Source: https://www.calattorneysfees.com/cases_prevailing_party/
Timestamp: 2019-04-25 12:06:17+00:00

Document:
Appellate Court Agrees With Trial Court’s Conclusion.
However, Prevailing Sibling’s Use Of Overly Redacted Billings Justified Reduction From Fee Request.
In Levine v. Levine, Case No. B284749 (2d Dist., Div. 1 February 6, 2019) (unpublished), siblings in a probate dispute entered into a global settlement agreement. One sibling moved to enforce the settlement agreement, but the motion was denied. The settlement agreement had a fees clause, inspiring the winning sibling to move as the prevailing party for costs of $2,659.17 and attorney’s fees of $74,349.17. The sibling moving for fees and costs submitted heavily redacted fee billings. The lower court granted the motion, but it denied the requested costs and awarded reduced fees of $25,112.
Both sides appealed, but nothing changed. Winning sibling did prevail because he took actions under the settlement agreement which were beneficial to the estate and belied the efforts to enforce the settlement agreement (especially given that the other sibling got sizeable distributions of an unusual nature before estate taxes were settled). However, the trial court’s award of reduced fees to prevailing sibling was justified; after all, he chose to not apportion costs between settlement agreement/trust administration activities and chose to submit redacted billings which made it equally hard to decipher what was compensable.
Fee Clause “Any Right” Language Allowed Tenant To Recover For Landlord’s Misrepresentations.
The 2/7 DCA upheld the fees/costs award. The “any right of either party” language was broad enough to encompass tenant’s victory on the misrepresentation/negligence claims. Because the jury awarded more to tenant than landlord, tenant was the successful party. Landlord then asked the appellate court to limit his liability to his equity in the property based on a lease limitations provision, but that only applied to any lease claims rather than the tort claims under which tenant was victorious.
Lower Court Fee Award And Appellate Fees Were Warranted In Favor OF The HOA.
Although we do not know the amount of fees awarded below, the homeowners in Windham at Carmel Mountain Ranch Assn. v. Lacher, Case No. D071799 (4th Dist., Div. 1 Jan. 16, 2019) (unpublished) obviously were dismayed when the lower court awarded HOA fees after the trial judge issued a preliminary injunction in favor of the HOA. Under the terms of the preliminary injunction, the homeowners had to vacate their unit and provide a key while separate units were being fumigated. The appellate court affirmed the finding that the HOA was the prevailing party, given that a preliminary injunction assisting the fumigation process so as to demonstrate that the organization obtained its litigation objectives. (Rancho Mirage County Club Homeowners Assn. v. Hazelbacker, 2 Cal.App.5th 252, 262 (2016); Press v. Lucy Stores, Inc., 34 Cal.3d 311, 316 (1983).) To add more insult, HOA was entitled to fees for prevailing on appeal.
This Situation Was Far From A Mere “Draw,” As The Defense Characterized It.
In Bayer v. Morse, Case No. A147318 (1st Dist., Div. 4 Dec. 28, 2018) (unpublished), 3 plaintiffs sued an apartment complex based on discrimination by the building management, which discrimination was aimed at tenants with children. Two plaintiffs won from a jury $50,000 each in noneconomic damages (later trebled by the trial judge to $150,000 under an applicable statute) and $10,000 each in punitive damages. A third plaintiff won from a jury $25,000 in noneconomic damages and a $25,000 penalty, although losing an injunction request. Because plaintiffs had fee entitlement under a San Francisco Rent Ordinance and the FEHA fee-shifting statute, the trial court determined they all were prevailing parties and awarded $334,080 in fees (this included a 1.2 multiplier, which was less than 1.5 multiplier requested). The defense appealed.
Defendants claimed that the matter was essentially a “draw.” The trial judge said “really?,” and the appellate court agreed—focusing on the fact two plaintiffs won 32 out of 42 claims and the third plaintiff (although the call was closer) did win significant relief. Nothing in the record showed that the injunction was the main litigation objective of plaintiffs. With respect to the due process argument, the 1/4 DCA did not believe that the fee award shocked conscience so as to result in a reversal.
We Had Questioned Whether The Original Decision Finding Fees Should Be Awarded To Plaintiff Was Correct, With Court Of Appeal Agreeing With Us Upon A Rehearing.
In our November 14, 2018 post on Olive v. General Nutrition Centers, Inc., Case No. B279490 (2d Dist., Div. 4), we had questioned at the end of our discussion whether it was correct for the Court of Appeal to determine plaintiff prevailed where he only succeeded to a small degree on his litigation objectives. We believed that the “no prevailing party” determination by the trial judge appeared to be correct.
