Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Los Angeles County Super. Ct. No. YC046839, Cary Nishimoto, Judge.
Tesser & Ruttenberg and Kenneth G. Ruttenberg for Cross-complainant and Appellant.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Allison A. Arabian; Law Offices of Stanley T. Denis and Stanley T. Denis for Cross-defendants and Respondents.
KRIEGLER, J.
After the sale of a residence, the buyer claimed the sellers had failed to disclose defects in the property. The sellers filed an action for declaratory relief, seeking a judicial determination of the parties’ rights and obligations under the contract. The buyer responded with a cross-complaint for damages, which factually involved the identical issues raised in the sellers’ declaratory relief complaint. The trial court dismissed the sellers’ declaratory relief action for failure to state a cause of action, ruling that declaratory relief was not an appropriate remedy and the disputed issues could all be resolved on the buyer’s cross-complaint.
Trial on the buyer’s cross-complaint resulted in a jury verdict in favor of sellers, meaning the jury found the sellers did not fail to disclose defects. The trial court determined the sellers were the prevailing parties and awarded them costs and attorney fees pursuant to Code of Civil Procedure section 1032. The buyer appeals, contending he was the prevailing party entitled to attorney fees in the action as a matter of law pursuant to section 1032, subdivision (a)(4), because neither party was awarded relief—sellers lost on declaratory relief, and buyer lost on his cross-complaint. Under the circumstances of this case, in which the sellers were effectively awarded the relief they sought in their declaratory relief action by means of the jury’s verdict in their favor on buyer’s cross-complaint, we hold that the trial court correctly ruled the sellers were the prevailing parties. Accordingly, we affirm the order of the trial court.
All statutory references are to the Code of Civil Procedure, unless otherwise indicated.
PROCEDURAL HISTORY
Kenneth and Kay Ohara sold a residence to Dennis Swing. After an unsuccessful mediation, the Oharas filed a complaint for declaratory relief against Swing, alleging the existence of a dispute as to an alleged failure to disclose specified conditions relating to the property. The Oharas sought a judicial determination of their rights and duties regarding the controversy with Swing.
Swing’s answer to the declaratory action included a prayer for attorney fees. Swing also filed a cross-complaint for breach of contract, violations of Civil Code section 1102 et seq., and intentional and negligent misrepresentation. Swing included a request for reasonable attorney fees in his cross-complaint. Attached to the cross-complaint was the standard form residential purchase agreement used in the sale of the residence, which included the following attorney fees provision: “In any action, proceeding, or arbitration between Buyer and Seller arising out of this agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller,” except as provided in a contractual provision requiring mediation prior to the filing of arbitration or a court action.
In their answer to the cross-complaint, the Oharas sought reasonable attorney fees and costs.
Swing’s motion for judgment on the pleadings on the Oharas’ declaratory relief complaint was granted. The trial court ruled the Oharas’ complaint did not state a cause of action for declaratory relief, in that the issues raised were all contained in Swing’s cross-complaint. The trial court signed an order granting judgment to Swing on the complaint. The trial court struck a provision in the proposed order that would have declared Swing the prevailing party on the Oharas’ complaint for declaratory relief.
During the jury trial on Swing’s cross-complaint, at the urging of the trial court, Swing dismissed his breach of contract cause of action in return for a waiver of costs by the Oharas. The jury returned a verdict in favor of the Oharas on the tort causes of action in Swing’s cross-complaint. The jury’s verdict included specific findings that the Oharas did not make a false representation of an important fact to Swing, they did not intentionally fail to disclose an important fact, and they did not make a false representation of an important fact. Judgment was entered against Swing on his cross-complaint.
The Oharas filed a motion to determine the prevailing party and to fix attorney fees as costs. Relying on the language of the attorney fees provision of the contract, they argued they were the prevailing party and could recover even in tort causes of action.
Swing opposed the Oharas’ motion for attorney fees, arguing they were not prevailing parties because Swing prevailed on the Oharas’ declaratory relief action. Swing filed his own motion to be declared the prevailing party and for costs.
The trial court granted the Oharas’ motion to be declared prevailing parties in the action. Although the trial court had found that the Oharas’ complaint for declaratory relief did not lie and had accordingly granted judgment on the pleadings, it nevertheless concluded that the issues presented by the Oharas were the same issues resolved in their favor during the trial of Swing’s cross-complaint. The broad language of the contract embraced both tort and contract actions.
Swing filed a timely appeal from the order awarding attorney fees to the Oharas.
