Oxnard
AP-Colton
Filed 12/5/13 Oxnard Corner v. AP-Colton CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FOURTH APPELLATE DISTRICT
DIVISION TWO
OXNARD CORNER,
LLC,
Defendant
and Appellant,
v.
AP-COLTON, LLC,
Defendant
and Respondent.
E053678
(Super.Ct.No.
CIVDS1014557)
OPINION
APPEAL
from the Superior Court
of
Bernardino County. David
Cohn, Judge. Affirmed.
Law
Offices of Ehsan Afaghi, Ehsan Afaghi, Firouzeh Simab; Gresham Savage Nolan
& Tilden, Theodore K. Stream and Jamie E. Wrage for Plaintiff and
Appellant.
Barry
L. Cohen & Associates, Barry L. Cohen and El Mahdi Young for Defendant and
Respondent.
Plaintiff
Oxnard Corner, LLC (Oxnard), owns
one of seven parcels in a shopping center on which it operates a supermarket. AP-Colton (AP-C), owned the remaining six
parcels, which were leased out subject to a restrictive clause prohibiting the
sale of groceries on any of AP-C’s parcels. A subdivision-lessee of one tenant engaged in
the prohibited activity and failed to correct the breach. Oxnard
sued AP-C, its tenant and subtenant for injunctive relief, as well as for
damages sounding in both contract and tort theories. While a hearing on AP-C’s pleading attacks was
pending, Oxnard voluntarily
dismissed AP-C, and AP-C filed a memorandum of costs. AP-C subsequently filed a motion for attorneys’
fees, which was granted. Oxnard
appeals that order.
On
appeal, Oxnard argues that the court erred (1) in awarding attorneys’ fees
pursuant to Code of Civil Procedure section 1032; (2) finding that AP-C was the
prevailing party; (3) making an order for attorneys’ fees prematurely; (4)
refusing to delay ruling on the motion until after the case was concluded; (5)
refusing to apportion fees between the contract and tort causes of action; and
(6) violating the one-judgment rule. We
affirm.
Because
there was no trial, we recite the facts as they are presented in the pleadings.
Colton
Shopping Center comprises seven
parcels: AP-C owns parcel Nos. 1, 2, 4,
5, 6, and 7, and Oxnard owns parcel
No. 3, which is improved by a supermarket plaintiff purchased from Albertson’s.
Pursuant to a Declaration of
Restrictions and Grant of Easements (Declaration of Restrictions) covering the
entire shopping center, no part of parcel Nos. 1, 2, 4, 5, 6, or 7 could be
used as a supermarket, bakery, or for the sale of fresh or frozen meat, fish,
poultry, or produce, for off premises consumption. This restriction was binding upon the owners
of the parcels, as well as any heirs, personal representatives, successors and
assigns, and upon any person acquiring a parcel, or any portion thereof, or any
interest therein for 65 years from the date of the declaration.
Prior
to 1999, AP-C’s predecessor in interest leased parcel No. 1 to Thrifty-Payless,
a subsidiary of Rite Aid Corporation for the operation of a drug store. In May, 2010, Thrifty-Payless subleased the
parcel to Just Bargain Stores. Just
Bargain Stores engaged in the sale of food and grocery items in violation of
the Declaration of Restrictions, despite Oxnard’s
demands to cease and desist. Oxnard
filed a complaint against AP-C, Thrifty-Payless, Rite Aid Corporation, and Just
Bargain Stores on October 20, 2010.
The complaint alleged four causes of
action against all four defendants: (1)
Breach of Contract; (2) Breach of Implied Covenant of Good Faith and Fair
Dealing; (3) Intentional Interference with Prospective Advantage; and (4)
Negligent Interference with Prospective Advantage.
On
November 19, 2010, AP-C
filed a demurrer to the Third and Fourth Causes of Action for failing to state
a cause of action because the tort claims arose from a contract, and a
claims, based also on the fact the matter arose from a contract. The remaining defendants answered the complaint
on November 22, 2010, and
cross-complained against Just Bargain Stores and its owners.
Prior
to the hearing on AP-C’s demurrer and motion to strike, Oxnard entered into an
agreement with Just Bargain Stores and Thrifty-Payless, resulting in a Stipulation
and Order for Preliminary Injunction, filed on December 6, 2010. On December
20, 2010, Oxnard filed an
opposition to AP-C’s demurrer and motion to strike. On December
28, 2010, Oxnard executed
a voluntary dismissal of its complaint against AP-C, without prejudice, which
was entered as requested on December
29, 2010, by the clerk.
