Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court for the County of Los Angeles No. BC323951Susan Bryant-Deason, Judge. Reversed and remanded.
Consumer Legal Services, N. Nicholas Nita and David N. Barry, for Plaintiff and Appellant.
Venable, Aaron H. Jacoby and Melanie S. Joo for Defendant and Respondent Euromotors West/The Auto Gallery.
RUBIN, J.
This matter, which is before us for the second time on appeal from an order denying attorney fees, arises out of an action brought by plaintiff and appellant Richard Sang Kim against defendant and respondent Euromotors West/The Auto Gallery (TAG) for, among other things, violation of the Consumers Legal Remedies Act (CLRA). In a prior published opinion, we reversed the trial court’s order denying Kim’s motion for attorney fees for the reason that the trial court erroneously found that, because the matter was resolved by settlement agreement prior to trial, there could be no prevailing party. (Kim v. Euromotors West/The Auto Gallery (2007) 149 Cal.App.4th 170 (Kim I).)
On remand, the trial court found Kim obtained a net monetary recovery but nevertheless denied him attorney fees under the CLRA because “on balance, neither party prevailed sufficiently to justify an award of attorney’s fees.” In this opinion, we take liberally from our prior opinion the discussion of the facts and the relevant law. We conclude that the trial court abused its discretion in finding that Kim obtained a net monetary recovery but was not a prevailing plaintiff under the CLRA, and direct the court to award Kim reasonable attorney fees to be determined by the trial court.
FACTUAL AND PROCEDURAL BACKGROUND
The complaint alleges that, on September 8, 2003, Kim traded in his 2001 Porsche Boxster to lease a used 2001 Porsche 996 Turbo Coupe (the vehicle) from TAG. According to the lease agreement, the “gross capitalized cost” of the vehicle at lease signing was $88,366.51 and the total amount Kim would have to pay on the lease by the end of the 48 month lease term would be $66,844. In addition, the estimated amount Kim would have to pay for fees and taxes was $4,533.38. Along with the lease, Kim received a written warranty. Over the next year, Kim brought the vehicle back to TAG for various repairs as a result of which the vehicle was out of service for over 78 days.
This amount was comprised of: $10,000 due at lease signing; plus a total of $57,969.00 in lease payments; plus a $350 termination fee; minus the $1,202.00 first monthly lease payment (which was included as part of the initial $10,000 payment).
In separate letters on September 21, 2004, Kim’s attorney notified Porsche and TAG that Kim was revoking his acceptance of the vehicle under Commercial Code section 2608 [revocation of nonconforming goods] and demanding a refund pursuant to the CLRA (Civ. Code, § 1750 et seq.). Porsche and TAG refused Kim’s demands.
All further undesignated section references are to the Civil Code.
On November 2, 2004, Kim filed this action against Porsche and TAG. In addition to violations of the CLRA, the complaint stated causes of action for breach of written contract; revocation; rescission; breach of express warranty; breach of implied warranty of merchantability; violations of the Song-Beverly Consumer Warranty Act (Song-Beverly Act) (§ 1790 et seq.); and violations of the Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq.). By the complaint, Kim sought, in addition to costs, prejudgment interest and attorney fees, the following relief: actual, incidental, and consequential damages; a civil penalty pursuant to the Song-Beverly Act; an order enjoining the defendants’ unlawful methods, acts, and/or practices; return of Kim’s down payment and all payments made by Kim under the lease; an order of restitution; an order of rescission of the lease agreement including refund of all monies paid by Kim and termination of the lease, and an order requiring defendants to pay off the balance of the lease and for Kim to return the vehicle; and exemplary damages.
Porsche is not a party to this appeal.
In September 2005, the parties reached a partial settlement: Kim dismissed with prejudice the First through Fifth Causes of Action, and Eighth and Ninth Causes of Action in their entirety, and the Tenth cause of action against Porsche, only. In exchange, Porsche and TAG both agreed to waive “any and all attorney’s fees and costs associated with the dismissed causes of action.” Following the dismissal, the Sixth and Seventh Causes of Action for violation of the Song-Beverly Act alleged against Porsche and TAG, and the Tenth Cause of Action for violation of the CLRA against TAG only, remained outstanding.
