PNEC Corp. v. Meyer

• Decision Date: 17 November 2010
• Docket Number: No. G042297.,G042297.
• Citation: 190 Cal.App.4th 66,2010 Daily Journal D.A.R. 1,10 Cal. Daily Op. Serv. 14, 446,118 Cal.Rptr.3d 730
• Court: California Court of Appeals Court of Appeals
• Parties: PNEC CORPORATION, Plaintiff and Appellant, v. Gail L. MEYER, Defendant and Respondent.

190 Cal.App.4th 66

118 Cal.Rptr.3d 730

10 Cal. Daily Op. Serv. 14,446

2010 Daily Journal D.A.R. 17,387

PNEC CORPORATION, Plaintiff and Appellant,

v.Gail L. MEYER, Defendant and Respondent.

No. G042297.

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

Nov. 17, 2010.

**731 Robert W. Bollar, Orange, for Plaintiff and Appellant.

Pivo, Halbreich, Martin, Wilson & Amo and Scott A. Martin, Costa Mesa, for Defendant and Respondent.

*68 OPINION

IKOLA, J.

The trial court awarded attorney fees to defendant Gail L. Meyer after she succeeded in moving to dismiss the action against her "on the ground of inconvenient forum." (Code Civ. Proc., § 418.10, subd. (a)(2).) Plaintiff PNEC Corporation (PNEC) appeals the post-dismissal attorney fee award, claiming: (1) a party is never entitled to contractual attorney fees under Civil Code section 1717 for successfully obtaining dismissal of an action on the ground of forum non conveniens; and (2) even if an attorney fee award is generally authorized in these circumstances, the amount awarded in this case ($21,677.25) was unreasonable because it included fees incurred working on aspects of the case other than forum non conveniens. We affirm the court's order.

FACTS

In November 2008, PNEC filed a complaint against Meyer and other defendants (one corporation and two other individuals). PNEC alleged it provided defendants**732 with "certain refined petroleum products" for which the defendants failed to pay. The complaint included causes of action for breach of contract, open book account, account stated, goods sold and delivered, and breach of guaranty. Only the fifth cause of action, breach of guaranty, was alleged against Meyer and the other individual defendants.

The complaint attached a copy of a written guaranty of payment allegedly signed by Meyer. In relevant part, the document states: "The Customer and the undersigned agree that if the account is referred for collection to an attorney, the undersigned will pay reasonable attorney's fees and costs of collection."

Meyer's counsel made a special appearance to move to either: (1) quash service of process on Meyer for lack of personal jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)); or (2) stay or dismiss the action due to inconvenient forum (Code Civ. Proc., § 418.10, subd. (a)(2)). According to her declaration, Meyer resides in Tacoma, Washington and has never lived, worked, or been involved in any legal proceeding in California. Meyer also attested she sold her ownership stake in the corporate defendant years earlier to the other individual defendants. The court granted the motion to dismiss on forum non conveniens grounds. The court entered judgment of dismissal without prejudice in March 2009. PNEC did not appeal the judgment of dismissal. ¹

*69 Meyer then filed a motion for attorney fees in the amount of $22,127. 25. The court granted Meyer's motion for attorney fees, awarding $21,667.25. The court's rationale was set forth in its minute order: "The Court finds that defendant was the prevailing party on the contract for purposes of [Civil Code] section 1717. The decision in [ Profit Concepts Management, Inc. v. Griffith (2008) 162 Cal.App.4th 950, 76 Cal.Rptr.3d 396 ( Profit Concepts) ] is deemed the controlling authority in this case.... Only 1.5 hours of the claimed total time is disallowed (the time spent researching Plaintiff's corporate status after the motion for forum non conveniens was granted.) Plaintiff cites no authority for its argument that Meyer should allocate the time spent on the forum non conveniens issue and the time spent on other work. The contract in question entitles Meyer to recover fees for the time reasonably spent in defending this action."

DISCUSSION

PNEC appeals the court's order awarding attorney fees. As noted, the fee-shifting provision in the pertinent contract provides: "The Customer and the undersigned agree that if the account is referred for collection to an attorney, the undersigned will pay reasonable attorney's fees and costs of collection." The provision must be construed to provide for reciprocal recovery of attorney fees, notwithstanding the contractual language favoring only PNEC. (Civ.Code, § 1717, subd. (a) [indicating the prevailing party shall be entitled to fees "whether he or she is the party specified in the contract or not"].)

