Fourth District, Division 1 Rejects “You Won One, I Won One” Scoreboard Approach to Section 1717.
This next case shows that appellate courts do indeed apply a pragmatic test when deciding whether a “prevailing party” determination rightfully gauged who obtained greater relief for purposes of awarding attorney’s fees under Civil Code section 1717. (For more discussion of the pragmatic test, go to our Leading Case list and locate Hsu v. Abbara, 9 Cal.4th 863, 875-877 (1995).)
Silver Creek, LLC v. Blackrock Realty Advisors, Inc., Case No. D052587 (4th Dist., Div. 1 May 20, 2009) (certified for publication) involved a situation where a trial court determined no party prevailed for section 1717 fee recovery purposes even though seller obtained its objective of keeping properties worth $29.75 million but having to refund a $1.13 million purchase deposit to the unsuccessful buyer. (During court testimony, seller’s witnesses indicated that seller’s goal was to get the properties back on the market, not keep buyer’s deposit.) Because each side had won an issue, the lower court concluded there was no unqualified “winner.”
That determination was reversed on appeal.
Justice McIntyre, on behalf of a 3-0 panel of the Fourth District, Division 1, concluded that the deposit issue was a secondary concern and controlled by clear language in the agreements that mandated return to the buyer if the purchase transaction did not go forward. The greater and most important issue to the parties was the $29.75 properties issue, with seller obtaining its litigation objective of getting the properties back. The trial court “oversimplified its duties by counting the number of contract claims presented and essentially declaring a tie because each party won one of the claims presented for resolution.” (Slip Opn., at p. 8.)
Buyer argued that the trial court punished it improperly for its litigation motives. (See Hsu, supra, 9 Cal.4th at 877 [litigation tactics should not be part of the section 1717 evaluation calculus].) However, nothing in the record demonstrated that this was the case.
So, the denial of fees was reversed, with the matter remanded for the lower court’s fixing of fees in favor of seller. The Court of Appeal eschewed a “scoreboard approach” to determining the prevailing party for section 1717 purposes.