Filed 1/3/20 Goraya v. Stephens CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

MOHAMMAD GORAYA,

Plaintiff, Cross-defendant and Respondent,

v.

MILDRED K. STEPHENS,

Defendant, Cross-complainant and Appellant.

F078335

(Super. Ct. No. S1500CV282409)

OPINION

THE COURT*

APPEAL from an order of the Superior Court of Kern County. Thomas S. Clark, Judge.

Yarra Law Group and Nicholas E. Aniotzbehere, for Defendant, Cross-complainant and Appellant.

Dessy & Dessy and Ronald D. Dessy, for Plaintiff, Cross-defendant, and Respondent.

-ooOoo-

 

Mildred Stephens appeals from an order denying her motion for attorney’s fees based on a fee provision in a purported contract between her and her real estate agent. The trial court’s denial was based on its determination that there was no prevailing party in the matter. We find no error.

FACTS AND PROCEDURAL HISTORY

Stephens had a commercial property to sell in Lamont. Mohammed Goraya was the listing agent. A dispute arose after purchase contracts were executed between Stephens and two different buyers, Sekhon and Aljanar, with the sale being completed to Aljanar, the high bidder, whom Goraya allegedly failed to present to Stephens because he favored Sekhon. Stephens paid Goraya no commission. In a lawsuit, the lower bidder made a contract claim against Stephens. Stephens filed, but never served, a cross-complaint against Goraya for implied indemnity. The dispute between Stephens and Sekhon, the thwarted buyer, was submitted to arbitration and settled. Goraya was joined as a party in the arbitration at his own request, and obtained an award against Stephens for his commission and attorney’s fees. Stephens asserted claims against Goraya before the arbitrator as well, but the arbitrator found that these lacked merit.

Goraya filed a petition to confirm the arbitration award against Stephens. Stephens opposed the petition, and, in her opposition, included a request to vacate the award. The trial court denied the petition to confirm and granted the request to vacate.

Goraya appealed. In a prior opinion, we dismissed his appeal as untimely. (Goraya v. Stephens (May 30, 2018, F074590) [nonpub. opn.].)

Returning to the trial court, Stephens filed a motion for attorney’s fees for the period beginning January 27, 2016, the date on which the arbitrator issued his award to Goraya. The motion was based on an attorney’s fees provision in a standard listing agreement form that had been partially filled out for the property. Neither the record for this appeal nor the record for the prior appeal (of which we take judicial notice) contains an executed copy of the listing agreement. In the copies in both records, all the signature lines and spaces for initialing are blank, except that Goraya’s initials appear in one of those spaces. There has been no claim, however, that the parties are not bound by the listing agreement.

At the hearing on the fee motion, the trial court stated:

“My tentative with respect to the attorney’s fees is to determine that there is no prevailing party. I want to give you some explanation for that. Stephens is maintaining that she’s the prevailing party in the post-arbitration proceeding and is entitled to fees in connection therewith and is basing her claim on a claim of being the prevailing party under Civil Code Section 1717.

“And as I understand it, her request for attorney’s fees is limited [in] scope [to] of the confirmation [or] vacation of the arbitrator’s award, reconsideration thereon, and in opposing the appeal.

“I find that Stephens is not the prevailing party on the contract. Stephens did not prevail against Goraya in the arbitration where the arbitrator issued an award in favor of Goraya, although that award was not confirmed and was later vacated.

“Stephens obtained no recovery against Goraya in arbitration nor via the cross-complaint that had been filed in this court … in which was subsequently voluntarily dismissed by Stephens.

“Following the dictates of the Hsu, H-s-u, case, 9 Cal.4th 863, I’m viewing the entirety of this proceeding and the litigation objectives of the parties. It cannot be said, in the Court’s view, that Stephens, in that view, is the prevailing party for fee purposes. Simply because Stephens was able to prevent confirmation of the arbitrator’s award against her does not, in the Court’s view, make Stephens the prevailing party under the circumstances of this case.

“Stephens is certainly not entitled to attorney’s fees for the underlying trial court proceedings, and I also note that Stephens did not bring a motion for fees following this Court’s ruling vacating the arbitration award in 2016.· That’s my tentative with respect to the motions for attorney’s fees.”

After hearing oral argument, the court added:

“Let me make one more comment on the motion for attorney’s fees because this was part of my thinking in my ruling. While Stephens may have prevailed on the appeal due to the technicality of the appeal being untimely, the appeal did not address the merits of the dispute and that also was part of my thinking. I just wanted the record to reflect that.”

At the end of the hearing, the court adopted its tentative ruling as final. It issued a minute order stating substantially identical reasoning.

