Opinion
A149217
11-20-2017
DIII PROPERTIES, LLC, Plaintiff and Appellant, v. EDF RENEWABLE ENERGY, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Solano County Super. Ct. No. FCS044071)
This appeal concerns the trial court's award of $158,616.90 in attorney fees to prevailing party EDF Renewable Energy, Inc. (EDF), following the court's grant of summary judgment for EDF. DIII Properties, Inc. (DIII) appeals, contending "there is no legal basis for an award of attorneys' fees to EDF."
References to DIII and EDF include their respective predecessors in interest. DIII appealed from the judgment and we affirmed. (DIII Properties, LLC v. EDF Renewable Energy, Inc. (Aug. 29, 2017, A148356) [nonpub. opn.].) We take judicial notice of that opinion; our factual summary, below, is developed in part from our prior opinion. (Evid. Code, § 452, subd. (d).)
We conclude the parties' amended easement agreement—which contains a prevailing party attorney fee clause—authorizes an award of attorney fees to EDF. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
DIII owns agricultural land in Solano County (the property). EDF develops, constructs, and operates wind energy projects. It sought to develop a wind energy project in the vicinity of the property and, in 2003, it entered into an easement agreement with DIII. In 2007, the parties executed an Amended and Restated Wind Farm Easement (Amended Easement Agreement). As relevant here, the Amended Easement Agreement granted EDF an easement over the property for the purpose of allowing EDF to operate a wind farm. The Amended Easement Agreement granted EDF the right to "locate the wind turbine generators" (turbines or towers) "and associated . . . buildings and equipment on the [p]roperty."
The Amended Easement Agreement contained an attorney fees clause, which provided in relevant part: "The prevailing Party in any . . . litigation undertaken in connection with any default under this [Amended] Easement Agreement shall be entitled to be paid its . . . attorneys' fees incurred in connection therewith by the losing Party, including such costs and fees as may be incurred on appeal . . . and in any petition for review, and including costs and fees as are incurred in connection with adjudication of any issues that are particular to such types of proceedings." The Amended Easement Agreement equated a default to a "failure to perform any obligation under this [Amended] Easement Agreement."
EDF installed turbines on the property as part of a larger project that encompassed other properties and was known as the Shiloh II Wind farm (Shiloh II). Ten of the Shiloh II project's 75 turbines were placed on the property, as were underground lines used to transmit energy generated by turbines on the property and by turbines on other Shiloh II properties. In 2011, EDF began constructing another wind farm (Shiloh III), the design of which called for the installation of underground lines across a portion of the property to connect the windfarm to an electrical substation. EDF asserted the Amended Easement Agreement authorized the placement of the collection lines for Shiloh III without obtaining further authorization from DIII, but DIII disagreed. It claimed the Amended Easement Agreement did not encompass the placement of lines unconnected to turbines located on the property itself.
The parties reached a compromise, under which EDF would pay DIII in exchange for the right to place the Shiloh III collection lines within an approximately 30-foot corridor across a portion of the property. The terms of the compromise were memorialized by an August 2011 letter agreement signed by both parties (Letter Agreement). The Letter Agreement described the terms and conditions for placement of the Shiloh III lines, and provided: "[DIII] hereby consents to [EDF's] installation, operation and maintenance of the Collection Line as described herein, and [EDF] acknowledges and agrees that no other electrical line not serving exclusively the Property or the Shiloh II project may be placed over, on, under or across the Property under the Wind Farm Easement or this letter agreement." Counsel for EDF stated the reference to the Shiloh II project was "consistent with . . . our positions as to the rights conferred" by the easement. The Letter Agreement contained an attorney fees provision providing that "[i]n the event of a dispute in connection with this letter agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs."
Underlying Litigation
A dispute arose over the scope of the easement and whether it allowed the use of underground lines placed by EDF across the property to transmit electricity generated by turbines on neighboring pieces of property. DIII filed a verified complaint against EDF alleging claims for declaratory relief, quiet title, and trespass. As relevant here, the complaint alleged DIII "has no objection to EDF's running electricity from On-Property Towers under the Property but . . . alleges, that in transmitting electricity from Off-Property Towers through the Gathering Lines that pass under the Property, [EDF] is committing an intentional trespass onto the Property with respect to that electricity from Off-Property Towers because such electricity transmission is outside the scope of the Amended . . . Easement [Agreement] or any other right EDF possesses." The complaint further alleged the Amended Easement Agreement "contains a prevailing party attorneys' fees provision." DIII sought an award of such fees.
The declaratory relief cause of action sought a judicial declaration that: (1) the Amended Easement Agreement was intended to allow EDF "to transmit electricity under the Property only from On-Property Towers;" (2) EDF encroached on the Property by "exceeding the scope" of the Amended Easement Agreement "in transmitting electricity under the Property from Off-Property Towers;" and (3) EDF damaged DIII by "exceeding the scope of the" Amended Easement Agreement. The quiet title claim similarly alleged EDF's encroachment on the property "exceed[ed] the scope" of the Amended Easement Agreement. The trespass cause of action alleged EDF's use of the property was "based on the right granted . . . by way of the" Amended Easement Agreement and that EDF trespassed on the property by "transmit[ting] electricity from Off-Property Towers under the Property without [DIII's] consent."
