Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC381325, Elizabeth Allen White, Judge.
Plotkin Rapoport and Russell H. Rapoport for Plaintiff and Appellant.
Payne & Fears, Benjamin A. Nix and Erik M. Andersen for Defendant and Respondent.
TURNER, P. J.
I. INTRODUCTION
Plaintiff, Jefferson Wells International, Inc., appeals from a summary judgment and attorney fee award in favor of defendant, American Reprographics Company. Plaintiff asserts the trial court erred in summarily adjudicating that its contract claim was time barred under a contractual provision requiring that any action arising out of the parties’ agreement be brought within one year after the cause of action has accrued. Plaintiff also challenges the attorney fee award claiming it was not authorized under Wisconsin law. We affirm the judgment including the attorney fee award in all respects.
II. BACKGROUND
The complaint, filed on November 27, 2007, contains contract breach claims (first) and common counts (second). The common counts are for an open book account and for work, labor, services and materials rendered. The complaint alleges: plaintiff is a Delaware Corporation that is qualified to do business in California; defendant is a Delaware Corporation, whose principal place of business is in California; the contract was entered into on January 28, 2005, and was to be performed in California; defendant breached the agreement in August 2006 by failing to pay balances then due or accruing thereafter; plaintiff is entitled to $287,964.02 in damages plus $75,295.77 in interest as of October 18, 2007; and plaintiff is entitled to attorney fees according to proof.
The parties’ agreement was attached to the complaint and is entitled:
“JEFFERSON WELLS INTERNATIONAL, INC. MASTER SERVICE AGREEMENT STANDARD TERMS AND CONDITIONS” (the agreement). Paragraph 3 of the agreement provides: “TERMINATION Unless otherwise provided for in the Engagement Letter(s)/Proposal(s), either party may terminate this Agreement for any reason upon two weeks notice. Upon termination, [defendant] shall pay [plaintiff’s] final invoice for all amounts due under the terms of section 4 below. In the event of termination of this Agreement for any reason, the obligations of the parties under [specified sections] shall survive termination.” Paragraph 4 of the agreement contains a payment provision which states: “[Plaintiff] shall be paid at the billable rates and/or fees set forth in each Engagement Letter(s)/Proposal(s). [Plaintiff] shall coordinate its standard 45-hour work week for its professionals to take place within [defendant’s] normal business hours, unless otherwise agreed in advance. [¶] a. [Plaintiff] shall invoice [defendant] on a bi-weekly basis. Terms shall be net 15 days. All objections by [defendant] to an invoice must be made in writing to [plaintiff] within fourteen days after the date of the invoice. If no objections are received by [plaintiff] within such fourteen-day period, the invoice shall be deemed accepted by [defendant]. [¶] b. If payment has not been received as set forth herein, [plaintiff] reserves the right, in addition to any other rights it may have, to (i) suspend the services until such payment is made in full, (ii) charge interest on the amount past due at the lesser of 1.5% per month or the maximum allowed by law and (iii) invoice [defendant] for all costs of collection including reasonable attorney’s fees.” Paragraph 16 of the agreement is a governing law provision which states Wisconsin law would apply to any action between the parties. This paragraph of the agreement also provided for a one-year limitation on actions between the parties arising from the agreement as follows, “No action arising out of this Agreement, regardless of the form, may be brought by either party more than one year after the cause of action has accrued.”
Defendant answered the complaint and asserted as an affirmative defense the one-year limitation period contained in the agreement. The parties subsequently filed a stipulation to file cross-motions to adjudicate the statute of limitations issue. The cross-summary judgment motions were based on stipulated facts.
