Court Opinion

ID: 4708791
Source: CourtListenerOpinion
Date Created: 2021-08-03 20:04:55.080472+00
Date Added: 2024-06-11T08:06:52.584462
License: Public Domain

Filed 8/3/21
                   CERTIFIED FOR PUBLICATION

      IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                     FIRST APPELLATE DISTRICT

                            DIVISION FOUR

 STEPHEN HOM, as Trustee, etc.,
         Cross-complainant and
         Appellant,                         A161770

 v.                                         (City & County of San Francisco
 DENNIS PETROU et al.,                      Super. Ct. No. CGC-13-536307)
         Cross-defendants and
         Respondents.

        Stephen Hom appeals the trial court’s order awarding attorney’s
fees to Dennis Petrou and Brian Utter after the settlement and
dismissal of a cross-complaint Hom filed against them and others. He
argues the trial court erred because Petrou and Utter were not
prevailing parties on Hom’s claim for declaratory relief concerning a
lease containing the attorney’s fees provision and further asserts that
Petrou and Utter could not collect fees on his tort claims because they
were not parties to the lease. We conclude the trial court correctly
awarded fees and will affirm the order.
                            BACKGROUND
        Hom’s parents rented out a building they owned in San Francisco
to Pure Entertainment, LLC to operate a bar and restaurant. Besides
addressing the rent due, the term of the lease, and similar provisions,
the lease Pure Entertainment signed allowed Pure Entertainment to
encumber its leasehold in favor of any of its lenders. Two of the lease’s

                                    1
nine pages gave various rights and responsibilities to a lender with an
encumbrance on Pure Entertainment’s leasehold, including the rights
to do anything required of Pure Entertainment under the lease,
foreclose on the leasehold, receive copies of notices due to Pure
Entertainment, cure any breach of the lease by Pure Entertainment,
and enter into a new lease at the lender’s option following any default
by Pure Entertainment. The lease also specified that Pure
Entertainment and the landlord would not modify or cancel the lease
without the written consent of the lender. The last sentence of the
lease further stated, “Should any dispute arise from this Lease or the
tenancy hereby created, and the parties cannot settle it between
themselves, then the prevailing party will be entitled to reimbursement
of its reasonable attorneys’ fees, in addition to any other remedy
awarded.” Pure Entertainment later signed promissory notes with
Petrou and Utter in which Pure Entertainment pledged all of its assets
as security for certain debts Pure Entertainment owed Petrou and
Utter.
      A dispute arose between Pure Entertainment and Hom’s parents
that resulted in litigation. Pure Entertainment filed a complaint for
breach of contract. After his parents passed away and Hom became the
trustee to the trust holding title to the property, Hom filed a second
amended cross-complaint against Pure Entertainment and, among
others, Petrou and Utter. As relevant here, the cross-complaint alleged
that Petrou and Utter became lenders with leasehold encumbrances for
the purpose of interfering with Hom’s ability to collect rent and evict
Pure Entertainment. The cross-complaint further alleged Petrou and
Utter did not qualify as lenders as contemplated in the lease and their

                                    2
loans were a sham. The cross-complaint asserted claims against Petrou
and Utter for intentional and negligent interference with contract,
conspiracy, and a declaration of Hom’s rights and obligations under the
lease.
         Hom and Pure Entertainment ultimately executed a settlement
agreement that required Hom to dismiss the entire cross-complaint
with prejudice. The trial court enforced the settlement by dismissing
the cross-complaint with prejudice.
         Petrou and Utter then moved for attorney’s fees based on the
lease’s attorney’s fees provision. The trial court granted their motion
and awarded them approximately $150,000 in fees.
                                  DISCUSSION
I. Legal principles and standard of review
         “A party may not recover attorney fees unless expressly
authorized by statute or contract. [Citations.] In the absence of a
statute authorizing the recovery of attorney fees, the parties may agree
on whether and how to allocate attorney fees. [Citation.] They may
agree the prevailing party will be awarded all the attorney fees
incurred in any litigation between them, limit the recovery of fees only
to claims arising from certain transactions or events, or award them
only on certain types of claims. The parties may agree to award
attorney fees on claims sounding in both contract and tort.” (Brown
Bark III, L.P. v. Haver (2013) 219 Cal.App.4th 809, 818 (Brown Bark).)
         When a party seeks to enforce a contractual fees provision and
requests fees related to litigation of claims “on a contract,” Civil Code 1
section 1717 makes the attorney’s fees provision reciprocal, in at least

