Filed 1 / 17 / 23 Varney Entertainment Group v. Avon Plastic s CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a) , prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.11 15.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

VARNEY ENTERTAINMENT GROUP, INC.,
Plaintiff and Appellant,

v.
AVON PLASTICS, INC., Defendant and Respondent. G060870 (Super. Ct. No. 30

- 2017

- 00958507)

O P I N I O N

Appeal from a postjudgment order of the Superior Court of Orange County, Fred W. Slaughter, Judge. Reversed and remanded with directions.

Foley, Bezek, Behle & Curtis, Roger N. Behle, Jr., Kevin D. Gamarnik, and Jordan A. Liebman for Plaintiff and Appellant.

Klein & Wilson, Mark B. Wilson and Joseph V. Miceli for Defendant and Respondent

. * * *2 This is our second opinion in this case. This appeal involve s a written endorsement agreement between Avon Plastics, Inc. (Avon) and Varney Entertainment Group, Inc. (Varney) that contains the following attorney fee provision: “In the event of any arbitration or litigation, including breach, enforcement or interpretation, arising out of this Agreement, the prevailing party of such litigation shall be entitled to recover reasonable attorneys’ fees, costs, and expenses, including pre

- litigation and appellate

att orneys’ fees and costs.” We must determine whether Avon ’s pr ior appeal “ar[ose] out of” th at agreement so as to entitle Varney , as the prevailing party in th e first appeal , to recover its appellate attorney fees.

In the parties’ written endorsement agreement, Varney agreed to let Avon

use its president’s name and likeness in promoting Avon ’s products f or two years in exchange for payment. Midway through the contract term, Avon unilaterally terminated the agreement and stopped issuing payments

. Varney sued, asserting claims for breach of
contract and for unauthorized commercial use of name or likeness in violation of Civil Code section 3344 ( section 3344). Shortly before the trial date , the parties entered into a stipulated judgment in favor of Varney on the contract claim, and Varney voluntarily
dismissed its section 3344 claim without prejudice. Avon then moved to recover its attorney fees under section 3344’s fee shift ing provision and under Code of Civil Procedure section 998 (section 998) . T he trial court denied Avon’s motion , and i n our previous opinion, we affirmed that order. ( Varney Entertainment Group, Inc. v. Avon Plastics, Inc . (2021) 61 Cal.App.5th 222 ( Varney I ).)
On remand , Varney filed a motion to recover the attorney fees it incurred in opposing Avon ’s unmeritorious appeal , citing the attorney fee provision in the parties’
endorsement agreement . The trial court denied that motion , an d this second appeal
followed. For the reasons explained below, we conclude that the first appeal “ ar [ ose ] out of ” the agreement so as to entitle Varney , as the prevailing party in th e first appeal, to3

recover its appellate attorney fees. We therefore re verse and remand for further proceedings.

FACTS

Our previous opinion described the facts and procedure as follows:

“ Jason Varney is a master dock builder and was the star of a cable
television show called Docked Out

. He is also the president and sole shareholder of plaintiff Varney Entertainment Group, Inc. (Varney). Defendant Avon Plastics , Inc.,
d oing business as Master Mark Plastic Products (Avon), manufactures products used to
build docks.

“ In 2016, Varney and Avon entered into a written endorseme nt agreement, under which Mr. V arney agreed to promote Avon ’ s brand and products and allow Avon
to use his name and likeness f or two years in exchange for payment. The contract allowed Avon to terminate the contract early if Docked Out was no longer broad cast on television. It also contained a prevailing party attorney fee provision.

“ Midway through the contract term, Docked Out was cancelled. Avon then unilaterally terminated the agreement and stopped paying Varney. Varney challenged the
termination be cause Docked Out reruns remained available for viewing on the I nternet.

“ In late 2017, V arney filed a complaint against Avon, asserting a single
cause of action for breach of contract. The parties liti gated the claim for over a year.

“ On April 5, 2019, Varney filed a first amended complaint, which alleged
that Avon had used Mr. Varney ’ s name and likeness without permission , and which
add ed a cause of action for unauthorized commercial use of name, voice, signature, photograph, or likeness in violation of section 3344.

“ Five days later, on April 10, Avon served Varney with a section 998 offer to compromise.

. . . [ In that offer to compromise , ] Avon offered to h ave judgment4

entered in Varney’s favor in the amount of $250,000, plus statutory costs including attorney fees through the date of the offer (the section 998 offer).

