Opinion
NOT TO BE PUBLISHED
Contra Costa County Super. Ct. No. C0801097.
Lambden, J.
Roger Di Fate, Sr. owns a home in a general plan development that is subject to recorded Discovery Bay Covenants, Conditions, and Restrictions (CC & Rs). The governing homeowners association is Discovery Bay Property Owners Association, Inc. (Discovery Bay Association or the Association). A dispute arose between Di Fate and the Discovery Bay Association regarding Di Fate’s installation of multiple curb cuts for additional driveways through the sidewalk area in front of his lot (the project). Discovery Bay Association filed an action to enforce the CC & Rs to compel Di Fate to remove the original driveway, sidewalk, and curb cut and to install a new sidewalk and curb cut. After a bench trial, the court ruled that the CC & Rs did not apply to the sidewalk in front of Di Fate’s lot and entered judgment in favor of Di Fate.
Di Fate filed a motion for costs and attorney fees. He claimed that he was entitled to attorney fees under statute (Civ. Code, § 1354) and under contract (§ 1717). His contractual claim was based on the attorney fees provision in the CC & Rs. The trial court awarded Di Fate costs, but denied his motion for attorney fees on the grounds that the court had ruled that the CC & Rs did not apply. Di Fate appeals from the denial of his request for attorney fees and contends that he is the prevailing party and entitled to attorney fees under the CC & Rs and under section 1354. We agree that Di Fate is entitled to attorney fees under section 1717 and reverse the order denying him attorney fees.
All further unspecified code sections refer to the Civil Code.
BACKGROUND
Di Fate owns a home in a general plan development that is subject to recorded CC & Rs. The governing homeowners association is Discovery Bay Association. Article 1.1 in the CC & Rs provides in pertinent part: “All of these covenants, conditions and restrictions shall be made for the direct, mutual and reciprocal protection and benefit of each and every lot shown on the subdivision maps... and shall be intended to create mutual and equitable servitudes upon each of said lots in favor of each other and to create reciprocal rights and obligations between respective owners of all the lots shown and to create a privity of contract and estate between the purchasers of said lots, their heirs, successors in interest and assigns, and shall, as to the owners of each lot, their heirs, successors in interest and assigns, operate as covenants running with the land for the protection and benefit of all other lots in each and every part of ‘Discovery Bay.’ ”
Article 1.6 of the CC & Rs reads in relevant part: “Every action or omission whereby any provision hereof is violated or breached, in whole or in part, shall render it lawful for [Discovery Bay Association] or [Design and Environmental Review Committee] to prosecute any proceedings at law or in equity against the person or persons violating or attempting to violate the same or either to prevent him or them from so doing or to recover damages for such violation or any combination of the same. Should any such suit be instituted and should the plaintiff be successful, the lot owner shall pay all the court costs and expenses and a reasonable attorney’s fee as may be fixed by the court.”
On June 8, 2004, Di Fate submitted plans for the project to Discovery Bay Association for approval. The project involved a new driveway, sidewalk, and curb cut in front of his home. On June 14, 2004, Discovery Bay Association stamped the plans “approved.” Di Fate had the work on the project completed.
After Di Fate completed the project, Di Fate applied to Discovery Bay Association for the front yard landscaping. Discovery Bay Association disapproved of the application and told him he had to remove the original driveway, sidewalk, and curb cut, as well as to install a new sidewalk and curb. Di Fate contested this requirement and Discovery Bay Association issued monthly fines for not removing the driveway.
On April 24, 2008, Discovery Bay Association filed a complaint for permanent injunction and damages against Di Fate. Discovery Bay Association alleged that “[section] 1354 and the CC & Rs entitle the ASSOCIATION to attorney fees and costs as the prevailing party in a legal action.” Di Fate filed a cross-complaint for declaratory relief. In his cross-complaint he asked for attorney fees and costs.