On
January 14, 2011, AP-C
submitted its cost memorandum, seeking filing fees in the amount of $454, and attorneys’
fees in an amount to be determined by a later motion. On February
14, 2011, AP-C filed a motion for attorneys’ fees in the amount
$16,926, which Oxnard opposed. On April 25, 2011, the court heard and granted
the motion, awarding $16,926 to AP-C, finding that matter was governed by Code
of Civil Procedure sections 1032 and 1033.5. Oxnard
appealed from that order.
name="_ftnref1" title="">[1]
Entitled to Attorneys’ Fees as Costs.
Oxnard
argues that the trial court erred in determining that AP-C was the prevailing
party and in awarding attorneys’ fees to AP-C. Oxnard
asserts that Code of Civil Procedure section 1032, authorizes the award of
costs to a prevailing party, but does not authorize the award of attorneys’
fees. We disagree.
We
review the determination of the legal
basis for an award of legal fees de novo as a question of law. (Cullen
v. Corwin (2012) 206 Cal.App.4th 1074, 1078.) We review the trial court’s decision for abuse
of discretion. (Salehi v. Surfside III Condominium Owners Assn. (2011) 200
Cal.App.4th 1146, 1154.) The right to
recover costs is purely a creature of statute, and the applicable statute
defines the extent of a party’s right to recover costs. (People
v. United States Fire Ins. Co. (2012) 210 Cal.App.4th 1423, 1427.) Attorney fees are an element of costs if
authorized by statute. (
determine if the court properly found attorney fees are authorized, and we look
to statutory and decisional law to determine if the court properly found AP-C
was the prevailing party.
Attorney Fees May Be Awarded Post-Dismissal in Contract or Tort Claims.
Prior
to 1968, attorneys’ fees and costs could not be awarded upon a voluntary
dismissal of an action. (
Inc. (2013) 216 Cal.App.4th 310, 322.) Civil Code section 1717 was enacted in 1968,
creating a reciprocal right to attorney fees in contracts containing unilateral
attorney fee provisions. (
21 Cal.3d 218, 223.) However, even then
the Supreme Court concluded that public policy and equitable considerations
required the parties to bear their own attorney fees when the plaintiff
voluntarily dismissed an action prior to trial, whether the claim for fees was
based on a contract provision or on the reciprocal right provided by Civil Code
section 1717. (Khavarian, at p. 322.)
The
Olen decision was reconsidered in
where the Supreme Court held that postdismissal awards of attorney fees outside
the scope of Civil Code section 1717 were not against public policy. (Santisas,
at pp. 621-622.) Instead, they are limited to causes of
action sounding in contract and based on a contract containing an attorney fee
provision. (Khavarian Enterprises, Inc. v. Commline, Inc., supra, 216
Cal.App.4th at p. 325.)
If
the contractual provision limits an award of attorney fees to the party who has
prevailed on the contract, fees may be awarded only to that party, and Civil
Code section 1717 is invoked. (
Cal.App.4th 984, 990.) In such a
situation, the determination of prevailing party for purposes of contractual
attorney fees is made without reference to the success or failure of
noncontract claims, in favor of the party who obtains greater relief on the
contract action. (Ibid.) However, an attorney
fee provision in a contract need not be so limited. (Id.
at p. 991.) Moreover, the specific language
of the contract does not necessarily govern the award. (Frog
Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 545.)
The attorney fees
clause in a contract may be broad enough to cover tort as well as contract
causes of action. (Maynard v. BTI Group, Inc., supra, 216 Cal.App.4th at pp. 991-992,
citing Hasler v. Howard (2005) 130
Cal.App.4th 1168, 1171; Childers v.
Edwards (1996) 48 Cal.App.4th 1544, 1549.) If the provision is broad enough to cover
noncontractual claims, the prevailing party entitled to recover fees will normally
be the party whose net recovery is greater, in the sense of most accomplishing
its litigation objectives, whether or not that party prevailed on a contract
cause of action. (Maynard v. BTI Group, Inc., supra, 216 Cal.App.4th at p. 992.)