We can now report that the 2/4 DCA granted a defense petition for rehearing, with the panel changing its mind and determining that the trial judge was correct in finding no one to be the “prevailing party” under Civil Code section 3344, a commercial likeness statute which has a mandatory fees/costs provision in favor of a prevailing party. See Olive, Case No. B279490 (2d Dist., Div. 4 Dec. 27, 2018) (published, opinion after rehearing).
Olive involved a situation where a plaintiff model/actor sued for multiple, multiple millions of dollars (at least $23.5 million, and maybe even $100 million for profit disgorgement/punitive damages), while defendant argued $4,800 were the properly recoverable compensable damages. The jury awarded $1.123 million in compensatory and emotional distress damages, with the trial court noting that both sides were visibly dismayed by the jury verdict. Based on plaintiff recovering only between 1-2% of his litigation objectives, the lower court decided no one prevailed under section 3344.
Although originally determining that plaintiff did prevail, the 2/4 DCA agreed that the trial court was correct in finding no “prevailing party.” It applied the practical prevailing party test under Civil Code section 1717 as articulated in Hsu v. Abbara, 9 Cal.4th 863 (1995) [our Leading Case No. 2], agreeing with the trial judge that the case was a “tie” and plaintiff only obtained a “middling” number well short of huge profit disgorgement and punitive damages sought from the jury. We believe that this is the proper result, as we commented on in our prior November 14 post.
Although Not Winning Everything, Plaintiff Did Obtain Significant Declaratory Relief So As To Be Deemed The Prevailing Party.
In Hot Rods, LLC v. Northrop Grumman Corp., Case No. G054432 (4th Dist., Div. 3 Dec. 5, 2018) (unpublished), the case involved environmental contamination of a property in Anaheim that was sold by defendant to certain buyers, who transferred their interest to plaintiff. Originally, plaintiff won $1.116 million in damages plus almost $2.1 million in costs based upon a referee’s recommendation on both contract and tort claims. However, the bulk of the damages award was reversed on appeal, with the appellate court determining only $117,050 of the original damages award could be upheld. This reversal also required a “restudy” of the fee award. On remand, the referee performed a new analysis of the fee request, finding that nearly $1.345 million was a reasonable fee award, computed as 60% of fees for trial, post-trial work, the appeal, and “fees on fees” activities. Defendant predictably appealed.
The fee award was affirmed.
The Purchase and Sale Agreement fees clause was broad, with the defense having to concede it covered all of plaintiff’s claims. So, the appeal really dwindled down to a focus on whether the “prevailing party” determination by the referee was proper. It was.
Although agreeing that plaintiff did not achieve a complete victory based on its prior “shaving” of compensatory damages, it was not contestable that it did win a substantial declaratory relief victory—the environmental indemnity applied both to first-party and third-party claims—as against defendant. As the Court of Appeal put it, “Indeed, given [the defense] position that the indemnity clause only applied to third party claims, the declaratory relief judgment is the whole ball game.” (Slip Op., p. 12.) The whole record showed plaintiff, with mixed results, left it to the lower court to decide who prevailed—plaintiff got the “call,” one which was subject to a deferential abuse of discretion standard which could not be hurdled in this one by the defense.
Justice Moore was the author of this 3-0 decision.
Finality Was Present With Respect To The One Contractual Issue, Justifying Civil Code Section 1717 Recovery.
In an earlier published decision, general contractor was found to have waived the right to compel arbitration in construction defect and mechanic’s lien cases which ultimately were consolidated. The winning party on the arbitrability dispute, the only contractual claim, moved for contractual fees and was awarded $14,805. The appellate court in Von Becelaere Ventures, LLC v. Zenovic, Jr., Case No. D073108 (4th Dist., Div. 1 Nov. 29, 2018) (unpublished) found that the situation was not premature for a fee recovery because the winner did win on the only contractual issue even though remaining noncontractual claims had not yet been arbitrated.
This Result Fosters Deterring Actions Without Foundation Brought By Government Against Private Entities/Persons.
