People ex rel. Department of Corps. v. Speedee Oil Change Systems, Inc.

147 Cal. App. 4th 424, 2007 Daily Journal DAR 1545, 54 Cal. Rptr. 3d 225, 2007 Cal. Daily Op. Serv. 1227, 2007 Cal. App. LEXIS 134

• Court: California Court of Appeal
• Decided: February 1, 2007
• Docket: No. B188775
• Status: Published

Opinions

Opinion

TURNER, P. J.

I. INTRODUCTION

Defendants, SpeeDee Oil Change Systems, Inc., NoCal, Inc., Gary L. Copp, and Kevin M. Bennett, appeal from a January 6, 2006 order awarding attorney fees on appeal to plaintiffs in intervention, Beldoon Corporation, Donald Almen, Belva Almen, Jon Andersen, Jerry Beezley, M.G. Han, Sam Lau, and Christopher Mack (interveners). Interveners argue that they are entitled to fees pursuant to the attorney fees clause in several franchise agreements, all of which contain the same language.¹ The attorney fee clause provides that the party in whose favor the “final judgment” is entered is entitled to recover attorney fees. After a trial, judgment on the complaints in intervention was entered in defendants’ favor. Defendants then secured a postjudgment attorney fee award, which we reversed on appeal at interveners’ urging. Interveners then filed their attorney fee motion. Interveners argued our opinion reversing the attorney fee award in defendants’ favor was a “final judgment” within the meaning of the attorney fee clause. An attorney fee award was issued in interveners’ favor. We conclude, utilizing traditional contract interpretation principles, that although our prior opinion was a judgment, it was not a “final judgment” within the meaning of the attorney fee clause. Therefore, we reverse the attorney fee award at issue.

H. BACKGROUND

This action was commenced on July 29, 1994, by the Department of Corporations on behalf of the People of the State of California. It was brought against a franchisor and others for alleged violations of the Franchise Investment Law, Corporations Code section 31000 et seq. The enforcement action is not before us having been resolved by separate judgment imposing penalties and injunctive relief on September 18, 1997.

Numerous franchisees intervened in the action, including the present interveners. They asserted causes of action for intentional and negligent misrepresentation, intentional emotional distress infliction, and contract breach, among others. On February 29, 2000, a nonsuit order was entered by Retired Judge Joseph R. Kalin in defendants’ favor and against interveners. Retired Judge Kalin found, among other things, there was no substantial evidence of a contractual relationship between defendants and interveners. Judgment was ultimately entered in defendants’ favor and against interveners by Retired Judge Kalin on July 12, 2000. We affirmed Retired Judge Kalin’s judgment entered on his nonsuit order in defendants’ favor on appeal on January 28, 2002. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (2002) 95 Cal.App.4th 709, 728 [116 Cal.Rptr.2d 497].)

Following the entry of the nonsuit, defendants repeatedly and unsuccessfully moved for an attorney fee award against interveners. By order entered on September 24, 2002, Judge Ronald M. Sohigian ruled: “[Defendants’ motion to fix attorney fees as an item of costs filed July 5, 2002, is] essentially premised on attorneys’ fees provisions in the franchise agreements. But such agreements are void.” Defendants did not appeal from these adverse decisions. However, following entry of a December 8, 2003 judgment, Judge Sohigian granted defendants’ third attorney fee motion. In an unpublished opinion, we reversed that order on appeal. (Andersen v. SpeeDee Oil Change Systems, Inc. (June 22, 2005, B173236) [nonpub. opn.].) We held the December 8, 2003 judgment, which was the second one entered against interveners on the same claims, was void and had no effect; therefore, defendants’ attorney fee motion was untimely. (Ibid.) We ordered in part, “[Interveners] are to recover their costs on appeal, jointly and severally, from defendants . . . .” (Ibid.) It bears emphasis we did not hold the attorney fee clause was unenforceable. Rather, we held the attorney fee motion was untimely.

Upon issuance of the remittitur, interveners sought an award of attorney fees incurred on appeal pursuant to California Rules of Court,² former rule 27, now rule 8.276. In response, defendants filed a motion to strike or tax costs. Interveners’ attorney fees motion was granted. Defendants’ motion to tax costs was denied. On January 6, 2006, Mr. Andersen, Mr. Beezley, Mr. Han, Mr. Lau, and Mr. Mack received an award of $65,000 in attorney fees and $3,450.37 in costs. Also, on January 6, 2006, $34,008 in attorney fees and $2,643.36 in costs were awarded to Beldoon Corporation and the Almens. Defendants have not raised any issue on appeal with respect to non-attomey-fee cost issues.

