Opinion
D072543
06-18-2018
JOSEPH HOWETH et al., Plaintiffs and Respondents, v. TINA COFFELT, Defendant and Appellant.
Galuppo & Blake, Louis A. Galuppo, Steven W. Blake, Andrew E. Hall and Daniel T. Watts for Defendant and Appellant. Law Offices of Robert L. Shipley, Robert L. Shipley and Brandon S. Gray for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2014-00034982-CU-MC-NC) APPEAL from a postjudgment order of the Superior Court of San Diego County, Timothy M. Casserly, Judge. Affirmed. Galuppo & Blake, Louis A. Galuppo, Steven W. Blake, Andrew E. Hall and Daniel T. Watts for Defendant and Appellant. Law Offices of Robert L. Shipley, Robert L. Shipley and Brandon S. Gray for Plaintiffs and Respondents.
This is the second time we have been presented with appellate issues arising from these parties' dispute over their respective easement rights to the use of a common residential driveway. Plaintiffs and respondents Joseph and Monique Howeth (the Howeths) own one property served by a recorded reciprocal easement, and they sued the other owner, defendant and appellant Tina Coffelt, for injunctive relief against interference with its terms. A negotiated settlement agreement (the Agreement) and stipulated judgment ensued.
In our prior published opinion in this matter, Howeth v. Coffelt (2017) 18 Cal.App.5th 126 (Howeth I), we dismissed an appeal by the Howeths of the order denying their postjudgment motion that was based on the enforcement mechanism specified in the Agreement. After the stipulated judgment was entered, their motion sought the issuance of an "interim judgment" awarding them fines and attorney fees against Coffelt. The trial court's denial of their motion was based on its finding that it did not have any such continuing enforcement jurisdiction, such that the appellants', the Howeths', proper remedy was to file a new lawsuit for breach of the Agreement of settlement. We accordingly concluded in Howeth I that the denial order was not an appealable one. (Code Civ. Proc., § 904.1, subd. (a)(2) [appeal may be taken from "an order made after a judgment made appealable by paragraph [a](1)"].)
While the Howeth I appeal was pending (supra, 18 Cal.App.5th 126), Coffelt brought a motion for an award of attorney fees and costs, invoking Civil Code section 1717. She sought to be declared the prevailing party under the Agreement and to receive fees and costs "for amounts incurred successfully defending against Plaintiffs' motion for breach of the settlement agreement." The trial court denied Coffelt's motion, concluding that within the meaning of this contractual attorney fees statute, neither party had "prevailed" at the time of denial of the Howeths' previous motion, when the court ruled it lacked jurisdiction to entertain it.
All further statutory references are to the Civil Code unless otherwise specified. In relevant part, section 1717, subdivision (a) provides: "In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, 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." (Italics added.) The "prevailing party" is usually defined as "the party who recovered a greater relief in the action on the contract." (§ 1717, subd. (b)(1); italics added.)
Now the appellant, Coffelt claims the order denying her subsequent fees motion should be reversed based on principles of reciprocity as applied to attorney fees clauses, specifically, the one found in the Agreement. Coffelt claims she "prevailed" at the previous motion hearing, even though the trial court correctly decided it lacked jurisdiction to enforce the Agreement as the Howeths requested. (See Hsu v. Abbara (1995) 9 Cal.4th 863, 870 (Hsu) [party in an action based on contract may be entitled to an award of § 1717 attorney fees " 'even when the party prevails on grounds the contract is inapplicable, invalid, unenforceable or nonexistent, if the other party would have been entitled to attorney's fees had it prevailed' "].) Since the Howeths' previous motion had asked for attorney fees if they received such an interim judgment, Coffelt argues their request in that respect now judicially estops them from contesting her own right to fees, and that she now qualifies as a "prevailing party in an 'enforcement action'." (International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1178-1179 (Emigh) ["party's claim of entitlement to attorney fees based on a breach of contract containing a fees provision judicially estops that party from contending the provision does not authorize an award of attorney fees"]; id. at pp. 1189-1192.)
Alternatively, Coffelt contends (apparently for the first time on appeal) that since the Howeths' complaint giving rise to the Agreement had cited to an attorney fees clause in the underlying reciprocal easement, she can now separately invoke that clause in the easement. She characterizes the Howeths' previous motion proceeding as an enforcement matter for adjudicating rights under the reciprocal easement.
