Opinion
A153560
03-24-2020
DAVID ACHTERKIRCHEN et al., Plaintiffs and Respondents, v. JESUS A. MONTIEL, Defendant and Appellant.
ORDER MODIFYING OPINION AND DENYING REHEARING [NO CHANGE IN JUDGMENT] THE COURT:
It is ordered that the opinion filed herein on March 24, 2020, be modified as follows:
1. At the bottom of page 4, the last sentence at the bottom of the page that carries over to page 5, that reads, "Achterkirchen II was not a separate action on the contract within the meaning of section 1717, nor did it result in a separate final judgment on the merits, as Montiel also contends," add the following footnote as footnote 5, which will require renumbering of all subsequent
5 In his petition for rehearing, Montiel argues he did not have the opportunity to brief these points in his opening and reply briefs. To the contrary, Montiel discussed the right to attorney fees under
section 1717 arises in an "action" on a specific contract, that both Achterkirchen I and Achterkirchen II were "on the contract" within the meaning of section 1717, and that Achterkirchen II was its own "action" and a separate final judgment "on the merits."
2. At the bottom of page 7, the last sentence on the page that carries over to page 8, beginning "For the reasons already discussed," is modified to read as follows:
For the reasons already discussed, however, Montiel's success on appeal challenging the evidentiary basis for an attorney fees award does not amount to a separate final judgment entitling him to his own award of attorney fees.
There is no change in the judgment.
Appellant's petition for rehearing is denied. Dated:
/s/_________
Humes, P.J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco City & County Super. Ct. No. CPF-11 5116369) MEMORANUM OPINION
We resolve this case by a memorandum opinion pursuant to the California Standards of Judicial Administration, section 8.1(1), (2).
In this appeal, the fourth we have considered in this case, defendant Jesus Montiel challenges the trial court's denial of his request for attorney fees after he prevailed in his second appeal. We affirm.
Because the facts of the underlying controversy have been detailed in our prior three opinions and are mostly unnecessary to this one, we include only a brief summary of the relevant facts.
Achterkirchen v. Montiel (Mar. 24, 2015, A140277) [nonpub. opn.] (Achterkirchen I); Achterkirchen v. Montiel (Mar. 28, 2017, A147386) [nonpub. opn.] (Achterkirchen II); Achterkirchen v. Montiel (Aug. 17, 2018, mod. Sep. 13, 2018, A148424) [nonpub. opn.] (Achterkirchen III).
In 2011, plaintiffs David Achterkirchen, Jane Achterkirchen, Genna Tricarico, Christopher Padula, Blake Mueller, and Matteo Fabiano (plaintiffs) initiated an arbitration proceeding pursuant to the parties' tenancy-in-common agreement (TIC Agreement) after Montiel refused to remove a tax lien from the parties' four-unit, tenant-in-common condominium. Plaintiffs prevailed on the merits of their claim in arbitration and were found to be the "prevailing party" by the arbitrator. The trial court entered judgment in plaintiffs' favor and Montiel appealed. In 2015, we affirmed the arbitration award in Achterkirchen I, supra, A140277.
After issuance of the remittitur in Achterkirchen I, plaintiffs moved under Civil Code section 1717 for an award of attorney fees as the prevailing party in Achterkirchen I. The trial court awarded plaintiffs their requested fees for work on Achterkirchen I. Montiel appealed, contending the declaration in support of the fee application was insufficient to support the award. We agreed, and in a memorandum opinion (Achterkirchen II, supra, A147386), reversed the trial court's award, awarding Montiel his costs on appeal pursuant to California Rules of Court, rule 8.278(a)(1), (2). We said nothing about attorney fees.
All further statutory references are to the Civil Code unless otherwise specified.
Following issuance of the remittitur in Achterkirchen II, Montiel filed a motion for attorney fees as the prevailing party under section 1717 in Achterkirchen II. This is the subject of the current appeal. The trial court denied his motion, concluding, "Mr. Montiel is not the prevailing party in this case and is not entitled to an award of fees per the parties' contract or Civil Code [section] 1717. Mr. Montiel has not cited any authority that there is a post-judgment exception to the single prevailing party rule, nor is the court aware of such an exception." Montiel timely appealed the trial court's order pursuant to Code of Civil Procedure section 904.1, subdivision(a)(2).
Achterkirchen III, supra, A148424, concerned an order for monetary, issue, and evidentiary sanctions issued in connection with plaintiffs' judgment debtor examination of Montiel, which has no relevance to the present appeal.
