An act to amend Section 1717.5 of the Civil Code, relating to attorney’s fees.
Summary
AB 78 updates California Civil Code Section 1717.5, which governs attorneys’ fees in actions on contracts based on a book account when the contract does not already provide for fees and costs. The bill raises the statutory maximum fee awards a court may grant to the prevailing party from $960 to $1,200 for book accounts tied to a natural person’s personal, family, or household purposes, and from $1,200 to $1,600 for all other book accounts, while keeping the existing 25% cap tied to the principal obligation. It also preserves the rule that the prevailing party is the one who recovers greater relief, and it continues to allow a court to find that no party prevailed.
Impact
The bill amends a single statute in the Civil Code and changes the ceiling on recoverable attorneys’ fees in qualifying book-account contract disputes. It affects litigants who sue or defend on open-book or account-based contracts without an express attorneys’ fee clause, including consumer and commercial parties, while leaving in place existing exclusions for actions involving insurance companies and certain financial institutions. The practical effect is to increase the potential fee exposure and recovery in these cases, which may influence settlement leverage and litigation strategy in small contract disputes.
Sentiment
The available voting record shows strong, unanimous support at each recorded stage, with no recorded opposition in committee or on the floor. The bill was repeatedly placed on the consent calendar and ultimately chaptered, suggesting it was viewed as a routine, noncontroversial update rather than a major policy dispute. No committee transcript material was provided indicating substantive debate.
Contention
There is no documented controversy in the provided materials, and the recorded votes were unanimous. The only potentially sensitive policy issue is the increase in fee caps, which could be seen by debtors or consumer advocates as raising litigation costs, while creditors and prevailing parties may view it as a modest inflation adjustment that better reflects current legal expenses. However, the absence of dissent or transcript discussion suggests no organized opposition surfaced during the legislative process.