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PNEC Corp. v. Meyer

November 17, 2010

PNEC CORPORATION, PLAINTIFF AND APPELLANT,
v.
GAIL L. MEYER, DEFENDANT AND RESPONDENT.



Appeal from a postjudgment order of the Superior Court of Orange County, Gregory Munoz, Judge. Affirmed. (Super. Ct. No. 30-2008-00114274).

The opinion of the court was delivered by: Ikola, J.

CERTIFIED FOR PUBLICATION

OPINION

The trial court awarded attorney fees to defendant Gail L. Meyer after she succeeded in moving to dismiss the action against her "on the ground of inconvenient forum." (Code Civ. Proc., § 418.10, subd. (a)(2).) Plaintiff PNEC Corporation (PNEC) appeals the post-dismissal attorney fee award, claiming: (1) a party is never entitled to contractual attorney fees under Civil Code section 1717 for successfully obtaining dismissal of an action on the ground of forum non conveniens; and (2) even if an attorney fee award is generally authorized in these circumstances, the amount awarded in this case ($21,677.25) was unreasonable because it included fees incurred working on aspects of the case other than forum non conveniens. We affirm the court's order.

FACTS

In November 2008, PNEC filed a complaint against Meyer and other defendants (one corporation and two other individuals). PNEC alleged it provided defendants with "certain refined petroleum products" for which the defendants failed to pay. The complaint included causes of action for breach of contract, open book account, account stated, goods sold and delivered, and breach of guaranty. Only the fifth cause of action, breach of guaranty, was alleged against Meyer and the other individual defendants.

The complaint attached a copy of a written guaranty of payment allegedly signed by Meyer. In relevant part, the document states: "The Customer and the undersigned agree that if the account is referred for collection to an attorney, the undersigned will pay reasonable attorney's fees and costs of collection."

Meyer's counsel made a special appearance to move to either: (1) quash service of process on Meyer for lack of personal jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)); or (2) stay or dismiss the action due to inconvenient forum (Code Civ. Proc., § 418.10, subd. (a)(2)). According to her declaration, Meyer resides in Tacoma, Washington and has never lived, worked, or been involved in any legal proceeding in California. Meyer also attested she sold her ownership stake in the corporate defendant years earlier to the other individual defendants. The court granted the motion to dismiss on forum non conveniens grounds. The court entered judgment of dismissal without prejudice in March 2009. PNEC did not appeal the judgment of dismissal.*fn1

Meyer then filed a motion for attorney fees in the amount of $22,127.25. The court granted Meyer's motion for attorney fees, awarding $21,667.25. The court's rationale was set forth in its minute order: "The Court finds that defendant was the prevailing party on the contract for purposes of [Civil Code] section 1717. The decision in [Profit Concepts Management, Inc. v. Griffith (2008) 162 Cal.App.4th 950 (Profit Concepts)] is deemed the controlling authority in this case. . . . Only 1.5 hours of the claimed total time is disallowed (the time spent researching Plaintiff's corporate status after the motion for forum non conveniens was granted.) Plaintiff cites no authority for its argument that Meyer should allocate the time spent on the forum non conveniens issue and the time spent on other work. The contract in question entitles Meyer to recover fees for the time reasonably spent in defending this action."

DISCUSSION

PNEC appeals the court's order awarding attorney fees. As noted, the fee-shifting provision in the pertinent contract provides: "The Customer and the undersigned agree that if the account is referred for collection to an attorney, the undersigned will pay reasonable attorney's fees and costs of collection." The provision must be construed to provide for reciprocal recovery of attorney fees, notwithstanding the contractual language favoring only PNEC. (Civ. Code, § 1717, subd. (a) [indicating the prevailing party shall be entitled to fees "whether he or she is the party specified in the contract or not"].)

PNEC's primary contention is that a dismissal on forum non conveniens grounds (Code Civ. Proc., § 418.10, subd. (a)(2)) does not provide an adequate basis for deeming a defendant to be a "party prevailing on the contract" pursuant to Civil Code section 1717, subdivision (a). "We review a determination of the legal basis for an award of attorney fees de novo as a question of law." (Pueblo Radiology Medical Group, Inc. v. Gerlach (2008) 163 Cal.App.4th 826, 828.)

It does not appear that the precise question before us has been addressed in published California authority. However, in Profit Concepts, supra, 162 Cal.App.4th at page 952, this court held that a defendant who successfully moved to quash service for lack of personal jurisdiction (Code Civ. Proc., § 418.10, subd. (a)(1)) was the "party prevailing on the contract under Civil Code section 1717" and was "therefore entitled to recover his reasonable attorney fees as costs." (Profit Concepts, at p. 952.)

In reaching its holding, the Profit Concepts court relied principally on its interpretation of the language of Civil Code section 1717, which states: "'(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. [¶] . . . [¶] (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 ...


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