The matter proceeded to a bench trial. On September 24, 2009, the court issued its statement of decision and granted Di Fate’s motion for a nonsuit on two bases. The first ground for granting the nonsuit was that the court found Discovery Bay Association to be a common interest development as defined by the Davis-Stirling Common Interest Development Act, and the Association failed to offer mediation as required by the Act.
The court also granted Di Fate’s motion for nonsuit because it found that the CC & Rs did not apply to the project and that the county was an indispensable and necessary party to the action because the action involved the county’s property. The court explained that “[t]he evidence was uncontroverted and established that the curb cut and sidewalk were located off of [Di Fate’s] lot and within separately owned interests of the County of Contra Costa.... There is no evidence that the County has relinquished its rights concerning its ownership and jurisdiction over the streets, curbs, sidewalks and utility areas to anyone.”
The court elaborated: “The streets, sidewalks curbs and utility areas within Discovery Bay are ‘separate interests’ as defined in... [section] 1351... on property that was dedicated in the original planned unit development recorded subdivision maps and accepted by the County of Contra Costa. The CC & Rs expressly state that they are for the ‘... benefit of each and every lot shown on the subdivision maps....’ ” The court continued: “Neither the recorded subdivision maps nor the CC & Rs define the streets, curbs, sidewalk or utility areas as ‘lots.’ There are no provisions in the CC & Rs that impose obligations on the property owners outside the confines of their subdivision lot and, by the same token, there are no provisions of the CC & Rs that provide for enforcement rights in the Association off of the individual owner’s separate interest lot. Accordingly, [Discovery Bay Association] does not have authority to compel a lot owner to enforce requirements off of the lot....”
The court stated that Di Fate was the prevailing party and “is entitled to his costs as provided by law.” The court added, “Any request for attorneys fees shall be determined upon noticed motion.” In the judgment, filed the same day as the statement of decision, the court ruled that Di Fate “is the prevailing party herein and is entitled to his costs and attorneys fees as provided by law.”
Following entry of judgment, Di Fate filed a memorandum of costs for $2,057.89 and a motion for attorney fees in the amount of $46,833.23. Di Fate requested attorney fees based on the attorney fees provision in the CC & Rs (§ 1717) and based on statute under section 1354, subdivision (c). Discovery Bay Association did not oppose Di Fate’s request for costs and agreed that the amount requested was reasonable. The Association did, however, oppose Di Fate’s motion for attorney fees. The Association argued that awarding fees would be contrary to the court’s ruling that the CC & Rs did not apply to the project. Further, the Association maintained that Di Fate should not receive any fees because he had “unclean hands.”
The trial court issued the following tentative ruling on Di Fate’s request for attorney fees: “In view of the prior ruling that the CC & Rs do not apply to the subject matter of this litigation, the request for attorney’s fees is denied.” Di Fate contested the tentative ruling and the court heard the motion on November 10, 2009. The court took the matter under submission and, on November 25, 2009, it issued its order that affirmed the tentative ruling.
Di Fate filed a timely notice of appeal from the order denying him attorney fees.
DISCUSSION
The sole issue on appeal is whether the lower court properly denied Di Fate’s request for attorney fees. Since we conclude that Di Fate was entitled to attorney fees under section 1717, we need not address whether he was also entitled to attorney fees under section 1354.
I. Standard of Review
Generally, orders denying an award of attorney fees are reviewed “using an abuse of discretion standard of review. [Citation.] But a ‘determination of whether the criteria for an award of attorney fees and costs have been met is a question of law.’ [Citation.] To the extent we determine in what circumstances attorney fees may be recovered in an action..., we review the trial court’s order de novo. To the extent the trial court had discretion to deny attorney fees, we review that determination using the abuse of discretion standard.” (Walker v. Countrywise Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.)
