Dorman v. DWLC Corp.

Decision Date27 June 1995
Docket NumberNo. B072335,B072335
Citation42 Cal.Rptr.2d 459,35 Cal.App.4th 1808
CourtCalifornia Court of Appeals Court of Appeals
Parties, 95 Daily Journal D.A.R. 8440 Morton DORMAN, Plaintiff, Respondent and Cross-Appellant, v. DWLC CORPORATION, et al., Defendant, Appellant and Cross-Respondent.

Ervin, Cohen & Jessup and Ronald M. St. Marie, Beverly Hills, for defendant, appellant and cross-respondent.

Robert Marc Hindin, Los Angeles, for plaintiff, respondent and cross-appellant.

HASTINGS, Associate Justice.

This appeal and the related cross-appeal involve the sufficiency of monetary damages awarded to a landlord after a long-time commercial tenant vacated and left the premises in disrepair. The property in question is a commercial building on La Cienega Boulevard in Culver City, which was operated at all relevant times as the Dorman-Winthrop men's clothing store.

Appellant and cross-respondent, the tenant, is a corporation named DWLC Corporation (hereinafter referred to as Tenant). Respondent and cross-appellant, Morton Dorman, was the landlord at all relevant times (hereinafter referred to as Landlord). The lease agreement was entered into in 1981. It expired by its own terms in May 1989, and then became a month-to-month tenancy subject to essentially the same terms and conditions but with an increase in rent of almost $6,000 per month.

In February 1990, Landlord entered into an escrow for the sale of the building to Frank Festa (Buyer). Shortly thereafter, on February 28, 1990, Tenant moved out, leaving the premises in a state of disrepair. Landlord ultimately expended approximately $17,000 to repair and clean up the premises and also was required to reduce the purchase price by $31,200 for the Buyer's expenditures in installing a new roof and a new air conditioning system.

Landlord then sued Tenant in Los Angeles Superior Court, seeking $50,000 plus attorney fees and costs. After unsuccessful attempts at settlement and court-ordered arbitration, the matter was tried before the court and the judge awarded Landlord damages in the amount of $22,910 for cleaning, necessary repairs to the roof, electrical system and air conditioning, plus prejudgment interest on the entire amount from the date suit was filed. It denied Landlord's request for attorney fees and costs.

On appeal, Tenant contends that the court erred in calculating the damage award for the roof and in awarding prejudgment interest. In its cross-appeal, Landlord contends the court should have awarded a greater amount for damages to the roof, air conditioning and electrical systems and that the court erred in denying Landlord its attorney fees and costs.

In the unpublished portion of this opinion, we uphold the award of damages to respondent and reverse the award of prejudgment interest. In the published portion of this decision, we reverse that portion of the judgment denying an award of attorney fees and costs. The matter is then remanded to the trial court for further proceedings.

DISCUSSION

A. & B. **

C. LANDLORD'S ATTORNEY FEES

a. Should attorney fees have been added to the base judgment?

Landlord filed suit in superior court, seeking over $50,000 in damages plus attorney Landlord argues that the trial court erred by not granting attorney fees pursuant to Civil Code section 1717 (hereinafter section 1717) and adding them to the judgment before determining whether the judgment exceeded the municipal court jurisdictional limit. Tenant urges that Code of Civil Procedure section 1033, subdivision (a) (hereinafter section 1033(a)) takes precedence over section 1717, and, hence, because the net judgment was less than $25,000, the trial court did not err.

                fees and costs.  The jurisdictional minimum amount in controversy for a lawsuit in superior court is $25,000.  (Code Civ.Proc., § 86.)   During a pretrial settlement attempt, the court had indicated it thought the value of the case was potentially $38,000.  However, the case did not settle.  When trial commenced, the court indicated to the parties:  "[B]oth sides were advised in chambers that, first, if the [Landlord] recovers less than the jurisdictional amount of this Court, this Court is entitled to deny the [Landlord] any costs and second, if the [Landlord] recovers less than whatever amount was awarded at the arbitration proceeding, the [Tenant] is entitled to costs and that includes attorneys fees.  That's made known." 2  After the close of evidence and prior to argument, the court evaluated the damages to be approximately $26,400.  After argument, in open court, the court indicated [35 Cal.App.4th 1813] damages were $21,200.  The ultimate judgment rendered was $22,910.  In the judgment and Statement of Decision, the following is included:  "The court, exercising its discretion, will not award [Landlord] costs or attorneys fees.  (CCP 1033(a))."
                

