People v. Speedee Oil Change Systems

• Decision Date: 01 February 2007
• Docket Number: No. B188775.,B188775.
• Citation: 54 Cal.Rptr.3d 225,147 Cal.App.4th 424
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE ex rel. DEPARTMENT OF CORPORATIONS, Plaintiff, v. SPEEDEE OIL CHANGE SYSTEMS, INC., et al., Defendants and Appellants; Beldoon Corporation, et al., Intervenors and Respondents.

54 Cal.Rptr.3d 225

147 Cal.App.4th 424

The PEOPLE ex rel. DEPARTMENT OF CORPORATIONS, Plaintiff, v. SPEEDEE OIL CHANGE SYSTEMS, INC., et al., Defendants and Appellants Beldoon Corporation, et al., Intervenors and Respondents.

No. B188775.

Court of Appeal, Second District, Division 5.

February 1, 2007.

Fitzgerald Abbott & Beardsley, Edward M. Keech and Dawn Newton, Oakland, for Defendants and Appellants.

Terrence A. Beard, Antioch, for Intervenors and Respondents Jon Andersen, Jerry Beezley, M.G. Han, Sam Lau, and Christopher Mack.

Craig J. Bassett, Morgan Hill, for Intervenors and Respondents Beldoon Corporation, Donald Almen, and Belva Almen.

TURNER, P. J.

I. INTRODUCTION

Defendants, SpeeDee Oil Change Systems, Inc., NoCal, Inc., Gary L. Copp, and Kevin M. Bennett, appeal from a January 6, 2006 order awarding attorney fees on appeal to plaintiffs in intervention, Beldoon Corporation, Donald Almen, Belva Almen, Jon Andersen, Jerry Beezley, M.G. Han, Sam Lau, and Christopher Mack (the intervenors). The intervenors argue that they are entitled to fees pursuant to the attorney fees clause in several franchise agreements; all of which contain the same language.¹ The attorney fee clause provides that the party in whose favor the "final judgment" is entered is entitled to recover attorney fees. After a trial, judgment on the complaints in intervention was entered in defendants' favor. Defendants then secured a post judgment attorney fee award which we reversed on appeal at the intervenors' urging. The intervenors then filed their attorney fee motion. The intervenors argued our opinion reversing the attorney fee award in defendants' favor was a "final judgment" within the meaning of the attorney fee clause. An attorney fee award was issued in the intervenors' favor. We conclude, utilizing traditional contract interpretation principles, that although our prior opinion was a judgment, it was not a "final judgment" within the meaning of the attorney fee clause. Therefore, we reverse the attorney fee award at issue.

II. BACKGROUND

This action was commenced on July 29, 1994, by the Department of Corporations on behalf of the People of the State of California. It was brought against a franchisor and others for alleged violations of the Franchise Investment Law, Corporations Code section 31000 et seq. The enforcement action is not before us having been resolved by separate judgment imposing penalties and injunctive relief on September 18,1997.

Numerous franchisees intervened in the action, including the present intervenors. They asserted causes of action for: intentional and negligent misrepresentation; intentional emotional distress infliction; and contract breach among others. On February 29, 2000, a nonsuit order was entered by Retired Judge Joseph R. Kalin in defendants' favor and against the intervenors. Retired Judge Kalin found, among other things, there was no substantial evidence of a contractual relationship between defendants and the intervenors. Judgment was ultimately entered in defendants' favor and against the intervenors by Retired Judge Kalin on July 12, 2000. We affirmed Retired Judge Kalin's judgment entered on his nonsuit order in defendants' favor on appeal on January 28, 2002. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (2002) 95 Cal.App.4th 709, 728, 116 Cal.Rptr.2d 497 [see nonpub. discussion at typed opn. p. 47].)

Following the entry of the nonsuit, defendants repeatedly and unsuccessfully moved for an attorney fee award against the intervenors. By order entered on September 24, 2002, Judge Ronald M. Sohigian ruled: "[Defendants' motion to fix attorney fees as an item of costs filed July 5, 2002, is] essentially premised on attorneys' fees provisions in the franchise agreements. But such agreements are void." Defendants did not appeal from these adverse decisions. However, following entry of a December 8, 2003 judgment, Judge Sohigian granted defendants' third attorney fee motion. In an unpublished opinion, we reversed that order on appeal. (Andersen v. SpeeDee Oil Change Systems, Inc. (June 22, 2005, B173236, 2005 WL 1460394) [nonpub. opn.].) We held the December 8, 2003 judgment, which was the second one entered against the intervenors on the same claims, was void and had no effect; therefore, defendants' attorney fee motion was untimely. (Id., typed opn. at pp. 2, 8-13.) We ordered in part, "[Intervenors] are to recover their costs on appeal, jointly and severally, from defendants ...." (Id., typed opn. at p. 13.) It bears emphasis we did not hold the attorney fee clause was unenforceable. Rather, we held the attorney fee motion was untimely.

