Piskur v. Parker Restaurant Group, Inc., B191750 (Cal. App. 11/19/2007)

• Decision Date: 19 November 2007
• Docket Number: B191750
• Court: California Court of Appeals Court of Appeals
• Parties: THOM PISKUR et al., Plaintiffs and Respondents, v. PARKER RESTAURANT GROUP, INC., et al., Defendants and Appellants.

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THOM PISKUR et al., Plaintiffs and Respondents, v. PARKER RESTAURANT GROUP, INC., et al., Defendants and Appellants.

B191750

Court of Appeals of California, Second Appellate District, Division Seven

November 19, 2007

NOT TO BE PUBLISHED

Appeal from an order of the Superior Court of Los Angeles County, No. GC033987, Jan A. Pluim, Judge. Affirmed.

Law Offices of Daniel J. Doonan, Inc., Daniel J. Doonan and Lynne Rasmussen for Defendants and Appellants, Parker Restaurant Group, Inc. and Old Town Brewpub.

Law Office of David Alan Cooper and David Alan Cooper for Plaintiffs and Respondents, Steve Smolinski and Sean Rooks.

PERLUSS, P. J.

Parker Restaurant Group, Inc. and Old Town Brewpub, Ltd. appeal from the trial court's denial of their application for costs and motion for an award of attorney fees following entry of judgment in their favor in an action for an accounting and for breach of fiduciary duty. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Under an agreement dated May 10, 2002 a limited partnership known as Old Town Brewpub, Ltd. was formed for the purpose of establishing and operating a restaurant and bar in Pasadena, California. The agreement identified Parker Restaurant Group, Inc. as the general partner and Charles R. Parker, Robert A. Parker and Tiffany T. Parker as limited partners (collectively the Parker Group). Over the next year the Parker Group raised nearly $1 million from various investors including Thom Piskur, Sean Rooks and Steve Smolinski (the Piskur parties).

The new restaurant was a bust. By December 2003, less than six months after opening and less than one year after the Piskur parties invested as limited partners, the Parker Group convened a meeting to determine whether to close or sell the restaurant or the building in which the restaurant was housed, the partnership's sole asset other than the restaurant. The partnership voted to sell both the building and the restaurant based on the general partner's recommendation and implied promise investors would recover their initial investments. Soon thereafter, the Piskur parties began to demand an accounting of partnership assets but received no response other than a letter dated April 12, 2004 enclosing a Schedule K-1 federal tax form revealing the partnership had only $34,487 in its capital account at the end of 2003. In June 2004 the restaurant business was sold, and the commercial space leased.

Having been rebuffed in the quest for an accounting, Piskur filed a lawsuit in July 2004 alleging causes of action for breach of contract and fraudulent conveyance.¹ Two months after the complaint was filed, the Parker Group provided the limited partners with an accounting for the year 2003. After the Parker Group successfully demurred to the complaints, the Piskur parties jointly filed an amended complaint seeking a full accounting and asserting a cause of action for breach of fiduciary duty.

Two weeks before trial was to begin, the Parker Group provided the limited partners an accounting for the year 2004. The accounting claim was dismissed by the court as moot, and a bench trial was held on the breach of fiduciary claim. The court ruled in favor of the Parker Group, and the Parker Group filed an application for costs as well as a motion for an order establishing it as the prevailing party and for an award of attorney fees under the limited partnership agreement. The trial court declined to award costs, finding there was no prevailing party in the litigation and denied the motion for attorney fees on the ground there was no applicable attorney fee provision in the limited partnership agreement.

CONTENTIONS

The Parker Group contends the trial court lacked discretion not to award costs of litigation and erred in denying its motion for attorney fees.

DISCUSSION

1. Standard of Review

An order granting or denying an award of costs or attorney fees is generally reviewed for an abuse of discretion. (See, e.g., Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 978; MHC Financing Limited Partnership Two v. City of Santee (2005) 125 Cal.App.4th 1372, 1397; Salawy v. Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664, 669.) Questions of statutory interpretation, however, are questions of law "subject to our independent or de novo review." (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432; California Veterinary Medical Assn. v. City of West Hollywood (2007) 152 Cal.App.4th 536, 546.) In addition, we independently determine as a question of law the scope of an attorney fee provision when, as here, the interpretation does not turn on extrinsic evidence. (Kalai v. Gray (2003) 109 Cal.App.4th 768, 777; Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 705.)

