Wednesday, April 25, 2018
Page 1
Court of Appeal:
Relinquishing Surviving Cause of Action Bars Fee-Shifting
Fifth District Says Defendant That Prevailed on Two Claims Against It Can’t Get Award Pursuant to a Contractual Provision for Fees to the Prevailing Party
By a MetNews Staff Writer
A plaintiff, by voluntarily dismissing his sole remaining cause of action after the defendant defeated the other two, prevented the defendant from being “prevailing party,” thereby blocking its entitlement to contractual attorney fees, the Third District Court of Appeal held yesterday.
The action was brought by Larry Payne, who installs windows, against American Contractors Indemnity Co. for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief. After Mono Superior Court Judge Stanley Eller in 2012 sustained demurrers to all three causes of action, Payne appealed from the judgment of dismissal, gaining a Feb. 8, 2016 reversal as to the cause of action for declaratory relief which, upon remand, he dismissed.
Eller proceeded to grant American Contractors $13,985.80 for its expenditure on attorney fees in defeating two of the causes of action, over Payne’s protest that in light of his dismissal of one cause of action, there was no prevailing party. The appeals court yesterday agreed with him, reversing.
Cites §1717(b)(2)
Acting Presiding Justice Harry E. Hull Jr. wrote the opinion, which was not certified for publication. He cited Civil Code §1717(b)(2), which provides:
“Where 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.”
Hull quoted the California Supreme Court’s 1998 opinion in Santisas v. Goodin as saying that “permitting recovery of attorney fees by defendant in all cases of voluntary dismissal before trial would encourage plaintiffs to maintain pointless litigation in moot cases or against insolvent defendants to avoid liability for those fees.”
The jurist said in yesterday’s opinion:
“While American Contractors successfully demurred to two causes of action, prevailing on the majority of causes of action is not equivalent to prevailing on an action….[W]hile some of Payne’s causes of actions were successfully demurred to, the ‘action’ continued until Payne voluntarily dismissed it, at which point it came within the ambit of section 1717, subdivision (b)(2).”
Fifth District Opinion
American Contractors cited the Fifth District’s 2011 decision in CDF Firefighters v. Maldonado. There, a union sued a former member to collect two fines, separately imposed on him.
The trial court found that a $22,000 had been invalidly imposed; there had been no adjudication as to a $743 fine; the union, CDF Firefighters (“CDFF”) filed a request for dismissal. The judge found that §1717(b)(2) barred an award of attorney fees based on the dismissal, and the Court of Appeal reversed.
Justice Bert Levy wrote:
“[E]ach obligation alleged by CDFF, i.e., the $743 fine and the $22,000 fine, is a cause of action and CHF’s right to enforce each obligation in a judicial proceeding is a separate action. Accordingly, when CDFF voluntarily dismissed its action on the $743 fine, there was no prevailing party on that claim. However, at that time, the action on the $22,000 fine had been finally adjudicated in appellant’s favor through judgment on the pleadings. Since action is not synonymous with complaint, CDFF’s dismissal of the balance of its complaint, a complaint based on two separate obligations, was not a dismissal of the separate action on the $22,000 fine. Therefore, section 1717, subdivision (b)(2), does not bar an award of the attorney fees and costs appellant incurred in defending the action on the $22,000 fine.”
Hull said that case is inapposite because the two fines were separate obligations. He explained:
“While the fines in Maldonado could have been filed as separate complaints, the same is not true here. Payne’s three causes of action arose from the same nucleus of facts. Thus, while Maldonado could be said to have prevailed on a discrete action, American Contractors cannot.”
The case is Payne v. American Contractors Indemnity Co., C084201.
The opinion comes one week after Div. Four of this district’s Court of Appeal held that a plaintiff, on the brink of losing in court, can avoid liability for attorney fees pursuant to a contractual provision by dismissing the action. Justice Audrey Collins said that §1717(b)(2) compels the result.
Copyright 2018, Metropolitan News Company