DISCUSSION
Swing argues the trial court erred in determining that the Oharas were the prevailing parties. He contends he was the prevailing party under section 1032, subdivision (a)(4), because neither party obtained relief in the judgment—the Oharas lost on their complaint when judgment on the pleadings was granted in favor of Swing, and Swing lost on the cross-complaint based upon the jury verdict. (See McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1453-1455 (McLarand).) In this situation, Swing maintains the court has no discretion to deny costs, citing Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 975. Swing also points out that the Oharas did not move for attorney fees under Civil Code section 1717, and they may not rely on that provision for the first time on appeal. Instead, the Oharas are limited to recovery, if any, pursuant to sections 1021, 1032, and 1033.5, subdivision (a), upon which they relied in the trial court.
The standard of review is well settled. Where the right to attorney fees depends upon statutory construction, the issue is one of law which we review de novo. (Wakefield v. Bohlin, supra, 145 Cal.App.4th at p. 978; Silver v. Boatwright Home Inspections, Inc. (2002) 97 Cal.App.4th 443, 448-449.) “On the other hand, depending on the circumstances of the case, the prevailing party determination, the cost award, or both may be committed to the trial court’s discretion. [Citation.] In such cases, we review the trial court’s determination for an abuse of discretion.” (Wakefield v. Bohlin, supra, 145 Cal.App.4th at p. 978.)
The Oharas moved for costs and attorney fees as prevailing parties under section 1032. Attorney fees are allowable as costs under section 1032 when authorized by contract, statute, or law. (§ 1033.5, subds. (a)(10)(A)-(C); Santisas v. Goodin (1998) 17 Cal.4th 599, 606.) “If a contractual attorney fee provision is phrased broadly enough, as this one is, it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims . . . .” (Santisas v. Goodin, supra, 17 Cal.4th at p. 608.)
There is no real dispute that the attorney fee provision in the contract between the Oharas and Swing was sufficiently broad so as to encompass both tort and contract causes of action. (Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1100-1102 [noting unanimity of decisions holding that identical language in standard real estate purchase agreements allows “for the recovery of attorney fees for causes of action sounding in tort as well as in contract”].) The issue, therefore, is whether the Oharas were prevailing parties in the action as defined in section 1032. This issue is one of statutory construction, which we review de novo.
We disagree with Swing’s characterization of the result in this action as being one in which neither party obtained relief. To the contrary, the jury’s verdict in favor of the Oharas on the cross-complaint resulted in them obtaining the very relief they sought in their declaratory relief action. Fairly construed, this is not an action in which neither side was awarded relief.
The Oharas’ complaint sought a declaration of the parties’ rights and duties under the contract for sale of the residence in light of the defects alleged by Swing, which had been the subject of mediation. Swing’s cross-complaint alleged the nondisclosure of the defects that were the subject of the Oharas’ declaratory relief action. Because the complaint and cross-complaint involved the identical alleged defects, Swing moved for judgment on the pleadings, arguing that declaratory relief was not a proper remedy and that the Oharas were “improperly attempting in their Complaint to try issues that are actually and properly the subject of Swing’s Cross-Complaint, and therefore suitable for resolution only by the jury.” According to Swing’s moving papers, all of the issues in the Oharas’ declaratory relief action “will be squarely framed and addressed in Swing’s Cross-Complaint and the Oharas’ defenses (if any) to those claims.” In fact, Swing described his cross-complaint as “the real crux of the action.”
The trial court granted the motion for judgment on the pleadings and entered a dismissal of the Oharas’ complaint. However, the trial court realized that Swing was not the prevailing party on the Oharas’ complaint and struck a finding to that effect in the proposed judgment. In striking the proposed language, the trial court obviously recognized that the issues involved in the complaint had not been resolved on the merits, and until Swing’s cross-complaint was tried by a jury, there could be no determination of a prevailing party.
As the trial court noted in its oral ruling on the motion to declare the Oharas the prevailing party, “the Oharas did, in effect obtain relief on their declaratory relief [action], because the same issues that were adjudicated were found in their favor.” In its written ruling, the trial court observed that the Oharas’ attempt to obtain declaratory relief was procedurally flawed, because a breach of an agreement has already been asserted. The trial court observed that the Oharas’ complaint for declaratory relief “merely sought a judicial determination of the rights and obligations of the parties that were the subject of defendant Swing’s cross complaint. These issues were determined on the merits by the jury which found for plaintiffs Ohara . . . .” The trial court therefore exercised its discretion and considered all factors indicating the success of the litigation, which lead to the reasonable conclusion that the Oharas were the prevailing parties.
