Murray v. JRW Construction, Inc., A116919 (Cal. App. 3/27/2008), A116919

• Decision Date: 27 March 2008
• Docket Number: A116919
• Court: California Court of Appeals Court of Appeals
• Parties: JUDITH MURRAY et al., Plaintiffs, Cross-defendants and Appellants, v. JRW CONSTRUCTION, INC., Defendant, Cross-complainant and Respondent.

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JUDITH MURRAY et al., Plaintiffs, Cross-defendants and Appellants, v. JRW CONSTRUCTION, INC., Defendant, Cross-complainant and Respondent.

A116919

Court of Appeals of California, First Appellate District, Division Two

March 27, 2008

NOT TO BE PUBLISHED

Appeal from the Alameda County, Super. Ct. No. 2002-066360.

KLINE, P.J.

This is the second appeal in a case arising from construction work performed by respondent JRW Construction, Inc. (JRW), for appellants Judith, Kevin and Dennis Murray (collectively the Murrays). On the previous appeal by JRW, this court affirmed a judgment determining that the Murrays owed JRW $180,001.33 in satisfaction of a mechanics lien, after subtraction of amounts JRW owed the Murrays due to improperly performed construction work and other issues. The Murrays sought attorney fees on the appeal. The trial court initially granted the fee request, then reversed itself on JRW's motion for a new trial and to vacate. The Murrays contend the trial court erred in granting the new trial motion and denying their request for attorney fees.

STATEMENT OF THE CASE AND FACTS

The facts underlying the parties' dispute are set forth in full in our opinion on the prior appeal, Murray v. JRW Construction, Inc. (May 15, 2006, A108956) [nonpub. opn.]. The Murrays hired JRW to perform repairs on an apartment building in Alameda. JRW stopped work on the project before completion due to the Murrays' failure to make payments due under the parties' contracts, and filed a mechanic's lien in the amount of $409,533.33. The Murrays filed a complaint for breach of contract, negligence, declaratory relief and negligent construction against JRW, seeking general and punitive damages, interest, and a declaration that JRW had no claim or right to foreclose the mechanic's lien. JRW cross-complained for breach of contract. The trial court determined that the Murrays had breached the contracts by not making required payments, and that JRW was negligent in performing under the contract, in that it performed work in contravention of building plans and specifications and industry standards. The court ordered that JRW's mechanic's lien be reduced by the amount it found to be the Murrays' damages for JRW's negligence, an amount due to JRW under a contractual provision the court found unconscionable, and an amount the court found represented labor, services, materials and equipment JRW had not actually provided. This resulted in a judgment for JRW in the amount of $180,001.33. At a hearing on JRW's motion for clarification, the trial court made clear that it intended to compensate both parties to a degree because both were at fault. The court ordered that "neither party prevailed in this action and that [the Murrays are] to pay [JRW] $180.011.33 in satisfaction of Mechanic's lien."

JRW appealed, challenging the manner in which the trial court had calculated the damages it owed to the Murrays and arguing the trial court improperly failed to award interest. This court affirmed, and the remittitur provided for the Murrays to recover their costs.

On August 23, 2006, the Murrays filed a memorandum of costs and motion for attorney fees on the appeal. The Murrays argued that they were entitled to attorney fees as the prevailing party on the appeal, because the underlying construction contract provided for the prevailing party to recover attorney fees. JRW did not oppose the Murrays' request for costs on appeal. With respect to the motion for attorney fees, however, JRW argued there was no basis for an award because there was no prevailing party on the contract containing the fee provision, noting that neither party had appealed the trial court's determination in this respect.

After a hearing on September 29, 2006, the trial court granted the Murrays' motion and ordered JRW to pay $18,875 in attorney fees. The court cited as authority former rules 27 and 870.2 of the California Rules of Court, now rules 8.278 and 3.1702 respectively.¹ JRW filed a motion to vacate the judgment and for new trial. The Murrays opposed JRW's motion, which it viewed as in effect an improper motion for reconsideration. On December 1, 2006, the trial court issued a tentative decision denying JRW's motion. After hearing, however, the court granted the motion, vacated its order awarding attorney fees, and denied the Murrays' motion for attorney fees.

The Murrays filed a timely notice of appeal on January 31, 2007.

DISCUSSION

I.

"`On appeal this court reviews a determination of the legal basis for an award of attorney fees de novo as a question of law.' " (Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 923, quoting Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677; see Snyder v. Marcus & Millichap (1996) 46 Cal.App.4th 1099, 1102 (Snyder).)

