Opinion
NOT TO BE PUBLISHED
Appeal from a postjudgment order of the Superior Court of Orange County No. 06CC01934, Dennis S. Choate, Judge.
Gutierrez, Preciado & House and Calvin House for Plaintiff and Appellant.
Nuefeld Law Group and Paul S. Marks for Defendant and Respondent.
OPINION
O’LEARY, ACTING P. J.
Epicor Software Corporation (Epicor) sued The Imagery Group, Inc. (Imagery), for breach of contract after Imagery backed out of the purchase of manufacturing software from Epicor. Imagery cross-complained against Epicor for fraud. A jury returned a verdict in Imagery’s favor on the complaint and in Epicor’s favor on the cross-complaint. In this appeal, Epicor challenges the postjudgment order awarding Imagery its attorney fees. Epicor contends: (1) there was no contract right to attorney fees; (2) Imagery was not the prevailing party; and (3) the amount of fees awarded was excessive. We find no abuse of discretion and affirm the order.
FACTS
The facts are detailed in our opinion in the companion appeal filed concurrently with this opinion. (Epicor Software Corporation v. The Imagery Group (May 22, 2008, G038748) [nonpub. opn.] (Epicor I).) Accordingly, we only give a brief summary here.
On November 30, 2005, Imagery’s owner, Greg Johnson, agreed to purchase the Vista manufacturing software program from Epicor. Prior to agreeing to purchase the program, Johnson indicated he wanted Epicor to supervise the installation and implementation of the software, and he wanted the software fully implemented in his facility by January 1, 2006. Epicor’s salesperson represented that Epicor had the resources to meet Johnson’s time table for implementation. As explained in Epicor I, it was contemplated there would ultimately be two contracts involved: the first was the agreement for purchase of the software license itself; and the second would be a consulting agreement with Epicor for professional services for implementation of the Vista software.
The purchase order form signed by Johnson indicated Imagery was to pay software licensing fees of $37,516 and “maintenance and support fees” of $5,821, for a total of $43,337. Above Johnson’s signature, the purchase order form stated, “This Order and Licensee’s use of the Licensed Software . . . is subject to and the terms and conditions of the shrink-wrap License Agreement and exhibits thereto that accompany the Licensed Software. Nothing contained in any License document, including printed terms on a Licensee purchase order shall become part of this Order.”
The Vista software package was shipped to Imagery, but almost immediately was returned to Epicor unopened. Johnson had come to believe Epicor’s salesperson had misrepresented the ability of the company to fully implement the software on Johnson’s short time table. And, as explained in Epicor I, although a proposed consulting agreement for implementation services was presented to Johnson, because he returned the software unopened, the consulting agreement was never fully executed.
The shrink-wrap License Agreement that accompanied the software began with the following language, “By loading and installing this software on your computer, you indicate your acceptance of the following Epicor Software Corporation License Agreement (‘Agreement’) . . . . If you do not agree to the terms of this Agreement, for a full refund, promptly (within no later than 30 days of receipt) return this product to the place you obtained it.”
The first three pages of the License Agreement contained general terms of the Vista license. Paragraph 1 granted the licensee the license to install and use Vista on its computer and provided the licensee would be bound by the license terms contained in Exhibit A pertaining to another software program sublicensed with Vista. Paragraph 10 provided the licensee would be bound by the terms and conditions on Exhibit B pertaining to the maintenance and support fees that were listed on the purchase order. Paragraph 12 provided, “Services. Epicor offers software implementation, consulting, custom programming, and education services (‘Services’). The terms and conditions set forth on Exhibit C apply with respect to all Services you obtain from Epicor.”
Paragraph 1(a) of Exhibit C provided, “By executing the attached License Agreement or Professional Services Engagement Agreement, as the case may be, you hereby agree that these terms and conditions (this ‘Agreement’) shall apply with respect to all software implementation, consulting, custom programming, and report design services . . . and education services . . . performed by Epicor on Customer’s behalf . . . .”
Paragraph 12(j) of Exhibit C provided, “Venue. Any action arising out of or relating to this Agreement [i.e., Exhibit C] or to its breach shall be brought in any federal or state court sitting in Orange County, California . . . . The prevailing party shall be entitled to receive from the other party its reasonable attorneys’ fees and costs incurred in connection with any action or proceeding hereunder.”
Epicor sued Imagery for breach of contract. Its complaint alleged the November 30 purchase order was “a written purchase agreement for [Epicor’s] ‘Vista’ product granting [Imagery] the right to certain intellectual property rights related to Epicor’s proprietary software.” Imagery cross-complained against Epicor seeking damages for fraud.
