Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County. Super.Ct.No. RIC362156 Edward D. Webster, Judge.
Troy A. Stewart for Defendant and Appellant.
Glicker & Associates and Brian I. Glicker for Plaintiff and Respondent.
OPINION
King, J.
I. INTRODUCTION
In a prior appeal in the present action (Pfeffer v. Missionary Foundation, Inc. (Nov. 15, 2007, E041935) [nonpub. opn.] [Fourth Dist., Div. Two]), this court reversed a money judgment in favor of plaintiff Matthew Pfeffer (Pfeffer) in the principal amount of $700,000. Thereafter, defendant Missionary Foundation, Inc. (MFI) obtained a judgment on the pleadings against Pfeffer, and moved for attorney fees as the prevailing party on a contract pursuant to Civil Code section 1717. The trial court denied MFI’s motion, reasoning that the present action by Pfeffer is not an “action on a contract” within the meaning of the statute, but an action sounding in tort for fraud. MFI appeals, claiming the present action by Pfeffer is an “action on a contract,” and the trial court’s contrary conclusion is erroneous as a matter of law.
All further statutory references are to the Civil Code unless otherwise indicated.
Pfeffer has not filed a respondent’s brief on this appeal; however, he opposed MFI’s motion in the trial court, and his opposition papers are part of the record on this appeal, together with MFI’s moving and reply papers and the reporter’s transcript of the hearing on MFI’s motion.
We affirm. We agree with the trial court that the present action is not an action on a contract, but an action sounding in tort for fraud. (Stout v. Turney (1978) 22 Cal.3d 718, 730 (Stout) [“A tort action for fraud arising out of a contract is not... an action ‘on a contract’” within the meaning of § 1717]; Walters v. Marler (1978) 83 Cal.App.3d 1, 27-28 (Walters), overruled on other grounds as stated in Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 505-507.)
In the present action, Pfeffer claimed MFI committed “extrinsic” fraud in connection with a judgment and settlement agreement entered in a prior action involving Pfeffer, MFI, and a third party, Wilson Creek, LLC. (Wilson Creek). Pfeffer initially sought to set aside the judgment and rescind the settlement agreement, but at trial he withdrew his demand for rescission and sought $700,000 in monetary damages for the fraud. Although the $700,000 judgment in the present action has been reversed, we conclude that the nature of the present action sounded in tort for fraud and was “in derogation” of the settlement agreement, not on it. As such, the present action is not an action “on a contract” within the meaning of section 1717, and MFI’s motion for attorney fees was properly denied.
Wilson Creek appealed from a separate order denying its motion for attorney fees and costs against Pfeffer. The appeal by Wilson Creek was consolidated with the present appeal by MFI; however, the appeal by Wilson Creek has since been dismissed.
II. FACTS AND PROCEDURAL HISTORY
A. Background
The facts and procedural history underlying the present action are set forth in detail in this court’s November 15, 2007, nonpublished opinion in case No. E041935. (Pfeffer v. Missionary Foundation, Inc., supra, E041935.) Here, we restate many of the facts set forth in the prior opinion in order to form our analysis and conclusion that the present action sounds in tort for fraud and is not an “action on a contract” within the meaning of section 1717.
B. The Prior Action
In 1997, Pfeffer and MFI entered into a real estate purchase and sale agreement. Pursuant to the agreement, MFI agreed to sell and Pfeffer agreed to purchase 740 acres of vacant land in the Aguanga area for $2.15 million. In May 1999, before escrow closed on the sale of the 740 acres to Pfeffer, Pfeffer entered into an agreement to resell the 740 acres to Sam Perricone (Perricone) for $2.85 million. Thus, Pfeffer expected to earn a profit of $700,000 on his resale of the property to Perricone.
The 740 acres consisted of approximately 520 acres of farmland and 220 acres know as the “mining plan.” The mining plan followed a creek bed that ran through the property and contained 11 million tons of extractable sand deposits. In 1997, and during the course of conducting his “due diligence” on the 740-acre property, Pfeffer discovered that the mining plan, or 220-acre portion, had been leased to Owl Properties, Inc., commonly known as Owl Rock. Pursuant to the terms of the lease and addendums, MFI was to receive $5,000 per month in rent on the 220-acre portion of the property through May 2014, or until mining operations commenced. In the event mining operations commenced before the lease expired in May 2014, MFI was to receive 10 percent of the gross value of the sand extracted from the property.
