Opinion
C052873
5-7-2007
ROY THOMPSON et al., Plaintiffs and Appellants, v. KEN JOHNSON et al., Defendants and Respondents.
NOT TO BE PUBLISHED
In a dispute over the purchase of residential real property, plaintiffs/buyers, Roy and Sylvia Thompson (collectively, "the Thompsons"), dismissed defendants/sellers Ken and Darcy Johnson (collectively, "the Johnsons") after reaching a monetary settlement with certain other defendants prior to trial. The trial court found the Johnsons were prevailing parties and granted their motion for attorney fees. On appeal, the Thompsons contend the trial court erred in granting the motion for attorney fees. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
On May 31, 2002, the Thompsons entered into a Residential Purchase Agreement and Joint Escrow Instructions (the "Purchase Agreement") to purchase a home in Loomis, California (the "Property") from the Johnsons for $1,050,000. The Purchase Agreement provided for close of escrow on September 13, 2002. Paragraph 22 of the Purchase Agreement provided that "[i]n 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 paragraph 17A."
Paragraph 17A of the Purchase Agreement requires the parties to submit any dispute or claim between them arising out of the contract to mediation before resorting to arbitration or court action, and is not at issue in this appeal.
In February 2003, just five months after close of escrow, the Thompsons placed the Property back on the market, selling it for $1,025,000.
The Thompsons filed suit against the Johnsons and other defendants, including the Johnsons real estate agents (William L. Lyon & Associates and Jim Miner) and the Thompsons own real estate agents (Coldwell Banker Residential Brokerage Company, Coldwell Banker Real Estate Corporation, Charlotte Loken and Ollie Nordby). As to the Johnsons, the second amended complaint alleged fraud, intentional misrepresentation, concealment, negligent misrepresentation, negligence and breach of Civil Code section 1102 et seq. Specifically, the suit alleged that the Johnsons were aware of, but failed to disclose, the existence of a pedestrian trail running alongside the Property "approximately fifteen feet from [the Thompsons] master bedroom" and "takes away from the privacy of the entire backyard," contrary to the specific request of the Thompsons. It was further alleged that, after moving into the Property and learning that the homeowners association had already voted to establish the trail for pedestrian foot traffic, the Thompsons were "forced to re-sell" the Property and suffered a loss of $25,000 on the sale as a direct result of "the intrusiveness of the pedestrian trail."
The original complaint was filed on September 17, 2004, and thereafter amended twice. The Second Amended Complaint was the operative pleading.
The Second Amended Complaint sought damages for that $25,000 loss, as well as unspecified commissions, fees, moving expenses and attorney fees, and punitive damages in an amount to be proven at trial.
On January 17, 2006, prior to trial, the court granted summary judgment in favor of the Johnsons real estate broker and agent, William L. Lyon & Associates, Inc. and Jim Miner. The courts order reflects the courts finding that it was undisputed the Thompsons were provided with information "prior to the close of escrow" disclosing the right of the homeowners association "to locate a pedestrian trail on Property adjacent to [the Thompsons] Property."
At a pretrial settlement conference on January 20, 2006, the Thompsons agreed to settle the case against their own real estate broker and agent, Coldwell Banker and Loken, for $35,000.
On January 23, 2006, the Thompsons dismissed the Johnsons from the action with prejudice.
Thereafter, the Johnsons filed a motion for attorney fees pursuant to Code of Civil Procedure sections 1021, 1032 and 1033.5, and the attorney fees provision in the Purchase Agreement, declaring themselves to be the "prevailing parties in this action following voluntary dismissal with prejudice" by the Thompsons.
A hearing on the motion was set for March 21, 2006. In the courts tentative ruling issued prior to the hearing, the court granted the motion, finding that the Thompsons had not "reached their litigation objectives" according to Silver v. Boatwright Home Inspections, Inc. (2002) 97 Cal.App.4th 443, 452 (Silver), and further finding the Johnsons to be the prevailing party.
The tentative ruling stated as follows: "In the present case, plaintiffs cannot be said to have reached their litigation objectives. Plaintiffs sought recovery of $25,000 for the loss on the sale of the house, $72,520.51 in commissions, fees, and moving expenses, and an additional unknown amount in attorneys fees. [Citation.] Plaintiffs settled with defendants Coldwell Banker/Loken for only $35,000. Unlike the case of Silver, where the plaintiffs settled for $68,500 and their claimed damages were $70,000 (which was 97.9% of the recovery sought), plaintiffs herein obtained a settlement of only 35.9% of the damages claimed. As such, this court finds that defendants Johnson are the prevailing party and the motion for attorneys fees is granted as prayed."
At the hearing on the motion, counsel for the Thompsons argued that they had, in fact, achieved their litigation goals, given that those goals "were not simply monetary relief," but also that "they felt that they had been wronged" and wanted someone to acknowledge that fact. Counsel added that, "[o]nce the settlement was achieved, they were happy with the result, and they decided to dismiss the Johnsons from [the] case."
Reiterating its finding that the Thompsons had not achieved their litigation objectives, the court adopted its tentative ruling in favor of the Johnsons.
The Thompsons filed a timely notice of appeal.
DISCUSSION
The Thompsons contend the court committed error when it determined the Johnsons were the prevailing party, and further erred in finding the Thompsons did not achieve their litigation objectives by virtue of their settlement with the other defendants. Notwithstanding that the second contention is part and parcel of the first, we disagree on both counts.