The First District, Division 5, in John Russo Industrial Sheetmetal, Inc. v. City of Los Angeles Dept. of Airports, Case No. A151729 (1st Dist., Div. 5 Nov. 26, 2018) (published), dealt with a situation where a plaintiff contracted with the L.A. Department of Airports (LAWA) to provide LAWA with specialized airport firefighting trucks. Each sued the other for breach of contract, but LAWA also sued plaintiff on a California False Claims Act (CFCA) cross-claim. LAWA was awarded $1 on the contract claim, but voluntarily dismissed one aspect of its CFCA cross-claim and lost the other aspect after a jury trial. Plaintiff lost all of its claims against LAWA. The trial judge awarded LAWA costs on its contractual claim, but awarded fees to plaintiff and against LAWA (albeit in a reduced amount from the request) under CFCA’s fee-shifting provision, Government Code section 12652(g)(9)(B), after finding that the action was frivolous and harassing.
The appellate court affirmed. The principal issue was whether plaintiff could be the prevailing party—given the fee-shifting language requiring that defendant “prevails in the action”—for prevailing on only the CFCA claim versus the action as a whole. The 1/5 DCA found that prevailing on the CFCA cross-claim alone sufficed given the lower court’s finding that the claim was frivolous. In doing so, it found that the legislative intent of deterring baseless CFCA suits would be thwarted and that “action”/”claim” were found synonymous in analogous federal False Claim Act jurisprudence.
Narrow Fees Clause and Tort Claims Were The Determining Factors Here.
In Echeverria v. Cohen, Case No. B285085 (2d Dist., Div. 8 Nov. 26, 2018) (unpublished), plaintiff dental corporation sued defendant landlord over a commercial lease termination, and defendant cross-claimed against the tenant and tenant’s principal under an alter ego theory. Landlord prevailed on the complaint and cross-complaint against tenant, garnering around $202,000 in compensatory damages. However, defendant did not win the cross-complaint against the individual cross-defendant, who requested $244,625 in attorney’s fees under the lease fees clause and Civil Code section 1717. The lower court denied the request, one which was affirmed on appeal.
The key reasons for the denial of fees to the individual defendants were the following: (1) the fees clause was narrow, applying only to parties (landlord and tenant, rather than other persons or entities); and (2) section 1717 does not apply to tort claims. Considering these principles in tandem, section 1717 does not apply to tort claims so as to encompass prevailing “alter ego” defendants, with the fees clause being narrow such that it could not sweep individual defendant into its scope for winning tort claims. So, this one shows how the claims won on and scope of fees clause determine the result on appeal.
Despite Plaintiff Not Winning Multi-Millions More Being Claimed, Appellate Court Believed He Should Get Prevailing Party Fees.
Co-contributor Mike was a little surprised by this one, given how prevailing party determinations in mixed cases are usually governed by a deferential abuse of discretion standard. However, that often depends on the facts of the case, with the appellate court in Olive v. General Nutrition Centers, Inc., Case No. B279490 (2d Dist., Div. 4 Nov. 2, 2018) (published) giving plaintiff a nice win on appeal such that he was declared the prevailing party and entitled on remand to seek what we would think are significant attorney’s fees in this status.
In an unauthorized likeness case by a plaintiff model/actor, where liability was conceded, damages was the contested item in this matter. Plaintiff won $1.123 million under Civil Code section 3344, which does have a prevailing party fee-shifting provision under subdivision (a). The trial judge determined no one prevailed because (1) plaintiff sought much, much larger profits and emotional distress damages (actually, $12 million to $36 million) but only received $1.123 million; (2) GNC recommended only damages of $4,800 in total; and (3) the jury did not accept either party’s recommendation. So, between $4,800 and $23.5 million, no one prevailed.
The appellate court disagreed, remanding such that plaintiff can be awarded prevailing party fees in the discretion of the lower court. It reasoned that failure to obtain the “most lucrative portion of sought-after damages” was not a disqualifying factor, such that plaintiff did garner the “greater relief” compared to the paltry amount which defendant thought was offered. Big win for a plaintiff who now gets to seek, we would think, significant fees.
BLOG OBSERVATION—We do not usually comment on the end result of a decision, but this one does not “smell” like an abuse of discretion. It appears that the appellate court compared the defense recommendation to what the plaintiff ultimately achieved, but this does not take into account the huge damages plaintiff really wanted as far as determining the true prevailing party calculus at the conclusion of the day. Just sayin’ ….., given we can comment once and a while on decisions.
Although Trial Court Lacked Jurisdiction Over The Dispute In California, Fee Denials On Dueling Motions Was Justified Because Siblings Had To Await Determination In Texas Action.
