Opinion
NOT TO BE PUBLISHED
Super. Ct. No. CU05048
BLEASE, Acting P. J.
Appellant SX Ranch, Inc. (SX) appeals from the trial court’s award of attorney fees to respondents Chet Vogt and Pat Kirby (collectively Vogt) following the voluntary dismissal of SX’s complaint against Vogt alleging interference with the sale of ranch property to a third party. In a prior action, Vogt sought specific performance of an agreement to purchase SX Ranch (purchase agreement) after SX cancelled escrow and accepted the offer of a third party to purchase the property. The trial court granted SX’s motion for summary judgment, and this court denied Vogt’s petition for writ of mandate on the ground Vogt had not shown he was ready, willing and able to purchase the property on the date set for close of escrow.
When the agreement between SX and the third party fell through, allegedly because of Vogt’s legal action, SX filed this complaint for breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic advantage, and intentional interference with contractual relations. SX voluntarily dismissed the complaint, but not before Vogt had filed a motion to strike and a special motion to strike pursuant to Code of Civil Procedure section 425.16, the “anti-SLAPP” statute. The trial court awarded attorney fees to Vogt, both on the basis of a contractual provision and pursuant to section 425.16, subdivision (c).
References to an undesignated section are to the Code of Civil Procedure unless otherwise stated.
SX argues the attorney fee award was erroneous because: (1) the trial court made no express finding as to which party prevailed in the action, (2) Civil Code section 1717, subdivision (b)(2) prohibits an award of attorney fees on a contract action in the case of a voluntary dismissal, (3) the agreement in question did not allow a recovery of attorney fees on tort actions, (4) the trial court did not rule on the anti-SLAPP motion, (5) Vogt would not have prevailed on the anti-SLAPP motion, and (6) if attorney fees were proper on the anti-SLAPP motion, they should have been limited to fees for that motion alone.
We shall conclude that attorney fees were improperly awarded under Civil Code section 1717, because that section does not allow the recovery of fees for an action on a contract, and the attorney fee agreement between the parties is not broadly worded to provide a basis for recovery under the tort claims alleged in this action. We shall conclude that although there was never a hearing on the anti-SLAPP motion, the trial court made a determination that Vogt was the prevailing party on that motion, and that determination was correct.
Finally, we shall conclude that although attorney fees are limited to those incurred in connection with the anti-SLAPP motion, the attorney fees incurred in the remainder of the lawsuit were necessary to the anti-SLAPP motion. Accordingly, we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
SX’s complaint alleged it entered into a purchase agreement with Vogt for the sale of SX Ranch, and that Vogt failed to close escrow on the date scheduled. Vogt then filed suit against SX, creating a cloud on its title to the ranch property. SX’s first cause of action for breach of the covenant of good faith and fair dealing was based on these allegations.
SX’s second and third causes of action, for intentional interference with prospective economic advantage and with contractual relations, were based on the allegations that SX entered into a purchase agreement to sell the ranch property to Green Valley Enterprises, and that Vogt’s legal action against SX interfered with that relationship.
Vogt filed a motion to strike the complaint. The grounds for the motion to strike that are relevant here are: (1) that SX’s complaint contained causes of action that were related to Vogt’s earlier action on the purchase agreement and should have been brought as a compulsory cross-complaint, and (2) that the action was barred by the litigation privilege. (Civ. Code, § 47, subd. (b).)
Vogt also filed a special motion to strike pursuant to section 425.16. SX never filed an opposition to the motion to strike or the special motion to strike. Instead, within two weeks of Vogt’s special motion to strike, SX filed a voluntary request for dismissal of the entire action.
Following the dismissal Vogt made a motion for attorney fees and costs. Vogt argued he was entitled to recover attorney fees both as the prevailing party under the attorney fee clause of the purchase agreement and as the prevailing defendant on an anti-SLAPP motion. With regard to the merits of the anti-SLAPP motion, Vogt’s points and authorities in support of attorney fees specifically referred to his previously filed arguments in support of the special motion to strike.
SX opposed Vogt’s motion for attorney fees, arguing, inter alia, that no attorney fees could be awarded under the anti-SLAPP motion because Vogt had not demonstrated that the action fell within the provisions of the anti-SLAPP statute or that SX had no reasonable probability of success on the merits.
