Republic Fastener v. Vivitar

Filed 4/19/07 Republic Fastener v. Vivitar CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Vivitar Corporation appeals from the judgment of costs entered in favor of Republic Fastener Mfg. Corp. after a jury awarded Republic damages in the amount of $241,228.96. Vivitar argues that the trial court abused its discretion by awarding Republic $32,992.29 in prejudgment interest and $264,669.50 in attorney's fees. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Republic owned and leased several commercial buildings in Newbury Park to Vivitar from January 25, 1994, through January 31, 2004. The lease required Vivitar to maintain and repair, and to surrender, the premises in good condition. After incurring substantial costs restoring the premises, Republic tried to recover those costs from Vivitar.

On December 17, 2004, Republic filed an action against Vivitar, seeking damages for breach of the lease. On October 31, or November 1, 2005, during a mandatory settlement conference, Vivitar offered to settle the action for $246,540, including a $46,540 security deposit. Although Vivitar describes this offer as a Code of Civil Procedure section 998 offer, the record refers to a section 998 offer but includes no copy of any such "offer in writing." (Vivitar also claims to have extended a "998 offer" in the amount of $200,000, on August 1, 2005.)

The jury found that "Vivitar [failed] to do something that the [lease] required it to do," which harmed Republic, and that Republic's damages totaled $241,228.96. The judgment in Republic's favor was filed on February 6, 2006, providing for $241,228.96 in damages, plus prejudgment interest at the rate of 12 percent per annum from December 17, 2004, until the entry of judgment, plus post-judgment interest at the rate of 10 percent per annum, plus costs and disbursements.

Following contested hearings, the trial court granted Republic's motions for prejudgment interest and attorney's fees and costs. On April 17, 2006, the court filed orders specifying that $32,992.29 in prejudgment interest, $264,669.50 in attorney's fees, and $33,001.12 in costs should be added to the judgment.

DISCUSSION

Standard of Review

In reviewing a trial court's determination regarding prejudgment interest, we apply an abuse of discretion standard. "[S]ince an abuse of discretion cannot be presumed [citation], we must search the record to determine whether there is a basis in fact supporting the denial of prejudgment interest by the trial judge." (Esgro Central, Inc. v. General Ins. Co. (1971) 20 Cal.App.3d 1054, 1065.) Similarly, we must affirm an award of attorney's fees absent a showing that the trial court clearly abused its discretion. (Jones v. Union Bank of California (2005) 127 Cal.App.4th 542, 549-550; Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1158.) "An abuse of discretion is shown when the award shocks the conscience or is not supported by the evidence." (Jones, at pp. 549-550.)

Prejudgment Interest

The trial court awarded prejudgment interest to Vivitar pursuant to Civil Code section 3287, subdivision (b), which provides: "Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed." [1]

Vivitar argues that because it was extremely difficult to compute the debt that it was obligated to pay, the trial court abused its discretion by awarding Republic prejudgment interest. This argument is irrelevant because "the limited purpose of [section 3287,] subdivision (b) . . . is to establish an exception to the general rule prohibiting prejudgment interest when the damages in issue are not capable of being made certain when due." (Lewis C. Nelson & Sons, Inc. v. Clovis Unified School Dist. (2001) 90 Cal.App.4th 64, 71.)

Vivitar further argues that the trial court abused its discretion in awarding prejudgment interest to Republic because it was not necessary to fairly compensate Republic, and that the trial court failed to conduct a detailed analysis concerning such necessity. The record supports the court's implied finding that such interest was necessary to fairly compensate Republic. Republic had tried to settle the underlying dispute for many months before it filed the complaint against Vivitar. The jury explicitly found that Vivitar's failure to fulfill its obligations under the lease harmed Republic and caused it to suffer damages in excess of $241,000.

Attorney's Fees

Vivitar asserts that the trial court abused its discretion by awarding attorney's fees to Republic. The lease contains a paragraph governing attorney's fees which provides in relevant part as follows: "If any Party . . . brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party . . . in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorney's fees. . . . 'Prevailing Party' shall include . . . a Party . . . who substantially obtains or defeats the relief sought . . . . The attorney's fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorney's fees reasonably incurred."

Section 1717, subdivision (a) provides in part, "In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded . . . , then the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorney's fees in addition to other costs." Under the statute, the trial court "shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. . . ." (Id., subd. (b)(1).)

Under section 1717, the trial court has discretion to determine who, if anyone, is the party prevailing on the contract. (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) When "the results of the litigation are mixed," section 1717 "reserv[es to] the trial court a measure of discretion to find no prevailing party . . . ." (Id. at p. 876.) Vivitar asserts that Republic is not the prevailing party under section 1717, or the terms of the lease, and the trial court therefore abused its discretion in awarding attorney's fees to Republic. Vivitar claims that, at best, Republic obtained results that were mixed. Vivitar stresses that the $241,228 in damages the jury awarded Republic are only about "20.8% of the original demand in its Complaint," so that there is no prevailing party in this case "under Hsu." (Emphasis omitted.) Hsu and numerous other cases recognize that a "prevailing party" need not win every issue in a case. (Hsu v. Abbara, supra, 9 Cal.4th at p. 877; Scott Co. of California v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.) Republic argues that it is the prevailing party because it alone recovered damages ($241,228.96) from the jury, in addition to $32,992.29 in prejudgment interest.

The court below decided to "declare [Republic the] prevailing party in light of not only [the] monetary award but the defeat of affirmative defenses. There was a real issue in this case as to whether they were entitled to anything and you have [an] affirmative defense arguing they were in breach. So I think that is to be taken into account, along with everything else." Republic had argued that it sought to settle with Vivitar for several months before filing its complaint, and that by the time Vivitar offered to settle the case for $246,540, Republic had incurred more than $100,000 in attorney's fees, costs, and expenses.

If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract. "[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." (Hsu v. Abbara, supra, 9 Cal.4th at p. 876.)

In this case, Republic initially sought more than $1 million in damages; it succeeded in establishing only about $241,000 in damages. Although Republic "did not achieve all of its litigation objectives, . . . the trial court did not abuse its discretion in implicitly concluding that on balance [Republic] prevailed on the contract for purposes of section 1717." (Scott Co. of California v. Blount, Inc., supra, 20 Cal.4th at p. 1109.)

The judgment is affirmed. Costs are awarded to respondent.

NOT TO BE PUBLISHED.

COFFEE, J.

We concur:

GILBERT, P.J.

PERREN, J.

Vincent J. O'Neill, Jr., Judge

Superior Court County of Ventura

______________________________

Wang, Hartmann & Gibbs, PC, Jeffrey C. P. Wang, Richard F. Cauley, Jason B. Witten, Jessica M. Helliwell, Peter O. Huang for Defendant and Appellant.

Arnold, Bleuel, LaRochelle, Matthews & Zirbel, LLP, Dennis LaRochelle, Peter D. Lemmon for Plaintiff and Respondent.

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[1] All statutory references are to the Civil Code unless otherwise stated.