In Savage v. Savage, Case No. A150984 (1st Dist., Div. 1 Oct. 15, 2018) (unpublished) [parenthetically, maybe a good case name for court disputes – no?], two siblings had quite a dispute about promissory notes, with litigation over the dispute occurring in California probate court and then a Texas court. The California probate court determined the California notes were extinguished, but denied dueling motions for contractual attorney’s fees by both sides on the basis that no one prevailed.
Neither Side Obtained Complete Success, With Both Suffering Significant Defeats In The Overall Litigation.
Both sides in 12400 Stowe Drive, LP v. Cycle Express, LLC, Case No. D069738 (4th Dist., Div. 1 Sept. 28, 2018) (unpublished) were unhappy that the trial judge found neither to be the “prevailing party” based on a lease fees clause under Civil Code section 1717. Plaintiff landlord had won $338,750 in damages under a lease renewal fair market valuation dispute, while tenant on its cross-complaint won damages of $32,960 for a leaky defective roof as against landlord. The trial judge found neither side enjoyed completed success and both sides suffered significant defeats.
Although Parties Settled, The Settlement Agreement Preserved The Prevailing Party’s Ability To Recoup Fees.
Plaintiff’s successor under certain loan documents brought a judicial foreclosure action against defendant borrower, who brought a declaratory relief cross-complaint claiming repayments all had been timely made. During the course of the litigation, a bank produced information showing that the loan had been repaid, such that the parties reached a settlement where the litigation was dismissed, a reconveyance provided to defendant, and with any party being able to bring a motion that it prevailed in the litigation so as to be entitled to attorney’s fees under Civil Code section 1717 (based on fees clauses in the loan documents). The trial judge agreed defendant prevailed, awarding defendant a little shy of $16,400 in attorney’s fees.
Plaintiff appealed, arguing that the defendant did not prevail and that plaintiff actually prevailed. The appellate court saw things in line with defendant and with the trial court in Cusack v. Togneri, Case No. A152844 (1st Dist., Div. 1 Aug. 30, 2018) (unpublished).
Albeit a successor to a signatory, plaintiff as successor in interest was liable for fees under the loan documents. The settlement reached by the parties was more than just a litigation dismissal, but subject to express settlement agreement reservations such that any party thinking they prevailed could move for fees—so there was no waiver by the litigation dismissal. Finally, defendant did get most of the primary relief, namely, a reconveyance and an acknowledgment that all repayments had been made, such that defendant (not plaintiff) did prevail.
Car Purchasers “Gambling” On Other Remedies Other Than Repurchase Might Have Repercussions – No Fee Recovery!
This case counsels that car purchasers and their attorneys in lemon law cases (equally applicable to situations involving consumer items other than cars as well) need to carefully think about rejecting a repurchase capitulation by a car manufacturer rather than take the “gamble” by rolling the dice to see they will receive civil penalties and attorney’s fees based on a litigation casino mentality. These lessons are well illustrated by the result in Nielsen v. FCA US LLC, Case No. A151659 (1st Dist., Div. 5 Aug. 23, 2018) (unpublished).
There, disgruntled Jeep Grand Cherokee purchaser believed the vehicle suffered from electrical/engine defects, seeking a repurchase by the car manufacturer under California’s lemon law which does have a fee-shifting clause if a court determines that the buyer “prevails” in the action. (Civ. Code, § 1794(d).) Needless to say, in both informal and a formal CCP § 998 offer requiring some documentation from buyer, car manufacturer basically offered to give car purchaser a repurchase option, along with some other incidental compensatory items. Car purchaser did not accept any of the offers, proceeded to trial, and obtained a stipulated amount of $48,267.41 from a jury under an implied warranty theory as far as a restitutionary remedy (given car manufacturer conceded this was the amount due under this scenario, a smart move). However, the jury found that manufacturer was not obligated to repurchase the car and was not liable for other damages, a civil penalty, or further relief.
Car buyer believed he “prevailed” and requested $280,275 in attorney’s fees under the lemon law fee provision, which included a 1.25 multiplier, as well as $21,180.96 in costs.
The trial court would have none of it, denying the motion in entirety.
Car purchaser appealed, but to no avail. The dispositive issue was whether car buyer “prevailed” under the lemon law fee statute. He did not. Because a pragmatic approach of whether a litigant achieved his/her main litigation objective is the guiding standard, it was not hard to decipher that car buyer nixed the repurchase/make whole option offered by car manufacturer based on a “gamble” of obtaining civil penalties and other relief, which simply did not happen. So, car buyer and his attorneys likely will go home feeling disgruntled, maybe not recognizing the “gamble” which the trial and appellate courts saw all so clearly.
