Opinion
NOT TO BE PUBLISHED
APPEAL from the judgment of the Superior Court of Orange County No. 03 CC 01709, Ronald L. Bauer, Judge.
McCONNELL, P. J.
This appeal involves the propriety of the trial court's denial of an award of attorney fees to successful cross-defendants on a cross-complaint alleging an unfair competition law claim. We conclude the trial court properly denied the award and affirm the judgment.
I
FACTUAL AND PROCEDURAL BACKGROUND
The facts underlying the lawsuit are detailed in our prior nonpublished opinion, Aladdin Companies, Inc. v. Chichi (Jan. 22, 2009, D051609, D052567). As relevant to this appeal, Brian and Lynn Chichi (the Chichis) filed a cross-complaint against David Ennen, Cory Ennen, and Insurance Repair Solutions, Inc. (Ennen defendants) that included a class action unfair business practices claim. The Chichis alleged the Ennen defendants authorized, ordered, or participated in violations of California's home solicitation contract law, violations of California's contractors' licensing law, and acts of malicious prosecution by Aladdin Companies, Inc. (Aladdin). At the time the acts prompting the litigation occurred, David Ennen and Cory Ennen were Aladdin's only shareholders and directors. In addition, David Ennen was Aladdin's president and Cory Ennen was Aladdin's vice president. After the litigation commenced, David Ennen resigned from Aladdin's board of directors and Aladdin repurchased his shares of stock, leaving Cory Ennen as the company's president and sole shareholder. Cory later dissolved Aladdin and formed Insurance Repair Solutions, Inc, which acquired certain of Aladdin's assets and liabilities.
The cross-complaint also included a fraudulent transfer claim against the Ennen defendants. The trial of the fraudulent transfer claim was bifurcated from the trial of the unfair business practices claim. The court dismissed the fraudulent transfer claim as moot after the Chichis settled related claims against other cross-defendants.
After the Chichis rested their case-in-chief at the bench trial on the class action unfair business practices claim, the trial court decertified the class and granted an oral motion for judgment against the Chichis. The trial court found the Chichis had not established they had been harmed by Aladdin's unfair business practices. The trial court also found the Chichis had failed to establish the Ennen defendants had alter ego liability for Aladdin's actions.
The Ennen defendants subsequently moved for an award of attorneys fees on two grounds. They claimed entitlement to contractual attorney fees based on an attorney fees provision contained in the contracts at issue in the unfair business practices claim. They also claimed entitlement to attorney fees for proving the truth of certain requests for admission (RFAs) the Chichis denied. The trial court denied the motion on both grounds.
The Ennen defendants appeal, repeating their contentions below. We conclude there is no merit to their contentions and affirm the judgment.
II
DISCUSSION
A
No Entitlement to Contractual Attorney Fees
A prevailing party in litigation is generally entitled to recover costs as a matter of right. (Code Civ. Proc., § 1032(b).) A prevailing party may recover attorney fees as costs if a contract, statute or law authorizes such recovery. (Id., § 1033.5, subd. (a)(10); Santisas v. Goodin (1998), 17 Cal.4th 599, 606 [recoverable litigation costs include attorney fees "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"].) Whether there is a legal basis for recovering attorney fees as costs is a question of law that we review de novo. (Exarhos v. Exarhos (2008), 159 Cal.App.4th 898, 903.)
Although the Chichis' cross-complaint contained numerous claims, the only claim involved in this appeal is their unfair business practices claim. The unfair competition law does not provide for attorney fees. Although a prevailing plaintiff on an unfair competition law claim may seek attorney fees as a private attorney general under Code of Civil Procedure section 1021.5, a prevailing defendant has no such right. Consequently, where a plaintiff has only an unfair competition law claim, a prevailing defendant may not recover attorney fees. (Walker v. Countrywide Home Loans, Inc. (2002), 98 Cal.App.4th 1158, 1179-1180.)
Notwithstanding this adverse authority, the Ennen defendants contend they are entitled to recover their attorney fees under Code of Civil Procedure section 1021, which provides in part: "Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties." However, "[t]he Legislature enacted this section to codify the 'American rule' that, ordinarily, 'each party to litigation must bear the expense of its own attorney fees.' [Citations.]" (Santisas v. Goodin, supra, 17 Cal.4th at p. 607, fn. 4.) This section does not independently authorize recovery of attorney fees. It simply recognizes attorney fees may be recovered as costs only when they are otherwise authorized by statute or the parties' agreement. (Ibid.)
The Ennen defendants also contend they are entitled to recover their attorney fees under Civil Code section 1717, which provides in part: "(a) 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." By its terms, this section has a limited application. "It covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to enforce that contract. Its only effect is to make an otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions to enforce the contract. [Citation.]" (Xuereb v. Marcus & Millichap, Inc. (1992), 3 Cal.App.4th 1338, 1342; accord, Federal Deposit Ins. Corp. (2008) 167 Cal.App.4th 333, 357.)