We have found no cases discussing which statute prevails under the circumstances presented where a party is clearly a prevailing party under both statutes, but the primary damages rendered are within the jurisdictional limits of the municipal court. Each statute incorporates the concept of prevailing party as the key to recovery of fees or costs.

Section 1033(a) provides: "In the superior court, costs or any portion of claimed costs shall be as determined by the court in its discretion in accordance with Section 1034 where the prevailing party recovers a judgment that could have been rendered in a court of lesser jurisdiction." (Italics added.) 3 The term "prevailing party" is defined in Code of Civil Procedure section 1032: "(a) As used in this section, unless the context clearly requires otherwise: [p] ... [p] (4) 'Prevailing party' includes the party with a net monetary recovery...." Code of Civil Procedure section 1033.5 lists what items the Legislature has determined to be allowable costs pursuant to section 1032, and includes attorney fees when authorized by contract.

Section 1717, subdivision (a) provides: "In any action on a contract, where the contract specifically provides that attorney fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the prevailing party on the contract ... shall be entitled to reasonable attorney's fees in addition to other costs...." (Italics added.) 4

The recent case of Hsu v. Abbara (1995) 9 Cal.4th 863, 39 Cal.Rptr.2d 824, 891 P.2d 804 dealt with discretion of the court in determining whether a party was a "prevailing party" for purposes of section 1717. The court determined that the trial court has no discretion to deny attorney fees to a clearly prevailing party where the contract sued upon provides for attorney fees: "Here, the judgment was a 'simple, unqualified win' (Deane Gardenhome Assn. v. Denktas [1993] 13 Here, there is no doubt but that Landlord was the prevailing party pursuant to Hsu, and as defined within section 1032. Therefore, we must reconcile which statute, section 1033(a) or section 1717, prevails under the circumstances presented.

Cal.App.4th 1394, 1398, 16 Cal.Rptr.2d 816) for the Abbaras on the only contract claim between them and Hsus. In this situation, the trial court had no discretion to deny the Abbaras their attorney fees under section 1717 by finding, expressly or impliedly, that there was no party prevailing on the contract. The record contains no substantial evidence to support such a finding." (Id. at p. 876, 16 Cal.Rptr.2d 816.)

"We begin with the fundamental rule that a court 'should ascertain the intent of the Legislature so as to effectuate the purpose of the law.' [Citation.] In determining such intent '[t]he court turns first to the words themselves for the answer.' [Citation.] ... Moreover, the various parts of a statutory enactment must be harmonized by considering the particular clause or section in the context of the statutory framework as a whole. [Citations.]" (Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, 514 P.2d 1224.)

In 1986, section 1717 provided that a party shall be entitled to "reasonable attorney's fees in addition to costs." The statute was amended in 1987 to read: "reasonable attorney's fees in addition to other costs." (Stats.1987, ch. 1080, § 1, italics added.) This evidences an intent by the Legislature to consider attorney fees awarded pursuant to contract as costs.

Before 1990, section 1033.5(a) provided, in pertinent part, as follows: "(a) The following items are allowable as costs under Section 1032: [p] ... [p] (10) Attorney fees authorized by statute." In 1990, the Legislature amended the section so that at the time this action was tried it read as follows: "(a) The following items are allowable as costs under Section 1032: [p] ... [p] 10. Attorney fees, when authorized by any of the following: [p] (A) Contract. [p] (B) Statute. [p] (C) Law." (Stats.1990, ch. 804, (A.B. 331) § 1, italics added.)

By these amendments, we conclude that the Legislature intended that an award of attorney fees pursuant to section 1717 should be in harmony with the statutory scheme relating to costs contained in the Code of Civil Procedure, sections 1032, et. seq. Therefore, discretion to award attorney fees pursuant to section 1717 is controlled by the provisions of section 1033 in that situation where the primary damages awarded are less than the jurisdictional limit of a court of lesser jurisdiction.

We conclude that Tenant is correct in its interpretation of the statutes and the trial court is not required to add a potential award of attorney fees, pursuant to section 1717, to the damage award before determining whether or not the prevailing party has recovered a judgment in excess of jurisdictional limits. However, that does not mean that the court need not consider the amount of reasonable fees or costs claimed when exercising its discretion...

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