Kim settled with TAG a few months later. According to the parties’ settlement agreement, (1) Kim agreed to turn over the vehicle to TAG, and to execute all documents necessary to transfer his interest in the vehicle to TAG; (2) TAG agreed to pay Kim an amount equivalent to the remaining lease obligation ($69,818.78) and to take steps necessary to terminate the lease agreement; and (3) TAG agreed to pay Kim “the lump sum settlement amount of $10,000.” The settlement agreement provided that Kim was reserving his right to seek attorney fees pursuant to the CLRA. Accordingly, Kim filed a motion for attorney fees and costs under section 1780, subdivision (d) (§ 1780(d)) of the CLRA. TAG opposed the motion on the grounds, among others, that Kim was not the prevailing party. The trial court denied Kim’s attorney fees motion reasoning that, because the matter was settled pursuant to an agreement, it was impossible for the court to determine whether there was a prevailing party. Kim appealed.
Specifically, paragraph 2 of the settlement agreement, entitled “Consideration,” states that the $10,000 payment to Kim was “made in full and final settlement and satisfaction of any and all claims Kim has or may have against TAG, excluding attorney’s fees and costs (the attorney’s fees and costs are discussed below).” (Italics added.) Paragraph 3 of the settlement agreement, entitled “No Admissions,” states that neither party was admitting liability and “neither party agrees that the other is the prevailing party. A determination of which, if any, party is the prevailing party will be made by the court as part of [Kim’s] motion for attorneys fees and costs . . . .” Paragraph 19 of the settlement agreement, entitled “Kim’s Attorneys’ Fees and Costs,” states: “Kim hereby reserves his right to make an application to the Court in an attempt to recover his reasonable attorneys’ fees and costs with respect to TAG in connection with his CLRA claim. TAG reserves its right to oppose the motion on grounds it deems appropriate.” Finally, paragraph 22 of the settlement agreement, entitled “Enforcement of Agreement,” provides that “[t]he Parties agree that, pursuant to California Code of Civil Procedure section 664.6, the Court may retain jurisdiction over the Parties to enforce the settlement until performance in full of the terms of this Agreement.”
In Kim I, we concluded that the trial court erroneously believed Kim could not be a prevailing plaintiff under the CLRA solely because the matter was resolved prior to trial by a settlement agreement. (Kim I, supra, 149 Cal.App.4th at pp. 180-181.) We remanded the matter to the trial court to determine whether Kim is a prevailing plaintiff and, if so, the amount of attorney fees he shall recover. (Id. at p. 181.)
Kim’s motion for attorney fees came on for hearing again on May 9, 2007. Counsel for TAG argued that Kim was not the prevailing party because he sought “not only rescis[s]ion of his lease but, you know, every dollar he ever spent on as far back – and when we talk about he got a $68,000 rescis[s]ion benefit, he basically turned in his car early; we paid it off and took the car. We took like a two, three, four, $5,000 loss on that process. We settled this case for less than it cost to defend.” The trial court denied Kim’s request for attorney fees, reasoning: “[Kim] obtained a net monetary recovery through settlement but [TAG] obtained a dismissal of nine of the 10 causes of action prior to settlement. Accordingly, neither party achieved complete recovery on all claims and on balance neither party prevailed sufficiently to justify an award of attorney’s fees.”Kim filed a timely notice of appeal.
DISCUSSION
Kim contends the trial court abused its discretion in denying his motion for attorney fees under the CLRA. He argues that he was entitled to an award of attorney fees based on the trial court’s finding that he obtained a net monetary recovery. We agree.
1. Standard of Review
The trial court’s determination of the prevailing party for purposes of awarding attorney fees is an exercise of discretion, which should not be disturbed on appeal absent a clear showing of abuse of discretion. (Kim I, supra, 149 Cal.App.4th at p. 176.) But, as we noted in Kim I, “discretion may not be exercised whimsically and, accordingly, reversal is appropriate where no reasonable basis for the action is shown.” (Ibid., internal quotations and citations omitted.) Failure to follow applicable legal principles is properly considered an abuse of discretion. (Id. at pp. 176-177.)