DISCUSSION

Stephens now argues that she was the prevailing party with respect to Goraya’s attempt to enforce his arbitration award against her, and therefore the court should have awarded attorney’s fees to her under Civil Code section 1717 and Code of Civil Procedure sections 1032 and 1293.2. To the extent that the correctness of a ruling on an attorney’s fee motion depends on whether a legal basis for an award exists, we review the ruling de novo as a question of law. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332; Khan v. Shim (2016) 7 Cal.App.5th 49, 55; Sessions Payroll Management v. Noble Constr. Co. (2000) 84 Cal.App.4th 671, 677.) If the ruling depends on disputed facts, we review the trial court’s factual findings under the substantial evidence standard. (J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 993.) In some circumstances, as will be seen, the question of which party, if any, has prevailed has more than one reasonable answer; and then we review the trial court’s answer for abuse of discretion. (Code Civ. Proc., § 1032, subd. (a)(4); Civ. Code, § 1717, subd. (b)(1); Goodman v. Lozano, supra, 47 Cal.4th at p. 1332; Khan v. Shim, supra, 7 Cal.App.5th at p. 55, fn. 3.) If there is any legal theory under which the trial court’s ruling is correct, we must affirm. (J.B.B. Partners, Ltd. v. Fair, supra, 232 Cal.App.4th at p. 993.)

The trial court’s analysis was, in effect, that the matter under consideration included not just Goraya’s unsuccessful efforts in the trial court and on appeal to obtain confirmation of the arbitration award against Stephens for his commission and attorney’s fees for pursuing the commission, but also the claims in Stephens’s unserved and dismissed cross-complaint against Goraya and Stephens’s unsuccessful claims against Goraya as asserted before the arbitrator. Taking all this into account, and citing Civil Code section 1717, the court found that each party had made claims against the other and neither had recovered anything against the other, and concluded this meant neither prevailed.

We find no error in this reasoning.

Civil Code section 1717, subdivision (a)(1), provides that attorney’s fees must be awarded to the prevailing party in an action on a contract that contains an attorney’s fee clause. Civil Code section 1717, subdivision (b)(1) provides:

“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.”

So the prevailing party is the party obtaining the greater relief, but the trial court “may” find (i.e., has discretion to find) there is no prevailing party if the circumstances warrant that finding.

If a defendant defeats a plaintiff’s claim, and that is the only claim on the contract in the case, then the defendant is deemed to have obtained the greater relief and is the prevailing party. (Hsu v. Abbara (1995) 9 Cal.4th 863, 875-876 (Hsu); Carole Ring & Assoc. v. Nicastro (2001) 87 Cal.App.4th 253, 261.) In that kind of situation, the defendant has achieved “a simple, unqualified victory by defeating the only contract claim in the action” and the trial court has no discretion to deny a motion for attorney’s fees under Civil Code section 1717. (Hsu, supra, 9 Cal.4th at p. 877.)

On the other hand, “when the results of the litigation are mixed,” Civil Code section 1717 gives the trial court discretion to decide that there is no prevailing party on the contract. (Hsu, supra, 9 Cal.4th at p. 876.) The court should exercise this discretion after “compar[ing] the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.” (Id. at p. 876.)

Stephens maintains she achieved a simple, unqualified victory, so she is entitled to a fee award under Civil Code section 1717. She relies on the fact that Goraya has obtained no relief on his claim against her for his commission. But she overlooks the fact that she made claims against him as well, both in her cross-complaint and in arbitration. The former were dismissed by her. The latter were rejected by the arbitrator, and after the court vacated the arbitrator’s award, she did not request a rehearing in arbitration. Her action advancing these claims was “on the contract” within the meaning of Civil Code section 1717. An action is on the contract in this context if it “involves” the contract. (Hjelm v. Prometheus Real Estate Group, Inc. (2016) 3 Cal.App.5th 1155, 1168-1171.) Stephens’s claims against Goraya all involved alleged actions inconsistent with his status as her agent or broker, a status that existed only because of the contract between them.

The trial court thus correctly concluded the results of the litigation on the contract were mixed. All the results can be classified as for Stephens and against Goraya, for Goraya and against Stephens, or neither for nor against either party:

Result For Stephens/against Goraya

For Goraya/against Stephens Neither for nor against either party
Arbitrator denies Stephens relief on her claims against Goraya; no rehearing requested after vacatur of arbitration award

X
Arbitrator awards commission and attorney’s fees to Goraya, but trial court denies Goraya’s motion to confirm, and vacates award

X
Stephens voluntarily dismisses cross-complaint against Goraya in court X
Goraya obtained an arbitration award in his favor both on his claims against Stephens and on her claims against him, but the trial court refused to confirm this award and instead vacated it, so he took nothing. We neither affirmed nor reversed this ruling, so his appeal changed nothing. Stephens sought but failed to obtain an arbitration award against Goraya. The arbitrator’s rejection of her claims was vacated, but she did not seek a rehearing in arbitration, so she took nothing. Under Civil Code section 1717, her voluntary dismissal in court of her cross-complaint against Goraya favored neither side (See Civ. Code, § 1717, subd. (b)(2) [neither party prevails if claim voluntarily dismissed].)

