Court Opinion

ID: 4016311
Source: CourtListenerOpinion
Date Created: 2016-07-16 00:02:31.372823+00
Date Added: 2024-06-11T13:04:11.635469
License: Public Domain

Filed 7/15/16 Stadium Promenade, LLC v. Auld Irisher, Orange, LLC CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

STADIUM PROMENADE, LLC,

     Plaintiff and Appellant,                                          G051513

         v.                                                            (Super. Ct. No. 30-2011-00516853)

AULD IRISHER, ORANGE, LLC, et al.,                                     OPINION

     Defendants and Respondents.

                   Appeal from an order of the Superior Court of Orange County, Jamoa A.
Moberly, Judge. Affirmed in part and reversed in part with directions.
                   Miller Starr Regalia, Basil S. Shiber and Sara Star for Plaintiff and
Appellant.
                   Alan S. Yockelson for Defendant and Respondent Auld Irisher, Orange,
LLC.
                   No appearance by Defendant and Respondent Terrence Branley.
                                     INTRODUCTION
              Landlord Stadium Promenade, LLC (Stadium), sued tenant Auld Irisher,
Orange, LLC (Auld Irisher), for unpaid rent of a lease of restaurant premises. Stadium
also sued the lease’s two guarantors, Terrence Branley and Eric Johnson, to collect the
rent. Auld Irisher, in turn, cross-complained for breach of the lease and nuisance, based
in part on allegation of a pervasive smell of sewage that drove customers away. Johnson
settled with Stadium, and the case went to trial on the complaint against Auld Irisher and
Branley and the cross-complaint against Stadium.
              The jury returned a verdict in Stadium’s favor on all the contract-based
claims, including those in the cross-complaint. It found in Auld Irisher’s favor on the tort
claim for nuisance. After some adjustments for set-offs and discounts, Auld Irisher came
out ahead by about $13,000.
              The lease contained an attorney fee provision, and both sides moved for
their fees. The trial court denied Stadium’s motion and granted Auld Irisher’s motion for
the fees expended in connection with the nuisance claim. Stadium has appealed from this
order.
              We affirm in part and reverse in part. Stadium was unquestionably the
“party prevailing on the contract” with respect to the contract-based claims. The jury
found in its favor on all the contract claims, even those in the cross-complaint. Auld
Irisher, however, prevailed on its tort claim, and, as the trial court found, the lease’s fee
provision was broad enough to cover this claim. Because the “net monetary recovery”
favored Auld Irisher, it was the prevailing party under Code of Civil Procedure section
1032 and therefore entitled to its “costs,” which include attorney fees provided by
contract. Under this peculiar constellation of circumstances, both sides are entitled to
their reasonable fees.

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                                                    FACTS
                 Auld Irisher leased space in appellant’s Stadium Promenade Shopping
Center for an Irish-themed restaurant and pub; the term of the lease began in January
2008. Branley and Johnson guaranteed the lease on Auld Irisher’s behalf. Auld Irisher
did not pay its rent starting in November 2010, and Stadium sued the lessee and the
guarantors for breach of the lease, breach of the guaranty, and unlawful detainer. The
parties entered into a stipulation regarding possession of the premises, and Stadium filed
a first amended complaint pursuant to the stipulation. The cause of action for unlawful
detainer was dropped, and the complaint alleged only breach of the lease, breach of the
guaranty, and declaratory relief.
                 Auld Irisher filed a cross-complaint alleging breach of the lease, breach of
                                          1
the covenant of quiet enjoyment, various kinds of fraud, and nuisance. Among the
allegations of Stadium’s wrongdoing was one regarding a problem with the plumbing that
allowed offensive odors to permeate the pub. The causes of action for breach of the
lease, breach of the covenant of quiet enjoyment, and nuisance included this allegation.
                 The case was tried to a jury in October 2013. By that time, Johnson had
settled with Stadium, paying $63,000, and had been dismissed. The case therefore
proceeded against Auld Irisher and Branley on Stadium’s complaint and against Stadium
on Auld Irisher’s cross-complaint. On Stadium’s complaint, the jury found in favor of
Stadium on both the breach of lease and breach of guaranty causes of action. It awarded
damages for past and future rent against both Auld Irisher and Branley in the total
amount of $238,856. On Auld Irisher’s cross-complaint, the jury found in Stadium’s

        1
                  The covenant of quiet enjoyment in the lease provided: “Upon timely payment by Tenant of the
Rent, and upon the observance and performance of all of the covenants, terms, and conditions on Tenant’s part to be
observed and performed hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term
without unreasonable hindrance or interruption by Landlord or any other person or persons lawfully or equitably
claiming by, through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease.”

