A co-owner who forces a partition sale should not end up paying the other side’s share of the legal bills, and the other side should not either. Stutz v. Davis (1981) 122 Cal.App.3d 1, 4–6 sets the basic rule: attorney’s fees spent to partition the property are shared by ownership percentage, figured on the full sale price, even when one of the co-owners is the buyer. The same case held that a lender named in the lawsuit cannot charge its legal fees to the co-owners as a cost of the partition.
The case is also a good example of a minority owner using partition to take control of a property. Frank Stutz owned only one-third, sued his two-thirds co-owner, and ended up buying the whole building. As we explain in what to do if a majority owner refuses a partition, owning the smaller share does not stop you from forcing a sale.
The Facts: A One-Third Owner Forces a Sale and Buys the Property
Stutz owned one-third of a commercial property in Los Angeles County, and Dave Davis owned two-thirds, as tenants in common. Stutz filed a partition action and named Davis and two lienholders (lenders with loans secured by the property) as defendants. (Stutz v. Davis, at p. 4.)
The complaint asked for a public sale, but the owners negotiated a different path: a private auction between the two of them, held in the courtroom. Stutz won the auction and bought the property for $840,000. Because Stutz already owned one-third, only two-thirds of the price went into escrow, the money that would buy out Davis. (Stutz v. Davis, at pp. 4–5.)
When the court confirmed the sale, it awarded attorney’s fees over Davis’s written objection: $7,500 to Stutz, $2,500 to Davis, and $1,000 to each lienholder, plus costs, all paid out of the sale proceeds. The problem was where the money came from. The only proceeds in escrow were Davis’s two-thirds, so Davis was paying every dollar of everyone’s fees. Davis appealed. (Stutz v. Davis, at p. 4.)
How the Court of Appeal Decided the Case
In most lawsuits, each side pays its own lawyer. Partition is different. Code of Civil Procedure section 874.010 (CCP 874.010) makes “Reasonable attorney’s fees incurred or paid by a party for the common benefit” part of the costs of partition. “Common benefit” means work that helps all of the owners, such as getting the property sold. Code of Civil Procedure section 874.040 (CCP 874.040’s rule on apportioning costs) then tells the court to divide those costs “among the parties in proportion to their interests or make such other apportionment as may be equitable.”
Reading the two statutes together, the Second District Court of Appeal said this “leads to the conclusion that costs should be awarded in proportion to the litigant’s interest in the property.” (Stutz v. Davis, at p. 4.) Both owners benefited from the partition, so each should pay by ownership: Davis two-thirds and Stutz one-third.
The Split Applies to the Whole Sale Price
The trial court used the right ratio but applied it to the wrong pot of money. It took the fees out of the escrow deposit, which belonged only to Davis, instead of the full $840,000 price. The Court of Appeal fixed that:
“This transaction should be treated as if a third party had purchased the property and costs should be apportioned the same way.”
Stutz v. Davis, at p. 5
The total fees and costs were $10,268. Stutz’s share was $3,422.67, leaving him $276,577.33 of his $280,000 interest. Davis’s share was $6,845.33, leaving him $553,154.67 of his $560,000 interest. (Stutz v. Davis, at p. 5.) Our guide on how to calculate your share in a partition walks through the same kind of math.
The court noted that the statute allows a different, fairer split when the facts call for one, but nothing in this record supported anything other than ownership shares. (Stutz v. Davis, at p. 5.)
The Owners’ Fees Stood Without Billing Records
Davis also argued there was no proof the fees were actually incurred. Neither side had offered evidence of hours or value. The court rejected the argument: the file showed many pleadings and court appearances, and the trial judge could value that work. (Stutz v. Davis, at p. 5.)
The Lenders Could Not Charge Their Fees to the Owners
The lienholders lost their fee awards. Their loans were never at risk in the partition, and the fact that a named lienholder must answer the complaint under Code of Civil Procedure section 872.410 (CCP 872.410) does not make the lender’s legal fees a cost of partition. The lenders pointed to fee language in their trust deeds, but the court said that language runs against the borrower, not the co-owners as a group:
“They may recover from their trustor under the trust deed but not under the Code of Civil Procedure.”
Stutz v. Davis, at p. 6
A trustor is the borrower who signed the trust deed. Because nothing showed the lenders’ work helped all of the parties, their fees were not allowed. (Stutz v. Davis, at p. 6.)
How Later Courts Treat Stutz v. Davis
Later cases read Stutz in two different ways. Finney v. Gomez (2003) 111 Cal.App.4th 527, 546 read it as making the ownership split the normal rule and a different split the exception. Then Lin v. Jeng (2012) 203 Cal.App.4th 1008, 1022–1023 found Stutz distinguishable, explaining that in Stutz nothing in the record showed the trial court meant to split fees any other way. Lin v. Jeng declined to follow Finney‘s narrow reading and held that trial courts have broad power to divide fees based on fairness.
So the law today is this: fees start out split by ownership, as Stutz v. Davis holds, but a court can shift more of them onto a co-owner whose conduct makes an even split unfair, as long as the record shows why. Orien v. Lutz adds that fees spent on contested issues can still be for the common benefit.
What Stutz v. Davis Means for California Co-Owners
- A minority owner can force a partition, and a co-owner can be the buyer.
- When a co-owner buys, the court treats the purchase like a sale to an outsider: fees and costs are figured on the full price, not just the cash that changes hands.
- Expect common-benefit fees to be split by ownership unless the record supports a different split.
- Lenders named in the lawsuit generally cannot take their attorney’s fees out of the sale proceeds as partition costs.
Our guides to attorney’s fees in a California partition action and recovering fees against an uncooperative co-owner explain how to build a record for shifting fees.
The costs of partition, including attorney’s fees, come out of the sale before the owners are paid, and each owner bears their share, as explained in who pays for a partition action. When you are ready to end a co-ownership, you can file a partition lawsuit.
Talkov Law can help. With 12 full-time partition attorneys and experience in over 650 partition actions throughout California, our team handles every step of the process, from filing through the sale and the final division of proceeds and fees. Call (877) PARTITION (727-8484) today or contact us online to get started.
