LITIGATION COSTS

The Vons Companies, Inc. (Vons) owned property and entered into a contract with Lyle Parks Jr., Inc. (Parks) to improve Vons' real property. The contract contained an attorney's fees provision. After the work was completed, Parks gave Vons a separate warranty that work was completed, etc. This warranty (as well as the original contract) stated that Parks would fix any defects in his work for one year. The warranty did not contain an attorney's fees provision like the contract did. Before the year was over on the warranty, Vons sold its property to Mock Rank, Inc. (Mock). In the sale agreement, Vons sold "all of its rights, title and interest" in the warranty, but not the contract.

Two years after the sale, Mock sued both Vons (for failing to disclose water leaks among other things) and Parks (for breach of warranty and negligence, etc.). Before trial, Mock and Vons settled with Mock assigning its claims against Park to Vons. Vons prevailed in court over Parks on most of the issues. After the verdict, Vons filed a memorandum asking for costs and attorney's fees, which Parks objected to. The trial court denied Vons both its costs and attorney's fees. Vons appealed.

The Court of Appeal reversed the judgment of Vons so that they could obtain their costs since they were the prevailing party. But the Court of Appeal did not reverse the judgment of no attorney's fees since the claims were based on the warranty and not the contract. Since the warranty did not contain any attorney's fees provision, no attorney's fees should be awarded.