Opinion
NOT TO BE PUBLISHED
Super. Ct. No. CVCS07-0765
BLEASE, Acting P. J.
This appeal tenders the right to attorney fees under Civil Code section 1717 for the prevailing party in several contracts involving the the purchase of building materials, two of which had an attorney fee clause. Section 1717 provides for an award of attorney fees only to the prevailing party in an action on a contract which contains an attorney fee provision.
The plaintiff Homewood Building Supply, Inc. (Homewood), a supplier of building materials, prevailed in its suit to recover $8,000 in unpaid building materials against the owner of a house being constructed, defendant Chukweuemeka Ndulue (Ndulue). Notwithstanding that the contract did not contain an attorney fee provision, the trial court ordered Ndulue to pay Homewood’s attorney fees on the theory that Bernie Taddy (Taddy), Ndulue’s construction consultant, was acting as Ndulue’s agent when he executed a credit agreement with Homewood to purchase materials for Ndulue’s home which contained an attorney fee clause. We shall reverse the judgment.
Ndulue filed a cross-complaint against Homewood for breach of contract and against his construction consultant, cross-defendant, Taddy arising from a consultant agreement which did contain an attorney fee provision. We shall affirm an award of attorney fees only as to Taddy who prevailed in the action involving Ndulue.
In summary, we agree the trail court erred in ordering that Ndulue pay Homewood’s attorney fees, but not in ordering him to pay Taddy’s attorney fees. We shall reverse the order that Ndulue pay Homewood’s attorney fees and otherwise affirm the judgment.
BACKGROUND
Because the only issue before us is whether the trial court properly found that the parties’ various agreements authorized the awards of attorney fees, we begin our recitation of the facts with a description of those agreements.
The Contracts
A. Taddy’s Credit Agreement with Homewood
On August 1, 2005, defendant Taddy entered into a written agreement (“Application/Agreement for Credit”) with plaintiff Homewood, by which Homewood agreed to furnish up to $15,000 worth of building materials to Taddy on credit (the credit agreement). Taddy signed the contract on behalf of “Taddy’s Construction” and “Owner Builder Consultant.” The credit agreement states in part: “In consideration of the extension of credit by HOMEWOOD TRUSS, the undersigned [Taddy] agrees: [¶]... [¶] 3. To pay late charges, including liquidated damages, and finance charges of 1.5% per month. [¶] 4. To pay all reasonable charges for collection, including but not limited to: attorney fees, and court costs.”
B. Ndulue’s Consultant Agreement with Taddy
Four months later, on December 16, 2005, Ndulue and Taddy entered into a written agreement by which Taddy agreed to provide construction consultant services to Ndulue in connection with the construction of a residence in Yuba City (the consultant agreement). The consultant agreement, in letter form, addressed by Taddy to Ndulue, states that, for a contract price of $50,000, Taddy is “selling you no more than information [for] building your own home from form start (setting of forms for concrete) to passing of final inspection. I, Bernie Taddy, am not liable or responsible in any way for workmanship, material, etc. You are responsible for all selecting and signing of contracts, funding of moneys, etc. For you are the builder!!!! Again, I am your consultant (INFORMATION). I will assist you with scheduling, acquiring workers comp and liability of all subs at request, I’ll call in required inspections, and answer[] any questions you have during this process of building your dream home....” The consultant agreement also provides that “[a]ny dispute arising under this contract with Owner Builder Consultant shall be settled by binding arbitration in accordance with the commercial arbitration rules of American association, and judgment on the award rendered by the Arbitrator may be entered in any court having jurisdiction. The arbitrator shall award the prevailing party in any dispute arising out of the agreement reasonable attorney’s fees and all reasonable cost[s], including cost of arbitration....”
C. The Taddy Agreements with Homewood
On or about February 8, 2006, Taddy entered into a written contract with Homewood, entitled “Bid Proposal & Agreement” by which Homewood agreed to furnish trusses and other materials to Taddy Construction for Ndulue’s house project for a total price of $51,843.33. Thereafter, on the following February 15, Taddy entered into two “Quotation and Purchase Agreements” with Homewood for the Ndulue project. Neither the Bid Proposal & Agreement, nor the Quotation and Purchase Agreements between Taddy and Homewood contain attorney fee provisions.
The Lawsuit
When Homewood was not paid in full for materials it supplied for Ndulue’s project, it sued both Ndulue and Taddy, on theories of breach of contract, account stated, open book account, and to foreclose its mechanics’ lien. The operative complaint alleged that Taddy was acting both as Ndulue’s agent and on his own account when he executed the Bid Proposal & Agreement to buy materials for Ndulue’s project, and close to $8,000 worth of materials supplied remain unpaid. Homewood also alleged that it is entitled to recover attorney fees pursuant to the credit agreement.
