Neither One Obtained Sought-After Litigation Objectives.
When a lower court has discretion to decide who the prevailing party is, unless the facts show otherwise, the abuse of discretion generally applies on appellate review and dictates the result. That is what happened here.
In Barez v. Ni, Case No. H037572 (6th Dist. July 31, 2013) (unpublished), no one was found to be the prevailing party so as to obtain an attorney’s fees award under Ciivl Code section 1717. Landlord sued for prospective rent after tenant cancelled the lease, and tenant cross-complained for fraud (dismissing this prior to trial) and for recovery of an approximate $10,000 security deposit. The jury denied relief to both parties, finding neither had fulfilled their obligations under the contract so — ta da! — neither party obtained relief on their respective complaints.
Then, the fee fun began. Tenant sought to recover $142,542 in fees, inspiring a dueling motion of $113,681 by landlord–both claiming to prevail under section 1717, a proposition rejected by the trial court in awarding no fees to either side. (One thing we all can agree upon is that each side spent a fair piece on fees, no?)
Landlord rested on the decision, but tenant appealed. Tenant fared no better.
The appellate court, although not requiring arm wrestling to break the dispute (because, after all, reviewing courts in California or the U.S. do not require this), did agree there was no clear winner such that the lower court’s discretionary call had to prevail. The lower court’s order is presumed correct, and nothing in the record suggested the court failed to understand what it had to do in the “prevailing party” analysis. (Cussler v. Crusader Entertainment, 212 Cal.App.4th 356, 367 (2012).)
Beyond that, tenant’s cross-complaint did not have to be brought such that it was not purely defensive in nature. However, even where a cross-action is essentially defensive in nature, a lower court still has discretion in determining who prevailed in the overall scheme of things–something tenant failed to persuade the lower court happened. Not only that, but tenant did not succeed in even obtaining a return of the deposit, so that this was reason enough to find that tenant did not achieve its main litigation objective.
Moral of the story: both sides go home, eat your fees, and wake up to another day of business/other activities.