Damian v. Tamondong

• Citation: 77 Cal.Rptr.2d 262,65 Cal.App.4th 1115
• Decision Date: 29 July 1998
• Docket Number: No. A076754,A076754
• Court: California Court of Appeals Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 5904, 98 Daily Journal D.A.R. 8163 L. DAMIAN, Plaintiff and Respondent, v. Romana D. TAMONDONG, Defendant and Appellant.

Page 262

77 Cal.Rptr.2d 262

65 Cal.App.4th 1115, 98 Cal. Daily Op. Serv. 5904,

98 Daily Journal D.A.R. 8163

L. DAMIAN, Plaintiff and Respondent, v. Romana D. TAMONDONG, Defendant and Appellant.

No. A076754.

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

July 29, 1998.

As Modified on Denial of Rehearing July 27, 1998.

Review Denied Oct. 14, 1998.

Andrew J. Ogilvie, San Francisco, for Defendant and Appellant.

Eskanos & Adler, Barry Adler, Crosby, Heafey, Roach & May, John J. Horton and Kathy M. Banke, Oakland, for Plaintiff and Respondent.

PHELAN, Presiding Justice.

I. INTRODUCTION

Pursuant to rule 63 of the California Rules of Court, this case was certified by the Appellate Department of the San Francisco Superior Court for our review. It presents an issue of first impression: Whether the defendant in a deficiency action brought under the Rees-Levering Automobile Sales Finance Act (Civ.Code, § 2981 et seq.) (hereinafter, the Rees-Levering Act or the Act) ¹ can be the "prevailing party" for purposes of awarding attorney fees pursuant to section 2983.4 ² where, prior to trial, the plaintiff has voluntarily dismissed the underlying contract-based action without prejudice.

Because neither the Rees-Levering Act nor section 2983.4 defines the term "prevailing party," respondent L. Damian urges us to look to section 1717, subdivision (b)(2)--which provides that there is "no prevailing party for purposes of [section 1717]" where an action has been voluntarily dismissed--and, on that basis, affirm the order of the municipal court denying appellant Romana Tamondong's request for attorney fees. ³ In a supplemental letter brief, Damian further contends that our Supreme Court's recent decision in Santisas v. Goodin (1998) 17 Cal.4th 599, 71 Cal.Rptr.2d 830, 951 P.2d 399 (Santisas ) compels such a result.

Tamondong claims she is a "defendant in whose favor a dismissal [was] entered" within the meaning of Code of Civil Procedure section 1032, subdivision (a)(4), and is, thus, a "prevailing party" entitled to an award of attorney fees "as a matter of right" (id., subd. (b)), and as an element of her "costs" (id., § 1033.5, subd. (a)(10)(B)). In her supplemental letter brief, Tamondong contends that Santisas has no bearing on this case because the source of her right to recover attorney fees is not a contract, but rather a fee-shifting statute, i.e., section 2983.4.

Relying on Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 26 Cal.Rptr.2d 758 (Heather Farms ) and its reading of the legislative history of section 2983.4, the appellate department rejected both parties' arguments ⁴ and held instead, without elaboration, that the determination of the "prevailing party" issue under a fee-shifting statute such as section 2983.4 must be resolved using a "pragmatic approach," i.e., a determination of "which party had prevailed on a practical level." (Heather Farms, supra, at p. 1574, 26 Cal.Rptr.2d 758.) The appellate department was concerned, inter alia, with the "potential for abuse" by defendant dealers to which the Rees-Levering Act attorney fees provision was originally addressed, that is, the " '... practice of fighting all cases brought against them ... as a matter of principle, to serve notice on attorneys who handle such cases on behalf of buyers that they will, regardless of the merits of the case, be involved in lengthy, expensive, time-consuming litigation....' " Apparently, the appellate department believed that, unless a fee award is available following a pretrial dismissal, dealers "could effectively thwart section 2983.4 by pursuing lengthy, expensive and meritless litigation up until the date of trial, then dismiss the action with no risk of adverse financial consequences."

We agree with the appellate department that section 1717(b)(2) does not bar a statutory award of attorney fees under section 2983.4 for a defendant in whose favor a dismissal has been entered in an action on a contract subject to the Rees-Levering Act, and that the trial court's interpretation of section 2983.4 would undermine the Legislature's purpose in enacting a bilateral attorney fees provision for Rees-Levering Act cases. Accordingly, we affirm the judgment of the appellate department and remand for a determination on the merits of Tamondong's fee petition.

