Tiso v. Stier
Filed 6/20/13 Tiso v. Stier CA4/1
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
ALLAN TISO et al.,
Plaintiffs and Appellants,
v.
GERHARD STIER et al.,
Defendants and Appellants.
D060061
(Super. Ct. No. 37-2010-00050591- CU-OR-NC)
APPEALS
from a judgment of the Superior Court
of
County,
William S. Dato, Timothy M. Casserly, Judges. Affirmed in part; reversed in part with
directions.
Mulvaney
Barry Beatty Linn & Mayers, Mulvaney, Kahan & Barry, John H. Stephens
and Stacy H. Rubin for Plaintiffs and Appellants Allan Tiso et al.
K. Martin
White for Defendants and Appellants Gerhard Stier et al.
Civil Code section 1717 (section
1717), subdivision (b)(2) provides there is no prevailing party for purposes of
contractual attorney fees "[w]here an action
has been voluntarily dismissed" before trial. (Italics added.) CDF
Firefighters v. Maldonado (2011) 200 Cal.App.4th 158 (Maldonado), held that when there were two "separate and
distinct" contract causes of action that could have been brought
independently, the voluntary dismissal of one of them did not bar recovery of
attorney fees incurred in the adjudication of the other one. (Id. at
p. 165.)
The issue
in plaintiffs' appeal is whether subdivision (b)(2) of section 1717 bars an
award of attorney fees when the complaint states only a single contract cause
of action, stated under different theories, or "counts," and
mislabeled as "causes of action," when some of the counts were
disposed of in a motion to strike and a remaining count was voluntarily dismissed. We conclude fees are barred, because
plaintiffs' dismissal of the remaining count was a dismissal of the
"action" for purposes of section 1717, subdivision (b)(2). We reverse the judgment to the extent it
awards defendants contractual fees for prevailing on some of the counts, with
directions, and affirm the judgment in all other respects.
Defendants
also appeal, contending the court erred by reducing their fee request to
reflect fees incurred in defending against the count the plaintiffs voluntarily
dismissed, under subdivision (b)(2) of section 1717. Their appeal lacks merit, as section 1717
fees are barred altogether.
FACTUAL AND
PROCEDURAL BACKGROUND
name="_ftnref1" title="">[1]
This case
arises out of a property dispute over a narrow L-shaped property known as
Parcel 48 (sometimes referred to as Parcel E), located in Fallbrook. Plaintiffs, Allan and Vitina Tiso, own
property known as Parcel 79, and to its east, Parcel 47, and they once owned
property known as Parcel 72, which is south of parcel 47. The north-south leg of Parcel 48 is situated
between Parcels 79 and 47, and the east-west leg of Parcel 48 is situated
between Parcels 47 and 72. In 1985,
before the Tisos purchased Parcel 47, they were awarded Parcel 48 in an adverse
possession action against a former owner of Parcel 47. From that point, they paid property taxes on
Parcel 48.
In 1988 the
Tisos sold Parcel 72 to defendants Gerhard and Regina Stier. Parcel 72 was conveyed by a deed to S.I.
Financial Corporation (S.I. Financial), which acted as an exchange accommodator
for the Stiers for tax purposes, and by a concurrent deed from S.I. Financial
to the Stiers. Both grant deeds included
an attached two-page legal description that described Parcel 48 (designated
Parcel E) on page two.
name="_ftnref2" title="">[2]
According to the Tisos, neither
they nor the Stiers intended to include any portion of Parcel 48 in the
deal. According to the Stiers, they were
unaware of the existence of Parcel 48 or its location, and when they purchased
Parcel 72 they assumed it extended just beyond a fence line on the property's
north boundary. During this litigation
they learned the east-west leg of Parcel 48 was within the fence line.
In 1994 the
Stiers conveyed Parcel 72 by quitclaim deed to themselves as trustees of their
family trust. The face of the quitclaim
deed does not refer to Parcel 48 (or Parcel E), and the second page of the
legal description that included Parcel E was not attached to the deed.
In 2002 the
Stiers' family trust sold Parcel 72 to Jack and Diane Jansen, and the two-page
legal description, including Parcel 48 (designated Parcel E), was attached to
the deed. In 2009 the Tisos learned the
Jansens were claiming ownership of Parcel 48.