We review de novo a determination that a party is not entitled to attorney fees as a matter of law. (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751 (Mountain Air); de la Carriere v. Greene (2019) 39 Cal.App.5th 270, 275 (Carriere).) In "any action on a contract" containing an attorney fees provision, section 1717 authorizes the recovery of reasonable attorney fees for the "party prevailing on the contract." (§ 1717, subd. (a).) The prevailing party is the party who recovered "greater relief in the action on the contract." (Id., subd. (b)(1).) Under section 1717, there can be only one prevailing party in an action on the contract. (DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 977 (DisputeSuite.com) [attorney fees under § 1717 are available to the party who "prevailed on the contract overall, not to a party who prevailed only at an interim procedural step"]; Mountain Air, at p. 755 [multiple fee awards in a single case would be "inconsistent with the conventional understanding of how contractual attorney fees are awarded"]; Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 543 (Frog Creek).)
In Frog Creek, Division Five of this court considered whether a plaintiff who successfully defeated the defendant's petition to compel arbitration could recover attorney fees for that victory, even if it later lost on the substantive contractual dispute. (Frog Creek, supra, 206 Cal.App.4th at pp. 520, 539.) After an extensive examination of the legislative history of section 1717 and relevant case law, the court concluded it could not, holding "under Civil Code section 1717 there can only be one prevailing party on a given contract in a given lawsuit." (Frog Creek, at pp. 525-543.) The court reasoned that the plaintiff's success on the petition to compel arbitration did not make the plaintiff the prevailing party on the contract because it did not resolve the parties' contractual dispute, which was eventually decided in the defendant's favor. (Id. at p. 546.) Thus, the Frog Creek court reversed the trial court's fee order because it had improperly awarded attorney fees to both parties on the same contract in the same lawsuit. (Ibid.)
In DisputeSuite.com, our Supreme Court discussed Frog Creek with approval and found its "general principle" that "fees under section 1717 are awarded to the party who prevailed on the contract overall, not to a party who prevailed only at an interim procedural step" was "equally applicable" to a situation where the defendant had obtained dismissal of a contract action in one forum under a forum selection clause but the litigation could continue in a different forum. (DisputeSuite.com, supra, 2 Cal.5th at pp. 977, 974.)
Although Montiel acknowledges Frog Creek was correctly decided on its facts, he contends its statement of law that there may be only one prevailing party on a contract is dictum and does not apply where the judgment on the underlying lawsuit is final and the later appeal is from a postjudgment decision. Here, he contends, plaintiffs may have prevailed in Achterkirchen I, but he was the " 'party prevailing on a contract' " in a final, separate appellate decision "on the merits" in Achterkirchen II. Though his opening and reply briefs total 85 pages, Montiel essentially bases his entire argument on this one premise: that the "dispute" in Achterkirchen II was a separate "action" between the parties arising out of the TIC Agreement.
As the trial court found, this argument lacks merit. Achterkirchen II was not a separate action on the contract within the meaning of section 1717, nor did it result in a separate final judgment on the merits, as Montiel also contends. "An 'action on a contract,' as used in Civil Code section 1717, refers to 'the whole of a lawsuit rather than to discrete proceedings within a lawsuit.' " (Carriere, supra, 39 Cal.App.5th at p. 276, quoting Frog Creek, supra, 206 Cal.App.4th at p. 527, fn. 6.) Achterkirchen II was a postjudgment appeal related entirely to the resolution of plaintiffs' attorney fees motion as the prevailing party in Achterkirchen I. The order on plaintiffs' postjudgment motion was an appealable collateral order, not a separate "action" instituted on the contract. (See Code Civ. Proc., § 904.1, subd. (a)(2); Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 654 [postjudgment order denying attorney fees was appealable because it "affects the judgment or relates to its enforcement in that it finally determines the rights of the parties arising from the judgment"]; Carriere, at p. 276 [trial and appeal are considered part of the same action for purposes of determining contractual attorney fees].) Indeed, despite 85 pages of briefing, Montiel never cites a single apposite authority supporting the proposition that an appeal from a postjudgment order awarding a party attorney fees is its own "action" entirely separate from the underlying judgment for purposes of determining a prevailing party under section 1717. Rather, as our Supreme Court explained in Lakin, such appealable orders are "a final determination of a matter affecting plaintiff in the original proceeding," and "an adjudication of the right to attorney fees arising from the judgment." (Lakin, at p. 654, italics added; see Serrano v. Unruh (1982) 32 Cal.3d 621, 636-637 ["A statutory fee motion 'does not create a new cause of action . . .' [citation], much less a new 'action.' It is a collateral matter, ancillary to the main cause. [Citations.] It ' "seeks what is due because of the judgment . . . ." ' "].)