         1   All statutory references are to the Civil Code.

                                         3
two ways. (§ 1717, subd. (a); Brown Bark, supra, 219 Cal.App.4th at
p. 819.) First, section 1717 allows either party to collect fees if the
contract allows one party but not the other to do so. (Brown Bark, at
p. 819.) Second, section 1717 allows “a party who defeats a contract
claim by showing the contract did not apply or was unenforceable to
nonetheless recover attorney fees under that contract if the opposing
party would have been entitled to attorney fees had it prevailed.”
(Ibid.) Aside from mandating reciprocity, section 1717 also addresses
how to determine which party is the prevailing party for the purposes
of a request for fees in an action on a contract. (§ 1717, subd. (b).) As
relevant here, section 1717, subdivision (b)(2) states that “[w]here an
action has been voluntarily dismissed or dismissed pursuant to a
settlement of the case, there shall be no prevailing party for purposes of
this section.”
      Because section 1717 only applies to an action “on a contract,” the
statute and its reciprocity rules do not apply to claims for fees for tort
or other non-contract claims. (Santisas v. Goodin (1998) 17 Cal.4th
599, 602 (Santisas).) For such claims, “the question of whether to
award attorneys’ fees turns on the language of the contractual
attorneys’ fee provision, i.e., whether the party seeking fees has
‘prevailed’ within the meaning of the provision and whether the type of
claim is within the scope of the provision.” (Exxess Electronixx v. Heger
Realty Corp. (1998) 64 Cal.App.4th 698, 708.) Because there is no
requirement of reciprocity for non-contract claims, a provision that
awards fees for such claims to only one party will be enforced according
to its terms, regardless of any apparent unfairness. (Moallem v.

                                     4
Coldwell Banker Com. Group, Inc. (1994) 25 Cal.App.4th 1827, 1832–
1833 (Moallem).)
      To interpret the scope and meaning of a contractual fees
provision, “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.
[Citation.] Such intent is to be inferred, if possible, solely from the
written provisions of the contract. [Citation.] 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 given to them by usage’ [citation], controls judicial
interpretation. [Citation.] Thus, if the meaning a layperson would
ascribe to contract language is not ambiguous, we apply that
meaning.’ ” (Santisas, supra, 17 Cal.4th at p. 608.)
      We review de novo the trial court’s application of section 1717
and its interpretation of the lease’s attorney’s fees provision. (Khan v.
Shim (2016) 7 Cal.App.5th 49, 55.)

                                     5
II. Analysis
      The trial court ruled that all of Hom’s claims against Petrou and
Utter were “on the contract” and that Petrou and Utter prevailed on
those claims. But the parties now agree that only Hom’s declaratory
relief claim was on the contract, so section 1717 applies only to that
claim. Hom also argues and Petrou and Utter do not dispute that
Petrou and Utter do not qualify as prevailing parties for the
declaratory relief claim under section 1717. But Petrou and Utter
argue that Hom cannot exclude from the fees award those amounts
apportionable to the declaratory relief claim because Hom failed to seek
such apportionment in the trial court. Hom in turn disclaims any
reliance on an apportionment theory and says that he raises the issue
with the declaratory relief claim only as part of his overall argument
that the entire fee award should be reversed.
      Although Hom did not cite the specific subdivision, he did
adequately raise the application of section 1717 below in his briefing
and at the hearing below, so he has not forfeited the issue. We agree
with Hom that section 1717, subdivision (b)(2) would bar an award of
fees on Hom’s declaratory relief claim because the trial court dismissed
it pursuant to a settlement. (§ 1717, subd. (b)(2) [“Where an action has
been . . . dismissed pursuant to a settlement of the case, there shall be
no prevailing party for purposes of this section”].) Because Hom does
not request apportionment of the fee award, however, this error
warrants reversal only if the award of fees on the non-contract claims
was also improper. We must therefore determine whether the trial
court properly awarded Petrou and Utter their attorney’s fees on Hom’s
non-contract claims.