The Tiso's informal attempt to resolve the dispute with the Jansen's was
unsuccessful.
Contemplating
a quiet title action, the Tisos obtained a litigation guaranty, which listed
the Stiers as record title holders of Parcel 48. The Tisos' attorney, Sarah Lanham, contacted
Gerhard Stier by phone, explained the situation to him, and offered to send him
a courtesy copy of a complaint the Tisos intended to file. He told Lanham he would discuss the matter
with an attorney.
In late
January 2010 the Tisos filed a complaint against the Jansens, the Stiers and
their family trust, S.I. Financial, and other entities. The Stiers were named in counts for
reformation of deeds (first count), quiet title (second count), recovery of
real property (fourth count), and declaratory relief (fifth count). The Tisos did not plan to serve the Stiers
with the summons and complaint "until necessary," but when Lanham
spoke to the Stiers' attorney, K. Martin White, he demanded immediate
service. The Stiers were served on
February 3, and on February 9, Lanham wrote to White and requested that the
Stiers quitclaim any interest in Parcel 48 to the Tisos, or alternatively,
"do nothing pending the resolution of this action."
Instead, on
February 12, 2010, the
Stiers executed and caused to be recorded a quitclaim deed in favor of the
Jansens, to correct the Stiers' inadvertent omission of the second page of the
legal description of the property, including Parcel E (Parcel 48), from the
2002 deed. Also in February 2010 the
Stiers and their family trust filed, in this action, disclaimers of any
interest in Parcel 48.
In June 2010
the Tisos filed a first amended complaint (FAC), which retained the original
complaint's counts against the Stiers, and added new counts against another
defendant. The Stiers moved to strike
the counts on the ground they had no interest in Parcel 48. The court granted the motion as to the
second, fourth, and fifth counts, without leave to amend. The court, however, denied the motion on the
first count, explaining "plaintiffs primarily seek reformation of deeds,"
and the Stiers' disclaimer of interest in Parcel 48 "would not appear to
compel or justify their dismissal from the action." The court granted the Tisos' request to amend
the complaint to allege a fraud claim.
In August
2010 the Tisos filed a second amended complaint (SAC), which added claims
against the Stiers for cancellation of the 2010 quitclaim deed between them and
the Jansens (second count), and fraud (ninth count).
motion to strike the new counts under the anti-SLAPP statute (Code Civ. Proc.,
§ 425.16), on the ground they arose from protected litigation
activity. The court granted the
motion. The court, however, overruled
the Stiers' demurrer to the SAC's count for reformation of deeds, finding a
factual dispute as to whether the parties intended Parcel 48 to be part of the
1988 conveyance to the Stiers.
The Stiers
later moved for summary judgment on the count for reformation of deeds, on the
ground they had sold whatever interest they had in Parcel 48 to the
Jansens. About two weeks before the
scheduled hearing, however, the Tisos voluntarily dismissed the SAC as to the
Stiers.
Finally out
of the litigation, the Stiers moved for costs in the amount of $44,107.12,
including $42,390 in attorney fees. They
sought fees under Code of Civil Procedure section 425.16, subd. (c)(1) on the
second and ninth counts of the SAC.
Additionally, while the Stiers did not cite section 1717, they claimed
entitlement to fees based on the attorney fees clause in the real estate
purchase agreement between them and the Tisos.
The Tisos
moved to tax costs. They conceded the
Stiers were entitled to attorney fees under Code of Civil Procedure section
425.16 on the SAC's second and ninth counts, but they argued section 1717,
subdivision (b)(2) barred additional fees since they voluntarily dismissed the
action before trial.
After a
hearing, the court determined the action arose from the parties' purchase
agreement for purposes of section 1717 because it provided the only ground for
including the Stiers in the lawsuit. The
court determined that under section 1717, subdivision (b)(2), they were
entitled to contractual fees, excluding fees associated with the summary
judgment motion on the dismissed count for reformation of deeds. The court reduced their attorney fees, and
other costs, to $32,345.79.
DISCUSSION
I
Standard of Review
"On
appeal this court reviews a determination of the legal basis for an award of
attorney fees de novo as a question of law." (G.
Voskanian Construction, Inc. v. Alhambra Unified School Dist. (2012) 204
Cal.App.4th 981, 995.) The
interpretation of a statute also presents a legal question we review
independently. (Lafferty v. Wells Fargo Bank (2013) 213 Cal.App.4th 545, 556.)
