Opinion
10-11-1956
Jessle L. REID and Robert W. Reid, Plaintiffs, Cross-Defendants, Respondents, v. VALLEY RESTAURANTS, Inc., a California corporation, et al., Defendants, Cross-Complainant, Appellant.* Civ. 21626.
Albert E. Isenberg, Don Lowry, Beverly Hills, for appellant. Girard F. Baker and John W. Erpelding, Los Angeles, for respondents.
Jessle L. REID and Robert W. Reid, Plaintiffs, Cross-Defendants, Respondents,
v.
VALLEY RESTAURANTS, Inc., a California corporation, et al., Defendants, Cross-Complainant, Appellant.*
Oct. 11, 1956.
Rehearing Denied Nov. 8, 1956.
Hearing Granted Dec. 5, 1956.
Albert E. Isenberg, Don Lowry, Beverly Hills, for appellant.
Girard F. Baker and John W. Erpelding, Los Angeles, for respondents.
MOORE, Presiding Justice.
Appeal from a judgment disallowing attorneys' fees and costs to defendant.
Respondents leased a restaurant to appellant corporation for a fifteen-year term. The lease provided, inter alia, that no assignment of the premises was to be made by the lessee without the consent of the lessors; rents were to be payable on the basis of gross receipts; lessee would prepare detailed financial statements for the inspection of the lessors; and in the event a dispute between the parties should result in litigation, the 'successful party' would be awarded reasonable attorneys' fees and costs.
After a year and a few months of the term had elapsed, respondents brought this action in unlawful detainer and to quiet title alleging on information and belief that lessee had violated covenants of the lease by assigning the lease on the premises without lessors' consent and by improperly accounting for rents. Attached to the complaint was the notice previously served demanding possession within three days of service. No specification of the alleged breaches of the covenants in the lease was set out in the notice nor was the lessee given the alternative of correcting the defects. The complaint prayed for restoration of the premises, damages in excess of $100,000, attorneys' fees and costs, and a declaraction that appellant has no right, title or interest in the restaurant. Appellant answered and cross-complained for costs and attorneys' fees.
It appeared from respondents' opening statement that there had been an assignment of the term without respondents' consent; that appellant had failed to provide sufficient financial statements as required by the lease; and that it had fraudulently transferred certain secret pie recipes used by respondents to another restaurant owned by appellant without recording the receipt of compensation.
Appellant then moved for judgment upon the opening statement, and upon denial of such motion, objected to the introduction of any evidence upon the ground that the notice of quit was not in the alternative as required by Code of Civil Procedure, section 1161, subsections (2) and (3); that is to say, appellant was not put on notice of its failure to pay rent and of its improper assignment and was not accorded the alternative of correcting the situation or of quitting possession. After argument, the trial court decided to exclude evidence relative to nonpayment of rent since the notice was not in the alternative and the defect was correctible, but offered to hear evidence of the improper assignment to determine whether it was a fait accompli that could not have been corrected even had the notice been proper.
After the ruling of the trial court, respondents, counsel stated that he deemed a continuation of the action to be fruitless since, even though he were successful, defendant would be able to obtain relief from forfeiture of the lease under Code of Civil Procedure, section 1179. Furthermore, one of his clients was too ill to undergo the ordeal of a protracted trial. He then made this offer to stipulate: '* * * we now offer to reinstate the lease and dismiss the action upon payment of the back rents and the accounting for the other rents. * * * The only question then would be the question of attorneys' fees * * * if each party bore their own attorneys' fees, that would be proper.'
Appellant accepted the offer as to the dismissal of the complaint, reinstatement of the lease, payment of back rents and the accounting, but insisted that the court should proceed to determine the issue of attorneys' fees raised by its cross complaint. Thereupon, the two lawyers reached an agreement, as follows: both the liability for the fees and their amount would be left to the court on the basis of the lease, the file and depositions already submitted.
In the subsequent judgment rendered pursuant to the stipulation, the court recited that the parties had stipulated to the reinstatement of the lease, payment of back rent, payment of costs by each party, and a determination by the court whether attorneys' fees were to be awarded and, if so, their amount. The court declined to include in the submitted judgment that appellant had indeed violated the lease by an assignment not consented to by respondents and that proper notice had been given; but it was ordered that the lease be reinstated, back rent be paid, that defendants take nothing by their cross complaint for fees, and neither party recover costs against the other.
