Civil Code Section 1717: Sixth District Affirms Trial Court Denial Of Fees To Defendant Where Plaintiff Dismissed Both Contract And Fraud Claims

 

Sixth District Applies Reasoning of Santisas.

     The next case shows how appellate courts apply a pragmatic standard in gauging whether a party prevailed in order to recover attorney's fees, even after a voluntarily dismissal of a fraud count where fees might be recoverable under an expansive Purchase Agreement clause.

     Almog v. Mueller, Case No. H032984 (6^th Dist. June 30, 2009) (unpublished) involved a situation where plaintiffs and defendant vied over contract and fraud claims based on deposit and purchase agreements to develop four adjacent lots of undeveloped real property. The dispute centered over who was responsible for lot line changes. While the litigation was pending, the lot line revisions were finalized and plaintiffs voluntarily dismissed their suit. Defendants sought to recover $3,388.05 in costs and $28,832.90 in attorney's fees as the "prevailing parties." The trial court awarded costs but refused to award fees after finding defendants did not prevail. Defendants appealed.

Surveyor, Chicot Farms, Arkansas.  1939.  Library of Congress

     The Sixth District affirmed.

     Because plaintiffs voluntarily dismissed their action, defendants were correctly awarded routine costs under Code of Civil Procedure section 1032(b).

     However, a different result was in order with respect to attorney's fees. The appellate panel did a scholarly review of the interplay between Civil Code section 1717 and voluntary dismissals, culminating in the California Supreme Court's decision in Santisas v. Goodin, 17 Cal.4^th 599, 602 (1998) [one of our Leading Cases]. Santisas held that voluntarily dismissals meant that section 1717 fees could not be recovered on contract claims, but could be recouped on noncontract claims depending upon breadth of the contractual fees clause at issue. However, even on the noncontract claims, lower courts retain discretion to decide if there was a prevailing party. That was the rub in this appeal. Plaintiffs' litigation objective was to get the lot line changes, which occurred and made unnecessary any further litigation. The fraud count had the same objective as the dismissed contract claim; even though plaintiffs obtained no recovery of fraud damages, they did get the main thrust of their litigation demands—the lot line changes. That evened the score—plaintiff got what they wanted, and defendants deflected any award of damages. As the appellate panel concluded in affirming the determination there was no prevailing party: "This was a simple tort cause of action in which there was no clear win by either side." (Slip Opn., at p. 11.)