Rose Garden Assocs. Danville v. ResMex Partners






Filed 10/7/11 Rose Garden Assocs. Danville v. ResMex Partners CA1/3





NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

ROSE GARDEN ASSOCIATES DANVILLE, LLC, Plaintiff and Respondent, v. RESMEX PARTNERS, LLC, Defendant and Appellant.

A130562 (Contra Costa County Super. Ct. No. C0901952)

ResMex Partners, LLC (ResMex) appeals from an order awarding attorney fees to Rose Garden Associates, LLC (Rose Garden). After ResMex repeatedly failed to pay rent due under a lease from Rose Garden, the parties negotiated an agreement under which ResMex would vacate the premises, pay the back rent, and transfer certain items to Rose Garden. ResMex vacated by the date specified but failed to pay the rent due or to immediately transfer many of the items it had agreed to transfer. Rose Garden sued ResMex for breach of contract, seeking the unpaid rent and specific performance, and obtained writs of attachment with which it successfully attached several ResMex bank accounts. Eventually the parties stipulated to a release of the bulk of the funds that were being held by the sheriff to Rose Garden and agreed that this amount represented the full amount owed under the lease. Rose Garden then moved for attorney fees as provided in the settlement agreement, as did ResMex. The trial court found that Rose Garden was the prevailing party and awarded $83,153 in attorney fees. ResMex appeals from that order. Although its arguments are not entirely coherent, its main contentions are that the attorney fee motion was premature and that the trial court erred in determining that Rose Garden was the prevailing party. We find no merit to these contentions and therefore shall affirm.

Background

On July 9, 2009, Rose Garden filed a complaint for breach of contract and other related causes of action against ResMex. The complaint alleged that on July 6, 2007, Rose Garden as lessor entered into a lease with ResMex, of space for a restaurant in Danville. ResMex took possession of the space and operated a restaurant and bar there, serving liquor under a state-issued license. ResMex became delinquent in its rent and on February 24, 2009, Rose Garden served ResMex with a three-day notice and demanded unpaid rent of $126,304.97.
The complaint alleged that on March 10, 2009, the parties entered into an agreement (the agreement) under which the lease was terminated. ResMex agreed that on May 31, 2009, it would vacate the premises in “turn key” condition, and assign to Rose Garden all of the furniture, fixtures, and equipment in the restaurant, and its liquor license. The agreement specified that Rose Garden could bring an action against ResMex for the unpaid rent plus damages at a rate of $830.50 per day, that ResMex would assert no defenses to the complaint, and that ResMex would stipulate to the entry of a judgment against it. The agreement provided for an award of attorney fees to the prevailing party in the event of litigation.
The complaint further alleged that after the parties performed a walk-through of the premises on May 31, 2009, ResMex removed “miscellaneous small wares, including flatware and dishes and two mixers, some blenders, a customer paging system, and a Point of Service Computer System (‘POS system’, valued in excess of $25,762.” The complaint also alleged that ResMex had failed to assign the liquor license and that entry of a lease with a new potential tenant was dependent on transfer of the license. The complaint alleged that ResMex had breached both the lease and the subsequent agreement.
The complaint asserted causes of action for 1) breach of contract, 2) possession of personal property, 3) conversion, and 4) specific performance. Rose Garden sought unpaid rent of $124,304.98; damages at $830.50 per day from March 1, 2009; possession of the POS system, small wares, a pager and other unspecified missing items or $25,762 replacement value; transfer of the liquor license to plaintiff; attorney fees; and costs.
The day after filing the lawsuit, Rose Garden obtained writs of possession for the small wares and the POS system, and writs of attachment for $180,626.26 in funds held in various accounts controlled by ResMex. The writs were executed by the sheriff who took possession of the personal property and of the funds.
Rather than stipulating to the entry of judgment as per the March 2009 agreement, on August 18, 2009, ResMex answered the complaint, generally denying the allegations and asserting 15 affirmative defenses.
On November 25, 2009, Rose Garden moved for summary judgment on the ground that the undisputed facts established ResMex’s breach of the original lease and of the agreement, that ResMex had converted property that belonged to Rose Garden and that Rose Garden was entitled to specific performance. The same day Rose Garden filed a request for dismissal of its cause of action for wrongful possession of personal property, having obtained possession of those items, and that cause of action was dismissed.
On January 29, 2010, the parties filed a stipulation that the San Mateo County Sheriff could release $151,033.69 of the attached funds to Rose Garden.
On February 8, Rose Garden filed an “amendment of plaintiff’s motion for summary judgment and withdrawal of certain claims in plaintiff’s motion for summary judgment . . . .” The motion states that “. . . 6. In January of 2010, to stop interest from accruing, defendant tendered part of the damages owed to plaintiff by offering to release $151,033.69 of the attached funds held pursuant to the levies of plaintiff’s prejudgment writs of attachment. [¶] 7. Plaintiff agreed to accept defendant’s tender but both parties wished to preserve the remainder of their claims and defenses. . . . [¶] 8. Notwithstanding the release of the attached funds, plaintiff continues to maintain its claims and its right to recover the attorneys’ fees and costs it has incurred in this matter. [¶] 9. Defendant continues to assert all of its defenses to plaintiff’s claims and disputes that plaintiff is entitled to judgment and/or the recover of its attorneys’ fees and costs incurred to date.” Rose Garden also withdrew “its claim for $8,040 in damages arising out of damage to the POS system.”[1]
The attached stipulation states, “The parties stipulate that the sum of $151,033.69 . . . from the accounts held by the Sheriff of San Mateo be immediately released to plaintiff to completely and fully pay damages claimed by plaintiff in this lawsuit pursuant to the agreement with ResMex to terminate the lease and vacate the leased premises . . . . The payment sum shall be applied (i) to pay all past rent claimed by plaintiff in the amount of $126,304.97, as set forth in the agreement; (ii) to pay all of plaintiff’s claims for daily damages under paragraph 2.2. of the agreement for defendant’s use of the restaurant premises . . . from March 1, 2009 to May 31, 2009; and (iii) to pay all of plaintiff’s claims for interest at the legal rate on items (i) and (ii) above.” (Italics added.)
On May 21, 2010, the trial court denied the motion for summary judgment, citing several deficiencies, including that there did not appear to be anything left to decide except Rose Garden’s entitlement to fees and costs. The court noted, “Defendant’s failure to agree to a stipulated judgment is unfortunate as it has resulted in many trees being killed.”
Nothing further was filed by either party until July 26, 2010, when Rose Garden filed a motion for attorney fees in the amount of $94,653 pursuant to Civil Code section 1717, subdivision (b)(1) and Code of Civil Procedure section 1033.5, subdivision (a)(10) and a memorandum of costs in the amount of $5,233.94. The same day, ResMex filed a motion for attorney fees, a motion for leave to file an amended answer, and a document styled “motion to/for damages for wrongful/excessive attachment.”
On December 7, 2010, the trial court entered an order granting Rose Garden’s motion for attorney fees on the ground that Rose Garden was the prevailing party under Civil Code section 1717, subdivision (b)(1) as “the party ‘who recovered a greater relief in the action on the contract.” The court denied ResMex’s motion for attorney fees, the motion to file an amended answer, and its motion for “wrongful/excessive attachment.” ResMex timely appealed.