The parties stipulated the following facts were undisputed. The parties entered into the agreement on January 28, 2005. On April 6, 2006, plaintiff and defendant agreed to a Statement of Work. The Statement of Work states in part, “[Plaintiff] shall provide the Services [in the Statement of Work] pursuant to the provisions of this Statement of Work and [plaintiff’s] Master Service Agreement between [plaintiff and defendant] dated January 28, 2005.” Pursuant to the agreement and the Statement of Work, plaintiff sent 17 invoices to defendant from March 29 through December 12, 2006. In July 2006, representatives from defendant met with plaintiff’s employees to discuss the invoices received to that point. During the meeting, defendant questioned the charges in the invoices. Defendant paid the balance of the majority of the invoices in their exact amounts. But, defendant did not pay the total amount of each invoice within one year of when certain invoices were sent. The invoices for which total payments were not made included invoice Nos.: SCA0104081 dated April 26, 2006 for $113,755.09; SCA0104165 dated May 10, 2006 for $224,263.45; and SCA0104215 for $309,542.00. With respect to these invoices, defendant paid plaintiff by check on July 21, 2006, a total of $663,516.89 which was $246,284.01 less than the invoiced amount. Total payment was also not made on invoices Nos. SCA0104276 dated June 21, 2006, for $147,087.09 and SCA0104324 dated July 7, 2006, for $47,579.91. Defendant paid plaintiff by check dated August 10, 2006, in the amount of $155,804.87 for the June 21 and July 7, 2006 invoices which is $38,862.13 less than the amount due. With those exceptions, defendant paid the invoices sent before and after August 10, 2006, in full. Defendant also paid two invoices in December 2006, which was within one year of when the complaint was filed on November 27, 2007. Defendant made a total payment by check dated December 5, 2006 on invoice No. SCA0104747 which bears the date November 7, 2006, in the amount of $66,972.77. Defendant made a total payment by check dated December 12, 2006 for invoice No. SCA0104782 dated November 21, 2006 in the amount of $30,551.14. Defendant did not make any payment on invoice No. SCA0104873 dated December 29, 2006, in the amount of $2,654.82. The parties stipulated that the November 27, 2007 action concerns alleged nonpayment of only the invoices which covered a period from April 26 until July 7, 2006.
The trial court granted defendant’s summary judgment motion. This was because: the one-year period began to run on the sixteenth day after the invoices were issued and not paid in full; plaintiff drafted the net 15-day term in the agreement; and the options in the agreement for non-payment were remedies for a breach. The trial court ruled with respect to the common counts the invoices show there was no open account nor was there a mutual account.
On January 12, 2009, the trial court entered a judgment pursuant to stipulation. The judgment provides that claims for contract breach, open book or account stated on or before August 10, 2006 are all time-barred. The ruling disposed of plaintiff’s claims for $246,284.01 plus $38,862.13 for unpaid invoiced amounts that predated August 10, 2006. The only invoice not time-barred was $2,654.82 due November 21, 2006 (the invoice date is actually December 29, 2006), which defendant contends was not a part of the case as pled. Defendant disputed the invoice but agreed to tender payment on the invoice plus interest in the amount of $3,625.69. It was stipulated, “IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that plaintiff takes nothing by way of its Complaint.” This timely appeal followed.
On January 27, 2009, defendant filed a motion for an award of its attorney fees in the amount of $69,396.25 plus $2,522.60 for the motion. The attorney fee motion was brought on the grounds: defendant was the prevailing party in the action; the written contract contains an attorney fee provision which is made reciprocal by Civil Code section 1717, subdivision (a); and the fees were reasonable and necessary.
At the hearing on the attorney fee award, the trial court ruled: defendant was the prevailing party; California law applies with respect to the unilateral attorney fee provision; even if Wisconsin law applied, Wisconsin Statute, section 814.03 provides for mandatory costs to the prevailing defendant in summary judgment litigation; but, Wisconsin law did not clearly provide for attorney fees to defendant. The trial court concluded that Civil Code section 1717, subdivision (a) applied under controlling choice of law standards. The trial court entered an order awarding defendant its attorney fees and costs. Plaintiff filed a timely appeal from the attorney fee order. On April 10, 2009, we consolidated the appeals from the summary judgment and attorney fees orders.
