Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Mateo County Super. Ct. No. CIV 439848
McGuiness, P.J.
Plaintiff Jay Patterson appeals from an order denying his request for an award of reasonable attorney fees as a prevailing party in a contract action under Civil Code section 1717. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In June 2004, Patterson sued defendant Cynthia Smith for breach of contract seeking to recover moneys he had allegedly loaned to her. According to Patterson, he gave Smith a check in the sum of $12,500, which she deposited into her bank account. When the loan was not repaid, Patterson asked Smith to sign a form promissory installment note and security agreement. The note provided: “If any action be instituted on this note,” Smith “promise(s) to pay such sum as the Court may fix as attorney’s fees.” The security agreement provided, that Smith agreed “to pay all costs incurred by” Patterson “in enforcing [his] rights under this Security Agreement, including but not limited to reasonable attorneys’ fees.” In his complaint, Patterson sought damages of $12,500 and attorney fees of $1,570, pursuant to the San Mateo County Superior Court default schedule and Civil Code section 1717.
On July 22, 2005, Smith, appearing in propria persona, made the following written offer to settle the case: “Cynthia Smith, Defendant, offers to pay Jay Patterson, $12,500 plus $1,500 additional expenses immediately upon acceptance of the offer, under California Code of Civil Procedure section 998, to settle this matter once and for all.” Patterson accepted the offer, and on August 2, 2005, a stipulated judgment was filed in his favor in the amount of $14,000.
About two months later, Patterson moved for an award of reasonable attorney fees as the prevailing party in a contract action pursuant to Civil Code section 1717. In support of his request, Patterson argued that his request was not barred by Smith’s Code of Civil Procedure section 998 offer because the offer did not expressly mention attorney fees. On November 7, 2005, the court granted Patterson’s unopposed motion, awarding him attorney fees in the sum of $30,978. On January 25, 2006, the court vacated its November 7, 2005, order on the ground that Smith’s default was excusable because her counsel had mistakenly failed to file a notice of representation and therefore, he had not been served with Patterson’s motion papers.
All further statutory references are to the Code of Civil Procedure unless otherwise stated.
A copy of the court’s January 25, 2006, order is attached as Exhibit A to Patterson’s Request for Judicial Notice filed on November 15, 2006. By a December 8, 2006, order, we deferred consideration of the request to this time. In the absence of any opposition, we now take judicial notice of the order.
Patterson refiled his motion, which was opposed by Smith. After a hearing on the matter, the court denied Patterson’s motion. In its written order of April 13, 2006, the court set forth several reasons for its ruling, including that the section 998 offer was not silent on the issue of attorney fees in that Smith offered to pay not just damages of $12,500, but a separate amount, “plus $1,500 additional expenses,” which was intended to, and did in fact, include a settlement of attorney fees.
DISCUSSION
In construing Smith’s section 998 offer, which was accepted by Patterson, “we apply the well-settled rule that the interpretation of a written agreement generally presents a question of law for this court to determine anew. [Citations.]” (Okun v. Morton (1988) 203 Cal.App.3d 805, 816.) Because “ ‘ ‘no conflicting parol evidence [was] introduced concerning the interpretation of the [agreement], ‘construction of the instrument is a question of law, and [we] will independently construe the writing.’ ” ’ [Citation.]” (Sanchez v. Bally’s Total Fitness Corp. (1998) 68 Cal.App.4th 62, 69.) Finally, we apply general principles of contract law where those principles neither conflict with section 998 nor defeat its purpose. (T.M. Cobb Co. v. Superior Court (1984) 36 Cal.3d 273, 280.)
Concededly, it has been held that attorney fees authorized by Civil Code section 1717 are available to a party who prevails by a section 998 offer that is silent as to costs and fees. (See, e.g., Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261, 263-264; Ritzenthaler v. Fireside Thrift Co. (2001) 93 Cal.App.4th 986, 989; Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 663, 671-672; Lanyi v. Goldblum (1986) 177 Cal.App.3d 181, 187.)
However, Smith’s section 998 offer was not silent on the issue of costs and fees. She expressly offered to pay $12,500 (the exact amount of damages requested in the complaint), and to pay a specific second sum: “plus $1,500 additional expenses.” The issue before us is whether the phrase “additional expenses” can and should be construed as including attorney fees. Our independent review persuades us that the offer to pay additional expenses must be so construed as to include attorney fees.
“Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible solely from the written provisions of the contract. (Id., § 1639.) The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given them by usage’ (id., § 1644), controls judicial interpretation. (Id., § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. [Citations.]” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821-822.)
Smith’s section 988 offer does not define the phrase “additional expenses” and there is no extrinsic evidence indicating that the parties ascribed to it a particular or special meaning. We therefore assume, in the absence of any evidence to the contrary, that the parties understood the phrase in its ordinary or popular sense, namely, that expenses meant costs. (See Black’s Law Dict. (7th ed. 1999) pp. 349 [cost defined “Cf. expense”]; 598 [expense defined “Cf. cost”].) And, indeed, at the hearing below, Patterson conceded that he interpreted the term “expenses” to mean “costs.”
Patterson argues, however, that the phrase “additional expenses” is not capable of being construed so as to include attorney fees because the courts have always drawn a “clear distinction” between “expenses - or costs - on one hand and attorney fees on the other.” However, Patterson ignores that the statutory definition of “costs” expressly includes “[a]ttorney fees,” when authorized by contract, statute, or law (§ 1033.5, subd. (a)(10)), and that in this case, the attorney fees he requests are expressly defined as “an element of the costs of suit.” (Civ. Code, § 1717, subd. (a).) Thus, under the circumstances of this case, “recoverable litigation costs do include attorney fees.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 606.)
The section 998 offer was not required to include the phrase “attorney fees” so as to preclude Patterson from later seeking those fees. “The party extending the statutory order of compromise bears the burden of assuring the offer is drafted with sufficient precision to satisfy the requirements of section 998. [Citations.]” (Berg v. Darden (2004) 120 Cal.App.4th 721, 727.) But, “the statute does not indicate any intent to limit the terms of the compromise settlement or the type of final disposition.” (Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899, 906.) The section 998 offer need only “be sufficiently specific to permit the recipient meaningfully to evaluate it and make a reasoned decision whether to accept it, or reject it and bear the risk he may have to shoulder his opponent’s litigation costs and expenses. [Citation.]” (Berg v. Darden, supra, 120 Cal.App.4th at p. 727.) Contrary to Patterson’s contention, we see no reasonable basis to distinguish attorney fees from the other costs concededly encompassed by Smith’s section 998 offer to pay $1,500 additional expenses to settle the matter. (See Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1114 [“no sound basis under section 998 for distinguishing attorney fees from other categories of costs” in applying cost-shifting consequences after a refusal to accept a section 998 offer].)
Because Smith’s section 998 offer to pay additional expenses encompassed costs, which necessarily included attorney fees, Patterson cannot now seek to recover those fees, and we uphold the trial court’s ruling on that basis.
In light of our determination, we need not address the parties’ other contentions.
DISPOSITION
The April 13, 2006, order is affirmed.
We concur:
Parrilli, J.
Pollak, J.