Whether Kim is entitled to attorney fees is governed by the CLRA. (Kim I, supra, 149 Cal.App.4th at p. 181.) Section 1780(d) of the CLRA provides: “The court shall award court costs and attorney’s fees to a prevailing plaintiff in litigation filed pursuant to this section. . . .” (Italics added.) Our Supreme Court has observed that “the availability of costs and attorneys fees to prevailing plaintiffs is integral to making the CLRA an effective piece of consumer legislation, increasing the financial feasibility of bringing suits under the statute.” (Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1086.) In Kim I, we held that, consistent with the legislative purpose underlying the statute, an award of attorney fees to “a prevailing plaintiff” in an action brought pursuant to the CLRA is mandatory. (Kim I, at p. 178.)
3. Definition of “Prevailing Plaintiff”
Although the CLRA does not define “prevailing plaintiff,” some courts have applied the general definition of “prevailing party” found in Code of Civil Procedure section 1032, to conclude that a plaintiff is a prevailing plaintiff under section 1780(d) “ ‘if he obtained a “net monetary recovery” on his [CLRA] claim.’ ” (Kim I, supra,149 Cal.App.4th at p. 179, citing Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1154 (Reveles).) Other courts have taken a pragmatic approach, determining prevailing party status may also be based on “ ‘ “which party realized its litigation objectives.” ’ ” (Kim I, supra, at p. 179, citing Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 150 (Graciano).) The pragmatic approach is often taken by courts called upon to define the term “prevailing party” in the context of other fee-shifting statutes. (See, e.g., Elster v. Friedman (1989) 211 Cal.App.3d 1439, 1443-1444 [plaintiffs were the prevailing parties within the meaning of Code Civ. Proc., § 527.6 [injunction prohibiting harassment] because they achieved their litigation objective of enjoining the defendant from harassing them, notwithstanding that the parties entered into a settlement agreement that imposed on both parties reciprocal duties to refrain from harassing one another]; see also Coltrain v. Shewalter (1998) 66 Cal.App.4th 94, 107 [critical issue for determining prevailing party under anti-SLAPP statute is which party realized its objectives in the litigation]; see also Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 571 [within the context of the private attorney general statute (§ 1021.5), the term “prevailing party” means the party that achieves its objectives].)
For purposes of an award of costs pursuant to Code of Civil Procedure, section 1021, section 1032, subdivision (a)(4) defines “prevailing party” as “the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. When any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court . . . .”
In Kim I, we concluded that “while TAG obtained a dismissal in the settlement agreement, Kim obtained many of his litigation objectives including return of the car, cancellation of the lease and a monetary recovery. By analogy to Code of Civil Procedure section 1032, this case therefore falls within the category of ‘situations other than as specified’ in which ‘the “prevailing party” shall be as determined by the court.’ Accordingly, we remand the matter to the trial court to determine whether Kim is a prevailing plaintiff either because he obtained a net monetary recovery or because he achieved most or all of what he wanted by filing the action or a combination of the two.” (Kim I, supra,149 Cal.App.4th at p. 181, italics added.) By phrasing the question to be decided in the disjunctive, we intended to designate three alternate ways Kim might have established prevailing plaintiff status under the CLRA: (1) he obtained a “net monetary recovery;” (2) he achieved “most or all” of his litigation objectives; or (3) he achieved a combination of monetary recovery and litigation objectives.
4. Application to Present Case
Here, the trial court expressly found that Kim obtained a net monetary recovery. Under the reasoning of Kim I, supra, 149 Cal.App.4th at page 181, and Reveles, supra, 57 Cal.App.4th at page 1154, this finding established that Kim was a prevailing plaintiff within the meaning of section 1780(d) of the CLRA. As such, he was entitled to attorney fees. Since the trial court found that Kim obtained a net monetary recovery, we need not decide whether he also established prevailing party status under either of the alternate theories.
