McEwen v. Benedict

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CARLA MCEWEN, et al., Case No.: 3:20-cv-2364-CAB-LL

12 Plaintiffs, ORDER ON MOTION FOR 13 v. ATTORNEYS’ FEES

14 AMANDA BENEDICT, et al., [Doc. No. 70] 15 Defendants. 16 17 18 On August 18, 2021, Defendants Shoot for the Moon Sales Consultants, LLC, and 19 Dennis Conklin, individually, as trustee of Shoot for the Moon DBPP (“Defendants”) filed 20 a motion for attorneys’ fees pursuant to contractual prevailing party fee provisions. [Doc. 21 No. 70.] On September 3, 2021, Plaintiffs Carla McEwen and Daniel Buzahar 22 (“Plaintiffs”) filed an opposition. [Doc. No. 78.] On September 10, 2021, Defendants filed 23 a reply. [Doc. No. 79.] For the reasons set forth below, the motion for attorneys’ fees is 24 DENIED. 25 PROCEDURAL HISTORY 26 In 2017, Plaintiffs obtained a loan from SFTM for $100,000 (the “2017 Note”). 27 [Doc. 45, First Amended Complaint (“FAC”), ¶ 28.] The 2017 Note was secured by a 28 deed of trust (the “2017 Deed of Trust”). [FAC, ¶ 29.] Plaintiffs paid the 2017 Note in 1 October 2018. [FAC, ¶ 32.] In April 2019, McEwen obtained a loan for $15,000 through 2 a promissory note from SFTM (the “2019 Note”). [FAC, ¶ 38, 40.] Plaintiff also signed a 3 deed of trust in favor of SFTM securing the 2019 Note (the “2019 Deed of Trust”). [FAC, 4 ¶ 40.] 5 McEwen defaulted on the 2019 Note in July 2019. About a year later, after 6 Plaintiff’s failure to pay the monies owed on the 2019 Note, SFTM retained counsel to 7 enforce the 2019 Note and the 2019 Deed of Trust. [FAC, ¶ 44.] Following failed 8 attempts to negotiate the repayment of the 2019 Note, Defendants initiated nonjudicial 9 foreclosure proceedings. [FAC, ¶ 45.] 10 On December 3, 2020, Plaintiffs filed the initial Complaint in this matter, alleging 11 seventeen causes of action related to the 2017 Note and 2019 Note against nine separate 12 defendants. [Doc. 1.] Defendants filed a motion to dismiss pursuant to rule 12(b)(6), 13 arguing Plaintiffs had failed to state claims for relief in their Complaint. [Doc. Nos. 15- 14 17.] This Court granted the motions as to all three federal claims, allowing Plaintiff leave 15 to amend the Complaint only with respect to a claim of rescission on the 2019 Note. 16 [Doc. No. 44.] The Court also sua sponte declined to exercise supplemental jurisdiction 17 over the fourteen state law claims and dismissed the state law claims without prejudice to 18 being refiled in state court. [Doc. No. 44 at 8-10.] 19 Plaintiffs filed the FAC on May 14, 2021. The FAC alleged the same three federal 20 causes of action against all defendants. [Doc. 45, FAC.] At approximately the same time, 21 on May 25, 2021, Plaintiffs filed an action in California Superior Court asserting their 22 state law claims which had been dismissed without prejudice from this action. [Doc. No. 23 51 at 3-4.; see McEwen v. Benedict, San Diego Superior Court Case No. 37-2021- 24 00023198-CV-FR-NC.] 25 On May 28, 2021, Defendants filed a motion to dismiss the FAC in this action. 26 [Doc. No. 49.] On June 21, 2021, Plaintiffs filed a motion to dismiss the entire action 27 without prejudice. [Doc. 51.] On July 27, 2021, after hearing argument, the Court 28 dismissed the three federal claims with prejudice and confirmed that the ruling would not 1 prejudice Plaintiff’s ongoing state law claims pending in state court. [Doc. Nos. 69, 72 at 2 7.] 3 DISCUSSION 4 Defendants argue they are entitled to a contractual award of attorneys’ fees under 5 the 2017 and 2019 Notes as prevailing parties because the federal claims in this action 6 were dismissed with prejudice. [Doc. No. 70-1 at 4-7.] 7 Generally, attorney's fees authorized by contract are allowable as costs under 8 California Civil Code section 1717. In an action to enforce a contract that authorizes an 9 award of attorney's fees and costs to either party, the “party prevailing on the contract” is 10 entitled to “reasonable attorney's fees in addition to other costs.” See Cal. Civ. Code § 11 1717(a). On a party's noticed motion for attorney's fees, the judge must determine which 12 party is the party prevailing on the contract. Cal. Civ. Code § 1717(b)(1); Regency 13 Midland Constr., Inc. v Legendary Structures, Inc., 41 CA5th 994, 1000 (2019). 14 The prevailing party for contractual attorney fees award purposes is the party who 15 recovered greater relief in an action “on the contract.” Cal. Civ. Code §1717(b)(1); see 16 Hsu v. Abbara, 9 Cal. 4th 863 (1995). 17 To support their argument that they are the prevailing parties, Defendants cite to 18 Wells v. California Home Loan Solutions, No. 07cv1040-J-AJB, 2007 WL 2915059 (S.D. 19 Cal., Oct. 4, 2007), where a defendant was awarded attorneys’ fees after the parties 20 stipulated to a dismissal of the defendant with prejudice. However, in Wells, the plaintiff 21 agreed to dismiss all the claims against the defendant. Wells, 2007 WL 2915059 at *1. 22 Here, this Court dismissed the three federal claims with prejudice, but had earlier 23 dismissed the fourteen state law claims (also based on the 2017 and 2019 Notes) without 24 prejudice, and those claims are still pending in the state court. 25 Courts must find a prevailing party where one party succeeds entirely on her 26 claims. Hsu v. Abbara, 9 Cal. 4th 863, 875-76 (1995). “[A] plaintiff who obtains all relief 27 requested on the only contract claim in the action must be regarded as the party 28 prevailing ... under section 1717.” Id. (emphasis added). But most cases involve results 1 || where opposing litigants could each claim some success in the litigation. /d. at 875. In 2 ||such mixed outcome cases, courts may determine there is no prevailing party where an 3 || ostensibly prevailing party receives only part of the relief sought. /d. at 875-76 (citation 4 || omitted). In such cases, the court retains discretion in whether to find a prevailing party. 5 || at 876. This is a fact-intensive inquiry: “the trial court is to compare the relief awarded 6 the contract claim or claims with the parties’ demands on those same claims and their 7 || litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and 8 || similar sources.” Id. “The prevailing party determination is to be made only upon final 9 resolution of the contract claims and only by a comparison of the extent to which each 10 || party has succeeded and failed to succeed in its contentions.” Jd. (cleaned up). 11 Here, given that fourteen of the seventeen claims based upon the Notes are still 12 || pending in the state court, this Court is unable to “compare the relief awarded on the 13 contract ... claims with the parties’ demands on those same claims.” Jd. Accordingly, 14 || the Court cannot determine a prevailing party as this time as there has not been a final 15 |/resolution on all the contract claims. 16 CONCLUSION 17 For the reasons set forth above, the motion for attorneys’ fees is DENIED without 18 || prejudice to being refiled in the state court action once there is a final resolution of all the 19 || pending claims that are based on the 2017 and 2019 Notes. 20 21 ||Dated: September 30, 2021 € ZL 22 Hon. Cathy Ann Bencivengo 23 United States District Judge 24 25 26 27 28