While the action was pending, Ndulue cross-complained against Taddy and Homewood on theories of breach of contract, quasi-contract, fraud, indemnification, and negligence. Taddy sought to compel arbitration of Ndulue’s cross-complaint against him, pursuant to the terms of the consulting agreement. Ndulue opposed the motion to compel arbitration, and the trial court agreed that arbitration could not proceed simultaneously with the trial of Homewood’s complaint because it might result in inconsistent awards.
The matter proceeded to a six-day court trial; no reporter’s transcript is in the record. The court ultimately entered judgment in Homewood’s favor against Ndulue only for damages from breach of contract in the amount of $7,823.42, plus interest, and against Ndulue on his cross-complaint.
As relevant to this appeal, the court ordered Ndulue to pay Homewood attorney fees in the amount of $30,272. Its statement of decision reflects findings that “Ndulue agreed with Taddy that Taddy would act as agent for Ndulue regarding the construction of a residence for Ndulue” and that “the principal (Ndulue) is bound by the acts of his agent (Taddy). The later execution of the Bid Proposal and Agreement and the two Quotation and Purchase Agreements by Taddy on behalf of Ndulue incorporated the terms of the earlier Application/Agreement for Credit.” The credit agreement contained an attorney fee clause. Accordingly, the court concluded, Ndulue is bound by the terms of the credit agreement between Homewood and Taddy; thus, “Ndulue agreed to pay... attorney fees and costs” to Homewood.
The court also ordered Ndulue to pay Taddy attorney fees in the amount of $32,187, because Taddy is the prevailing party in Ndulue’s cross-complaint.
DISCUSSION
Ndulue claims the trial court erred in holding him liable for attorney fees in this case. We agree only that the court erred in holding him responsible for the attorney fees incurred by Homewood.
I. 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 [contract], 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; see also Exarhos v. Exarhos (2008) 159 Cal.App.4th 898, 903.)
II. The Court Erred in Ordering Ndulue to Pay Homewood’s Attorney Fees Pursuant to the Credit Agreement
Ndulue contends on appeal the trial court erred in concluding that he is bound by the credit agreement to pay Homewood’s attorney fees because he was not a signatory to that agreement, and he had no agency relationship with Taddy when Taddy signed the credit agreement with Homewood. We agree.
In contract actions, Civil Code section 1717 governs “whether and how attorney’s fees should be awarded under a contract.” (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1157.) Section 1717 provides: “(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. [¶]... [¶] Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit....”
“Civil Code section 1717 has a limited application. It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to enforce that contract.” (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342.)
We begin our analysis of whether the trial court correctly applied Civil Code section 1717 with a recognition of certain fundamental principles. “Ordinarily attorney fees can only be awarded when the lawsuit (1) involves a claim covered by a contractual attorney fee clause [citation] and (2) is between the parties to that contract [citation].” (Super 7 Motel Assoc. v. Wang (1993) 16 Cal.App.4th 541, 544-545, italics added.) “The first issue (the claims issue) essentially involves interpreting the parties’ contract, and requires the court to examine the language of the contractual clause to determine whether the nature of the claims asserted by plaintiff fall within the intended scope of the attorney fee clause. [Citation.] [¶] The second issue (the parties issue) also requires that we examine the operative contract to determine if the parties to the lawsuit were also parties to the attorney fee clause covering the disputed claims. In some cases, however, the parties issue also involves the reciprocity principles embodied in Civil Code section 1717, because under some circumstances a nonsignatory to the contract will be deemed entitled to the benefits of the attorney fee clause.” (Id. at p. 545.)
The dispositive issue is whether Ndulue was a party to Taddy’s credit agreement contract with Homewood, which contains the attorney fee clause. On the face of the credit agreement, the answer is no. Ndulue is not a party to that contract. He is not mentioned in the contract: No persons other than Taddy are mentioned. The credit agreement does not suggest its benefits or obligations will extend in the future to new parties or to the successors in interest of Taddy and/or Homewood. It is also apparently undisputed that Taddy was not acting as Ndulue’s agent in August 2005, when the credit agreement was signed.
Nor do the other operative contracts indicate, expressly or impliedly, that Ndulue agreed to be bound by the terms of the credit agreement. The consulting agreement makes no reference to the credit agreement and includes nothing to suggest Taddy’s agreement to extend the benefits (and obligations) of his available credit for Ndulue’s benefit. The Bid Proposal & Agreement and two Quotation and Purchase Agreements by which Taddy ordered materials from Homewood for Ndulue’s project neither refer to nor incorporate any term or provision of Taddy’s preexisting credit agreement with Homewood.
Homewood nonetheless argues that Ndulue became a party to the credit agreement by virtue of his subsequent agency relationship with Taddy. It relies upon Civil Code section 2330, which states: “An agent represents his principal for all purposes within the scope of his actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from transactions within such limit, if they had been entered into on his own account, accrue to the principal.” Acknowledging that this section “makes no reference to preexisting contracts,” Homewood asserts that this section can be interpreted to mean that a principal “takes the agent as he finds him,” i.e., burdened by an obligation to pay attorney fees under a preexisting agreement.