EDF moved for summary judgment, contending it had the right to transmit electricity across the property pursuant to the Amended Easement Agreement, even if that electricity was generated by turbines located off the property. EDF also argued the Letter Agreement confirmed that right. In opposition, DIII argued the Amended Easement Agreement extended only to a wind farm or wind plant on the property itself, and that the Letter Agreement's reference to the Shiloh II project did not change the scope of the Amended Easement Agreement because DIII was subjectively unaware that any lines on the Property carried electricity generated by turbines on other properties.
The court granted summary judgment for EDF. First, the court observed EDF's motion was "primarily based upon claims that the relevant contracts are unambiguous in recognizing EDF's right to use the property." Next, the court analyzed the Amended Easement Agreement and the Letter Agreement and concluded the documents were "ambiguous as to whether they covered any wind turbines located outside of [the] Property. The . . . Letter Agreement resolved that ambiguity, but created another one, as to the scope of EDF's Shiloh projects, for which EDF was given a contractual right to run electricity generated from wind turbines located outside of Owner's property through Connection Lines running under [the] Property." The court determined DIII's manager "objectively intended and understood when he signed the . . . Letter Agreement that those collection lines could be used to transmit electricity generated from wind turbines in the Shiloh II project located on other properties." The court entered judgment for EDF.
As stated ante, DIII appealed from the judgment and we affirmed. (DIII Properties, LLC v. EDF Renewable Energy, Inc. (Aug. 29, 2017, A148356) [nonpub. opn.].) We analyzed the Amended Easement Agreement and the Letter Agreement and concluded the court properly granted summary judgment for EDF. We determined the Letter Agreement, in which the parties agreed to insert the Shiloh II reference, and the "related email correspondence[,] show that the . . . Amended Easement Agreement allows the placement of lines transmitting energy from all Shiloh II turbines, and because the undisputed evidence shows the Shiloh II project includes turbines not located on the property, DIII cannot prevail in its claims for declaratory relief, quite title and trespass."
EDF's Attorney Fees Motion
EDF moved for attorney fees under the Amended Easement Agreement, arguing it "prevailed in 'litigation undertaken in connection with any default under' the Amended [Easement Agreement]. . . . DIII's claims revolve around a singular assertion: that EDF exceeded the scope of its rights" under the Amended Easement Agreement and that EDF "failed to fulfill its obligations thereunder." EDF also claimed it was entitled to attorney fees under the Letter Agreement because that document "effectively became part of the" Amended Easement Agreement and because it had the right to install collection lines pursuant to the Letter Agreement.
In opposition, DIII contended the underlying action did not involve a dispute " 'in connection' " with the Letter Agreement. DIII also argued the underlying action did not come within the scope of the Amended Easement Agreement, because DIII "did not allege a default" under that agreement, nor a "breach of contract cause of action." According to DIII, the "objective" of the lawsuit "was not to remedy a default" under the Amended Easement Agreement but rather to remedy EDF's "wrongful use" of the property. As DIII explained, the "foundation of the dispute is trespass."
The court granted the motion and awarded EDF attorney fees of $158,616.90. It determined the litigation concerned the Letter Agreement because the summary judgment ruling "referred to that Letter Agreement multiple times, and confirmed its importance to the resolution of that motion." The court also concluded EDF was entitled to attorney fees under the Amended Easement Agreement because, "[b]oiled down to its essence, [DIII]'s contention in this litigation was that EDF failed to limit its transmission to on- property towers as [DIII] interpreted the [Amended Easement Agreement] to require." According to the court, DIII cited no authority precluding "the interpretation of the word 'default' to include this alleged violation of the limits of permission." Finally, the court noted it had discretion to award fees incurred on non-contract causes of action where the contract and non-contract claims are inextricably intertwined and that "although [DIII]'s complaint contained a cause of action labeled as trespass, the court finds that EDF is entitled to recovery of all the fees it reasonably incurred to defend against the entirety of this case."
DISCUSSION
DIII contends EDF is not entitled to attorney fees under the Amended Easement Agreement or the Letter Agreement and, as a result, there is "no legal basis" for the attorney fee award.
"On appeal, a determination of the legal basis for an attorney fees award is reviewed de novo as a question of law. [Citation.] [¶] Each party to a lawsuit must pay his or her own attorney fees except where a statute or contract provides otherwise. [Citation.] Where a contract specifically provides for an award of attorney fees, Civil Code section 1717 allows recovery of attorney fees by whichever contracting party prevails, regardless of whether the contract specifies that party." (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966.) " 'Before section 1717 comes into play, it is necessary to determine whether the parties entered an agreement for the payment of attorney fees and, if so, the scope of the attorney fee agreement.' [Citation.] This determination requires us to apply traditional rules of contract interpretation." (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751-752, fn. omitted (Mountain Air Enterprises).)