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favor on all causes of action except nuisance. It awarded $184,350 in damages for
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nuisance.
                  Although Auld Irisher’s cross-complaint identified several instances of
nuisance, by the time of trial only the sewage odor was still at issue. The parties’ trial
briefs and the jury instructions are included in the record. From these we infer that the
sewage smell underlay all the causes of action in Auld Irisher’s cross-complaint.
Stadium apparently did not dispute the existence of the smell, but contended that Auld
Irisher had failed to follow the procedure set out in the lease for tenant complaints,
specifically written notice of the problem. Several jury instructions dealt with whether
Auld Irisher properly notified Stadium regarding the need for repairs.
                  After post-trial briefing, the court entered judgment in April 2014, in Auld
Irisher’s favor, calculated as follows: from the $238,856 award to Stadium, the court
subtracted $184,350 awarded to Auld Irisher, $63,000 paid to Stadium by Johnson in
settlement, and $5,109, representing the present value discount on the award of future
rent. As a result of the subtractions, Auld Irisher came out ahead by $13,603. Notice of
entry of judgment was served on April 18.
                  The lease included an attorney fee clause, and both sides made posttrial
motions for fees and costs. The lease’s fee clause provided, “In the event that either
Landlord or Tenant shall institute any action or proceeding against the other relating to
the provisions of this Lease, or any default thereunder, or engage an attorney to enforce
such provision then, and in that event, the unsuccessful party in such action or proceeding
agrees to reimburse the successful party for the actual expenses of attorneys’ fees and
disbursements incurred therein by the successful party. The successful party in such suit
shall be entitled to its costs of suit and actual attorneys’ fees whether or not such action is

         2
                  Apparently there was a problem with the jury’s verdict regarding Stadium as it was initially
rendered, and the jurors were sent back to resolve the problem. As a result, there are two verdicts on Stadium’s
complaint.

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prosecuted to judgment. ‘Successful party’ within the meaning of [this section] shall
include, without limitation, a party who brings an action against the other or who defends
against an action brought by the other and whose position is substantially upheld.”
                  The trial court granted Auld Irisher’s motion for the part of the fees
expended on the nuisance claim and denied Stadium’s outright. The court found that the
fee provision was broad enough to cover both tort and contract claims. It awarded Auld
Irisher fees and costs in the amount of $352,922. Stadium has appealed from this order.
                                                 DISCUSSION
I.                Civil Code section 1717, subdivision (a)
                  Several statutes are at issue here. One is Civil Code section 1717,
subdivision (a), which provides in pertinent part: “In 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, whether he or she
is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees
in addition to other costs.” The California Supreme Court has held that the statute
applies “only to actions that contain at least one contract claim.” (Santisas v. Goodin
                                                     3
(1998) 17 Cal. 4th 599, 615 (Santisas).)
                  Stadium was indisputably “the party prevailing on the contract.” It was
“the party who recovered a greater relief in the action on the contract.” (Civ. Code, §
1717, subd. (b)(1).) Stadium obtained awards for breach of the lease for both back and
future rent. These are “actions on a contract.” (See, e.g., Cussler v. Crusader
Entertainment, LLC (2012) 212 Cal. App. 4th 356, 365-366 [basis for cause of action
determines whether suit is “on the contract”]; California Wholesale Material Supply, Inc.

         3
                  Code of Civil Procedure section 22 defines “action” as “an ordinary proceeding in a court of
justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or
prevention of a wrong, or the punishment of a public offense.”

