Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. SC095654 John H. Reid, Judge.
Law offices of Robert G. Padrick and Robert G. Padrick; Bruce C. Janke for Plaintiff and Appellant.
Murchison & Cumming, James S. Williams for Defendants and Respondents Sullivan Motor Cars, LLC, Sean Homayoun, and Universal Underwriters Insurance Company.
Cooksey, Toolen, Gage, Duffy & Woog, Lawrence H. Miller for Defendant and Respondent Toyota Motor Credit Corporation.
KITCHING, J.
INTRODUCTION
This appeal addresses whether a plaintiff suing for violations of the Consumer Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.) is bound by his waiver of statutory attorney’s fees (§ 1780, subd. (e)) in accepting defendant’s Code of Civil Procedure section 998 settlement offer. We conclude that the plaintiff’s acceptance of the settlement agreement, which contained an express waiver of his right to attorney’s fees, was valid, binds the plaintiff, and prohibits an award of attorney’s fees. Moreover, the prohibition of waiver of provisions of the CLRA in section 1751 does not invalidate plaintiff’s waiver of attorney’s fees. We affirm the order denying plaintiff’s motion for attorney’s fees.
Unless otherwise specified, statutes in this opinion will refer to the Civil Code.
FACTUAL AND PROCEDURAL HISTORY
Allegations of the Complaint:
As alleged in the operative complaint, plaintiff Christian Mark Anderson sued defendants Sullivan Motor Cars, LLC (dba Toyota Santa Monica), Toyota Motor Credit Corporation (dba Toyota Financial Services), and Universal Underwriters Insurance Company (UUIC) for six causes of action (fraud, negligent misrepresentation, violation of the CLRA, violation of the Rees-Levering Motor Vehicle Sales and Finance Act (§ 2981 et seq.), commission of unfair, unlawful, or fraudulent business acts or practices (Bus. & Prof. Code, § 17200 et seq.), and declaratory relief). The complaint alleged a seventh cause of action for enforcement of liability of surety against Universal Underwriters Insurance Company. The complaint arose out of plaintiff’s purchase of a 2007 Toyota FJ Cruiser from Sullivan Motor Cars. The complaint alleged that defendants falsely represented to Anderson that they would not make further inquiry into his credit, that he could re-finance the purchase of the vehicle with the eventual holder, and misrepresented to Anderson a cash price of $7,980 for accessories when the cash price was in fact $5,285. The complaint also alleged violations of sections 1770, 2981, 2981.9, 2982, Vehicle Code section 11713.1, Business and Professions Code sections 17200, 17203, and 17500. The cause of action for enforcement of liability of surety alleged that defendant Universal Underwriters Insurance Company executed a $50,000 surety bond conditioned on the fact that Sullivan Motor Cars would not practice any fraud that would cause a monetary loss to a purchaser, seller, financing, agency, or governmental agency, that Sullivan Motor Cars breached the conditions of the bond, and that Anderson had suffered $36,000 in actual damages.
Sean Homayoun, an employee of Sullivan Motor Cars, was added as a defendant.
Settlement:
On March 27, 2008, attorneys for defendants UUIC, Sullivan Motor Cars, and Homayoun made a statutory offer to compromise pursuant to Code of Civil Procedure section 998. In exchange for a dismissal with prejudice as to the entire case, including Toyota Motor Credit Corporation, and a general release of all claims, defendants offered to rescind the contract and to take back the vehicle; discharge Anderson from all indebtedness to Toyota Motor Credit Corporation for any obligation from the purchase of the vehicle; and pay Anderson $27,000. Defendants’ offer stated: “This offer in settlement shall be the total offer that the defendants shall be obligated on account of any liability claim herein, and is inclusive of any lien of any kind. Each party agrees to bear their own costs, and by acceptance of this offer of settlement, the plaintiff expressly waives any claim for attorneys’ fees or costs.” Anderson accepted the settlement on March 31, 2008. On April 4, 2008, Anderson executed a general release, which, Anderson notes, said nothing about attorney’s fees. Anderson filed a request for dismissal on April 8, 2008, on which date the dismissal was entered as requested.