                                    6
      This inquiry would normally entail examining the fees provision
to see (1) if it covers non-contract claims, (2) whether Petrou and Utter
may claim the benefit of it, and (3) whether Petrou and Utter are
prevailing parties within its meaning. (Brown Bark, supra,
219 Cal.App.4th at pp. 827–828; Santisas, supra, 17 Cal.4th at pp. 608–
609.) But we may omit the first and third of these steps because Hom
does not dispute that the fees provision is broad enough to apply to his
tort claims, nor does he dispute that Utter and Petrou prevailed on
those claims within the meaning of the fees provision. Instead, he
contends they cannot claim the benefit of the fees provision. Hom
argues primarily that nonsignatories to a contract can never collect fees
relating to tort claims, except in the rare circumstance that the
contract expressly identifies them as entitled to do so. For this
argument, Hom relies on Topanga and Victory Partners v. Toghia
(2002) 103 Cal.App.4th 775, 783–787 (Topanga); Sweat v. Hollister
(1995) 37 Cal.App.4th 603, 615–616 (Sweat), disapproved of on other
grounds by Santisas, supra, 17 Cal.4th at p. 609, fn. 5; Super 7 Motel
Associates v. Wang (1993) 16 Cal.App.4th 541, 549–550 (Super 7); and
Brown Bark, supra, 219 Cal.App.4th 809. We therefore examine each
of these cases in turn to determine whether they establish a per se rule
barring nonsignatories from collecting attorney’s fees on tort claims
under a contractual fees provision.

                                      7
Topanga
      In Topanga, a landlord sued a tenant corporation and a
shareholder/officer of the corporation as its alter ego for breach of
contract and tort claims. (Topanga, supra, 103 Cal.App.4th at p. 778.)
After the landlord settled the case with the corporation and voluntarily
dismissed the shareholder with prejudice, the shareholder moved to
collect his attorney’s fees related to the landlord’s tort claims based on
the contract’s attorney’s fees provision. (Ibid.) The provision allowed
the prevailing party to collect attorney’s fees “ ‘[i]f either
Landlord . . . or Tenant . . . commences or engages in . . . any action or
litigation or arbitration against the other party arising out of or in
connection with the Lease, the Premises or the Building or the
Property.’ ” (Id. at pp. 778–779.) The provision further specified, “ ‘If
Landlord becomes involved in any litigation or dispute, threatened or
actual, by or against anyone not a party to the Lease, but arising by
reason of or related to any act or omission of Tenant or Tenant’s
Employees, Tenant agrees to pay Landlord’s reasonable attorneys’ fees
and other costs incurred in connection with the litigation or dispute.’ ”
(Id. at p. 779.) The Court of Appeal held that because section 1717 and
its reciprocity rules did not apply to the tort claims, and because the
shareholder “simply was not a party to” the lease, he could not invoke
the contract’s fees provision to collect fees on the tort claims. (Id. at
p. 786.)
      Unlike Hom, we do not read Topanga as establishing a blanket
rule that a nonsignatory is barred in every instance from recovering
attorney’s fees on tort claims pursuant to a contractual fees provision.
The court’s conclusion that the shareholder could not collect fees

                                      8
because he was not a party to the contract is not surprising, given that
the contract’s attorney’s fees provision was limited to the expressly
named landlord and tenant. The shareholder relied primarily on
section 1717, and there is no indication that he raised any other theory
by which he could have claimed the benefits of the fees provision, such
as a third party beneficiary theory. This is likely because the contract
expressly addressed litigation between a party to the contract and third
parties by giving the landlord a non-reciprocal right to attorney’s fees
in such situations. Topanga therefore cannot be read to establish as a
matter of law that nonsignatories are necessarily barred from obtaining
fees under a contract. (Sanjiv Goel, M.D., Inc. v. Regal Medical Group,
Inc. (2017) 11 Cal.App.5th 1054, 1063 [“ ‘Language used in any opinion
is of course to be understood in the light of the facts and the issue then
before the court, and an opinion is not authority for a proposition not
therein considered’ ”].)
Super 7 and Sweat
      In Super 7, supra, 16 Cal.App.4th at page 544, a buyer of real
estate sued the seller and the seller’s broker for fraud and rescission of
the sale. The purchase agreement included a fees provision that read,
“ ‘In any action or proceeding arising out of this agreement, the
prevailing party shall be entitled to reasonable attorney’s fees and
costs.’ ” (Ibid.) The document included a separate section titled
“Acceptance,” which the seller had signed to indicate his acceptance
and which stated that the seller would pay the broker a commission.
(Ibid.) The broker signed on another line in the “Acceptance” section.
(Ibid.) The “Acceptance” section included its own fees provision, stating