Appellant's position now is that the judgment improperly failed to dismiss the complaint in accordance with the stipulation of the parties; that had such been done, the action would have terminated in appellants' favor. Gagnon Co., Inc., v. Nevada Desert Inn, 45 Cal.2d 448, 455, 289 P.2d 466. Thus, appellant was the 'successful' party and entitled to attorneys' fees as provided for in the lease. Cirimele v. Shinazy, 124 Cal.App.2d 46, 51, 268 P.2d 210. On the contrary, respondents contend that, regardless of the dismissal of the complaint, (1) the question of whether or not attorneys' fees should be awarded was left to the sole and unreviewable discretion of the trial judge; (2) the stipulation amounted to a compromise of the litigation so that neither party could be characterized as 'successful.'
In Steele v. Steele, 132 Cal.App.2d 301, 303, 282 P.2d 171, 173, the parties entered into a stipulation that certain property was separate and that the trial court should determine the character of the balance. One of the stipulators appealed the determination that it was community. But it was held that after 'knowingly entering into such a definite stipulation in open court * * * it does not stand in the mouth of either party to dispute its terms or to contend that the judge should have done something other than that provided by the stipulation.' Thus, respondents here contend that the parties stipulated for the trial court's determination of the question of fees and 'it does not stand in the mouth of either party' to dispute his conclusion. However, whatever may have been the state of the record in the Steele case, the stipulation between the litigants here was not for submission of the question to plenary arbitration by the judge. The parties merely desired to avoid the necessity of a lengthy hearing of testimony relative to the fees. Rather the court was to determine the issue on the basis of 'the files in this case, depositions and the lease.' The court was vested with the duty of deciding whether or not defendants were 'successful' and should succeed on their cross complaint, but was relieved from the responsibility of rendering a correct judgment.
Was the offer by respondents to stipulate, as accepted by appellant, a 'compromise' of the dispute, or tantamount to total abdication of their legal position? As noted, the complaint prayed for restoration of the premises, damages, attorneys' fees, costs and a declaration that the purported lessee have no interest in the premises. The judgment awarded not one particle of this relief to respondents, nor did they by their offer to stipulate demand recovery of any of the relief sought as a condition of dismissal. Respondents demanded merely 'payment of back rents and the accounting for the other rents which, I assume, there would be no difficulty about.' Indeed, the latter assumption was well-founded. The back rents referred to were those which had accrued since service of the notice to quit. All such sums had been previously tendered by appellant. Appellant's counsel had in his possession checks sufficient immediately to pay those rents. As to the 'accounting,' the complaint included no request for an accounting of rents, nor did the stipulation provide for a judicial accounting. The purport of the agreement was only that the parties would secure through their own devices a settlement of their disagreement over the extent of past gross receipts upon which the rent obligation was based. Therefore, since the action was, or should have been, dismissed without attainment of any of the relief prayed for or any substantial external concession on the part of appellant, the latter was indeed the 'successful' party and should have been awarded its fees.
The judgment incorrectly recited that the parties had stipulated that each pay his proportionate share of the costs. Actually, the term 'costs' never appeared in that portion of the record wherein the oral stipulation was recorded. Therefore, since the lease provided also that the successful litigant should recover costs, the award should have been to appellant. Furthermore, regardless of the provisions of the lease, Code of Civil Procedure, section 1032(b), requires that costs be awarded to 'the defendant * * * as to whom the action is dismissed.' Dismissal of an action with prejudice is a final decision, terminates it, and entitles the defendant to costs. Fisher v. Eckert, 94 Cal.App.2d 890, 894, 212 P.2d 64. A dismissal pursuant to a stipulation in open court intended finally to determine the dispute between the litigants is, in effect, with prejudice. Gagnon Co., Inc., v. Nevada Desert Inn, supra, 45 Cal.2d 448, 455, 289 P.2d 466.
The judgment for the reinstatement of the lease, the payment of back rentals, and defendant's right to possession under the lease is affirmed, but in all other respects the judgment is reversed with instructions to dismiss the complaint, award costs and to determine and award reasonable attorneys' fees to defendant, based upon the lease, the depositions, and the file.
FOX and ASHBURN, JJ., concur. --------------- * Opinion vacated 311 P.2d 473.