II. FACTUAL AND PROCEDURAL BACKGROUND

The underlying facts of this case are straightforward and undisputed. In May 1994, Tamondong purchased a car from Melody Toyota pursuant to a "Re-Computed (Add-On) Interest Motor Vehicle Contract and Security Agreement" (the sales contract). Although Damian admits the sales contract was subject to the Rees-Levering Act, it contained a one-sided attorney fees clause, authorizing an award of fees only for the seller (or its assignees) in the case of default. Specifically, in a paragraph entitled "Default," the sales contract provided: "You agree that upon your default we shall be entitled to recover from you our reasonable collection costs, including, but not limited to, an attorney's fee...."

Damian, acting as the "nominee" of Bank of America, the lender to which Melody Toyota assigned its rights under the sales contract, filed a complaint in municipal court to collect a deficiency judgment after the bank repossessed and resold the vehicle. Tamondong retained an attorney, who spent approximately 54 hours actively defending the deficiency action. Damian voluntarily dismissed the action pursuant to Code of Civil Procedure section 581, subdivision (b), literally on the eve of trial. Tamondong's objections to the dismissal were overruled, and she does not challenge that ruling on appeal.

Following dismissal, Tamondong filed a motion for an award of attorney fees and costs pursuant to section 2983.4, and subdivisions (a)(10)(B) and (c)(5) of section 1033.5 of the Code of Civil Procedure. Damian raised no specific objection to Tamondong's request for non-attorney fee costs, but opposed her motion on the ground that section 1717(b)(2) precludes an award of attorney fees where there has been a voluntary dismissal. The trial court agreed with Damian and denied Tamondong's motion in its entirety. Tamondong appealed to the appellate department of the superior court. The appellate department vacated the trial court's order, and remanded for a determination, using a "pragmatic approach" based on "an analysis of the relevant facts at the trial level," whether Tamondong was the "prevailing party" in the action.

III. DISCUSSION

A. Standard of Review.

This case involves the application of various statutes to undisputed facts which, the parties agree, calls for independent review. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 699, 170 Cal.Rptr. 817, 621 P.2d 856; Tobin v. Oris (1992) 3 Cal.App.4th 814, 825, 4 Cal.Rptr.2d 736.)

B. Section 1717(b)(2) Does Not Bar a Fee Award Where the Prevailing Party's Right to Recover Fees Arises Under a Fee-Shifting Statute.

Damian provides excerpts from the legislative history of the Unruh Act (§ 1801 et seq.), the Rees-Levering Act, and section 1717, in support of a claim that the attorney fees provisions of these statutes was intended to correct a long-standing problem for consumers in California: a lack of reciprocity in attorney fees provisions in consumer credit agreements. On this basis, Damian contends that we must construe the term "prevailing party" as having the same definition in each of these statutes. More accurately, Damian urges us to import the definition found in section 1717(b)(2) into section 2983.4, and find that Tamondong cannot, as a matter of law, be the prevailing party after dismissal of this Rees-Levering Act case. We reject this argument.

In 1959, as part of the Unruh Act, the Legislature enacted section 1811.1 which provides, in relevant part: "Reasonable attorney's fees and costs shall be awarded to the prevailing party in any action on a contract or installment account subject to the provisions of [the Unruh Act] regardless of whether such action is instituted by the seller, holder or buyer." (Stats.1959, ch. 201, § 1, p. 2105, eff. Jan. 1, 1960.)

The Legislature next enacted the Rees-Levering Act, which extended many of the consumer protection provisions of the Unruh Act to agreements for motor vehicle sales and financing. (See 10 UCLA L.Rev. (1962) 125, 126.) One such provision was codified as section 2983.4, which provides, in relevant part: "Reasonable attorney's fees and costs shall be awarded to the prevailing party in any action on a contract or purchase order subject to [the Rees-Levering Act] regardless of whether such action is instituted by the seller, holder or buyer." (Stats.1961, ch. 1626, § 4, p. 3539, eff. Jan. 1, 1962.) This provision was designed to rectify the universal practice of including in standard form conditional sales contracts a provision for an award of attorney fees and court costs to a seller who sued a buyer to enforce its rights under the contract, but failing to provide a corresponding right for buyers when they successfully brought or defended an action under the contract. (10 UCLA L.Rev., supra, at pp. 153-154; 15 Assem. Interim Com. Rep. No. 24, Interim Com. on Finance and Insurance, Rep. on Automobile Financing (Dec. 1960) pp. 29-30 (hereinafter, Final Report).) Such one-sided attorney fees provisions, coupled with other oppressive litigation tactics by dealers, had made it difficult or impossible for consumers with good defenses to find attorneys willing to represent them in prosecuting or defending litigation arising from automobile purchases. (Final Report, supra, at pp. 29-31.) Apparently, the Legislature decided the best way to address this problem was to give buyers "an effective means of self-help through the legal process," including a statute authorizing an award of attorney fees to consumers who prevailed in an action on the sales contract. (Final Report, ...