Code of Civil
Procedure section 1033.5, subdivision (a)(10), provides that attorneys’ fees
are allowable as costs under section 1032, when they are authorized by either
contract, statute, or law. (
p. 606.) Contract provisions referring
to any claim “in connection with†a particular agreement (Myers Building Industries, Ltd. v. Interface Technology, Inc.
(1993) 13 Cal.App.4th 949, 966), or to any action “arising out of†an agreement
(Santisas, at p. 608), or based on
the outcome of “any dispute,†encompass all claims, whether in contract, tort,
or otherwise. (Maynard v. BTI Group, Inc., supra 216 Cal.App.4th at p. 993.)
A
contract provision authorizing an award of attorney fees in an action to
enforce any provision of the contract is not broad enough to cover tort claims.
(Gil
v. Mansano (2004) 121 Cal.App.4th 739, 743.) However, a defense to a tort action may be
based on a provision of a contract and have the effect of enforcing the
provisions of the contract. (
v. Mansano, the contract provision related solely to “instituting†an
action to enforce a provision of the contract and was held to be limited to the
party filing an action based on the contract, not defending on that basis. In Allstate
Ins. Co. v. Loo (1996) 46 Cal.App.4th 1794, language relating to “any legal
action brought by either party to enforce the terms hereof or relating to the
demised premises†encompassed any action, whether in contract or in tort. (Id. at
p. 1799.)
In the present
case, paragraph 6.13 of the Declaration of Restrictions governing attorney’s
fees provides, “In the event any person is required to initiate or defend any
legal action or proceeding to enforce or interpret any of the terms of this
Declaration, the prevailing party in any such action or proceeding shall be
entitled to recover its reasonable costs and attorney’s fees (including its reasonable
costs and attorney’s fees on any appeal).†It expressly included both initiating and
defending any legal action. The broader
language supports a broader interpretation. (Gil v.
Mansano, supra, 121 Cal.App.4th at p. 744; Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698,
712.)
At oral argument,
Oxnard noted that in Exxess Electronixx,
supra, the order awarding attorney’s fees was reversed because the tort
claims were not brought to “enforce the terms†of the lease agreement
containing the attorney fee provision.
In that case, the lease language provided for an award of attorney’s
fees “[I]f any Party or Broker brings an action or proceeding to enforce the
terms hereof or declare rights hereunder, . . .†(Exxess
Electronixx v. Heger Realty Corp., supra, 64 Cal.App.4th at pp. 702-703.) Oxnard
argues that Exxess Electronixx is
squarely on point because the “declare rights hereunder†language is synonymous
with “interpret any of the terms of this Declaration†found in the present
matter. We disagree.
The court in
language referring to “declare rights hereunder†was a narrow term, which
limited attorney’s fees to actions for declaratory relief, so it did not apply
to tort claims for constructive fraud and breach of fiduciary duty. (
Cal.App.4th at pp. 710-711.) The present
case does not contain such limiting language.
Instead, it broadly authorizes an award of attorney’s fees for initiating or
defending any legal action or proceeding to enforce or interpret any of the
terms of the declaration of restrictions. Having broader language, the provision is
subject to a broader interpretation.
This case is more
analogous to Santisas v. Goodin, supra, 17
Cal.4th at page 603, where the clause called for attorney’s fees “‘[i]n the
event legal action is instituted by the Broker(s), or any party to this
agreement or arising out of the execution of this agreement, . . .’†Similarly, attorney’s fees were authorized in
56 Cal.App.4th 464, 480, where the clause called for attorney’s fees in “‘
(2007) 151 Cal.App.4th 1063, 1071-1072, where the lease provided for such an
award “[i]n the event legal action is instituted [ . . .] arising out of the
execution of this agreement . . . .†The
language of the declaration of restrictions in the present case is equally
broad, justifying application of attorney’s fees in noncontract actions.
b. Prevailing Party
Determination
As to which party
is the prevailing party in the case before us, we look to the statute. Code of Civil Procedure section 1032,
subdivision (b), provides that except as otherwise expressly provided by
statute, a prevailing party is entitled as a matter of right to recover costs
in any action or proceeding. Subdivision
(a)(4) of section 1032 defines “prevailing party,†in relevant part, as one
with a net monetary recovery, a defendant in whose favor a dismissal is
entered, a defendant where neither plaintiff nor defendant obtains any relief,
and a defendant as against those plaintiffs who do not recover any relief
against that defendant. “If a party fits
one of the definitions of ‘prevailing’ listed in C.C.P. 1032(a)(4) . . . that
party is entitled as a matter of right to recover costs.†(Zintel
Holdings, LLC v. McLean
(2012) 209 Cal.App.4th 431, 441.)
