AMC, Inc. v. Phan

Filed 3/19/07 AMC, Inc. v. Phan CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Clay M. Smith, Judge. Affirmed.

Fink & Abraham, Steven A. Fink and Stephen E. Abraham for Defendants and Appellants.

Law Offices of Ronald S. Cooper and Ronald S. Cooper for Plaintiffs and Respondents.

* * *

Defendants and cross-complainants Cu N. Phan and Khiem T. Tran appeal from a judgment awarding attorney fees to plaintiff and cross-defendant AMC, Inc. dba Star Real Estate (AMC) and cross-defendant Don Enright. They contend the trial court erred in determining AMC and Enright were the prevailing parties and awarding them attorney fees. We find no abuse of discretion and affirm.

FACTS AND PROCEDURAL BACKGROUND

In June 1999, the parties entered into a listing agreement granting AMC the exclusive right to sell, lease or exchange certain property owned by defendants located in Newport Beach. The listing agreement, which contained an attorney fees provision, expired on December 31.

In September, Enright, a real estate agent and broker for AMC, introduced and negotiated with defendants next door neighbors, Farrockh and Stephanie Alaghband. The parties were unable to reach an agreement. Immediately after rejecting the Alaghbands final offer in late September, defendants informed Enright they had decided not to sell or lease the property at that time and instructed him to withdraw the property from sale and remove it from the multiple listing service. Enright did so the following month and on December 31 the listing agreement expired.

Three days later, Enright sent defendants a letter listing the names of prospective purchasers with whom he had negotiated during the listing period, including the Alaghbands. The next month, Enright discovered defendants had sold the property to the Alaghbands. AMCs counsel demanded a commission from defendants for that sale. Defendants counsel denied any commission was owed.

After unsuccessful attempts to mediate the dispute, AMC sued defendants for breach of the listing agreement and fraud. Defendants cross-complained against AMC, Enright, and others, for, among other things, negligent misrepresentation based on a separate leasing agreement. Following a mandatory judicial arbitration, the arbitrator awarded AMC almost $24,000 and found against defendants on their cross-complaint. Defendants filed a request for trial de novo and the case was placed back on the civil trial calendar.

The parties were unable to settle the case at the mandatory settlement conference. Among other things, defendants rejected cross-defendant Coldwell Bankers offer of $4,000 to settle the claims alleged in the cross-complaint. Coldwell Banker later paid the $4,000 to AMC in exchange for a determination of good faith settlement and dismissal from the action.

The day after trial was scheduled to commence, the parties reached a settlement and recited its terms in open court as follows: Mr. Cooper: . . . The terms of the agreement, your honor, are that [defendants] will pay to the plaintiff the sum of $15,000. That sum will be payable within seven days of the execution of a formal written settlement agreement, which will be prepared. The parties are reserving their rights to bring motions to determine the prevailing party and for attorney fees pursuant to the contract in this case . . . . [] Mr. Fink: Okay. The other things we left out [are] that there should be no presumptive or conclusive effect one way or the other as to who the prevailing party is by virtue of entering into this settlement agreement, and there should be no admission of liability on the party of anybody by entering into this settlement. The parties accepted these terms on the record. Defendants answered affirmatively when asked whether they understood an attorney fee motion would be filed and that fees would be awarded at a later date.

After defendants executed the final draft of the settlement agreement containing these terms and paid the $15,000, AMC filed a motion for attorney fees. The court found AMC and Enright were the prevailing parties and awarded them fees in the amount of $74,617.63.

DISCUSSION

Defendants contend the trial court erred in determining AMC and Enright were the prevailing parties entitled to attorney fees. We disagree.

Under Civil Code section 1717, subdivision (b)(1), the prevailing party in an action on a contract is the party who recovered a greater relief in the action . . . . When the judgment reflects anything less than a simple, unqualified victory for either the plaintiff or defendant, the trial court has discretion to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees. [Citation.] (Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 789 (Jackson).) [I]n deciding whether there is a party prevailing on the contract, the trial court is to 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. (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.) The courts exercise of discretion will not be disturbed on appeal absent a clear showing of abuse. (Jackson, supra, 93 Cal.App.4th at p. 789.)