III. DISCUSSION
A. Summary Judgment Review Standard
In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, our Supreme Court described a party’s burdens on summary judgment or adjudication motions as follows: “[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a court’s action in his favor bears the burden of persuasion thereon. [Citation.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.... [¶] [T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.... A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]” (Fns. omitted, see Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878.) We review the trial court’s decision to grant the summary judgment motion de novo. (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65, 67-68; Sharon P. v. Arman, Ltd. (1999) 21 Cal.4th 1181, 1188, disapproved on another point in Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 853, fn. 19.) The trial court’s stated reasons for granting summary judgment are not binding on us because we review its ruling not its rationale. (Continental Ins. Co. v. Columbus Line, Inc. (2003) 107 Cal.App.4th 1190, 1196; Dictor v. David & Simon, Inc. (2003) 106 Cal.App.4th 238, 245.) In addition, a summary judgment motion is directed to the issues framed by the pleadings. (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1252; Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673, superseded by statute on a different point as stated in Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767-768.) Those are the only issues a motion for summary judgment must address. (Turner v. Anheuser-Busch, Inc., supra, 7 Cal.4th at p. 1252 ;Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 364.)
B. The Contractual Time Limitation
As previously noted, the January 28, 2005 agreement provides that Wisconsin law applies to an action between the parties. The parties do not dispute that Wisconsin and California law are consistent for determining the sole issue raised by the cross-motions for summary judgment, which is whether the contract breach claim was time barred by the one-year limitation period. The determination involves an interpretation of when the cause of action accrued within the meaning of the January 28, 2005 agreement. The parties agree that Wisconsin and California law are consistent and require a court to ascertain the parties’ intention based on the writing alone when the contract is unambiguous. (Stone v. Acuity (Wis. 2008) 747 N.W.2d 149, 163; Huml v. Vlazny (Wis. 2006) 716 N.W.2d 807, 820; see Cal. Civ. Code, §§ 1636, 1639; Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 526; Amtower v. Photom Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1605; American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 1239, 1245.) The interpretation of a contract is a question of law requiring independent review on appeal. (D.L. Anderson’s Lakeside Leisure Co., Inc. v. Anderson (Wis. 2008) 757 N.W.2d 803, 812; see Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co. (2004) 116 Cal.App.4th 1375, 1388.) Unless the facts are disputed, the question of when a statute of limitations begins to run is legal and subject to independent review. (Kroeger v. Kroger (Wis. App. 1984) 353 N.W.2d 60, 61 [application of a limitation is a question of law requiring de novo review]; see Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814.)
As noted, Paragraph 16 of the agreement states, “No action arising out of this Agreement, regardless of the form, may be brought by either party more than one year after the cause of action has accrued.” The general rule is that a cause of action for breach of contract accrues at time of the breach. (CLL Associates Ltd. Partnership v. Arrowhead Pacific Corp. (Wis. 1993) 497 N.W.2d 115, 116 [“‘In Wisconsin, a 90 year line of precedent holds that [i]n an action for breach of contract, the cause of action accrues and the statute of limitations begins to run from the moment the breach occurs.”]; Messner Manor Assocs. v. Wisconsin Housing & Econ. Dev. Auth. (Wis.App. 1996) 555 N.W.2d 156, 159 [cause of action for contract breach accrues and statute of limitations begins to run at time of breach]; see also Reichert v. General Ins. Co. of America (1968) 68 Cal.2d 822, 831-832; Menefee v. Ostawari (1991) 228 Cal.App.3d 239, 246.) At the outset, it should be noted that the complaint alleges that defendant breached the contract on or around August 2006. Paragraph 4 of the agreement states that payment shall be made based on biweekly invoices and, “Terms shall be net 15 days.” The term net 15 days means that, after 15 days, the invoice is past due. (Valentine v. Patrick Warren Const. Co. (Wis. 1953) 56 N.W.2d 860, 870; Bandana Trading Co. v. Quality Infusion Care, Inc. (2008) 164 Cal.App.4th 1440, 1443.)
