Contractual Attorneys' Fees Provision Bites Employer

Profit Concepts Management, Inc. sued Greg Griffith, a former employee, for trade secrets violations in California Superior Court. Griffith moved to quash service on the basis of no personal jurisdiction. Profit Concepts did not oppose the motion and the trial court dismissed the case.

The confidentiality agreement that formed the basis for the lawsuit contained a provision awarding attorneys' fees to the prevailing party. Griffith, having secured dismissal, moved for attorneys' fees under the agreement. Profit Concepts opposed that motion.

The Court of Appeal decided Griffith was the "prevailing party" under Civil Code 1717, which authorizes recovery of contractual attorneys' fees as costs to a prevailing party "regardless" of whether the case proceeds to final judgment. Profit Concepts vainly argued that there was no determination of who prevailed under the contract itself. The court said that section 1717 did not require the prevailing party to win on the contract claim itself.

The case is Profit Concepts Management, Inc. v. Griffith. The opinion is here.