The Chichis' unfair business practices claim alleges the Ennen defendants authorized, ordered, or participated in the use of a contract that did not comply with certain statutory requirements. It does not allege the contract was breached nor does it seek enforcement of the contract. Therefore, Civil Code section 1717 does not apply to it.
The Ennen defendants further contend they are entitled to recover their attorney fees under Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), which permits attorney fees to be recovered as a cost item if their recovery is authorized by contract. This section can support an award of contractual attorney fees for tort or other claims to which Civil Code section 1717 does not apply if the contractual attorney fees provision is sufficiently broad to cover these types of claims. (Santisas v. Goodin, supra, 7 Cal.4th at pp. 617-619.) The Ennen defendants contend the attorney fees provision contained in the contract at issue here is sufficiently broad; however, we are unable to confirm this contention because the copy of the contract contained in the record is illegible. Moreover, even assuming the attorney fees provision is sufficiently broad, the provision does not support an attorney fees award in this instance because the Ennen defendants were not parties to the contract. (Topanga and Victory Partners, LLP v. Toghia (2002), 103 Cal.App.4th 775, 783, 786 [in some instances a nonparty may rely on a contractual attorney fees provision to recover attorney fees for contract claims, but a nonparty may not rely on a contractual attorney fees provision to recover attorney fees for tort or other noncontract claims].)
B
No Entitlement to Attorney Fees as Costs of Proof
In addition to their claim for contractual attorney fees, the Ennen defendants contend they are entitled to attorney fees for the costs of proving eight RFAs the Chichis denied. The RFAs asked the Chichis to admit Cory Ennen did not authorize, direct, or have any personal involvement in contracting with them or the class members (RFA Nos. 2, 5, 21-22) and did not order, authorize, direct, or participate in the filing of a mechanic's lien on their property (RFA Nos. 13-16). The Chichis denied the RFAs stating they believed to the contrary and reiterating the agency allegations contained in their cross-complaint.
"[A] party that denies a request for admission may be ordered to pay the costs and fees incurred by the requesting party in proving that matter. The court 'shall' order the payment of such fees and costs unless it finds: (1) that an objection to the request was sustained or a response to the request was waived; (2) the admission sought was of no substantial importance; (3) the party failing to make the admission had reasonable ground to believe that the party would prevail on the matter; or (4) there was other good reason for the failure to admit the request. (Code Civ. Proc., § 2033.420, subd. (b).)" (Laabs v. City of Victorville (2008), 163 Cal.App.4th 1242, 1276.) We review the trial court's decision whether to grant or deny a motion for costs of proof under section 2033.420 for abuse of discretion. (Laabs v. City of Victorville, at pp. 1275-1276; Wimberly v. Derby Cycle Corp. (1997), 56 Cal.App.4th 618, 637, fn. 10; Brooks v. American Broadcasting Co. (1986), 179 Cal.App.3d 500, 508.) "An abuse of discretion occurs only where it is shown that the trial court exceeded the bounds of reason. [Citation.] It is a deferential standard of review that requires us to uphold the trial court's determination, even if we disagree with it, so long as it is reasonable. [Citation.]" (Stull v. Sparrow (2001), 92 Cal.App.4th 860, 864.)
We conclude the trial court did not abuse its discretion in denying costs of proof to David Ennen and Insurance Repair Solutions, Inc. because they did not propound the RFAs. Cory Ennen propounded them. Therefore, only Cory Ennen can claim entitlement to costs of proof. (Civ. Proc. Code, § 2033.420, subd. (a) [if a party fails to admit the truth of an RFA and the party requesting the admission proves the truth of the RFA, then the party requesting the admission may move for an order requiring the payment of reasonable expenses and attorneys incurred in making that proof].)
We further conclude the trial court did not abuse its discretion in denying costs of proof to Cory Ennen because the record does not show the Chichis' denials were unreasonable. The Chichis had no personal knowledge of the matters referred to in the RFAs and there is nothing in the record indicating the Chichis failed to reasonably investigate available sources of information before denying them. (Brooks v. American Broadcasting Co., supra, 179 Cal.App.3d at p. 510.) In addition, there is nothing in the record indicating the Chichis learned of information after denying the RFAs that would have required them to modify their responses. (Id. at pp. 510-511.) There is also nothing in the record indicating the Chichis lacked a reasonable basis for contesting the matters referred to in the RFAs. (Id. at p. 511.) Rather, the record shows Aladdin was a closely held corporation, Cory Ennen had a considerable financial stake in Aladdin, and Cory Ennen held positions with Aladdin that typically include significant oversight and decision-making responsibilities. Under these circumstances, we cannot conclude it was unreasonable for the Chichis to question his purported lack of knowledge and involvement in Aladdin's litigation decisions or in determining the terms of Aladdin's standard service contracts.
C
Appeal Not Frivolous
The Chichis filed a motion for sanctions against the Ennen defendants for filing a frivolous appeal. (Cal. Rules of Court, rule 8.276.) Although we conclude the appeal lacked merit for the reasons stated, we do not find the appeal to be frivolous and, therefore, deny the motion.
III
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal. Respondents' motion for sanctions is denied.
WE CONCUR: HALLER, J., McDONALD, J.