The escrow on the sale of the 740 acres to Pfeffer never closed because MFI did not provide documents necessary for Pfeffer to obtain title insurance on the property. In June 1998, Pfeffer sued MFI for breach of the 1997 purchase agreement in case No. RIC314275. In the same action, MFI filed a cross-complaint against Pfeffer for breach of contract and damages.
In February 1999, Wilson Creek sued MFI in a separate action, case No. RIC324134, alleging that MFI breached a “back-up agreement” to sell the 740 acres to Wilson Creek for $2.23 million in the event the sale to Pfeffer did not close. Wilson Creek claimed that MFI was obligated to sell the 740 acres to Wilson Creek, because the escrow on the sale to Pfeffer never closed. In March 1999, MFI filed a cross-complaint against Pfeffer and Wilson Creek in case No. RIC324134. Case Nos. RIC314275 and RIC324134 were eventually consolidated. In our opinion in the prior appeal and in this opinion, we refer to the consolidated actions as “the prior action.”
C. The August 1999 Mediation and 1999 Settlement Agreement in the Prior Action
On August 17, 1999, Pfeffer, MFI, and Wilson Creek mediated their claims in the prior action before Judge Joseph Katz. At the conclusion of the mediation, the parties and their counsel executed a handwritten settlement agreement and release of claims (the settlement agreement).
Pursuant to the settlement agreement, Pfeffer agreed to purchase the entire 740 acres from MFI for $2.15 million, and immediately resell the 520-acre portion of the property to Wilson Creek for $1.45 million. Escrows on the purchase and resale were to close simultaneously on October 16, 1999. Thus, on a net basis, Pfeffer was to purchase the mining plan, or 220-acre portion of the property, for $700,000. The settlement agreement further provided that Wilson Creek could “step into” Pfeffer’s “position” and purchase the entire 740 acres for $2.15 million in the event Pfeffer failed to close escrow on his purchase of the 740 acres. In this event, Pfeffer’s interest in and right to purchase the entire 740 acres was to be extinguished.
In agreeing to purchase the 220-acre portion of the property, Pfeffer believed he would be acquiring MFI’s right to receive the rents and royalties payable under the lease with Owl Rock. At trial in the present action in April 2006, Pfeffer testified that, at the August 17, 1999, mediation, MFI’s then-president Anthony Lewis “looked at me, and he said, do you want the rents and royalties on the mining plan? And I said, yes, because it seemed it was a good investment.” (Italics added.) Mr. Lewis died in December 2000, several years before the present action was tried in April 2006.
Pfeffer further testified that, in his view, the $5,000 per month or $60,000 per year in rents due on the property through May 2014 was a “reasonable return” on his $700,000 investment. In addition to the rents, Pfeffer expected to receive “the royalties on the sand taken off the site” in the event mining operations commenced before May 2014. Mining operations had not yet commenced as of August 1999, but Owl Rock was in the process of building a bypass road in preparation for the mining operations.
Not more than two weeks after the August 17, 1999, mediation, Pfeffer met with representatives of Owl Rock to discuss whether they were interested in purchasing, at a discount, the royalties payable under the lease. At the meeting, Pfeffer learned for the first time that MFI had already assigned to other parties approximately 80 percent of the rents and the royalties due under the lease. This information was not available through public records, including preliminary title reports that showed the property was leased to Owl Rock.
Accordingly, Pfeffer realized that the return on his $700,000 investment for the 220 acres was going to be substantially less than what he expected it would be when he signed the settlement agreement. After discovering the assignments, Pfeffer refused to sign a typed version of the settlement agreement. Further attempts to resolve the matter were unsuccessful.
Before Pfeffer signed the settlement agreement, representatives of Owl Rock were unwilling to provide him with information concerning the rents and royalties payable under the lease.
D. Further Proceedings in the Prior Action
In May 2000, Pfeffer filed a first amended complaint in the prior action against MFI and Wilson Creek. In his amended pleading, Pfeffer sought specific performance of his March 1997 agreement with MFI to purchase the entire 740 acres. The amended complaint did not mention the August 17, 1999, mediation, nor did it allege any fraud on the part of MFI or Wilson Creek in connection with the mediation and settlement agreement.
