Court Opinion

ID: 9407356
Source: CourtListenerOpinion
Date Created: 2023-07-06 17:05:40.465779+00
Date Added: 2024-06-11T17:19:48.350386
License: Public Domain

Filed 7/6/23 Rubin v. Cho CA1/5

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                    DIVISION FIVE

 TAMRA RUBIN,
            Plaintiff and Respondent,                             A165667
 v.
 GODWIN CHO,                                                      (Alameda County Super. Ct. No.
            Defendant and Appellant.                              RG20055176)

      Civil Code section 1717,1 enacted to ensure the mutuality of
contractual attorney fees provisions, bars fee awards when the
plaintiff voluntarily dismisses an action on a contract. (§ 1717,
subds. (a), (b)(2); see Santisas v. Goodin (1998) 17 Cal.4th 599,
602 (Santisas).) Appellant Godwin Cho contends this bar does
not apply to his litigation with respondent Tamra Rubin because,
he maintains, although she voluntarily dismissed her complaint,
the action was not on a contract for purposes of section 1717.
Settled law has laid that argument to rest; we reject Cho’s
attempt to exhume it.

                                    BACKGROUND
     Rubin bought a house from Cho. According to her
complaint, captioned “Complaint for Breach of Contract,” the
purchase contract required Cho to disclose all known material

        1   Undesignated statutory references are to the Civil Code.
                                                1
facts and defects affecting the property and make any and all
other disclosures required by law. The complaint further alleged
Cho represented that a driveway was part of the property and
included in the sale, but it was actually on an adjoining owner’s
land. Rubin alleged Cho’s misrepresentation constituted a
breach of their contract.2 She dismissed the case before trial.

       Cho moved for attorney fees pursuant to a contractual
provision entitling the prevailing party in any action arising out
of the contract to reasonable fees and costs. In opposition, Rubin
argued section 1717 precluded a fee award because she
voluntarily dismissed the complaint. The trial court agreed with
her and denied the motion.

                         DISCUSSION
      Cho contends the statutory preclusion of attorney fees after
a voluntary dismissal is inapplicable because Rubin’s complaint

      2 Because they are critical to Cho’s contentions, we set out
the relevant allegations here: “6. Plaintiff Rubin and defendant
Cho entered into a California Residential Purchase Agreement
and Joint Escrow Instructions (‘Contract’) whereby defendant
Cho agreed to sell certain real property commonly known as 120
Robles Road, CA, [sic] Oakland, CA (‘Property’) to Rubin. [¶] 7.
Escrow closed and the Property transferred from defendant Cho
to Rubin on or about December 15, 2015. [¶]. . . [¶] 10. Paragraph
11A of the Contract provides that defendant Cho was required to
disclose all know[n] material facts and defects affecting the
Property. [¶] 11. Defendant Cho represented that a driveway to
the house from the private road located on the Property was part
of the Property, and that it would be conveyed to Rubin as part of
the sale of the Property. [¶] 12. On information and belief, Rubin
alleges that the driveway is actually on the adjoining owner’s
land and was not part of the Property sold to plaintiff. [¶] 13.
Defendants’ representation constitutes a breach of the Contract.
[¶] 14. As a result of defendants’ breach of contract, plaintiff
Rubin has been damage[d] in excess of $25,000 [in] an amount to
be proven at the time of trial.”
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sounded in tort, not contract, and therefore was not subject to
section 1717. Rather, he variably asserts the one-count
complaint alleged negligent misrepresentation, not a failure to
disclose known facts in breach of contract, because it failed to
allege he knew about the driveway problem; was “in essence” a
complaint for fraud in the inducement; and alleged only a breach
of a general legal duty that existed independently of the contract.
These claims, which we review de novo (Mitchell Land &
Improvement Co. v. Ristorante Ferrantelli, Inc. (2007) 158
Cal.App.4th 479, 484 (Mitchell)), are unsupported by the record
or law.

                                A.
      Section 1717, subdivision (a) provides that “[i]n any action
on a contract, where the contract specifically provides that
attorney’s fees and costs, which are incurred to enforce that
contract, shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the
party prevailing on the contract . . . shall be entitled to
reasonable attorney’s fees in addition to other costs.” (Italics
added.)

