Third Party Beneficiary to Contract May Invoke Attorney Fee Provision

A few days ago, in my post “Of Walnut Trees and Attorney Fees,” I took issue with the Third District Court of Appeal’s holding that a party suing on a contract that it alleges does not include an attorney fee provision is not entitled to recover attorney fees notwithstanding that the defendant alleges that additional written terms of the contract contain an attorney fee provision.  Yesterday, a different panel of the Third District Court of Appeal and I agree on the attorney fee issue in Laduca v. Polyzos, case no. C050757 (July 16, 2007).  The issue is whether the property owner, as a third party beneficiary of the contract between the general contractor and subcontractor, is able to invoke the attorney fee provision of the general-sub contract when the owner brings suit on the contract directly against the sub.

The court says the property owner is entitled to attorney fees under the general-sub contract.  The property owner is indisputably an intended third party beneficiary of the general-sub contract, the attorney fee provision is extremely broad, and the contract imposes no limitation on third party rights.  Thus, the third party beneficiary’s right to enforce the contract includes the right to enforce the attorney fee provision.