On March 30, 2001, MFI filed a motion in the prior action to reduce the settlement agreement to a judgment pursuant to Code of Civil Procedure section 664.6. Pfeffer opposed the motion. The motion was apparently granted, although it is unclear from the record in the prior appeal, or on this appeal, when the motion was granted. In any event, the record in the prior appeal shows that, on July 9, 2002, the court signed a “Corrected Judgment” setting forth the court’s findings reducing the settlement agreement to a judgment. The corrected judgment “ordered, adjudged and decreed” that the settlement agreement was “valid, existing and binding.” (Capitalization omitted.) And, in accordance with the settlement agreement, the corrected judgment ordered that Wilson Creek could step into Pfeffer’s position and purchase the 740 acres for $2.15 million in the event Pfeffer failed to close escrow on the purchase of the 740 acres.
Code of Civil Procedure section 664.6 provides: “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.”
In October 2003, Wilson Creek filed a motion to enforce the settlement agreement and corrected judgment. In January 2004, and over Pfeffer’s opposition, the court granted the motion and issued an order extinguishing any right Pfeffer had to purchase any portion of the 740 acres. The court expressly found that Pfeffer failed to “comply in good faith with any portion of the Settlement Agreement and Correct[ed] Judgment within the time periods prescribed therein,” and Wilson Creek had shown it “made a good faith effort to comply with the terms of the Settlement Agreement and Corrected Judgment.”
Pfeffer did not appeal the judgment in the prior action. Nor did he appeal the subsequent order extinguishing his interest in the 740 acres. At trial in the present action, it was undisputed that MFI sold the 740 acres to Wilson Creek for $2.15 million. Thereafter, in July 2005, MFI and Wilson Creek dismissed their claims in the prior (consolidated) action against all parties with prejudice.
E. The Present Action; Trial and Appeal of the Extrinsic Fraud Issue
On August 3, 2001, nearly two years after the settlement agreement was signed but before judgment was entered in the prior action on July 9, 2002, Pfeffer filed the present action against MFI and Wilson Creek. Pfeffer alleged that MFI and Wilson Creek made fraudulent misrepresentations to Pfeffer at the August 17, 1999, mediation and fraudulently induced Pfeffer to sign the settlement agreement. Pfeffer sought (1) rescission of the settlement agreement and (2) money damages. He also sought to “reinstate” his breach of contract claim against MFI in the prior action. In October 2001, Pfeffer filed a first amended complaint, alleging essentially the same claims and seeking the same relief he sought in his original complaint. He later dismissed Wilson Creek from the present action, with prejudice.
Trial in the present action began on October 20, 2005. After Pfeffer was sworn as the first witness and began to testify, the trial was adjourned and the parties were directed to brief the issue of whether the (corrected) judgment in the prior action barred Pfeffer’s claims in the present action under the principles of res judicata and collateral estoppel. At a hearing on February 3, 2006, the court ruled that the corrected judgment did not bar the present action. The court said: “It is finally clarified that the issue is whether or not there is intrinsic or extrinsic fraud. If it was extrinsic fraud... then it would be appropriate to... set aside the judgment.” In addition, and although Pfeffer was seeking only to rescind the settlement agreement and not the judgment in the prior action, the trial court said it would “paint a broad brush” and construe Pfeffer’s operative complaint as seeking to set aside the judgment and the settlement agreement.
When trial resumed on April 3, 2006, Pfeffer advised the court he was no longer seeking to rescind the settlement agreement or set aside the judgment in the prior action. Instead, he said he was only pursuing his claim for $700,000 in money damages based on the extrinsic fraud perpetrated in connection with the settlement agreement. The trial proceeded solely on Pfeffer’s claim for money damages based on extrinsic fraud.