II. Awarding Attorney Fees Under the CC & Rs
As relevant to this case, the applicable CC & Rs provide that “[e]very action or omission whereby any provision hereof is violated or breached, in whole or in part, shall render it lawful for [Discovery Bay Association]... to prosecute any proceedings at law or in equity against the person or persons violating or attempting to violate the same or either to prevent him or them from so doing or to recover damages for such violation or any combination of the same. Should any such suit be instituted and should the plaintiff be successful, the lot owner shall pay all the court costs and expenses and a reasonable attorney’s fee as may be fixed by the court.” Discovery Bay Association’s complaint contained one cause of action for permanent injunction to enforce the CC & Rs and included a request for damages against Di Fate. Discovery Bay Association asserted in its complaint that it was entitled attorney fees under section 1354 and the CC & Rs.
Section 1717, subdivision (a) provides: “(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. [¶] Where a contract provides for attorney’s fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract. [¶] Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit. [¶] Attorney’s fees provided for by this section shall not be subject to waiver by the parties to any contract which is entered into after the effective date of this section. Any provision in any such contract which provides for a waiver of attorney’s fees is void.”
Subdivision (b)(1) of section 1717 reads: “The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment.... [T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.”
To ensure mutuality of remedy, “it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.) Since CC & Rs have been held to be contracts subject to the general rules of contract interpretation, this reciprocal remedy is triggered by the presence of an attorney fee provision in CC & Rs when a cause of action is based on the enforcement or violation of another provision in the CC & Rs. (See 14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1410.) This is true even though the party prevailing on the claim obtains no affirmative relief. (Foothill Properties v. Lyon/Copley Corona Associates (1996) 46 Cal.App.4th 1542, 1555.)
Section 1717 gives the trial court discretion to determine there is no prevailing party on a contract claim. However, that discretion does not apply where the result of litigation on that claim is not mixed, “that is, when the decision on the litigated contract claim[ ] is purely good news for one party and bad news for the other.... Thus, when a defendant defeats recovery by the plaintiff on the only contract claim in the action, the defendant is the party prevailing on the contract under section 1717 as a matter of law.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876.)
Here, the trial court did rule that Di Fate was the prevailing party and Di Fate was the prevailing party as a matter of law since the court ruled against Discovery Bay Association on its request for injunctive relief to enforce the CC & Rs. The court, however, found Di Fate was not entitled to attorney fees under section 1717 because of its judgment after trial that the CC & Rs did not apply to the project. This finding was error because the trial court failed to appreciate that the reciprocal remedy of section 1717 was triggered by the Discovery Bay Association’s allegation in its pleading that it was entitled to attorney fees in this litigation under the attorney fees provision in the CC & Rs.
Discovery Bay Association never specifies section 1717 in its complaint, but it alleged in its complaint that it was entitled to attorney fees under the attorney fees provision of the CC & Rs.
On appeal, Discovery Bay Association maintains that it would be inconsistent for the court to award attorney fees under section 1717 when the court ruled that the CC & Rs do not apply. Discovery Bay Association does not discuss Santisas v. Goodin, supra, 17 Cal.4th 599, or any other case that applies section 1717. Instead, the Association cites Parrott v. Mooring Townhomes Assn., Inc. (2003) 112 Cal.App.4th 873, 879 (Parrott)and Salawy v. Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664, 674 (Salawy). Neither of these cases concerns a request for attorney fees under contract.
The issue in Parrott was whether the trial court had jurisdiction to determine who was a prevailing party under section 1354 for purposes of awarding attorney fees after the plaintiffs’ voluntary dismissal. (Parrott, supra, 112 Cal.App.4th at pp. 876-877.) In Parrott, attorney fees were not sought under section 1717 and, even if they had been, they would not have been awarded because section 1717, subdivision (b)(2) specifies that there is no prevailing party “[w]here an action has been voluntarily dismissed....” Similarly, Salawy, supra, 121 Cal.App.4th 664, did not involve any claim for attorney fees under section 1717. (See Salawy, at p. 670 [“We may also infer that by not awarding fees under section 1717, which provides for attorney fees pursuant to a contract, the trial court did not determine that there had been an ‘action’ ‘seeking enforcement’ of the lease”].) At issue in Salawy was whether an operator of a cooperative apartment was entitled to attorney fees under section 1354 after successfully demurring to the complaint filed by residents and shareholders of a cooperative apartment building. (Salawy, supra, at pp. 667-669.) The appellate court held that fees were not recoverable because the action was based on a breach of a promise, not on the governing documents. (Id. at p. 671.) In contrast to the pleadings in both Parrott and Salawy, the complaint filed by Discovery Bay Association expressly sought attorney fees based on contract, that is a provision in the CC & Rs.