At the hearing on attorney fees, both parties presented arguments on the issue of Vogt’s contractual right to attorney fees, and both parties argued the merits of the anti-SLAPP motion. The trial court awarded costs and attorney fees to Vogt. The trial court found that the cause of action for breach of the covenant of good faith and fair dealing was brought under the implied terms of the purchase agreement which contained an attorney fee clause that applied to the current litigation. The trial court further found that Civil Code section 1717 applied to the tort causes of action, and that the causes of action were so intertwined they could not be apportioned between contract and tort. As to the request for fees pursuant to the anti-SLAPP statute, the trial court stated the anti-SLAPP claim “appears to be meritorious and is not vitiated by the Plaintiff’s claimed reason for dismissal (no damages).”
SX argued it dismissed the case because the ranch property was eventually sold to Green Valley Enterprises.
The court awarded Vogt attorney fees in the amount of $12,098 and costs in the amount of $715.
DISCUSSION
I
Agreement for Attorney Fees
Where contracting parties agree that attorney fees may be recovered in an action on the contract, the prevailing party is entitled to reasonable attorney fees. (Civ. Code, § 1717, subd. (a).) However, where the action is voluntarily dismissed, there is no prevailing party. (Civ. Code, § 1717, subd. (b)(2).) This means attorney fees are not recoverable for an action on a contract where the case is voluntarily dismissed. (Santisas v. Goodin (1998) 17 Cal.4th 599, 615.)
We agree with the trial court that SX’s cause of action for breach of the covenant of good faith and fair dealing was an action on a contract. Apart from the fact that the complaint alleged that Vogt’s failure to close the transaction was a breach of the agreement and a breach of the covenant of good faith and fair dealing, the Supreme Court has held that damages for breach of the covenant of good faith and fair dealing are limited to contract damages, unless the action is based upon an insurance policy. (Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 43.) Since the agreement in question was not an insurance agreement, nothing but contract damages would have been recoverable in this case.
Consequently, Vogt could not recover any attorney fees based upon the first cause of action for breach of the covenant of good faith and fair dealing, as such recovery is prohibited under Civil Code section 1717, subdivision (b)(2).
Nevertheless, Civil Code section 1717, subdivision (b)(2) does not prevent recovery of attorney fees for any tort cause of action, provided the attorney fee clause of the contract is broad enough to provide for attorney fees for such claims. (Santisas v. Goodin, supra, 17 Cal.4th at p. 617.) Although the trial court stated that the purchase agreement provided for a fee award in “any litigation,” the actual language of the purchase agreement provides for a fee award “[i]n the event of any litigation regarding the rights and obligations under this Agreement . . . .”
We disagree with the trial court’s determination that the tort causes of action fall within the language of the attorney fee provision in the purchase agreement. Both tort causes of action were based upon Vogt’s alleged interference with the contractual relationship between SX and Green Valley Enterprises. They were not based upon the rights and obligations under the purchase agreement between Vogt and SX. Therefore, there was no contractual basis for an award of attorney fees under the tort causes of action, and no basis for recovery under the contract cause of action pursuant to Civil Code section 1717, subdivision (b)(2).
Because we conclude Vogt was not entitled to attorney fees based upon the attorney fee clause of the purchase agreement, we need not consider SX’s arguments that the trial court made no express determination of prevailing party, or that Vogt did not timely file a memorandum of costs.
II
Fees Authorized by Anti-SLAPP Law
Vogt is nevertheless entitled to recover attorney fees as the prevailing defendant on a special motion to strike pursuant to section 425.16, subdivision (c).
Subdivision (b)(1) of section 425.16 provides: “A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” Subdivision (c) states in pertinent part: “In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs.”
A defendant who is voluntarily dismissed from an action while an anti-SLAPP motion is pending is entitled to have the merits of the anti-SLAPP motion heard as a predicate to the determination of the defendant’s entitlement to attorney fees and costs under section 425.16, subdivision (c). (Moore v. Liu (1999) 69 Cal.App.4th 745, 751.)
In Coltrain v. Shewalter (1998) 66 Cal.App.4th 94, the court ruled that the prevailing party after a voluntary dismissal will ordinarily be the defendant, but the “critical issue is which party realized its objectives in the litigation.” (Id. at p. 107.) The plaintiff may be able to overcome the presumption that the defendant is the prevailing party by demonstrating that it dismissed the case for reasons unrelated to success on the merits, such as substantial achievement of the litigation goals through settlement or other means. (Ibid.)
Later cases have held that the determining factor in establishing the prevailing party is not the determination of which party realized its litigation objectives, but which party would have prevailed on the merits of the anti-SLAPP motion. (Moore v. Liu, supra, 69 Cal.App.4th at p. 752; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 218-219; see also White v. Lieberman (2002) 103 Cal.App.4th 210, 221; Sylmar Air Conditioning v. Pueblo Contracting Services, Inc. (2004) 122 Cal.App.4th 1049, 1056.)