A trial courts determination that a party is a prevailing party is "subject to an abuse of discretion standard of review, and will not be reversed on appeal unless it appears that the court abused its discretion and a miscarriage of justice has resulted." (Silver, supra, 97 Cal.App.4th at p. 449, citing Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
"Whether attorney fees incurred in defending tort or other noncontract claims are recoverable after a pretrial dismissal depends upon the terms of the contractual attorney fee provision." (Santisas v. Goodin (1998) 17 Cal.4th 599, 602 (Santisas).)
The court in Silver summarized the holding of the states high court in Santisas as follows: "[W]hen a trial court is presented with a contractual claim for attorneys fees by a defendant who has been voluntarily dismissed from a suit prior to trial, the court must deny such fees as are limited to the parties contract claims. Regarding the noncontract claims, the court must look to the parties contractual attorneys fees provision to determine if it defines who is a prevailing party or addresses voluntary pretrial dismissals. If the contract does not provide such guidance, the court must utilize its discretion in determining whether such defendant should be considered a prevailing party for the purpose of recovering attorneys fees as costs under [Civil Code] sections 1032 and 1033.5. In exercising that discretion, the court may consider the reason for the dismissal, including whether the parties have reached their litigation objectives by settlement, judgment, or other means." (Silver, supra, 97 Cal.App.4th at p. 452, italics in original.)
The Purchase Agreement between the Thompsons and the Johnsons provides for payment of reasonable attorney fees and costs to the "prevailing Buyer or Seller," but does not define that term or address voluntary pretrial dismissals. Consistent with the guidance given in Silver, the trial court exercised its discretion in determining the reason the Thompsons dismissed the Johnsons by considering whether or not the Thompsons had reached their litigation objectives via the settlement with their agent and broker. In doing so, the court noted in its tentative ruling that the Thompsons sought damages of approximately $100,000 plus "an additional unknown amount in attorneys fees," but received "only $35,000" as a result of the settlement, as compared to the plaintiffs in Silver, who recovered $68,500 of their $70,000 in claimed damages. The court also considered, at the hearing on the Johnsons attorney fee motion, counsels argument that the Thompsons litigation objective was not just monetary, but also "vindicat[ion] in the lawsuit." The court nonetheless found that, because "plaintiff was seeking a lot more than it obtained," the amount they recovered via the settlement "was not such that they achieved their litigation objectives."
The Thompsons insist that the trial court "failed to realize" that Silver clarified the holding in Santisas to mean that a recovery by a plaintiff from other defendants necessarily results in a determination that the defendant seeking attorney fees incurred in defending noncontract causes of action alleged against it is not the prevailing party. They are mistaken. The Silver court simply construed the reference in Santisas to parties who "have reached their litigation objectives by settlement" to include "a plaintiff who obtains a settlement from a party other than a defendant who has been voluntarily dismissed prior to trial and who is asserting entitlement to contractual attorneys fees under [Civil Code] sections 1032 and 1033.5." (Silver, supra, 97 Cal.App.4th at p. 452, italics in original.) In other words, a trial courts determination whether the settling plaintiff reached its litigation objectives by settlement for purposes of an attorney fees motion by a defendant voluntarily dismissed before trial should take into consideration plaintiffs case as a whole, including relief obtained from other defendants. However, the fact that the plaintiff obtained some fractional relief from the nonmoving parties is not dispositive of the issue of whether the moving defendant is a prevailing party.
The Thompsons also urge that, in comparison to other cases, the amount they recovered from their own broker/agent defendants was more than sufficient to achieve their litigation objectives. However, as demonstrated by the cases cited in support of that contention, there is no formula, no hard and fast rule, to determine what percentage of a partys overall claims must be recovered in order to find that party has achieved its litigation objectives. "[I]n determining litigation success, courts should respect substance rather than form, and to this extent should be guided by `equitable considerations." For example, a party who is denied direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its main litigation objective. [Citations.]" (Hsu v. Abbara (1995) 9 Cal.4th 863, 877, italics omitted.) Giving further guidance in that regard, the Hsu court directed that the trial court, in deciding whether there is a prevailing party on the contract, should "compare the relief awarded on the contract claim or claims with the parties demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources." (Id. at p. 876.)
The same instruction is applicable here. As the trial court noted, the Thompsons "sought recovery of $25,000 for the loss on the sale of the house, $72,520.51 in commissions, fees, and moving expenses, and an additional unknown amount in attorneys fees." We can infer that the court gleaned that information by reviewing the second amended complaint, the pleadings submitted in opposition to the motion for attorney fees and perhaps other documents submitted by the Thompsons throughout the course of the litigation. Although counsel argued that vindication in the lawsuit was one of the Thompsons primary objectives in bringing the action, the trial court was not persuaded that it made up for the significant portion of their overall claim that was not recovered.
The record, such as it is, provides sufficient evidence that, in determining the Thompsons had not achieved their litigation objective through settlement and therefore finding the Johnsons to be prevailing parties, the trial court considered the Thompsons $ 35,000 recovery from Coldwell Banker and Loken against the backdrop of their claimed damages of approximately $100,000 (plus punitive damages and attorney fees) overall. In doing so, it concluded the Thompsons did not reach their litigation objective as a result of the settlement with their agent and broker. We do not find that determination to be an abuse of discretion.
DISPOSITION
The judgment is affirmed.
We concur:
SCOTLAND, P.J.
RAYE, J.