The invoices at issue were sent between April 26 and July 7, 2006. The failure to pay within 15 days meant that there was a breach as of July 22, 2006 (calculated as 15 days after July 7, 2006.) On August 10, 2006, defendant made a partial payment on the invoices dated April 26 through July 7, 2006. Before the August 10, 2006 payment, representatives from both sides met to discuss disputed amounts. Defendant made the August 10, 2006 partial payment by taking an approximately $300,000 deduction from the six invoices. There is nothing in the stipulated facts that any discussion was engaged in or the matter was raised about the six disputed invoices in the months following the partial payment. No further payments were made on those invoices. Thus, the time came and went for performance of payment on those invoices within the time specified in paragraph 3 of the agreement. Under the terms of the agreement calling for payment of invoices within 15 days, plaintiff could have sued defendant for the failure to pay the invoices on or after July 22, 2006. In any event, there was certainly a breach no later than August 10, 2006 when defendant failed to pay the entire amount of the invoice within the terms of the agreement. Paragraph 16 of the agreement provides that an action must be brought within one year after the cause of action accrues. The cause of action accrued when there was a breach by failure to pay the total amount of the six disputed invoices. The disputed invoices were all dated on or before July 7, 2006. The complaint alleged that defendant breached the contract on or around August 2006. The complaint was filed on November 27, 2007. This was more than one year after the invoices were unpaid as required by paragraph 4 of the agreement.
Plaintiff argues under both Wisconsin and California law and the “termination” provision in paragraph 3 of the agreement, the cause of action was tolled until the last payment between the parties which occurred in December 2006. Plaintiff cites Wisconsin Statute section 893.43 which provides in part, “An action upon any contract, obligation or liability, express or implied, … shall be commenced within 6 years after the cause of action accrues or be barred.” Plaintiff also relies on Liberty Credit Services, Inc. v. Nancy Quinn (Wis. App. 2004) 688 N.W.2d 768, 770 which holds that a partial payment on a contractual obligation can toll the limitations period from the last date money was paid: “A partial payment on the contractual obligation made before the statute of limitations has run tolls the statute and sets it running from the date of payment. [Citation.] Generally, a statute of limitations exists to insure prompt litigation of claims and to protect defendants against fraudulent or stale claims. [Citation.] A partial payment on a contract claim extends the statute of limitations to encourage settlement agreements without litigation. [Citation.] Periodic partial payments on a debt may be made beyond the ordinary statutory limitation period without the creditor losing the right to pursue the unpaid balance. [Citation.]”
Plaintiff also relies on the following language by our Supreme Court in Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 479, 489-490 to support its argument the cause of action did not accrue on the April 26 through July 7, 2006 invoices until the agreement was terminated: “Indeed, whether the breach is anticipatory or not, when there are ongoing contractual obligations the plaintiff may elect to rely on the contract despite a breach, and the statute of limitations does not begin to run until the plaintiff has elected to treat the breach as terminating the contract. [Citation.] In the context of successive breaches of a continuing contractual obligation, we have explained: ‘“In such a contract, where the parties did not mutually abandon or rescind it upon a breach or successive breaches, the injured party could wait until the time arrived for a complete performance by the other party and then bring an action for damages for such breaches. [Citation.] [Plaintiff] was not bound to treat the contract as abandoned on the first breach of it, or on any particular breach, but had [its] election to still rely on it, and the statute of limitations could not begin to run until it had made its election.”’ [Citations.]”
According to plaintiff, the agreement did not provide that failure to pay an invoice on a specified date was a breach. Rather, plaintiff argues the agreement only provided remedies in the event there was a failure to pay. Plaintiff reasons: all amounts invoiced were not fully due until termination of the contract under paragraph 3 of the agreement; the breach did not occur until defendant failed to pay both the principal and interest that had been billed; and plaintiff did not elect to treat the failure to perform as a breach until the agreement was terminated.