      Section 1717, subdivision (b)(2) carves out an exception to
the availability of contractual attorney fees where the plaintiff
dismisses the action. It provides: “[w]here an action has been
voluntarily dismissed . . . there shall be no prevailing party for
purposes of this section.” If and to the extent the action was “on
a contract” within the meaning of section 1717, defendants are
thus barred from recovering fees even though they prevailed in
the ordinary sense of the word and “the contract on its own terms
authorizes recovery of those fees.” (Santisas, supra, 17 Cal.4th at
pp. 609, 617.)

      Whether and to what extent Cho may recover contractual
fees after Rubin dismissed the complaint thus turns on whether
her action was in whole or in part “on a contract” and therefore
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subject to section 1717. The rule is well-settled: in this context
we construe the term “on a contract” liberally to apply to any
cause of action that “ ‘involves’ an agreement, in the sense that
[it] arises out of, is based upon, or relates to an agreement by
seeking to define or interpret its terms or to determine or enforce
a party’s rights or duties under the agreement.” (Douglas E.
Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th
230, 241-242; see Hjelm v. Prometheus Real Estate Group, Inc.
(2016) 3 Cal.App.5th 1155, 1168, 1170; Mitchell, supra, 158
Cal.App.4th at p. 486.)

       While an action is more likely to be found “on a contract”
for purposes of section 1717 if the scope of the fee clause is broad
or the litigation’s main thrust is based on the contract (Orozco v.
WPV San Jose, LLC (2019) 36 Cal.App.5th 375, 409), the
dispositive question is whether the factual allegations are
sufficient to put a contract theory in issue. (Perry v. Robertson
(1988) 201 Cal.App.3d 333, 337-338 (Perry).) If the nature of the
action is unclear, we consider it to be based on contract rather
than tort. (Kangarlou v. Progressive Title Co., Inc. (2005) 128
Cal.App.4th 1174, 1178-1179.)

                                 B.

      This action terminated at the pleading stage, so we look to
the pleadings to determine whether it was on a contract or, as
Cho claims, sounded in tort. (See Boyd v. Oscar Fisher Co. (1989)
210 Cal.App.3d 368, 377.) We have no difficulty concluding it
was on a contract.

       First, the attorney fee provision in the parties’ contract is
broad in scope: “In any action, proceeding, or arbitration between
Buyer and Seller arising out of this Agreement, the prevailing
Buyer or Seller shall be entitled to reasonable attorney fees and
costs from the non-prevailing Buyer or Seller.” (See Lerner v.
Ward (1993) 13 Cal.App.4th 155, 160 [interpreting similar
attorney fee clause].)
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      Second, and more fundamentally, the complaint plainly
alleges breach of contract. Its sole cause of action, captioned (like
the complaint) “Breach of Contract,” alleges (1) the parties
executed the purchase agreement; (2) Cho breached its disclosure
provision by misrepresenting to Rubin that the driveway was
included in the sale, when in fact it was not; and (3) Rubin
suffered resulting damages. No more was required to make out a
cause of action for breach of contract. (Careau & Co. v. Security
Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388
[elements of breach are the contract, the plaintiff’s performance
or excuse for nonperformance, the defendant’s breach, and
resulting damages].

       Cho nonetheless contends the complaint failed to make out
a breach of his contractual obligation to disclose known defects
because it failed to allege he knew about the driveway problem.
In his view, then, Rubin’s allegations amount at most to a claim
for negligent misrepresentation, “although she does not call it
that.” He is mistaken. It is “ ‘cornerstone jurisprudential
polic[y]’ ” that we must liberally construe a complaint, drawing
all reasonable inferences from its direct allegations. (Rickley v.
Goodfriend (2013) 212 Cal.App.4th 1136, 1141-1142.) We may
readily infer from the straightforward allegations here that Cho
knew the driveway was not part of the property. His related
suggestion that the complaint alleged only an affirmative
misrepresentation rather than a failure to disclose cuts too fine a
line between misrepresentation and nondisclosure, a species of
misrepresentation. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 974.) Cho necessarily failed to disclose
that the driveway was not part of the property when he allegedly
misrepresented that it was.