For purposes of our review, the current ruling on Coffelt's motion should appropriately be viewed as a collateral matter relating to the stipulated judgment. (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 651-652 (Lakin) [postjudgment order is appealable if it affected or related to the judgment].) As we will explain (pt. III, post), Coffelt's attorney fees motion, while invoking the terms of the Agreement, did not as a matter of law arise in an action on a contract, to create such an entitlement. (§ 1717, subd. (a).) Due to the nature of the enforcement mechanism created by the Agreement and in light of the previous restrictive ruling by the trial court (as fully discussed in Howeth I, supra, 18 Cal.App.5th 126), we now conclude Coffelt's resistance to the Howeths' motion, even if deemed successful, was not the equivalent of prevailing in an action on a contract as required under section 1717.
Within the meaning of the prevailing party determination required by section 1717, subdivision (b)(1), we further conclude the trial court appropriately exercised its discretion to rule that no party had prevailed within the meaning of the Agreement's attorney fees provision, on a reciprocal basis or otherwise. (§ 1717, subd. (b)(1) [prevailing party determination is discretionary where statutory criteria otherwise met]; Bear Creek Planning Comm. v. Ferwerda (2011) 193 Cal.App.4th 1178, 1187-1188 (Bear Creek Planning Comm.) [no basis, either contractual or statutory, on which to award attorney fees, where entitlement to attorney fees under a contract was incorrectly alleged and unsupported by the record].) Consistent with the approach we previously used in Howeth I, supra, 18 Cal.App.5th 126, to evaluate the parties' available and stipulated remedies, we can express no opinion at this stage of the proceedings on any attorney fee entitlements under either the Agreement or the reciprocal easement. We affirm the order denying Coffelt's motion for attorney fees.
I
BACKGROUND
A. Agreement and Stipulated Judgment
In the Howeths' complaint, they alleged Coffelt had engaged in harassing behavior and they were entitled to injunctive relief regarding the manner and scope of her use of the driveway area, which is the subject of the declaration of reciprocal easement recorded by the common developer of their properties. The complaint attached a copy of the reciprocal easement for purposes of defining its terms and relying on its attorney fees provision.
The reciprocal easement includes an attorney fees and costs provision applicable to "any action or proceeding against another Parcel Owner for the adjudication of any rights under this Declaration," and allows the "prevailing Parcel Owner as determined by the court" to recover attorney fees, costs, and expenses. (Italics added.)
After several months of litigation, the parties appeared for a mandatory settlement conference, where they arrived at the Agreement for definition of the proper scope of the reciprocal easement, and formalization of it in a stipulated consent judgment. This judgment incorporated a copy of the reporter's transcript of the settlement conference at which the parties' attorneys recited the terms of the Agreement, covering the use of the easement and allowing for an award of prevailing party attorney fees "in any action to enforce" payment of prescribed fines, should any noticed violations of the Agreement occur. (Italics added.) Alleged violations soon occurred.
As outlined in Howeth I, supra, 18 Cal.App.5th 126, the Agreement "is not a model of clarity. Nevertheless, the parties appeared to agree that they could both park on the driveway," but only in certain spots. (Id. at p. 129.) Also, to enforce the Agreement, "the parties stipulated that any violation of these rules would permit the nonviolating party to notify the violating party via e-mail and would subject the violating party to a $500 fine. In anticipation of a party refusing to pay the fine, the parties agreed that 'if an action [is] required to enforce payment of the easement violation amount or what we have chosen to call the fine, the amount of the fine will be $1,000. The prevailing party shall be entitled to recover attorney's fees and costs in bringing the enforcement action.' The parties also agreed that the agreement 'shall be enforceable via contempt proceedings on an expedited basis pursuant to the judgment entered by this court today.' All parties acknowledged that the agreement was a 'legally binding contract' that would result in a stipulated judgment," and one was entered accordingly. (Id. at pp. 129-130.)
Over the next few months, the driveway disputes continued. The Howeths filed a motion to request relief styled "entry of interim money judgment" against Coffelt, seeking $12,000 in fines, costs and attorney fees that allegedly arose from 12 separate violations by Coffelt, for which she refused to pay fines. As already explained, their motion was denied. And by dismissing the appeal from the trial court's order denying the relief requested, Howeth I left in place the court's conclusion that it was "without jurisdiction to entertain the Plaintiffs' motion, and the parties' remedy is to pursue a breach of contract claim for any purported breach of the settlement agreement." (Howeth I, supra, 18 Cal.App.5th 126, 130.)