Plaintiff is not entitled to toll the limitation period in the contract based on these circumstances. Both the Wisconsin and California cases cited by plaintiff are based on a continuing obligation under the contract. Plaintiff’s “termination” argument does not take into consideration the doctrine of contractual severability; i.e., if performance of contractual obligations is apportioned, the contract may be severable or divisible. Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 16 Cal.App.4th at page 1388, explained the doctrine of contractual severability as follows: “[W]here performance of contractual obligations is severed into intervals, as in installment contracts, the courts have found that an action attacking the performance for any particular interval must be brought within the period of limitations after the particular performance was due. The situations in which this rule has been applied include not only installment contracts [citation], but also such diverse contractual arrangements as leases with periodic rental payments [citation], and contracts calling for periodic, pension-like payments on an obligation with no fixed and final amount [citation].” (Id. at p. 1388.) The doctrine of contractual severability is recognized in Wisconsin and California. (Davies v. J. D. Wilson Co. (Wis. 1957) 85 N.W.2d 459, 474-475 [contracts can be severable or be divisible where contract contains several distinct items that can be separately performed and compensation for each is settled and apportioned]; see Lowy v. United Pac. Ins. Co. (1967) 67 Cal.2d 87, 91-92.)
The Wisconsin Supreme Court’s contractual severability rule as it relates to the statute of limitations can be summarized as follows. The statute of limitation begins to run when services are terminated or the work is completed in the case of a divisible contract. But, where a contract contains several distinct items that can be separately performed and compensation for each is settled and apportioned, each cause of action accrues and the statute of limitations begins to run when the particular service is rendered. (Davies v. J. D. Wilson Co., supra, 85 N.W.2d at pp. 474-475.) In California, the rule concerning the statute of limitations where a contract is divisible or severable is as follows: “‘Where a contract is divisible and, thus, breaches of its severable parts give rise to separate causes of action, the statute of limitations will generally begin to run at the time of each breach; in other words, each cause of action for breach of a divisible part may accrue at a different time for purposes of determining whether an action is timely under the applicable statute of limitations.’” (Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1389 quoting 15 Williston on Contracts (4th ed.2000) § 45:20, p. 356.) Thus, both Wisconsin and California have similar rules as to when the statute of limitations begins to run in the case of a divisible agreement. (See e.g. Policemen’s Annuity and Ben. Fund City of Milwaukee v. City of Milwaukee (Wis. App. 2001) 630 N.W.2d 236, 210-211 [each improper payment in amount less than what was owed under a pension plan triggered the statute of limitations]; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1389.)
Whether the contract is divisible or severable depends upon the parties’ intentions. (Armendariz v. Foundation Health Psyhcare Services, Inc. (2000) 24 Cal.4th 83, 122; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1389-1391.) In this case, paragraph 4 of the agreement required payment of a specific amount for plaintiff’s services. The contract, which was drafted by plaintiff, provides it was to be paid after service of an invoice “net 15 days” for the services that had been rendered. The consideration could be, and in fact, was apportioned as indicated in each invoice. The agreement’s unambiguous language shows that the parties intended a severable contract. (See Davies v. J. D. Wilson Co., supra, 85 N.W.2d at pp. 474-475; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1389.)
Furthermore, the parties certainly acted as if the contract was severable. Plaintiff issued a number of invoices for its services. Defendant refused to pay the entire amount of the invoices issued between April 26 and July 7, 2006. In July 2006, the parties’ representatives had a meeting about the disputed amounts reflected in the invoices issued between April 26 and July 7, 2006. Defendant made a partial payment on the disputed amounts on August 10, 2006. The August 10, 2006 payment did not include the disputed amounts. Thereafter, the parties continued a contractual relationship until December 2006. But, defendant paid the balances on all the remaining invoices without once referencing any balance due from the April 26 through July 7, 2006 invoices. Indeed, plaintiff never billed defendant for the six unpaid invoices again. In addition, it is undisputed that each payment made by defendant applied to a specific invoice. Defendant so directed the payments. A debtor liable under several obligations has the right at the time of the payment to apply the moneys to the obligation he or she debtor desires. (Waukesha Concrete Products Co. v. Capitol Indemnity Corp. (Wis.App. 1985) 379 N.W.2d 333, 337; see Cal. Civ. Code, § 1479; Ray v. Borgfeldt (1915) 169 Cal.253, 262-263; Orlopp v. Willardson Co. (1965) 232 Cal.App.2d 750, 758.)