Following the close of evidence, the court issued a tentative decision that became its final decision. The court concluded that: (1) under Code of Civil Procedure section 307, it had jurisdiction to award monetary damages for the extrinsic fraud and was not limited to awarding equitable relief in the form of relief from the settlement agreement or judgment in the prior action; (2) Pfeffer proved that the settlement agreement was obtained by extrinsic fraud on the part of MFI; and (3) Pfeffer was entitled to $700,000 in money damages—the difference between the $2.15 million Pfeffer agreed to pay MFI for the 740 acres and the $2.85 million that Perricone agreed to pay Pfeffer for the 740 acres.
On July 14, 2006, the trial court entered judgment in favor of Pfeffer and against MFI in the principal amount of $700,000. MFI appealed from the judgment. On November 15, 2007, this court issued a decision reversing the $700,000 money judgment in favor of Pfeffer on the ground he was barred from raising his extrinisic fraud claim in the present action. (Pfeffer v. Missionary Foundation, Inc., supra, E041935.) At trial in the present action, it was undisputed that Pfeffer had known of the extrinsic fraud since shortly after it was perpetrated upon him in August 1999. Yet, he did not assert his extrinisic fraud claim in opposition to MFI’s March 2001 motion to enforce the settlement agreement as a judgment in the prior action. Nor did he demonstrate a satisfactory excuse for failing to assert his extrinsic fraud claim in the prior action.
F. Current Proceedings in the Present Action
Following our decision in the prior appeal, MFI successfully moved for judgment on the pleadings on Pfeffer’s operative first amended complaint. Judgment was entered in its favor, and MFI moved for attorney fees and costs as the “prevailing party” in the present action. (Civ. Code, § 1717; Code Civ. Proc., §§ 1032, 1033.5.) The trial court denied the motion following an August 7, 2008 hearing.
In denying the motion, the court reasoned that the present action is not an “action ‘on a contract’” within the meaning of section 1717, but an action sounding in tort for damages. The trial court principally relied on two cases it deemed “key” and controlling, namely, Stout, supra, 22 Cal.3d at page 730 and Walters, supra, 83 Cal.App.3d at pages 27 and 28. MFI timely appealed.
III. DISCUSSION
MFI contends the trial court erroneously concluded that the present action is not an “action on a contract” within the meaning of section 1717, and for this reason erred in denying its motion for attorney fees and costs pursuant to the statute. MFI argues that the present action is “indisputably” an “action on a contract,” namely, the settlement agreement and judgment in the prior action.
In order to recover attorney fees and costs pursuant to section 1717, there must be (1) an “action on a contract” to enforce or interpret its terms, and (2) a provision in the contract awarding attorney fees “either to one of the parties or to the prevailing party.” (See Santisas v. Goodin (1998) 17 Cal.4th 599, 615.) Although the settlement agreement includes a provision awarding attorney fees to the prevailing party, the present action is not an action “on a contract” within the meaning of section 1717.
In pertinent part, 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... 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. [¶]... [¶] (b)(1)... [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.”
Paragraph C. 13. of the (handwritten) settlement agreement provides for the recovery of attorney fees and costs to the prevailing party in an action to enforce or interpret its terms. It states: “If any party brings an action to enforce the terms of this agreement or interpret [this] agreement, the prevailing party shall be entitled to recover [its] reasonable attorneys’ fees and costs incurred.”
Courts of this state liberally construe the phrase “on a contract” for purposes of section 1717. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) Thus, it has been said that “[a]s long as the action ‘involve[s]’ a contract it is ‘“on [the] contract”’ within the meaning of section 1717. [Citations.]” (Dell Merk, Inc. v. Franzia (2005) 132 Cal.App.4th 443, 455.) This statement is too broad, because not every action that “involves” a contract is an action “on the contract” within the meaning of the statute.
As the trial court recognized, an action sounding in tort for fraud is not an action “on a contract,” or to enforce or interpret the provisions of a contract, within the meaning of section 1717, even though the action “involves” a contract. (Walters, supra, 83 Cal.App.3d at pp. 27-28 [action involving purchase and sale agreement of real property sounded in tort for fraud and was “in derogation of the contract,” not “on” the contract within the meaning of section 1717]; Stout, supra, 22 Cal.3d at p. 730 [same].) As the Stout court put it: “A tort action for fraud arising out of a contract is not... an action ‘on a contract’ within the meaning of [section 1717.]” (Stout, supra, at p. 730.)