Swing’s reliance on McLarand is misplaced. In McLarand, an architectural firm entered into a contract with a bank for the design of an office building. The architectural firm filed a breach of contract claim against the bank. The bank, in turn, filed a cross complaint for breach of contract and various tort causes of action. Following a jury trial on the complaint and cross-complaint, general verdicts were returned denying relief to both parties. Both parties moved for costs under section 1032. McLarand held that the bank was the prevailing party under section 1032, subdivision (a)(4), because one of the statutory definitions of prevailing party was “a defendant, where neither plaintiff nor defendant obtains relief.” (McLarand, supra, 231 Cal.App.3d at pp. 1453-1455.)
The distinction between the instant case and McLarand is apparent. In McLarand, a jury returned verdicts denying relief to both parties on breach of contract causes of action. In that circumstance, the defendant bank was the prevailing party under section 1032 because neither party obtained a recovery. In the instant case, the jury’s verdict was a vindication of the position taken by the Oharas throughout the litigation. Swing convinced the trial court that declaratory relief was not a viable remedy, and all of the issues raised by the Oharas were properly before the court in his cross-complaint. Having taken the position that the entire cause should properly be resolved on his cross-complaint, and having lost, Swing is in no position to maintain that the Oharas did not obtain the relief they sought. The reality of the situation is that the Oharas achieved their litigation objective, and it is unrealistic to describe them as not having obtained any relief in this action.
If it were true that neither the Oharas nor Swing obtained relief, Swing would be the prevailing party for purposes of section 1032 and the trial court would lack the discretion to deny him costs. (Building Maintenance Service Co. v. AIL Systems, Inc. (1997) 55 Cal.App.4th 1014, 1025-1027; Chaparral Greens v. City of Chula Vista (1996) 50 Cal.App.4th 1134, 1152-1153.) However, because we have determined that this case does not involve an action in which neither a plaintiff nor a defendant obtained relief, Swing does not fall within that portion of section 1032 mandating an award of costs. Instead, the issue of costs was within the sound discretion of the trial court under the second sentence of section 1032, subdivision (a)(4) (when there is no applicable provision defining a prevailing party in an action, the “‘prevailing party’ shall be determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not”).
The trial court did not abuse its discretion in finding that the Oharas were the prevailing party. The purpose of the Oharas’ declaratory relief action was to determine whether they had breached an obligation to disclose the condition of the sold residence. That issue was conclusively resolved in their favor when the jury ruled against Swing on his cross-complaint. In other words, the Oharas won exactly what they were looking for in their own complaint, even though it was dismissed—a determination they were not liable for nondisclosure of pertinent information. The award of attorney fees was not error.
DISPOSITION
The judgment is affirmed. Costs are awarded to Kenneth and Kay Ohara.
I concur: ARMSTRONG, Acting P. J.
MOSK, J., Concurring
California Civil Code section 1717 does not apply to the cross-complaint because defendant dismissed his contract claim and litigated only tort claims. (Santisas v. Goodin (1998) 17 Cal.4th 599, 614-615.) It is not clear if Civil Code section 1717 could apply to the dismissal of the plaintiffs’ declaratory relief action. But that does not matter. The plaintiffs, in their complaint do not specifically seek a declaration as to contractual rights and did not seek attorney fees.
As Civil Code section 1717 is not involved, only Code of Civil Procedure sections 1021, 1032 and 1033.5, subdivision (a) are applicable. Those provisions provide that the prevailing party is entitled to attorney fees as costs if there is a contractual provision for attorney fees. Section 1032, subdivision (4) defines a prevailing party and specifically provides that a prevailing party is a “defendant where neither plaintiff nor defendant obtains any relief.”
All further statutory references are to the Code of Civil Procedure, unless otherwise stated.
Plaintiffs filed an action seeking “a declaration that in conjunction with the sale of the subject property that plaintiffs made full disclosure of all facts required of them by law and that plaintiffs did not fail to disclose any facts required by law to be disclosed. Although the trial court granted a motion for judgment on the pleadings as to the complaint, the trial court specifically refused to determine that defendant was the prevailing party on the complaint for declaratory relief. And the jury specifically found that defendant did not make a false representation or fail to disclose any important fact. Thus, plaintiffs obtained the relief they had sought by their declaration—i.e. a determination that they had not made any false disclosure. Because of these peculiar facts, I concur in the judgment.
That does not necessarily mean that a party who brings a declaratory relief action and fails to obtain a declaratory judgment but prevails in the cross-action should be immune from the implications of section 1032, subdivision (a)(4). Generally a party should not be rewarded for commencing an action for tactical reasons that may have been unnecessary because the defendant may never have brought an action. Such a plaintiff generally should bear the consequences of such tactics.