Procedural Posture

Procedural Posture: ADA defense attorney

Defendant buyer sought review of the portion of the judgment entered by the Superior Court of Los Angeles County (California) awarding attorneys' fees to plaintiff seller and denying attorneys' fees to the buyer, in the seller's action for declaratory relief for a determination that the buyer was obligated to pay a sales or use tax levied by the state.

Overview

The seller and the buyer's contract provided that the buyer would indemnify and hold the seller harmless from paying any sales tax in connection with the transfer of an airplane. The state levied a sales tax. The seller gave notice to the buyer, who denied liability for The tax. After the seller unsuccessfully petitioned the state for redetermination of the tax, the seller filed an action for declaratory relief. The buyer then paid the tax. The trial court ordered that any refund of the tax by the state should be paid directly to The buyer, awarded attorneys' fees to the seller, and denied the buyer's motion for attorneys' fees. On appeal, the court affirmed. The court held that the buyer's conduct was an anticipatory breach of the contract. Had the buyer informed the seller of its secret intention to pay the tax,Then the seller would have had no reason to file the declaratory action. Thus, the seller was entitled to attorneys' fees under the contract. The judgment directing that any refund be paid directly to the buyer was not a judgment in favor of the buyer, but a statement of the obvious. Thus, the buyer was not entitled to attorneys' fees.

Outcome

The court affirmed the judgment by the trial court awarding attorneys' fees to the seller and denying attorneys' fees to the buyer in the seller's action for declaratory relief to have it determined that the buyer was obligated to pay a sales tax.