Nehmeh v. Heraux

Filed 8/6/07 Nehmeh v. Heraux CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from a judgment of the Superior Court of Los Angeles County. Peter J. Meeka, Judge. Affirmed.

Dickson & Dickson and Robert M. Dickson for Defendants and Appellants.

Joanne C. Moore for Plaintiff and Respondent.

_________________________________

After filing a complaint alleging forgery of a document entitled Substitution of Trustee and Full Reconveyance, plaintiff Mohamad Touric Nehmeh requested dismissal of the action. After entry of the dismissal, two of the eight named defendants in Nehmehs actionEdmond Heraux and Perry Sandermanfiled a motion to be deemed prevailing parties entitled to attorney fees. Heraux and Sanderman appeal from the order denying their motion for attorney fees. We affirm.

ALLEGED FACTS AND PROCEDURAL HISTORY

The Complaint

Nehmehs complaint, consisting of ten causes of action, alleged that Nehmeh was the beneficiary of a $100,000 note secured by a trust deed. Heraux and Sanderman were debtors on the note. Nehmeh alleged creation of a forged document purporting to substitute the trustee and fully reconvey his interest in the trust deed. The eighth cause of action, the only relevant cause of action in this appeal, was for cancellation of the forged substitution of trustee and reconveyance. Nehmeh prayed for a declaration that the forged instrument was void, an order requiring defendants to deliver the forged document to the court for cancellation, treble damages on the sum of $100,000 pursuant to Code of Civil Procedure sections 749 and 749.5,^[1]costs of suit, and such other damages that the court deemed appropriate.

Heraux and Sanderman answered the complaint, but before trial, Nehmeh caused a voluntary dismissal to be entered by the trial court clerk. According to a declaration later filed by Nehmeh, he reached a settlement agreement with some of the defendants where [he] was compensated monetarily and [a]s a part of this settlement all parties agreed to dismiss their actions without prejudice. Heraux and Sanderman were not among the defendants entering into the settlement, but they were nonetheless dismissed along with all other defendants.

The Motion for Attorney Fees

After entry of the dismissal, Heraux and Sanderman moved for attorney fees pursuant to Code of Civil Procedure sections 1021, 1033.5, and 1032 on the basis that they were prevailing parties in the action. The motion for attorney fees recognized that because Nehmeh dismissed the action before trial, Heraux and Sanderman were not prevailing parties in an action on a contract under Civil Code section 1717, as interpreted by Santisas v. Goodin (1998) 17 Cal.4th 599 (Santisas). Instead, Heraux and Sanderman rested their motion on that portion of Santisas holding that if an attorney fees provision is phrased broadly enough . . . it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims . . . . (Id. at p. 608.) They argued the eighth cause of action, for cancellation of a forged document, was not an action on a contract, and thus attorney fees could be awarded independent of Civil Code section 1717.

Heraux and Sanderman relied upon two clauses they believed constituted broadly phrased attorney fee provisions warranting an award of attorney fees on the eighth cause of action. First, the note secured by the deed of trust contained the following attorney fee clause: Should suit be commenced to collect this note or any portion thereof, such sum as the Court may deem reasonable shall be added hereto as attorneys fees. Second, the promissory note secured by a deed of trust included the following language: Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without an obligation to do so, and without notice to or demand upon Trustor, and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof,[^[2]] Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof and the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any incumberance, mortgage or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising such powers, pay necessary expenses, employ counsel and pay his reasonable fees.

The trial court denied the motion for attorney fees, first observing that there was no prevailing party within the meaning of Civil Code section 1717, subdivision (b)(2). The trial court recognized that attorney fees may be granted under Santisas following a dismissal when justified by a broadly worded attorney fee provision in a noncontract cause of action. However, the court ruled that the attorney fee provisions relied upon by Heraux and Sanderman were not sufficiently broad to support an award of attorney fees on Nehmehs eighth cause of action.

DISCUSSION

Heraux and Sanderson argue the trial court erred in denying their motion for attorney fees. They repeat the argument made below that the two attorney fee provisions relied upon were broadly phrased and justified an award of attorney fees on Nehmehs eighth cause of action, because Nehmeh filed an action to collect on the note. We hold that the trial court correctly ruled the attorney fee provisions were not broadly phrased and did not support an award of attorney fees.

Standard of Review

The issues presented by this appeal involve statutory and case law respecting an award of attorney fees. We, therefore, review the matter as a pure question of law. [Citation.] There are no relevant evidentiary disputes and the determination of the trial court did not require an exercise of discretion. Consequently, this appeal does not involve the resolution of disputed facts, and is subject to the appellate courts de novo review. [Citation.] (Topanga and Victory Partners v. Toghia (2002) 103 Cal.App.4th 775, 779-780.)