Anderson’s Motion for Attorney’s Fees:
On June 4, 2008, Anderson made a motion for an award of attorney’s fees to be paid by defendants pursuant to sections 1717, 1780, subdivision (d), and 2983.4. The motion was made on the ground that plaintiff was the prevailing party in an action on a contract pursuant to the Rees-Levering Motor Vehicle Sales and Finance Act (§ 2981 et seq. and Veh. Code, § 11713), in an action pursuant to the CLRA, and that the vehicle sales contract contained an attorney’s fee provision made reciprocal by section 1717. Regarding the provision in the settlement agreement by which plaintiff expressly waived any claim for attorneys’ fees or costs, the motion cited section 1751: “Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.”
Order Denying Attorney’s Fee Motion:
On September 4, 2008, the trial court denied plaintiff’s attorney fee motion on several grounds: (1) because the plaintiff filed a dismissal with prejudice, the trial court had no jurisdiction to rule on the motion; (2) even if the court had jurisdiction, the dismissal operated as a retraxit; (3) the plaintiff was not prevailing party pursuant to Code of Civil Procedure section 1032, subdivision (a)(4); (4) plaintiff was not prevailing party pursuant to section 1717, subdivision (b); (5) even if plaintiff were deemed to be the prevailing party, Anderson’s acceptance of the Code of Civil Procedure section 998 offer to compromise and his execution of the general release waived his claim for attorney’s fees; (6) section 2983.7 does not prohibit a wavier of attorney’s fees as part of a settlement of an AFSA claim.
Appeal: Anderson filed a timely notice of appeal from the September 4, 2008, order denying his motion for attorney’s fees.
ISSUES
Plaintiff Anderson claims on appeal that:
1. The dismissal did not divest the trial court of jurisdiction to hear the attorney fee motion;
2. The attorney’s fee waiver provision in defendant’s Code of Civil Procedure section 998 offer is illegal and unenforceable.
3. A CLRA plaintiff may not waive his right to attorney’s fees and costs;
4. Anderson is the prevailing plaintiff under the CLRA as a matter of law and is entitled to attorney’s fees.
DISCUSSION
1. After Entry of the Voluntary Dismissal, the Trial Court Retained Jurisdiction to Award Statutory Attorney’s Fees, But Lacked Jurisdiction to Award Attorney’s Fees Incurred in Litigation of Contract Claims
Anderson claims that the trial court erroneously ruled that Anderson’s dismissal pursuant to the terms of the settlement agreement was a retraxit that deprived the court of jurisdiction to rule on Anderson’s attorney fee motion.
Entry of Anderson’s voluntary dismissal with prejudice deprived the trial court of subject matter and personal jurisdiction, except that the court retains jurisdiction to vacate the judgment of dismissal under Code of Civil Procedure section 473 (Basinger v. Rogers & Wells (1990) 220 Cal.App.3d 16, 21) and to award costs and statutory attorney’s fees (Gogri v. Jack in the Box Inc. (2008) 166 Cal.App.4th 255, 261). The voluntary dismissal with prejudice did deprive the trial court of jurisdiction to award section 1717 attorney’s fees incurred in litigation of contract claims. That is because section 1717, subdivision (b)(2) states that after a plaintiff voluntarily dismisses the action, there shall be no prevailing party for purposes of section 1717. (Gogri, at p. 274.)
2. The Express Waiver of Attorney’s Fees in the Code of Civil Procedure Section 998 Settlement Agreement Binds Plaintiff and Bars an Award of Statutory Attorney’s Fees
The Code of Civil Procedure section 998 settlement offer stated: “This offer in settlement shall be the total offer that the defendants shall be obligated on account of any liability claim herein, and is inclusive of any lien of any kind. Each party agrees to bear their own costs, and by acceptance of this offer of settlement, the plaintiff expressly waives any claim for attorneys’ fees or costs.”