In Jackson, there was no clear win by either side because the case had settled. Nevertheless, Division Two of this District upheld the trial courts exercise of discretion in awarding attorney fees to the homeowner plaintiffs, where the settlement agreement achieved their main litigation objective of modifying the restrictions imposed by the defendant homeowner association, and provided for a payment of $2,500 to the homeowners. (Jackson, supra, 93 Cal.App.4th at p. 788.) We similarly conclude no abuse of discretion has been shown in this case. AMC received a $15,000 settlement from defendants, while defendants took nothing on their cross-complaint.

Defendants contend the trial court erred in relying on AMCs net recovery without considering the effect of the separate contract alleged in the cross-complaint, as required by Arntz Construction Co. v. St. Paul Fire & Marine Ins. Co (1996)

47 Cal.App.4th 464, 491 and other cases. According to defendants, the filing of the cross-complaint led AMC to recover less than one-third of the amount they had prayed for in their complaint. In defendants view, therefore, they prevailed on their cross-complaint because if the $25,000 claimed in the cross-complaint is offset from the $47,000 claimed in the complaint, then AMC prevailed as to $15,000, the net amount received from [defendants] but . . . [defendants] prevailed as to $32,700, the amount by which AMCs claim was reduced or offset.

Contrary to defendants claim, the court did not decline[] (or . . . fail[]) to examine each of the contracts that were the subject of the complaint and cross-complaint prior to awarding AMC all of its requested attorney fees . . . . It considered defendants arguments with respect to the contract alleged in the cross-complaint but rejected their claim they were the prevailing parties. Although AMC did not recover the entire amount it had originally sought, the trial court could have reasonably determined AMC and Enright obtained the greater relief. That defendants disagree with the trial court does not demonstrate an abuse of discretion.

Defendants also contend the settlement agreement expressly precluded the trial court from relying on it to determine the prevailing party. The contention lacks merit. Paragraph 2.0.3 of the settlement agreement reads: Notwithstanding any other provision of this Agreement, or case law, or statute, it is agreed that there should be no presumptive or conclusive effect one way or the other as to who the Prevailing Party is by virtue of entering into this Settlement Agreement and there should be no admission of liability on the part of anybody by entering into this settlement. As defendants admit, this language does not say the court cant look at or cant consider in any way the settlement agreement. And the court made it clear it did not simply pick up the settlement agreement and presume because of it and presumptively or conclusively that one party or the other is the prevailing party. [] [It] looked at the merits of everything that happened and the fact that plaintiff recovered a not insubstantial amount of money. The court did not abuse its discretion in doing so.

Finally, defendants contest the amount of the attorney fees awarded, claiming the evidence did not apportion between the work performed to enforce the contract as distinct from the cross-complaint. Although defendants did not specifically raise this argument in their opposition to the motion to determine the prevailing party, they asserted at the hearing on the motion that at a minimum[, the attorney fees] have to be apportioned between the two [contracts] . . . . We therefore address the issue.

Defendants are correct in theory that a party prevailing on a contract containing an attorney fees provision is entitled only to the pro rata portion of fees incurred to enforce [that contract], and not for the entire amount of fees incurred in its action . . . . (Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 975, fn. 21.) But in rejecting defendants argument they prevailed on the contract alleged in cross-complaint, the court implicitly found AMC and Enright were the prevailing parties and awarded them fees under that contract as well. Because there was no simple, unqualified victory for either party, the determination of the prevailing party or whether there shall be no prevailing party on that contract was a matter left to the trial courts discretion. (Jackson, supra, 93 Cal.App.4th at p. 789.) Defendants have not shown the court abused its discretion.

DISPOSITION

The judgment is affirmed. Respondents shall recover their attorney fees and costs on appeal in an amount to be determined by the trial court.

RYLAARSDAM, J.

WE CONCUR:

SILLS, P. J.

FYBEL, J.

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