BLOG OBSERVATION—Although the appellate court did not have to resolve whether car manufacturer’s 998 offer was valid (although the lower court found that it was), this decision is great for car manufacturers/dealers to read as far as potentially structuring a 998 offer, which is quoted in full. We believe that the appellate court might well have found it valid, given that the specific damages substantiation was a matter within plaintiff’s control and given that an offeree usually has an obligation to ask for clarification if an offer is ambiguous to the offeree/offeree’s counsel even though fairly clear from an objective standpoint.
Litigant Awarded Fees Did Prevail Under CCP §§ 874.010/874.040 And Civil Code Section 1717.
In Shadab v. Goldberg, Case No. B277925 (2d Dist., Div. 6 Aug. 22, 2018) (unpublished), one side won a partition by sale of undeveloped land, with the trial court eventually awarding attorney’s fees of $99,761.46 after finding the fee claimant “prevailed” under both a purchase agreement fees clause (Civil Code section 1717) and partition fees and allocation statutes (Code of Civil Procedure sections 874.010 and 874.040). The appellate court affirmed the fee and costs awards. The losing side had a disorganized trial presentation and was obstructionist in nature, both client and counsel. Fee claimant won all that she sought, so sustaining the result below seemed easy for the reviewing court.
Plaintiff Dismissed Her Action, After Initial Successes, Not On The Merits But For Fear Of Her Safety, Such That Fees Were Unwarranted Under The Peculiar Circumstances.
So, who says that appellate jurists are not sometimes convinced by unique circumstances to find that an attorney’s fees award against a litigant should be reversed? Not us, and the next case illustrates that this actually does occur on a rare occasion where the facts so dictate.
In Farboodi v. Tavangar, Case No. B279875 (2d Dist., Div. 3 Aug. 20, 2018) (unpublished), plaintiff (an Irani national who was in the U.S. on a student visa) sought a domestic violence restraining order against a former romantic partner. She did obtain a TRO, was issued a 3-year domestic violence restraining order, and had the transcript of the case sealed for the time being. Plaintiff then sought a permanent sealing order based on the fact that Iran’s Penal Code criminalizes sexual conduct between unmarried men and women, which it punishes by flogging or death. She was concerned that these records would be provided by defendant to Irani government officials upon her return to Iran. At a hearing on the motion to seal the case, the trial judge indicated it might not seal them permanently at which point plaintiff chose not to testify unless the testimony was sealed, in the process withdrawing her request for a restraining order. The trial judge denied the motion to seal and found defendant to be the prevailing party such that plaintiff had to pay $5,623 in fees and $488 in costs.
Plaintiff appealed the motion to seal ruling and fees award against her. She went 1-1, winning a reversal of the fees/costs award.
Although the record sealing order denial was affirmed, the appellate court found that the fees/costs award should be overturned “in these unique circumstances” because defendant did not prevail. Although recognizing that a court has the ability to award fees and costs to the prevailing party in a domestic violence restraining order proceeding (Fam. Code, § 6344(a)), the appellate court believed that plaintiff dismissed her claim not on the merits, but because she feared serious consequences in her home country of Iran if she did not drop the case. As such, defendant did not prevail because there was a withdrawal of the case having no relationship to the merits of the controversy.
Petitioners Did Prevail Because Their Actions Motivated A Water District To Disclose Previously Withheld Records.
Writ relief does not happen often, but plaintiffs seeing that the lower court was against them sought it and were awarded by the Third District in Harrell & Gifford v. Superior Court (Hornbrook Community Services Dist.), Case Nos. C085484/C085606 (3d Dist. July 27, 2018) (unpublished).
The writ proceeding largely considered what it means to be a prevailing party under the California Public Records Act (CPRA), which has a fee-shifting statute in favor of a prevailing plaintiff by virtue of Government Code section 6259(d).
In this case, two plaintiffs—one of whom had been employed by the District/served on the District’s Board and another of which had attended District meetings, such that they had insight into documents possessed and stored by the District at any particular time—separately asked for documents from the District. However, District refused to comply so as to trigger both plaintiffs to file CPRA actions. Finally, six months after one plaintiff filed his action and two months after the other was filed, meetings finally occurred in an effort to meet and confer over the document demands. Not all of the proper records were produced, a lot of it having to do with the way District somewhat haphazardly stored records. However, the lower court seemed to be jaded by the lengthy post-filing meetings and found both plaintiffs’ CPRA petitions lacked merit. Even more alarming for them, it then put plaintiffs on notice that it would hold a hearing to determine whether their actions were frivolous and as a result they were liable to the District for fees under another CPRA fee-shifting feature. That prompted plaintiffs, as petitioners, to seek writ relief from the appellate work.
