R.W.L. Enters. v. Oldcastle, Inc.

• Decision Date: 29 November 2017
• Docket Number: D070189
• Citation: 17 Cal.App.5th 1019,226 Cal.Rptr.3d 677
• Court: California Court of Appeals Court of Appeals
• Parties: R.W.L. ENTERPRISES, Plaintiff and Appellant, v. OLDCASTLE, INC., et al., Defendants and Respondents.

17 Cal.App.5th 1019

226 Cal.Rptr.3d 677

R.W.L. ENTERPRISES, Plaintiff and Appellant,

v.OLDCASTLE, INC., et al., Defendants and Respondents.

D070189

Court of Appeal, Fourth District, Division 1, California.

Filed November 29, 2017

The Kiamilev Law Group, Chandra E. Kiamilev, San Diego; Karcher Harmes and Kathryn E. Karcher for Plaintiff and Appellant.

Braun & Melucci and Kerri M. Melucci, La Jolla for Defendants and Respondents.

DATO, J.

All Masonry & Landscape Supply (All Masonry) appeals a postjudgment order awarding attorney fees to Oldcastle, the prevailing party in a breach of contract action.¹ We conclude the award of attorney fees was erroneous because the contract that All Masonry sued on did not provide for the recovery of attorney fees. Although a later agreement between the parties did include an attorney fee provision, the trial court erred in construing the two instruments together pursuant to Civil Code section 1642.²

FACTUAL AND PROCEDURAL BACKGROUND

Oldcastle manufactures masonry and concrete products, including its Belgard-branded concrete pavers and segmented retaining walls. All Masonry distributes landscape supplies and concrete products to customers. All Masonry claimed that in 2001, it entered into an agreement with Oldcastle to be Oldcastle's exclusive dealer of Belgard products in San Diego County.

The 2001 dealer agreement was part written and part oral. The written portion consisted of a document titled "Belgard Authorized Dealer Agreement" signed by both parties. Within that document, Oldcastle offered All Masonry training and technical support, while All Masonry agreed to use Belgard as its primary supplier and market and showcase its products. All Masonry also promised to "[m]aintain account with BELGARD on a current basis." The oral portion of the 2001 dealer agreement allegedly consisted of Oldcastle's agreement to distribute Belgard products exclusively through All Masonry in San Diego County and offer All Masonry price concessions. In 2002 and 2006, Oldcastle sent All Masonry letters offering pricing discounts that All Masonry claimed memorialized the parties' special relationship.

The relationship soured in 2009 when Oldcastle began distributing its Belgard products through other dealers in San Diego County. It further deteriorated around 2010 or 2011 when Oldcastle hired Jeffrey Bal, a competitor's son.

During this period, All Masonry changed its business name and had to update its credit information with Oldcastle. All Masonry filled out a credit application in 2010 that contained two attorney fee provisions. The 2010 credit application also contained an integration clause that stated,

"This document constitutes the entire CONTRACT between SELLER and PURCHASER with respect to the product and it exclusively determines the rights and obligations of these parties thereunder, notwithstanding any prior course of dealings, custom or usage of trade, or course of performance."³

In 2013, All Masonry sued Oldcastle for breaching the 2001 dealer agreement by distributing Belgard products through other dealers in San Diego County. The operative Second Amended Complaint alleged Oldcastle was liable for breach of contract, unfair business practices, antitrust, unfair competition, tortious interference, fraud, negligent misrepresentation, and negligent hiring and supervision of Jeffrey Bal. Oldcastle prevailed on the breach of contract cause of action in 2015 when the court granted its motion for summary adjudication on that claim, rejecting All Masonry's contention that it had the exclusive right to sell Belgard at preferential pricing in San Diego County. The remaining claims were likewise decided in Oldcastle's favor, either through summary adjudication or at trial. The court entered judgment for Oldcastle in December 2015.

Oldcastle filed a postjudgment motion to recover attorney fees in connection with All Masonry's breach of contract claim. It contended that fees were available pursuant to the attorney fee provisions in the 2010 credit application. All Masonry opposed the motion, arguing that the 2001 dealer agreement did not provide for attorney fees and the 2010 instrument had no bearing on the matter. The trial court ruled in Oldcastle's favor, stating:

"While there is no attorney fee clause in the Belgard Authorized Dealer Program there is an attorney fee clause in the [2010 credit application] which was also entered into by the same parties. Pursuant to [ Civil Code section] 1642, ‘several contracts relating to the same matters, between the same parties, and made as part of substantially one transaction are to be taken together.’