Montiel cites a number of authorities to support his argument, but none stand for the proposition that the appeal of a postjudgment attorney fees motion constitutes a second judgment on the merits in a separate "action" on the contract. Rather, as he acknowledged at oral argument, most of the cases he cites involved multiple defendants in which there were separate judgments (or potential judgments) as to each defendant on the contract claims. (See Burkhalter Kessler Clement & George LLP v. Hamilton (2018) 19 Cal.Appp.5th 38, 45 [considering application of § 1717 when there are more than two parties in contract action, "a situation left unconsidered in Frog Creek"; prevailing alter ego defendant entitled to attorney fees though corporation was not]; Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 9 [one final judgment rule does not apply where a case involves multiple parties and judgment is entered which leaves no issue to be decided as to one party]; Buckaloo v. Johnson (1975) 14 Cal.3d 815, 821, fn. 3 [same]; Pueblo Radiology Medical Group, Inc. v. Gerlach (2008) 163 Cal.App.4th 826, 829 [affirming award of contractual attorney fees to individuals sued as alter ego defendants before trial against corporation had taken place]; First Security Bank of California v. Paquet (2002) 98 Cal.App.4th 468, 475 [cross-defendants sued as alter egos could appeal postjudgment attorney fee award while they continued their derivative shareholder lawsuit against bank].) Here, by contrast, there was one defendant, in one capacity—Montiel—and one action on the contract claim. Other cases on which Montiel relies involved procedural postures not at issue here. (Turner v. Schultz (2009) 175 Cal.App.4th 974, 978-979, 983 [defendants entitled to attorney fees for prevailing on declaratory and injunctive relief claims in independent lawsuit seeking to stay arbitration]; Otay River Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796, 806-808 [prevailing party on petition to compel arbitration entitled to attorney fees when petition was denied]; Cole v. BT & G, Inc. (1983) 141 Cal.App.3d 995, 998 [defendant could obtain attorney fees after successfully setting aside confession of judgment while new and independent lawsuit on liability under contract continued].) Montiel also cites Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394, 1396, 1398, for the proposition that a party who obtains an unqualified victory on every contract claim is entitled as a matter of law to be deemed the prevailing party for purposes of section 1717. In that case, however, unlike here, defendants prevailed on the merits of the contract claim in the trial court. (Deane Gardenhome Assn., at p. 1398.)
We find instructive a recent case from the Second Appellate District which, like this case, dealt with a postjudgment appeal, Carriere, supra, 39 Cal.App.5th 270. In Carriere, defendant Greene obtained a judgment in his favor against the plaintiff. The trial court declared Greene the prevailing party and awarded him attorney fees according to a contractual attorney fees provision. Greene appealed, contending the trial court erred in calculating his damages, but then voluntarily dismissed his appeal. The plaintiff then moved for an award of attorney fees incurred on appeal, which the trial court granted. (Id. at p. 273.) The appellate court reversed, following Frog Creek and concluding that under section 1717, only one party could be the prevailing party in an action on a contract. (Carriere, at pp. 273, 276.) The trial court had determined Greene was the prevailing party in the lawsuit after finding he had defeated the plaintiff's claims and obtained affirmative relief on the cross-complaint, and the plaintiff's "subsequent success on appeal and her postjudgment motion did not affect that determination." (Id. at p. 276.) Because Greene recovered the greater amount in the action on the contract, he remained the prevailing party for purposes of section 1717. (Carriere, at pp. 276-277; see Wood v. Santa Monica Escrow Co. (2009) 176 Cal.App.4th 802, 806, 808 [rejecting plaintiff's argument he was "prevailing party" because he won appeal of attorney fees award; trial and appeal are parts of a single proceeding and party prevailing on appeal is not necessarily the prevailing party for purposes of awarding contractual attorney fees].) The Carriere court also rejected the plaintiff's argument that the underlying action had been " 'fully resolved' " and her appeal constituted a " 'separate matter, standing on its own merits' " for purposes of awarding attorney fees. (Carriere, at p. 277.)
