2012-00134178-CU-FR

Patrick LeMieux vs. Xiansheng Bing Fan Yeyoung

Nature of Proceeding: Motion for Attorney Fees

Filed By: Judson, Scott J.

Defendants/Cross-complainant’s motion for attorneys’ fees is denied.

The Court is not ruling on the evidentiary objections since the evidence objected to is
not relevant to the motion.

Plaintiffs allege that after they studied martial arts with defendant, they purchased
ceramics from defendant as an investment for the price of $214,500 when they were
only worth $76,750. Plaintiffs alleged that defendant promised to buy back the
ceramics if plaintiffs needed the money but reneged on his promise. Plaintiff’s
Complaint alleged causes of action for fraud and conspiracy.

Plaintiffs allege as follows:

“As part of the ongoing education and instruction at [defendant’s] business, defendant
conducts a “Tea Retreat,” participation in which is “coveted,” and “restricted to those
individuals invested in the collection of… teapots.” In fact, one must be a student and
have purchased at least one teapot, or a non-student having made a commitment to
purchase one teapot per year in order to participate in the retreats. In furtherance of
his business operations, [defendant] promotes and sells oriental ceramics and teapots,
representing the values of those ceramics and teapots orally, in writing, and by
nonverbal conduct.”(Complaint, para. 13)

Defendant filed a compulsory cross-complaint against plaintiffs in which he alleges
they defamed him, among other things. The cross-complaint alleges that YeYoung
Cultural Studies (“YCS”) provides an educational service. “It does not buy or sell
goods, merchandise, or products for profit (or otherwise, except as used and
consumed as incidentals to its business.” (Cross-complaint ¶ 6) The cross-complaint
seeks attorneys fees. (Cross-complaint, Prayer Item 3)

Plaintiffs’ voluntarily dismissed the Complaint on January 22, 2014. Defendant seeks
attorneys fees pursuant to an indemnity clause that plaintiffs signed when they began
taking martial arts.

The indemnity clause provides as follows:

“I shall and hereby do indemnify, protect, defend, release, discharge, and forever hold
harmless Bing Fan Ye Young and Ye Young Cultural Studies, his employees, his
agents, and his estate from and against any and all actions, claims, demands,
liabilities, losses, costs (including court costs) damage awards, and expenses
(including reasonable attorney’s fees) arising from any use of Bing Fan YeYoung
and YeYoung Culture Studies services, equipment, and facilities.
(Emphasis added)

Defendant relies on the above clause to obtain attorneys fees as the prevailing party
on the Complaint pursuant to CCP 1033.5. In opposition, plaintiffs Lemieux and Allen
contend that there is no contractual attorneys fees clause that applies to the
allegations in their Complaint. Plaintiffs contend that the indemnity clause was a
release of liability for the martial arts program, similar to a release signed when a
person joins a gym. Defendant has provided no evidence that the above clause was
intended to cover a dispute over the purchase of ceramic teapots, and the plain
language of the indemnity clause does not cover the purchase of goods, only use of
services, equipment and facilities. The purchase of teapots does not constitute
plaintiffs “use of services, equipment and facilities.”

The Court finds that the language of the indemnity clause limiting indemnity to claims
arising from the use of services, equipment and facilities does not cover the parties
dispute as set forth in the Complaint.

Plaintiffs also contend that contractual attorneys fees are not available under Civil
Code, Section 1717, which provides as follows:

(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.

Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the
costs of suit.

(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.

Plaintiffs contend that because the action was voluntarily dismissed, no contractual
attorneys fees may be awarded under Civil Code 1717 because the defendant is not
the prevailing party, relying on Santisas v Goodin (1998) 17 Cal.4th 599.

Defendant contends that the indemnity clause does not limit fees to a party prevailing
on a contract, but covers all claims arising from “any use of Bing Fan YeYoung and
YeYoung Culture Studies services, equipment, and facilities.” However, because
the Court has determined that the indemnity clause does not apply to the allegations of
the Complaint, it need not determine whether this in an action on the contract under
Civil Code 1717.

The Court would usually determine that any ruling on attorneys fees is premature until
after judgment is entered on the cross-complaint. However, under the present
circumstances the motion for attorneys fees is denied on the Complaint.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.