Opinion
Case No. EDCV 12-02274 DDP (SPx)
07-30-2013
WUXI CITY RUNYUAN KEJI ZIAOE DAIKUAN CO. LTD., Plaintiff, v. XUEWEI XU, an individual; HAIRONG CAO, an individual; REPET, INC., a California corporation, Defendants.
ORDER DENYING MOTION FOR
ATTORNEY'S FEES
[Dkt. No. 41]
Presently before the court is Defendants' Motion for Attorney's Fees ("Motion"). Having reviewed the parties' submissions, the court DENIES the Motion and adopts the following Order.
I. Background
The facts are recited in the court's Order Granting Motion to Dismiss. (Dkt. No. 38.) Defendants' motion to dismiss was granted with leave to amend because Plaintiff's complaint failed to adequately plead a RICO predicate act that would allow this court to exercise jurisdiction over the action. Plaintiff did not timely file an amended complaint, and the action was dismissed without prejudice. Plaintiff then filed a new complaint (Case No. EDCV 13-944 DDP). A motion to dismiss the new action is under submission.
II. Legal Standard
Federal courts apply state law in determining whether to award attorney's fees in an action on a contract. Ford v. Baroff, 105 F.3d 439, 442 (9th Cir. 1997). Under California law, "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. Cal. Civ. Code § 1717(a) (emphasis added). "The court may also determine that there is no party prevailing on the contract for purposes of this section." Id. § 1717(b)(1).
The California Supreme Court has held that § 1717 entitles a defendant that has "obtain[ed] a simple, unqualified, victory" to recover attorney's fees. Hsu v. Abbara, 9 Cal. 4th 863, 877 (1995).
III. Discussion
For the sake of argument, the court assumes that the contract in question allows for attorney's fees to be collected by the prevailing party on the contract claims. The issue is whether when this court dismissed Plaintiff's complaint without prejudice it conveyed "prevailing party" status upon the Defendants given that the Plaintiff has re-filed the complaint and the dismissal focused on the RICO claims.
A. Prevailing Party
A dismissal without prejudice is not a "simple, unqualified victory" that would entitle a party to attorney's fees. However, a party may be considered to prevail in the absence of a simple unqualified victory. To determine if a party has prevailed in such circumstances, the court compares "the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources." Id. at 891. "The prevailing party determination is to be made only upon final resolution of the contract claims and only by 'a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.'" Id. (emphasis added). A party can be considered a "prevailing party" on a contract claim if the claim is dismissed on procedural grounds as long as the claim is completely resolved in the relevant state. Profit Concepts Mgmt., Inc. v. Griffith, 162 Cal. App. 4th 950 (2008)(holding that attorney's fees were appropriate after a dismissal for lack of personal jurisdiction because the contract claims, although pending in Oklahoma, were completely resolved in California).
While some procedural victories are sufficient to support the award of attorney's fees, obtaining an interim victory does not constitute a "final resolution" of contract claims. In re Estate of Drummond, 149 Cal. App. 4th 46, 49 (2007). In Drummond, a party's contract claim against will contestants was dismissed as having been brought in the wrong forum; the contract claim, the court ruled, must instead be brought in an already pending civil action. Id. The dismissal of the petition did not defeat the party's contract claims; "it merely deflected or forestalled them," and was not a final resolution. Id. at 53.
Here, the dismissal of Plaintiff's complaint was not a final resolution of the contract claims. Like Drummond, Defendants sustained an interim victory that ended as soon as Plaintiff re-filed its claim in this court. Unlike Profit Concepts, in which a contract claim was completely resolved in California allowing for the recovery of attorney's fees, there has been no final resolution of the contract claims in this or any other forum.
B. Contract Claims
Additionally, while a procedural victory is sometimes sufficient to allow for attorney's fees under § 1717, the victory must pertain to the contract claims. See Vistan Corp. v. Fadei, USA, Inc., C-10-04862 JCS, 2013 WL 1345023(N.D. Cal. Apr. 2, 2013). In Vistan, a plaintiff filed an action in federal court that included both a patent infringement claim and a breach of contract claim. Id. at *1. The court granted summary judgment in favor of the defendants on the patent claim and declined to exercise pendant jurisdiction over the contract claims. Id. The court then dismissed the case without prejudice for want of federal jurisdiction. Id. The court did not award attorney's fees because, even though the case was dismissed, the defendants did not prevail on the contract claims; they only "succeeded at moving a determination on the merits [of the contract claims] from one forum to another" Id. at *4.
Similarly, in Idea Place Corp. v. Fried, plaintiffs filed a complaint alleging a breach of contract. 390 F. Supp. 2d 903, 904 (N.D. Cal. 2005). The court dismissed the action for lack of subject matter jurisdiction because the complaint did not state a cause of action arising under federal law. Id. The court in Idea Place did not award attorney's fees, finding that the defendants "were quite obviously not the prevailing party on the contract[]" because the court made no findings on the breach of contract claim. Id. at 905. The court reasoned that a dismissal for lack of jurisdiction "did not foreclose the possibility that Plaintiff could pursue its contract claims in state court," leaving open "which entity [was] the "prevailing party" on Plaintiff's contract action." Id. at 905.
Here, this court dismissed the case after finding that Plaintiff's pleading of its RICO claims was deficient. As in Vistan, in which the court only resolved the infringement claim, this court likewise did not determine which party prevailed on the contract claims. The court determined only that Plaintiff had not stated a claim under RICO and that the court did not otherwise have jurisdiction over the action.
Thus, the court finds that even if Plaintiff had not re-filed its complaint in this court, Defendants cannot be considered a prevailing party with respect to the Plaintiff's contract claims, which this court did not address and which Plaintiff could raise in state court.
IV. Conclusion
For the reasons stated above, the Motion for Attorney's Fees is DENIED. IT IS SO ORDERED.
DEAN D. PREGERSON
United States District Judge