham.
Yegan’s Opinion
In his opinion ordering reinstatement of the verdict, Yegan said:
“The jury could have reasonably found that an award of attorney fees was necessary to put Norholm Builders ‘in as good a position as it would have been if [respondents] had performed as promised.’ If respondents had performed as promised, Norholm Builders would not have incurred attorney fees. The jury could also have reasonably concluded ‘that when the contract was made, both parties knew or could reasonably have foreseen that [attorney fees were] likely to [be incurred] in the ordinary course of events as [a] result of the breach of the contract.’ Neither party could have reasonably expected that the innocent party suffering harm as a result of the breach would sue in propria persona.”
He pointed out in a footnote that Norwood Builders, a corporation, could not have appeared in pro per.
Yegan continued:
“The jury was instructed that ‘Norholm Builders, Inc. claims damages for the remaining amount due on the contract for remodeling work for [respondents].’ The instruction did not limit the recoverable damages to this amount.”
The jurist noted that Garrett also gave California Civil Jury Instruction No. 355, which says:
“To recover damages for the breach of a contract to pay money, the party claiming a breach must prove the amount due under the contract.”
Yegan reasoned:
“The jury was not instructed that its award of damages could not exceed the amount due under the contract.
“Thus, by including attorney fees in its award of damages, the jury did not violate the instructions.”
Two Factors
He summed up:
“The jury’s award of attorney fees was due to two factors: (1) the admission of Poul Norholm’s testimony that he had incurred attorney fees of more than $20,000, and (2) instructions on breach of contract damages that could reasonably be construed by the jury as authorizing an award of attorney fees. Both of these factors were within respondents’ control. They could have prevented the award by objecting to the question that elicited Poul Norholm’s testimony about attorney fees or by moving to strike his testimony and requesting that the jury be admonished to disregard it.”
Yegan added:
“Respondents also could have prevented the award by requesting that the court give CACI No. 3964 informing the jury to ‘not consider, or include as part of any award, attorney fees or expenses that the parties incurred in bringing or defending this lawsuit.’ In view of Poul Norholm’s unstricken testimony about attorney fees, the instructions on breach of contract damages, and respondents’ failure to request CACI No. 3964, the jury did not commit misconduct by including an award of attorney fees in the amount of damages. The trial court therefore abused its discretion in granting respondents’ motion for a new trial on the ground of jury misconduct.”
Krouse v. Graham, Yegan said, is distinguishable. There, the jury added about $30,000 to its damage award to compensate a plaintiff, Vinka Mladinov, in a personal injury action for what jurors assumed she would have to pay to her lawyer.
Richardson’s Opinion
Justice Frank Richardson wrote:
“Generally, it is clear, attorneys’ fees are not recoverable in personal injury or wrongful death actions….An express agreement by the jurors to include such fees in their verdict, or extensive discussion evidencing an implied agreement to that effect, constitutes misconduct requiring reversal.”
Differentiating that case, Yegan said:
“Unlike the present case, in Krouse (1) no evidence was introduced as to the amount of Mladinov’s attorney fees, and (2) the trial court did not give jury instructions on breach of contract damages that could reasonably be construed by the jurors as authorizing the inclusion of attorney fees in their award of damages.”
The case is Norholm v. Cirovic, B308563.
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