Local Santa Ana Appellate Court Follows Santisas.
Santisas v. Goodin, 17 Cal.4th 599 (1998) is one of our Leading Cases, where the California Supreme Court held that contractual fees are not available under Civil Code section 1717(b)(2) where a case has been voluntarily dismissed or dismissed pursuant to a settlement of the case (unless the settlement reserves the fees determination for a later time). Santisas and its progeny were followed recently by our local Fourth District, Division 3 appellate court in Kato v. Superior Court, Case No. G040272 (4th Dist., Div. 3 Feb. 23, 2009) (unpublished).
There, plaintiffs voluntarily dismissed an action with claims for declaratory relief and injunction (based on two independent contractor agreements) after losing a preliminary injunction motion. Defendant sought routine costs as well as an award of attorney’s fees under Civil Code section 1717, both of which totaled $174,062.76. The trial court denied both requests, and defendant appealed (even though the appellate panel treated it as a petition for writ of mandate, as it was entitled to do).
The Fourth District, Division 3, in a 3-0 opinion authored by Justice Fybel, sustained the fee denial and overturned the decision to deny costs.
The fee denial was easily sustainable under Santisas because plaintiff did request dismissal, such that it was voluntary in nature. (Marina Glencoe, L.P. v. Neue Sentimental Film AG, 168 Cal.App.4th 874, 877 (2008).) Defendant then argued that the claims were not “on a contract” within the meaning of section 1717(a). Not persuasive, said the appellate panel. Rather, the declaratory relief claim was “on a contract” (Kachlon v. Markowitz, 168 Cal.App.4th 316, 348 (2008); Exxess Electronixx v. Heger Realty Corp., 64 Cal.App.4th 698, 707 (1998)), as was the injunction that was based on the two agreements (Kachlon v. Markowitz, supra, 168 Cal.App.4th at 348).
However, a different result was necessary with respect to the costs denial. Code of Civil Procedure section 1032 did make defendant a prevailing party for routine costs after plaintiffs’ dismissal. (See consistent cases listed in our category, “Costs.”) Although the trial court denied costs based on granting a motion to compel arbitration by which it felt jurisdiction was lost, the appellate panel did not agree: “Neither party argues the trial court lacked such jurisdiction to award [defendant] court costs, or cites any legal authority on this issue. [Defendant] sought costs after plaintiffs voluntarily dismissed the entire Orange County action while discovery was in progress and before the arbitration itself had occurred. Under the circumstances we conclude [defendant] was entitled to court costs under Code of Civil Procedure section 1032, subdivision (b).” (Slip Opn., at p. 10.)