Attorney Fees as Costs Under Code of Civil Procedure section 1033.5

Code of Civil Procedure section 1033.5 provides, in subdivision (a)(10), that attorney fees are allowable as costs under Section 1032 when they are authorized by either Contract, Statute, or Law. Thus, recoverable litigation costs do include attorney fees, but only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees. (Santisas, supra, 17 Cal.4th at p. 606.) A partys right to costs is governed by Code of Civil Procedure section 1032. Under section 1032, subdivision (b), [e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding. For the purpose of determining entitlement to recover costs, Code of Civil Procedure section 1032 defines prevailing party as including, among others, a defendant in whose favor a dismissal is entered. (Code Civ. Proc., 1032, subd. (a)(4).) (Santisas,supra, 17 Cal.4th at p. 606.)

Although Civil Code section 1717 precluded an award of attorney fees in an action on a contract because of Nehmehs voluntary pretrial dismissal, neither Civil Code section 1717 nor [International Industries, Inc. v.Olen (1978)] 21 Cal.3d 218, bars recovery of attorney fees incurred in defending tort or other noncontract claims. 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,supra, 17 Cal.4th at p. 602.) 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: [P]arties may validly agree that the prevailing party will be awarded attorney fees incurred in any litigation between themselves, whether such litigation sounds in tort or in contract. [Citation.] (Id. at p. 608.)

[U]nder Santisas, when 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 [Code of Civil Procedure] 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 v. Boatwright Home Inspection, Inc. [(2002)] 97 Cal.App.4th 443, 452.) (Topanga and Victory Partners v. Toghia, supra, 103 Cal.App.4th at pp. 786-787.)

Our decision in Gil v. Mansano (2004) 121 Cal.App.4th 739, 744-745 (Gil) demonstrates that Heraux and Sanderman were not entitled to attorney fees based upon the cited attorney fees provisions. In Gil, we recognized that an attorney fee provision applicable to any dispute under the agreement is sufficiently broad to include the assertion of a contractual defense to fraud and breach of fiduciary duty causes of action. (Id. at p. 744, citing Thompson v. Miller (2003) 112 Cal.App.4th 327, 335-337.) Other broad language has also been interpreted broadly to include tort actions. (Santisas, supra, 17 Cal.4th at p. 607 [arising out of the execution of the agreement]; Allstate Ins. Co. v. Loo (1996) 46 Cal.App.4th 1794, 1799 [relating to the demised premises]; Moallem v. Coldwell Banker Com. Group, Inc. (1994) 25 Cal.App.4th 1827, 1831 [relating to the contract]; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342 [to which this Agreement gives rise].) (Gil, supra, 121 Cal.App.4th at p. 744.)

In Gil, the attorney fee provision was very narrowly drawn. (Gil, supra, 121 Cal.App.4th at p. 745.) The provision provided, [i]n the event action is brought to enforce the terms of this [Release], the prevailing party shall be paid his reasonable attorney[] fees and costs incurred therein. (Id. at p. 742.) The plaintiff in Gil sued in tort for fraud; the defendant asserted the release as a defense. In rejecting the argument that attorney fees should be awarded based upon the contract language, we held, [t]he fraud action is certainly not an action to enforce the release. Neither is the assertion of the affirmative defense of release an action brought to enforce the release. Accordingly, no action was brought by either party to enforce the terms of the release and defendant may not recover attorney fees as the prevailing party in the fraud action. (Id. at p. 745.)

Applying the reasoning in Gil to Nehmehs eighth cause of action, we conclude the trial court properly denied the request for attorney fees. The first provision relied upon by Heraux and Sanderson simply provided for attorney fees [s]hould suit be commenced to collect this note or any portion thereof. Nehmehs eighth cause of action did not constitute commencement of a suit to collect on the note; instead, this cause of action was directed at setting aside an allegedly forged document and reinstating the note in its original form. Nor did the second provision relied upon constitute a broadly worded attorney fees provision applicable to Nehmehs eighth cause of action. The second provision provided that if Heraux and Sanderman, as trustors, failed to comply with their obligations under the note and trust deed to protect Nehmehs security interest, the beneficiary or trustee was empowered to take steps to preserve the beneficiarys interest, and in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. We fail to see how this provision constituted an attorney fees provision, but if so, it was not broadly phrased so as to support an award of attorney fees on a cause of action seeking to cure the forgery of a trust deed.

Neither of the provisions relied upon by Heraux and Sanderman were broadly phrased attorney fee provisions supporting an award of attorney fees in an action to cancel forged documents. A more broadly worded attorney fee provision could have been drafted, but in its absence, the trial court properly denied the request for attorney fees.

DISPOSITION

The judgment is affirmed. Each party shall bear their own costs on appeal.

KRIEGLER, J.

We concur:

ARMSTRONG, Acting P. J.

MOSK, J.

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^[1] Nehmehs request for treble damages under Code of Civil Procedure sections 749 and 749.5 is confusing, as those sections apply to actions against a beneficiary of a trust deed. Here, Nehmeh alleged he was the beneficiary of the trust deed, rendering the cited sections facially inapplicable.

^[2] The duties of Heraux and Sanderman, as trustors, included proper maintenance of the property subject to the trust deed, securing adequate insurance, defense of any action affecting the security, and payment of all taxes and assessments.