The appellate court found that although no formal order was entered, the lower court did deny the petitions as having a lack of merit such that the prevailing party issue was ripe for determination on review. The proper test for a plaintiff’s recovery of fees as a prevailing party under CPRA is whether plaintiff’s lawsuit motivated defendants to provide documents or modify their behavior, whether or not a favorable final judgment is entered in the CPRA action. (San Diegans for Open Government v. City of San Diego, 247 Cal.App.4th 1306, 1321-1322 (2016); Sukumar v. City of San Diego, 14 Cal.App.5th 451, 454 (2017).) Here, the clear record showed that plaintiffs’ actions did trigger the release of documents, so that it was an abuse of discretion to find them other than prevailing parties. The appellate court ordered the trial court to vacate its order finding plaintiffs had not prevailed, to enter an order determining they did prevail, and to then determine the reasonable fees and costs under section 6259(d).
A nice reversal of fortune on appeal!
Tenant Also Entitled To Costs And Appellate Fees For Winning On Appeal.
Strength Farm, LLC v. The Heron Family Trust, Case No. B285264 (2d Dist., Div. 8 July 25, 2018) (unpublished) illustrates that contractual fee recoveries do not have to proportionate to the compensatory breach of contract award (may even be more if tort claims are intertwined) under Civil Code section 1717 contractual fee principles.
In this one, tenant won a tenant improvement allowance dispute against landlord in a commercial gym lease situation. A jury awarded tenant $84,595 based on a breach of contract claim under a lease with a fees clause (although abandoning or losing some noncontractual claims). Then, tenant moved to recover $434,528 in fees, with the trial judge ultimately awarding $371,135. That award was affirmed on appeal.
Fundamentally, the fees clause was broad, encompassing actions involving the premises, “whether founded in tort, contract or equity to declare rights thereunder.” Given the breadth of this clause, that might have been the end of this appeal, but the reviewing panel did give an extended discussion. The breach of contract claim was the focus, such that all of the other noncontractual claims were interrelated, not requiring an apportionment of fees. However, the lower court did make some reductions for lack of success on some claims such that prevailing tenant was entitled to fees and the amount awarded was no abuse of discretion.
As the clear winner, the appellate court also determined tenant was entitled to appellate costs and appeal fees as the prevailing party, awards which the lower court would scrutinize after tenant’s win on appeal.
Trial and Appellate Courts Found Neither Side Was A Prevailing Party, With Defense Request For $147,932.50 In Fees Denied.
Whenever a trial judge decides, in a post-trial fee hearing, that the result was a “tie” (or close thereto) as far as whether a fee claimant was a prevailing party in a lawsuit with mixed contract and tort claims, such a decision generally is reviewed under an abuse of discretion standard. (Civ. Code, § 1717(b)(1); Hsu v. Abbara, 9 Cal.4th 863, 871 (1995) [our Leading Case No. 2].) The trial judge in the next case found that neither side prevailed, and the appellate court agreed with that analysis.
In Martin Automotive Group v. Horton, Case No. B281963 (2d Dist., Div. 3 July 12, 2018) (unpublished), plaintiff brought an action to foreclose on a lien on a Cadillac owned by defendants, which prompted them in turn to file a cross-complaint for breach of a car service contract and for the tort of conversion. Defendants, as cross-complainants, were seeking hundreds of thousands in compensatory damages plus punitive damages (the trial court dismissed the punitive damages prayer). After a jury trial, plaintiff lost on its contract claim, while defendants/cross-complainants lost on their contract claim but won $5,787.81 on the conversion claim. Both sides moved for attorney’s fees as the prevailing parties, with defendants/cross-complainants requesting $147,932.50 based on a fees clause in the car service contract (unilateral in favor of plaintiff, but reciprocal by operation of Civil Code section 1717). The trial judge found no one prevailed, with only defendants/cross-complainants appealing the fee denial.
Motion Was Not On The Contract, Opposing Side Was Not Estopped From Denying Fee Exposure, And Prevailing Party Determination Was Premature In Nature.