We disagree. True, there are circumstances under which a nonsignatory could find himself bound by an attorney fee provision in a contract that preexisted his interest in the transaction, such as when the nonsignatory has succeeded to the interest of a party to the underlying agreement. (E.g., Exarhos v. Exarhos, supra, 159 Cal.App.4th at pp. 903-905; California Wholesale Material Supply, Inc. v. Norm Wilson & Sons (2002) 96 Cal.App.4th 598, 605, 608-609.) And a principal who ratifies his agent’s prior action may thereafter be bound by it, depending on the circumstances. (E.g., Allied Mut. Ins. Co. v. Webb (2001) 91 Cal.App.4th 1190, 1194-1195; see also Civ. Code, § 2307 [“An agency may be created, and an authority may be conferred, by a precedent authorization or a subsequent ratification”].) But, here, the trial court’s statement of decision reflects that it made no findings of fact which would support a ruling that Ndulue should be bound -- under either of these theories -- by the attorney fee clause of the credit agreement.
Indeed, nothing in the contracts suggests this is a proper case for departing from the general rule that attorney fees are available under Civil Code section 1717 only as between the parties to the contract containing the attorney fee clause. (See Super 7 Motel Assoc. v. Wang, supra, 16 Cal.App.4th at p. 544.) The trial court found -- wholly as a matter of contract interpretation -- that the Bid Proposal and Agreement and two Quotation and Purchase Agreements executed by Taddy on behalf of Ndulue “incorporated” the terms of the earlier credit agreement. To the contrary, we find for the reasons set forth above that the contracts at issue cannot reasonably be so interpreted. Nor are there issues of reciprocity which might have justified imposing the attorney fee provision on a nonsignatory. (See Super 7 Motel Assoc. v. Wang, supra, at p. 545.)
In sum, nothing in the contracts we interpret de novo justifies the trial court’s legal conclusion that Ndulue can be bound by the attorney fee provision of the Application/Agreement for Credit to which he was not a party. Its order that Ndulue pay Homewood’s attorney fees was error.
III. The Court Did Not Err in Ordering Ndulue to Pay Taddy’s Attorney Fees under the Consulting Agreement
The same cannot be said of the trial court’s decision to award Taddy attorney fees as the prevailing party under his consulting contract with Ndulue. Ndulue’s challenge to that award is meritless.
Again, the facts surrounding this issue are not in dispute. The parties do not dispute that the consulting contract required any dispute arising between Ndulue and Taddy under the consulting contract to be resolved in binding arbitration; the consulting contract provided for the prevailing party to be awarded reasonable attorney fees; Taddy petitioned to submit the parties’ dispute to binding arbitration; Ndulue successfully opposed Taddy’s petition; and Taddy ultimately prevailed in Ndulue’s cross-complaint against him.
Rather, Ndulue argues that the consulting agreement, by its own terms, “applied only to arbitration” and, since the cross-complaint was not resolved in arbitration, no attorney fees should have been awarded.
Taddy responds that, because Ndulue opposed Taddy’s efforts to submit the cross-complaint to binding arbitration as required by the consulting contract, Ndulue should be estopped from denying liability for Taddy’s reasonable fees and costs. Taddy has the better argument.
Ndulue is judicially estopped from arguing no attorney fees may be awarded because the dispute was not resolved in arbitration. The fact that Ndulue opposed Taddy’s petition to submit the dispute to arbitration precludes him from now arguing that Taddy may not recover attorney fees because the dispute was not so resolved.
The principle of judicial estoppel forecloses a litigant from taking inconsistent positions that suit its purposes at different points in the litigation and that impinge on the integrity of the judicial process. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181.) The doctrine applies “when: (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” (Jackson v. County of Los Angeles, supra, 60 Cal.App.4th at p. 183.)
Here, Ndulue is arguing that his dispute with Taddy should have been resolved in arbitration in order for Taddy to recover attorney fees. In the trial court, Ndulue successfully opposed Taddy’s attempt to have the dispute resolved in arbitration. These two positions, taken by Ndulue in the judicial proceedings, are inconsistent. Ndulue was successful when he urged in the trial court that Taddy’s petition for arbitration should be denied, and he does not now argue he was mistaken in advancing that position. (See Jackson v. County of Los Angeles, supra, 60 Cal.App.4th at p. 183.)
Having successfully convinced the trial court to disallow Taddy to submit the dispute to binding arbitration, Ndulue cannot now be heard to argue that Taddy should be denied attorney fees to which he is otherwise entitled as the prevailing party, wholly because the dispute was not resolved in arbitration.
The trial court did not err in awarding Taddy attorney fees.
DISPOSITION
The court’s award of attorney fees to Homewood is reversed. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
We concur: SIMS, J., NICHOLSON, J.