United States District Court, S.D. California
ORDER GRANTING IN PART DEFENDANT'S MOTION FOR
ATTORNEY'S FEES AND COSTS (DOC. NO. 20)
Anthony J. Battaglia United States District Judge
before the Court is Defendant Great American Insurance
Co.'s (“Defendant”) motion to be deemed the
prevailing party and for attorney's fees and costs. (Doc.
No. 20.) Plaintiff GDS Industries, Inc.
(“Plaintiff”) opposes the motion. (Doc. No. 22.)
Having reviewed the parties' moving papers and
controlling legal authority, and pursuant to Local Civil Rule
7.1.d.1, the Court finds the matter suitable for decision on
the papers and without oral argument. For the reasons set
forth below, the Court GRANTS IN PART Defendant's motion
and AWARDS Defendant $41, 209 in attorney's fees.
dispute arises from nonpayment for materials, equipment, and
services Plaintiff rendered to nonparty Rodeway Engineering
Works, Inc. (“Rodeway”). (Doc. No. 1-2
¶¶ 8-13, 18.) Defendant is a surety company that duly
made, executed, and filed a payment and performance bond
whereby Defendant guaranteed to pay in the event Rodeway
failed to do so. (Id. ¶¶ 20-21.) Plaintiff
submitted a formal bond claim to Defendant on February 9,
2016, which Defendant ultimately denied on April 7, 2016, for
being time barred. (Id. ¶ 23.)
instituted this lawsuit in San Diego Superior Court on May
10, 2016. (Doc. No. 1 ¶ 1; see Doc. No. 1-2.)
On June 8 and 14, 2016, Defendant informed Plaintiff in
writing that its claim is time barred. (Doc. No. 20-2
¶¶ 6-7; see Id. at 13-14, 17-18.)
Plaintiff did not respond to these letters; accordingly, on
June 15, 2016, Defendant answered the complaint in state
court. (Doc. No. 1 ¶ 3; see Doc. No. 1-4.)
Defendant subsequently removed the action to this Court the
following day. (Doc. No. 1.)
8, 2016, the parties filed a joint discovery plan. (Doc. No.
6.) Following an early neutral evaluation conference
(“ENE”), on July 21, 2016, Magistrate Judge Major
issued a scheduling order that set a deadline for fact
discovery to be completed by February 17, 2017, and
dispositive motions to be filed by March 20, 2017. (Doc. No.
August 5 and 30, 2016, Defendant informed Plaintiff of its
intent to file a motion for summary judgment at the end of
August. (Doc. No. 20-2 ¶ 8; see Id. at 30.) On
September 20, 2016, Defendant reserved a motion hearing date
for the motion, which was calendared for December 29, 2016.
(Doc. No. 20 ¶ 8.) That same day, Plaintiff informed
Defendant that Plaintiff intended to file a motion for
voluntary dismissal. (Doc. No. 20-2 ¶ 9.) As such,
Defendant took its motion for summary judgment off calendar.
(Id.) Defendant agreed to stipulate to a voluntary
dismissal if Plaintiff reimbursed Defendant in the amount of
$29, 686 for attorney's fees and costs and $1605.58 in
recoverable costs. (Doc. No. 20-2 at 32.) Plaintiff did not
respond to this request for reimbursement but instead filed
its motion for voluntary dismissal on September 22, 2016.
(Doc. No. 20-2 ¶ 9; Doc. No. 12.)
parties fully briefed Plaintiff's motion for voluntary
dismissal. (Doc. Nos. 14, 15.) After considering the
parties' respective positions, the Court dismissed the
case with prejudice. (Doc. No. 19.) The Court declined to
condition the dismissal on an award of attorney's fees to
Defendant, but permitted Defendant to brief the issue of
prevailing party status and the propriety of an
attorney's fee award under California Civil Code section
9564. (Id. at 5-6 & n.4.) Defendant accepted the
Court's invitation and filed the instant motion to be
deemed prevailing party and for an award of attorney's
fees on December 13, 2016. (Doc. No. 20.) The parties fully
briefed the motion. (Doc. Nos. 22, 23.) This order follows.
absence of a rule, statute, or contract authorizing the
award, each party must bear its own attorney's fees.
