Tenant Not Entitled to Attorney's Fees as Third-Party Beneficiary of Other Tenant's Lease

Tenant #1 sued Tenant #2 and the center, claiming that Tenant #2's lease gave it the right to use parking spaces that Tenant #1 had been using exclusively. The lower court ruled that Tenant #1 didn't have exclusive rights to these parking spaces. So Tenant #2 asked the court to order Tenant #1 to pay its attorney's fees, as provided for in Tenant #1's lease, since it was the “prevailing party” in the lawsuit. The court refused to do so, so Tenant #2 appealed.

A California appeals court ruled that Tenant #2 wasn't entitled to attorney's fees as a third-party beneficiary of Tenant #1's lease. The court said that attorney's fees aren't recoverable unless authorized by law or in a contract, such as a lease. The court noted that Tenant #1's lease provided for the recovery of attorney's fees but rejected Tenant #2's argument that it was a third-party beneficiary of that lease. There was no evidence that the terms of Tenant #1's lease were intended to benefit Tenant #2, the court said [Rialto Pockets, Inc. v. El Pollo Loco, Inc.].