At trial, Imagery defended the breach of contract claim on two primary grounds: (1) fraud in the inducement as a defense to contract formation (i.e., Epicor fraudulently induced Johnson to buy the software by misrepresenting Epicor’s ability to implement on Johnson’s timetable); and (2) the License Agreement, which was incorporated into the purchase order, permitted Imagery to return for a full refund within 30 days of purchase. Imagery’s fraud complaint was premised on the same facts as asserted in its fraud defense.
The jury returned a verdict in Imagery’s favor on the complaint and Epicor’s favor on the cross-complaint. The court entered a judgment providing “[c]osts and attorney’s fees are to be determined in accordance with code.”
Imagery subsequently filed a memorandum of costs, which is not contained in the record on appeal. Epicor apparently filed a motion to strike or tax costs (also not in the record), which was denied. Imagery was awarded $14,849 in costs.
Imagery filed a separate motion for attorney fees. It contended it was entitled to attorney fees on the contract claims pursuant to Paragraph 12(j) of Exhibit C to the License Agreement. It also contended it was the prevailing party in the underlying action because its separate fraud complaint was merely a “defensive” cross-complaint, which was in all respects identical to the fraud in the inducement defense it raised as to Epicor’s complaint. Epicor opposed Imagery’s request. The trial court granted Imagery’s motion and awarded it $141,363.80 in attorney fees. Epicor appealed the order.
DISCUSSION
Standard of Review
“On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law. [Citations.] [¶] Stated another way, to determine whether an award of attorney fees is warranted under a contractual attorney fees provision, the reviewing court will examine the applicable statutes and provisions of the contract. Where extrinsic evidence has not been offered to interpret the lease, and the facts are not in dispute, such review is conducted de novo. [Citation.] Thus, it is a discretionary trial court decision on the propriety or amount of statutory attorney fees to be awarded, but a determination of the legal basis for an attorney fee award is a question of law to be reviewed de novo. [Citation.]” (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.)
Contract Attorney Fees
Attorney fees incurred in prosecuting or defending an action may be recovered as costs only when they are otherwise authorized by statute or contract. (Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10).) In this case, there is a contractual attorney fees clause, Paragraph 12(j) of Exhibit C, and thus Civil Code section 1717 (section 1717) comes into play.
Section 1717 provides, in relevant part, as follows: “(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. [¶] Where a contract provides for attorney’s fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.”
Section 1717 ensures mutuality of remedy regarding contractual attorney fees in several situations: One is when the contract provides the right to attorney fees to one party but not to the other; and another is when the person sued on a contract containing an attorney fees clause successfully argues its unenforceability—“when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed. [Citations.]” (Santisas v. Goodin (1998) 17 Cal.4th 599, 610-611.) A third scenario in which mutuality of remedy is ensured by section 1717 is contemplated by the second paragraph of subdivision (a), which states: “Where a contract provides for attorney’s fees . . . that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.” (Italics added.) That sentence was added to section 1717 in 1983 for the purpose of overturning an appellate court decision that denied fees to the prevailing party in a breach of contract action because the provision limited recovery of fees to certain types of contract claims—“parties may not limit recovery of attorney fees to a particular type of [contract] claim[.]” (Paul v. Schoellkopf (2005) 128 Cal.App.4th 147, 152-153.)
Here, paragraph 12(j) of Exhibit C contained a broadly worded attorney fees clause: “The prevailing party shall be entitled to receive from the other party its reasonable attorneys’ fees and costs incurred in connection with any action or proceeding hereunder.” That the attorney fees clause in Exhibit C is limited to contact claims related to “Exhibit C” services, i.e., “software implementation, consulting, custom programming, and report design services . . . and education services . . . performed by Epicor on Customer’s behalf . . . ” does not alter its applicability. The Licensing Agreement was subject to the terms and conditions of Exhibit C, and thus, under the second sentence of section 1717, subdivision (a), the attorney fees provision in Exhibit C must be construed as applying to the entire Licensing Agreement, not just specific kinds of contract claims.
We turn then to Epicor’s specific argument: that the Licensing Agreement is irrelevant. Epicor argues it was not suing for breach of the Licensing Agreement. Because Imagery never loaded the software, but returned it unopened, Imagery never agreed to the Licensing Agreement’s terms. (“By loading and installing the software on your computer, you indicate your acceptance of the following Epicor Software Corporation License Agreement (‘Agreement’) . . . .”)
Epicor’s argument is nonsensical. Epicor urges it was only suing to enforce the purchase order, i.e., to make Imagery pay the agreed upon price for the Vista software. Epicor asserts it was not suing to enforce the Licensing Agreement for that same software. Accepting such an argument would lead to one of two absurd results: (1) Imagery was to pay for something it could never use, since without the Licensing Agreement it would not have a legal license to install or use the software it was supposed to buy; or (2) Imagery could acquire the disks and manuals for Epicor’s proprietary software, unencumbered by the legal constraints on its use imposed by the Licensing Agreement.
