Court Opinion

ID: 9393984
Source: CourtListenerOpinion
Date Created: 2023-05-11 19:03:07.907667+00
Date Added: 2024-06-11T17:16:20.758307
License: Public Domain

Filed 5/11/23 Ghukassian v. Wolfberg CA4/2
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO

 HOVIK GHUKASSIAN et al.,

          Plaintiffs and Respondents,                                    E078304

 v.                                                                      (Super. Ct. No. CVPS2103176)

 BRENT WOLFBERG et al.,                                                  OPINION

          Defendants and Appellants.

         APPEAL from the Superior Court of Riverside County. Ronald L. Johnson and

Randolph Rogers, Judges. Affirmed.

         Inland Counties Legal Services, Iris I. Vasquez, Maria E. Castillo, Sang Banh,

Darrell K. Moore and Anthony D. Lewis, for Defendants and Appellants.

         Knauss Law Group and Joanne M. Knauss, for Plaintiffs and Respondents.

                                                             I.

                                                 INTRODUCTION

         In July 2021, respondents Hovik and Mariet Ghukassian sued their tenants,

appellants Brent Wolfberg and Barry E. Taff, for allegedly not paying almost $30,000 in

rent and other costs during the COVID-19 pandemic. Appellants demurred on the ground

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that the lawsuit was prematurely filed under renter protection laws enacted during the

pandemic, which did not allow the lawsuit to be filed until November 2021. In October

2021, the trial court agreed, sustained appellants’ demurrer, and dismissed the case

without prejudice to refiling the complaint a few weeks later. Appellants then sought

attorney’s fees and costs under their rental agreement’s fee-shifting provision on the

ground that they were the prevailing party in the action. The trial court denied their

request. Because the trial court correctly found that appellants were not prevailing parties

and thus not entitled to attorney’s fees, we affirm.

                                             II.
                                                                          1
                  FACTUAL AND PROCEDURAL BACKGROUND

       The Ghukassians sued appellants for breach of contract in July 2021. The

Ghukassians alleged that appellants leased a property from them for $2,700 per month in

October 2019, but stopped paying rent in October 2020. In February 2021, the

Ghukassians filed a successful unlawful detainer action against appellants, which resulted

in the possession of the rental property being restored to them.

       The Ghukassians then filed this action for breach of contract in July 2021. The

Ghukassians alleged appellants violated the terms of their lease by failing to pay

$29,522.84 in rent, utility bills, and attorney’s fees associated with the unlawful detainer

       1
         We assume the truth of the allegations in the Ghukassians’ operative complaint.
(See Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.)

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action. The Ghukassians thus sought, among other relief, $29,522.84 in damages from

appellants for unpaid rent between October 2020 and June 2021.

       Appellants demurred to the complaint, arguing that Code of Civil Procedure
                                2
section 871.10, subdivision (c) prevented the Ghukassians from suing for rent not paid

during the COVID-19 pandemic until November 1, 2021. On October 8, 2021, the trial

court agreed and found that the Ghukassians’ complaint was “premature.” The trial court

therefore sustained appellants’ demurrer and dismissed the case “without prejudice to re-

filing on or after November 1, 2021.”

       About a month later, appellants moved for attorney’s fees under Code of Civil

Procedure section 1717 (section 1717) and their rental agreement, which states that “[i]n

any action or proceeding arising out of this Agreement, the prevailing party . . . shall be

entitled to reasonable attorney fee and costs . . . .” The trial court denied the motion

because appellants “did not incur attorney’s fees or costs to enforce the contract nor did

[they] prevail on the contract.” Appellants timely appealed.

       2
          This provision provides in full: “An action to recover COVID-19 rental debt, as
defined in [Code of Civil Procedure] Section 1179.02, that is subject to this section shall
not be commenced before November 1, 2021.” Code of Civil Procedure section 1179.02
in turn defines “COVID-19 rental debt” as “unpaid rent or any other unpaid financial
obligation of a tenant under the tenancy that came due” between March 1, 2020 and
September 30, 2021.

                                              3
                                              III.

                                        DISCUSSION

       Appellants contend the trial court erred because they are entitled to attorney’s fees

as the prevailing party. We disagree. Because we conclude the trial court properly found

appellants were not the prevailing party and thus properly denied appellants’ attorney fee

request on that basis, we need not address the court’s alternative finding that appellants

did not incur any recoverable attorney’s fees.

       We first note appellants argue the trial court’s ruling is subject to our “independent

review” while the Ghukassians take no position on the appropriate standard of review.

“Generally, a trial court’s determination that a litigant is a prevailing party, along with its

award of fees and costs, is reviewed for abuse of discretion.” (Goodman v. Lozano

(2010) 47 Cal.4th 1327, 1332.) But when the determination of which party is the

prevailing party is an issue of law based on undisputed facts, our review is de novo.

