Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. RIC386409, Arnie Wuhrman, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.)
Sands & Associates, Leonard S. Sands and Heleni E. Suydam for Cross-defendant and Appellant.
No appearance by Cross-complainant and Respondent.
OPINION
King, J.
I. INTRODUCTION
The present appeal is from an order denying a motion for attorney fees and costs by appellant Regency Highlands, Inc. (Regency) against respondent Imperial Cabinets, Inc. (Imperial) which Regency filed following its successful motion for judgment on the pleadings. The trial court ruled that there was no prevailing party for the purpose of granting attorney fees because there was the possibility of future arbitration between the parties. Imperial has not filed a brief on appeal.
Several defendants, including Imperial and Regency, were sued for judicial foreclosure in connection with a construction project. Based on Regency’s opening brief, Regency apparently took over the role of general contractor on the project from Martin Construction (Martin), the original general contractor; thereafter, Regency defaulted on its construction loans. The construction funds were frozen and payments to subcontractors ceased, although they had previously supplied goods, labor, and services to the project. Imperial, a subcontractor, filed a cross-complaint against Regency for breach of contract and to foreclose mechanics’ liens against numerous parties, including Regency. Regency’s brief states that Imperial’s mechanics’ lien claims against Regency were dismissed on summary judgment. Imperial also settled its contract claims with all cross-defendants except Regency.
Regency was a nonsignatory to the construction subcontract between Martin and Imperial and did not possess a copy of the contract it assumed when it took Martin’s place as general contractor on the project. The copy of the contract Imperial submitted to Regency during discovery and to the trial court as an initial trial exhibit was missing one page. Imperial failed to produce a complete copy of the contract until the eve of trial, nearly five years into the litigation, despite Regency’s request for one. When Regency learned that the single missing page contained a mandatory arbitration provision, it moved for judgment on the pleadings on the ground the trial court lacked jurisdiction to hear the claim since Regency had not waived its right to arbitrate. The court ruled in favor of Regency.
Rather than staying the proceedings pending arbitration, the court dismissed Imperial’s breach of contract action with prejudice. After judgment was entered in Regency’s favor, it moved for nearly $40,000 in attorney fees and costs. The request for attorney fees was denied by the trial court. The court ruled that the judgment was not final for the purpose of awarding attorney fees because there was the potential for arbitration and the same parties could end up in a California court seeking to confirm an arbitrator’s award; at that time, attorney fees could be awarded.
We disagree with the trial court’s determination that there was not yet a prevailing party for the purpose of awarding attorney fees. In reversing the trial court’s decision, we find that Regency’s status as a nonsignatory to the construction subcontract does not bar its recovery of attorney fees. Regency defeated recovery on the only contract claim in the action and, as such, is the prevailing party as a matter of law. A decision on the merits need not be reached and the potential for future arbitration and litigation is no bar to recovery of attorney fees at this time. Regency is the prevailing party as a matter of law and is therefore entitled to recover its reasonable attorney fees and costs.
II. FACTS
On February 10, 2003, Imperial filed a cross-complaint against Regency and multiple other cross-defendants for breach of contract and to foreclose mechanics’ liens. Based on Regency’s brief, it appears that Imperial reached settlement agreements with all cross-defendants except Regency and its causes of action to foreclose its mechanics’ liens were dismissed. This left only Imperial’s breach of contract claim against Regency.
Imperial’s breach of contract claim was based on a subcontract between Imperial and Martin, the original general contractor for the construction project. Imperial alleged that Regency assumed the contract when it took over as general contractor. Around June 2006, counsel for Regency reviewed a copy of the Martin/Imperial subcontract upon which Imperial based its claim and noticed that page 10 of the subcontract was missing.
Regency requested a complete copy of the subcontract, but it was not provided to Regency until more than one and a half years later, on February 1, 2008, at the trial readiness conference. During that conference, counsel for Imperial said he had to switch the contract in the binder containing exhibits for trial with a complete copy of the contract because a page was missing. After reviewing the complete contract, counsel for Regency learned that paragraph 25 on page 10 (the missing page) contained a mandatory arbitration provision of which Regency had not been made aware at any time during the course of litigation.
