Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. CGC-06-454422
Reardon, J.
As the trial court dismissed appellant Prana Growth Fund I’s (Prana) declaratory relief action with prejudice, it also found that respondent David Parkinson was the prevailing party and awarded him $9,495 in attorney fees and costs. (See Civ. Code, § 1717 (section 1717).) On appeal from the attorney fees order, Prana contends that Parkinson was not entitled to attorney fees because (1) Parkinson was not the prevailing party; (2) the scope of the attorney fees provision did not include a landlord’s action for declaratory relief about the landlord’s statutory rights; and (3) the underlying action was not one “on the contract” as the issues did not turn on interpretation of the underlying rental agreement. For his part, Parkinson also seeks an award of attorney fees on appeal. We affirm the trial court’s order and find that Parkinson is entitled to reasonable attorney fees on appeal.
I. FACTS
In July 1998, respondent David Parkinson leased a San Francisco residential dwelling unit on a month-to-month basis from Bahia Vista Apartments, the predecessor-in-interest of appellant Prana, a limited partnership. The lease contained a clause entitling the prevailing party in any action to enforce it to reasonable attorney fees and costs. The unit was subject to San Francisco’s rent ordinance, limiting rent increases. Prana suspected that by 2003, Parkinson had taken up residence in Santa Rosa and was subletting the San Francisco rental unit to others.
In July 2006, Prana filed a complaint for declaratory relief against Parkinson, seeking a determination that he was no longer a permanent resident of the unit within the meaning of San Francisco’s rent ordinance. It sought a ruling that state law permitted it to charge market rent on the unit—approximately $1,950 per month instead of the $1,197.28 in monthly rent that Parkinson was paying for it under the terms of the San Francisco rent ordinance. In September 2006, Parkinson demurred to this complaint, alleging that Prana had failed to state a sufficient cause of action because it had not exhausted its administrative remedies. (See Code Civ. Proc., § 430.10, subd. (e).) The trial court sustained the demurrer, but gave Prana leave to amend the complaint in good faith.
In November 2006, Prana filed a first amended complaint for declaratory relief, adding an allegation that any administrative remedy it may have had was inadequate. Parkinson demurred to the first amended complaint. In December 2006, the trial court sustained this demurrer without leave to amend because of Prana’s failure to exhaust its administrative remedies.
In January 2007, Parkinson moved to be declared the prevailing party in this action, seeking reasonable attorney fees and costs. In February 2007, Prana opposed the motion, arguing that its declaratory relief action did not allege any breach of the lease agreement and that the hourly rate that Parkinson’s counsel sought for his services was excessive. The trial court granted the motion, declaring that Parkinson was the prevailing party in the underlying litigation and awarding him $9,000 in attorney fees and $495 in costs. The action was dismissed with prejudice and Prana was ordered to pay $9,495 in attorney fees and costs. (See Code Civ. Proc., § 581, subd. (f)(1).)
II. ATTORNEY FEES
A. Prevailing Party
Prana contends that Parkinson was not entitled to attorney fees for several reasons. First, it argues that Parkinson was not the prevailing party within the meaning of section 1717. It reasons that Parkinson’s success did not result in a determination of the underlying substantive issue, but merely moved the issue from the trial court to the San Francisco rent board. Thus, it urges us to find that when his demurrer was sustained without leave to amend, Parkinson won only a procedural victory on failure to exhaust administrative remedies grounds, not a substantive success warranting an award of attorney fees. As the issues on appeal involve the interpretation of the lease or applicable statutory law, we conduct an independent review of those issues. (See Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 705.)
The lease stated that if any legal action or proceeding was brought by either party to enforce any part of the lease, the prevailing party was entitled to reasonable attorney fees and costs. When a contract provides for attorney fees to be awarded to any prevailing party, the trial court must award such fees to the prevailing party in an action on the contract to enforce that contract. (§ 1717, subd. (a); see Hsu v. Abbara (1995) 9 Cal.4th 863, 876; Jackson v Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 789.) The trial court determines who is the prevailing party, including the possibility that neither party prevailed on the contract within the meaning of this statute. (§ 1717,subd. (b)(1).) If the matter before the trial court resulted in a simple, unqualified win, the issue of which party prevailed is determined as a matter of law. In such circumstances, the trial court has no discretion to deny a request for attorney fees if the underlying contract contains an attorney fees clause. (Hsu v. Abbara, supra, 9 Cal.4th at pp. 875-876; Jackson v Homeowners Assn. Monte Vista Estates-East, supra, 93 Cal.App.4th at p. 789.)
In the case before us, Parkinson’s defense to the declaratory relief action was an unqualified success. After obtaining an order sustaining his demurrer without leave to amend, the trial court did not merely order the matter transferred to another forum—it dismissed Prana’s action against him. (See Code Civ. Proc., § 581, subd. (f)(1).) This judgment—based on the order sustaining the demurrer without leave to amend—constituted a trial of the merits. (Smith v. City of Los Angeles (1948) 84 Cal.App.2d 297, 302.) Prana did not appeal this judgment, which is now final. Whether we view the issue as a matter of law requiring the application of our independent judgment on appeal or an evaluation of the trial court’s exercise of discretion on the matter, the result would be the same. Prana’s claims that the effect of this dismissal was merely a procedural change to the venue of the action to the rent board notwithstanding, we are satisfied that Parkinson was the prevailing party in the underlying declaratory relief action within the meaning of section 1717.