So Goraya lost on his claims against Stephens, she lost on her claims against him, and there was one neutral disposition. In other words, each party had a won-lost-tied record of 1-1-1. Under these circumstances, the trial court had discretion under Civil Code section 1717 to find that no one prevailed, and its decision to do so was within the bounds of reason.

Stephens next argues that she is entitled to attorney’s fees under Code of Civil Procedure sections 1293.2 and 1032. The former authorizes costs awards for proceedings on petitions to compel arbitration and to confirm or vacate arbitration awards. It provides:

“The court shall award costs upon any judicial proceeding under this title as provided in Chapter 6 (commencing with Section 1021) of Title 14 of Part 2 of this code.” (Code Civ. Proc., § 1293.2.)

“[T]his title” is title 9 of part 3 of the Code of Civil Procedure, which contains statutes regulating arbitration. Part 2, title 14, chapter 6 of the Code of Civil Procedure deals with costs awards in civil litigation generally. Its provisions include these:

“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.” (Code Civ. Proc., § 1021.)

“‘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. If 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.” (Code Civ. Proc., § 1032, subd. (a)(4).)

“Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).)

Goraya was a defendant in whose favor a dismissal was entered. On its own, under Code of Civil Procedure section 1032, this fact would mean he was the prevailing party. (In this respect, Code of Civil Procedure section 1032 contrasts with Civil Code section 1717, under which the dismissal would mean there was no prevailing party on the dismissed pleading.) But at the same time, each party was a defendant where neither plaintiff nor defendant obtained any relief, which would mean they were both prevailing parties. Code of Civil Procedure section 1032 thus does not yield any definite result on the prevailing party question, so this case must be one of those “situations other than as specified” in which the court is to exercise its discretion. Once again, we cannot say the court abused its discretion in this situation, in which each party made claims against the other and both failed. (If anything, the analysis is worse for Stephens here, since Stephens’s dismissal of her cross-complaint is treated as a win for Goraya here, but would be neutral under Civil Code section 1717. )

Stephens further maintains, in effect, that the trial court should have made the prevailing party determination based on the court proceedings alone, and more specifically her successful opposition to Goraya’s petition to confirm the arbitration award and her successful request that the court vacate the award; and it should not have considered what happened in the arbitration proceedings.

Stephens has cited no authority for this notion, and it does not stand to reason. Reason indeed does tell us that Goraya did not prevail in his claim for his commission even though he obtained an arbitration award, because the court refused to confirm the award and vacated it, leaving him with no recovery in the end. And this means, conversely, that Stephens did prevail on Goraya’s claims against her. But reason also tells us that Stephens did not prevail in her claims against Goraya. The arbitrator rejected them, and after the arbitrator’s decision was vacated, Stephens chose not to pursue the matter further: She did not ask the court to order a rehearing in arbitration and she voluntarily dismissed her cross-complaint. We see no reason why the trial court should have disregarded these matters when deciding whether or not she was a prevailing party.

Finally, Stephens argues that her voluntary dismissal of her cross-complaint against Goraya is irrelevant to the issue of attorney’s fees because she never served it on Goraya. But under Code of Civil Procedure section 1032, a prevailing party includes “a defendant in whose favor a dismissal is entered” (Code Civ. Proc., § 1032, subd. (a)(4)); “defendant” includes “a person against whom a complaint is filed,” (Code Civ. Proc., § 1032, subd. (a)(2) [italics added]); and a complaint “includes a cross-complaint” (id., subd. (a)(1)). There is no indication that the complaint or cross-complaint must have been served as well as filed before its dismissal would mean the defendant was a prevailing party.

Similarly, under Civil Code section 1717, “[w]here an action has been voluntarily dismissed …, there shall be no prevailing party for purposes of this section.” (Civ. Code, § 1717, subd. (b)(2) [italics added].) And “[a] civil action is commenced by filing a complaint with the court.” (Code Civ. Proc., § 411.10 [italics added].) There is no indication that a voluntary dismissal would mean there was no prevailing party only if there was service of the complaint in addition to commencement of the action.

Either way, the failure of the plaintiff or cross-complainant to serve the subsequently dismissed pleading would not strengthen that party’s claim to be prevailing.

DISPOSITION

The order denying Stephens’s motion for attorney’s fees is affirmed. Costs on appeal are awarded to respondent Mohammad Goraya.