On February 5, 2008, the date set for trial, Regency filed a motion for judgment on the pleadings. The motion was based primarily on the ground that the court lacked jurisdiction to hear the case because the contract contained a mandatory arbitration clause. The arbitration provision reads, in relevant part, as follows: “All claims, disputes and other matters in question arising out of, or relating to, this Subcontract or the breach thereof (not exceeding the accumulative amount of $100,000.00) shall be settled by arbitration....” Because of the motion, the trial court vacated the trial date, set a briefing schedule, and tolled the five-year limitation period upon which to prosecute a case. (Code Civ. Proc., § 583.310.)
On March 3, 2008, the trial court heard Regency’s motion for judgment on the pleadings. Initially, the judge was going to grant the motion and stay the proceedings pending possible arbitration. At the previous hearing, counsel for Regency seemed amenable to that approach, and counsel for Imperial seemed willing to go along with this so long as Regency was the one electing to refer the matter to arbitration. Counsel for Regency, however, reiterated that there was no motion for a stay or to compel arbitration before the court. The court told counsel for Imperial that he would have to make a formal demand for arbitration because his client was the party seeking relief. Counsel for Imperial attempted to persuade the court that Regency was making such a demand, but the court disagreed. Imperial did not move to stay the proceedings or for an order to arbitrate. The court granted the motion for judgment on the pleadings, dismissing the case with prejudice. On March 7, the judgment was entered in favor of Regency. Notice of entry of judgment was filed on April 24. The judgment was not appealed.
On May 9, 2008, Regency filed a memorandum of costs, including a request for attorney fees in the amount of $36,900 and other costs in the amount of $2,974.15. Concurrently, Regency filed a motion for attorney fees based on Civil Code section 1717 and paragraph 33 of the subcontract. That paragraph provides that if “either party become[s] involved in litigation or arbitration arising out of this Subcontract [or] the performance thereof, the court in such litigation or arbitrator in such arbitration, as applicable, or in a separate suit, shall award attorney’s fees and cost[s] to the prevailing party.”
All further statutory references are to the Civil Code unless otherwise indicated.
On August 25, 2008, the motion for attorney fees was heard and taken under submission. On or about September 4, 2008, the clerk served notice of the court’s ruling, which stated that because “both parties recognize the dismissal order as being no bar to future litigation (including arbitration) of the matters set forth in the cross[-]complaint... there is not yet a ‘prevailing party’ within the meaning of [paragraph] 33 of the underlying agreement [or] Civil Code [section] 1717, and any award of attorney’s fees at this time is premature.” The motion was denied without prejudice “to [either] party’s right to claim attorney’s fees upon resolution of the matters at issue on the merits.”
III. DISCUSSION
Imperial has not filed a brief on appeal. Under California Rules of Court, rule 8.220(a)(2), if a respondent fails to file a brief the court may decide the appeal based on the record, the appellant’s opening brief, and any oral argument made by the appellant.
The review of an order denying a motion for attorney fees involves the trial court’s interpretation and application of Civil Code section 1717 and Code of Civil Procedure sections 1021, 1032, subdivision (a)(4), and 1033.5. In some instances the trial court may exercise discretion in deciding which party, if any, is the prevailing party for purposes of awarding attorney fees. In this case, however, there is no relevant evidentiary dispute and the trial court did not require an exercise of discretion in making its determination. Our review of the trial court’s order is therefore a question of law subject to de novo review. (Topanga and Victory Partners v. Toghia (2002) 103 Cal.App.4th 775, 779-780.)
Under section 1717, subdivision (a): “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, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (Italics added.)
Under section 1717, subdivision (b)(1) of the statute: “The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.” Section 1717, subdivision (b)(2) states that: “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.”
