Opinion
F085536
05-10-2024
JOHN GARCIA et al., Plaintiffs and Appellants, v. BANK OF STOCKTON, Defendant and Respondent.
Gilmore Magness Janisse and David M. Gilmore for Plaintiffs and Appellants. Lewis Brisbois Bisgaard &Smith, Sean M. Higgins and Greg L. Johnson for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Fresno County. No. 18CECG00977, D. Tyler Tharpe, Judge.
Gilmore Magness Janisse and David M. Gilmore for Plaintiffs and Appellants.
Lewis Brisbois Bisgaard &Smith, Sean M. Higgins and Greg L. Johnson for Defendant and Respondent.
OPINION
HILL, P.J.
INTRODUCTION
This is the second appeal taken by appellants John Garcia, Janie Garcia, and Vista Del Sol, LLC in relation to the same underlying indemnification matter. In the first appeal, appellants sought review of the trial court's decision on the merits of their breach of contract claims and related cross-claims for declaratory relief by respondent Bank of Stockton. (Garcia v. Bank of Stockton (Dec. 20, 2023, F084375) [nonpub. opn.] (Garcia).) Here, appellants contest the award of attorney fees to respondent as the prevailing party. Appellants do not contest the amount or reasonableness of attorney fees sought by respondent, but rather contest whether the trial court appropriately determined respondent was the prevailing party. We conclude the court did not abuse its discretion and therefore affirm its decision.
BACKGROUND
Because the background of the case is set forth fully in Garcia, supra, F084375, it is not repeated here in full. In brief summary, appellants owned two entities-Vista Del Sol Farms, LLC and Vista Del Sol Farms I, LLC (collectively, "Vista Del Sol")-with two other individuals, Morris Garcia and Sharon Garcia. Morris and Sharon Garcia, pursuant to other debts they incurred, lost their economic interests in Vista Del Sol, and respondent was ultimately awarded ownership of those interests. Vista Del Sol sold its primary asset-almond orchards-in 2013 and executed several agreements with respondent to allow respondent to receive a distribution from the sale. One of these agreements required respondent to indemnify and defend appellants against certain limited claims a third party-the estate of Douglas Maddox ("Maddox")-was then pursuing against the economic interests of Morris and Sharon Garcia in Vista Del Sol. When several other actions were filed against appellants, they requested respondent indemnify and defend them against these actions. Respondent's response to these tenders was mixed: it largely denied responsibility for one of the actions (although it offered to pay defense costs up to $20,000); it agreed to accept defense and indemnity of one suit, but advised its attorney would handle the defense and that it would not pay for separate counsel, which appellants rejected; the fate of a third tender purportedly made was unclear under the record previously provided to us; and the tender of a fourth and final action was wholly rejected by respondent.
The record available to us in this appeal offers no further clarity on this point.
The underlying action began when appellants filed a complaint on March 21, 2018, alleging breach of contract and declaratory relief. Respondent filed a crosscomplaint for declaratory relief on August 7, 2018. Following briefing on cross-motions for summary judgment and/or adjudication, the trial court denied appellants' motion for summary judgment, concluding appellants were not entitled to judgment as a matter of law. However, the court granted respondent's motion and concluded any obligation respondent may have had to defend and indemnify appellants expired on January 4, 2017, pursuant to the language of the parties' agreement. The parties then stipulated to a bench trial based on written submissions-largely the information that had been submitted on summary judgment-pursuant to which the court found in favor of respondent, concluding appellants had failed to prove damages in a nonspeculative manner, and entered judgment on November 17, 2021. Appellants appealed, resulting in our decision in Garcia.
While the appeal in Garcia was ongoing, respondent sought attorney fees in the trial court pursuant to Civil Code section 1717 because the contract containing the indemnification and defense requirement contained a fee-shifting provision in the event of a dispute. The court concluded respondent was the prevailing party because its motion for summary adjudication was granted, limiting appellants' claims, and because respondent succeeded in entirely defeating appellants' breach of contract claims at trial, for which appellants had sought over $600,000 in damages. The court noted that respondent obtained a judgment in its favor and the court had previously described respondent as the "prevailing party." Appellants' argument here is not that they were the prevailing party, but rather that the trial court failed to treat this as a case of "mixed" results, in which case the court would have the discretion, but not the obligation, to find respondent the prevailing party.