Under these circumstances, we disagree with plaintiff’s argument that the limitation period did not begin to run until the parties “terminated” the contract as stated in paragraph 3 of the agreement. The limitations period began to run on each severable obligation from the time performance was due or net 15 days. Defendant made a partial payment on the invoices on August 10, 2006. Plaintiff was required to bring an action relating to the six disputed invoices within one year of the breach. (Davies v. J. D. Wilson Co., supra, 85 N.W.2d at pp. 474-475; Policemen’s Annuity and Ben. Fund City of Milwaukee v. City of Milwaukee, supra, 630 N.W.2d at pp. 210-211; see also Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co., supra, 116 Cal.App.4th at pp. 1388-1389; Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1344.) The November 27, 2007 complaint was filed over one year after the failure to pay the obligations due under the six invoices dated April 26 through July 7, 2006.
C. The Attorney Fee Award
1. Overview
Plaintiff also contends that the attorney fee award cannot stand because: defendant was not the prevailing party under Code of Civil Procedure section 1032, subdivision (a)(4); the trial court erred in applying Civil Code section 1717, subdivision (a) to this case when Wisconsin does not prohibit unilateral attorney fee provisions; and conflict of law analysis favors application of Wisconsin law. Defendant asserts it is the prevailing party because the stipulated judgment provides in part, “[P]laintiff takes nothing by way of its Complaint.” And, although the stipulated judgment also provided that defendant had paid a December 29, 2006 invoice in the amount of $3,625.69, the payment was not subject to the judgment. Rather, under standards set forth in Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 185-190, the amount of the payment was irrelevant to the prevailing party determination. This is because the money was paid as part of settlement and outside of any court order. Plaintiff counters that it is the prevailing party because it had a net recovery of $3,625.69. According to plaintiff, the words of the stipulated judgment really mean “Plaintiff takes nothing else by way of its Complaint.” Chinn (a dismissal case) is distinguishable from this case because here no dismissal is involved. In its reply brief, plaintiff concedes that, if Civil Code section 1717, subdivision (a) applies, defendant is the prevailing party. However, plaintiff asserts that Civil Code section 1717, subdivision (a) should not have been applied.
2. Defendant is the prevailing party.
In both California and Wisconsin, the right to recover costs is purely statutory. The trial court correctly concluded that defendant is the prevailing party in this case under both Wisconsin and California law. (Wis. Stat., § 814.03(1); Code Civ. Proc., § 1032, subd. (a)(4).) Defendant prevailed on its summary judgment motion. Plaintiff obtained no recovery against defendant in the action. The stipulated judgment orders, “[P]laintiff takes nothing by way of its Complaint.” Although the stipulated judgment in this case provides that only one invoice was not barred by the one-year time limitation in the agreement, it does not change defendant’s prevailing party status. The stipulated judgment states that the amount of the remaining invoice is $2,654.82, which under the agreement provides for interest at the rate of 1.5 percent per month. The stipulated judgment further provides: “Defendant contends that the remaining invoice was not part of the case as pled and the invoice is disputed. In any event, as a means of avoiding further litigation costs, on December 31, 2008, by letter which stated that payment was being made without any admission of liability, Defendant tendered $3,625.69 to Plaintiff as payment of principal and interest on that invoice. To avoid the expense of trial, Plaintiff has accepted that tender as payment in full of the remaining invoice, leaving no issues to be tried.” The payment on the invoice was not as a result of any court order but was paid as part of a settlement agreement without an admission of liability. (See Chinn v. KMR Property Management, supra, 166 Cal.App.4th at pp. 185-190.) Defendant was the prevailing party.
3. Civil Code section 1717, subdivision (a) applies to this case.
Civil Code section 1717 subdivision (a) provides in 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.” Civil Code section 1717, subdivision (a) reflects the California public policy of ensuring mutuality of remedy in California’s courts by preventing the unfairness of one-sided attorney fee provisions. (PCLM Group v. Drexler (2000) 22 Cal.4th 1084, 1091; Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 127-128; see ABF Capital Corp. v. Grove Properties Co. (2005) 126 Cal.App.4th 204, 214 [fundamental public policy]; International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1187-1188 [important public policy].)