B. Coffelt's Attorney Fees Motion
Following the denial of the Howeths' motion for an interim judgment, Coffelt promptly filed a motion seeking to recover attorney fees, claiming her defense of the motion had been successful and she was the prevailing party, for purposes of section 1717. She argued she defeated recovery by the Howeths on their entire contract claim (e.g., the fines and associated relief), when the trial court decided the Agreement was not presently enforceable. Mainly, she relied on Emigh, supra, 84 Cal.App.4th 1175, 1178-1179 to argue that the Howeths were judicially estopped from contesting her motion for fees, since they had relied on the Agreement and its fees provision when bringing their own motion for enforcement and including a fees request.
The Howeths opposed the request for fees, and brought a related motion to tax costs. They argued that Coffelt was mischaracterizing the ruling on their own motion, because the trial court never effectively invalidated the Agreement or held it to be unenforceable, but rather, only required a separate lawsuit to be filed if enforcement of the Agreement were to be pursued.
In reply, Coffelt claimed that she had not achieved merely a procedural victory, as in the recent California Supreme Court case, DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 977 (DisputeSuite) [fees under section 1717 are awardable to party who prevails on the contract overall, not to party prevailing only at an interim procedural step such as forum selection].) Coffelt argued she had defeated all the contract claims and therefore was entitled to fees, in light of the Howeths' own previous claim for fees. She contended they were estopped from denying an award of fees was due to her.
After hearing argument, the court issued a ruling denying Coffelt's motion for attorney fees and costs, stating that neither party had prevailed when the Howeths' previous motion was ruled upon, since at the time, the court had simply concluded it was without jurisdiction to entertain it. The Howeths' related motion to tax costs was deemed to be moot. Coffelt appeals.
II
APPEALABILITY
"This court cannot entertain an appeal taken from a nonappealable judgment or order. '[T]he question of whether an order is appealable goes to the jurisdiction of an appellate court, which is not a matter of shades of grey but rather of black or white.' " (Howeth I, supra, 18 Cal.App.5th 126, 130; Farwell v. Sunset Mesa Property Owners Ass'n., Inc. (2008) 163 Cal.App.4th 1545, 1550.) We are "dutybound" to address the question of jurisdiction, and are mindful it is not conferred by consent. (City of Gardena v. Rikuo Corp. (2011) 192 Cal.App.4th 595, 599, fn. 3, 604.)
Our decision in Howeth I, supra, 18 Cal.App.5th 126, interpreted the stipulated judgment as a consent judgment that was not itself appealable within the terms of Code of Civil Procedure section 904.1, subdivision (a)(2) [to be appealable, an order must follow an appealable judgment].) In the current appeal, the Howeths briefly argue the current order is also not appealable, as lacking all the "earmarks" of a final judgment. (Los Angeles Times v. Alameda Corridor Transportation Authority (2001) 88 Cal.App.4th 1381, 1388 (Los Angeles Times).) That case, however, actually describes an applicable exception to the nonappealability rule: "[C]ase law is clear that an order denying attorney fees may be appealable as a final judgment, even when the underlying order or judgment is not appealable." (Ibid.) The subject order is properly considered to be a collateral and appealable one, as next explained.
Coffelt's reply brief asks this court to exercise its discretion to construe the appeal as a petition for writ of mandate. (See Olson v. Cory (1983) 35 Cal.3d 390, 401.) It is unnecessary to use that approach to determine if there are exceptional circumstances warranting relief in mandamus, since our appealability determination provides an adequate opportunity for review.
In Howeth I, supra, 18 Cal.App.5th 126, we could not conclude that the Howeths' appeal, going to the merits of the Agreement, was properly before us, due to the evident distinctions between the scope of the Agreement as compared to the subsequent stipulated judgment. (Id. at p. 133 ["Because the Howeths' motion seeks to enforce the settlement agreement rather than the judgment, it does not affect or relate to the judgment and is not appealable."].) In the current appeal, we again turn for the applicable rule to Lakin, supra, 6 Cal.4th 644, 651-652. A postjudgment order that is appealable " 'must either affect the judgment or relate to it by enforcing it or staying its execution.' " (Ibid.) Such an order must be final as to the collateral matter involved, and the subject of it must be in fact collateral to the general subject of the litigation. (Sjoberg v. Hastorf (1948) 33 Cal.2d 116, 119 (Sjoberg); Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696 [reviewing court has jurisdiction over a direct appeal only when there is an appealable order or an appealable judgment].)
