Opinion
A167335
09-17-2024
MIGUEL DEL RIO, Plaintiff and Appellant, v. PETER WEIS et al., Defendants and Respondents PETER WEIS et al., Cross-complainants and Respondents, v. MIGUEL DEL RIO, Cross-defendant and Appellant.
NOT TO BE PUBLISHED
(Contra Costa County Super. Ct. No. C19-02477)
SIGGINS, J. [*]
Miguel Del Rio sued Peter Weis and Laura Rider (Homeowners) for breach of a home remodel construction contract between Del Rio's business, JODR Inc. (JODR), and Homeowners. The trial court ruled in favor of Homeowners and granted their motion for attorney fees. Del Rio contests the fee award, arguing he cannot be held personally liable for contractual attorney fees because he was not, individually, a party to the contract. We affirm.
I. BACKGROUND
In August 2018, Homeowners entered into a contract with JODR to rebuild and remodel their home. The contract described the work to be done and included a payment structure for over a half million dollars. The contract states, in part: "In case of failure to recover money owed for work done, property will be liened, and all expenses to recover will be added to final amount owed, including time lost and attorney fees." Del Rio signed the contract for the "Contractor."
As construction progressed, differences arose between the parties over change orders, progress payments, the rate of progress, and the quality of the workmanship. Homeowners eventually asked Del Rio to stop working.
In November 2019, Del Rio sued the Homeowners for breach of contract, among other causes of action. The complaint identifies the plaintiff as "Miguel Del Rio dba JODR, Inc." and avers that he "has complied with the fictitious business name laws and is doing business under the fictitious name" of JODR. In the breach of contract cause of action, Del Rio stated that the written agreement was made between "Miguel Del Rio dba JODR Inc., Peter Weis and Laura Rider."
Homeowners answered and filed a cross-complaint against Del Rio for breach of contract and negligent design and construction, among other causes of action. The cross-complaint alleged numerous deficiencies in workmanship and disputes regarding the construction's rate of progress, progress payments, and change orders.
In February 2022, the parties settled the Homeowners' construction defect allegations against Del Rio and agreed that all remaining breach of contract claims would go to trial. In August 2022, the trial court entered judgment in favor of Homeowners and awarded them over $56,000 for overpayment on the contract. Later that month, Homeowners filed a memorandum of costs and moved for attorney fees.
Del Rio opposed the motion on the ground he could not be held liable for attorney fees because he was not a party to the contract. The trial court rejected the argument, and held Del Rio brought the suit in his individual capacity to enforce the contract and as such "stepped into the shoes" of JODR. The court observed that if Del Rio had prevailed, he would have been entitled to attorney fees. The court ordered Del Rio to pay Homeowners over $94,000 in attorney fees, plus their uncontested costs.
Del Rio appeals. He did not file a reply brief.
II. DISCUSSION
Del Rio argues the trial court erred in holding him liable for attorney fees because he was a not a party to the contract; it was between JODR and Homeowners. Homeowners argue Del Rio is a party to the contract because he signed it, or, alternatively, that he stepped into the shoes of JODR and should be held liable even if he were a nonsignatory. Homeowners have the better argument.
Attorney fees are not recoverable unless authorized by statute or contract. (Code Civ. Proc., § 1021; Santisas v. Goodin (1998) 17 Cal.4th 599, 607, fn. 4.) Generally, only the parties to a contract containing an attorney fees provision are entitled to fees. (Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 379-380 (Real Property Services).) "The issue of a party's entitlement to attorney fees is a legal issue subject to de novo review." (Apex LLC v. Korusfood.com (2013) 222 Cal.App.4th 1010, 1016 (Apex).)
Here, it is undisputed that the contract contained an attorney fees provision: "In case of failure to recover money owed for work done, property will be liened, and all expenses to recover will be added to the final amount owed, including time lost and attorney fees." (Italics added.) Irrespective of any wording that makes this language appear unilateral, Civil Code section 1717 makes such a provision reciprocal between the parties to the contract. (Real Property Services, supra, 25 Cal.App.4th at p. 379.)