Plaintiff concedes that, if Civil Code section 1717, subdivision (a) is applicable, defendant is entitled to its reasonable attorney fees. The parties agree no similar reciprocity public policy statute exists under Wisconsin law. Rather, Wisconsin follows the American rule that each party to a lawsuit bears its own costs of litigation. Nevertheless, in Wisconsin attorney fees may be recoverable by a statute or an enforceable contract. (Kremers-Urban Co. v. American Employers, Ins. (Wis. 1984) 351 N.W.2d 156, 167-168; Purdy v. Cap Gemini America, Inc. (Wis. App. 2001) 637 N.W.2d 763, 768.) Wisconsin Statutes, section 814.04(2) provides that allowed costs include: “DISBURSEMENTS. All the necessary disbursement and fees allowed by law....” Contractual attorney fees are “fees allowed by law.” (Stewart v. Farmers Ins. Croup (Wis.App. 2009) 773 N.W.2d 513, 516; Purdy v. Cap Gemini America, Inc., supra, 637 N.W.2d at p. 768.) Thus, the prevailing party of a contract action, in which the contract allows for the recovery of attorney fees, may obtain the fees as taxable costs. (Wis. Stat., § 814.10; Purdy v. Cap Gemini America, Inc., supra, 637 N.W.2d at p. 768.) Here, the complaint demanded contractual attorney fees “by an agreement or statute” according to proof. It is not entirely clear that, under Wisconsin law, the attorney fees would not have been recoverable as costs based on plaintiff’s demands in the complaint. The problem is that defendant has no express contractual right to the fees. But, if the fees would not have been recoverable in Wisconsin, there would definitely be an inconsistency with California Civil Code section 1717, subdivision (a).
Wisconsin Statutes, section 814.04 states in part: “(1) Attorney fees. (a) When the amount recovered or the value of the property involved is greater than the maximum amount specified in s. 799.01(1)(d), attorney fees shall be $500; when it is equal to or less than the maximum amount specified in s. 799.01(1)(d), but is $1,000 or more, attorney fees shall be $300; when it is less than $1,000, attorney fees shall be $100. In all other cases in which there is no amount recovered or that do not involve property, attorney fees shall be $300. [¶] (c) No attorney fees may be taxed on behalf of any party unless the party appears by an attorney other than himself or herself. [¶] (2) Disbursements. All the necessary disbursements and fees allowed by law; the compensation of referees; a reasonable disbursement for the service of process or other papers in an action when the same are served by a person authorized by law other than an officer, but the item may not exceed the authorized sheriff’s fee for the same service; amounts actually paid out for certified and other copies of papers and records in any public office; postage, photocopying, telephoning, electronic communications, facsimile transmissions, and express or overnight delivery; depositions including copies; plats and photographs, not exceeding $100 for each item; an expert witness fee not exceeding $300 for each expert who testifies, exclusive of the standard witness fee and mileage which shall also be taxed for each expert; and in actions relating to or affecting the title to lands, the cost of procuring an abstract of title to the lands. Fees Guardian ad litem fees shall not be taxed as a cost or disbursement.”
In Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 465, our Supreme Court adopted the Restatement Second of Conflict of Laws, section 187, subdivision (2) test for determining the enforceability of a choice of law contractual provisions: “The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either [¶] (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice, or [¶] (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188 [of the Restatement], would be the state of the applicable law in the absence of an effective choice of law by the parties.”
In Farb v. Superior Court (2009) 174 Cal.App.4th 678, 686, Division Four of this appellate district synthesized our Supreme Court’s analysis in Nedlloyd Lines B.V., thusly: “In determining the enforceability of arm’s length contractual choice-of-law provisions, California courts apply the principles set forth in the Restatement Second of Conflict of Laws..., which reflects a strong policy favoring enforcement of such provisions. (Nedlloyd Lines B.V. v. Superior Court[, supra,] 3 Cal.4th [at pp.] 465-466.) ‘[T]he proper approach under Restatement section 187, subdivision (2) is for the court first to determine either: (1) whether the chosen state has a substantial relationship to the parties or their transaction, or (2) whether there is any other reasonable basis for the parties’ choice of law. If neither of these tests is met, that is the end of the inquiry, and the court need not enforce the parties’ choice of law. If, however either test is met, the court must next determine whether the chosen state’s law is contrary to a fundamental policy of California. If there is no such conflict, the court shall enforce the parties’ choice of law.’ (Nedlloyd, supra, 3 Cal.4th at p. 466, fn. omitted.)”
