511 S. Park View, Inc. v. Tsantis

Filed 9/15/15 and certified for publication as modified 10/5/15.
CERTIFIED FOR PUBLICATION
APPELLATE DIVISION OF THE SUPERIOR COURT
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
511 S. PARK VIEW, INC., ) No. BV 031134
)
Plaintiff and Appellant, ) Central Trial Court
)
v. ) No. 14U07420
)
MARIA TSANTIS et al., )
)
Defendants and Respondents. ) OPINION
)
APPEAL from a judgment of the Superior Court of Los Angeles County, Mary
Ann Murphy, Judge. Reversed.
Karen Nakon of the Law Offices of Kevin B. Jones, for Plaintiff and Appellant
511 S. Park View, Inc.
Ave Buchwald of the Blumberg Law Corporation, for Defendants and
Respondents Maria Tsantis and Michael Iorio.
* * *
INTRODUCTION
Plaintiff 511 S. Park View, Inc. appeals from an order awarding $12,375 in
attorney fees to defendants Maria Tsantis and Michael Iorio following an unlawful
detainer court trial. Plaintiff contends the award of attorney fees was limited by the
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express terms of the parties‟ lease agreement, and therefore the trial court erred in
awarding an amount in excess of $750. We conclude that the court‟s ruling was in error
and reverse the attorney fees order.
BACKGROUND
Plaintiff filed an unlawful detainer complaint against defendants alleging failure
to comply with a three-day notice to pay rent or quit. The complaint requested
possession of the premises, past due rent of $1,050, holdover damages, forfeiture of the
lease agreement, costs, and reasonable attorney fees. In response, defendants filed an
answer, in which they also requested reasonable attorney fees.
Following a court trial wherein judgment was rendered in defendants‟ favor,
defendants filed a motion for attorney fees as the prevailing parties. The motion argued
defendants were entitled to recover $12,375 in attorney fees pursuant to Civil Code
section 1717 and the attorney fees clause in the parties‟ lease agreement, and that the
provision in the lease limiting the recovery of fees to $750 was void and unenforceable.
Plaintiff filed an opposition, arguing there was no right to recover attorney fees in excess
of $750 because attorney fee provisions in lease agreements, like all other contractual
provisions, are enforced according to their terms. The trial court granted the motion for
fees in its entirety, finding that “the $750.00 limitation on attorney fees in the lease is
void and unenforceable.”
DISCUSSION
“A request for an award of attorney fees is entrusted to the trial court‟s discretion
and will not be overturned in the absence of a manifest abuse of discretion, a prejudicial
error of law, or necessary findings not supported by substantial evidence. [Citations.]”
(Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 577.) Because
the appeal centers on the attorney fees provision contained in the lease agreement, and
neither party offered extrinsic evidence to aid in interpreting the contract, we turn
immediately to the contract itself, which we interpret de novo. (See Hemphill v. Wright
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Family LLC (2015) 234 Cal.App.4th 911, 914; Scheenstra v. California Dairies, Inc.
(2013) 213 Cal.App.4th 370, 389-390.)1
An attorney fees provision in a contract is interpreted under ordinary contract
principles. (Gil v. Mansano (2004) 121 Cal.App.4th 739, 743; see Santisas v. Goodin
(1999) 17 Cal.4th 599, 608.) “„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. [Citation.] Such intent is to be inferred, if
possible, solely from the written provisions of the contract. [Citation.] 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” [citation], controls judicial interpretation. [Citation.] Thus, if the meaning a
layperson would ascribe to contract language is not ambiguous, we apply that meaning.
[Citations.]‟ [Citation.]”‟ [Citations.]” (Butler-Rupp v. Lourdeaux (2007) 154
Cal.App.4th 918, 929; Santisas v. Goodin, supra, 17 Cal.4th at p. 608; Civ. Code, §§
1636, 1638, 1639.) “„Courts will not strain to create an ambiguity where none exists.
[Citation.]‟ [Citation.] „“If contractual language is clear and explicit, it governs.”
[Citations.]‟ [Citation.]” (U.S. Bank National Association v. Yashouafar (2014) 232
Cal.App.4th 639, 646.)
The attorney fees provision in the case sub judice states: “In any legal action
brought by either party to enforce the terms of this LEASE, the prevailing party shall be
entitled to all costs, reasonably incurred in connection with that action, limited to no
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Defendants contend plaintiff failed to provide an adequate record for appellate review.
We determine that plaintiff was not required to provide a reporter‟s transcript of the argument
before the trial court because we decide a pure legal issue based on the filings before the trial
court (Chodos v. Cole (2012) 210 Cal.App.4th 692, 699), and there is no indication that a party
took a position at the argument different from that taken in the documents relating to the motion
for attorney fees filed in the trial court.
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more than five hundred dollars ($500.00). In addition, the prevailing party is entitled to
reasonable attorney fees, limited to no more than seven hundred fifty dollars ($750.00).”