II
The Tisos' Appeal
A
The Tisos
contend the trial court erred by granting the Stiers additional fees under
section 1717 since they voluntarily dismissed the SAC as to the Stiers before
trial. We agree with their analysis.
"California
follows the 'American rule,' under which each party to a lawsuit must pay its own
attorney fees unless a contract or statute or other law authorizes a fee
award." (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211
Cal.App.4th 230, 237; Code Civ. Proc., §§ 1021, 1033.5, subd.
(a)(10).) Attorney fees are allowed as
an item of costs under Code of Civil Procedure section 1032 when they are
authorized by contract, statute, or law.
(Code Civ. Proc., § 1033.5, subd. (a)(10).) Attorney fees authorized under Civil Code
section 1717 are specifically included as an item of allowable costs. (§ 1717, subd. (a); Code of Civ. Proc.,
§ 1033.5, subd. (c)(5).)
Subdivision
(a) of section 1717 provides: "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."
Subdivision
(b)(1) of section 1717 states that "[e]xcept as provided in paragraph (2),
the 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."
Subdivision (b)(2) of section 1717 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." (Italics added.) The purpose of this provision is to encourage
settlement and curtail pointless litigation.
(Santisas v. Goodin (1998) 17
Cal.4th 599, 613-614.)
name="_ftnref4" title="">[4]
In
authorizing attorney fees under section 1717, the court explained that
"looking at the case as a whole, the Stiers are the prevailing parties as
this court resolved five of six causes of action in their favor." The court relied on the following language
from Hsu v. Abarra (1995) 9 Cal.4th
863, 876 (Hsu): "[W]e hold that in deciding whether
there is a 'party prevailing on the contract,' 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. The prevailing party determination is to 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.' " (
In
Court held that a court lacks
discretion to deny attorney fees under section 1717 on equitable grounds when
the "court renders a simple, unqualified decision in favor of the
defendant on the only contract claim in the action." (Hsu,
the opinion does not discuss subdivision (b)(2) of section 1717. "In California, '[i]t is axiomatic that
cases are not authority for propositions not considered.' " (Cottonwood
Duplexes, LLC v. Barlow (2012) 210 Cal.App.4th 1501, 1508.)
"In
construing a statute, a court's objective is to ascertain and effectuate legislative
intent. [Citation.] To determine legislative intent, a court
begins with the words of the statute, because they generally provide the most
reliable indicator of legislative intent."
(Hsu, supra, 9 Cal.4th at p. 871.)
When the words of a statute are unclear, "we must look elsewhere
for evidence of legislative intent.
[¶] Statutory ambiguities often
may be resolved by examining the context in which the language appears and
adopting the construction which best serves to harmonize the statute internally
and with related statutes." (
Section
1717, subdivision (b)(2) does not define the term "action," and thus
we look elsewhere for a definition. 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." (Italics
added.) "That definition of
'action' has been applied to various statutory schemes. [Citations.]
It appears that courts generally treat the term 'action,' as defined by
Code of Civil Procedure section 22, as referring to the whole of a lawsuit
rather than to discrete proceedings within a lawsuit." (Frog
Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 527;
536 ["With respect to civil actions, 'an "action" means the same
thing as a "suit."
[Citation.]' "]; Salawy v.
Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664, 672-674
["action" refers to lawsuit as a whole and not a demurrer filed in
the suit].)
" 'In
California the phrase "cause of action" is often used
indiscriminately . . . to mean counts which
state [according to different legal theories] the same cause of
action. . . .' "
(Boeken v. Philip Morris USA, Inc.
(2010) 48 Cal.4th 788, 798.)
"The cause of action is the right to obtain redress for a harm
suffered, regardless of the specific remedy sought or the legal theory (common
law or statutory) advanced.
[Citations.] . . . '[T]he "cause of action" is based
upon the harm suffered, as opposed to the particular theory asserted by the
litigant. [Citation.] Even where there are multiple legal theories
upon which recovery might be predicated, one injury gives rise to only one
claim for relief.' " (
"The
manner in which a plaintiff elects to organize his or her claims within the
body of the complaint is irrelevant to determining the number of causes of
action alleged under the primary right theory. . . . [T]he only way a litigant can show probable
cause for the cause of action as a whole—or for the "primary
right"—is to show probable cause for each of the counts or theories
alleged. In this event the whole is
indeed the sum of the parts.' " (
1247, 1257-1258.)