PNEC's primary contention is that a dismissal on forum non conveniens grounds (Code Civ. Proc., § 418.10, subd. (a)(2)) does not provide an adequate basis **733 for deeming a defendant to be a "party prevailing on the contract" pursuant to Civil Code section 1717, subdivision (a). "We review a determination of the legal basis for an award of attorney fees de novo as a question of law." ( Pueblo Radiology Medical Group, Inc. v. Gerlach (2008) 163 Cal.App.4th 826, 828, 77 Cal.Rptr.3d 880.)

It does not appear that the precise question before us has been addressed in published California authority. However, in Profit Concepts, supra, 162 Cal.App.4th at page 952, 76 Cal.Rptr.3d 396, this court held that a defendant who successfully moved to quash service for lack of personal jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)) was the "party prevailing on the contract under Civil Code section 1717" and was "therefore entitled to recover his reasonable attorney fees as costs." ( Profit Concepts, at p. 952, 76 Cal.Rptr.3d 396.)

*70 In reaching its holding, the Profit Concepts court relied principally on its interpretation of the language of Civil Code section 1717, which states: " '(a) In any action on a contract, where the contract specifically provides that attorney's 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 party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs. [¶] ... [¶] (b)(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section. [¶] (2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.' " ( Profit Concepts, supra, 162 Cal.App.4th at pp. 953-954, 76 Cal.Rptr.3d 396.) ²

Reading the language of Civil Code section 1717, and comparing such language to a prior version of Civil Code section 1717 applied in previous cases, Profit Concepts concluded that a defendant obtaining a dismissal of a contract claim for lack of personal jurisdiction is a prevailing party. **734 ( Profit Concepts, supra, 162 Cal.App.4th at p. 955, 76 Cal.Rptr.3d 396.) Profit Concepts contrasted this result with a case in which a plaintiff voluntarily dismisses its case; Civil Code section 1717, subdivision (b)(2), plainly "provides there is no prevailing party for purposes of that section when the case is voluntarily dismissed, or dismissed pursuant to settlement." ( Profit Concepts, supra, 162 Cal.App.4th at p. 955, 76 Cal.Rptr.3d 396.)

Profit Concepts rejected the notion that a final judgment was required to obtain attorney fees under Civil Code section 1717; nothing in the current *71 version of the statute (as opposed to the pre-1981 version) indicates a final judgment is necessary. ( Profit Concepts, supra, 162 Cal.App.4th at pp. 954-955, 76 Cal.Rptr.3d 396.) Profit Concepts also rejected the argument that only "a determination on the 'merits' of the contract claim" can result in attorney fees for a prevailing party. ( Id. at pp. 955-956, 76 Cal.Rptr.3d 396.) "The case in California has been finally resolved. What was awarded on Profit Concepts's complaint? Zero. Thus, the contract claim was finally resolved within the meaning of Hsu v. Abbara [ (1995) 9 Cal.4th 863, 39 Cal.Rptr.2d 824, 891 P.2d 804], and that case does not use the term 'merits.' [¶] The determination of which party is the prevailing party must be made without consideration of whether the plaintiff may refile the action after a motion to quash service is granted. The issue of final resolution should not depend on the plaintiff's possible future conduct. Prevailing party attorney fees should be awarded based on the contract language, the statutory language, and the fact of dismissal of the case, not on speculation." ( Profit Concepts, supra, 162 Cal.App.4th at p. 956, 76 Cal.Rptr.3d 396.) The Profit Concepts court also found it to be inconsequential to its "prevailing party" adjudication in the California action that an action in Oklahoma had been filed to litigate the merits of the dispute. ( Ibid.)

Here, the court dismissed the action on forum non conveniens grounds rather than for lack of personal jurisdiction. PNEC claims this difference is determinative because forum non conveniens is not a jurisdictional concept, but is instead "an equitable doctrine invoking the discretionary power of a court to decline to exercise the jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately and justly tried elsewhere." ( Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751, 1 Cal.Rptr.2d 556, 819 P.2d 14.) But, like the trial court, we find the cogent statutory analysis set forth in Profit Concepts to apply equally to this case. If an action on a contract (here, the Meyer guaranty agreement) is dismissed for forum non conveniens, a court may award attorney fees to the moving party under Civil Code section 1717 if the contract provides for such fee shifting.³

At oral argument, PNEC made much of the fact that the...