A. Regency’s Status as a Nonsignatory to the Construction Subcontract is Not a Bar to Recovery of Attorney Fees
“‘[S]ection 1717 was enacted to establish mutuality of remedy where [a] contractual provision makes recovery of attorney’s fees available for only one party [citation], and to prevent oppressive use of one-sided attorney’s fees provisions. [Citation.]’” (Hsu v. Abbara (1995) 9 Cal.4th 863, 870 (Hsu); Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128 (Reynolds).) The statute’s purposes require that it be “interpreted to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney’s fees should he prevail in enforcing the contractual obligation against the defendant.” (Reynolds, supra, at p. 128.) In Reynolds the defendants owned and operated a company that went bankrupt. (Id. at p. 127.) The plaintiff, having extended credit of $823,231.48 to the company, brought suit seeking to hold the defendant owners personally liable for the debts as “alter egos” of their bankrupt company. (Ibid.) The trial court rejected the “alter ego” theory and absolved the defendants from personal liability, granting them $80,500 in attorney fees. (Ibid.) The court found the language of section 1717 somewhat ambiguous, stating it was “unclear whether the Legislature used the terms [‘parties’ and ‘party’] to refer to signatories or to litigants.” (Id. at p. 128.) The court held that, since the defendants would have been liable for attorney fees pursuant to the fees provision of the promissory notes sued upon if the plaintiff had prevailed, then the defendants, having prevailed, were entitled to recover attorney fees. (Id. at p. 129.)
Just as the nonsignatory defendant in Reynolds would have been liable for attorney fees had the plaintiff prevailed, Regency would have been liable for attorney fees if Imperial had prevailed on its breach of contract action against Regency. Thus, Regency may recover its costs and attorney fees pursuant to section 1717. California courts have granted attorney fees to a prevailing party even in cases where no contract was found to exist. “‘[A] prevailing defendant sued for breach of contract containing an attorney’s fees provision and having had to defend the contract cause of action is entitled to recover its own attorney’s fees and costs therefore, even though the trial court finds no contract existed.’” (Cano v. Glover (2006) 143 Cal.App.4th 326, 331, quoting Jones v. Drain (1983) 149 Cal.App.3d 484, 490.) Regency had to defend against Imperial’s breach of contract claim for over five years and would have been obligated to pay costs and attorney fees had it lost; therefore, its status as a nonsignatory to the original subcontract at issue is no bar to its recovery of attorney fees.
B. The Dismissal With Prejudice Entered in Regency’s Favor Was a Proper Resolution of Imperial’s Contract Claim
Although neither Imperial nor Regency moved to compel arbitration or stay the proceedings pending arbitration, the trial court was prepared to order such a stay. The court was not prepared, however, to order the parties to arbitrate absent an affirmative demand to compel arbitration. Rather than move to compel arbitration, Regency asserted Imperial’s failure to arbitrate as an affirmative defense to its sole remaining cause of action for breach of contract. “A defendant sued over a dispute which he contends is subject to arbitration may ‘elect to demur or move for summary judgment on the ground that the plaintiff has failed to exhaust arbitration remedies....’” (Hayworth v. City of Oakland (1982) 129 Cal.App.3d 723, 730, quoting Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 899 (Rounds); see also Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1096-1097.) “[L]ower courts have continued to dismiss actions or grant summary judgment where (1) all issues raised are arbitrable, (2) the plaintiff has not pursued the arbitration remedy, and (3) neither party has asked for a stay in the proceedings.” (Rounds, supra, at p. 898.)
The court in Rounds found instructive the holdings in Leon Handbag Co. v. Local 213 (1969) 276 Cal.App.2d 240 and Ross v. Blanchard (1967) 251 Cal.App.2d 739. “[I]n Ross, where proceedings were merely stayed, defendants demanded arbitration; in Leon Handbag a dismissal was sustained because defendants elected to assert plaintiffs’ failure to arbitrate as an affirmative defense only. In Ross the court recognized that ‘an agreement to arbitrate is an affirmative defense’ [citation], but was not confronted by a situation in which a dismissal was sought. When defendants did elect to demur in Leon Handbag, and where no other issues were before the court, dismissal was ruled proper relief.” (Rounds, supra, 4 Cal.3d at p. 899, fn. omitted.)