Had Discovery Bay Association prevailed in its action to enforce the CC & Rs, it would have been entitled to attorney fees under section 1717 because, as it alleged in its complaint, the CC & Rs had an attorney fees provision. Di Fate prevailed in the action by establishing that the CC & Rs did not apply and, therefore, under the mutuality of remedy of section 1717, he was entitled to attorney fees. Accordingly, we conclude that the trial court erred in denying Di Fate’s request for attorney fees.
III. Allegation of “Unclean Hands”
In the trial court, Discovery Bay Association asserted that Di Fate had “unclean hands” and therefore was not entitled to attorney fees. Neither party addresses this issue on appeal, but we discuss this issue to provide the trial court with guidance on remand.
Even if the evidence does support Discovery Bay Association’s claim of “unclean hands, ” this would not permit the court in the present case to deny Di Fate attorney fees under section 1717. “[W]hen one party obtains a ‘simple, unqualified win’ on the single contract claim presented by the action, the trial court may not invoke equitable considerations unrelated to litigation success, such as the parties’ behavior during settlement negotiations or discovery proceedings, except as expressly authorized by statute. (See, e.g., Deanie Gardenhome Assn. v. Denktas [(1993)] 13 Cal.App.4th 1394, 1398-1399 [trial court improperly relied on party’s obstreperous behavior and uncompromising litigation stance to find there was no prevailing party]; Bruckman v. Parliament Escrow Corp. (1987) 190 Cal.App.3d 1051, 1059... [stating that party’s failure to offer to compromise did not affect that party’s right to attorney fees under section 1717].) To admit such factors into the ‘prevailing party’ equation would convert the attorney fees motion from a relatively uncomplicated evaluation of the parties’ comparative litigation success into a formless, limitless attack on the ethics and character of every party who seeks attorney fees under section 1717.” (Hsu v. Abbara, supra, 9 Cal.4th at p. 877.)
Since Di Fate obtained an unqualified win, the trial court must award Di Fate attorney fees. Although a party’s litigation conduct may not be used to determine who prevailed at trial, such conduct may be considered when the trial court determines whether the fees requested are reasonable or should be reduced because the fees were due to the party’s unreasonable conduct. (See, e.g., EnPalm, LCC v. Teitler (2008) 162 Cal.App.4th 770, 775-778 [permissible to reduce $50,000 fee to $5,000 because action could have been resolved early in the litigation had client been more truthful].)
IV. The Amount of Attorney Fees
Di Fate contends that this court should order that he is entitled to his requested attorney fees in the amount of $46,833.23, because Discovery Bay Association never argued that the fees requested were not reasonable. We conclude that the matter should be remanded to the trial court to determine the reasonable amount of fees.
The trial court is to award “[r]easonable attorney’s fees” (§ 1717, subd. (a)), and, as already stressed, the award of such fees is governed by equitable principles. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1094-1095.) “It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court.... [Citations.] The value of legal services performed in a case is a matter in which the trial court has its own expertise. [Citation.] The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. [Citations.] The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623-624.)
Here, the trial court never determined whether the requested amount was reasonable or whether, under the applicable equitable principles, the sum should have been reduced. (See PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at pp. 1095-1096.) Thus, we will remand for the trial court to determine and award the reasonable amount of attorney fees.
DISPOSITION
The order denying the motion for attorney fees is reversed. The matter is remanded to the trial court to determine the reasonable amount of fees to be awarded to Di Fate. Di Fate is awarded the costs of appeal.
We concur: Haerle, Acting P.J., Richman, J.