Defendants contend the cap on fees “cannot be reconciled” with the portion of the
attorney fees clause that allows for “reasonable” attorney fees. We find there is no
conflict or ambiguity created by the two parts of the fees clause simply because
reasonable fees are capped at $750. A contract provision is considered ambiguous when
it may be interpreted in two or more ways, both of which are reasonable. (TRB
Investments, Inc. v. Fireman’s Fund Ins. Co. (2006) 40 Cal.4th 19, 27.) Here, there is
but one interpretation based on the plain meaning of the terms. The attorney fees
provision imposes two conditions on the recovery of fees—they must be reasonable and
must be no more than $750. The measure and mode of compensation of attorneys are
left to the agreement of the parties (Code Civ. Proc., § 1021; see Reynolds Metals Co. v.
Alperson (1979) 25 Cal.3d 124, 130 [holding trial court was bound by provision of two
promissory notes limiting award of fees]), and here the parties expressly agreed that in
an action to enforce the lease agreement, the prevailing party would be entitled to no
more than $750 in attorney fees.
There is nothing inconsistent or “unreasonable,” as defendants claim, in capping
“reasonable” fees at $750. By expressly agreeing to do so, the parties recognized that
even fees below the contractual limit can still be unreasonable, as determined by the trial
court based on its review of the hourly rate, time expended, nature and difficulty of the
case, or quality of the work by the attorney. (See Concepcion v. Amscan Holdings, Inc.
(2014) 223 Cal.App.4th 1309, 1320-1321.)
Defendants also contend the cap is void because it impairs the trial court‟s power
under Civil Code section 1717 to award “reasonable” attorney fees. Civil Code section
1717 provides in part: “In any action on a contract, where such contract specifically
provides that attorney‟s fees and costs, which are incurred to enforce the provisions of
such contract, shall be awarded to one of the parties, the prevailing party, whether he is
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the party specified in the contract or not, shall be entitled to reasonable attorney‟s fees in
addition to costs and necessary disbursements.”
The attorney fees clause does not contravene Civil Code section 1717. The
reciprocal attorney fees statute was enacted to ensure mutuality of remedy for attorney
fee claims under contractual attorney fee provisions. (In re Tobacco Cases I (2011) 193
Cal.App.4th 1591, 1599; Sessions Payroll Management, Inc. v. Noble Construction Co.,
Inc. (2000) 84 Cal.App.4th 671, 678.) Civil Code section 1717‟s “effect is to make an
otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions
to enforce the contract.” (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th
1338, 1342 [“Because of its more limited scope, Civil Code section 1717 cannot be said
to supersede or limit the broad right of parties pursuant to Code of Civil Procedure
section 1021 to make attorney fees agreements”].) The bilaterality of the attorney fees
provision in the instant case is in accord with the main purpose of Civil Code
section 1717.
Moreover, there is ample case law which holds that parties to a contract may limit
entitlement to fees. In Kalai v. Gray (2003) 109 Cal.App.4th 768, 777, the Court of
Appeal held that the trial court erred in awarding attorney fees in a civil action because
the parties‟ agreement specifically limited the award of fees to the prevailing party in
arbitration. The Court of Appeal in Leamon v. Krajkiewcz (2003) 107 Cal.App.4th 424,
433 addressed whether a condition precedent to an award of attorney fees set forth in a
standard residential form purchase agreement was invalid, and “conclude[d] that the
enforcement of the condition precedent to the recovery of attorney fees does not conflict
with the concept of mutuality of remedy” embodied in Civil Code section 1717. (See
Cullen v. Corwin (2012) 206 Cal.App.4th 1074, 1079 [prevailing party who refused
prelitigation mediation as a condition precedent under the parties‟ purchase agreement
barred from recovering fees].)
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Cases cited by defendants are inapposite because they do not concern contractual
limitations on fees. For example, Beverly Hills Properties v. Marcolino (1990) 221
Cal.App.3d Supp. 7 addressed whether attorney fees are “incurred” for purposes of Civil
Code section 1717 when pro bono counsel does not charge the prevailing party fees. In
interpreting Civil Code section 1717, this court concluded that the statute did “not
expressly require the prevailing party to incur legal expenses”; rather, fees are
recoverable as long as they “are incurred,” even if only by the attorney. In PLCM
Group v. Drexler (2000) 22 Cal.4th 1084, the California Supreme Court addressed
whether an entity that is represented by in-house counsel may recover fees under Civil
Code section 1717, and did not consider a contractual cap on fees.2 In sum, the parties‟
attorney fees provision is not void, and the court abused its discretion in awarding
attorney fees in excess of the contractual limit.
DISPOSITION
The order awarding $12,375 in attorney fees is reversed. Plaintiff to recover
costs on appeal.
______________________
Ricciardulli, J.
We concur:
______________________
Kumar, Acting P. J.
______________________
B. Johnson, J.
2
Defendants assert that equitable considerations favor nonenforcement of the fee cap,
namely because such caps purportedly discourage representation by private counsel and chill
tenants‟ right to trial by jury. Because defendants cite no authority in support of a court‟s
equitable powers not to enforce a contract in the present context, we do not address it. (See
Maral v. City of Live Oak (2013) 221 Cal.App.4th 975, 984-985.)
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