Both sides
cite Maldonado, supra, 200 Cal.App.4th
158, as supporting their positions. In
filed a complaint for breach of contract against a former member, alleging he
failed to pay two fines the union had levied against him, one for $22,789.96
and the other for $743.30. After years
of litigation, the larger fine was found invalid, and thus the defendant was
granted a partial judgment on the pleadings.
The union then voluntarily dismissed its remaining claim on the smaller
fine. (Id. at p. 161.) The
defendant consequently sought attorney fees under section 1717 as the
prevailing party on the larger fine, and the trial court denied fees under
subdivision (b)(2) of section 1717 on the ground the union dismissed the
smaller claim before trial. (
at p. 161.) The court determined that
" 'all claims on the same contract must be looked at
together when determining the identity of the prevailing party on that
contract.' " (Id. at p. 164.)
The
appellate court reversed the order. It
explained that while only one contract was at issue, consisting of the union's
constitution and bylaws, the two claims against the defendant "were based on
two separate and distinct disciplinary proceedings instigated by two different
[union] members. One fine was imposed in
June 2003 and the other was imposed in November 2003. Thus, [the union] sought to recover damages
based on two separate and distinct obligations.
A cause of action is ' "simply the obligation sought to be
enforced." ' [Citation.] Accordingly, despite being pled as one cause
of action in the complaint, [the union] stated two causes of action. [Citation.]
[¶] In fact, these two causes of
action could have been filed as separate complaints. The causes of action accrued, i.e., they were
complete with all of their elements, at different times." (Maldonado,
supra, 200 Cal.App.4th at p.
165.) The court held that the
"voluntary dismissal of one of the separate and distinct contract causes
of action" did not bar "recovery of attorney fees on the adjudicated
contract cause of action." (
Here, in
contrast to Maldonado,
and distinct contract claims against the Stiers, which could have been brought
independently. While the pleadings
purported to set forth several "causes of action," the Tisos actually
had a single cause of action, or primary right, arising from the alleged mutual
mistake in the conveyance of Parcel 48 to the Stiers. It follows that the Tisos' voluntary
dismissal of the SAC's remaining count for reformation of deeds constituted a
dismissal of the "action" for purposes of section 1717, subdivision
(b)(2). The previous disposal of the
contract claims in the motion to strike is immaterial because they did not
constitute an "action" apart from the count for reformation of
deeds. The public policy of encouraging
settlement and ending pointless
litigation is not served by allowing attorney fees for counts disposed of
piecemeal in pretrial proceedings, when the cause of action proceeds under an
alternative theory.
We conclude
subdivision (b)(2) of section 1717 precludes a finding the Stiers are
prevailing parties for purposes of the contract claims. Had the Legislature intended to allow fees
based on individual counts within a
contract cause of action, it could easily have said so. Because the fee award does not apportion fees
allowable under Code of Civil Procedure section 425.16, subdivision (c)(1), the
calculation of a proper award is subject to further proceedings on remand.
B
The Stiers
contend that while this action arose from
the parties' real estate purchase agreement, it is not "on a
contract" within the meaning of section 1717, subdivision (a), and thus
section 1717 is inapplicable and the Tiso's dismissal of the action before
trial does not bar an award of attorney fees.
They assert this action was a "real estate case" outside the
scope of section 1717.
The
attorney fees clause at issue does not restrict an award of fees to an action
sounding in contract. Rather, it
provides, "In any action or
proceeding arising out of this agreement,
the prevailing party shall be entitled to reasonable attorney's fees and
costs." (Italics added.) The Stiers rely on Santisas v. Goodin, supra,
"in voluntary pretrial dismissal cases, . . . section 1717
bars recovery of attorney fees incurred in defending contract claims, but [it
does not] bar[] recovery of attorney fees incurred in defending tort or
attorney fees clause broadly includes any type of claim arising from a
contract. (Italics added.) The Stiers assert a "real estate
case" falls within the italicized language. (See also Xuereb
v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1340-1341.)