Similarly, in this case, Regency asserted Imperial’s failure to arbitrate as an affirmative defense and moved for judgment on the pleadings, without requesting a stay in the proceedings or an order to compel arbitration. Imperial’s failure to move for a stay in the proceedings or for an order to compel arbitration, despite the mandatory arbitration provision in the subcontract sued upon, made dismissal of its action against Regency proper.
C. Regency Was the Prevailing Party in the Action on the Contract Despite the Possibility of Future Arbitration or Litigation
The potential for future arbitration and litigation to confirm an arbitrator’s award does not change the fact that Imperial’s action for breach of contract was dismissed with prejudice. Although Imperial may have the option of pursuing arbitration against Regency on claims not asserted in its breach of contract action, its discrete action against Regency for breach of contract has been adjudicated and Regency is the prevailing party.
Under section 1717, subdivision (b)(1), “the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (Italics added.) Subdivision (b)(1) grants the trial court discretion to find that there was no prevailing party, but only when the results of the litigation are mixed, such as when “‘both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.’ [Citation.]” (Hsu, supra, 9 Cal.4th at p. 875; Carole Ring & Associates v. Nicastro (2001) 87 Cal.App.4th 253, 261.) But when, as here, the results of the litigation are not mixed—when the decision on the litigated contract claim is “purely good news for one party and bad news for the other”—the trial court has no discretion to deny attorney fees to the successful litigant. (Hsu, supra, at p. 876.) This construction is “consistent with the underlying purposes of the statute—to achieve mutuality of remedy—and it harmonizes section 1717 internally by allowing those parties whose litigation success is not fairly disputable to claim attorney fees as a matter of right, while reserving for the trial court a measure of discretion to find no prevailing party when the results of the litigation are mixed.” (Ibid.) Furthermore, under Hsu, “when a defendant defeats recovery by the plaintiff on the only contract claim in the action, the defendant is the party prevailing on the contract under section 1717 as a matter of law.” (Ibid.; Carole Ring & Associates v. Nicastro, supra, at p. 261.)
Under Code of Civil Procedure section 1032, subdivision (a)(4), “‘[p]revailing party’” includes “a defendant in whose favor a dismissal is entered” or “a defendant as against those plaintiffs who do not recover any relief against that defendant.” Regency satisfies both of these criteria and must be regarded as having obtained “greater relief in the action on the contract.” (Civ. Code, § 1717, subd. (b)(1).)
In Hsu, supra, 9 Cal.4th at page 876, the California Supreme Court held that “[t]he prevailing party determination is to be made only upon final resolution of the contract claims....” This does not require a decision to be reached on the merits of the case. In Profit Concepts Management, Inc. v. Griffith (2008) 162 Cal.App.4th 950, 956 (Profit), the court stated that “the contract claim was finally resolved within the meaning of [Hsu], and that case does not use the term ‘merits.’” In Profit,a California based company sued its former employee, an Oklahoma resident, for breach of a contract that provided for attorney fees and costs to be awarded to the prevailing party in any litigation involving the contract. (Id. at p. 952.) The defendant filed a motion to quash service for lack of personal jurisdiction and the company filed a notice of nonopposition. (Ibid.) The court granted the motion and the former employee then requested and was awarded attorney fees as the prevailing party. (Ibid.) The company appealed and the decision was affirmed. (Ibid.) The defendant was found to be the prevailing party even though the dismissal was based upon procedural grounds rather than the merits of the case. (Id. at pp. 956-957.) The Profit court’s analysis of the history of section 1717 and its applicability to cases dismissed on procedural grounds is instructive.
The court in Profit looked at two cases decided before the 1981 revision of section 1717, when the statute stated that “prevailing party” meant “the party in whose favor final judgment is rendered.” (Profit, supra, 162 Cal.App.4th at p. 954.) In the first case, Berard Construction Co. v. Municipal Court (1975) 49 Cal.App.3d 710, 715 and 716, the appellate court held that even if the defendant’s motion to quash service had been granted it would not have been a “final judgment” authorizing the award of attorney fees. The second case, Samuels v. Sabih (1976) 62 Cal.App.3d 335, 339 and 340, held that the defendants could not recover attorney fees despite their success in having the case against them dismissed for failure to bring it to trial within five years, because the dismissal was not a final judgment.