                                     9
that the prevailing party could recover attorney’s fees in any action
between the broker and seller arising out the agreement. (Ibid.)
      The Court of Appeal held that the broker could not collect his
attorney’s fees from the buyer under the purchase agreement. (Super
7, supra, 16 Cal.App.4th at p. 544.) The court reasoned that the broker
was not a party to the purchase contract because, even though the
contract referred to him in one clause, the broker had no contractual
obligations or interest in the sale of the property. (Id. at p. 545.) The
court rejected the broker’s argument that he was a party based on his
signature in the “Acceptance” section. (Id. at p. 546.) The court found
that the “Acceptance” section containing the broker’s commission
agreement was a separate agreement from the buy-sell agreement, and
that the broker was a stranger to the latter agreement. (Ibid.) The
buyer’s suit did not arise from the broker’s commission agreement.
(Ibid.) Applying the rules for interpreting contracts, the court further
reasoned that allowing the broker to collect fees under the buy-sell
agreement would render the separate fees provision in the broker’s
commission agreement redundant and unnecessary. (Ibid.)
      Super 7 also rejected the broker’s theory that was he was a third
party beneficiary of the buy-sell agreement, for two reasons. (Super 7,
supra, 16 Cal.App.4th at pp. 546–547.) First, the court found the
broker cited no authority allowing a third party beneficiary to do
anything other than collect the benefits due under the contract. (Id. at
p. 546.) The court further noted that “the basic premise underlying
attorney fee clauses, i.e., a party is not liable for attorney fees unless he
agrees to the clause, is inconsistent with [the broker’s] theory, because
a third party beneficiary does not participate in reaching the

                                     10
agreement. [The broker’s] theory would have the third party
beneficiary bound by an agreement to which he did not consent.”
(Ibid.) The second and more fundamental problem, according to the
court, was that the agreement did not confer third party beneficiary
status on the broker because the buy-sell agreement contained no
promise to pay the broker and the broker’s rights arose solely from the
separate broker’s commission agreement. (Id. at pp. 546–547.)
      The third case Hom cites, Sweat, supra, 37 Cal.App.4th at
pages 605–606, involved essentially the same fact pattern as Super 7:
A buyer of property sued the sellers and the sellers’ brokers for
misrepresentation and nondisclosure. The purchase agreement’s fees
provision was similar, if not identical, to the one at issue in Super 7,
and the facts were no different. (Id. at pp. 615–616.) Sweat followed
Super 7 and held that the brokers could not collect fees based on the
purchase agreement because they were not parties to that contract.
(Id. at p. 616.)
      Super 7 and Sweat do not establish a blanket rule against
allowing nonsignatories to collect fees any more than does Topanga. To
the contrary, those decisions’ focus on the specific language in the
contracts at issue demonstrates that the relevant question is simply
whether the language of the attorney’s fees provision covers
nonsignatories. The purchase agreements at issue in Super 7 and
Sweat did not, because the brokers were not parties to the agreements
and could not be considered third party beneficiaries in light of the side
agreements providing for the broker’s commissions.
      Super 7’s remarks about the incompatibility of a third party
beneficiary theory and an attorney’s fees provision appear to be dicta,

                                    11
since the court concluded that the purchase agreement did not confer
third party beneficiary status on the broker in that case. (Super 7,
supra, 16 Cal.App.4th at p. 546.) But even if those remarks were not
dicta, we find them unpersuasive. The court found no authority
indicating that a third party beneficiary “has any right other than to
collect the benefits the contracting parties agreed to confer on him.”
(Ibid.) This begs the question, however, because the issue at hand is
whether one of the benefits the contracting parties agreed to confer on
a third party beneficiary is the right to recover attorney’s fees in
litigation arising from the contract. Super 7’s remark about it being
inconsistent to allow a third party beneficiary to collect attorney’s fees
under a contract which the beneficiary did not negotiate or to which the
beneficiary did not consent (ibid.) is puzzling, because, by definition, a
third party beneficiary is not a party to the agreement whose benefits
the beneficiary seeks to enforce. Moreover, attorney’s fees provisions
need not be reciprocal with regard to non-contract claims, so the fact
that a third party beneficiary cannot be liable for attorney’s fees on
such claims presents no bar to allowing a third party beneficiary to
collect such fees. (Moallem, supra, 25 Cal.App.4th at pp. 1832–1833
[fees provisions can be non-reciprocal for non-contract claims]; accord,
Brown Bark, supra, 219 Cal.App.4th at pp. 828–829.)
Brown Bark
      Hom claims, based on a remark in Brown Bark, that the only
exception to the blanket rule prohibiting nonsignatories from collecting
attorney’s fees is when the fees provision “expressly identifies that
party as a party entitled to its benefits.” (Brown Bark, supra,
219 Cal.App.4th at p. 828.) Although Brown Bark dealt with a claim