The Murrays contend they are entitled to attorney fees under rules 8.278 and 3.1702 because they were the prevailing parties on the prior appeal, which affirmed the trial court's judgment, regardless of whether they were the prevailing parties at trial. They further contend they are entitled to attorney fees on appeal because they were the prevailing parties at trial—even though the trial court expressly stated neither party prevailed—in that they recovered greater relief than JRW. (See Mustachio v. Great Western Bank (1996) 48 Cal.App.4th 1145, 1150.) This argument is based on the fact that the trial court awarded the Murrays a total of $229,532, $49,531 more than the $180,001 it awarded to JRW.²

The Murrays' latter argument is unavailing. As stated above, the trial court expressly found that neither party prevailed in the action. Neither the Murrays nor JRW appealed this determination. The only appeal from the trial court's judgment was JRW's, and it was expressly limited to challenging the method by which the trial court calculated its award. "An ` "appeal from a distinct and independent part of a judgment does not bring up the other parts for review in the appellate court . . . ." [Citation.]' (Gonzales v. R.J. Novick Constr. Co. (1978) 20 Cal. 3d 798, 805.)" (11382 Beach Partnership v. Libaw (1999) 70 Cal.App.4th 212, 219.) "As explained in Gonzales v. R.J. Novick Constr. Co., [at pages] 804-805, ` "Ordinarily [an appeal from a specific portion of a judgment] would leave the parts not appealed from unaffected, and it would logically follow that such unaffected parts must be deemed final, being a final judgment of the facts and rights which they determine. . . . [T]he court upon such partial appeal can inquire only with respect to the portion appealed from." ' (Ibid., quoting Whalen v. Smith (1912) 163 Cal. 360, 362-363.)" (ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1015.) The Murrays cannot now challenge the determination that neither party prevailed at trial.

The question, then, is whether the Murrays are entitled to attorney fees on appeal because this court affirmed the judgment from which JRW appealed—that is, because they were the prevailing party on appeal even though they were not the prevailing party at trial. As stated above, the Murrays' argument is based on rules 8.278 and 3.1702.

Rule 8.278(a)(1) provides that "the party prevailing in the Court of Appeal in a civil case . . . is entitled to costs on appeal." The "prevailing party is the respondent if the Court of Appeal affirms the judgment without modification or dismisses the appeal. The prevailing party is the appellant if the court reverses the judgment in its entirety." (Rule 8.278(a)(2).) Rule 8.278(d)(2) further specifies, "[u]nless the court orders otherwise, an award of costs neither includes attorney's fees on appeal nor precludes a party from seeking them under rule 3.1702."

Rule 3.1702, entitled "Claiming attorney's fees," sets forth the time for filing motions for attorney fees, including attorney fees on appeal. "A notice of motion to claim attorney fees on appeal—other than the attorney's fees on appeal claimed under (b) [attorney fees before trial court judgment]—under a statute or contract requiring the court to determine entitlement to the fees, the amount of the fees, or both, must be served and filed within the time for serving and filing the memorandum of costs under [former] rule 8.276(d) [now rule 8.278(c)]." (Rule 3.1702(c)(1).) The foregoing provision applies "when the court determines entitlement to the fees, the amount of the fees, or both, whether the court makes that determination because the statute or contract refers to `reasonable' fees, because it requires a determination of the prevailing party, or for other reasons." (Rule 3.1702(a).)

The Murrays contend that under rule 8.278, they were the prevailing party on the first appeal because the judgment was affirmed in its entirety. Accordingly, they argue, they were entitled to move for attorney fees on appeal pursuant to the procedures of rule 3.1702. Contrary to the Murrays' position, however, rules 8.278 and 3.1702 do not provide independent authority for an award of attorney fees. Rule 8.278 simply states that an award of costs on appeal neither includes nor precludes an award of attorney fees. Rule 3.1702 provides that a notice of motion to claim attorney fees on appeal "under a statute or contract requiring the court to determine entitlement to the fees, the amount of the fees, or both" must be filed and served within the time for filing and serving the memorandum of costs under rule 8.278(c) [former rule 8.276(d)]. As our Supreme Court has explained, "recoverable litigation costs do include attorney fees, but only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees." (Santisas v. Goodin (1998) 17 Cal.4th 599, 606.)

The attorney fees provision of the parties' contract states: "In the event legal action or arbitration is instituted for the enforcement of...