“ On April 16, w hile its section 998 offer was still pending, Avon sent Varney’s counsel a letter explaining that Avon was tendering the full amount owed under the contract, plus interest, fo r a total payment of $191,626.03, and stating that if Varney accepted the tender as satisfaction of the full amount owed under the contract, Avon would stip ulate that Varney was the prevailing party on the contract claim so it could seek statutory attorney fees and costs (the second offer)

.

“ Varney accepted the second offer, and Avon wired $191,626 .03 to Varney . The parties then filed a stipulation for entr y of judgment for Varney in the amount of $191,626 .03 on Varney ’ s contract cause of action. The stipul at ed judgment
spe cified that Varney was the prevailing party on th at claim so it could s eek statutory costs, including attorney fees

.

“ Over the next seve n weeks, the parties prepared for trial on Varney’s remaining section 3344 claim; they engaged in expert discovery and filed various pretrial motions. Varney’s damages expert testified at deposition that Varney would be seeking more than $16 million on th at cause of action.

“ The parties answer ed ready for trial on June 18. That morning, the trial court granted Avon’s pretrial motion for an order declaring that Tennessee law would apply to Varney’s section 3344 claim, effectively cutting off Varney’s abili ty to recover statutory damages under section 3344.

. . .

“ Later that day, just as jury selection was about to commence, Varney orally dismissed its section 3344 claim without prejudice. It later filed a new action against Avon in Tennessee, asserting a claim for unauthorized commercial use of name, voice, signa ture, photograph, or likeness.

“ Both parties subsequently moved for attorney fees and costs. C iting the

contract ’ s fee shifting provisi on and the stipulated judgment on the contract cause of5

action, Varney argued it was the prevailing party in the overall litigation because it achieved its litigation goals of (1) stopping Avon from using Mr. Varney ’ s name, image, and likeness, and (2) sec uring payment from Avon for what it owed; thus, asserted Varney, as the prevailing party it was entitled to the $271,244 in attorney fees and the $32,022 in costs it incurred through July 2019

.

“ Avon argued it was entitled to attorney fees on two grounds. First, citing section 998’s cost shifting provision, Avon asserted it was entitled to the $242,808 in attorney fees it incurred after serving its section 998 offer , because Varney recovered only $191,626.03 total, which was less than the $250,000 amount offered in Avon’s
section 998 offer. Second, citing section 3344 ’s fee shifting provision, Avon claimed it was the prevailing party on the section 3344 claim because Varney dismissed that claim without prejudice ; Avon therefore argued it was entitled to t he additional $22,690 in attorney fees it incurred on the section 3344 claim before it served the section 998 offer

. Avon also sought over $31,000 in costs.

“ The trial court granted Varney’s motion for fees and costs, finding Varney was the prevailing pa

rty on the contract claim [but not the section 3344 claim] and was entitled to $1 25,000 in attorney fees and $10,000 in cost s. [F n. omitted.] The court denied Avon’s motion. It reasoned there was no prevailing party on the section 3344
claim because there was no resolu tion on the merits , and thus no basis to award fees under section 3344. It also declined to shift costs to Avon under section 998, reasoning
that ‘ [b]ecause Avon Plastics is not a prevailing party, the “ more favorable judgment ” analysis of CCP §998 does not apply. ’

“ The trial court entered judgment for Varney on the first cause of action, awarding $191,626.03 in damages, $125,000 in attorney fees, and $10,000 in costs, for a total judgment of $326,626.03. ” ( Varney I, supra , 61 Cal.App.5th at pp. 226

– 228.)

Avon appealed, asserting the court erred in denying its motion for attorney
fees and costs under Civil Code section 3344 and Code of Civil Procedure section 998

.6

( Varney I, supra, 61 Cal. App.5th at p. 228.) Avon did not ch allenge Varney’s entitlement to attorney fees and costs as the prevailing party on the contract cause of
action , and Varney did not file a cross

- appeal challenging the court’s ruling that Varney was not the prevailing party on the section 3344 claim.

We af firmed the trial court’s ruling, finding Avon was not entitled to attorney fees or costs under Civil Code section 3344 or Code of Civil Procedure
section 998. ( Varney I, supra , 61 Cal.App.5th at pp. 230

– 236.) On remand , Varney filed
a motion to recover the attorney fees it incurred in successfully defending Avon’s appeal , citing (among other things) the contractual attorney fees provision in the engagement agreement. The trial court (a different judge presiding) denied that motion, and this

seco nd appeal followed.

