Fourth District, Division One Reverses Fee Denial Based on Hsu v. Abbara.
We survey unpublished decisions because they frequently reinforce distinctions that get lost in translation because of the diffuse opinions on the “prevailing party” concept in California attorney’s fees award jurisprudence. The next case reminds us that the “prevailing party” determination means that the proper focus must remain on results reached under the contract-based claims, not the contract winner’s success or failure on noncontract claims.
FDIC v. Dintino, Case No. D051447 (4th Dist., Div. 1 Sept. 9, 2008) (unpublished) involved a borrower who had prevailed against the lender on a breach of contract cause of action. However, borrower did not do so well on lender’s unjust enrichment claim, with lender recovering over $415,000 on its unjust enrichment claim. Borrower moved for attorney’s fees of $41,285.98 and $7,000 in costs based on a fee clause in the promissory note, contending he was the prevailing party under Civil Code section 1717 for having been the victor on bank’s contract claim. The trial court denied the fee request, explaining that bank was the prevailing party by having “achieved its main litigation objectives.”
Borrower appealed both the merits and the fee denial. He lost the merits appeal, but the Fourth District, Division One reversed the order refusing to grant borrower an award of attorney’s fees.
Justice McDonald—writing for a 3-0 panel—found that borrower was entitled to an award of reasonable attorney’s fees for prevailing on the contract claim. Hsu v. Abbara, 9 Cal.4th 863, 873-874 (1995) [one of our Leading Cases] noted that in 1987 the Legislature amended Civil Code section 1717 to replace the term “prevailing party” with “prevailing party on the contract,” “evidently to emphasize that the determination of prevailing party for purposes of contractual attorney fees was to be made without reference to the success or failure of noncontract claims.” Because a trial court has no discretion to deny fees to a clear winner (such as borrower on bank’s contract claim), borrower was entitled to a fee recovery.
However, the appellate panel would not simply award the requested $48,285.98 in fees and costs on a carte blanche basis. Justice McDonald, on behalf of the 4/1 panel, remanded to the trial court with directions to (1) award reasonable fees; and (2) apportion fees and costs between those expended against the contract claim and those incurred in defending the noncontract causes of action. Also, borrower was awarded reasonable fees for prevailing on appeal.
BLOG OBSERVATION #1—The Court of Appeal did cite to the leading apportionment cases, which we repeat here: PM Group, Inc. v. Stewart, 154 Cal.App.4th 55, 68-69 (2007); Erickson v. R.E.M. Concepts, Inc., 126 Cal.App.4th 1073, 1083-1086 (2005); Akins v. Enterprise Rent-A-Car Co., 79 Cal.App.4th 1127, 1133 (2000); Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1111 (1996); Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129 (1979) [another one of our Leading Cases].
BLOG OBSERVATION #2—Dintino also had two merits rulings of interest: (1) it expressly disagreed with the conclusion reached in Sierra Craft, Inc. v. Magnum Enterprises, Inc., 64 Cal.App.4th 122 (1998) that a summary judgment denial can only be reviewed by extraordinary writ petition, determining that the denial can be challenged upon review of the ultimate judgment; and (2) it decided that the “discovery accrual” rule applied to borrower as far as determining when the applicable three-year statute of limitations (Code Civ. Proc., sec. 338, subd. (d)) began running on lender’s unjust enrichment claim.