The court in Profit then discussed Elms v. Builders Disbursements, Inc. (1991) 232 Cal.App.3d 671, 674, in which the appellate court recognized that, “[i]n 1981, apparently in response to Samuels [v.] Sabih... the Legislature amended section 1717 to authorize a determination of the prevailing party ‘whether or not the suit proceeds to final judgment.’” (Fn. omitted.) In Elms, the court held that under the amended version of section 1717, a defendant who is sued under a contract containing an attorney fees provision may recover such fees under section 1717 if the plaintiff’s action is dismissed because it was not brought to trial within five years. (Elms v. Builders Disbursements, Inc., supra, at p. 672.)
By amending section 1717, the Legislature intended to allow the award of attorney fees even when a case has not been decided on the merits. The statute outlines two situations where there shall be no prevailing party based on the dismissal of an action on a contract and where an award of attorney fees is therefore inappropriate—when “an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case.” (§ 1717, subd. (b)(2).) The amendment of the statute allowing a determination of the prevailing party “whether or not the suit proceeds to final judgment,” and the delineation of two instances when attorney fees should not be awarded pursuant to a dismissal, show that the Legislature intended for a prevailing party determination to be made and attorney fees awarded when a case is involuntarily dismissed, whether upon the merits or upon procedural grounds.
The court in Profit also held that: “The determination of which party is the prevailing party must be made without consideration of whether the plaintiff may refile the action... [and] should not depend on the plaintiff’s possible future conduct. Prevailing party attorney fees should be awarded based on the contract language, the statutory language, and the fact of dismissal of the case, not on speculation.” (Profit, supra, 162 Cal.App.4th at p. 956.)
In this case, just as in Profit, “[t]he complaint was dismissed in its entirety and the [plaintiff] obtained nothing.” (Profit, supra, 162 Cal.App.4th at p. 952.) That court found no meaningful difference between a dismissal for violation of the five-year rule and a dismissal due to lack of personal jurisdiction over the defendant. (Id. at p. 955.) Similarly, we find no meaningful difference between the dismissals for lack of jurisdiction in Profit and in this one. Both cases were dismissed on procedural grounds rather than on the merits; both plaintiffs retained another option for vindicating their rights. There is “no valid reason why [Regency] should have to wait until the end of the case to recover fees [it] is entitled to by virtue of prevailing on a specific motion. [Regency] is not attempting to recover attorney fees under a provision permitting an award of fees to the party prevailing on the merits of a claim arising under the [contract]. Rather, [it] is seeking fees incurred while enforcing an independent provision of the contract, fees to which [it] is entitled even if [it] loses the case on the merits in the arbitration.” (Acosta v. Kerrigan (2007) 150 Cal.App.4th 1124, 1132 (Acosta), italics added, fn. omitted.)
California courts have found an award of attorney fees appropriate at an “interim stage of the overall proceedings” (Acosta, supra, 150 Cal.App.4th at p. 1131, capitalization and bolding omitted) in conjunction with petitions to compel arbitration (see also Otay River Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796, 807 [“courts have awarded attorney fees to a party obtaining an appealable order or judgment in a discrete legal proceeding even though the underlying litigation on the merits was not final.”]). In Acosta, attorney fees were awarded to the defendant tenant in connection with his successful petition to compel arbitration of a dispute arising under a lease agreement between him and the plaintiff landlord. (Acosta, supra, at p. 1125.) The court found unpersuasive appellant landlord’s argument that an interim award of attorney fees is impermissible. (Ibid.) It held that: “Given the trial court is responsible for deciding a petition to compel arbitration, the trial court also should be responsible for resolving a claim for attorney fees made in connection with that petition to compel arbitration. The contract expressly contemplates such a petition might be required and, if so, it necessarily would be heard by a judge not an arbitrator.” (Id. at pp. 1129-1130.) The contract in the present case, like that in Acosta, contemplates the possibility of litigation separate and distinct from arbitration and expressly authorizes “the court in such litigation or arbitrator in such arbitration” to grant attorney fees to the prevailing party. (Italics added.)