The Fourth District, Division 1, in Howeth v. Coffelt, Case No. D072543 (4th Dist., Div. 1 June 18, 2018) (unpublished) (Howeth II), had to deal with one side’s appeal of an order denying attorney’s fees based on a settlement agreement relating to a longstanding reciprocal easement dispute. In the end, the appellate court concluded that the “prevailing party” determination was premature until someone used the settlement agreement remedy to file an independent enforcement action and actually won, rather than resort to a quicker CCP § 664.6 motion procedure found to be inapt for resolving the dispute.
In this one, the parties settled the easement dispute through a settlement agreement requiring an independent action to enforce it, also replete with a prevailing party fees clause. One side brought a motion to enforce, which was denied because the proper remedy was to bring an independent action—with the 4/1 DCA determining in a prior appeal that the denial order was not appealable. Then, the other side brought a motion for an award of fees and costs as the prevailing party in the prior proceeding. The trial court denied the motion, finding that neither party had prevailed at the time of denial of the Howeths’ previous motion because the court lacked jurisdiction to entertain it.
Coffelt, the other side, appealed the appeal denial in Howeth II. They, too, were not successful.
Although finding that the denial order was sufficiently “collateral” to an underlying judgment and was equivalent to an enforcement matter, the 4/1 DCA affirmed the denial order for numerous reasons. First, the matter was not an action “on the contract” because the motion to enforce did not really implicate the proper avenue to file an independent action truly based on the contract. Second, despite Howeths’ allegation of entitlement to attorney’s fees, this did not result in equitable estoppel because a Civil Code section 1717 fee claimant must show that there was an actual exposure to liability for fees by the opposite site, not just allegations of exposure—relying on Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 899, 899 n. 12 (2008). Third, any prevailing party determination was premature because no one prevailed until the independent action determined who won, colorfully quoting from Estate of Drummond, 149 Cal.App.4th 46, 53 (2007) [“By achieving that result, appellants no more ‘prevailed’ than does a fleeing army that outruns a pursing one. Living to fight another day may be a kind of success, and surely it is better than defeat. But as long as the war goes on neither side can be said to have prevailed.”].
Almost $90,000 In Fees Was Final “Reward” For Prevailing Buyer.
In Elie v. Kallie, Case No. B272360 (2d Dist., Div. 5 June 12, 2018) (unpublished), plaintiff seller lost in an effort to invalidate a sale agreement as unenforceable and also lost on defendant buyer’s cross-complaint seeking specific performance. In the end, defendant buyer obtained specific performance requiring plaintiff seller to convey the property vacant without a tenant on it. Buyer moved for contractual attorney’s fees as the prevailing party. The trial judge agreed that buyer prevailed, awarding a total of about $90,000 in fees. Seller appealed, but the appellate court saw no reason to disturb the result—buyer pragmatically prevailed in every sense of the term. The fee award was warranted and sustained on appeal.
Finding That Neither Side Prevailed For Routine Costs Did Not Decide Section 1717 Prevailing Party Issue.
In AAWestwood, LLC v. Liberal Arts 677 Benevolent Foundation, Case No. B275717 (2d Dist., Div. 5 May 23, 2018) (unpublished), defendant won non-monetary relief under its cross-complaint while plaintiff lost some claims but won a net $3,809.52 in damages under a forcible detainer theory, all involving an easement over six parking spaces that had been the subject of a long-term lease between the parties. With respect to routine costs under CCP § 1032, however, the trial judge exercised discretion to find neither party prevailed so that each should bear its own costs. Defendant then moved for attorney’s fees based on a lease contractual fees clause to the tune of $250,826.79. (There was a timeliness filing issue, but the trial court decided that in favor of defendant.) The trial court then ruled that its prior ruling on the costs “prevailing party” issue also determined that defendant was not the “prevailing party” for fees under Civil Code section 1717.
The 1717 fee determination was reversed and remanded. The reason is that the “prevailing party” determinations under Civil Code section 1717 and Code of Civil Procedure section 1032 are distinct such that a routine costs “prevailing party” does not resolve the section 1717 “prevailing party” issue. (Sears v. Baccaglio, 60 Cal.App.4th 1136, 1143 (1998) [section 1032 focuses on who receives the net monetary award versus section 1717 zeroing in on who recovers “a greater relief in the action on the contract”]; see also PNEC Corp. v. Meyer, 190 Cal.App.4th 66, 70 n. 2 (2010), disapproved on another point in DisputeSuite.com, LLC v. Scoreinc.com, 2 Cal.5th 968, 979 (2017).) Because the trial judge failed to determine if defendant prevailed on the contract, the matter was remanded for the lower court to do in the first instance under section 1717.
