The Title Issue That Started It All Was Partly Corrected And Seller Resumed Payments Years Before, But The Parties Battled On All The Way To Trial – Incurring A Combined Total Of $202,299.50 In Fees, Plus Costs.
In our Mission Statement, we quote a statement made by Retired Justice Wallin in Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993). “All too often attorney fees become the tail that wags the dog in litigation.” As Justice Wallin explained, “Often the economic value of what the [litigant] gains is minute compared to the litigation costs.” This next case exemplifies Justice Wallin’s observation.
In Real Properties Network v. D’Alessio, Case No. G058351 (4th Dist., Div. 3 February 22, 2021) (unpublished), plaintiff Michael Mitchell and his company Real Properties Network, LLC (Network) sued defendant Dennis D’Alessio and his two companies, Newport Harbor Ventures, LLC (Ventures) and D’Alessio Investments, LLC (Investments) seeking quiet title to a Newport Beach condo Mitchell purchased from D’Alessio – along with causes of action for fraud, slander of title, and other related claims – following discovery of a title problem wherein defendant Ventures recorded a grant deed transferring the condo to plaintiff Network, but weeks prior had also recorded a quitclaim deed transferring the condo to defendant Investments.
Defendant Investments also filed its own lawsuit against plaintiff Network for repayments, also seeking late fees for various payments, when plaintiffs stopped making interest payments because of the title problem and refused to make the scheduled balloon payment pursuant to the 2-year note on the property. The lawsuits were consolidated.
Despite the title and payment disputes being partly resolved by a corrective grant deed and interest/balloon payments years before, the parties argued entitlement to additional remedies – battling all the way to trial where they received mixed results. Plaintiff Mitchell did not prevail on any of his causes of action, but the trial court found in favor of plaintiff Network against defendants Investments and Ventures on the quiet title cause of action, against defendant Ventures only on plaintiffs’ breach of warranty claim, and defendants prevailed on plaintiffs’ remaining causes of action. Additionally, plaintiff Network prevailed on defendants’ only remaining claim by the time of trial – the late fees. No party recovered money from any other party.
Then came the motions for fees and costs from both sides. The parties had incurred a combined total of $202,299.50 in fees, plus costs. Plaintiffs sought $74,722.50 in fees, and defendants sought $127,577 in fees. We cannot imagine the parties were too happy with the mixed results they received. The trial court granted the motions to tax costs on both sides – so no costs were awarded due to the parties’ failures to apportion between successful and unsuccessful claims. Additionally, the trial court made reductions on both sides for excessive billing and other issues. In the end, plaintiff Network was awarded $34,740 in attorney fees for defeating Investments’ late fee claims, but no fees on the title claim because it did not prevail against D’Alessio – the only signatory to the Agreement, and plaintiff Mitchell was denied fees. Defendant Investments’ fee request was denied because the fee provision in the Note was too narrowly worded to reach the claims in the title action. As to D’Alessio, the trial court found he was entitled to an award of his fees as he had prevailed on all claims in the title action. However, because defendant Ventures was a non-signatory to the parties’ Agreement, it was entitled only to its fees on the contract claims in the title action, under Civil Code section 1717, not on the tort claims. This resulted in a combined $35,577 award to defendants D’Alessio and Ventures – which beat out Network’s award by $837, although defendants incurred $52,854.50 more in fees than plaintiffs.
Defendants appealed, but the results were not mixed this time – with the 4/3 DCA affirming in a 3-0 opinion authored by Justice Thompson.
Three out of four of defendants’ arguments declared prevailing party entitlement, but the appellate panel disagreed. Investments was not the prevailing party on its claims by having induced plaintiffs to make the interest and balloon payments. By the time of trial, Investments only remaining claim was for late payments and was defeated. Likewise, defendants were not entitled to their costs as the prevailing parties where they had failed to allocate their costs between the claims where they were successful and those where they were not. Additionally, defendants’ contention that D’Alessio’s complete victory entitled him to all claimed fees failed to take into account that Civil Code section 1717 only permits recovery of “reasonable” attorney fees by a prevailing party in an action on a contract containing an attorney fee provision. The trial court had properly reduced for excessive billing, clerical tasks, work performed on a cross-complaint against unrelated parties, and fees incurred for the late fees claim. Finally, the panel found no abuse of discretion in defendants’ challenge of the evidentiary support for plaintiffs’ fee motion.
BLOG NOTE: This case, like some others before it, caused us to ask, “Seriously?!” – hence the addition of a new category beginning with this post because . . . seriously . . . how could we not?
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