ANALYSIS
Civil Code section 1717, subdivision (a) states in pertinent part: "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." The trial court "shall determine who is the party prevailing on the contract for purposes of this section," which is "the party who recovered a greater relief in the action on the contract." (Civ. Code, § 1717, subd. (b)(1).) "The court may also determine that there is no party prevailing on the contract for purposes of this section." (Ibid.) Thus, the trial court is vested with considerable discretion to determine which party, if any, was the prevailing party in a dispute. (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.)
A trial court's determination as to which party is the prevailing party in a dispute is reviewed for abuse of discretion. (DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 973-974; Waterwood Enterprises, LLC v. City of Long Beach (2020) 58 Cal.App.5th 955, 966.) While the court retains considerable discretion, where one party achieved a "simple, unqualified" win, it would abuse that discretion if it did not conclude that party was the prevailing party. (Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394, 1398.) Only where "the ostensibly prevailing party receives only a part of the relief sought" or "the judgment is' "considered good news and bad news as to each of the parties," '" is it appropriate for the court to determine neither party prevailed. (Ibid.) The court is governed by any language in the contract defining "prevailing party," so long as it does not run counter to the statute, and if there is none, "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." (Santisas v. Goodin (1998) 17 Cal.4th 599, 622.)
In this case, the contract at issue states: "If any legal action or any motion or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorney fees and other costs and expenses incurred in any action or other proceeding, in addition to any other relief to which it or they may be entitled." Thus, the contract itself does not offer any further definition of which party would be the prevailing party. Accordingly, the court was to approach this question pragmatically, determining "the extent to which each party has realized its litigation objectives." (Santisas v. Goodin, supra, 17 Cal.4th at p. 622; see also Civ. Code, § 1717, subd. (b)(1).)
The trial court concluded respondent was the prevailing party, noting appellants did not prevail on the contract claim because they failed to prove damages. The court noted it did not award appellants any damages, despite their request for over $667,000, and instead granted judgment for respondent on the contract claims. The only point in appellants' favor was that the court determined respondent owed at least a partial duty of indemnity and defense regarding some of the underlying actions; however, appellants had sought to have respondent pay all of their legal fees and costs in relation to all of the underlying actions. Moreover, as set forth in Garcia, respondent had actually agreed to provide coverage for certain tenders, although the relationship between the parties deteriorated when respondent did not accede to every demand from appellants. It is therefore not clear the extent to which respondent even contested its duty in relation to every claim.
Appellants do not argue they should be considered the prevailing party. Rather, they argue it was error for the trial court to treat respondent's victory as an "unqualified" win-and thus find respondent must be considered the prevailing party as a matter of law-rather than a "mixed" result, pursuant to which the trial court would exercise its discretion to determine which party prevailed.
We do not agree with the premise of appellants' argument here, because the trial court clearly exercised discretion. The court's ruling shows it recited the law pertinent to determining which party prevailed in litigation, and then proceeded to compare the results each party obtained. It noted the rulings it made in favor of respondent, which it clearly believed were significant. It then noted appellants "prevailed on limited issues" and "did not prove their damages and could not prevail on their contract claim." The court considered the fact that it "did not award [appellants] any damages, despite their request for over $667,000 in damages" but instead "granted judgment in favor of [respondent] on the contract claim." It compared these victories for respondent with the results appellants achieved, noting that, while appellants "did obtain an order declaring that [respondent] owed them at least a partial duty of indemnity and defense as to two of the three underlying actions, this order did not achieve [appellants'] primary litigation objective." In short, the trial court exercised its discretion. It did not find it had no discretion to exercise in this matter.
Further, it did not abuse that discretion. Pragmatically, this is a case in which appellants sought more than $600,000 in damages on a contract action and were awarded nothing. Respondent also prevailed on its major pretrial declaratory relief arguments that the agreement terminated any responsibility to indemnify and defend on a date certain. (Garcia, supra, F084375.) Even if the win was not "unqualified" in favor of respondent, the court did not err in finding respondent to be the prevailing party.
CONCLUSION
For the reasons given above, the trial court's determination is affirmed. Respondent is awarded its costs on appeal.
WE CONCUR: PENA, J., MEEHAN, J.