We are well aware of authorities appearing to hold that a postjudgment order which does not direct the payment of money, or the performance of an act, is not sufficiently collateral in nature to be appealable. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2017) ¶ 2:78, p. 2-56; Sjoberg, supra, 33 Cal.2d 116, 119.) As in Howeth I, supra, 18 Cal.App.5th 126, 133, the "temporal circumstance, standing alone, is insufficient to establish the appealability of the order." (Code Civ. Proc., § 904.1, subd. (a)(2); Los Angeles Times, supra, 88 Cal.App.4th at p. 1388 ["It is the 'substance and effect of the order, not its label or form, [that] determines whether it is appealable as a final judgment.' "].)
On appealability, we look to the nature of the order and whether it relates to the subject of the judgment. (See Muller v. Fresno Community Hospital & Medical Center (2009) 172 Cal.App.4th 887, 904-905 (Muller) [order resolving a severable issue and finally determining the rights of the party is deemed to be collateral in nature].) In Muller, the court interpreted the relevant authorities in this manner: "When the order does not require a payment of money or the performance of an act, the Supreme Court will find the order appealable without reference to these limitations, as long as the court is satisfied that the order is truly collateral." (Id. at p. 902, italics added; see Sjoberg, supra, 33 Cal.2d 116; Meehan v. Hopps (1955) 45 Cal.2d 213, 215-217.)
We consider the current appeal to fall within the category of collateral and appealable orders, since the decision on whether to impose contractual attorney fee liability is a matter properly relating to the validity of an underlying judgment and is equivalent to an enforcement matter. (Lakin, supra, 6 Cal.4th 644, 651-652.) Our conclusion that asserting jurisdiction over this appeal is proper is buttressed by the trial court's statutory interpretation in the ruling on appeal, which reached prevailing party issues. Although its "no prevailing party" determination was discretionary in nature, there could have been no basis for considering that issue without an underlying statutory or contractual authorization. (Santisas v. Goodin (1998) 17 Cal.4th 599, 614 (Santisas); Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 379; Code Civ. Proc., § 1021.)
For purposes of analysis, we assume that the court had all the section 1717 issues before it. These include questions of law on an undisputed record about whether Coffelt qualified on a contractual basis for the award she requested under section 1717 (pt. III, post; Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1213 [question of law whether statutory criteria for an award of attorney fees are satisfied]; Sessions Payroll Management v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677). We then turn to the abuse of discretion standard for analysis of the trial court's conclusion there was not yet any prevailing party in this matter, to justify any attorney fees award. (§ 1717, subd. (b)(1); pt. IV, post.)
III
SECTION 1717 ENTITLEMENT ISSUES
A. Nature of the Agreement and its Enforcement Mechanism
Initially, we address as a question of law whether a legal basis for an award of attorney fees has been shown. (§ 1717, subd. (a); Conservatorship of Whitley, supra, 50 Cal.4th 1206, 1213; Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.) The trial court's rulings disclose that it properly viewed the Agreement as a contract in this settlement context, utilizing legal principles generally applicable to contracts. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.) In considering Coffelt's current motion for fees, the court was required to decide whether the Howeths' previous motion for an interim judgment amounted to an "action on a contract," which would invoke a specific provision for attorney fees and costs awards. Coffelt sought to qualify as a prevailing party "on the contract" and to show her fees were "incurred to enforce that contract." (§ 1717, subd. (a).)
The court's ruling was consistent with precedent allowing settlement agreements in a pending case to be enforced either through a separate suit in equity, or motions for summary judgment or amendments to the pleadings, to accommodate the development of facts outside the original pleadings. (Levy v. Superior Court (1995) 10 Cal.4th 578, 584-585 [referring to law in effect until 1981 enactment of Code Civ. Proc., § 664.6].)
At the time of the Howeths' previous motion for an interim judgment, the trial court was required to interpret the rights conferred under the Agreement, which contained an enforcement mechanism involving the filing of a subsequent action if any breaches of that Agreement were to be proven. As this court previously pointed out in Howeth I, supra, 18 Cal.App.5th at page 132, the Agreement "did not 'expressly contemplate[] further court proceedings and a separate ruling.' " Instead, it provided that the Agreement for a stipulated judgment " 'represents a final resolution of all their disputes as of today's date.' " (Ibid.) We explained that the Howeths' motion at that time was seeking to enforce the settlement agreement, rather than the judgment itself. (Id. at p. 133.) The Howeths sought an award of damages pursuant to the terms of the Agreement, but only in the case of future disputes. The only dispute they had already resolved was over the scope and interpretation of the reciprocal easement, as alleged in the underlying complaint. (Id. at pp. 132-133.) Those were not framed as contract claims. The Howeths' motion for an interim judgment imposing contractual fines invoked the terms of the Agreement, but it did not qualify as an independent action or proceeding authorized by it or another contract. (Id. at pp. 133-135.)