Discussion

ResMex challenges the trial court’s order awarding attorney fees.[2] It argues that the motion was prematurely made and that the trial court erred in determining that Rose Garden was the prevailing party.
Timeliness of the motion
ResMex argues that the court erred in ruling on the motion for attorney fees because when it did so there had been no final resolution of the contract claim. ResMex argues that Rose Garden “insisted on filing a motion for attorney fees even though there had not been any judgment or dismissal—no final resolution—of the first, third and fourth causes of action.”
In an action for breach of a contract containing an attorney fee provision, Civil Code section 1717 permits an award of attorney fees as an element of costs to the prevailing party. Subdivision (b)(1) of Civil Code section 1717 provides: “The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. . . . [T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.” (Italics added.) The agreement between Rose Garden and ResMex likewise provides, “Should there be any litigation under this agreement to enforce its terms, the prevailing party shall be entitled to an award for all of its attorney’s fees and costs of suit, whether or not the matters proceeds to judgment,” echoing subdivision (b)(1) of section 1717.
ResMex argues that because there was no judgment, there was no final determination of the action permitting the court to determine the prevailing party. This argument is not only at odds with the fact that both parties submitted attorney fee motions claiming to be the prevailing party, but it disregards the plain language of the statute, which we have just quoted. (Civ. Code, § 1717, subd. (b)(1).)[3] Although it is true that the prevailing party determination can be made “only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions’ ” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876), in this case the parties stipulated that the money released to Rose Garden was intended “to completely and fully pay damages claimed by plaintiff in this lawsuit pursuant to the agreement to terminate the lease and vacate the premises.” Thus, the contract cause of action was finally resolved in Rose Garden’s favor.
ResMex also suggests that the contract dispute had not been fully resolved because the January 2010 stipulation, which ResMex repeatedly refers to as a “stipulated judgment,” “did not provide for the $30,000 credit due defendant under the June 1, 2009 e-mail amendment.” The $30,000 credit to which Res Mex refers is memorialized in a June 1, 2009 email message from Rose Garden’s agent to one of ResMex’s managers stating, “We will credit ResMex and reduce the past due liability for $30,000 for [Rose Garden] being assigned ownership of the smallwares.” ResMex mischaracterizes this message as an amendment to the agreement. In all events, the parties agreed in the January 2010 stipulation that the amount of funds transferred to Rose Garden out of the attached funds was the full amount to which Rose Garden was entitled. The fact that the stipulation did not specifically refer to the $30,000 credit does not mean that this amount was not taken into account in calculating the amount to which Rose Garden was entitled or that there was anything further to be decided with respect to the $30,000 credit. Both parties were sophisticated business entities represented by counsel; presumably the stipulated amount was negotiated and agreed upon. Therefore the contract cause of action had been resolved so that the trial court could determine the prevailing party for the purpose of the motion for attorney fees.
ResMex also argues that because the sheriff “still has possession of $6,147.91 of defendant’s money,” the issues are not finally resolved. However, questions concerning the proper disposition of the remaining funds in the possession of the sheriff are separate and distinct from the resolution of the contract claims. While Res Mex claims it is entitled to the return of those funds, Rose Garden contends it is entitled to receive those funds in partial satisfaction of the attorney fee award. The proper resolution of these conflicting claims is not now before us, but in all events they did not preclude the trial court from ruling on the attorney fee motion.
Determination that Rose Garden was the prevailing party
ResMex contends that Rose Garden was incorrectly determined to be the prevailing party. “The court’s determination a party prevailed on a contract action is an exercise of discretion which should not be disturbed on appeal absent a clear showing of abuse.” (Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1153, disapproved on other grounds by Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th 754, 775, fn. 6.) “When a party obtains a ‘ “simple, unqualified win” ’ by completely prevailing on, or defeating, the contract claims in the action and the contract contains a provision for attorney’s fees, the successful party is entitled to attorney’s fees as a matter of right, eliminating the trial court’s discretion to deny fees under [Civil Code] section 1717. [Citation.] ‘If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.’ [Citation.] ‘Because the statute allows such discretion, it must be presumed the trial court has also been empowered to identify the party obtaining “a greater relief” by examining the results of the action in relative terms: the general term “greater” includes “[l]arger in size than others of the same kind” as well as “principal” and “[s]uperior in quality.” [Citation.]’ [Citation.] [¶] When determining the prevailing party under section 1717, the trial court ‘is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.’ ” (Silver Creek, LLC v. BlackRock Realty Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1538-1539.)