                                    12
for fees by a successor in interest to a contracting party, the passage
Hom quotes was not referring to nonsignatories or third parties. The
court there was merely describing the principle that section 1717 does
not make a fees provision reciprocal for tort claims, so anyone seeking
fees for tort claims under a contract must prove the contractual fees
provision applies to that person. (Ibid.) The decision Brown Bark cited
for this statement, Moallem, was similar. (Ibid., citing Moallem, supra,
25 Cal.App.4th at pp. 1830–1832 [Moallem not entitled to fees on tort
claims under section 1717; unilateral fees provision allowed only
defendant broker to recover fees associated with tort claims].) These
decisions do not recognize a blanket rule prohibiting nonsignatories
from collecting fees on tort claims, nor do they establish or acknowledge
any exceptions to such a rule.
The language of the attorney’s fees provision in the lease
      The absence of a blanket rule regarding fees for nonsignatories in
these authorities should not be surprising. Santisas makes clear that
the scope of a contractual right to attorney’s fees on non-contract claims
is a question of contractual intent. (17 Cal.4th at p. 617 [for non-
contract claims not covered by section 1717, “the attorney fee provision,
depending upon its wording, may afford the defendant a contractual
right, not affected by section 1717, to recover attorney fees incurred in
litigating those causes of action,” italics added]; id. at p. 619 [because
section 1717 does not apply to tort claims, “it does not bar recovery of
attorney fees that were incurred in litigation of those claims and that
are otherwise recoverable as a matter of contract law”].) Because the
language in contractual fees provisions will vary from contract to
contract, it scarcely seems possible to establish a blanket rule

                                     13
regarding the availability of fees for nonsignatories. We must therefore
examine the language of the lease here to determine whether the fees
provision covers Petrou’s and Utter’s tort claims. (Sessions Payroll
Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671,
680 [examining fees provision to determine if it covered third party
beneficiaries] (Sessions).)
      The parties have not pointed to any extrinsic evidence on the
question, so our analysis focuses solely on with the language of the
lease, which we interpret as a question of law. (Khan v. Shim, supra,
7 Cal.App.5th at p. 55.) Because Petrou and Utter seek the benefits of
the lease even though they did not sign it, we begin with the law
concerning third party beneficiaries. 2 A nonsignatory is entitled to
bring an action to enforce a contract as a third party beneficiary if the
nonsignatory establishes that it was likely to benefit from the contract,
that a motivating purpose of the contracting parties was to provide a
benefit to the third party, and that permitting the third party to
enforce the contract against a contracting party is consistent with the
objectives of the contract and the reasonable expectations of the

      2 Hom contends Petrou and Utter do not claim to be third party
beneficiaries, but we disagree. They argue they are entitled to the
benefits of the fees provision whether they are considered parties or
beneficiaries. Hom further argues that Petrou and Utter did not raise
a third party beneficiary theory below. While they did not use the
specific phrase, the substance of their argument was that they were
entitled to the benefit of the lease because of their status as lenders. To
the extent that the third party beneficiary theory is a new argument on
appeal, we exercise our discretion to entertain it as an issue of law.
(Sweat, supra, 37 Cal.App.4th at p. 610, fn. 6 [“it is within the power of
this court to grant relief based on pure issues of law, even though the
same are raised for the first time on appeal”].)