A judgment entered pursuant to the acceptance of a Code of Civil Procedure section 998 offer is regarded as a contract between the parties, to be construed as any other contract. Code of Civil Procedure section 998 allows the parties to determine the nature of the judgment to be entered and to resolve collateral matters, including costs and attorney’s fees. (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 184.) Where fees are authorized solely by statute and are not a part of the cause of action, “[t]hey are incidents to the cause, properly awarded after entry of a stipulated judgment, unless expressly or by necessary implication excluded by the stipulation.” (Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 678.)
Anderson, by accepting the offer of settlement, expressly waived any claim for attorney’s fees. Thus the settlement agreement does expressly exclude attorney’s fees. “The rule is that a section 998 offer to compromise excludes fees only if it says so expressly. It is a bright-line rule: the only question is does the offer address fees or not?” (Engle v. Copenbarger & Copenbarger, LLP (2007) 157 Cal.App.4th 165, 169.) The court will not infer a waiver of attorney’s fees where the settlement agreement is silent on the matter. (Lanyi v. Goldblum (1986) 177 Cal.App.3d 181, 193; Chinn v. KMR Property Management, supra, 166 Cal.App.4th at pp. 184-185.) But when a settlement agreement expressly waives attorney’s fees, that waiver is binding.
Plaintiff claims that Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 263-264 ruled that attorney’s fees did not fall within a settlement of a plaintiff’s “ ‘claims regarding his service aboard the SS Mayaguez....’ ” Rappenecker, however, involved costs; no issue of attorney’s fees, statutory or otherwise, was raised in that case. The issue in Rappenecker was whether plaintiffs’ acceptance of a settlement in a personal injury action stating that sums offered were in “full compromise settlement” of plaintiffs’ claims entitled plaintiffs to costs. Rappenecker held that despite the absence of any provision in the settlement agreement with regard to costs, plaintiffs could recover costs as the prevailing party. Rappenecker cited the rule that a judgment based on the parties’ stipulation is binding only as to the matter consented to by the stipulation and does not cover matters not in the stipulation. (Id. at p. 263.) Defendant’s settlement offer was made “ ‘in full compromise settlement of [plaintiff’s] claims regarding his service aboard the SS Mayaguez[, ]’‘ ” and costs of suit did not fall within such service. Because the defendant failed to draft the compromise offer precisely regarding costs, defendant could not claim that the language of the settlement precluded an award of costs. (Id. at p. 264.)
Here, by contrast, the settlement offer was precisely drafted, and specifically stated: “Each party agrees to bear their own costs, and by acceptance of this offer of settlement, the plaintiff expressly waives any claim for attorneys’ fees or costs.” Anderson accepted the settlement on March 31, 2008, and therefore is bound by his express waiver of any claim for attorney’s fees.
3. Section 1751 Does Not Make Waiver, in a Settlement Agreement, of the Right to Statutory Attorney’s Fees Unenforceable
Anderson claims that section 1751 makes the waiver of attorney’s fees unenforceable. Anderson argues that although a plaintiff can release his claims under the CLRA, the plaintiff cannot be forced to waive his right to attorney’s fees.
The attorney fee provision of the CLRA states, in relevant part: “The court shall award court costs and attorney’s fees to a prevailing plaintiff in litigation filed pursuant to this section.” (§ 1780, subd. (e).) Anderson relies on section 1751, which states: “Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.”
Anderson argues the waiver of “attorney’s fees and costs” in the Code of Civil Procedure section 998 agreement was not only an unenforceable express waiver of attorney’s fees but was also an unenforceable de facto waiver of attorney’s fees, since under Code of Civil Procedure section 1033.5, subdivision (c)(5), attorney’s fees become part of “costs” when a statute specifically refers to both. Anderson argues that the prohibition of a consumer’s waiver of provisions of the CLRA applies to all waivers, whether express, implied, or de facto. Anderson cites three cases which, he argues, struck down de facto waivers of CLRA rights.