In determining whether an action is “on a contract” within the meaning of section 1717, “the proper focus is not on the nature of the remedy, but on the basis of the cause of action.” (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 347.) In Kachlon, an action seeking declaratory and injunctive relief was held to be “on the contract,” namely, a note and deed of trust, within the meaning of section 1717, even though the remedies sought were equitable. (Kachlon v. Markowitz, supra, at pp. 346-348.) Similarly, in Baugh v. Garl (2006) 137 Cal.App.4th 737, 742, an action seeking the equitable remedy of specific performance of a contract was “on the contract” for purposes of the statute. Again, the nature of the cause of action, rather than the nature of the remedy sought, is controlling.
Nevertheless, a distinction has been drawn between fraud actions in which the equitable remedy of rescission of a contract is sought, and fraud actions in which the plaintiff seeks monetary damages for the fraud, rather than rescission. A fraud action seeking rescission is an action “on the contract,” namely, the contract the plaintiff seeks to rescind. (See, e.g., Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1152 & fn. 6 [action sounding in tort for fraud and seeking rescission of contract was “action on the contract” for purposes of § 1717], disapproved on other grounds in Gavaldon v. Daimler Chrysler Corp. (2004) 32 Cal.4th 1246, 1261 and Snukal v. Flight ways Mfg., Inc. (2000) 23 Cal.4th 754, 775-776, fn. 6.) But if monetary damages are sought in lieu of rescission, the fraud action is not “on the contract”; it is “in derogation” of it. (See, e.g., Walters, supra, 83 Cal.App.3d at pp. 16, 27-28.) As another court has explained: “[A]n action for fraud seeking damages sounds in tort, and is not ‘on a contract’ for purposes of an attorney fee award, even though the underlying transaction in which the fraud occurred involved a contract containing an attorney fee clause. [Citation.] However, where the plaintiff’s claim instead seeks rescission based on fraud, the courts have concluded such claim does sound in contract and permits the award of fees.” (Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 549; Hastings v. Matlock (1985) 171 Cal.App.3d 826, 841.)
In the present action, Pfeffer initially sought to rescind the settlement agreement and judgment entered in the prior action—both in his original complaint and in his operative first amended complaint. But at the time of trial, he withdrew his demand for rescission and elected to pursue monetary damages—specifically, $700,000—which he claimed he incurred as a result of MFI’s fraud in inducing him to enter into the settlement agreement. Pfeffer’s election not to pursue rescission of the settlement agreement, or set aside the judgment based on the agreement, and to pursue monetary damages for the alleged fraud, converted what would have otherwise been an action “on” the settlement agreement into an action not “on” the contract or settlement agreement, but in derogation of it. (Super 7 Motel Associates v. Wang, supra, 16 Cal.App.4th at p. 549; Walters, supra, 83 Cal.App.3d at pp. 16, 27-28.)
As the trial court observed at the hearing on MFI’s motion, Stout and Walters, like the present case, were fraud actions in which money damages rather than rescission were sought. In Walters, the buyer of real property sued the sellers, among others, for intentional misrepresentation or fraud in connection with the purchase and sale of the property. In his complaint, the buyer sought the full range of remedies available for fraud: (1) rescission of the agreement and restitution based on rescission; (2) reformation of the agreement; and (3) damages. But at trial, the buyer elected not to pursue rescission of the purchase agreement and instead sought and obtained an award of monetary damages for the fraud. (Walters, supra, 83 Cal.App.3d at pp. 11, 15.) The Walters court explained that the buyer “had an election of two inconsistent remedies: one to disaffirm the contract and rescind, and the other, to affirm the contract and sue for damages.” (Id. at pp. 15-16.)
In view of the buyer’s election at trial to pursue monetary damages, the Walters court reversed an award of attorney fees to the buyer, reasoning that the buyer’s action was not “on the contract” or purchase agreement within the meaning of section 1717, but an action “in tort for fraud in derogation of the contract.” (Walters, supra, 83 Cal.App.3d at pp. 27-28.) Similarly, in Stout, a buyer of real property sued the sellers for fraud in connection with the sale of the property, and sought and obtained monetary damages for the fraud. (Stout, supra, 22 Cal.3d at pp. 721-722.) On appeal, the buyers claimed that the trial court had erroneously refused to award them attorney fees pursuant to section 1717. The court rejected the claim, reasoning that “[a] tort action for fraud arising out of a contract” is not an “action ‘on a contract’” within the meaning of section 1717. (Stout, supra, at p. 730.) It is significant that the buyers did not ultimately seek rescission of the purchase and sale contract.