(Khan v. Shim (2016) 7 Cal.App.5th 49, 55; Burkhalter Kessler Clement & George LLP

v. Hamilton (2018) 19 Cal.App.5th 38, 43-44.) We need not resolve the issue because the

trial court properly found appellants were not the prevailing party under section 1717

under any standard of review.

       “[S]ection 1717, subdivision (b)(1), a prevailing party is defined as ‘the party who

recovered a greater relief in the action on the contract.’” (City of West Hollywood v.

Kihagi (2017) 16 Cal.App.5th 739, 753 (Kihagi).) To be a prevailing party, the party

generally must prevail on the merits of the dispute, even though a purely procedural

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victory can make a party the prevailing party under section 1717. (See DisputeSuite, LLC

v. Scoreinc.com (2017) 2 Cal.5th 968, 969.) But the statute still requires a dispositive

victory, not just an interim one where further proceedings on the merits are contemplated.

(Kihagi, supra, at p. 753.)

       To support their argument that they were the prevailing party, appellants rely

entirely on Hsu v. Abarra (1995) 9 Cal.4th 863, but that case does not apply here. There,

the defendant prevailed on the plaintiffs’ breach of contract action by proving there was

no contract between the parties. (Id. at p. 865.) This “simple, unqualified decision” on

the merits in the defendant’s favor “on the only contract claim in the action” rendered the

defendant “unquestionably the sole victor” on the merits and thus the prevailing party

under section 1717. (Id. at pp. 865-866.)

       That is not the case here. Appellants did not prevail on the merits of the

Ghukassians’ contract claim or procure a dispositive procedural victory that ended the

case for good. They instead obtained only an interim dismissal of the Ghukassians’

contract claim without prejudice to the refiling of the claim. The dismissal may have

delayed the final resolution of the claim, but that is not enough to be a prevailing party

under section 1717. (See Kihagi, supra, 16 Cal.App.5th at p. 754 [“[A] defendant might

prevail within the meaning of . . . section 1717 by winning a purely procedural dismissal.

If refiling would be legally barred . . . or would be otherwise impossible or impracticable,

the defendant might be deemed the prevailing party without obtaining a resolution on the

merits.”].)

                                              5
       Estate of Drummond (2007) 149 Cal.App.4th 46, is illustrative here. In that case,

appellants hired an attorney to assist them in a probate matter. (Id. at p. 48.) After the

case settled, the appellants objected to the fee that the attorney charged, and claimed he

had “duped them into hiring him on a contingency basis.” (Ibid.) The attorney, on the

other hand, argued the appellants owed him more money, and petitioned the probate court

for an order adjudicating their fee dispute. (Id. at p. 49.) Before he filed that motion, the

clients filed a separate civil action against him for various claims, including fraud and

breach of faith. (Ibid.) The probate court eventually dismissed the attorney’s petition

because it had to be filed as a compulsory cross-complaint against the appellants in their

civil action. (Ibid.; see Code Civ. Proc., § 426.30, subd. (a).) The probate court then

denied the appellants’ motion for attorney’s fees. (Estate of Drummond, supra, at p. 49.)

       The Court of Appeal held the appellants were not prevailing parties and thus were

not entitled to attorney’s fees. (Estate of Drummond, supra, 149 Cal.App.4th at p. 49.)

The court reasoned that the appellants had “obtained only an interim victory” based only

on the attorney’s “pursu[ing] his claims in the wrong forum.” (Id. at p. 51.) Litigation on

the attorney’s fee petition “ended solely because it should have been brought” elsewhere,

and “[n]othing prohibited [him] from taking up his claims” in another forum. (Id. at p.

53.) The probate court’s dismissal of his fee petition thus “did not defeat his contract

claims,” but “merely deflected or forestalled them.” (Ibid.) As a result, the appellants

had not prevailed on the merits of the parties’ fee dispute. (Ibid.)

                                              6
       In dismissing the Ghukassians’ sole contract claim without prejudice only because

it was “premature,” the trial court expressly stated that the Ghukassians could refile it

about three weeks later. As in Estate of Drummond, the dismissal was not dispositive

and did not resolve the merits of the Ghukassians’ contract claim, “but instead merely

deflected or forestalled” it. (Kihagi, supra, 16 Cal.App.5th at p. 754.) Because the victor

on the merits of the Ghukassians’ contract action “is yet to be determined,” the trial court

properly found that appellants are not the prevailing party under section 1717. (Presley

of Southern California v. Whelan (1983) 146 Cal.App.3d 959, 961.) For that reason

alone, the trial court properly denied their motion for attorney’s fees.

                                             IV.

                                       DISPOSITION

       The trial court’s order denying appellants’ motion for attorney’s fees is affirmed.

The Ghukassians may recover their costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS

                                                                 CODRINGTON
                                                                                             J.

We concur:

MILLER
                Acting P. J.

SLOUGH
                           J.

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