Associated Convalescent Enterprises v. Carl Marks & Co., Inc.

• Decision Date: 27 June 1973
• Citation: 33 Cal.App.3d 116,108 Cal.Rptr. 782
• Court: California Court of Appeals Court of Appeals
• Parties: ASSOCIATED CONVALESCENT ENTERPRISES, a California corporation, Plaintiff and Respondent, v. CARL MARKS & CO., INC., a New York corporation, et al., Defendants and Appellants. Div. 40814.

Page 782

108 Cal.Rptr. 782

33 Cal.App.3d 116

ASSOCIATED CONVALESCENT ENTERPRISES, a California corporation, Plaintiff and Respondent, v. CARL MARKS & CO., INC., a New York corporation, et al., Defendants and Appellants.

Div. 40814.

Court of Appeal, Second District, Division 3, California.

June 27, 1973.

Hearing Denied Aug. 22, 1973.

Beardsley, Hufstedler & Kemble, Charles E. Beardsley, John Sobieski and Burton J. Gindler, Los Angeles, for defendants and appellants.

Hall, Cunningham & Morrow, and Dion G. Morrow, Los Angeles, for plaintiff and respondent.

SCHWEITZER, Associate Justice.

Action on a promissory note for unpaid principal ($1,040,000), for accrued interest thereon, for attorney's fees, ¹ for foreclosure of the security for the note, for declaratory and equitable relief, for damages for fraud, and for other related relief. Demurrers were sustained to eight of the eleven causes of action. Plaintiff then filed an amended complaint, again setting forth eleven causes of action. Before defendants filed any pleadings thereto, the action was dismissed without prejudice at the request of plaintiff and without notice to defendants. (Code Civ.Proc., § 581, subd. 1.) Defendants thereupon moved for judgment for costs of suit (Code Civ.Proc., § 1032, subd. (a)) and for attorney's fees. (Civ.Code, § 1717.) The motion was granted as to costs of suit, but denied as to attorney's fees on the ground that defendants were not prevailing parties 'in whose favor (a) final judgment is rendered,' as required by the last sentence of section 1717, Civil Code. Defendants thereupon submitted a proposed judgment; the court refused to sign the judgment, stating that the minute order was fully dispositive of the matter and that there was no requirement for signing and filing a judgment. Defendants appeal from that portion of the minute order denying their motion for attorney's fees and for a judgment therefor.

Section 1717, enacted in 1968, provides as follows:

'In any action on a contract, where such contract specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of such contract, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements.

'Attorney's fees provided for by this section shall not be subject to waiver by the parties to any contract which is entered into after the effective date of this section. Any provision in any such contract which provides for a waiver of attorney's fees is void.

'As used in this section 'prevailing party's means the party in whose favor final judgment is rendered.'

Defendants do not question the right of plaintiff to request dismissal of the contract action or the entry of the dismissal by the clerk; they concede that as of the date thereof they had no pleading on file seeking affirmative relief. (Code Civ.Proc., § 581, subd. 1.) Their request for fees is based solely on their contention that by its enactment of section 1717, the Legislature recognized that one-sided attorney's fee clauses can 'be used as instruments of oppression' (Coast Bank v. Holmes, 19 Cal.App.3d 581, 596--597, 97 Cal.Rptr. 30, 39), and intended that fees be awarded under the circumstances of this case.

Although the reasonableness of defendants' requested fee ($31,246.60) is not before us, they stress the extent of legal services required and performed in seeking from us a liberal interpretation and application of section 1717. ²

A dismissal of an action by a plaintiff under section 581, subdivision 1, when a defendant has not sought affirmative relief, must be distinguished from dismissals entered by order of court pursuant to other provisions of the code. It is available to plaintiff as a matter of right and is accomplished by filing with the clerk a written request therefor. If in proper form, the dismissal is effective immediately. (Egly v. Superior Court, 6 Cal.App.3d 476, 479--480, 86 Cal.Rptr. 18.) The entry is a ministerial, not a judicial, act, and no appeal lies therefrom (Cook v. Stewart McKee & Co., 68 Cal.App.2d 758, 760--762, 157 P.2d 868; see generally, 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 58, subd. (d), p. 4074.) Following entry of such dismissal, the trial court is without jurisdiction to act further in the action (Gherman v. Colburn, 18 Cal.App.3d 1046, 1050, 96 Cal.Rptr. 424; Cook v. Stewart McKee & Co., Supra, 68 Cal.App.2d 758, 760--762, 157 P.2d 868) except for the limited purpose of awarding costs and statutory attorney's fees. (See Hopkins v. Superior Court, 136 Cal. 552, 553--554, 69 P. 299; MacLeod v. Tribune Publishing Co., 157 Cal.App.2d 665, 668, 321 P.2d 881; Spinks v. Superior Court, 26 Cal.App. 793, 795--796, 148 P. 798.)

The sole purpose of section 1717 is to transform a unilateral contract right to attorney's fees 'into a reciprocal provision giving the right to recover fees to whichever party prevails (in the contract action).' (San Luis Obispo Bay Properties, Inc. v. Pacific Gas & Elec., 28 Cal.App.3d 556, 570, 104 Cal.Rptr. 733, 743; see also Arnold v. Browne, 27 Cal.App.3d 386, 398, 103 Cal.Rptr. 775; Coast Bank v. Holmes, Supra, 19 Cal.App.3d 581, 596, 97 Cal.Rptr. 30; Review of Selected 1968 Code Legislation (Cont.Ed.Bar) pp. 35--36.) Defendants, therefore, had a statutory right to attorney's fees if they could establish that they were the prevailing parties within the meaning of section 1717. Since such issue required a judicial determination, any order made with respect thereto is appealable as a final determination on a collateral matter, severable from the general subject of the litigation. (See Spencer v. Spencer, 252 Cal.App.2d 683, 688--691, 60 Cal.Rptr. 747; see also cases collected in 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, §§ 38--41, pp. 4052--4056.)

Although we recognize that a voluntary dismissal may have some of the attributes of a final judgment, we doubt that the Legislature ever intended that a ministerial, non-judicial act by a clerk, which 'leaves the defendant as though he had never...