We disagree with Epicor’s assertion the purchase order and the shrink-wrap Licensing Agreement that accompanied the software were two separate contracts. Rather, they were two parts of the same contract. In Register.Com, Inc. v. Verio, Inc. (2d Cir. 2004) 356 F.3d 393, the court explained the “‘money now, terms later’” nature of shrink-wrap license agreements that accompany a computer software license purchase. (Id. at p. 429, fn. 39.) In essence, the consumer pays for the software license upfront, without knowing the applicable terms and conditions of the license he has bought, until he later receives the License Agreement with the software disks. The consumer manifests assent to the terms and conditions of the license by some later action (such as installing the software on his computer).
Here, the purchase order signed by Johnson specifically indicated it was “subject to the terms and conditions of the shrink-wrap License Agreement and exhibits thereto that accompany the Licensed Software.” (Italics added.) The purchase order and the Licensing Agreement were part of the same transaction. Accordingly, the trial court properly concluded there was a contractual basis for an award of attorney fees to the prevailing party.
Prevailing Party
Epicor contends Imagery was not the prevailing party and thus not entitled to attorney fees. We disagree.
Upon noticed motion the court must “determine who is the party prevailing on the contract . . .” for purposes of contract attorney fees and “the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (§ 1717, subd. (b)(1).) “The court may also determine that there is no party prevailing on the contract for purposes of this section.” (Ibid.)
The determination as to who is the prevailing party under section 1717 rests within the discretion of the trial court. (Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 789.) Epicor has not shown an abuse of that discretion. Epicor argues it sued Imagery for breach of contract, seeking approximately $47,000 in damages, but Imagery cross-complained against it for fraud, seeking $250,000 in damages. Although Imagery prevailed on the contract, Epicor defeated the much larger tort claim, and thus, it was in fact the winner here.
Epicor’s revisionist history does not win the day. Imagery prevailed on the contract causes of action. At trial, Epicor specifically argued Imagery’s cross-complaint was simply a defensive cross-complaint. As the Supreme Court noted in Hsu v. Abbara (1995) 9 Cal.4th 863, 875, at footnote 10, “If the court concludes that the defendant’s cross-action against the plaintiff was essentially defensive in nature, it may properly find the defendant to be the party prevailing on the contract.”
Amount of Award
Epicor contends the amount of fees awarded—$141,000—was excessive in comparison to the amount of damages Epicor sought—$47,000. We find no error.
The trial court’s determination of the amount of attorney fees cannot be disturbed on appeal unless the trial court abused its discretion. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1094-1095.) In Thompson Pacific Construction, Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525, 557, the court affirmed an award of $377,799 in attorney fees incurred to defend a $58,994 claim noting, “[T]he trial judge is in the best position to evaluate the services rendered and the court’s decision will not be disturbed on appeal unless it is clearly wrong. [Citation.] The trial court, which possesses its own expertise on the value of legal services performed, makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case. [Citation.]”
Epicor has not demonstrated the trial court’s award was an abuse of discretion. Epicor makes no cogent argument concerning allocation of the attorney fees between the fees incurred by Imagery in defending the contract claim and in pursuing (unsuccessfully) its cross-complaint. (See Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130 [fees need not be apportioned when incurred for representation on common issues].) And as already noted, the cross-complaint raised the exact same fraud issue as raised by Imagery in defense of the contract action. That Imagery prevailed on its fraud in the inducement defense, but failed on its separate claim for relief, indicates only that the jury concluded Imagery suffered no additional damage as a result of Epicor’s fraud. Epicor has not established that allocation was necessary.
The gist of Epicor’s argument is that Imagery racked up high attorney fees as an act of “revenge against Epicor for bringing a claim on a contract . . . .” Epicor asserts, “This litigation never had to continue much past the pleading stages.” Taken together with Epicor’s assertion in the context of its prevailing party argument that “[n]o prudent business man would spend $141,000 in fees to defend a $47,000 claim unless [he] had much bigger objectives[,]” the tenor of Epicor’s argument seems to be that Imagery should not be awarded its attorney fees because it would have been more financially reasonable for it to have simply paid Epicor for the software and saved the costs of litigation. We are not persuaded by that line of attack, and it does not establish the trial court abused its discretion in its award.
DISPOSITION
The postjudgment order is affirmed. The Respondent is awarded its costs on appeal.
WE CONCUR: MOORE, J., IKOLA, J.