Wednesday, February 17, 2010
Court Tosses $70,000 Attorney Fee Award in Consolidated Lawsuits
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal yesterday threw out an award of $70,000 in attorney fees a homeowner obtained for his defense of two consolidated lawsuits against tenants.
Div. Four held in an unpublished opinion that Solomon Costanza could not recover fees incurred defending against Phillip and Carol Alford’s action for specific performance of an option agreement to purchase a home because the agreement did not provide for an award of attorney fees and the dispute was not related to a prior contract between the parties containing a fee-shifting provision.
The dispute arose over a single-family residence in Valley Glen, which Costanza owned with his wife, since deceased, and leased to the Alfords.
The parties entered into a rental agreement in 1998 which provided for a one-year renewable lease with rent set at $2,500 a month. It also contained a provision providing that any proceedings arising out of the agreement would entitle the prevailing party to reasonable attorney’s fees and costs.
In 2004, Constanza filed a complaint asserting a single cause of action for unlawful detainer, claiming that the rent had been increased to $2,750 per month in 2003. He later amended the complaint to state a single cause of action for breach of contract by failing to pay rent.
A few days after Constanza filed his complaint, the Alfords sued him for specific performance of an option to purchase the property. They alleged that they entered a written agreement titled, “Lease With Option to Purchase,” in June 2000 with Constanza’s wife.
The Alfords claimed that they had timely provided notice of their intention to exercise the option to purchase the property before June 30, 2004, for $390,000, and that Constanza’s wife had improperly refused to convey the property.
They attached a copy of this later agreement to their second amended complaint, but the document was not signed by Constanza or his wife. The agreement also did not contain an attorney fee provision.
Both cases were tried before Los Angeles Superior Court Judge James A. Kaddo, who found that the 2000 agreement was unenforceable because it had not been signed and rejected the Alford’s claims for specific performance.
On the breach of contract claim, Kaddo awarded Constanza $59,979.28 in damages against Carol Alford and $57,929.12 against Phillip Alford, with any payments received from one to apply to both.
In a post-judgment order, Kaddo further awarded Solomon $71,071.36 in attorney fees, payable by Carol Alford.
On appeal, the Alfords contended that Kaddo erred by failing to segregate the fees based on the 1998 agreement from those based on the 2000 agreement, and Justice Nora M. Manella agreed.
Joined by Presiding Justice Norman L. Epstein and Justice Thomas L. Willhite Jr., she explained that Civil Code Sec. 1717 allows a prevailing party to recover attorney fees in a dispute involving a cause of action based on a contract providing for attorney fees joined with other causes of action beyond the contract only as the fees relate to the contract action.
Manella reasoned that the attorney fees Constanza incurred defending against the specific performance lawsuit “did not relate to—much less arise out of—the 1998 Agreement” since the specific performance lawsuit involved the Alford’s attempt to compel Constanza to transfer the property to them and the breach of contract claim involved the Alford’s failure to pay rent under the 1998 agreement.
“The testimony and evidence in the two lawsuits was presented at separate times, concerned different agreements, and was not overlapping,” she said, emphasizing that the two lawsuits did not involve common issues, “intertwined” claims for relief which would make it impractical to separate an attorney’s time into compensable and noncompensable units, or a situation where Constanza was compelled to defend on one action in order to vindicate his rights in another.
“In short, the two suits arose from two distinct contracts,” she concluded, and as only one contained a provision authorizing the recovery of attorney fees, Constanza could only recover the fees he incurred in pursuing that action.
Marshall C. Sanders represented the Alfords while Raymond Hovsepian and David Dantes represented Constanza.
The case is Alford v. Constanza, B210315.
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