Prevailing Party: Defendant/Cross-Complainant Prevailing On Note W/Contractual Fees Clause Not Subject To Fee Exposure On Subsequent Appeals And Lis Pendens Expungement Proceeding, As Other Side Never Sought Specialized Fee Relief From Appellate Court

Prevailing Party Did Accept Satisfaction Of Judgment While Appeals Were Pending, With Court Of Appeal Concluding There Can Only Be One Prevailing Party; CCP § 128.5 Sanctions Also Inapt.

            De la Carriere v. Greene, Case No. B285793 (2d Dist., Div. 8 Aug. 28, 2019) (published) is a good addition to the jurisprudence in the prevailing party area, establishing that there is only one prevailing party and that subsequent posttrial/appellate proceedings do not usually alter the result.

            What happened here is that plaintiff, an estranged friend of defendant, sued to void a note and deed of trust under a note which had a contractual fees clause.  Defendant cross-complained for breach of the note.  After a four-day bench trial, defendant was declared the prevailing party based on a merits $150,329.21 judgment, even though some usurious interest was subtracted from the note principal, with the lower court later awarding defendant $123,975 in attorney’s fees.  Both sides appealed, with defendant claiming that the usury “subtraction” was erroneous.  While the appeals were pending, plaintiff paid defendant/cross-complainant the full amount owed under the merits and fees judgments, with an acknowledgment of satisfaction being filed.  Plaintiff filed a motion to expunge a lis pendens while the appeals were pending, which was denied based on lack of jurisdiction due to the pendency of the appeals.  Plaintiff filed a motion to dismiss defendant’s appeal as moot, with defendant dismissing his appeal.  One day later, plaintiff requested a dismissal of her cross-appeal.  Plaintiff then filed a motion for attorney’s fees for work in connection with the appeal and lis pendens post-trial motion, under both Civil Code section 1717 and CCP § 128.5.  The lower court awarded plaintiff $67,238 under Civil Code section 1717, prompting an appeal by defendant.

            The 2/8 DCA reversed.

            No section 1717 fees were justified because there can only be one prevailing party, which defendant was.  Trial and appellate proceedings are considered together, such that plaintiff’s success on appeal and her post-judgment determination did not affect that determination.  (Wood v. Santa Monica Escrow Co., 176 Cal.App.4^th 802, 806-808 (2009).)  Even with execution of a judgment satisfaction acknowledgment, plaintiff could cite no authority indicating that the appeal constituted a new matter separate from the underlying lawsuit.  Plaintiff should have asked for relief from the appellate court to add to costs on appeal under certain circumstances or to sanctions for a frivolous appeal, but none of these options were pursued.

            Plaintiff then argued that the award could be affirmed based on the CCP § 128.5 sanctions request.  The Court of Appeal disagreed.  It first found that the trial judge did not award sanctions, awarding fees instead under section 1717—so it could not presume how the lower court would rule.  However, plaintiff did not provide any authority that the lower court, rather than the appellate court, could award sanctions for a frivolous appeal.  In fact, CRC 8.276(a)(1) vests this sanctioning power to the reviewing court only.  Finally, defendant’s appeal was not necessarily barred even though the defendant collected the full amount of the judgment from plaintiff given that the appeal might have resulted in a reversal where actually more was owed than what had been collected earlier—put another way, the judgment might have been increased so the appeal was not frivolous.  (Heacock v. Ivorette-Texas, Inc., 20 Cal.App.4^th 1665, 1670-1672 (1993).) 

Comments

[Jan Van Der Hook]

What the 2/8 DCA has done in this ruling is to tell all prevailing parties in such disputes to collect the award + legal fees and then -- even with a signed EJ-100 -- file what is a no risk appeal.

This decision encourages prevailing parties to file appeals in every similar case. This can be done to force the other side to spend money defending, or, offer additional money to settle. The prevailing party has no risks given that they can dismiss in the face of an OSC asking why their case should not be dismissed.

An EJ-100 is now absolutely meaningless in such prevailing party cases as is not a bar to appeal. The 2/8 DCA has allowed prevailing parties to have their cake and eat it too. Go for it. File those appeals.

A correct ruling in the lower court would not have awarded the defendant fees. The lower court appears to have not understood what a "prevailing party" is in this case.