Applying this standard to the instant case, Rose Garden unquestionably was the prevailing party on the contract cause of action. As stipulated by the parties, the amount released by the sheriff was intended “to completely and fully pay damages claimed by plaintiff in this lawsuit.” Rose Garden obtained the monetary relief it sought under the agreement, as well as transfer of the small wares and the liquor license. ResMex argues the prevailing party determination was incorrect because the $30,000 credit is still in dispute, but as indicated above it is mistaken in this regard. ResMex also asserts that the small wares were returned prior to the litigation and argues that Rose Garden misled the trial court when it filed its declaration in support of its application for writs of possession by failing to acknowledge that the small wares had already been returned at that time. However, Rose Garden disputes this assertion and the record contains substantial evidence supporting an implicit finding that the return of these items did not occur until after the litigation was commenced and the writ of possession issued. [4] Moreover, regardless of when the items were returned to Rose Garden’s possession, the determination that Rose Garden was the prevailing party is supported by the fact that Rose Garden recovered all of the monetary damages it sought under the complaint. Indeed, under the standard quoted above, the trial court likely would have abused its discretion had it found that Rose Garden was not the prevailing party, so completely did it prevail on its claims under the contract.
ResMex also argues that the award of attorney fees was improper because Rose Garden voluntarily dismissed the action in February 2011 after the trial court made its order awarding Rose Garden attorney fees. ResMex bases this argument on the language of Civil Code section 1717, subdivision (b)(2), which provides in relevant part that “[w]here 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.”
On January 27, 2011, after ResMex noticed its appeal, Rose Garden submitted a letter to the trial court. At that point, the case had been reassigned to a different judge than the one who heard the motion for attorney fees. The letter states, “Enclosed is the Order for Dismissal that we understand Judge Zuniga wanted entered as a final resolution of the above-referenced matter. As the matter has been re-assigned to your department, with a ‘tickler’ indicating to check for dismissal by January 28, we submit this order for your review.” On February 2, 2011, the trial court entered an order dismissing the case, reasoning that the court had “addressed all of the disputed issues in this matter, by the court’s January 26, 2010 order releasing $151,033.69 to plaintiff Rose Garden . . . and by the court’s December 7, 2010 order which (1) found [Rose Garden] to be the prevailing party, (2) awarded [Rose Garden] $83,153.00 in attorneys’ fees, and (3) denied defendant ResMex’s . . . motion for attorneys’ fees and costs.”
In opposing the entry of the dismissal order, ResMex argued that such an order was “plaintiff’s attempt to avoid the voluntar[y] dismissal language of Civil Code section 1717. Such action by this court would be prejudicial to defendant. This court’s entry of the proposed order would allow plaintiff to argue to the appellate court that even if the December 7th order awarding plaintiff attorneys’ fees was premature and contrary to statutes and the case law, it was not prejudicial as the subsequent entry of an order of dismissal by the court cures any earlier error.” (Emphasis in original.) ResMex thus reverses its position when it now argues that because the form of order was submitted by Rose Garden, the order dismissing the case should be viewed as a voluntary dismissal precluding the attorney fee award. In all events, the case was dismissed by the court and was not voluntarily dismissed within the meaning of Civil Code section 1717. The fact that the attorneys for Rose Garden prepared the order at the court’s request does not change that fact. Moreover, the dismissal occurred after the court ruled on the motion for attorney fees and does not affect the propriety of the earlier order granting the attorney fee motion.

Disposition

The judgment is affirmed.




_________________________
Pollak, J.


We concur:


_________________________
McGuiness, P. J.


_________________________
Jenkins, J.


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