Application of these principles Nedlloyd test to this case establishes Civil Code section 1717, subdivision (a) must be enforced. The first part of the test is determining whether Wisconsin has a relationship to the parties. Plaintiff is a Delaware corporation which has its principal place of business in Wisconsin. Payments were mailed to a Wisconsin post office box. There is a relationship with Wisconsin. Second, Wisconsin has no reciprocity statute for unilateral attorney fee provisions, which is inconsistent with Civil Code section 1717, subdivision (a). The application of Wisconsin law would frustrate the reciprocity public policy of this state contained in Civil Code section 1717, subdivision (a). (See ABF Capital Corp. v. Grove Properties Co., supra, 126 Cal.App.4th at p. 214 [reciprocity is fundamental public policy] (Grove Properties); International Billing Services, Inc. v. Emigh, supra, 84 Cal.App.4th at pp.1187-1188 [reciprocity statute is important public policy].)
Third, California has a materially greater interest than Wisconsin in the determination of this issue. As previously noted, California has a public policy of reciprocity in contractual attorney fee provisions which is embodied in Civil Code section 1717, subdivision (a). Defendant is a Delaware corporation. However, defendant’s principal place of business is California. The contract was negotiated and signed in California. Plaintiff conducted some of the business for defendant in California. These services were provided by plaintiff’s employees in California. The disputed invoices were mailed to California. Plaintiff sued a California resident in California. We conclude that California’s interests is much greater than Wisconsin’s.
As explained in Grove Properties Co., supra, 126 Cal.App.4th at page 220: “The interest of California in seeing its residents receive fair play with respect to attorney fees, when resort is made to the California courts, is a fundamental equitable policy of this state. Because resort is made to the California courts, and implicates the equitable treatment of California citizens, California has a great material interest in the attorney fees issue-fees which are attributable to litigation in California.” The purpose of Civil Code section 1717, subdivision (a) is to ensure equal and fair access to California courts, which is a fundamental interest in this state. Wisconsin arguably has no interest (but certainly not a greater interest) in controlling the amount of attorney fees paid to parties litigating in California courts. Although there was evidence that the business was conducted in California and seven other states, there is no evidence that any of the work was performed in Wisconsin. The attorney fees were not incurred in Wisconsin. There was also no issue of access to a Wisconsin court at issue. Accordingly, the trial court properly awarded the fees under Civil Code 1717, subdivision (a).
We also disagree with plaintiff that ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 837-840 (Berglass) requires a different result. In Berglass, there was a dispute over whether New York law applied to an attorney fee dispute. In an opinion authored by Presiding Justice Vaino Spencer, the Court of Appeal specifically declined to decide whether New York law contravened California public policy embodied in Civil Code section 1717, subdivision (a). (Id. at p. 837.) The Berglass opinion explained that the facts before the court demonstrated New York had a substantial relationship with parties and the subject matter of the contract. Moreover, the Berglass opinion distinguished Grove Properties, supra, 126 Cal.App.4th at page 222 where, as noted, the parties negotiated the contract in California and New York. But in Grove Properties, the contract was entered into in California. (Berglass, supra, 130 Cal.App.4th at p. 838, Grove Properties, supra, 126 Cal.App.4th at p. 222.) In Berglass, there was no evidence of where the contract was executed or negotiated. (Berglass, supra, 130 Cal.App.4th at p. 838.) The only California contact in Berglass was that the defendant was a California resident. Thus, Berglass is factually distinguishable from this case as well as Grove Properties.
IV. DISPOSITION
The judgment is affirmed. Defendant, American Reprographics Company, shall recover its costs incurred on appeal from plaintiff, Jefferson Wells International, Inc. Any attorney fee request must be pursued pursuant to California Rules of Court, rule 3.1702(c).
We concur ARMSTRONG, J. KRIEGLER, J.