DISCUSSION

T he parties’ agreement contain s the following fee shifting provision: “In the event of any arbitration or litigation, including breach, enforcement or interpretation, arising out of this Agreement, the prevailing party of such litigation shall be entitled to recover reasonable attorneys’ fees, costs, and expenses, including pre

- litigation and appellate attorneys’ fees and costs.” Accordingly, w e must determine whether Avon’s previous appeal qualifies as “litigation . . . arising out of” the agreement so as to entitle Varney , as the prevailing party in Avon’s appeal, to recover its appellate attorney fees. The parties agree our review is de novo. ( Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1200 [“ i nterpretation of a contract is a question of law we review de novo when, as here, the parties offer no extrinsic evidence on the contract ’s meaning ”].)

Does the agreement’s fee provision encompass Avon’s previous appeal ?

“ To answer this question, we apply the ordinary rules of contract interpretation

. ‘ Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be7

inferred, if poss ible, solely from the written provisions of the contract. ( Id ., § 1639.) The

“ clear and explicit ” meaning of these provisions, interpreted in their “ ordinary and popular sense, ” unless “ used by the parties in a technical sense or a special meaning is giv en to them by usage ” ( id ., § 1644), controls judicial interpretation. ( Id ., § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. ’ ” ( Santisas v. Goodin (1998) 17 Cal.4th 599, 608 ( Santisas )

. )

The agreement does not define the phrase “arising out of.” In common parlance , t o “arise” can mean “to originate from a source , ” “to come into being ” (see
Merriam

- Webster Dict. OnLine (2023) https://www.merriam

web ster.com/dictionary/arise [as of Jan. 11, 2023] archived at: < https://perma.cc/VY3W

5ELQ > ), or “to result or proceed” from (Dictionary.com Online (2023) https:// www.d ictionary.com/browse/arise [as of Jan. 11, 2023] archived at:

< https://perma.cc/VKG3

- XET E > ). (S ee also Central Pathology Service Medical Clinic, Inc. v. Superior Court (1992) 3 Cal.4th 181, 187 [ ‘ “arising out of” ’ refers to

“‘“ origination, growth, or flow from [ an ] event ”’” ] ; Vitton Construction Co., Inc. v. Pacific Ins. Co . (2003) 110 Cal.App.4th 762, 767 [the ‘ “commonsense meaning” ’ of

‘ “arising out of” ’ is originating fro m, growing out of , flowing from , incident to, or having
connection with ]; Xuereb v. Marcus & Millichap, Inc . (1992) 3 Cal.App.4th 1338, 1344 ( Xuereb ) [in “ordinary po pular speech,” the phrase ‘ “arises out of” ’ is used “ in a far more general, transactional sense than is suggested by phrases such as

. . . ‘ proximately caused by ’”] .)
W e must therefore determine whether Avon’s appeal seeking statutory attorney fees under Civil Code section 3344 and Code of Civil Procedure section 998 originated from , came into being because of , or resulted from the parties’ endorsement

a greement. W e have not found any published case with similar facts. On balance, however, we concl ude that question must be answered in the affirmative

.8 W ere it not for the parties’ entry into the endorsement agreement, Avon’s early termination of the end orsement agreement , and Avon’s subsequent unauthorized use of Varney’s name and likeness, Varney would not have filed its lawsuit for breach of
contract or unauthorized commercial use of name or likeness

. Likewise , Avon would not have incurred any attorney fees in defending against Varney’s claims, Avon never would
have had occasion to file the previ ous appeal seeking to recover those attorney fees under
Civil Code section 3344 and Code of Civil Procedure section 998, and Varney never would have incurred attorney fees in litigating Avon’s appeal.

It is t rue that Avon’s legal basis for seeking its fees on appeal was statutory, not contractual, but in our view that is a distinction without a difference ; at the end of the day, Avon’s fees were incurred litigating claims that came into bein g only because of the parties’ agreement that Avon would pay Va rney for the right to use Mr. Varney’s name and likeness in promoting Avon ’s products , and Avon’s subsequent breach of that agreement

. We therefore conclude Varney has established the requisite causal connection between the parties’ agreement and Avon’s appeal to recover its appellate attorney fees

. (See Xuereb , supra, 3 Cal.App.4th at p p . 1343

– 1344 [“ It is clear that but for the Purchase Agreement by which the allegedly defective property was sold to respondents, the dispute between the parties would no t have arisen , [ and ] respondents
would have had no basis ” to seek damages for negligence, breach of fiduciary duty , concealment, and misrepresentation]

. )

O ur decision is bolstered by the well

- established rule that a contractual provision that awards attorney fees to the prevailing party in any litigation “arising out of” the contract may support a prevailing party fee award in any litigation between the parties, regardless of whether the claim sounds i n contract or in tort