Sheet Metal Workers' Int'l Ass'n Local Union
No. 359 v. Madison Indus., Inc., 84 F.3d 1186, 1192 (9th
Cir. 1996). When there is no federal statute or rule on
point, Federal Rule of Civil Procedure 54(d)(2) establishes a
procedure for claiming a right to an award of attorney's
fees. Rule 54(d)(2) requires an independent source of
authority for awarding attorney's fees. See Alyeska
Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S.
240, 257 (1975); Travelers Indem. Co. v. Arena Group
2000, L.P., No. 05-CV-1435 JLS (CAB), 2008 WL 696932, at
*2 (S.D. Cal. March 13, 2008).
looking for such an independent source of authority, a
federal court sitting in diversity must apply state law in
denying or granting those fees because the decision to award
fees reflects a substantial policy of the state. Id.
at 259 n.31; see Sioux Cnty. v. Nat'l Sur. Co.,
276 U.S. 238, 243 (1928) (explaining that when state policy
allows for recovery of attorney's fees, removal to
federal court cannot thwart that policy).
brings its claim for attorney's fees and costs pursuant
to California Civil Code section 9564. (Doc. No. 20-1 at 2.)
Section 9564 governs actions seeking to enforce
liability of a surety on a payment bond. Cal. Civ. Code
§ 9564(a), (b). It provides, in pertinent part,
“In an action to enforce the liability on the bond, the
court shall award the prevailing party a reasonable
attorney's fee.” Id. § 9564(c).
asserts it is entitled to an award of attorney's fees
because it is the prevailing party. (Doc. No. 20-1 at 5-6.)
Accordingly, Defendant argues that section 9564 mandates that
it be awarded its reasonable attorney's fees.
(Id. at 7-8.) Defendant finally contends that its
request of $43, 818 in attorney's fees and $891.50 in
costs is reasonable. (Id. at 11; Doc. No. 23 at
Attorney's Fees Under Section 9564
Defendant is the Prevailing Party.
argues it is the prevailing party within the meaning of
section 9564 and thus entitled to a fee award. (Doc. No. 20-1
at 5-6.) Plaintiff asserts that Defendant is not a true
prevailing party because the dismissal resulted from
Plaintiff's own motion. (Doc. No. 22 at 4.) Plaintiff
further contends that Defendant should not be awarded
attorney's fees because a fee award generally does not
follow a voluntary dismissal. (Id. at
9564 mandates that “the court shall award the
prevailing party a reasonable attorney's fee.” Cal.
Civ. Code § 9564(c). The section does not define
“prevailing party.” In the absence of a
definition, California courts take a pragmatic approach,
looking at “the extent to which each party has realized
its litigation objectives, whether by judgment, settlement,
or otherwise.” Santisas v. Goodin, 17 Cal.4th
599, 622 (1998) (citing Hsu v. Abbara, 9 Cal.4th
863, 877 (1995)).
California state law is applied, Defendant is the prevailing
party. The California Supreme Court's decision in
Santisas v. Goodin is dispositive. There, the
plaintiffs sued the defendants for various tort and contract
claims arising out of the plaintiffs' purchase of a home,
a purchase in which each defendant played a role.
Id. at 603. After discovery proceedings, including
depositions of some of the parties, the plaintiffs
voluntarily dismissed their complaint with prejudice.
Id. at 603-04. The defendants thereafter sought an
award of attorney's fees pursuant to the fee provision
contained in the sales agreement, which read, “In the
event legal action is instituted by the Broker(s), or any
party to this agreement, or arising out of the execution of
this agreement or the sale, or to collect commissions, the
prevailing party shall be entitled to receive from the other
party a reasonable attorney fee to be determined by the court
in which such action is brought.” Id. at 604,
plaintiffs asserted section 1717 barred the defendants from
recovering any attorney's fees. Id. at 607-08.
That section, which governs fee awards for claims sounding in
contract, provides, “Where an action has been
voluntarily dismissed or dismissed pursuant to a settlement
of the case, there shall ...