Section 1717: Plaintiff’s Voluntary Dismissal Of Action While One Claim Remained Intact Precluded Award Of Attorney’s Fees Under Civil Code Section 1717(b)(2)

Fee Award Of $13,985.80 To Defense Reversed As A Matter Of Law.

            Plaintiff contractor sued his contractor’s bond surety defendant for three claims after surety refused to issue him a new bond based on a prior payout to a homeowner for alleged faulty window installations.  The trial judge eventually sustained a demurrer on all three claims with prejudice, but the appellate court in an earlier decision reversed the dismissal on one claim but affirmed the dismissals on the two other claims.  Plaintiff voluntarily dismissed his complaint without prejudice upon remand.   Surety moved for Civil Code section 1717 attorney’s fees, with the trial judge awarding $13,985.80 in fees to surety.

            That award was reversed as a matter of law in Payne v. American Contractors Indemnity Co., Case No. C084201 (3d Dist. Apr. 24, 2018) (unpublished).

            Civil Code section 1717(b)(2) was the key statutory provision which specifies there is no prevailing party for 1717 purposes where an action has been voluntarily dismissed, whether with or without prejudice.  (Mesa Shopping Center-East, LLC v. O’Hill, 232 Cal.App.4^th 890, 903 (2014).)   It made no difference that surety successfully demurred to two causes of action, because prevailing on a majority of causes of action is not equivalent to prevailing on an action such that the dismissal of the entire action triggered section 1717(b)(2).  Although surety argued that CDF Firefighters v. Maldonado, 200 Cal.App.4^th 158 (2011) dictated a different result, that case involved fines which could have been filed as separate complaints, unlike surety’s claims which arose from the same nucleus of facts.  Fee award reversed.