HI. DISCUSSION

It is undisputed the attorney fee clause provides, “ ‘In the event that any action or proceeding is filed by one party against the other party to enforce any of the covenants or conditions hereto, the party in whose favor final judgment shall be entered shall be entitled to recover from the other reasonable attorney’s fees, to be fixed by the court in which the judgment is entered.’ ” The sole question presented is whether interveners were entitled to recover attorney fees incurred in the appeal. This issue arises on undisputed facts. Under these circumstances, we review the legal basis for an attorney fee award de novo. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175-1176 [39 Cal.Rptr.3d 788, 129 P.3d 1]; Whiteside v. Tenet Healthcare Corp. (2002) 101 Cal.App.4th 693, 707 [124 Cal.Rptr.2d 580]; Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677 [101 Cal.Rptr.2d 127]; Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 705 [75 Cal.Rptr.2d 376].) As noted above, interveners rely on former rule 27, now rule 8.276, in support of their claimed entitlement to attorney fees. Rule 8.276 provides in pertinent part; “(a) Right to costs [f] (1) Except as provided in this rule, the party prevailing in the Court of Appeal in a civil case is entitled to costs on appeal. [][]... [<][] (c) Recoverable costs [][]... [f] (2) Unless the court orders otherwise, an award of costs neither includes attorney’s fees on appeal nor precludes a party from seeking them under rule 3.1702.” (Original boldface.) Under rule 8.276, our order in the prior appeal was, “[Interveners] are to recover their costs on appeal, jointly and severally from defendants . . . .” (Andersen v. SpeeDee Oil Change Systems, Inc., supra, B173236.) Our order did not include an attorney fee award nor preclude interveners from seeking such fees. (Rule 8.276(c)(2).) Interveners must show a legal basis independent of rule 8.276 for recovery of attorney fees. (Santisas v. Goodin (1998) 17 Cal.4th 599, 606 [71 Cal.Rptr.2d 830, 951 P.2d 399]; see Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 973 [52 Cal.Rptr.3d 400].) This is because as a general rule, attorney fees are not recoverable as costs unless they are authorized by statute or agreement. (Serrano v. Unruh (1982) 32 Cal.3d 621, 637 [186 Cal.Rptr. 754, 652 P.2d 985]; Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 127-128 [158 Cal.Rptr. 1, 599 P.2d 83]; Code Civ. Proc., §§ 1021, 1032, subd. (b), 1033.5, subd. (a)(10).) A party may seek attorney fees on appeal under a statute or a contract. (Rules 8.276(a), 8.276(c)(2), 3.1702(c)(1).) Here, interveners rely on a contractual attorney fee provision.

Our analysis begins and ends with the language of the attorney fee clause on which interveners rely. (See Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1106 [86 Cal.Rptr.2d 614, 979 P.2d 974]; Santisas v. Goodin, supra, 17 Cal.4th at pp. 606-608; Hasler v. Howard (2005) 130 Cal.App.4th 1168, 1170-1171 [30 Cal.Rptr.3d 714]; Exxess Electronixx v. Heger Realty Corp., supra, 64 Cal.App.4th at pp. 705, 708-709.) Code of Civil Procedure section 1021 provides, “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.” We use traditional contract interpretation principles in assessing the extent of the parties’ rights to recover attorney fees. (Santisas v. Goodin, supra, 17 Cal.4th at p. 608 [construing the term “ ‘prevailing parties]’ ” in attorney fee clause]; Royster Construction Co. v. Urban West Communities (1995) 40 Cal.App.4th 1158, 1170 [47 Cal.Rptr.2d 684] [interpreting the term “ ‘costs’ ” in an attorney fee provision]; Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1343, 1344-1345 [5 Cal.Rptr.2d 154] [construing the language in the phrases “ ‘lawsuit or other legal proceeding’ ” to which “ ‘this Agreement gives rise’ ” (italics omitted) as including tort claims in a suit brought against a real estate broker].) The Supreme Court has synthesized the applicable contract interpretation principles in the attorney fee clause context thusly: “ ‘Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage” (id., § 1644), controls judicial interpretation. (Id., § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. [Citations].’ (AIU Ins. & Co. v. Superior Court (1990) 51 Cal.3d 807, 821-822 [274 Cal.Rptr. 820, 799 P.2d 1253].)” (Santisas v. Goodin, supra, 17 Cal.4th at pp. 608-609.)

The parties present two contrasting arguments as to the meaning of the term “final judgment” in the attorney fee clause. Interveners argue that our June 22, 2005 unpublished ruling reversing Judge Sohigian’s ruling awarding fees to defendants was a “final judgment” within the meaning of the attorney fee clause. Interveners contend that having secured a final judgment by reason of our June 22, 2005 unpublished opinion, they are entitled to their costs incurred in that appeal. By contrast, defendants assert that the only final judgment within the meaning of the attorney fee clause was the one signed on July 12, 2000, by Retired Judge Kalin.