                                    14
contracting parties. (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817,
821.)
        There can be little doubt that Petrou and Utter qualify as third
party beneficiaries of the lease as a whole. They were lenders to Pure
Entertainment with encumbrances on its leasehold, and two of the
lease’s nine pages specify the rights such lenders would have with
respect to the lease. Those rights include the right to receive copies of
notices due to Pure Entertainment; prevent the parties to the lease
from modifying the lease without the lenders’ consent; do anything
required of Pure Entertainment under the lease; foreclose on the
leasehold; cure any breach of the lease by Pure Entertainment; and
enter into a new lease at the lenders’ option following any default by
Pure Entertainment. Given the detail with which the lease specified
the lenders’ rights, one of the contracting parties’ motivating purposes
was evidently to allow Pure Entertainment to use its leasehold as
collateral for loans from future lenders such as Petrou and Utter, and
to permit Petrou and Utter to protect the value of their encumbrance
on the leasehold. Permitting Petrou and Utter to obtain benefits under
the lease is therefore consistent with the parties’ expectations.
        Turning to the language of the fees provision, we further conclude
that one of the benefits to which the lenders were entitled under the
lease was the right to collect attorney’s fees in an action arising from
the lease. The attorney’s fees provision in the lease here states in full,
“Should any dispute arise from this Lease or the tenancy hereby
created, and the parties cannot settle it between themselves, then the
prevailing party will be entitled to reimbursement of its reasonable
attorneys’ fees, in addition to any other remedy awarded.” The phrase

                                     15
“any dispute” is broad and is not limited to disputes between the
contracting parties. The lease’s fees provision is broader than the
provision entitling a prevailing party to fees “ ‘[i]n the event of any
action or proceeding brought by either party against the other under
this Lease,’ ” which another court held would allow third party
beneficiaries to collect fees. (Real Property Services Corp. v. City of
Pasadena (1994) 25 Cal.App.4th 375, 377, 383; see Cargill Inc. v Souza
(2011) 201 Cal.App.4th 962, 965, 969–970 [contract allowed third party
to collect attorney’s fees where the fees provision applied “[i]n the event
that any party hereto obtains a judgment in its favor in connection with
the enforcement or interpretation of this Agreement”].) It is at least as
broad as the provision, “ ‘If a court action is brought, prevailing party to
be awarded attorneys fees and collection costs,’ ” which Loduca v.
Polyzos (2007) 153 Cal.App.4th 334, 343, held allowed a third party
beneficiary to collect his fees.
      The “any dispute” phrase is also more expansive than other
phrases that courts have held extend only to contracting parties, such
as “ ‘[i]n the event it becomes necessary for either party to enforce the
provisions of this Agreement’ ” (Sessions, supra, 84 Cal.App.4th at
p. 681) or in “ ‘any litigation between the parties hereto to enforce any
provision of this Agreement’ ” (Blickman Turkus, LP v. MF Downtown
Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 896, italics removed). For
the same reason, it is distinguishable from the fees provision at issue in
in the lease in Topanga, which specifically named the landlord and
tenant as the parties entitled to collect attorney’s fees. (Topanga,
supra, 103 Cal.App.4th at pp. 778–779.) In comparison with these

                                     16
decisions, the fees provision’s expansive language is broad enough to
encompass claims by third party beneficiaries like Petrou and Utter. 3
      The parties spar over the proper interpretation of the fees
provision’s clause allowing fees for any dispute if “the parties cannot
settle it between themselves.” Hom maintains that this reference to
“parties” indicates that the provision was intended to apply solely to
the contracting parties. Petrou and Utter counter that the clause
relates to the “any dispute” phrase, since the “it” in the clause refers
back to “dispute.” Petrou’s and Utter’s interpretation is more
reasonable, but it is not so conclusive as to foreclose Hom’s contrary
interpretation, so we conclude that the reference to “parties” in the fees
provision is ambiguous. (Solis v. Kirkwood Resort Co. (2001) 94
Cal.App.4th 354, 360 [“An ambiguity exists when a party can identify
an alternative, semantically reasonable, candidate of meaning of a
writing”].) To resolve the ambiguity, we interpret the phrase using the
ordinary rules of contractual interpretation. (Santisas, supra,
17 Cal.4th at p. 608.)
      Hom notes that the lease elsewhere uses “party” or “parties” to
refer to the landlord and Pure Entertainment, and he cites the rule
that a word used multiple times in a contract is generally given the
same meaning, unless the contract indicates otherwise. (E.M.M.I. Inc.
v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 475.) We conclude

      3 Hom distinguishes these decisions construing fees provisions
because they involved reciprocity analysis under section 1717. Section
1717 and its reciprocity analysis are not applicable here, but these
decisions’ interpretations of various fees provisions as part of that
analysis are nonetheless relevant to our task of interpreting the lease’s
fees provision.