Here, the trial court appears to have taken both lines of cases into account when it ruled that the anti-SLAPP motion appeared to be meritorious and that the motion’s merit was not vitiated by SX’s claim that it dismissed the case because it was no longer damaged by Vogt’s actions.
SX argues the trial court could not award Vogt attorney fees without first entering an order on the anti-SLAPP motion. It is true that “the trial court's adjudication of the merits of a defendant's motion to strike is an essential predicate to ruling on the defendant's request for an award of fees and costs.” (Liu v. Moore, supra, 69 Cal.App.4th at p. 752.) However, that adjudication may be made by the trial court on the motion for fees, as occurred in this case. As noted, the parties briefed the merits of the anti-SLAPP motion when briefing the trial court on the issue of attorney fees, and argued the merits of the anti-SLAPP motion at the hearing regarding fees. Having heard the arguments, the trial court ruled that Vogt was successful on the merits of the anti-SLAPP motion and was the prevailing party entitled to attorney fees.
SX argues that determination was in error. We disagree.
To prevail on an anti-SLAPP motion, a defendant must demonstrate that the plaintiff’s suit arises from an act in furtherance of defendant’s right of petition or free speech, and the plaintiff must be unable to establish a reasonable probability of success on the merits. (Healy v. Tuscany Hills Landscape & Recreation Corp (2006) 137 Cal.App.4th 1, 5.) Section 425.15 defines an act in furtherance of the right of petition to include written or oral statements made before a judicial proceeding. (§ 425.16, subd. (e).) SX argues the action upon which their complaint was based was the interference by Vogt with the agreement between SX and Green Valley Enterprises. However, the interference alleged was the filing of Vogt’s complaint and the filing of the lis pendens.
A cause of action that arises from litigation activity may be the subject of an anti-SLAPP motion. (Shekhter v. Financial Indemnity Co. (2001) 89 Cal.App.4th 141, 151.) Here, SX’s complaint arises from the Vogt’s litigation activity because the harm SX claimed was directly caused by the filing of Vogt’s suit for breach of the purchase agreement and specific performance, and the recordation of the lis pendens. Therefore, SX’s suit arose from Vogt’s act in furtherance of the right of petition, and was properly the subject of an anti-SLAPP motion.
Vogt also conclusively showed that SX could not succeed on the merits of its action. No tort liability arises from statements made “[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate],” with certain statutory exceptions not applicable here. (Civ. Code, § 47, subd. (b); Hagberg v. California Federal Bank FSB (2004) 32 Cal.4th 350, 360 (Hagberg).) The privilege encompasses pleadings, testimony in court, and any other statement made outside the courtroom if it is “required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation . . . .” (Silberg v. Anderson (1990) 50 Cal.3d 205, 212; Hagberg, supra, at p. 361.) The privilege extends to any potential tort claim with the exception of malicious prosecution. (Hagberg, supra, at p. 361.)
Because Vogt’s lawsuit was absolutely privileged, SX’s tort causes of action could not succeed on the merits, and would have been subject to a special motion to strike pursuant to section 425.16. Given this state of affairs, we need not also consider whether SX’s cause of action for breach of the covenant of good faith and fair dealing was unlikely to be successful because it should have been raised as a compulsory cross-complaint to Vogt’s earlier breach of contract action. It is sufficient for purposes of Vogt’s recovery of attorney fees that the motion would have been successful on the two tort causes of action. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1020 [holding a fee award proper where the anti-SLAPP motion was granted only to some of plaintiff’s claims].)
SX is correct that a prevailing defendant on an anti-SLAPP motion may recover only the attorney fees in connection with the motion to strike. (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1383.) In this case, however, Vogt argues the fees incurred on the first motion to strike based upon the litigation privilege and the failure to bring the action as a compulsory cross-claim were also necessary to the special motion to strike pursuant to section 425.16 for the purpose of showing SX’s complaint would not succeed on the merits. We agree that even though the first motion to strike was brought as a separate motion, the merits of that motion were an essential part of the work necessary for the anti-SLAPP motion. The issues being inextricably intertwined, the trial court correctly awarded Vogt all of its attorney fees.
DISPOSITION
The judgment is affirmed. Respondents shall recover costs on appeal.
We concur: NICHOLSON, J., HULL, J.