It did not make any difference in the Howeth I opinion that Code of Civil Procedure section 664.6 appears to permit a court to " 'retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.' " (Howeth I, supra, 18 Cal.App.5th at p. 134.) This was not a case of a stipulated settlement resulting in a dismissal, where the parties failed to fulfill their promises but had provided for the court to retain jurisdiction for purposes of supervision. (Ibid.) Instead, the format of the Agreement did not provide for the trial court to retain jurisdiction over a motion summarily purporting to enforce the terms of the Agreement, as applied to new disputes that arose after a final judgment is entered. (Ibid.)
Because there was no voluntary dismissal of the complaint, the parties do not make any arguments on appeal about the applicability of section 1717, subdivision (b)(2), and we need not consider its unique prevailing party language [no prevailing party in such a voluntary dismissal after settlement].)
Thus, the trial court's ruling on the Howeths' previous motion to enforce the Agreement was not as far ranging as Coffelt argues in this appeal. She seems to claim the court previously declared the Agreement was void or unenforceable. Rather, the trial court properly issued a restrictive interpretation of the Agreement, as requiring a subsequent contractual action to be brought to determine whether a breach had occurred regarding the rights and duties existing under it. In no way did the trial court, or this court, establish that the Agreement is nonexistent, invalid or unenforceable on its merits or through its attorney fees provision. Instead, any issues of breach were properly deferred for resolution. (Howeth I, supra, 18 Cal.App.5th at pp. 133-135.)
B. Other Procedural Contexts for Interpretation of Section 1717
We next consider if Coffelt's claim of entitlement to enforce the attorney fees portion of the Agreement was well grounded in an "action" on a contract, within the meaning of the Agreement and section 1717. First, to the extent Coffelt now relies on the terms of the reciprocal easement to argue a right to contractual attorney fees from a prior "proceeding" (i.e., the motion by the Howeths for an interim judgment), we note her moving papers below did not contain such an argument and the trial court thus was not required to consider it. (See fn. 2, ante [language of reciprocal easement attorney fees provision].) For that reason, and also because the Agreement's requisite separate breach of contract action has not been shown to be filed or pursued, we are not now required to consider any potential attorney fee liability under the reciprocal easement.
Coffelt mainly claims her filing of opposition to the Howeths' motion for an interim judgment qualified her as "prevailing" on a contract action they brought, even though the trial court denied their motion for lack of jurisdiction. She relies on Benjamin, Weill & Mazer v. Kors (2011) 195 Cal.App.4th 40, 78 (Kors) for the statement that " 'California courts construe the term "on the contract" liberally. " 'As long as the action "involve[s]" a contract it is " 'on [the] contract' " within the meaning of section 1717. [Citations.]' [Citations.]" [Citation.] Where an attorney fee clause provides for an award of fees incurred in enforcing the contract, the prevailing party is entitled to fees for any action "on the contract," whether incurred offensively or defensively. [Citations.] Such fees are properly awarded under section 1717 "to the extent that the action in fact is an action to enforce—or avoid enforcement of—the specific contract." ' " (Ibid.)
As explained in Santisas, supra, 17 Cal.4th 599, section 1717 applies only to an "action" that contains at least one contract claim. Where "an action asserts both contract and tort or other noncontract claims, section 1717 applies only to attorney fees incurred to litigate the contract claims." (Santisas, supra, at p. 615.) In such a case, the courts utilize a practical or pragmatic approach when identifying the prevailing party in a mixed action, after a voluntary dismissal of the case. (Id. at pp. 615-623.) Then, "a court may determine whether there is a prevailing party, and if so which party meets that definition, by examining the terms of the contract at issue. . . . If, as here, the contract allows the prevailing party to recover attorney fees but does not define 'prevailing party' or expressly either authorize or bar recovery of attorney fees in the event an action is dismissed, a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement, or otherwise." (Id. at p. 622, italics added; Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1018-1020.)
The Howeths' underlying complaint sought injunctive relief, seeming to combine that theory with a declaratory relief approach. (Kors, supra, 195 Cal.App.4th 40, 78 [" 'An action for declaratory relief can be an action "on a contract" ' "].) There is no severable contract issue identifiable within the underlying complaint, that has been finally resolved in any motion proceedings. Nor have separate tort issues yet been adjudicated. (Code Civ. Proc., §§ 1021, 1032 [attorney fees as costs].) The stipulated judgment that resulted from the parties' settlement formalized the Agreement, but compliance with the Agreement's own terms was still required, as we confirmed in Howeth I, supra, 18 Cal.App.5th 126. No attorney fees could yet have been incurred within this action to litigate and prevail upon any contract claims, based upon the terms of the Agreement, because our prior opinion established that the terms of the Agreement require that a separate action be brought.
