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Lqnn, Inc. v. Lanvesco

California Court of Appeals, Fourth District, Third Division
Apr 28, 2009
No. G040998 (Cal. Ct. App. Apr. 28, 2009)

Opinion

NOT TO BE PUBLISHED

Appeal from an order of the Superior Court of Orange County No. 04CC05641, Robert D. Monarch, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)

Dale E. Washington and Bart Kasperowicz for Plaintiff and Appellant.

W.G. Wells for Defendant and Respondent.


OPINION

ARONSON, J.

Plaintiff LQNN, Inc., doing business as Lee’s Sandwiches, (LQNN) challenges the trial court’s order denying its attorney fee request. Although the trial court previously determined neither party prevailed at trial, LQNN contends our unqualified affirmance of the judgment in defendant Lanvesco’s previous appeal rendered LQNN a prevailing party on that appeal. LQNN recognizes that Civil Code section 1717 defines prevailing party as “the party who recovered a greater relief in the action on the contract.” But LQNN asserts section 1717’s prevailing party definition was enlarged by the attorney fee provision in the lease they signed, which purports to grant fees to the party who prevails “on trial or appeal.”

All statutory references are to the Civil Code.

The law is well established that parties may not by contract alter or affect section 1717’s definition of prevailing party. In cases where, as here, the action is based solely on contract claims, the contract’s attorney fee provisions are governed exclusively by section 1717. Because we previously affirmed the trial court’s judgment, which included a finding neither party prevailed, the trial court properly denied LQNN’s attorney fee request. Accordingly, we affirm.

I

Factual and Procedural Background

LQNN entered into a commercial lease with Lanvesco, the property owner. After a dispute arose regarding LQNN’s allowable use of the property, LQNN sued Lanvesco, which cross-complained against LQNN. After a bench trial, the court amended the pleadings on its own motion to add mutual mistake as a basis for rescission, and issued of statement of decision granting rescission of the lease. Finding neither side entitled to damages, the court determined there was no prevailing party, and ordered each side to bear its own attorney fees.

Lanvesco appealed the judgment, contending the trial court erred in amending the pleadings and refusing Lanvesco’s request to reopen the evidence. Lanvesco also contended insufficient evidence supported the judgment and that the trial court’s statement of decision was deficient. In an unpublished opinion, we rejected each of these contentions and affirmed the judgment without modification, and awarded LQNN its costs on appeal. (LQNN, Inc. v. W.G. Wells Co. (March 27, 2008, G038097).)

On remand, LQNN moved for an award of attorney fees, contending our affirmance of the judgment rendered it the prevailing party on appeal. The trial court denied the motion, observing that our affirmance merely upheld the court’s earlier ruling that neither party had prevailed in the case. LQNN now appeals the trial court’s order denying its attorney fee request.

II

Standard of Review

The question of a party’s entitlement to attorney fees is purely legal, and we review a trial court’s order denying fees de novo. (Snyder v. Marcus & Millichap (1996) 46 Cal.App.4th 1099, 1102.)

III

Discussion

The Lease Did Not Alter or Affect Section 1717’s Definition of Prevailing Party

Section 1717 provides, in relevant 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... shall be entitled to reasonable attorney’s fees in addition to other costs. [¶]... [¶] (b)(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment.... [T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.”

Here, the trial court determined neither party prevailed on the contract. We affirmed the trial court’s determination in the previous appeal, and LQNN cannot challenge it here. Nonetheless, LQNN asserts it is entitled to prevailing party attorney fees because it prevailed as the respondent in the prior appeal, and we unqualifiedly affirmed the trial court’s judgment. LQNN recognizes it does not fall within section 1717’s definition of prevailing party, but relies instead on the fee provision in the lease, which provides: “If either party or the broker named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by the losing party as fixed by the court.” LQNN asserts the phrase “trial or appeal” in the lease broadens the definition of prevailing party found in section 1717, and allows a party that does not prevail at trial to recover fees if it succeeds as a respondent on appeal. LQNN asserts that parties may contractually enlarge the scope of the term “prevailing party” in section 1717 if it does not directly contradict any provision of that statute. We disagree.

“[T]he definition of ‘prevailing party’ in... section 1717 is mandatory and cannot be altered or avoided by contract. [Citation.] Contractual provisions that conflict with the ‘prevailing party’ definition under section 1717 are void.” (Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 707 (Exxess), citing Santisas v. Goodin (1998) 17 Cal.4th 599, 615-617 (Santisas).); see also Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 785, fn. 6; Fairchild v. Park (2001) 90 Cal.App.4th 919, 929.)

As the California Supreme Court explained in Santisas: “[T]he legislative history of section 1717... generally reflects a legislative intent to establish uniform treatment of fee recoveries in actions on contracts containing attorney fee provisions and to eliminate distinctions based on whether recovery was authorized by statute or by contract. A holding that in contract actions there is still a separate contractual right to recover fees that is not governed by section 1717 would be contrary to this legislative intent.” (Santisas, supra, 17 Cal.4th at p. 616.) Accordingly, “[i]f a cause of action is ‘on a contract,’ and the contract provides that the prevailing party shall recover attorneys’ fees incurred to enforce the contract, then attorneys’ fees must be awarded on the contract claim in accordance with... section 1717.” (Exxess, supra, 64 Cal.App.4th at pp. 706-707.)

There is no question the parties’ right to attorney fees is governed by section 1717 in the present case. The attorney fee provision in the lease is narrowly drawn to cover only actions to “enforce the terms” or “declare [the] rights” under the lease. The present action, which included causes of action for breach of contract and, alternatively, rescission, clearly falls within the scope of section 1717. Thus, section 1717’s definition of prevailing party, i.e., “the party who recovered a greater relief in the action on the contract,” applies here. Before the first appeal, the trial court determined neither party recovered greater relief in the action. Our decision in the first appeal affirmed this finding.

Our award of costs to LQNN in connection with the first appeal did not affect the trial court’s prevailing party determination. “‘“The provisions allowing costs on appeal... are entirely separate from the contractual provision for fees and do not depend on the party winning the appeal being the ultimate prevailing party....” [Citations.]’ [Citation.]” (Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 924.) Accordingly, we conclude the trial court did not err in denying LQNN’s attorney fee request.

IV

Disposition

The order is affirmed. Lanvesco is entitled to its costs of this appeal.

WE CONCUR: MOORE, ACTING P. J., FYBEL, J.


Summaries of

Lqnn, Inc. v. Lanvesco

California Court of Appeals, Fourth District, Third Division
Apr 28, 2009
No. G040998 (Cal. Ct. App. Apr. 28, 2009)
Case details for

Lqnn, Inc. v. Lanvesco

Case Details

Full title:LQNN, INC., Plaintiff and Appellant, v. LANVESCO, Defendant and Respondent.

Court:California Court of Appeals, Fourth District, Third Division

Date published: Apr 28, 2009

Citations

No. G040998 (Cal. Ct. App. Apr. 28, 2009)