Upon issuance of the remittitur, the intervenors sought an award of attorney fees incurred on appeal pursuant to California Rules of Court,² former rule 27, now rule 8.276. In response, defendants filed a motion to strike or tax costs. The intervenors' attorney fees motion was granted. Defendants' motion to tax costs was denied. On January 6, 2006, Mr. Andersen, Mr. Beezley, Mr. Han, Mr. Lau, and Mr. Mack received an award of $65,000 in attorney fees and $3,450.37 in costs. Also on January 6, 2006, $34,008 in attorney fees and $2,643.36 in costs were awarded to Beldoon Corporation and the Almens. Defendants have not raised any issue on appeal with respect to non-attorney fee cost issues.

III. DISCUSSION

It is undisputed the attorney fee clause provides: "`In the event that any action or proceeding is filed by one party against the other party to enforce any of the covenants or conditions hereto, the party in whose favor final judgment shall be entered shall be entitled to recover from the other reasonable attorney's fees, to be fixed by the court in which the judgment is entered." The sole question presented is whether the intervenors were entitled to recover attorney fees incurred in the appeal. This issue arises on undisputed facts. Under these circumstances, we review the legal basis for an attorney fee award de novo. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175-1176, 39 Cal.Rptr.3d 788, 129 P.3d 1; Whiteside v. Tenet Healthcare Corp. (2002) 101 Cal.App.4th 693, 707, 124 Cal.Rptr.2d 580; Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal. App.4th 671, 677, 101 Cal.Rptr.2d 127; Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 705, 75 Cal. Rptr.2d 376.) As noted above, the intervenors rely on former rule 27, now rule 8.276, in support of their claimed entitlement to attorney fees. Rule 8.276 provides in pertinent part: "(a) Right to costs [¶] (1)Except as provided in this rule, the party prevailing in the Court of Appeal in a civil case is entitled to costs on appeal. [¶] .... [¶] (c) Recoverable costs [¶] ... [¶] (2)Unless 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." (Original bold.) Under rule 8.276, our order in the prior appeal was, "[Intervenors] are to recover their costs on appeal, jointly and severally from defendants ..." (Andersen v. SpeeDee Oil Change Systems, Inc., supra, typed opn. at p. 13) Our order did not include an attorney fee award nor preclude the intervenors from seeking such fees. (Rule 8.276(c)(2).) The intervenors must show a legal basis independent of rule 8.276 for recovery of attorney fees. (Santisas v. Goodin (1998) 17 Cal.4th 599, 606, 71 Cal. Rptr.2d 830, 951 P.2d 399; see Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 973, 52 Cal.Rptr.3d 400.) This is because as a general rule, attorney fees are not recoverable as costs unless they are authorized by statute or agreement. (Serrano v. Unruh (1982) 32 Cal.3d 621, 637, 186 Cal.Rptr. 754, 652 P.2d 985; Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 127-128, 158 Cal.Rptr. 1, 599 P.2d 83; Code Civ. Proc., §§ 1021, 1032, subd. (b), 1033.5, subd. (a)(10).) A party may seek attorney fees on appeal under a statute or a contract. (Rules 8.276(a), 8.276(c)(2), 3.1702(c)(1).) Here, the intervenors rely on a contractual attorney fee provision.

Our analysis begins and ends with the language of the attorney fee clause on which the intervenors rely. (See Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1106, 86 Cal.Rptr.2d 614, 979 P.2d 974; Santisas v. Goodin, supra, 17 Cal.4th at pp. 606-608, 71 Cal.Rptr.2d 830, 951 P.2d 399; Hasler v. Howard (2005) 130 Cal.App.4th 1168, 1170-1171, 30 Cal. Rptr.3d 714; Exxess Electronixx v. Heger Realty Corp. (supra) 64 Cal.App.4th at pp. 705, 708-709, 75 Cal.Rptr.2d 376.) Code of Civil Procedure section 1021 provides, "Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided." We use traditional contract interpretation principles in assessing the extent of the parties' rights to recover attorney fees. (Santisas v. Goodin, supra, 17 Cal.4th at p. 608, 71 Cal.Rptr.2d 830, 951 P.2d 399 [construing the term `"prevailing part[ies]"' in attorney fee clause]; Royster Construction Co. v. Urban West Communities (1995) 40 Cal.App.4th 1158, 1170, 47 Cal.Rptr.2d 684 [interpreting the term `"costs"' in an attorney fee provision]; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1344-1345, 5 Cal. Rptr.2d 154 [construing the language the phrases `"lawsuit or other legal proceeding"' to which `"this Agreement gives rise" as including tort claims in a suit brought against a real estate broker].) The Supreme Court has synthesized the applicable contract interpretation principles in the attorney fee clause context thusly: ""Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ.Code, § 1636.) Such intent is to be...