. ( See Santisas , supra, 17 Cal.4th at p. 608 .) I n Santisas , for example, our Supreme Court found that a contract provision in a residential purchase agreement allowing the prevailing party to9

recover its attorney fees in any litigation ‘ “arising out of the execut ion of [ this ] ag reement or the sale” ’ entitled the prevailing party to recover fees in an action alleging both
contract and tort claims based on alleged defects in the home ; as the c ourt put it, all such
claims ‘ “ar[ose] out of the execution of th[e] agreement or the sale .” ’ ( Ibid

. [“I f a contractual attorney fee provision is phrased broadly enough, as this one is, it may support an award of attorney fees to the prevailing party in an action alleging both
contract and tort claims .”] .) Although not precisely on point , the se cases support our broad interpretation of the phrase “arising out of .” 1

As a final matter, Avon contends that Varney is precluded from pursuing

a ny relief here because it failed to appeal the trial court’s order on the parties’ original

cross

- motions for attorney fees and the subsequent judgment incorporating that ruling

. In
that order , the court found the section 3344 claim was “independent” from the breach of

contract claim an d therefore the two claim s for attorney fees must be analyzed separately. The subsequent judgment confirmed there was no prevailing party on the section 3344
claim. According to Avon, Varney’s failure to appeal that order and judgment preclude it
from no w asserting that the contrac t’s fee provision encompasses appe llate litigation involving the section 3344 claim.

We are not persuaded. The trial court’s 2019 order o n the extent to which Varney was entitled to fees incurred in pretrial proceedings has n o bearing on whether Varney is entitled to fees incurred in litigating Avon’s 2021 appeal

. N either party wa s

1 S ee also Hemphill v. Wright Family, LLC (2015) 234 Cal.App.4th 911, 91 4 [residential lease providing for fee award in ‘ “any action aris[ing] out of . . . tenancy” ’ encompassed tenant’s negligence and strict liability claims against landlord]; Drybread v. Chipain Chiropractic Corp . (2007) 151 Cal.App.4th 1063, 1071

– 1072 [commercial sublease providing for fee award in any action ‘ “arising out of this Sublease

. . . c oncerning the subleased premises” ’ was broad enough to include noncontract claims , including unlawful detainer action]; Lerner v. W ard (1993) 13 Cal.App.4th 155, 159

– 160 [provision in real estate purchase agreement awarding fees to prevailing party in “any action or proceeding arising out of this agreement” encompassed fraud claim]

.10

the prevailing party on the section 3344 claim , either within the meaning of the endorsement agreement or section 3344’s fee shifting provision 2 (see Varney I, supra , 61 Cal.App.5th at pp. 230

- 231) , because that claim was dismissed without prejudice. But Varney was the prevailing party on both the contract claim and in Avon’s subsequent appeal concerning Avon’s right to statutory attor ney fees under Civil Code section 3344
and Code of Civil Procedure section 998

. That warrant s an award of appellate attorney fees to Varney under the language of the endorsement agreement

. ( Contrast Snyder v. Marcus & Millichap (1996) 46 Cal.App.4th 1099 , 1102 [ party that prevailed in partial appeal but that was not prevailing party in underlying litigation could not recover attorney fees on partial appeal] .)

O ur focus here is on the language of the parties’ agreement: “In the event of any

. . . litigation

. . . arising out of this Agreement, the prevailing party of such litigation shall be entitled to recover reasonable attorneys’ fees, costs, and expenses, including

. . . ap pellate attorneys’ fees and costs.” We conclude that Avon’s previous appeal arose out of the endorsement a greement because it concerned fees incurred in litigating whether Avon breached t hat agreement and the related question of whether
Avon used Mr. Varn ey’s name and likeness without permission . Because Varney was the prevailing party in that previous appeal , the trial court erred in denying Varney’s motion for appellate fees.

DISPOSITION

The trial court’s order denying Varney’s motion for attorney fees is
reversed

. On remand, the court is ordered to rehear Varney’s motion for attorney fees and consider any re levant issues not addressed in this opinion, including whether

2 S ection 3344 ’ s fee shifting provision provides t hat “[t]he prevailing party in any action under this section shall also be entitled to attorney ’ s fees and costs.” (§ 3344, subd. (a).)11

Varney’s requested fees were reasonable

. Varney is to recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)( 1 ).)

GOETHALS, J.

WE CONCUR:

O’LEARY , P. J.

DELANEY , J.