In his opening brief, Del Rio states that he is the president of JODR and signed the contract on behalf of JODR. However, Del Rio filed the complaint as "Miguel Del Rio dba JODR Inc." and asserted that he is doing business under the fictitious business name of JODR. The record fails to disclose whether JODR is a fictitious business name or a separate corporate entity. No matter, either way Del Rio can be held liable for contractual attorney fees.
If JODR is a fictitious business name, as alleged in Del Rio's verified complaint, then Del Rio is a party to the contract." 'Use of a fictitious business name does not create a separate legal entity' distinct from the person operating the business. [Citation.]' "The business name is a fiction, and so too is any implication that the business is a legal entity separate from its owner." '" (Ball v. Steadfast-BLK (2011) 196 Cal.App.4th 694, 701.) Under this analysis, Del Rio is personally liable for contractual attorney fees as a signatory party.
But even if JODR is a separate legal entity from Del Rio, he can be held personally liable for contractual attorney fees as a nonsignatory because he stepped into the shoes of JODR. "Under some circumstances, . . . the reciprocity principles of Civil Code section 1717 will be applied in actions involving signatory and nonsignatory parties." (Real Property Services, supra, 25 Cal.App.4th at p. 380.) A nonsignatory party "will be bound by an attorney fees provision in a contract when the nonsignatory party' "stands in the shoes of a party to the contract."' [Citation.] In that situation, the nonsignatory party is liable for attorney fees if it would have been entitled to fees if it prevailed." (Apex, supra, 222 Cal.App.4th at pp. 1017-1018.)
Where, as here, a nonsignatory has sought relief for breach of contract against a signatory, he must be suing under "a legal theory which entitles that nonsignatory to 'stand in the shoes' of a party to the agreement." (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1240, fn. 20.) A nonsignatory may stand in the shoes of a party to a contract "either by virtue of a preexisting relationship, or as an assignee or successor in interest." (Ibid.) This can occur, when, for example, a nonsignatory is sued as the alter ego of a signatory (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129); the nonsignatory is the successor in interest of the signatory (Exarhos v. Exarhos (2008) 159 Cal.App.4th 898, 904-905); or the nonsignatory acts on behalf of a corporate signatory (Montgomery v. Bio-Med Specialties, Inc. (1986) 183 Cal.App.3d 1292, 1295 (Montgomery)).
Del Rio suggests he can only be held liable for contractual attorney fees if the trial court found he was the alter ego of JODR. To the contrary, the alter ego doctrine is just one of several ways a nonsignatory may be held liable for contractual attorney fees. It is not the only way. (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966.)
According to Del Rio, he signed the contract with Homeowners as the company's president. But Del Rio, not JODR, sued Homeowners for breach of contract. Assuming JODR is the signatory to the contract, then Del Rio acted on its behalf to enforce the contract. (Montgomery, supra, 183 Cal.App.3d at p. 1295.) Contrary to Del Rio's assertion, had he prevailed on his claims, he would have been entitled to attorney fees under the contract just as if JODR had filed the suit. Having lost on his breach of contract claim, Del Rio cannot now argue he has no liability for contractual attorney fees after he chose to sue individually to enforce the contract on behalf of the corporation. (See Brusso v. Running Springs Country Club, Inc. (1991) 228 Cal.App.3d 92, 110.)
Thus, Del Rio is personally liable for the award of attorney fees to Homeowners either as a party to the contract or by stepping into the shoes of JODR.
III. DISPOSITION
The order awarding attorney fees is affirmed. Homeowners are entitled to their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
WE CONCUR: BANKE, ACTING P. J., LANGHORNE WILSON, J.
[*] Retired Presiding Justice of the Court of Appeal, First Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.