MFI maintains that, unlike the plaintiffs in Stout and Walters, Pfeffer never had a legal fraud claim for damages in the present action. Rather, he only had an equitable claim to set aside the judgment in the prior action, and the underlying settlement agreement, based on extrinsic fraud. MFI argues there is “no such thing as a ‘tort for extrinsic fraud’ that supports a claim for ‘monetary damages,’” and because the judgment in the prior action has not been set aside, it “refutes any showing of damage” in the present action for extrinsic fraud.
A judgment may only be set aside based on extrinsic fraud; it cannot be set aside based on ordinary or intrinsic fraud. (In re Margarita D. (1999) 72 Cal.App.4th 1288, 1294-1295.) Extrinsic fraud is fraud which a party, through no fault of its own, is prevented from knowing before a judgment is entered against him; in contrast, intrinsic fraud “goes to the merits of the prior proceeding and is ‘not a valid ground for setting aside a judgment when the party has been given notice of the action and has had an opportunity to present his case....’” (Ibid.)
MFI’s argument confuses the nature of the present action—for “extrinsic” fraud in the inducement of the settlement agreement and judgment in the prior action—with the remedies available to Pfeffer for that fraud. (See Baugh v. Garl, supra, 137 Cal.App.4th at p. 742.) None of the authorities MFI cites support its claim that Pfeffer was not entitled to seek monetary damages in the present action and was limited to the equitable remedy of rescinding the settlement agreement and setting aside the judgment in the prior action. In any event, we find the claim without merit.
In awarding Pfeffer $700,000 in damages following the 2005-2006 bench trial in the present action, the trial court acknowledged that Pfeffer’s remedy of rescinding the settlement agreement and setting aside the judgment in the prior action was “futile” because the agreement and judgment had already been fully executed. Indeed, by the time of trial, the entire 740-acre property had been sold to Wilson Creek for $2.15 million. Thus, Pfeffer sought $700,000 in monetary damages—the amount he claimed he would have made in profit on the sale of the 740-acre property to Perricone had the fraud not occurred.
In the prior appeal, this court reversed the $700,000 judgment on the ground that Pfeffer did not present a viable claim for extrinisic fraud. But if Pfeffer had presented a valid claim for extrinsic fraud, an award of monetary damages would have been proper, particularly in view of the futility of setting aside the executed judgment and settlement agreement in the prior action. (See Walters, supra, 83 Cal.App.3d at p. 16 [defrauded party may elect between rescission and restitution based on rescission, or monetary damages].)
As we explained in our prior opinion, at trial it was undisputed that Pfeffer had known of the alleged extrinsic fraud since shortly after the settlement agreement was signed and long before judgment was entered in the prior action. Yet Pfeffer failed to demonstrate a satisfactory excuse for not presenting his extrinsic fraud claim in the prior action. (Pfeffer v. Missionary Foundation, Inc., supra, E041935 at pp. 16-18; City and County of San Francisco v. Cartagena (1995) 35 Cal.App.4th 1061, 1067-1068; Humes v. MarGil Ventures, Inc. (1985) 174 Cal.App.3d 486, 499; DeMello v. Souza (1973) 36 Cal.App.3d 79, 85.)
MFI further argues that, in the prior appeal, this court “determined” that Pfeffer’s action was an “action on a contract.” (Pfeffer v. Missionary Foundation, Inc., supra, E041935.) Not so. The issue whether the present action is an action “on a contract” for purposes of section 1717 was not presented in the prior appeal. And, although in our prior decision we loosely referred to the present action as being “based on the settlement agreement,” this did not amount to a “determination” that the present action constitutes an “action on a contract” for purposes of section 1717.
IV. DISPOSITION
The order denying MFI’s motion for attorney fees and costs pursuant to section 1717 is affirmed. The parties shall bear their respective costs on appeal.
We concur:Ramirez P.J., McKinster J.