Allstate Ins. Co. v. Loo, No. A071266

• Court: California Court of Appeals
• Writing for the Court: POCHE; ANDERSON, P.J., and HANLON
• Citation: 54 Cal.Rptr.2d 541,46 Cal.App.4th 1794
• Parties: , 96 Cal. Daily Op. Serv. 5017, 96 Daily Journal D.A.R. 8005 ALLSTATE INSURANCE COMPANY, Plaintiff and Respondent, v. Dennis J. LOO, Defendant and Appellant.
• Docket Number: No. A071266
• Decision Date: 02 July 1996

Page 541

54 Cal.Rptr.2d 541 46 Cal.App.4th 1794, 96 Cal. Daily Op. Serv. 5017, 96 Daily Journal D.A.R. 8005 ALLSTATE INSURANCE COMPANY, Plaintiff and Respondent,
v.
Dennis J. LOO, Defendant and Appellant. No. A071266. Court of Appeal, First District, Division 4, California. July 2, 1996.
As Modified Aug. 1, 1996.

[46 Cal.App.4th 1796] John M. Walker, Law Offices of Patrick Charles Smith, Pleasanton, for Appellant.

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William B. Sloan, Bolinger, Morse & Sloan, Pleasant Hill, for Respondent.

POCHE, Associate Justice.

In this case we consider whether a lessor who prevails in an action in subrogation brought by his lessee's property insurer is entitled to recover attorney fees under a provision in the lease.

BACKGROUND

Allstate insureds Tony and Eleanor Dudley were tenants in an apartment building owned by Loo. After their personal property was destroyed in a fire in the apartment building, they filed a claim with their insurer. After paying the claim Allstate commenced the instant action in subrogation against Loo, asserting causes of action for negligence, failure to disclose a latent defect, and breach of an implied warranty of habitability.

Loo successfully moved for summary judgment. Following entry of judgment, Loo filed a "Motion to Determine Prevailing Party and to Fix Amount of Attorney Fees as Costs in Contract Action," attaching a copy of the residential lease agreement he had with the Dudleys. The lease contained a [46 Cal.App.4th 1797] provision authorizing a "reasonable attorney's fee" to the prevailing party "In any legal action brought by either party to enforce the terms hereof or relating to the demised premises...." Allstate opposed the motion, arguing Loo was not entitled to rely on the attorney fees provision in the lease because Allstate's action against Loo was based in tort, not contract. The trial court gave a different reason for denying Loo's request for attorney fees: "Neither party [pleaded] the existence of a contract containing the provision for attorney's fees." Thereafter, the court took the matter under submission and issued a final ruling denying the motion. This timely appeal by Loo followed.

REVIEW

A. Attorney Fees as an Element of Costs

The trial court concluded that a party seeking to recover attorney fees pursuant to a contractual provision must plead entitlement to attorney fees as an item of damages in order to recover them in California. That is no longer correct.

Under Code of Civil Procedure section 1033.5, subdivision (a)(10), attorney fees, when authorized by contract, statute, or law, are recoverable as an element of costs. The Legislature has further detailed the procedure by which attorney fees as costs may be fixed: upon a noticed motion. (Code Civ. Proc., § 1033.5, subd. (c)(5); Cal. Rules of Court, rule 870.2.)

The trial court's ruling that attorney fees must be pleaded as an item of damages is understandable. Prior to 1990 it was not entirely clear what the proper method was to obtain an award of attorney fees. In particular, there was no agreement about whether such an award should be claimed as an element of damages or as an item of costs. (See, e.g., Bankes v. Lucas (1992) 9 Cal.App.4th 365, 370, 11 Cal.Rptr.2d 723; Genis v. Krasne (1956) 47 Cal.2d 241, 246, 302 P.2d 289; T.E.D. Bearing Co. v. Walter E. Heller & Co. (1974) 38 Cal.App.3d 59, 63, 112 Cal.Rptr. 910.) To end this confusion the Legislature enacted Code of Civil Procedure section 1033.5 and declared: "The Legislature finds and declares that there is great uncertainty as to the procedure to be followed in awarding attorney's fees where entitlement thereto is provided by contract to the prevailing party. It is the intent of [46 Cal.App.4th 1798] the Legislature in enacting this act to confirm that these attorney's fees are costs which are to be awarded only upon noticed motion, except where the parties stipulate otherwise or judgment is entered by default." (Stats.1990, ch. 804, § 2, p. 3552; see also Jue v. Patton (1995) 33 Cal.App.4th 456, 460-461, 39 Cal.Rptr.2d 364.) Thus, the trial court's ruling is wrong.

B. Tort v. Contract

Allstate suggests an alternative basis to support the trial court's ruling: Loo is not

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entitled to recover attorney fees under the lease provision because each of the causes of action asserted was in tort, not contract.

The initial fatal problem with this contention is that the facts do not fit. Allstate did assert a contractual cause of action: breach of the implied warranty of habitability. (Quevedo v. Braga (1977) 140 Cal.Rptr. 143, 72 Cal.App.3d Supp. 1, 7-8.)

The second fatal defect of the argument is that it assumes that if Allstate had sued only in tort the contractual provision for attorney fees would not apply. As the case law makes clear, the test is not whether the cause of action sounds in tort or contract. Instead, the sole question is the intent of the parties: did they intend to authorize the prevailing party to recover its attorney fees for a tort cause of action. (Lerner v. Ward (1993) 13 Cal.App.4th 155, 160-161, 16 Cal.Rptr.2d 486; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342-1343, 5 Cal.Rptr.2d 154.) The answer to that question depends upon the language of the agreement.

For...