West Coast Specialties v. Jaffe

Filed 8/9/06 West Coast Specialties v. Jaffe CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Jay M. Bloom, Judge. Affirmed.

The question in this case is whether a defendant in an interpleader action may obtain attorney fees under Civil Code^[1] section 1717 from a codefendant in the action, based on a promissory note between those parties that contained an attorney fees clause. We answer the question in the negative, as the interpleader action was not "on the contract" within the meaning of section 1717; the plaintiff was not a party to the note and it was not required to rely on the note to satisfy its litigation objective. Moreover, a settlement of the interpleader's claim before trial precludes an award of fees. (§ 1717, subd. (b)(2).) Accordingly, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In January 2003 DiPizzo signed a promissory note in favor of Jaffe for $27,600, which he loaned her so she could purchase his 2002 Mercedes Benz sports car.^[2] The note was to be paid on the earlier of two events, the passage of 30 months or the sale of the Mercedes. The note was secured by the Mercedes, and it stated, "If this note is placed with an attorney for collection, then I agree to pay any attorney's fee of 15% of the unpaid balance. This fee will be added to the unpaid balance of the loan." The certificate of title (pink slip) listed DiPizzo as the registered owner and Jaffe as the lienholder.

In May 2004, before making any payment on the note, DiPizzo seriously damaged the Mercedes in a collision. The car was towed to West Coast Specialties, Inc. (West Coast) and DiPizzo and her insurer contracted for repairs. Between July and October, both Jaffe and DiPizzo advised West Coast they were the legal owners of the car and demanded delivery of the car after the completion of repairs. Jaffe provided West Coast a copy of the pink slip.^[3]

West Coast asked the parties to resolve the issue, to no avail. In December 2004, West Coast filed a complaint in interpleader against Jaffe and DiPizzo, which included an allegation regarding the promissory note between them. West Coast sought an order restraining the defendants from taking any action pertaining to the Mercedes before the court had an opportunity to rule on the complaint, and an order discharging West Coast from liability arising from the delivery of the car.

Jaffe and DiPizzo separately answered the complaint. They both sought possession of the Mercedes and each alleged entitlement to reasonable attorney fees from the other.

In December 2004 and January 2005 Jaffe unsuccessfully sought discovery against DiPizzo. She failed to appear for a deposition, and to respond to form interrogatories and a demand for production of documents. Jaffe's counsel's informal efforts to seek compliance were unsuccessful, and on January 27, 2005, he prepared a motion to compel discovery and for monetary sanctions. That afternoon, Jaffe's counsel received a copy of

a letter from DiPizzo's counsel to West Coast authorizing it to deliver the Mercedes to Jaffe. West Coast complied, and it no longer had an interest in the matter.

Jaffe, however, continued to pursue DiPizzo for sanctions, and the court awarded him $937 for discovery abuses. She did not satisfy the order, which resulted in contempt proceedings. On the day of the hearing, she paid the sanctions.

Jaffe then moved for attorney fees from DiPizzo under section 1717 and the promissory note. He sought $4,657.50, which was 15 percent of the unpaid balance on the promissory note, the maximum allowed under the note's fee provision.

The court denied the motion because West Coast's interpleader action was not an action on the contract between Jaffe and DiPizzo. Alternatively, the court determined "the case settled and therefore there is no prevailing party" under section 1717. At the conclusion of the hearing the court dismissed the action.

DISCUSSION^[4]

An award of attorney fees ordinarily rests within the trial court's sound discretion. However, the determination of the legal basis for a fee award is a question of law we review de novo. (Braude v. Automobile Club of Southern Cal. (1986) 178 Cal.App.3d 994, 1013-1014.)

Allowable costs to the prevailing party include attorney fees when authorized by contract, statute or law. (Code Civ. Proc., §§ 1032, subd. (b), 1033.5, subd. (a)(10).) Civil Code 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 either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs." (Italics added.) Under section 1717, "the party prevailing on the contract shall be the party who received a greater relief in the action on the contract." (§ 1717, subd. (b)(1), italics added.)

"California Courts 'liberally construe "on a contract" to extend to any action "[a]s long as an action 'involves' a contract and one of the parties would be entitled to recover attorney fees under the contract if that party prevails in its lawsuit . . . ." [Citation.]' " (California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598, 605.) However, "[a]s a general rule, attorney fees are awarded only when the action involves a claim covered by a contractual attorney fee provision and the lawsuit is between signatories to the contract." (Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 379-380.)