                                                           5
v. Norm Wilson & Sons, Inc. (2002) 96 Cal. App. 4th 598, 605.) Moreover, the jury found
against Auld Irisher on its breach of contract and breach of the covenant claims in the
cross-complaint.
                 “[T]he determination of prevailing party for purpose of contractual attorney
fees [under Civil Code section 1717] was to be made without reference to the success or
failure of noncontract claims.” (Hsu v. Abbara (1995) 9 Cal. 4th 863, 873-874 (Hsu).)
“[T]he party who obtains greater relief on the contract action is the prevailing party
entitled to attorney fees under [Civil Code] section 1717, regardless of whether another
party also obtained . . . greater relief on noncontractual claims.” (Frog Creek Partners,
LLC v. Vance Brown, Inc. (2012) 206 Cal. App. 4th 515, 531 (Frog Creek).) Accordingly,
Stadium was entitled to attorney fees under Civil Code section 1717 for the amounts
expended on the contract claims.
II.              Code of Civil Procedure sections 1021 and 1032
                 But that is not the end of the story. As the court held in Santisas, “Under
[Civil Code] section 1717, the seller defendants are not ‘part[ies] prevailing on the
            4
contract’ . . . . But this conclusion does not affect the seller defendants’ right to recover
as costs the attorney fees they incurred in defense of the tort claims. Because [Civil
Code] section 1717 does not apply to those claims [citations], 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.” (Santisas, supra, 17 Cal.4th at p. 619.) The
court further observed that “the Legislature did not act to expand the scope of [Civil
Code] section 1717 to encompass tort and other noncontract claims arising from contracts
containing broadly worded attorney fee provisions, nor did it enact separate legislation to
address such claims or otherwise articulate public policy as permitting or precluding
attorney fee awards as costs for such claims. Given this legislative inaction, we cannot

        4
                 The seller defendants had been dismissed. Civil Code section 1717, subdivision (a), provides that
when an action has been dismissed, there is no party prevailing on the contract and thus no right to attorney fees.

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assume that the Legislature views such awards as against public policy.” (Id. at p. 621.)
The court concluded that the dismissed defendants were “entitled under the attorney fee
provision of the purchase agreement to recover as costs the amount they incurred in
attorney fees to defend the tort claims . . . .” (Id. at p. 622.)
                   Code of Civil Procedure section 1021 provides, “Except as attorney’s fees
are specifically provided for by statute, the measure and mode of compensation of
attorneys and counselors at law is left to the agreement, express or implied, of the parties;
but parties to actions or proceedings are entitled to their costs, as hereinafter provided.”
The fee provision, which allowed attorney fees for “any action or proceeding against the
other relating to the provisions of this lease,” was broad enough to encompass Auld
Irisher’s tort claim for nuisance. (See, e.g., Allstate Ins. Co. v. Loo (1996) 46
Cal. App. 4th 1794, 1799; Moallem v. Coldwell Banker Com. Group, Inc. (1994) 25
Cal. App. 4th 1827, 1830, 1831 (Moallem).)
                  The lease provided for attorney fees to a party that “institute[ed] an action”
“relating to the provisions of this Lease.” Auld Irisher’s nuisance claim in its cross-
complaint “related to” a lease “provision.” The lease included a covenant of quiet
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enjoyment that provided, in effect, contractual protection against nuisance. Although the
jury found against Auld Irisher on the breach of the covenant claim, we infer from the
trial materials in the record that it probably did so because it credited Stadium’s argument
regarding waiver. That is, the pub smelled bad, but Auld Irisher did not give Stadium
proper notice of the problem. If the jury had not believed the pub smelled bad and the
smell was Stadium’s fault, it would have found against Auld Irisher on the nuisance
claim as well. The jury’s verdict in Stadium’s favor on the breach of the covenant cause
of action does not mean the nuisance claim did not “relate to” a provision of the lease.

         5
                 Civil Code section 3479 includes “an obstruction to the free use of property, so as to interfere with
the comfortable enjoyment of life or property” in the definition of “nuisance.”