Thus, two of Prana’s cited authorities in support of this argument differ from the case before us. (See Estate of Drummond (2007) 149 Cal.App.4th 46, 51-54 [order directing that claim be brought in civil action rather than in probate court]; Lachkar v. Lachkar (1986) 182 Cal.App.3d 641, 647-649 [order compelling arbitration].)
B. Authorization for Award
Prana contends that the attorney fees award was unauthorized for two other reasons. First, it asserts that the scope of the attorney fees provision of the lease did not include the action for declaratory relief about the landlord’s statutory rights. It argues that the declaratory relief action was not one to enforce the lease, but one seeking an interpretation of substantive law applicable to that lease. Second, Prana challenges the attorney fees award on the ground that the underlying action was not one “on the contract” within the meaning of section 1717 as the issues did not turn on interpretation of the underlying rental agreement. These two arguments are sufficiently related that we treat them as different ways to state the same basic claim—that the attorney fees clause was not sufficiently related to the declaratory judgment action to warrant application of the attorney fees clause of the lease.
At the hearing on the motion for attorney fees and costs, the trial court considered this argument. It found that the question posed by the declaratory relief action required that Prana put its contractual relationship with Parkinson at issue, which was sufficient to warrant application of the lease’s attorney fees clause. It found that the San Francisco rent ordinance was part of the substantive law that applied to the relationship created and defined by that lease.
We are not persuaded by Prana’s arguments, for several reasons. First, it is clear that section 1717 can apply even if the relief sought in the underlying action was declaratory in nature, as long as that action involves a contract. (Milman v. Shukhat (1994) 22 Cal.App.4th 538, 545; see Harbour Landing-Dolfann, Ltd. v. Anderson (1996) 48 Cal.App.4th 260, 263 [enforcement of rights under lease by means of declaratory relief action]; Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1259.) In the case before us, if Prana had obtained a successful determination of the statutory law, it could have used that ruling to invalidate Parkinson’s rights under the lease. Thus, we are satisfied that the declaratory relief action was one involving the lease such that its attorney fees clause applied. (See Las Palmas Associates v. Las Palmas Center Associates, supra, at p. 1259.)
Second, case authorities that Prana cites in support of its claim are factually distinguishable from the case before us, because they involve fraud causes of action that stemmed from a contract. These cases held that, to the extent that the action sounded in tort, it was not an action to enforce the underlying contract and thus, no contractual attorney fees clause applied. (See, e.g., Gil v. Mansano (2004) 121 Cal.App.4th 739, 742-743; Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 549.) In the case before us, Prana brought an action sounding in contract, not tort. It sought an interpretation of the San Francisco rent ordinance and other statutes as a means to increase the amount of rent it was entitled to demand of Parkinson pursuant to the lease. Parkinson successfully defended this action and obtained a final judgment in his favor. (See pt. II.A., ante.) Although Prana argues that it never interfered with Parkinson’s right to possess the unit, it is clear that the purpose of the declaratory relief action was to obtain a trial court ruling interpreting the law applicable to the lease such that it would have been entitled to dispossess Parkinson. Thus, the cases that Prana cites do not support its claim that the declaratory relief action was separate from an action to enforce the lease.
Third, we are satisfied that the declaratory relief action was one based on the lease. Prana itself concedes that the lease gave “birth” to its relationship with Parkinson. A declaratory relief action may be brought to determine one’s rights under a contract. (Code Civ. Proc., § 1060.) Prana’s declaratory relief action put the amount of rent that could be charged at issue. When Prana brought its action, it put its contractual relationship with Parkinson under the lease at issue. Even though that action sought a ruling on the meaning of the San Francisco rent ordinance, it did so in the context of the contractual relationship created and defined by that lease. The lease entitles Parkinson to an award of reasonable attorney fees if he prevails in “any legal action or proceeding . . . to enforce any part of [the lease] . . . .” The amount of rent to be paid pursuant to the lease is thus a “part” of the lease within the meaning of the attorney fees clause.
For all these reasons, we are satisfied that the issue presented in the declaratory relief action about whether Parkinson was a permanent resident of the leased unit is an action to enforce the contract—that is, the lease. Thus, we find that the declaratory relief action fell within the terms of the lease such that its attorney fees clause applied.
C. Attorney Fees on Appeal
In his brief, Parkinson also asks that he be awarded attorney fees and costs on appeal. The lease provides that the prevailing party in any enforcement action is entitled to recover reasonable attorney fees and costs. A right to an award of attorney fees at trial extends to attorney fees on appeal as well. (See Harbour Landing-Dolfann, Ltd. v. Anderson, supra, 48 Cal.App.4th at p. 263; Milman v. Shukhat, supra, 22 Cal.App.4th at p. 546.) We agree that he is entitled to a reasonable award of attorney fees and costs on appeal. Although we have the power to appraise and fix attorney fees on appeal, we deem it the better practice to remand this matter to the trial court to determine the amount of such fees. (Harbour Landing-Dolfann, Ltd. v. Anderson, supra, 48 Cal.App.4th at p. 263; Milman v. Shukhat, supra, 22 Cal.App.4th at p. 546.)
The order is affirmed. Respondent David Parkinson is also entitled to reasonable attorney fees and costs on appeal. The matter is remanded to the trial court for a determination of the specific amount of attorney fees and costs on appeal to be awarded.
We concur: Ruvolo, P.J. Rivera, J.