Undesignated statutory references are to the Civil Code. --------
As stated above, the Amended Easement Agreement authorizes an award of attorney fees to the prevailing party "in any . . . litigation undertaken in connection with any default under" that agreement. DIII acknowledges the Amended Easement Agreement equates a default with a "failure to perform any obligation" under the agreement, but contends the underlying litigation arose out of EDF's unauthorized use and encroachment of the property, not out of an alleged default under the Amended Easement Agreement.
We are not persuaded by DIII's narrow characterization of the underlying litigation, nor by its narrow interpretation of the term "default" in the Amended Easement Agreement. The complaint alleged EDF's transmission of electricity from off-property turbines was "outside the scope" of the Amended Easement Agreement. The declaratory relief and quiet title causes of action similarly alleged EDF's actions "exceed[ed] the scope" of the Amended Easement Agreement; the trespass claim alleged the Amended Easement Agreement defined EDF's use of the property and that EDF's transmission of electricity from off-property turbines violated that agreement and constituted a trespass. The crux of DIII's claims is EDF failed to limit its transmission of electricity to on-property turbines, thereby violating the Amended Easement Agreement.
The trial court's order granting EDF's summary judgment motion and our opinion in DIII's prior appeal further demonstrate the underlying litigation concerned the parties' rights and obligations under the Amended Easement Agreement and EDF's purported failure to comply with those obligations. (See Mountain Air Enterprises, supra, 3 Cal.5th at pp. 760-761 [courts may consider pleaded theories of recovery and the evidence produced at trial to determine "whether a claim on which attorney fees are incurred is within the scope of a fees provision"].) In granting the summary judgment motion, the trial court analyzed the Amended Easement Agreement and the Letter Agreement, and determined EDF was entitled to judgment as a matter of law because the Amended Easement Agreement, as clarified by the Letter Agreement, authorized EDF to transmit electricity from off-property turbines.
In affirming the judgment, we examined the Amended Easement Agreement and determined it allowed "the placement of lines transmitting energy from all Shiloh II turbines," including those "not located on the property." We interpreted the Amended Easement Agreement, determined an ambiguity existed, and considered extrinsic evidence in the Letter Agreement to resolve that ambiguity. DIII concedes as much by noting the prior appeal concerned the interpretation of the Amended Easement Agreement.
DIII observes the complaint "did not allege EDF 'defaulted' " under the Amended Easement Agreement or assert "a breach-of-contract claim for any 'default.' " No such allegations were required. (See Mountain Air Enterprises, supra, 3 Cal.5th at p. 758 [attorney fees recoverable even where operative complaint did not reference the option agreement and where "the enforcement or interpretation of the option agreement was not the declared purpose" of the lawsuit].) To recover attorney fees under the Amended Easement Agreement, the litigation was to be brought "in connection with any default" of that agreement. As discussed above, the litigation was brought in connection with EDF's alleged default of the Amended Easement Agreement. (Id. at p. 760.)
We conclude EDF was entitled to an award of attorney fees under the attorney fees clause of the Amended Easement Agreement. DIII's reliance on Hasler v. Howard (2004) 120 Cal.App.4th 1023, and Kim v. Kang (9th Cir. 1998) 154 F.3d 996, does not alter our conclusion. Those cases involved narrow attorney fee provisions authorizing recovery of such fees only where the litigation concerned " 'the obligation to pay compensation' " under the agreement (Hasler, at p. 1027) or was " 'instituted to collect a sum due' " to a broker. (Kim, at p. 1001.) The attorney fee clause in the Amended Easement Agreement is significantly broader than in Hasler and Kim.
Finally, we reject DIII's argument that EDF was not entitled to recover attorney fees on noncontractual claims under section 1717. " 'California courts liberally construe the term " ' "on a contract" ' " as used within section 1717. [Citation.] As long as the action "involve[s]" a contract it is " 'on [the] contract' " within the meaning of section 1717.' " (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) Here, the complaint referred to the Amended Easement Agreement numerous times. The complaint also alleged the Amended Easement Agreement authorized an award of attorney fees to the prevailing party, and sought an award of such fees. Furthermore, the complaint included a declaratory relief claim premised on a dispute over the scope of the Amended Easement Agreement. "Plainly, a declaratory relief action that seeks to establish the parties' rights under a contract is an action sounding in contract." (Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 711.) "Given these facts we detect no error in the implied determination that [the complaint] was 'on [the] contract' for purposes of section 1717(a)." (Blickman, at p. 895.)
Having concluded the Amended Easement Agreement authorizes the attorney fee award, we need not consider whether EDF is also entitled to attorney fees under the Letter Agreement.
DISPOSITION
The trial court's July 21, 2016 order awarding EDF attorney fees is affirmed. EDF is entitled to costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
/s/_________
Jones, P. J. We concur: /s/_________
Simons, J. /s/_________
Needham, J.