Kors, supra, 195 Cal.App.4th 40, is distinguishable on its facts because it involved a party to an arbitration clause (in an attorney representation agreement) who prevailed on a petition to compel arbitration, within an underlying civil action. As such, she had "incurred attorney fees in vindicating a contractual right," and was not required to file a separate claim in arbitration in order to recover those expenses. (Id. at p. 79.) Within the civil action, that party had " 'an immediate right to make a claim for the attorney fees [s]he incurred in getting the trial court to move the controversy to arbitration.' " (Ibid.) (See Otay River Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796, 807 (Otay River Constructors) [if party prevails on merits of a severable contractual issue, such as arbitrability, contractual attorney fees can be awarded to it].) In the case before us, neither the Agreement or the stipulated judgment successfully severed out a contractual entitlement for enforcement within the same proceeding. (Howeth I, supra, 18 Cal.App.5th 126, 133-135.) Coffelt cannot show she realized her "litigation objectives" to prevail on the Agreement, simply because the trial court declared it lacked jurisdiction to rule on the merits of the Howeths' motion for an interim judgment, as an enforcement matter. (Santisas, supra, 17 Cal.4th at p. 622.)
C. Claim of Estoppel
Coffelt next argues the Agreement's attorney fees clause can be invoked solely on an estoppel theory, as follows: "The Howeths brought claims against Coffelt alleging that she was liable for tens of thousands of dollars in attorney fees. If they had prevailed, they would have gotten what they asked for - that's what it means to prevail, after all. Because she would have been liable if her opponents prevailed, Coffelt is entitled to fees if her opponents do not prevail. Whether one calls this judicial estoppel, reciprocity, or something else, the result is the same. The Howeths demanded fees as the prevailing party under a contract whose provisions allow for fees; now that Coffelt prevailed, she gets those same fees."
The problem with Coffelt's argument is that a mere allegation of entitlement to attorney fees is not the same as actual exposure to liability for them. Reciprocity principles still require that the actual terms of the contract be invoked in some manner, and in the action in which the fees were incurred. For example, in Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, the court interpreted section 1717 as providing a reciprocal remedy for nonsignatory defendants who were sued on a contract "as if" they were parties to it, when the plaintiff would clearly be entitled to attorney fees if he had prevailed in enforcing the contractual obligation against the defendants. (Reynolds, supra, at p. 128.) That plaintiff had entered into a contract containing an attorney fees provision with two companies. The companies went bankrupt, and the plaintiff sought to hold defendants personally liable for debts by claiming the defendants were "alter egos" of the bankrupt companies. (Id. at p. 127.) The plaintiff did not prevail on its claim that the defendants were "alter egos" of the corporation. (Id. at p. 129.)
Nevertheless, the court in Reynolds, supra, 25 Cal.3d at page 128 determined that the defendants were entitled to recover attorney fees because they were sued on the contract "as if" they were parties to it (alter egos), and had the plaintiff prevailed, they would have been responsible for plaintiff's attorney fees. Coffelt appears to be making a similar claim, that she defeated the Howeths' motion "as if" the Agreement had permitted them to bring a motion of that nature, which it did not. However, " '[t]he mere fact that a plaintiff alleges an entitlement to attorney fees does not create an entitlement to same by a prevailing defendant . . . .' " (Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 715, fn. 21.)
The operative rule appears to be that a section 1717 claimant must show an actual exposure to liability for attorney fees, not mere allegations of exposure that could give rise to an estoppel theory. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 899 ["A party claiming fees under section 1717 must 'establish that the opposing party actually would have been entitled to receive them if he or she had been the prevailing party.' "].
In Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, supra, 162 Cal.App.4th at page 899, footnote 12, the court referred to comparable analysis in Loduca v. Polyzos (2007) 153 Cal.App.4th 334, 341, 344 [signatory to contract could recover fees from losing third party beneficiary if signatories' apparent intent was to allow such a third party to seek and recover attorney fees].)