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                  The attorney fee provision also required a party to be “successful” in order
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to be entitled to reimbursement for fees, expenses, and disbursements. “‘Successful
party’ . . . shall include, without limitation, a party who brings an action against the other
or who defends against an action brought by the other and whose position is substantially
upheld.” The definition of “successful party” is quite vague. In the first place, the term
merely “includes” the category of parties whose position is substantially upheld;
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“successful party” could therefore be interpreted in other ways. (See People v. Western
Air Lines, Inc. (1954) 42 Cal. 2d 621, 639 [“includes” is word of enlargement, not
limitation]; In re Marriage of Angoco & San Nicolas (1994) 27 Cal. App. 4th 1527, 1534
[same].) Even more indefinite is the inclusion in the provision of the words “without
limitation.” This leaves the field rather wide open.
                  Secondly, the successful party’s position must be “substantially upheld.”
The provision does not require the successful party to be totally victorious. Both sides’
positions could be substantially upheld, as they were in this case. Stadium’s position on
the contract was substantially upheld, and Auld Irisher’s position on the nuisance claim
was substantially upheld.
                  Auld Irisher sued Stadium for contract and tort claims under a lease
containing an attorney fee provision broad enough to encompass both kinds of claims and
with an exceedingly vague definition of “successful party.” It prevailed on a tort claim,
one that “related to” a lease provision. An action is “outside the ambit of [Civil Code]
section 1717 insofar as it asserts tort claims[.]” (Santisas, supra, 17 Cal.4th at p. 615.)
In mixed contract and tort actions, the section “applies only to attorney fees incurred to
litigate the contract claims.” (Ibid.) Fees for the non-contract claims, however, are left to

         6
                  “[T]he unsuccessful party . . . agrees to reimburse the successful party for the actual expenses and
attorneys’ fees and disbursements incurred [in any action or proceeding . . .] by the successful party.”
         7
                  The provision is also ambiguous, depending on the antecedent of “whose.” It could mean that a
party who brings an action against another is automatically entitled to fees, whether or not that party is successful.
We have to interpret contracts so that they make sense. (See Civ. Code, § 1638.)

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the parties’ agreement, per Code of Civil Procedure section 1021. “An agreement to pay
attorney fees to the prevailing party in an action not governed by Civil Code section 1717
or some other statute is controlled by the more general provisions found in the Code of
Civil Procedure.” (Maynard v. BTI Group, Inc. (2013) 216 Cal. App. 4th 984, 993-994.)
                  Code of Civil Procedure section 1032, subdivision (b), provides that a
prevailing party is entitled to costs “as a matter of right,” and Code of Civil Procedure
section 1033.5, subdivision (a) (10)(A) provides: “The following items are allowable as
costs under Section 1032: [¶] . . . [¶] (10) Attorney’s fees, when authorized by any of the
following: [¶] (A) Contract.” Code of Civil Procedure section 1032, subdivision (a)(4)
provides definitions of “prevailing party”; they include “the party with a net monetary
recovery.”
                  Auld Irisher prevailed on its nuisance cause of action, which was covered
by the terms of the lease’s fee provision. It was also the party with the “net monetary
recovery,” after the amount of the settlement with Johnson and Auld Irisher’s nuisance
damages were deducted from the jury’s award to Stadium. Neither party appealed from
                          8
the judgment itself.
                  So which party is entitled to attorney fees? The answer has to be: both of
them. We have found nothing in the legislative history to suggest that the Civil Code
takes precedence over the Code of Civil Procedure or vice versa when the conditions for
applying each attorney fee statute are met. (See, e.g., Santisas, supra, 17 Cal.4th at pp.
613-614, 616-617, 621; Hsu, supra, 9 Cal.4th at pp. 872-874; Frog Creek, supra, 206
Cal.App.4th at pp. 525-531; Goodman v. Lozano (2010) 47 Cal. 4th 1327, 1335, fn. 3.)
Stadium prevailed “on the contract,” and Auld Irisher prevailed under the terms of the fee

         8
                   We do not address Stadium’s argument that the trial court improperly calculated the judgment, by
reducing Stadium’s award below zero. Regardless of whether it was correct or incorrect in so doing, the court made
the calculation in connection with the judgment, not with the fee awards. The opportunity to complain about the
way the judgment was calculated was lost when the time to appeal it expired. A modification to add costs and fees
is not a substantial alteration of the original judgment and does not restart the appellate clock. (Torres v. City of San
Diego (2007) 154 Cal. App. 4th 214, 222.)