In Wang v. Massey Chevrolet (2002) 97 Cal.App.4th 856, defendant automobile dealership alleged that the parole evidence ruled barred plaintiff’s statutory claim for violations of section 1770, subdivision (a)(14) of the CLRA, which prohibits “[r]epresenting that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.” (Wang, at pp. 861, fn. 1, 867-868.) Wang held that the parole evidence rule was inapplicable to such a claim (id. at p. 868) and that “the Legislature clearly intended to repudiate any purported bar or defense based on the parol evidence doctrine” (id. at p. 870). Wang stated that permitting a parole evidence defense would involve construing the written contract as waiving the protections of the act, a waiver contrary to public policy. (Ibid.) Wang did not address any issue of attorney’s fees or waiver of section 1780, subdivision (e) attorney’s fees.
In America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, plaintiffs were former subscribers of AOL’s internet service and brought a class action alleging that AOL violated, inter alia, section 1770, subdivision (a)(14), by continuing to debit plaintiffs’ credit cards for monthly fees after plaintiffs terminated their subscriptions to AOL. (America Online, Inc., at p. 5.) Defendant AOL moved to stay or dismiss the action on the ground of inconvenient forum, based on a forum selection clause in plaintiffs’ contracts stating that Virginia courts had jurisdiction over claims against AOL. (Id. at p. 6.) America Online, Inc. affirmed a trial court’s order denying AOL’s motion, holding that “enforcement of AOL’s forum selection clause, which is also accompanied by a choice of law provision favoring Virginia, would necessitate a waiver of the statutory remedies of the CLRA, in violation of that law’s antiwaiver provision (Civ. Code, § 1751) and California public policy.” (America Online, Inc., at p. 15.) America Online, Inc. did not address waiver of attorney’s fees in a Code of Civil Procedure section 998 offer or otherwise.
In Brack v. Omni Loan Co., Ltd. (2008) 164 Cal.App.4th 1312, defendant Omni Loan Company engaged in consumer lending in California. In choice-of-law provisions in Omni’s loan agreements, borrowers agreed that the law of Nevada would govern loan contracts. (Id. at pp. 1316, 1318.) Brack held that “because application of Nevada law would conflict with fundamental California policy as manifested in the Finance Lenders Law [Fin. Code, § 22000 et seq.] and because California has a greater interest in the parties’ transaction than Nevada, the parties’ choice of law is not enforceable.” (Id. at pp. 1316-1317.) Brack did not involve the CLRA, its prohibition against waiver, or any issue concerning attorney’s fees.
Wang, America Online, Inc., and Brack provide no support for Anderson’s position. Brack did not involve the CLRA at all. In America Online, Inc. and Brack, which enforced antiwaiver provisions in the CLRA and in the Finance Lenders Law, the forum selection clause and the choice-of-law provision were found in the contract between the consumer and the defendant. These cases found that an advance, contractual waiver of provisions of the CLRA was not enforceable. That differs from Anderson’s waiver of attorney’s fees, which was made as part of a settlement of litigation. None of the three cases addressed the waiver of a statutory right to attorney’s fees in a settlement agreement or found such a waiver in a settlement agreement unenforceable because of the antiwaiver provision in section 1751.
The CLRA lists proscribed practices in section 1770. In section 1780, the CLRA also provides remedies to a consumer who suffers damage as a result of the use or employment of a method, act, or practice declared to be unlawful by section 1770. Section 1781 provides for consumer’s class actions, and section 1782 provides procedures for obtaining those remedies and for obtaining injunctive relief. We interpret the antiwaiver provision of section 1751 as prohibiting a consumer, at the time the consumer enters into a consumer contract, from waiving provisions of the CLRA in advance. Settlement of a CLRA claim necessarily involves the plaintiff’s waiver of the CLRA provisions which plaintiff claims the defendant violated. If a plaintiff consumer is prohibited from waiving provisions of the CLRA in order to settle, no settlement would be possible. That would contradict the well-established public policy in California that favors and encourages settlement of litigation. (City of Orange v. San Diego County Employees Retirement Assn. (2002) 103 Cal.App.4th 45, 55.) A universal prohibition against negotiated waiver of attorney’s fees in exchange for a settlement on the merits could also tend to impede vindication of the plaintiff consumer’s rights under the CLRA, in some cases, by reducing the value of the settlement. (See Evans v. Jeff D. (1986) 475 U.S. 717, 732.)