       Perry, supra, 201 Cal.App.3d 333, is instructive. There, the
complaint’s sole cause of action put in issue both contract and
tort theories. The plaintiff prevailed at trial and manifested an

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election to treat it as a contract action by seeking attorney fees.
(Id. at p. 335.) The court affirmed the fee award. (Ibid.) It
explained: “A single cause of action or claim, framed in ultimate
facts, may sound . . . variously in, e.g., tort or contract.
[Citation.] [¶] Of significance here, ‘[the] same act may be both a
breach of contract and a tort. . . . [W]here a contract gives rise to
a duty of care, negligence in the performance of the duty may
give rise to a cause of action for breach of contract. [Citation.]
When such a hybrid cause of action arises, the plaintiff may
pursue both legal theories of recovery until an occasion for an
election of remedies arises.” (Id. at p. 340.)

      Cho attempts to distinguish Perry as applying only where,
as there, the complaint alleges a “hybrid” claim of negligent
performance of a contractual duty. The attempt fails. First, as in
Perry, Rubin’s factual allegations support an inference that the
nondisclosure constituting the alleged breach was negligent.3
Second, while Perry involved the negligent performance of a
contractual obligation, the court’s analysis was premised on the
broader principle that the same factual allegations may support
multiple legal theories “variously in, e.g., tort or contract” (Perry,
supra, 201 Cal.App.3d at p. 340), between which the plaintiff
need not elect before choosing a remedy. (Id. at pp. 339-342.)

      Cho insists in his reply brief that, rather than alleging (as
in Perry) the negligent performance of a disclosure clause, Rubin
“entirely disavow[ed]” the contract itself. No such disavowal is
found in the complaint.

      His further contention that the complaint was for fraud in
the inducement is equally meritless. Fraud in the inducement
occurs when the promisor knows what she is signing, but her

      3The alternative, that it was intentional, does not change
the analysis. The complaint alleged breach either way; the exact
means of the breach is not determinative. (Perry, supra, 201
Cal.App.3d at p. 341.)
                                  6
consent is induced by fraud. (Julius Castle Restaurant Inc. v.
Payne (2013) 216 Cal.App.4th 1423, 1440.) The complaint alleged
no such thing.

      In any event, even assuming the complaint made out a
misrepresentation theory—an uncertain proposition (see Foster v.
Sexton (2021) 61 Cal.App.5th 998, 1028 [complaint for fraud or
negligent misrepresentation must set forth how, when, where, to
whom, and by what means the representations were made])—or
breach of a common law duty of disclosure (see Assilzadeh v.
California Federal Bank (2000) 82 Cal.App.4th 399, 410), it also
put a contract theory in issue. (See Orozco v. WPV San Jose,
LLC, supra, 36 Cal.App.5th at p. 409; Perry, supra, 201
Cal.App.3d at p. 338.) That Cho may also have been subject to
other, noncontractual legal disclosure obligations does not, as he
maintains, insulate him from potential contractual liability for
breaching the purchase agreement.

       Cho’s reliance on Vera v. REL-BC, LLC (2021) 66
Cal.App.5th 57 is misplaced. There, a property buyer sued the
seller for fraud and breach of contract, among other things.
Applying law specific to limitations periods, the court held both
claims were subject to the shorter window for fraud actions
because the gravamen of the complaint was fraud. (Id. at pp. 65-
66.)

       Cho argues Vera is dispositive here. It is not. First, there
is no basis to find the gravamen of Rubin’s complaint is fraud or
any other tort. Second, Perry strictly limited cases addressing
the statutes of limitations for “hybrid” actions sounding in both
tort and contract to their specific legal context, rejecting their
application for purposes of section 1717. (Perry, supra, 201
Cal.App.3d at pp. 342-343.) This distinction is well grounded in
policy. Statutes of limitations are intended to protect defendants
from stale claims and encourage plaintiffs to diligently pursue
claims while they are fresh. (Norgart v. Upjohn Co. (1999) 21

                                 7
Cal.4th 383, 395; Pointe San Diego Residential Community, L.P.
v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195
Cal.App.4th 265, 277.) In contrast, section 1717, subdivision
(b)(2) was enacted to discourage plaintiffs from maintaining
pointless or moot litigation. (International Industries, Inc. v.
Olen (1978) 21 Cal.3d. 218, 224; Santisas, supra, 17 Cal.4th at p.
616 [noting § 1717, subd. (b) codified Olen].) Importing precedent
from the statute of limitations context could needlessly
undermine that policy.

                         DISPOSITION
      The order is affirmed. Costs are awarded to respondent.
(Cal. Rules of Court, rule 8.278(a).)

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                                   ______________________
                                   BURNS, J.

We concur:

____________________________
SIMONS, ACTING P.J.

____________________________
CHOU, J.

A165667

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