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provision and Code of Civil Procedure sections 1021 and 1032. These are two distinct
means of recovering attorney fees, each with its own requirements and conditions. (See
DeSaulles v. Community Hospital of the Monterey Peninsula (2016) 62 Cal. 4th 1140,
1147 [definition of “prevailing party” in Code of Civil Procedure section 1032 not
universally applicable]; Santisas, supra, 17 Cal.4th at pp. 615, 619 [Civil Code section
1717 applies to contract actions; Code of Civil Procedure section 1032 applies to tort
actions]; Moallem, supra, 25 Cal.App.4th at pp. 1832-1833 [reciprocity applies only to
Civil Code section 1717, not Code of Civil Procedure 1021].)
III.           Costs
               The trial court awarded Auld Irisher $39,488 in costs, and the amount of
this award has not been disputed. As the party with the net monetary recovery – the
“prevailing party” as defined by Code of Civil Procedure section 1032 – Auld Irisher was
entitled to recoup its costs.
               In addition to attorney fees, the lease allowed the successful party to
recover both “disbursements” and “costs of suit.” Civil Code section 1717, subdivision
(a), provides for an award of “reasonable attorney’s fees in addition to other costs”
“where the contract specifically provides that attorney’s fees and costs . . . shall be
awarded to . . . the prevailing party[.]” The attorney fee provision in the lease
specifically provided for costs, so Stadium is also entitled to recover its contract-related
costs under this code section. (See Texas Commerce Bank v. Garamendi (1994) 28
Cal. App. 4th 1234, 1249 [party prevailing on contract entitled to costs under Civil Code
section 1717 even if not entitled to costs under Code of Civil Procedure section 1032].)
IV.            Civil Code section 1717, subdivision (c)
               Given the reciprocal entitlement to fees under the different statutes, the
matter must be sent back to the trial court for an additional determination. Both statutes
entitled the parties only to “reasonable” fees. (Civ. Code, § 1717, subd. (a); Code Civ.
Proc., 1033.5, subd. (c)(3).) The trial court has already determined the reasonable fees to

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be awarded to Auld Irisher, the amount of which Stadium did not dispute. It now must
determine the reasonable fees to be awarded to Stadium on its successful contract claims.
              There is one more statute to be considered: Civil Code section 1717,
subdivision (c), which provides: “In an action which seeks relief in addition to that based
on a contract, if the party prevailing on the contract has damages awarded against it on
causes of action not on the contract, the amounts awarded to the party prevailing on the
contract under this section shall be deducted from any damages awarded in favor of the
party who did not prevail on the contract. If the amount awarded under this section
exceeds the amount of damages awarded the party not prevailing on the contract, the net
amount shall be awarded the party prevailing on the contract and judgment may be
entered in favor of the party prevailing on the contract for that net amount.” Thus, once
the trial court has determined Stadium’s reasonable contract fees and costs, it must reduce
this amount by Auld Irisher’s net damages award of $13,603. Assuming Stadium’s
contract-related fees and costs exceed $13,603, the amount remaining must be awarded to
Stadium under Civil Code section 1717, subdivision (c). The statute does not require the
court to enter judgment in this amount, however, and the judgment in this case has
already been entered. The time for contesting it has expired. The sole issue before the
trial court, then, was the final fee award to each party.
              When it determines the reasonable fees to be awarded to Stadium from
Auld Irisher, the court must also determine the status of Branley, Auld Irisher’s
guarantor. The jury found against Branley on the breach of the guaranty, and the
guaranty included an attorney fee provision. The briefing on Branley in this appeal has
been too cursory to allow us to decide the issue of his liability for attorney fees.
                                      DISPOSITION
              The order denying Stadium’s motion for attorney fees is reversed and the
matter is returned to the trial court for a determination of the reasonable fees and costs to
which Stadium is entitled as the party prevailing in an action on the contract. Auld

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Irisher’s net damages award of $13,603 must be subtracted from the attorney fees and
costs awarded to Stadium, pursuant to Civil Code section 1717, subdivision (c). The trial
court is also to determine the liability, if any, of Branley to Stadium for attorney fees.
The order granting Auld Irisher’s motion for attorney fees is affirmed. Each party is to
bear its own costs on appeal.

                                                   BEDSWORTH, ACTING P. J.

WE CONCUR:

ARONSON, J.

FYBEL, J.

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