2. The Trial Court Did Not Err in Denying the Parker Group's Application for Costs

Code of Civil Procedure, section 1032, subdivision (a)(4),² defines prevailing party for purposes of an award of litigation costs. "As used in this section, unless the context clearly requires otherwise: [¶] . . . [¶] (4) `Prevailing party' includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. When any party recovers other than monetary relief and in situations other than as specified, the `prevailing party' shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034."

The Parker Group argues the trial court lacked discretion as a matter of law to deny costs because the Piskur parties' claim for an accounting was dismissed by the court and they obtained no relief on their cause of action for breach of fiduciary duty. That contention improperly relies on an overly literal interpretation of section 1032, subdivision (a)(4), and entirely disregards the practical realities of the Piskur parties' lawsuit and the positive results it obtained.

First, the fact the Piskur parties' accounting claim, but not their entire complaint, was dismissed does not entitle the Parker Group to recover its costs for the entire action. The cases authorizing the recovery of costs under that portion of section 1032, subdivision (a)(4), involve full dismissals — involuntary or voluntary — of the entire action. (See, e.g., Santisas v. Goodin (1998) 17 Cal.4th 599, 606 (Santisas); Crib Retaining Walls, Inc. v. NBS/Lowry, Inc. (1996) 47 Cal.App.4th 886, 889-890.)

Second, as the record makes clear, the trial court viewed the Piskur parties' accounting claim as successful because it forced the Parker Group to account to the limited partners. (See Howard v. Howard & Smith Inc. (1943) 58 Cal.App.2d 172 [plaintiff seeking inspection of corporate records entitled to costs as prevailing party even though action dismissed as moot after defendant corporation complied with plaintiff's demand].) That is, the dismissal was not granted in favor of the Parker Group on the merits, but was entered because the claim became moot on the eve of trial when the Parker Group, faced with an inevitable adverse judicial ruling, complied with its obligation to account to the limited partners. (See Chaparral Greens v. City of Chula Vista (1996) 50 Cal.App.4th 1134, 1152 ["a determination of prevailing party status is discretionary with the court `[w]hen any party recovers other than monetary relief'"]; Childers v. Edwards (1996) 48 Cal.App.4th 1544, 1549 ["`Relief' in this sense has been defined generally as `[d]eliverance from oppression, wrong, or injustice. . . . [I]t is used as a general designation of the assistance, redress, or benefit which a complainant seeks at the hands of a court'"]; cf. International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 224 ["Although a plaintiff may voluntarily dismiss before trial because he learns that his action is without merit, obviously other reasons may exist causing him to terminate the action. For example, the defendant may grant plaintiff — short of trial — all or substantially all relief sought, or the plaintiff may learn the defendant is insolvent, rendering any judgment hollow"].)

Thus, the trial court's finding there was no prevailing party in this case was properly based on its conclusion none of the four separate circumstances warranting costs as a matter of right applied to the Parker Group's application. On these facts we cannot say the trial court erred in this determination. Nor did the court plainly abuse its discretion in denying an award of costs altogether.³ (See Lincoln v. Schurgin (1995) 39 Cal.App.4th 100, 105-106 [trial court did not abuse its discretion in declining to award costs where defendant not entitled to costs as matter of right because of mixed result].)

3. The Trial Court Did Not Err in Declining To Award Attorney Fees to the Parker Group Based on Its Finding There Was No Prevailing Party

Under the "American rule," codified in section 1021, each party to a lawsuit is required to bear its own attorney fees unless recovery of those fees is authorized by contract or statute. (Santisas, supra, 17 Cal.4th at p. 607, fn. 4; City and County of San Francisco v. Sweet (1995) 12 Cal.4th 105, 115; § 1021 ["[e]xcept 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"].) Civil Code section 1717, subdivision (a), authorizes the trial court to award reasonable attorney fees to the prevailing party in a contract action if the contract specifically provides for an award of such fees.⁴ (See also § 1033.5, subd. (a)(10)(A) ["(a) The following items are allowable as costs under Section 1032: [¶] . . . [¶] (10)...