Jaffe contends the court erred by finding this interpleader action by West Coast was not an action on the promissory note between him and DiPizzo, within the meaning of section 1717, since DiPizzo's claim of right to possession of the Mercedes, albeit unfounded, was based on the note and necessitated the action. The interpleader action, however, was not brought by a party to the note or to enforce the note. Although the complaint in interpleader referred to the note, to meet its litigation objective West Coast was not required to rely on the note. Section 1717, subdivision (a) unambiguously requires that the action be on a contract with an attorney fees clause. "Our primary aim in construing any law is to determine the legislative intent. [Citation.] In doing so we look first to the words of the statute, giving them their usual and ordinary meaning. [Citations.]" (Committee of Seven Thousand v. Superior Court (1988) 45 Cal.3d 491, 501.)

Section 1717 does not suggest that codefendants in an interpleader action have any right against each other for attorney fees, and Jaffe cites no legal authority to support that notion. "Where a point is merely asserted by counsel without any argument of or authority for its proposition, it is deemed to be without foundation and requires no discussion." (People v. Ham (1970) 7 Cal.App.3d 768, 783, disapproved on another ground in People v. Compton (1971) 6 Cal.3d 55, 60, fn. 3; People v. Sierra (1995) 37 Cal.App.4th 1690, 1693, fn. 2.)

Jaffe contends that DiPizzo's prayer for attorney fees from him in her answer gives him the right to fees under 1717's reciprocity standard. He asserts her prayer is a "judicial admission" that an award of fees "follows possession of the car." A judicial admission, however, pertains to a factual matter. "It is a waiver of proof of a fact by conceding its truth, and it has the effect of removing the matter from the issues." (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 413, p. 511.) A pleader is not bound by conclusions of law. (Ibid.) The test for reciprocity is not whether DiPizzo prayed for attorney fees, but whether she would have actually been entitled to fees had she established a right to possess the Mercedes. (See Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128-129.) DiPizzo would not have been entitled to fees for the same reason Jaffe is not entitled to fees, because the interpleader action was not an action "on the contract" for purposes of section 1717.

Jaffe's reliance on subdivision (a)(4) of Code of Civil Procedure section 1032 is also misplaced. It provides that a "prevailing party" includes "a defendant as against those plaintiffs who do not recover any relief against that defendant." (Code Civ. Proc., § 1032, subd. (a)(4), italics added.) Jaffe does not seek attorney fees from the plaintiff, but from his codefendant. We are not free to rewrite the provision to conform to the situation here, and any right to fees between codefendants in an interpleader action should be determined by the Legislature. Contrary to Jaffe's position, the court did not err by not determining a prevailing party under Code of Civil Procedure section 1032.

Moreover, DiPizzo satisfied West Coast's litigation objective before trial by notifying it to release the Mercedes to Jaffe. Section 1717, subdivision (b)(2) provides, "Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section." Jaffe asserts that DiPizzo's authorization to West Coat to release the Mercedes to Jaffe did not constitute a dismissal or settlement, because he and DiPizzo remained embroiled in his claims for sanctions, contempt and attorney fees. Perhaps if Jaffe had filed a cross-complaint against DiPizzo his argument would have merit, but he cites no legal authority showing section 1717, subdivision (b)(2) may be interpreted the way he urges. West Coast

brought the interpleader action, and its claim was settled before trial. Accordingly, the court's analysis was sound.

DISPOSITION

The judgment is affirmed.

McCONNELL, P. J.

WE CONCUR:

BENKE, J.

HUFFMAN, J.

Publication courtesy of California pro bono lawyer directory.

Analysis and review provided by Chula Vista Real Estate Attorney.

^[1] Statutory references are to the Civil Code except when otherwise specified.

^[2] Jaffe and DiPizzo were never married, but they have a daughter together. They have also been engaged in family court litigation regarding paternity, custody, visitation and support issues.

^[3] Under Vehicle Code section 370, a " 'legal owner' is a person holding a security interest in a vehicle. . . ." Jaffe asserts that when the collision occurred DiPizzo was driving under the influence of alcohol and drugs, and that conduct, along with failing to provide him with updated insurance information and to keep the Mercedes' registration current, breached the promissory note and gave him the right of repossession.

^[4] DiPizzo has filed no respondent's brief. Thus, we "will decide the appeal on the record, the opening brief, and any oral argument by the appellant." (Cal. Rules of Court, rule 17(a)(2).)