United States District Court, N.D. California
ORDER GRANTING MOTION FOR ATTORNEYS FEES Re: Dkt. No.
47
JOSEPH
C. SPERO CHIEF MAGISTRATE JUDGE
I.
INTRODUCTION
The
dispute in these related cases revolves around a commercial
lease for a restaurant property located at 702-706 Valencia
Street, in San Francisco, California. In the lower-numbered
case (“the Breach of Contract Action”), filed on
May 21, 2015, Farina Focaccia & Cucina Italiana, LLC
(“Farina Focaccia”) asserts, inter alia,
that landlord 700 Valencia Street LLC (“700
Valencia”) breached the parties’ lease agreement
(“Lease”) by refusing to extend the lease
pursuant to an option that Farina Focaccia contends it
validly exercised. The higher-numbered case (“the
Unlawful Detainer Action”) is an unlawful detainer case
that was brought against Farina Focaccia and Luca Minna,
among others. On April 19, 2016, the Court granted a motion
to dismiss (“Motion to Dismiss”) by Defendant
Luca Minna in the Unlawful Detainer Action, finding that the
allegations in the Unlawful Detainer complaint were not
sufficient to state a claim as to Minna.
Presently
before the Court is Minna’s Motion for Attorneys’
Fees (“Motion”), in which he asks the Court to
award attorneys’ fees incurred in connection with the
Motion to Dismiss under California Civil Code § 1717,
[1]
pointing to the attorneys’ fees provision found at
Paragraph 58 of the Lease. 700 Valencia contends Minna may
not recover under Paragraph 58 because he was not a party to
that the Lease. It further contends that while there are
circumstances under which California law permits a
non-signatory to an agreement to recover attorneys’
fees under a contractual attorneys’ fees provision,
that exception to the general rule does not apply.
The
Court finds that the Motion is suitable for determination
without oral argument pursuant to Civil Local Rule 7-1(b) and
therefore vacates the hearing scheduled for July 29, 2016.
For the reasons stated below, the Motion is
GRANTED.[2]
II.
ANALYSIS
A.
Whether Minna is Entitled to an Award of Attorneys’
Fees Under California Civil Code Section 1717
California
Civil Code section 1717 provides, in relevant part, as
follows:
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.
Cal. Civ. Code § 1717. The California Supreme Court has
explained that this provision “was enacted to establish
mutuality of remedy where contractual provision makes
recovery of attorney’s fees available for only one
party.” Reynolds Metals Co. v. Alperson, 25
Cal.3d 124, 128 (1979). Consistent with this purpose, the
court in Reynolds found that section 1717 should be
construed “to further provide a reciprocal remedy for a
nonsignatory defendant, sued on a contract as if he were a
party to it, when a plaintiff would clearly be entitled to
attorney’s fees should he prevail in enforcing the
contractual obligation against the defendant.”
Id.
The
term “on a contract” under section 1717 is
construed liberally by California courts. Eden Twp.
Healthcare Dist. v. Eden Med. Ctr., 220 Cal.App.4th 418,
426 (2013) (citing Turner v. Schultz, 175
Cal.App.4th 974, 979 (2009)). The court in Eden
Township explains:
The phrase “action on a contract” includes not
only a traditional action for damages for breach of a
contract containing an attorney fees clause (e.g., Jones
v. Drain (1983) 149 Cal.App.3d 484, 487- 488, 196
Cal.Rptr. 827), but also any other action that
“involves” a contract under which one of the
parties would be entitled to recover attorney fees if it
prevails in the action (e.g., Mitchell Land &
Improvement Co. v. Ristorante Ferrantelli, Inc. (2007)
158 Cal.App.4th 479, 486, 70 Cal.Rptr.3d 9). “In
determining whether an action is ‘on the
contract’ under section 1717, the proper focus is not
on the nature of the remedy, but on the basis of the cause of
action.” (Kachlon v. Markowitz (2008) 168
Cal.App.4th 316, 347, 85 Cal.Rptr.3d 532.)
Id.
Thus,
the question of whether a defendant who prevails in an
unlawful detainer case may receive an award of
attorneys’ fees on the basis of an attorneys’
fees provision in a lease does not focus on the abstract
question of whether an unlawful detainer action sounds in
tort or contract but instead, on the specific basis for the
plaintiff’s claim. Consequently, California courts have
found that an unlawful detainer action may or may not be an
“action on a contract, ” depending on the rights
the plaintiff in the action is seeking to enforce. For
example, California courts have found that “an unlawful
detainer action based on a lessee’s alleged breach of
covenants in a lease” sounds in contract for the
purposes of Section 1717. Douglas E. Barnhart, Inc. v.
CMC Fabricators, Inc., 211 Cal.App.4th 230, 241 (2012)
(citing Mitchell Land & Imp. Co. v. Ristorante
Ferrantelli, Inc., 158 Cal.App.4th 479, 490 (2007)
(finding that because unlawful detainer action was premised
upon an alleged breach of covenants of the lease, the action
was one “on a contract” for the purposes ...