The
term “net monetary recovery†refers to the party who gains money that is free
from all deductions. (
1327, 1334.) “Net monetary recovery†is
determined without regard to settlements or other contributions from unrelated
defendants or from other parties. (
Cal.App.4th 963, 982.) A plaintiff who
obtains a verdict against a defendant that is offset to zero by settlements
with other defendants does not gain any money free from deductions and gains
nothing. (Ibid., citing Wakefield, at
p. 992.)
Here, AP-C was
voluntarily dismissed from the action before Oxnard negotiated the stipulated
preliminary injunction against Thrifty Payless and Just Bargain Stores, and
while hearing on AP-C’s demurrer to the tort causes of action was pending. AP-C qualified as a defendant “in whose favor
a dismissal was entered,†and as a defendant as against “those plaintiffs who
d[id] not recover any relief against that defendant.†Because we must determine whether Oxnard
experienced a “net monetary recovery†without regard to settlements with other
defendants, the dismissal of AP-C made it the prevailing party, and entitled
AP-C to recover costs as a matter of right. There was no error in determining whether AP-C
was the prevailing party and entitled to attorneys’ fees as costs pursuant to
Code of Civil Procedure sections 1032 and 1033.5.
Attorneys Fees’, As An Element of Costs, Was Made Prematurely.
At
the hearing, the trial court indicated its tentative ruling to grant AP-C’s
motion for attorneys’ fees. Oxnard’s
counsel indicated that whether or not it had achieved its litigation goals was
premature because a case management conference was scheduled for a later date,
and the case might settle in Oxnard’s favor. Although the court did not expressly deny the
request to continue the hearing, it proceeded to grant the motion. It therefore denied the continuance impliedly.
On
appeal, Oxnard argues that the court erred in granting the motion before final
disposition of the litigation and before the entry of a final judgment. In a separate argument, Oxnard contends that
the order awarding attorneys’ fees violated the “One Final Judgment Rule.â€
A
dismissal with prejudice is the equivalent of a final judgment on the merits,
barring the entire cause of action. (
48 Cal.4th 788, 793; Torrey Pines Bank v.
Superior Court (1989) 216 Cal.App.3d 813, 821-822.) A dismissal without prejudice is not a bar to
another action by the plaintiff on the same cause. (Gagnon
Co. v. Nevada Desert Inn, Inc. (1955) 45 Cal.2d 448, 455.) However, in other respects, a dismissal
without prejudice has the effect of a final judgment in favor of the defendant,
for it terminates the action and concludes the rights of the parties in that
particular action. (Ibid.)
In
the trial court, Oxnard did not object on the ground that the motion was
premature for lack of a notice of entry of judgment. Instead, Oxnard’s objection was that it was
premature to determine whether Oxnard has achieved its litigation goals at this
point, because it might settle the case with the remaining defendants. Whether or not Oxnard was able to settle with
the other defendants would not alter the fact that AP-C was a prevailing party
pursuant to Code of Civil Procedure section 1032, because the “net monetary
recovery†determination must be made without regard to settlements or other
contributions from other defendants or from other parties. (Goodman
v. Lozano, supra, 47 Cal.4th at p. 1335.) Thus, it was not an abuse of discretion to
deny a continuance.
A motion for
attorney’s fees must be served and filed within the time for filing a notice of
appeal under California Rules of Court, rule 8.104 and 8.108. (Cal. Rules of Court, rule 3.1702.) There are no rules governing time limits for
motions for attorney’s fees made upon the entry of a voluntary dismissal by the
plaintiff, but as an item of costs, the rules governing the filing of a
memorandum of costs are instructive.
