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No Recovery of Attorney Fees Where Retention Not Owed.

Diaa Yassin v. Vinicio Solis (May 2010). Solis hired Yassin, a licensed contractor, to do improvement work on his home.  The contract between them provided for installment payments to Yassin with final payment to be made upon completion of the work. During construction Solis terminated Yassin and hired another contractor to complete the work.  Solis refused to make the final payment to Yassin, arguing that the subcontractors were unlicensed and that the work deviated from the plans and was substandard.  Yassin sued to recover the final payment.  Solis filed a cross complaint for damages.  The trial court awarded nothing to Yassin and awarded damages and attorney fees to Solis.

The Appellate Court affirmed the damages, but reversed the attorney fees award.  The Appellate Court held that Solis was not entitled to attorney fees because the final payment to Yassin was not a retention under Civil Code § 3260, instead it was an unpaid installment payment.  Retention payments are funds withheld from a payment, not the payment itself.  A final payment due at the end of the contract performance is not a retention.  A retention occurs when the owner retains a percentage from each progress payment as a form of security against potential mechanics’ liens and as security that the contractor will complete the work properly and repair defects.  Since no retention was involved attorney fees were unrecoverable under Civil Code § 3260.