                                    17
the lease here does indicate otherwise. “Landlord” and “Tenant” are
both specifically defined terms in the lease, while “parties” is not. This
shows the term was intended to be context-dependent, rather than
have a fixed and unchanging meaning. A comparison of the various
uses of “parties” in the lease confirms this and demonstrates why the
term in the fees provision is more reasonably read to include lenders.
      In one paragraph, the lease defines the acts that will constitute a
default and breach of the lease to include the making “by either party”
of a general assignment for the benefit of creditors, the filing “by either
party” of a petition for bankruptcy or reorganization, or the assignment
of a receiver to take possession of substantially all of the assets of
“either party.” The use of “either” denotes one of two things and refers
to the original parties to the lease. Reading “party” in this clause to
include lenders would also be unreasonable because it would make the
tenant’s default under the Lease contingent on actions by its lenders,
who are beyond the tenant’s control.
      In another paragraph, the lease states that the “parties” agreed
the tenant would prepay a fixed amount for the last month’s rent due
under the lease. Similarly, earlier in same paragraph containing the
attorney’s fees provision, the lease contains an integration clause
stating that the lease “encompasses the entire understanding of the
parties with respect to the subject matter covered herein.” Because
there were no Lenders with rights under the Lease when the Lease was
first executed and the tenant had to prepay the last month’s rent,
“parties” in these two instances naturally refers only to the Landlord
and Tenant.

                                     18
      The fees provision is different. As described above, the lease
confers extensive rights on lenders. Because the lease goes into such
detail regarding lenders’ rights, it was reasonably foreseeable that
disputes involving lenders would arise over those rights. It is natural,
then, to conclude that the landlord and tenant intended to give lenders
the same rights to attorney’s fees as the direct parties to the contract.
The lease is substantially different in this regard from the agreement
at issue in Super 7 and Sweat, which those courts held used “parties”
consistently to refer only to signatories to the contract. (Super 7, supra,
16 Cal.App.4th at p. 546, fn. 3; Sweat, supra, 37 Cal.App.4th at
pp. 615–616 [fees provision was essentially identical to that in Super
7].) The real estate purchase agreements in Super 7 had only a single,
inconsequential reference to the broker trying to collect fees under
them, while the lease here describes Petrou’s and Utter’s rights as
lenders in detail. (Super 7, at p. 546, fn. 3; Sweat, at pp. 615–616.) The
Super 7 and Sweat agreements also allowed the buyer and seller to
modify the agreement without the broker’s consent, whereas here the
lease could not be modified without a lender’s consent after a lender
obtained an encumbrance over Pure Entertainment’s leasehold and the
landlord received notice of it. (Super 7, at p. 546, fn. 3; Sweat, at
pp. 615–616.) The substantial rights the lease accords to lenders like
Petrou and Utter, as well as the language in the fees provision that ties
the word “parties” to “any dispute” in which attorney’s fees might be
incurred, indicates that “parties” in the fees provision here, unlike the
fees provision in Super 7 and Sweat, was intended to have a different
meaning from the rest of the lease and encompass third party
beneficiaries.

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       In sum, we conclude Petrou and Utter are entitled to collect their
attorney’s fees related to Hom’s non-contract claims as third party
beneficiaries to the lease and its broad attorney’s fees provision.
Because Hom does not seek apportionment of the fees award, this
means Petrou and Utter are also entitled to their fees related to Hom’s
declaratory relief claim.

                                 DISPOSITION
       The trial court’s order is affirmed. Petrou and Utter are entitled
to their attorney’s fees and costs on appeal. “ ‘ “Although this court has
the power to fix attorney fees on appeal, the better practice is to have
the trial court determine such fees.” ’ ” (SASCO v. Rosendin Electric,
Inc. (2012) 207 Cal.App.4th 837, 849.) We therefore remand for the
trial court to determine the total amount of fees to which Petrou and
Utter are entitled.

                                           BROWN, J.

WE CONCUR:

STREETER, ACTING P. J.
TUCHER, J.
Hom v. Petrou et al. (A161770)

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Trial Court: San Mateo County Superior Court

Trial Judge:     Hon. Harold Khan

Counsel:

Law Office of Jocelyn Sperling, Jocelyn Sperling; Rencher Law Group,
D.L. Rencher for Cross-complainant and Appellant.

Kilpatrick Townsend & Stockton, James A. Smith for Cross-defendants
and Respondents.

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