Silver v. Boatwright Home Inspection, Inc., B146581.

CourtCalifornia Court of Appeals
Citation118 Cal.Rptr.2d 475,97 Cal.App.4th 443
Decision Date04 April 2002
Docket NumberNo. B146581.,B146581.
PartiesTracy J. SILVER et al., Plaintiffs and Respondents, v. BOATWRIGHT HOME INSPECTION, INC., Defendant and Appellant.

Blatz, Pyfrom & Associates, LLP, Gregory C. Pyfrom, Ventura, and Sherie A. Taylor, Santa Barbara, for Defendant and Appellant.

Silver & Freedman and Barry M. Appell, Los Angeles, for Plaintiffs and Respondents.

CROSKEY, Acting P.J.

Defendant Boatwright Home Inspection, Inc. ("Boatwright") appeals from an order that denied the motion for attorney's fees it filed after a pretrial judgment of voluntary dismissal was entered in its favor. Boatwright contends it is the prevailing party as between itself and the plaintiffs who filed the dismissal, and therefore the trial court abused its discretion when it denied Boatwright such fees. The plaintiffs, Tracy Silver and Maria Rodriguez ("plaintiffs"), assert that the various factors considered by the trial court when it ruled on Boatwright's motion led the court to properly decide that Boatwright should not recover its attorney's fees.

We have examined the procedural posture of this case and the applicable law, and we find that the trial court did not abuse its discretion when it denied Boatwright's motion for fees. Plaintiffs obtained their litigation objective, recovery of damages, through settlements with defendants other than Boatwright. We hold that under Santisas v. Goodin (1998) 17 Cal.4th 599, 71 Cal.Rptr.2d 830, 951 P.2d 399, this recovery of damages, even though it was not from Boatwright, will support the trial court's determination that Boatwright was not the prevailing party for purposes of recovering attorney's fees it incurred in defending the noncontract causes of action plaintiffs alleged against it. Therefore, the order denying Boatwright such fees will be affirmed.1

BACKGROUND OF THE CASE
1. The Events Prompting This Action

This case has its beginnings in plaintiffs' purchase of residential property in Los Angeles County ("the property"). Plaintiffs and Boatwright entered into an agreement for Boatwright to conduct an inspection of the main house and the guest house on the property, and to provide plaintiffs with a written report on the inspection.

Named as defendants in this suit were Boatwright, the sellers of the property, the sellers' broker and his employer (together "sellers' broker"), and an exterminator hired by one or more of the other defendants to inspect the property. According to the operative complaint, defendants failed to live up to the duties of inspection, reporting, and disclosure they owed to plaintiffs. The consequence of this failure was that after plaintiffs purchased the property, they discovered that the main house and the guest house have extensive water and termite damage, which necessitates extensive repairs to the structures, and which makes the property worth far less than what plaintiffs paid for it.

The causes of action against Boatwright and various of the other defendants were for neghgence, breach of contract, fraud and deceit, constructive fraud, and breach of fiduciary duty. Additionally, plaintiffs alleged Boatwright engaged in a civil conspiracy with the other defendants to conceal from plaintiffs the extent of the pest and water damage to the houses and the extent of the needed repairs.

2. The Subject Contract

The contract between plaintiffs and Boatwright contains an attorney's fees clause. The clause states: "The prevailing party in any dispute arising out of this agreement, the inspection, or report(s) shall be awarded all reasonable attorney's fees, arbitration fees and other costs."

The contract also contains a special statute of limitations provision that states: "No legal action or proceeding of any kind, including those sounding in tort or contract, can be commenced against [Boatwright] or its officers, agents or employees more than one year after the date of the subject inspection. This time period is shorter than otherwise provided by law." Boatwright's inspection of the property was made on May 22, 1998. This suit was filed on June 7, 1999.

3. The Dismissal of Boatwright from the Suit

Based on the timing of Boatwright's inspection of the property and the commencement of this suit, and on the contractual provision for a shortened statute of limitations, Boatwright filed a motion for summary judgment, contending the suit is time-barred against Boatwright and therefore Boatwright was entitled to a judgment in its favor. However, prior to the date on which the motion was set to be heard, plaintiffs filed a request for dismissal of Boatwright from the lawsuit. A dismissal was entered by the clerk and thereafter, the court signed and filed a judgment of dismissal that awards Boatwright its costs of suit.