It is important to note that the court that issued Emigh, supra, 84 Cal.App.4th 1175 (the authority chiefly relied on by Coffelt for her estoppel arguments), subsequently limited and reframed its own analysis. In Bear Creek Planning Comm., supra, 193 Cal.App.4th 1178, 1187-1188, the Third District Court of Appeal held that a property owner's mere request for attorney fees, if he prevailed in his action against his subdivision association's committees, and others, did not alone make the owner liable to pay fees, absent any proof there was an applicable and valid attorney fee clause at issue. Such a provision cannot be imported from another document to which the parties did not agree. (Id. at p. 1185 [CC&Rs omitted fees clause and related planning documents sued upon were not contractual, hence, there was no support for the claimed fee award].)
In Bear Creek Planning Comm., supra, 193 Cal.App.4th 1178, the court traced the history of several such attorney fee entitlement cases since Emigh, as follows:
"Pursuant to Civil Code section 1717, 'a prevailing party is entitled to attorney fees only if it can prove it would have been liable for attorney fees had the opponent prevailed.' (M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One (2003) 111 Cal.App.4th 456, 467.) In Perez, we disapproved dictum in our earlier opinion in [Emigh, supra, 84 Cal.App.4th 1175], which said, 'Where a party claims a contract allows fees and prevails, it gets fees. Where it claims a contract allows fees and loses, it must pay fees.' ([Emigh] at p. 1190.) We explained in Perez: 'The fallacy of the rule stated in [Emigh] is the assumption that if the party who claims that a contract allows fees prevails in the underlying litigation, it gets attorney fees. In truth, the party must still prove that the contract allows attorney fees. The mere allegation is not enough.' (M. Perez, at p. 468.) The same applies for a losing plaintiff. For a losing plaintiff to be required to pay attorney fees, the plaintiff's 'bare allegation that [h]e is entitled to receive attorney's fees [is] not . . . sufficient'; he also had to have established the attorney fees clauses 'actually entitled' him to recover fees." (Bear Creek Planning
Comm., supra, 193 Cal.App.4th 1178, 1187-1188; italics added, original italics omitted.)
Bear Creek Planning Comm., supra, 193 Cal.App.4th 1178, 1187-1188 stands for the proposition that a party seeking attorney fees must demonstrate that the fees were incurred in an existing action on the contract, and that the contract itself contains a valid and applicable attorney fees provision. "That the plaintiff asked for fees in his complaint did not in itself create a basis for a fee award to any prevailing party." (Linear Technology Corp. v. Tokyo Electron, Ltd. (2011) 200 Cal.App.4th 1527, 1539 (Linear Technology Corp.) [interpreting Bear Creek Planning Comm.].) The party seeking fees must establish the attorney fees clause exists in an applicable document, to "actually entitle" someone else to an award of fees, in order for the clause to become subject to reciprocal treatment. (Bear Creek Planning Comm., supra, at p. 1187.)
Linear Technology Corp., supra, 200 Cal.App.4th 1527, 1535-1539 further interpreted the same line of cases, concluding that where the defendant is not challenging the existence of an attorney fee provision but is only disputing the allegation of breach, "a prevailing party does not obtain fees if the contract contains no such provision." (Id. at p. 1538.) Where a defendant that litigated a contract containing a fees clause has disputed the existence or validity of the contract, and successfully challenged the applicability of that contract or its fee clause, "then that defendant is entitled to its fees, as the plaintiff would have been had it prevailed. In short, '[w]here a plaintiff claims breach of a contract containing an attorney fee provision and the defendant asserts there is no contract and wins, it will have established that there is no contract and, hence, no attorney fee provision. Nevertheless, since the plaintiff would have been entitled to attorney fees if the plaintiff had succeeded in proving there was a contract, courts have recognized a right of the defendant to recover attorney fees even if [the] defendant proves there was no contract, in order to further the purposes of [] section 1717.' " (Ibid.) This analysis presupposes there was an applicable attorney fees provision in existence.
In our situation, Coffelt's opposition to the Howeths' motion for an interim judgment certainly disputed their allegations of breach of the Agreement. But Coffelt did not seek to prove there was no such contract or Agreement, nor did she succeed at that. Instead, the result was that the Agreement did not allow litigation within the same proceeding, but required a new and different one, so there was no operative provision for awarding fees in any applicable contract documents, at the time Coffelt was opposing the Howeths' motion. Howeth I, supra, 18 Cal.App.5th 126, 133-135 established that baseline. Neither party can be said to have prevailed at that time, as the trial court correctly ruled in this attorney fees matter. (See Linear Technology Corp., supra, 200 Cal.App.4th 1527, 1539.)