There are two parts to the attorney fee clause. The first part is the “any action or proceeding” language. We agree with interveners this is a broad provision which includes the contractual right to attorney fees incurred on appeal. Defendants do not dispute this analysis. The second part of the attorney fee clause is more limited in scope. The second part of the clause with its “party in whose favor final judgment shall be entered shall be entitled to recover from the other reasonable attorney’s fees, to be fixed by the court in which the judgment is entered” language is narrower in its scope. This second portion of the attorney fee clause limits recovery to the party in whose favor a “final judgment” is entered. Defendants contend this latter portion of the attorney fee clause, with its reference to a final judgment and the duty of the court which enters the judgment to fix the fees, controls the outcome of this appeal.

The term “final judgment” has varying definitions. The Supreme Court has explained: “On the contrary, it has long been recognized that ‘No hard-and-fast definition of “final” judgment applicable to all situations can be given, since its finality depends somewhat upon the purpose for which and the standpoint from which it is being considered, and it may be final for one purpose and not for another. (Freeman on Judgments, 5th ed., sec. 27.) This is so manifest that it would be idle to attempt any exhaustive examination into the different cases in which the word “final” is employed.’ (Howard v. Howard (1927) 87 Cal.App. 20, 25 [261 P. 714], italics added.)” (Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 303-304 [63 Cal.Rptr.2d 74, 935 P.2d 781], original italics.) The parties’ contentions demonstrate the differing manner in which the language “final judgment” can be construed. As interveners argue, our June 22, 2005 unpublished opinion can be construed as a judgment for some purposes. (Rest.2d Judgments, § 27, com. o, p. 263 [res judicata]; Cal. Const., art. VI, § 2 [requirement of concurrence of four justices in order for the Supreme Court to enter a “judgment”].) By contrast, defendants argue that Retired Judge Kalin entered a final judgment on July 12, 2000, for purposes of triggering the right to attorney fees. (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 [39 Cal.Rptr.2d 824, 891 P.2d 804] [“when a defendant defeats recovery by the plaintiff on the only contract claim in the action, the defendant is the party prevailing on the contract under section 1717”]; Doudell v. Shoo (1911) 159 Cal. 448, 453 [114 P. 579] [“A judgment is final ‘when it terminates the litigation between the parties on the merits of the case and leaves nothing to be done but to enforce by execution what has been determined’ ”].)

Reason tells us that the term “final judgment” as used by the parties in the franchise agreements refers to the July 12, 2000 judgment in favor of defendants signed by Retired Judge Kalin. Retired Judge Kalin’s July 12, 2000 judgment finally resolved the merits of interveners’ contract claims. No doubt, Retired Judge Kalin’s July 12, 2000 contract findings were subject to appellate review. But once we affirmed Retired Judge Kalin’s contract findings and our Supreme Court denied interveners’ review petitions, it was all over—the judgment was “final” as that term appears in the attorney fee clause. Under interveners’ theory, there are a series of “final” judgments including: Retired Judge Kalin’s July 12, 2000 judgment; Judge Sohigian’s September 24, 2002 attorney fee order; our June 22, 2005 unpublished opinion reversing Judge Sohigian’s attorney fee order; and the present January 6, 2006 order granting interveners’ attorney fee motions. No doubt, as interveners assert, there can be a series of judgments in a particular lawsuit. (See 7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 7, pp. 544—545.) But the parties’ use of the term “final judgment” in the singular in the attorney fee clause, although not conclusive, is of logical consequence. Final means final—not successive or repetitive. Based on contractual interpretation principles, we conclude the controlling judgment is the one executed by Retired Judge Kalin on July 12, 2000. Defendants are the only litigants entitled to attorney fees in post final judgment fee litigation.

Since Retired Judge Kalin’s July 12, 2000 judgment was in favor of defendants, they are the prevailing parties for purposes of the recovery of attorney fees. Hence, interveners were not entitled to their fees incurred in their successful appeal from Judge Sohigian’s September 24, 2002 attorney fee order. Thus, the attorney fee awards under review must be reversed. We need not discuss the parties’ remaining contentions.

IV. DISPOSITION

The attorney fee awards are reversed. In all other respects, the January 6, 2006 cost awards are affirmed. Defendants, SpeeDee Oil Change Systems, Inc., NoCal, Inc., Gary L. Copp, and Kevin M. Bennett, are to recover their costs incurred on appeal from plaintiffs in intervention, Beldoon Corporation, Donald Almen, Belva Almen, Jon Andersen, Jerry Beezley, M.G. Han, Sam Lau, and Christopher Mack.

Kriegler, J., concurred.

1 Technically, there are six different attorney fee clauses in the franchise agreements separately executed by interveners. But the language in the attorney fee clauses is word for word the same. For purposes of clarity, we will refer to the attorney fee clauses in the singular; viz., attorney fee clause.

2 All further references to a rule are to the California Rules of Court.