We therefore do not find that section 1751 makes a plaintiff’s waiver, in a settlement agreement, of the right to statutory attorney’s fees unenforceable.
4. Anderson Was Not the Prevailing Party
Section 1780, subdivision (e) requires the trial court to award attorney’s fees “to a prevailing plaintiff in litigation filed pursuant to this section.” Anderson claims that he is the prevailing plaintiff under the CLRA and is entitled to attorney’s fees.
Anderson cites Kim v. Euromotors West/The Auto Gallery (2007) 149 Cal.App.4th 170 (Kim) for its definitions of when a plaintiff can be determined to be a prevailing party under section 1780, subdivision (e). (Kim, at p. 181.) Plaintiff Kim sued defendants Porsche and Euromotors West/The Auto Gallery (TAG) for, inter alia, violations of the CLRA in connection with Kim’s lease of a 2001 Porsche automobile from TAG. After a partial settlement and dismissal of nine causes of action, two causes of action remained against Porsche and TAG for violation of the Song-Beverly Act and a final cause of action remained against TAG only for violation of the CLRA. (Id. at pp. 173-174.) A few months later, Kim and TAG settled, with Kim returning the vehicle to TAG and TAG paying Kim an amount equivalent to the remaining lease obligation ($69,818.78), terminating the lease, and paying Kim a $10,000 lump settlement amount. Regarding attorney’s fees, the settlement agreement stated that the $10,000 payment to Kim was “ ‘made in full and final settlement and satisfaction of any and all claims Kim has or may have against TAG, excluding attorney’s fees and costs (the attorney’s fees and costs are discussed below).’ ” (Id. at p. 174, italics omitted.) The next paragraph of the settlement agreement stated that neither party admitted liability and “ ‘neither party agrees that the other is the prevailing party. A determination of which, if any, party is the prevailing party will be made by the court as part of [Kim’s] motion for attorney’s fees and costs[.]’ ” (Ibid.) Paragraph 19 of the agreement stated: “ ‘Kim hereby reserves his right to make an application to the Court in an attempt to recover his reasonable attorneys’ fees and costs with respect to TAG in connection with his CLRA claim. TAG reserves the right to oppose the motion on grounds it deems appropriate.’ ” (Ibid.) Kim filed a motion for attorney’s fees under section 1780; TAG opposed the motion on the grounds that Kim was not the prevailing party, improperly sought attorney’s fees attributable to the litigation against Porsche, and sought an unreasonable amount of fees. The trial court found that settlement of the matter made it impossible to determine whether there was a prevailing party, and denied the motion. Kim appealed. (Id. at p. 175.)
In 2007, the attorney fee provision of section 1780 was subdivision (d). It was subsequently redesignated subdivision (e). (Stats. 2008, ch. 479, § 2.)
Kim states: “an award of attorney fees to ‘a prevailing plaintiff’ in an action brought pursuant to the CLRA is mandatory, even where yhe litigation is resolved by a pretrial settlement agreement, absent an enforceable agreement to the contrary.” (Kim, supra, 149 Cal.App.4th at pp. 178-179; italics added.) In Kim, the parties’ settlement agreement expressly reserved the plaintiff’s right to seek attorney’s fees, the defendant’s right to oppose that motion, and the trial court’s power to determine which party, if any, was the prevailing party. In this appeal, by contrast, the parties’ settlement agreement expressly waived any claim by plaintiff Anderson to attorney’s fees, and we have found that waiver to be binding and enforceable. For this reason alone Kim has no applicability to this appeal. The definitions of when a plaintiff can be determined to be a prevailing party in Kim do not apply where the plaintiff has waived the right to those attorney’s fees, as occurred here.
DISPOSITION
The order is affirmed. Costs on appeal are awarded to defendants Sullivan Motor Cars, LLC (dba Toyota Santa Monica), Toyota Motor Credit Corporation (dba Toyota Financial Services), Universal Underwriters Insurance Company (UUIC) and Sean Homayoun.
We concur: KLEIN, P. J. CROSKEY, J.