These principles indicate that as a matter of pleading and practice, it was not enough for a mere allegation of entitlement to attorney fees to be raised, to create reciprocal effect. The proper purposes of section 1717 in awarding fees are not furthered through such hypothetical estoppel allegations. (See Linear Technology Corp., supra, 200 Cal.App.4th 1527, 1539.) As a matter of law, the trial court correctly concluded that based on the structure of the Agreement, containing an enforcement mechanism requiring a subsequent action, the Howeths' unsuccessful attempt to invoke and enforce the Agreement did not at this time support an award of attorney fees to Coffelt as their opponent, whether through estoppel or otherwise.
IV
SECTION 1717 PREVAILING PARTY ISSUES
Even under the construction of the Agreement as stated in Howeth I, supra, 18 Cal.App.5th 126 (requiring further proceedings to interpret its contractual provisions), Coffelt argues she has qualified under the statute as a prevailing party who achieved all her litigation objectives. The ruling she challenges, denying her motion for attorney fees by determining she was not the prevailing party in the previous Howeth motion proceedings, is evaluated for abuse of discretion. The trial court ruling on a motion for fees under section 1717 is vested with discretion in determining which party has prevailed on the contract, or that no party has. (Hsu, supra, 9 Cal.4th at p. 871.) Abuse of discretion occurs if the trial court exceeded the bounds of reason, or failed to apply correct legal standards and thereby took action outside the confines of the applicable principles of law or without substantial support in the evidence. (Gonzalez v. Munoz (2007) 156 Cal.App.4th 413, 420.)
In DisputeSuite, supra, 2 Cal.5th 968, the Supreme Court recently analyzed an analogous section 1717 prevailing party issue. There, the court decided that a defendant in an action arising out of contract (breach of obligation to pay commissions) was not entitled to a prevailing party award of attorney fees under section 1717, simply by obtaining "a dismissal from a California court on the ground that the agreement at issue contained a forum selection clause specifying the courts of another jurisdiction." (DisputeSuite, supra, at p. 971.) At the time that fees were sought, there was not yet any prevailing party, since "the action had already been refiled in the chosen jurisdiction and the parties' substantive disputes remained unresolved." (Ibid.) Under section 1717, subdivision (b)(1), neither party had yet achieved its litigation objectives "to an extent warranting an award of fees." (DisputeSuite, supra, at p. 971; Hsu, supra, 9 Cal.4th at p. 876 [prevailing party determination is to be made by comparing the parties' relative degrees of success "upon final resolution of the contract claims"].)
The fees request in DisputeSuite, supra, 2 Cal.5th 968 was directly sourced in a contract action, whereas the request before us arises out of a more attenuated context alleging injunctive and declaratory relief, and a subsequent Agreement for settlement. (Id. at p. 972.) Significantly, the Supreme Court established in that case that the results of preliminary procedural skirmishes, such as litigation over forum selection, are not considered as resolving the merits of the underlying contract claim. "A party does not become the prevailing party under the statute merely by obtaining a forum for resolution of the contractual dispute or by moving it from one forum to another." (Id. at p. 976.)
Here, Coffelt cannot claim her opposition to the Howeths' motion for an interim judgment somehow obtained an unqualified victory on a severable contract dispute, for purposes of contractual attorney fees entitlement. (Otay River Constructors, supra, 158 Cal.App.4th 796, 807.) Determinations on whether the Agreement has been breached were expressly deferred by its parties, and the courts, to a future, separately filed contract action. No record exists to show that any binding decision has been made on whether the Agreement was breached, to be dispositive of the contractual dispute or to enable a prevailing party determination to be made. (DisputeSuite, supra, 2 Cal.5th 968, 977-978, fns.1, 2.)
At most, Coffelt deflected or forestalled resolution of the contract matters. "By achieving that result, appellants no more 'prevailed' than does a fleeing army that outruns a pursuing one. Living to fight another day may be a kind of success, and surely it is better than defeat. But as long as the war goes on, neither side can be said to have prevailed." (Estate of Drummond (2007) 149 Cal.App.4th 46, 53.) "Whether [Coffelt] will ultimately be the overall victor, and become entitled to . . . attorney fees pursuant to the agreements, remains to be seen." (DisputeSuite, supra, 2 Cal.5th 968, 977.) In construing the pleadings and the history of this case, the trial court properly applied the law and exercised its discretion to determine that there is no prevailing party at this time. (§ 1717, subd. (b)(1).)
DISPOSITION
The postjudgment order is affirmed. Each party shall bear its own costs on appeal.
HUFFMAN, Acting P. J. WE CONCUR: NARES, J. O'ROURKE, J.