A memorandum of
costs must be filed within 15 days after the date of mailing of the notice of
entry of judgment or dismissal by the
clerk under Code of Civil Procedure section 664.5, or the date of service of
written notice of entry of judgment or dismissal, or within 180 days after
entry of judgment, whichever is first. (Cal. Rules of Court, rule 3.1700 [italics
added].) The time limitation within
which a memorandum of costs must be filed does not constitute a matter of
jurisdiction; rather, it is directed to the sound discretion of the court. (Le Deit
v. Ehlert (1962) 205 Cal.App.2d 154, 170.) A dismissal is entered when it is entered in
the clerk’s register; it is thereafter effective for all purposes. (Boonyarit
v. Payless Shoesource, Inc. (2006) 145 Cal.App.4th 1188, 1192.)
However, entry of
a judgment is not required. (
Cal.App.4th 182, 183, 188.) The 15-day
period within which to file a costs bill commences to run upon notice to the
defendant of entry of dismissal. (
supra, the court addressed the legal effectiveness of a dismissal of
defendant Payless that had not been entered
by the clerk. The court held the dismissal
was ineffective because it was never entered, so Payless failed to perfect its statutory right to costs. (Boonyarit
v. Payless Shoesource. Inc., supra, 145 Cal.App.4th at pp. 1192-1193.)
Here,
the dismissal had been duly entered by the clerk before AP-C submitted its memorandum
of costs. It was properly and timely
filed. However, the motion for attorneys’
fees was technically filed prematurely, since such motions are usually filed
postjudgment. Nevertheless, as to AP-C,
the action had concluded and the voluntary dismissal was not an appealable
judgment. Whether it was made before the
entry of judgment is irrelevant as to AP-C. In any event, the premature determination of attorneys’
fees inured to Oxnard’s interest because it prevented AP-C from incurring subsequent
additional fees for postdismissal activities. The early filing of the motion to allow
attorneys’ fees was harmless error.
As
to the asserted violation of the “one final judgment†rule, we find none. That doctrine deals with the appealability of
prejudgment rulings, not a postjudgment motion for attorneys’ fees. Under the one final judgment rule, an appeal
may be taken only from the final judgment in an entire action. (In re
Baycol Cases I & II (2011) 51 Cal.4th 751, 756.) The theory behind the rule is that piecemeal
disposition and multiple appeals in a single action would be oppressive and
costly and that a review of intermediate rulings should await the final
disposition of the case. (
25 Cal.4th 688, 697.)
A trial court does
not violate the one final judgment rule by making a ruling on a motion. Instead, a party violates the rule by
attempting to appeal from an intermediate ruling. Entertaining the motion for attorneys’ fees
did not violate the one final judgment rule.
3. Whether the Attorneys’ Fees Should Have Been Apportioned
Between the Contract and Non-Contract Claims.
Oxnard argues that
the trial court erred by failing to apportion attorneys’ fees between the
contract and tort causes of action, thereby awarding an unreasonable amount of attorneys’
fees. We disagree.
The attorney fee
clause contained in the Declaration of Restrictions encompasses both contract
and noncontract claims. In such cases,
in awarding fees to the prevailing party it is unnecessary to apportion fees
between those claims. (
Cal.App.4th at p. 992, citing Cruz v.
Ayromloo (2007) 155 Cal.App.4th 1270, 1277 [language of the attorney fee
clause covered all fees in any civil action stemming from the lease, so court
did not have to base award solely on breach of contract damages and was not
required to apportion fees between contract and tort causes of action]
The pivotal point
in the analysis of whether a prevailing party is entitled to recover
contractual attorney fees for defending against a competing non-contractual
claim (where the contract language does not encompass non-contractual claims or
is ambiguous) is not whether the fees can be apportioned between the theories,
but whether a defense against the non-contractual claim is necessary to succeed
on the contractual claim. (
Cal.App.4th 873, 879.)
As explained
Declaration of Restrictions was broad enough to cover both contract and tort
claims. As a result, apportionment of
the attorney fees was not required.
DISPOSITION
The judgment
awarding attorneys’ fees is affirmed. AP-C
is entitled to costs on appeal.
NOT TO BE
PUBLISHED IN OFFICIAL REPORTS
RAMIREZ
P.
J.
We concur:
McKINSTER
J.
MILLER
J.
On May 23, 2011, after the notice of appeal had been filed, a permanent
injunction was ordered upon the stipulation of Oxnard and the remaining
defendants. Notice of entry of that judgment
was filed on June 8, 2011, after which Oxnard dismissed the balance of the
complaint as against all the defendants.