Trial Court’s Discretionary Decision Of No Prevailing Party Affirmed On Appeal.
The appellate court affirmed. The results were mixed, and the trial court did not have to designate one party securing relatively more relief as the prevailing party because no unqualified victory was had.
Lower Court Used CCP § 1032, Rather Than Civil Code § 1717, For Purposes Of Determining The Prevailing Party.
8121 Van Nuys Associates, Inc. v. Hoffman, Case No. B276900 (2d Dist., Div. 4 March 21, 2018) (unpublished) involved a landlord/tenant case where both parties won some relief. Landlord won past rent/damages, while tenant won a security deposit award, resulting in a net judgment in favor of landlord. Both sides moved for fees, with landlord requesting $43,123.60 and tenant requesting $233,949. The trial court then determined that landlord was the prevailing party under a lease fees clause, awarding it $42,513.62. It reasoned that landlord was the prevailing party based under CCP § 1032 because it received a positive net judgment.
The 2/4 DCA reversed and remanded. The flaw in the lower court’s analysis was that CCP § 1032 does not determine which side prevailed in this context; rather, Civil Code section 1717 governs. (Zintel Holdings, LLC v. McLean, 209 Cal.App.4th 431, 438 (2012).) Because discretion was not exercised under section 1717, a remand was appropriate. However, the appellate court somewhat provided some guidance on remand by observing landlord had claimed damages of about $61,000 (out of a request exceeding $1 million), while tenant obtained its security deposit request—such that both sides obtained some success. But, in the end, the lower court had to exercise discretion under section 1717 for purposes of determining the prevailing party.
Appellate Court Did De Novo Review On Most Issues.
In a fairly lengthy decision, the Fifth District basically reversed trial court determinations on fees and costs issues in Johnson v. Johnson, Case No. F073191 (5th Dist. Feb. 26, 2018) (unpublished), involving a dispute between siblings arising out of their real estate partnership where the partnership agreement stated the prevailing party was entitled to recover attorney’s fees “actually expended” if “litigation is instituted with respect to any matter regarding the covenants in this Agreement.” The lower court determined the sister was the prevailing party, awarding her costs and about $135,000 in attorney’s fees. Brother appealed, arguing he was the prevailing party because the jury awarded him $12,822 on a breach of contract claim despite the fact sister won a defense verdict on three tort claims submitted to the jury.
First, with respect to the costs award, brother was indeed the “prevailing party” under CCP § 1032 because he obtained a net monetary recovery such that sister was erroneously awarded costs and he was erroneously not awarded costs.
Finally, on the sanctions issue, the trial court did not provide the mandatory 21-day safe harbor notice required in its OSC order and did not issue as OSC describing the specific conduct to be potentially sanctioned with required specificity.
Brother did well to appeal, to say the least.
Prior Settlement Agreement Between Parties Did Not Preclude Later Costs Award.
In L.A. County MTA v. Parsons-Dillingham Metro Rail, Case No. B265863 (2d Dist., Div. 7 Feb. 26, 2018) (unpublished), Parsons was the prevailing party under a false claims count in a qui tam action. Earlier, Parsons and MTA had reached a settlement agreement by which Parsons allowed certain credits to MTA after foregoing certain claims, with the agreement specifying that the compromise terms did not impede any repercussions in further proceedings between the parties. After Parsons won, the trial court awarded it $60,185.07 in routine costs and $249,473.50 in expert witness fees after a CCP § 998 offer was rejected, with the award against MTA.
MTA’s appeal of the costs award did not result in any change of circumstance.
The appellate court determined that the prior settlement agreement “credit” by Parsons did not have to offset against the costs award against MTA, because nothing in the settlement agreement so stated and the “no impact on further proceedings” language demonstrated that this was not the case. (DeSaulles v. Community Hospital of Monterey Peninsula, 62 Cal.4th 1140 (2016) [our Leading Case No. 19]. Although arguing that Parsons’ costs were not apportioned only to the false claims count, Parsons had done so such that the amount of the award was proper.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 1794
 § 998
 v. 
 v. 
 § 6344
 v. 
 v. 
 v. 
 v. 
 § 1717
 v. 
 v. 
 v. 
 § 664
 v. 
 v. 
 v. 
 § 1032
 v. 
 v. 
 v. 
 § 1032
 § 1717
 v. 
 § 1032
 § 1032
 v. 
 v. 
 § 1032
 v. 
 § 998
 v.