"The court also concludes, based on the evidence presented at trial and the allegations in Plaintiffs' complaint, that the Belgard Authorized Dealer Program and the [2010 credit application] both relate to the same subject matter; were intended to govern the same transaction; and that they can therefore be construed together as one contract. (See Boyd v. Oscar Fisher Co. (1989) 210 Cal.App.3d 368 .)

"Plaintiff cites no conflicting evidence that precludes the Court from concluding as a matter of law, that the [2010 credit application] and The Belgard Authorized Dealer Program were a single contract .... ‘Where a contract provides for attorney's fees ... that provision shall be construed as applying to the entire contract ....’ ( Civil Code[,] § 1717 [subd.] (a).) Thus, Defendants are entitled to a fee award in conjunction with their defense of Plaintiff's first cause of action for breach of the Belgard Authorized Dealer Program."

The court awarded Oldcastle $180,120 in attorney fees for defending the breach of contract cause of action through summary adjudication and for litigating the postjudgment fees motion.

DISCUSSION

"Under the American rule, each party to a lawsuit ordinarily pays its own attorney fees." ( Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751, 220 Cal.Rptr.3d 650, 398 P.3d 556 ( Mountain Air ).) Section 1021 of the Code of Civil Procedure codifies this general rule but allows parties to contract out of it. ( Mountain Air, at p. 751, 220 Cal.Rptr.3d 650, 398 P.3d 556.) Parties may contractually agree that if litigation ensues, the prevailing party will be awarded attorney fees. ( Ibid. , citing Santisas v. Goodin (1998) 17 Cal.4th 599, 608, 71 Cal.Rptr.2d 830, 951 P.2d 399 ( Santisas ).)

On a postjudgment motion for attorney fees, the trial court must evaluate whether the parties entered an agreement for the payment of attorney fees and, if so, the scope of that agreement. ( Mountain Air, supra, 3 Cal.5th at p. 752, 220 Cal.Rptr.3d 650, 398 P.3d 556.) The parties disagree on the appropriate standard of review applicable to that determination on appeal. All Masonry contends the de novo standard applies, whereas Oldcastle argues we should review the ruling for substantial evidence.

As the Supreme Court recently stated, we generally review an award of attorney fees for abuse of discretion. However, we independently review the legal basis for an attorney fee award. ( Mountain Air, supra, 3 Cal.5th at p. 751, 220 Cal.Rptr.3d 650, 398 P.3d 556.) Under some circumstances, this may be a mixed question of law and fact warranting a deferential standard of review. ( Ibid. ) But where the material facts are not in dispute, our review is de novo. ( Ibid. ; see Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843, 102 Cal.Rptr.2d 468 ["The interpretation of a contract is subject to de novo review where the interpretation does not turn on the credibility of extrinsic evidence."]; Paul v. Schoellkopf (2005) 128 Cal.App.4th 147, 151, 26 Cal.Rptr.3d 766 [same] ( Paul ).)

Here, there is no dispute the 2001 dealer agreement did not include an attorney fee provision. The parties agree that to the extent attorney fees are available, that right comes from the 2010 credit application. The propriety of attorney fees rises and falls on whether the 2010 credit application, which contains an attorney fee provision, is part of the same transaction as the 2001 dealer agreement on which All Masonry based its breach of contract claim. This presents a pure question of law subject to de novo review.

We apply traditional rules of contract interpretation to "give effect to the mutual intention of the parties as it existed at the time of contracting ...." ( Mountain Air, supra, 3 Cal.5th at p. 752, 220 Cal.Rptr.3d 650, 398 P.3d 556 ; Civ. Code, § 1636.) If possible, we ascertain such intent "from the writing alone." ( Civ. Code, § 1639.) "The words of a contract are to be understood in their ordinary and popular sense ... unless used by the parties in a technical sense, or unless a special meaning is given to them by usage ...." ( Civ. Code, § 1644.) " ‘ "Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning." ’ " ( Mountain Air, at p. 752, 220 Cal.Rptr.3d 650, 398 P.3d 556.)

The 2010 credit application contains two attorney fee provisions. The narrower provision states,

"Should SELLER be required to initiate any legal action or proceeding to enforce payment under this CONTRACT, or to recover damages for the breach thereof, PURCHASER agrees to pay court costs and reasonable attorney's fees incurred by SELLER."

The broader provision states,

"If suit or action by an attorney is instituted, we agree to pay reasonable attorney fees in said suit or action."

As All Masonry contends, the provisions must be construed together to avoid rendering the narrow one superfluous. ( Tanner v. Tanner (1997) 57 Cal.App.4th 419, 424, 426, 67 Cal.Rptr.2d 204 [narrowly construing clause obligating ex-husband to " ‘pay all legal fees associated with this dissolution’ " because a broad reading would render indemnification provisions meaningless]; see Civ. Code, § 1641 ["The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping...