Case Number: TC028862 Hearing Date: April 10, 2018 Dept: A

# 13. Francisco Corona, et al. v. Ramon Bueno, et al.

Case No.: TC028862

Matter on calendar for: Hearing on motion for attorney fees and costs

Tentative ruling:

I. Introduction

Plaintiffs allege that there was a real estate purchase agreement between themselves as buyers and Defendants Ramon Bueno and Bueno Properties, LLC as sellers, but these Defendants breached the agreement and sold the property to Defendants Hugo Hernandez and Georgina Hernandez. There were no specific allegations against former Defendant Green Apple Escrow, except that the sale was made “thru [sic] an Escrow with Green Apple Escrow, Inc…” (Original Complaint, ¶ 16.)

Nevertheless, Plaintiffs asserted Causes of Action alleging Specific Performance, Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, and Fraud, against Green Apple.

The Court sustained Green Apple’s demurrer to the original Complaint with leave to amend on January 4, 2018, and Plaintiffs subsequently dismissed Green Apple from the action on January 8, 2018.

Green Apple now moves for attorney fees and costs in the amount of $14,947.50.

II. Analysis

A. Entitlement to reasonable attorney fees and costs

1. CCP § 128.5

A “prevailing party,” which includes a “defendant in whose favor a dismissal was entered,” is “entitled as a matter of right to recover costs in any action or proceeding.” (CCP §§ 1032(a)(4) & (b).)

Recoverable costs include attorney fees when authorized by contract, statute, or law. (CCP §§ 1033.5(a)(10)(A)-(C).)

CCP § 128.5 states: “A trial court may order a party, the party’s attorney, or both, to pay reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” Under CCP § 128.5, the Court must “determine that an action was being pursued in subjective bad faith before imposing sanctions…” (Summers v. City of Cathedral City (1990) 225 Cal.App.3d 1047, 1071.)

Green Apple argues that a statute, CCP § 128.5, authorizes recovery of attorney fees against Plaintiffs, because Plaintiffs engaged in “bad faith actions that are frivolous.” (Id.)

The original complaint, despite asserting Causes of Action alleging Specific Performance, Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, and Fraud, against Green Apple., merely referenced “an Escrow” with Green Apple. But Green Apple has not shown that such defective pleading amounts to a “bad faith action that [is] frivolous,” especially from a subjective standpoint. (Id.) Further: (1) Plaintiffs swiftly dismissed Green Apple from this action after the Court sustained Green Apple’s demurrer with leave to amend, and (2) even Green Apple alleges the existence of some “underlying contract or escrow instructions” between Green Apple and Plaintiff. (Motion, 8:21-22.) Such facts (or concessions) do not paint a picture of bad faith.

CCP § 128.5, which relates to “bad faith actions or tactics,” generally, does not have a safe harbor requirement. CCP § 128.7, which concerns pleadings or similar papers, does have a safe harbor requirement. The subject of this motion may have been within the purview of CCP § 128.7, but not CCP § 128.5.

2. Civil Code § 1717

Green Apple independently moves to recover attorney fees under Civil Code § 1717. Under Civil Code § 1717, attorney fees shall be awarded to the prevailing party “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract…” The action is “on a contract” if it involves a contract. (Torres v. City of San Diego (2007) 163 Cal.App.4th 103.)

Green Apple mentions “an underlying contract or escrow instructions” and attaches Exhibit A to the Dieringer Declaration. Without scrutinizing Exhibit A, Green Apple is estopped from arguing it is entitled to attorney fees under Civil Code § 1717 when it concurrently moves for attorney fees on the basis that “[t]here was no contract between Plaintiffs and Green Apple.” (Motion, 3:14.) Even the Saucedo Declaration at ¶ 3 states that Green Apple “had not entered into any contract with Plaintiffs.”

Civil Code § 1717(b)(2) also states that “there shall be no prevailing party for purposes of this section” where “an action has been voluntarily dismissed.” Plaintiffs voluntarily dismissed the action against Green Apple. And Green Apple’s citation to a case distinguishing a voluntary dismissal of an action from a voluntary dismissal of “one cause of action among many” is obviously inapplicable here. (See Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 151.)

III. Ruling

The Court denies the motion with prejudice.