The Stiers
assert this action cannot sound in contract because the four-year statute of
limitations for the breach of a written contract had long run. (Code Civ. Proc., § 337.) The term "on a contract," however,
"does not mean only traditional breach of contract causes of action. Rather, 'California courts "liberally
construe 'on a contract' to extend to any action '[a]s long as an action
"involves" a contract and one of the parties would be entitled to
recover attorney fees under the contract if that party prevails in its
lawsuit . . . .'
[Citation.]" [Citations.]'
" (Mitchell Land & Improvement Co. v. Ristorante Ferrantelli, Inc. (2007)
158 Cal.App.4th 479, 486.) "In
determining whether an action is 'on the contract' under section 1717, the
proper focus is not on the nature of the remedy, but on the basis of the cause
of action." (Kachlon v. Markowitz (2008) 168 Cal.App.4th 315, 347 (
declaratory and injunctive relief, and to quiet title, based on deeds of trust,
sound in contract for purposes of section 1717.
(Kachlon, supra, at p. 348.)
We conclude
this action sounded in contract for purposes of section 1717. The Stiers cite no authority suggesting it
was instead a "real estate case" outside the reach of section
1717. The SAC's reformation of deeds
count alleged that under the terms of the real estate purchase agreement, the
Tisos conveyed Parcel 72 to the Stiers by grant deed, and the two 1988 grant
deeds for the purchase "each contained a mutual mistake" by the
parties, in that they included a legal description of Parcel 48, when they did
not intend a conveyance of that property.
The Tisos requested the reformation of the two 1988 deeds, and the 2002
grant deed from the Stiers to the Jansens, to delete all references to Parcel
48.
The action
was essentially for reformation of an executed contract. "As a general rule an executed contract
is presumed to express the intentions of the parties correctly, but this
presumption is rebuttable and may be overcome by evidence that the written
instrument is not in conformity with the agreement of the parties." (Miller and Starr, 12 Cal. Real Estate (3d
ed.) § 34.11.) The additional
counts stricken from the FAC, for quiet title, recovery of real property and
declaratory relief, are based on the same agreement and facts.
The Stiers
also criticize the Tisos for waiting so long to dismiss the action. They assert that when they filed their
disclaimers of any interest in Parcel 48 in February 2010, it was clear that
the action was meritless as to them and they should have been dismissed. Subdivision (b)(2) of section 1717, however,
"contains no temporal limitation; it 'bars recovery of section 1717
attorney fees regardless of when the dismissal is filed.' " (Marina
Glencoe, L.P. v. Neue Sentimental Film AG (2008) 168 Cal.App.4th 874,
877.) The Steirs also contend section
1717, subdivision (b)(2) does not apply because the Tisos did not dismiss the
action as to all the defendants. The
same theory was rejected in Rosen v.
Robert P. Warmington Co. (1988) 201 Cal.App.3d 939, 943, and we
concur. The relevant status pertains to
the Stiers, not other defendants.
III
The Stiers' Appeal
Based on
their theory section 1717 is inapplicable, the Stiers contend the court erred
by excluding fees "relating to the motion for summary judgment [on the
remaining count for reformation] and other costs," under subdivision
(b)(2) of section 1717. The Stiers'
appeal lacks merit, because as discussed, the voluntary dismissal of the action
bars the award of any fees under section 1717.
DISPOSITION
The
judgment is reversed to the extent it awards the Stiers attorney fees under
section 1717. It is affirmed in all
other respects. On remand the court is
directed to determine the proper amount of fees to be awarded the Stiers under
Code of Civil Procedure section 425.16, subdivision (c)(1). The Tisos are awarded costs on appeal.
McCONNELL, P. J.
WE CONCUR:
McDONALD, J.
McINTYRE, J.
name="_ftn1" title="">[1] We deny the Tisos' request for judicial notice filed on
January 26, 2012, for noncompliance with California Rules of Court, rule 8.252.
name="_ftn2" title="">
[2] The face of the grant deed from the
Tisos to S.I. Financial refers to Parcels A through E, as described in an
attached legal description. The attached
document is two pages, with Parcels A through C described on the first page and
Parcels D and E described on the second page.
Parcel A is the same property known as Parcel 72, and Parcels B through
D are easements. Again, Parcel E is the
same property known as Parcel 48. The
face of the grant deed from S.I. Financial refers only to Parcels A and B, but
the same two-page legal description of Parcels A through E is attached.