In the same vein, it would be inequitable to make vindication of Regency’s right to attorney fees dependent upon Imperial’s future decision to pursue arbitration on any other arbitrable claims it may have against Regency. To force Regency to assert its claim for attorney fees in a future proceeding would place it in “perpetual limbo,” much like the defendant in Cano v. Glover, supra, 143 Cal.App.4th 326. In that case, the defendant’s motion for dismissal with prejudice was denied after the plaintiff failed to name him in its fourth amended complaint. (Id. at p. 328.) The trial court dismissed the action without prejudice and denied the defendant’s motion for costs and attorney fees as premature. (Ibid.) The appellate court held that the motion for dismissal with prejudice should have been granted and attorney fees awarded. (Id. at p. 332.) That court stated that: “‘No good reason appears why encouragement should be given to such tactics... which... expose defendants to duplicative “annoying and continuous litigation,”... burden our trial court with “fruitless” proceedings, and... delay the ultimate resolution of the validity of the plaintiff’s pleading. [Citation.]’” (Id. at p. 330, quoting Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, 788-789.)
By failing to provide a complete copy of the contract upon which its claim was based, Imperial exposed Regency to annoying, continuous, and unnecessary litigation for a period of five years, significantly delaying resolution of the validity of its claim on the merits. It was Imperial who had the complete contract containing the mandatory arbitration provision and yet still continued to pursue litigation. It was Imperial who failed to disclose the complete contract to Regency until more than a year and a half after it was requested and nearly five years into the litigation. Imperial should not be allowed to benefit from pursuing unnecessary litigation by causing Regency’s award of attorney fees to be held in limbo, only to be granted at some later time if and when Imperial pursues arbitration. “‘[I]t is extraordinarily inequitable to deny a party who successfully defends an action on a contract, which claims attorney’s fees, the right to recover its attorney’s fees and costs simply because the party initiating the case has filed a frivolous lawsuit.’” (Cano v. Glover, supra, 143 Cal.App.4th at p. 331, quoting Jones v. Drain, supra, 149 Cal.App.3d at pp. 489-490; see also Reynolds, supra, 25 Cal.3d at pp. 128-129.) We find that the possibility of future arbitration and litigation does not render the trial court’s dismissal with prejudice anything less than a final resolution of Imperial’s breach of contract claim and that Regency was the prevailing party.
D. As the Prevailing Party Regency is Entitled to Its Costs and Reasonable Attorney Fees as a Matter of Right
“[T]he measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs....” (Code Civ. Proc., § 1021.) “[A] prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).) Attorney fees are recoverable as costs under Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), when authorized by contract.
Regency is entitled to costs and attorney fees as a matter of right. “The words ‘shall be entitled’ [in section 1717] reflect a legislative intent that a party prevailing on a contract receive attorney fees as a matter of right (and that the trial court is therefore obligated to award attorney fees) whenever the statutory conditions have been satisfied.” (Hsu, supra, 9 Cal.4th at p. 872.) The statutory conditions have been satisfied in this case. Regency defended against an “action on a contract” that “specifically provide[d] that attorney’s fees and costs... incurred to enforce the contract, shall be awarded... to the prevailing party....” (§ 1717, subd. (a).)
The statutory conditions for recovery of costs under Code of Civil Procedure sections 1032 and 1033.5 have also been satisfied. Under Code of Civil Procedure section 1032, “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” Under Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), attorney fees can be recovered as costs when authorized by contract, as they were in this case. As the prevailing party, Regency is entitled under the statutes and the agreement of the parties to recover costs and attorney fees incurred in defending Imperial’s breach of contract claim.
IV. DISPOSITION
The decision of the trial court is reversed and the case is remanded for determination of Regency’s costs and reasonable attorney fees. Regency shall recover its costs on appeal.
We concur: Hollenhorst, Acting P.J., Richli, J.