4. Boatwright's Prevailing Party Claim

Boatwright filed a memorandum of costs which included $24,300 in attorney's fees and a motion for attorney's fees as costs. Citing Civil Code section 1717 and Code of Civil Procedure section 1033.5, Boatwright contended it was entitled to attorney's fees because plaintiffs dismissed their suit against it.

Plaintiffs filed a motion to strike or tax costs and to be declared the prevailing parties in the suit. The declaration of plaintiffs' attorney that was filed in support of their motion states that plaintiffs settled with the sellers of the property for $20,000, the termite inspection company for $20,000, and certain cross-defendants (plaintiffs' realtor and broker) for $3,500. Additionally, settlement negotiations with sellers' broker were pending. According to plaintiffs' moving papers, their damages total approximately $70,000. Plaintiffs asserted that it was because of these settlements and pending settlement that they dismissed Boatwright from the suit since pursuing Boatwright any further would have been a waste of resources. Prior to the hearing on the parties' respective motions, plaintiffs filed notice that they settled with sellers' broker for $25,000.

The trial court denied Boatwright's motion for fees and ruled that plaintiffs' motion was therefore moot. Citing International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 145 Cal.Rptr. 691, 577 P.2d 1031, the court stated that equitable principles govern awards of attorney's fees made pursuant to contract, and when plaintiffs' case is viewed as a whole, plaintiffs are the prevailing parties because they have recovered, or are in the process of recovering, significant relief. On the other hand, said the court, if only plaintiffs' case against Boatwright is considered, Boatwright is the prevailing party because it was dismissed from the suit. The court observed that if it awarded Boatwright the fees it requested, "it would virtually eliminate the relief procured by plaintiffs from any other parties. This result is inequitable. The court also believes that public policy considerations favoring voluntary dismissal of before trial [sic] to avoid maintaining pointless litigation takes priority over the recovery of attorney fees."

ISSUES ON APPEAL

Plaintiffs and Boatwright raise the following appellate issues. What is the appropriate standard of review for this court to apply? Did the trial court improperly deny Boatwright's claim for prevailing party status and attorney's fees? If such claim was improperly denied, what amount of fees is Boatwright entitled to recover?

Because we find no cause to reverse the order denying Boatwright attorney's fees, the latter issue need not be addressed.

DISCUSSION
1. Standards of Review

The correct application, to this case, of statutory and case authority respecting awards of attorney's fees presents a question of law, which we address de novo. (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1132-1133, 94 Cal.Rptr.2d 448.) Additionally, as we discuss below, the trial court's determination that Boatwright should not be declared a prevailing party was an exercise of the court's discretion. Discretionary decisions are subject to an abuse of discretion standard of review, and will not be reversed on appeal unless it appears that the court abused its discretion and a miscarriage of justice has resulted. (Denham v. Superior Court (1970) 2 Cal.3d 557, 566, 86 Cal.Rptr. 65, 468 P.2d 193.) "`Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered. The burden is on the party complaining to establish an abuse of discretion, and unless a clear case of abuse is shown and unless there has been a miscarriage of justice a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power.'" (Ibid.)

2. Boatwright's Claim, for Prevailing Party Status and Attorney's Fees

A contractual provision for attorney's fees may be broad enough to address both contract claims (i.e., as causes of action to enforce the terms of the contract) and noncontract claims (such as tort claims). Thus, parties to a contract may agree that in the event of litigation between themselves, the prevailing party will be awarded attorney's fees whether the litigation concerns contract or noncontract claims, or both. (Santisas v. Goodin, supra, 17 Cal.4th 599, 608, 71 Cal.Rptr.2d 830, 951 P.2d 399, ("Santisas").) The attorney's fees provision in the contract between plaintiffs and Boatwright is such a provision, addressing as it does, the award of attorney's fees to "[t]he prevailing party in any dispute arising out of this agreement, the inspection, or report(s)."

In Santisas, a suit was brought by buyers of a home against the sellers and others. The buyers asserted both contract and tort causes of action based on alleged defects in the home. The purchase agreement contained a broadly worded attorney's fees clause and the buyers' complaint alleged a right to...

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