Opinion
C084201
04-24-2018
LARRY PAYNE, Plaintiff and Appellant, v. AMERICAN CONTRACTORS INDEMNITY COMPANY, Defendant and Respondent.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. CV110138)
Plaintiff Larry Payne brought suit against defendant American Contractors Indemnity Company (American Contractors) alleging three causes of action. After American Contractors successfully demurred to two causes of action, Payne dismissed his remaining cause of action. American Contractors then moved successfully for attorney fees. On appeal, Payne challenges that award, arguing attorney fees are precluded because under Civil Code section 1717, subdivision (b)(2) (unless otherwise set forth, statutory section references that follow are to the Civil Code), when an action has been voluntarily dismissed, there is no prevailing party. We agree and will reverse the order granting attorney fees.
FACTS AND PROCEEDINGS
We take the facts from a prior opinion in this matter. (Payne v. American Contractors Indemnity Company (Feb. 8, 2016, C072674) [nonpub. opn.].)
Payne is a contractor and American Contractors issued him a contractor's bond. In 2007, a homeowner made a claim against the bond, claiming Payne improperly installed windows in her home. After investigating, American Contractors informed Payne it would pay the homeowner, and it expected Payne to reimburse it. Payne protested, maintaining he had followed the window installation instructions.
After paying the claim, American Contractors refused to issue Payne a new bond, and notified the Contractors' State Licensing Board of Payne's "alleged improper work," the bond payout, and Payne's refusal to reimburse. The Board suspended Payne's license.
In late 2011, Payne filed a complaint against American Contractors for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) declaratory relief. American Contractors demurred to all three causes of action. The trial court sustained the demurrer with leave to amend as to the first and second causes of action. As to the third, it sustained without leave to amend. After Payne filed an amended complaint, the trial court sustained the demurrer for all causes of action without leave to amend. Payne appealed.
This court reversed as to the cause of action for declaratory relief and affirmed the remainder. Following remand, Payne voluntarily dismissed his complaint without prejudice.
American Contractors then moved for attorney fees. Payne opposed the fees, arguing under section 1717 subdivision (b)(2), fees are not authorized where a party voluntarily dismisses his suit. American Contractors argued it had successfully demurred to two causes of action.
The trial court ordered $13,985.80 in attorney fees for American Contractors. It noted under section 1717, subdivision (b)(2), American Contractors could not collect fees for the declaratory relief cause of action, but it was a prevailing party on the causes of action alleging breach of contract and breach of the covenant of good faith and fair dealing.
DISCUSSION
On appeal, Payne challenges the award of attorney fees. He argues, under section 1717 subdivision (b)(2), American Contractors was not entitled to attorney fees because he voluntarily dismissed the remaining cause of action. American Contractors maintains the award of attorney fees was not an abuse of discretion. We agree with Payne.
In pertinent part, section 1717 provides that, "[i]n any action on a contract, where the contract specifically provides that attorney's fees and costs . . . shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorney's fees in addition to other costs." (§ 1717, subd. (a).) Subdivision (b)(1) directs the court to determine which side is the party prevailing. (§ 1717, subd. (b)(1).)
Subdivision (b)(2), however, provides an exception: "Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section." (§ 1717, subd. (b)(2).) The exception applies regardless of whether an action is dismissed with or without prejudice, so long as the dismissal is voluntary. (Mesa Shopping Center-East, LLC v. O Hill (2014) 232 Cal.App.4th 890, 903.) Subdivision (b)(2) is based on a policy that "permitting recovery of attorney fees by defendant in all cases of voluntary dismissal before trial would encourage plaintiffs to maintain pointless litigation in moot cases or against insolvent defendants to avoid liability for those fees." (See Santisas v. Goodin (1998) 17 Cal.4th 599, 613.)
Here, subdivision (b)(2) precludes attorney fees as Payne voluntarily dismissed the action. All three causes of action were "on a contract." (See Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 707 [claim for declaratory relief that the trial court determines the parties' rights and duties under the lease was on a contract]; Texas Commerce Bank-El Paso, N.A. v. Garamendi (1994) 28 Cal.App.4th 1234, 1246 [action for declaration of rights based upon an agreement is "on the contract" within the meaning of section 1717].)
While American Contractors successfully demurred to two causes of action, prevailing on the majority of causes of action is not equivalent to prevailing on an action. (See Code Civ. Proc., § 30 ["A civil action is prosecuted by one party against another for the declaration, enforcement or protection of a right, or the redress or prevention of a wrong"]; Black's Law Dictionary (10th ed. 2014) p. 35 [An action is more accurately "defined to be any judicial proceeding, which, if conducted to a determination, will result in a judgment or decree"]; Roberts v. Packard, Packard & Johnson (2013) 217 Cal.App.4th 822, 832 [an action to enforce is a proceeding initiated by the filing of a claim and encompasses not only the complaint but the entire judicial proceeding].) Accordingly, while some of Payne's causes of actions were successfully demurred to, the "action" continued until Payne voluntarily dismissed it, at which point it came within the ambit of section 1717, subdivision (b)(2).
American Contractors nevertheless maintains that CDF Firefighters v. Maldonado (2011) 200 Cal.App.4th 158 (Maldonado) compels a different result. Maldonado, however, is inapposite.
In Maldonado, a firefighter union levied two fines against Maldonado: a $743 fine and a $22,000 fine. (Maldonado, supra, 200 Cal.App.4th at p. 162.) The fines were separately levied based on different allegations, by different people, at different times. (Ibid.) When Maldonado refused to pay, the union brought suit to collect the fines. (Ibid.) The trial court ultimately concluded the $22,000 fine was improper. (Id. at pp. 162-163.) It granted Maldonado judgment on the pleading for the $22,000 claim, with leave to amend, but it refused to do the same for the $743 fine. (Id. at p. 163.) The union did not amend its complaint and later dismissed the complaint. (Ibid.) Maldonado then moved for attorney fees on the $22,000 claim. (Ibid.) The trial court denied the motion, concluding the dismissal of the remaining claim for the $743 fine triggered section 1717 subdivision (b)(2). (Id. at p. 164.)
The appellate court reversed, reasoning that while the two fines arose from the same contract, they were based on separate disciplinary proceedings, instigated by different union members, at different times. (Maldonado, supra, 200 Cal.App.4th at p. 165.) Thus, the two causes of action could have been filed as separate complaints. (Ibid.) Because the action on the $22,000 fine was finally adjudicated in Maldonado's favor, he was the prevailing party on that contract dispute and could recover attorney's fees. (Id. at pp. 165-166.)
Here, a different result obtains. While the fines in Maldonado could have been filed as separate complaints, the same is not true here. Payne's three causes of action arose from the same nucleus of facts. Thus, while Maldonado could be said to have prevailed on a discrete action, American Contractors cannot. We will therefore reverse the award of attorney fees.
DISPOSITION
The order awarding attorney fees is reversed. Payne shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
HULL, Acting P. J.
We concur:
MURRAY, J.
DUARTE, J.