Fifth District So Rules In Unpublished Decision, Rejecting That “Labels” Rather Than Substance Are Governing.
Santisas v. Goodin, 17 Cal.4th 599 (1998) [one of our Leading Cases] held that Civil Code section 1717 bars an action voluntarily dismissed as a result of a settlement to the extent contract claims were involved in the dismissed action. In the next case, Santisas was found applicable, with the appellate court rejecting arguments that the “labels” on causes of action should determine their substance as far as determining if contract or noncontract claims were at issue.
In Norris v. Herrera, Case No. F056374 (5th Dist. Aug. 27, 2009) (unpublished), landlords and tenants were locked in litigation over no-assignment/no-subletting/purchase option clauses in a written lease with a fees provision. Eventually, the parties reached a settlement by which a purchase option was exercised and tenants became owners of the property. The complaint and cross-complaint in the action were voluntarily dismissed pursuant to the settlement. Tenants then moved to recoup $53,532.75 in fees under Civil Code section 1717, arguing they prevailed against the claims in landlords’ complaint. The lower court denied the request, and tenants appealed.
The Fifth District, in a 3-0 decision authored by Acting Presiding Justice Wiseman, affirmed. Landlords’ claims were for ejectment (tort), declaratory relief (equitable, asking for a declaration that tenants breached the lease), and quiet title (real property claim). In arguing for a reversal, tenants claimed that the court must be limited to the labels attached to the causes of action in the complaint, finding that their claims were noncontractual rather than contractual in nature. That did not sit well at all with the Fifth District: “The tenants’ view that the labels control over the substance is not supported by authority or reason.” (Slip Opn., p. 4.) It found that the relief sought by tenants was for nothing but a set of alleged breaches of contract. “ There is no authority for the idea that a lawsuit is a contract action only when the remedies sought are damages or an eviction order, however.” (Slip Opn., p. 7.) Substance prevailed in this one, not the “labels” on the underlying claims.