We note that TAG argues on appeal that, notwithstanding the trial court’s finding, Kim did not obtain a net monetary recovery. But there is substantial evidence to support the contrary finding by the trial court.
The trial court’s stated reasons for finding Kim was not a prevailing plaintiff notwithstanding the fact that he obtained a net monetary recovery do not compel a contrary result. First, “complete recovery on all claims” is not the correct test. At most, even a plaintiff who has not obtained a net monetary recovery need show only that he achieved most of his litigation objectives to establish prevailing plaintiff status; he need not show “complete recovery on all claims.” (See Graciano, supra, 144 Cal.App.4th at p. 150.)
Second, dismissal of nine out of the ten “causes of action” set forth in the complaint does not preclude Kim from establishing prevailing plaintiff status. This is because, in California, “the invasion of one primary right gives rise to a single cause of action.” (Slater v. Blackwood (1975) 15 Cal.3d 791, 795.) But a plaintiff may seek different forms of relief under different theories for the violation of one primary right. (Ibid.) “[T]he phrase ‘cause of action’ is ‘often used indiscriminately to mean what it says and to mean counts which state differently the same cause of action . . . .’ [Citation.]” (Id. at p. 796.) Applied to the determination of prevailing plaintiff status, this means that a settling plaintiff who does not obtain a net monetary recovery may nevertheless achieve the status of “prevailing plaintiff” under the CLRA if he can show that he obtained his litigation objective by obtaining relief under one theory even though he dismissed counts, which sought either duplicative relief or less important forms of relief. Experience tells us it is not unusual for a plaintiff to succeed on only one of several theories under circumstances in which all would agree that the plaintiff was the prevailing party. For example, the primary right alleged to have been violated in this case was Kim’s right to receive a working automobile in exchange for his lease payments. He sought different forms of relief for the violation of this primary right (e.g., monetary damages, rescission, injunction, etc.) under different theories (e.g., breach of contract, breach of warranty, violation of the Song-Beverly Act and the CLRA, etc.). Even if Kim had not obtained a net monetary recovery, he established his status as a prevailing plaintiff by showing that the relief he did obtain – monetary damages, rescission of the contract, etc. – constituted his primary litigation objectives and that the counts he dismissed sought either duplicative relief (e.g., monetary damages) or relief that was less important than his primary litigation objectives of rescission and restitution (e.g., a civil penalty under the Song-Beverly Act and an order enjoining the defendant’s unlawful methods, acts and/or practices).
[x] TAG’s reliance on Gilbert v. National Enquirer, Inc. (1997) 55 Cal.App.4th 1273 for a contrary result is misplaced. In that case, the court held that trial courts have discretion to conclude that there is no prevailing party for purposes of an attorney fee award under section 3344, subdivision (a) [misappropriation of likeness] following a plaintiff’s voluntary dismissal of the complaint. Gilbert is inapposite because the issue in that case was limited to which party succeeded on a practical level since there was no monetary recovery. Here, by contrast, the trial court found Kim had obtained a net monetary recovery. Having made that finding, the trial court had no further discretion to deny Kim attorney fees as the prevailing plaintiff. Finally, unlike in Gilbert the record here demonstrated that plaintiff in fact achieved most of his litigation objectives.
DISPOSITION
The judgment is reversed and remanded for the limited purpose of directing the trial court to determine the amount of attorney fees Kim shall recover. Kim shall recover his costs on appeal.
WE CONCUR: COOPER, P. J.
Judge of the Los Angeles County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6, of the California Constitution.
I concur in the result. The majority acknowledges – and I write separately to emphasize – that trial courts have very broad discretion in determining which party (if any) is the prevailing party in awarding attorneys’ fees. Moreover, when a plaintiff has sued on ten causes of action and dismissed nine of them, it often will be the case that he is not the prevailing party. On the specific facts of this case, however, I agree with the majority that Kim was entitled to attorneys’ fees under the CLRA. Before suing, Kim asked TAG to take the car back and to refund his money. TAG refused. In the settlement, Kim succeeded in returning the car to TAG and getting his money back.