Montiel contends Carriere is distinguishable because it, like Frog Creek, involved "one contract dispute, a single lawsuit and one final judgment on the merits," and is not "relevant here where there were two final judgments on separate and unconnected issues." For the reasons already discussed, however, Montiel's success on appeal challenging the evidentiary basis for an attorney fees award does not amount to a separate final judgment. Here, as in Carriere, there was one lawsuit and one final judgment on the merits. The fact Montiel won in a subsequent appeal challenging the attorney fees award does not change that fact.
In Achterkirchen I, supra, A140277, we affirmed the judgment finding plaintiffs prevailed on the substance of their contract claims, obtaining a forced sale of Montiel's interest in the property, liquidated damages of $5,000, attorney fees and costs of $334,536, fees and costs associated with enforcing the award, and prejudgment interest. In Achterkirchen II, supra, A147386, Montiel succeeded only in challenging an insufficient declaration in support of plaintiffs' fee request, reversing a $18,360 attorney fees award. On these facts, we perceive no abuse of discretion by the trial court in denying Montiel's request for fees because plaintiffs clearly recovered the greater amount in the action on the contract, and were, thus, the prevailing party for purposes of section 1717.
We also reject Montiel's argument that the language of the parties' TIC Agreement dictates a different outcome. Paragraph 15.10 of the TIC Agreement states: "In the event that any dispute between the Parties related to this Agreement or to the Property should result in litigation or arbitration, the prevailing Party in such dispute shall be entitled to recover from the other Party all reasonable fees, costs and expenses of enforcing any right of the prevailing Party, including without limitation, reasonable attorney fees and expenses, all of which shall be deemed to have accrued upon the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. Any judgment or order entered in such action shall contain a specific provision providing for the recovery of attorney fees and costs incurred in enforcing such judgment . . . ." If further provides: "For the purposes of this Section: (i) attorney fees shall include, without limitation, fees incurred in the following: (a) post-judgment motions . . . and (ii) prevailing Party shall mean the Party who is determined in the proceeding to have prevailed or who prevails by dismissal, default or otherwise." Montiel contends the language of the TIC Agreement clearly shows the parties agreed "that the prevailing party on any matter that might arise from any provision of their contract would be entitled to an award of attorney fees" because it refers to "any dispute . . . related to this Agreement." He further contends a "proceeding" would include an appeal.
We disagree that the language of the parties' contract can be read to confer a separate right to attorney fees for a party that prevails on any dispute related to the TIC Agreement. The TIC Agreement specifically refers to "any dispute" that "should result in litigation or arbitration," consistent with Frog Creek and other case law construing prevailing party to mean the party prevailing in the whole lawsuit on the contract—not any party who prevails on a particular issue or procedural ground. (Frog Creek, supra, 206 Cal.App.4th at p. 543; Mountain Air, supra, 3 Cal.5th at p. 755; DisputeSuite.com, supra, 2 Cal.5th at p. 977.) Though Montiel argues "proceeding" can mean "appeal," nothing in the language of the contract suggests that meaning. Rather, the more logical reading of "proceeding" is that it refers to either "litigation or arbitration" as stated in the first sentence of paragraph 15.10 of the TIC Agreement. (See, e.g., Mountain Air, at pp. 755-756 [interpreting contractual provision by "considering the words in context and the provision as a whole"].)
In any event, section 1717 does not authorize the parties to agree to more than one prevailing party in a contract action for attorney fees. "[T]he definition of 'prevailing party' in Civil Code section 1717 is mandatory and cannot be altered or avoided by contract. [Citation.] Contractual provisions that conflict with the 'prevailing party' definition under section 1717 are void." (Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 707; Frog Creek, supra, 206 Cal.App.4th at pp. 544-546 [rejecting argument that parties to a contract could provide for attorney fees in any specified circumstance with highly specific contractual language].) Accordingly, we reject Montiel's claim that the specific language of the TIC Agreement entitles him to an award of attorney fees for his success in Achterkirchen II.
Montiel cites several cases for the proposition that "[s]ection 1717 does not supersede or limit the right of the parties to enter into an agreement that broadly covers all aspect[s] of litigation with as much specificity as they choose," but the cases he cites all concern whether parties may contract for recovery of attorney fees on tort claims. (See Allstate Ins. Co. v. Loo (1996) 46 Cal.App.4th 1794, 1799; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342; Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1277; Khan v. Shim (2016) 7 Cal.App.5th 49, 60-62.)
The trial court's order denying Montiel's request for attorney fees under section 1717 is affirmed. Plaintiffs are to recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
/s/_________
Margulies, J. We concur: /s/_________
Humes, P. J. /s/_________
Sanchez, J.