Fifth District Weighs in on Silver Creek Comparative Measuring Test and Hsu Dicta on “Defensive” Cross-Complaints.
Above: Lewis Wiggins cutting off a slice of homecured ham in his smokehouse. June 1940. Marion Post Wolcott, photographer. Library of Congress.
Here is an interesting Civil Code section 1717 decision from the Fifth District, authored by Presiding Justice Hill–a former high school classmate of co-contributor Mike. The case is Boland v. Baker, Case No. F060786 (5th Dist. Dec. 19, 2011) (unpublished).
There, plaintiffs lost a specific performance complaint on a right of first refusal to purchase a piece of real property, while defendants lost a cross-complaint seeking about $500,000 in damages after determining plaintiffs did not breach the contract. After the appellate court reversed a prior finding that plaintiffs were the prevailing parties, the lower court on remand denied defendants’ motion for attorney’s fees on their claim that they prevailed.
This determination was affirmed on appeal
There was no unqualified win by defendants, with these litigants ignoring the fact that they did not prevail as cross-complainants on their cross-complaint. Such a “mixed result” certainly gave the lower court discretion to find that no one prevailed.
However, the appellate panel did have some interesting observations on two other decisions we have posted about before.
First, the panel did question the comparative measuring method used in Silver Creek LLC v. BlackRock Realty Advisors, Inc., 173 Cal.App.4th 1533 (2009) to determine the prevailing party in a real property dispute, especially when Silver Creek did not recover the value of the property in damages but merely obtained a declaration that it had validly terminated the contract for sale of the property. However, it did distinguish Silver Creek because the party recovering the deposit did so on a non-breach basis.
Second, the panel clarified its interpretation of a footnote in Hsu v. Abbara, 9 Cal.4th 863, 875 n.10 (1995), where a trial court can find that an unsuccessful defensive cross-complaint does not give rise to section 1717 fee recovery where it was essentially defensive in nature. The Fifth District found this only gave the trial court discretion (not a mandate to award fees), but only where the cross-complaint sought to undermine or defeat the plaintiff’s contract claim rather than seeking to establish a separate breach of contract. “Where both parties seek affirmative relief based on claims that the other party breached the contract, the success of the competing claims should be compared in determining which party prevailed for purposes of an award of attorney’s fees.” (Slip Opn., p. 11.)