Judge Cynthia A Freeland, Case 37-2022-00021702-CU-OR-NC 2023-11-17 Tentative Ruling

Judge: Cynthia A Freeland, Case: 37-2022-00021702-CU-OR-NC, Date: 2023-11-17 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - November 16, 2023

11/17/2023 01:30:00 PM N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited Other Real Property Motion Hearing (Civil) 37-2022-00021702-CU-OR-NC MEKHAIL VS BASKARON [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 08/25/2023

Defendants Paul Baskaron and Mona Baskaron (collectively, 'Defendants')'s motion for attorneys' fees is denied.

California follows the 'American rule,' under which 'each party to a lawsuit must ordinarily pay his own attorney fees.' Trope v. Katz (1995) 11 Cal. 4th 274, 278 (citing Gray v. Don Miller & Associates, Inc.

(1984) 35 Cal. 3d 498, 504; United Services Auto. Assn. v. Dalrymple (1991) 232 Cal. App. 3d 182, 187).

The Legislature codified the American rule when it enacted California Code of Civil Procedure ('CCP') § 1021, which provides that '[e]xcept 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.' See Cal. Code Civ. P. § 1021; Cargill, Inc. v. Souza (2011) 201 Cal. App. 4th 962, 966. CCP § 1033.5(a)(10) likewise allows attorneys' fees as costs under CCP § 1032 when contractually, statutorily, or legally authorized. See Cal. Code Civ. P. § 1033.5(a)(10). CCP § 1032(a)(4) defines the 'prevailing party' as 'the party with a net monetary recovery, a defendant whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant.' Cal. Code Civ. P. § 1032(a)(4).

Additionally, California Civil Code ('CC') § 1717(a) provides: 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(a). CC § 1717(b)(1) defines the 'prevailing party' on a contract as 'the party who recovered a greater relief in the action on the contract.' Cal. Civ. Code § 1717(b)(1).

The contract upon which the present request is predicated is the March 13, 2019 Purchase Agreement under which Defendants agreed to sell to Plaintiff a 50% interest in the real property located at 3017 Rue Montreux, Escondido, CA 92026 (the 'Property'). See Guerrero Decl., Ex. A. In relevant part, ¶ 14 of the Purchase Agreement, entitled 'Binding Arbitration,' provides that: In the event any dispute should arise between the Parties out of this Agreement, the Parties agree to submit such a dispute to binding arbitration with a mutually agreed upon arbitrator within thirty (30) days Calendar No.: Event ID: TENTATIVE RULINGS

3012869 CASE NUMBER: CASE TITLE: MEKHAIL VS BASKARON [IMAGED] 37-2022-00021702-CU-OR-NC of the breach (the 'Arbitration Proceedings'). The Arbitration Proceedings and selection of the arbitrator shall be governed by the rules of the American Arbitration Association and California law. The venue for the Arbitration Proceedings shall be San Diego, California. The arbitrator shall have authority to grant the prevailing party their reasonable attorney's fees for enforcement of this Agreement.

See Purchase Agreement, ¶ 14.

On May 14, 2021, Plaintiff commenced this action by filing a Complaint against Defendants and others.

See ROA No. 1. The operative Third Amended Complaint (the 'TAC'), filed on December 9, 2022, alleged causes of action for: (1) breach of contract; (2) concealment fraud; (3) false promise fraud; (4) constructive trust; (5) quiet title; (6) declaratory relief; and (7) accounting. See ROA No. 122. No party to this action moved to compel arbitration at any point. Instead, the parties proceeded to litigate their dispute in this court. On July 14, 2023, the court sustained Mr. Baskaron's demurrer to the TAC without leave to amend. See ROA No. 168; Chorbajian Decl., Ex. A. On August 2, 2023, the court sustained Mrs. Baskaron's demurrer to the TAC without leave to amend. See ROA No. 174; Chorbajian Decl., Ex. B. On September 12, 2023, the court entered Judgment in Defendants' favor and against Plaintiff. See ROA No. 182.

The court finds that Defendants have failed to identify a statutory, contractual, or other legal basis for an award of attorneys' fees in this matter. Defendants are correct that Plaintiff waived his right to pursue arbitration by litigating this matter to conclusion in this court. See, e.g., Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal. App. 4th 436, 444. However, it does not follow that the attorneys' fee provision set forth in ¶ 14 of the Purchase Agreement should apply with equal force to Plaintiff's chosen forum.

The Purchase Agreement is subject to fundamental principles of contract interpretation. In California, '[t]he fundamental canon of contract interpretation remains to give effect to the mutual intention of the parties as it existed at the time of contracting.' Ahern v. Asset Management Consultants, Inc. (2022) 74 Cal. App. 5th 675, 694. See also Cal. Civ. Code § 1636. This principle applies to contracts containing arbitration provisions. See Victoria v. Sup. Ct. (1985) 40 Cal. 3d 734, 743. Toward that end, the principles of contract interpretation are well established. 'When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible[.]' Cal. Civ. Code § 1639.

'The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.' Cal. Civ. Code § 1638. 'The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.' Cal. Civ.

Code § 1641. 'A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.' Cal. Civ. Code § 1643. 'The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.' Cal. Civ. Code § 1644. If a contract is plain and unambiguous, courts 'are bound to give effect to the plain and ordinary meaning of the language used by the parties.' EFund Capital Partners v. Pless (2007) 150 Cal. App. 4th 1311, 1322.

In this case, the court finds that the Purchase Agreement is plain and unambiguous, and not susceptible to Defendants' interpretation. Paragraph 14, by its own terms, authorizes the arbitrator to grant the prevailing party in arbitration his or her reasonable attorneys' fees for enforcing the Purchase Agreement. However, this case did not proceed to arbitration – Judgment was entered in Defendants' favor following the court sustaining the Baskarons' respective demurrers to the TAC. The Purchase Agreement does not contain a provision by which Defendants may seek an award of attorneys' fees for prevailing on the contract in civil court. Moreover, the Purchase Agreement contains a broad integration clause, and Defendants provide no evidence that the parties agreed in writing to amend the Purchase Agreement to permit the recovery of attorneys' fees outside of the arbitration context. See Purchase Agreement, ¶¶ 10, 11. Simply put, the court cannot insert into the Purchase Agreement an attorneys' fee provision about which the contract is silent. See Levi Strauss & Co. v. Aetna Casualty & Surety Co. (1986) 184 Cal. App. 3d 1479, 1486.

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3012869 CASE NUMBER: CASE TITLE: MEKHAIL VS BASKARON [IMAGED] 37-2022-00021702-CU-OR-NC The court agrees with Plaintiff that Kalai v. Gray (2003) 109 Cal. App. 4th 768 is persuasive. In Gray, the parties' agreement provided for an award of attorneys' fees only to the prevailing party in an arbitration.

However, the plaintiff opted to litigate his breach of contract and related claims in civil court. The trial court granted the defendant's motion for summary judgment on the ground that the parties had agreed to submit their dispute to arbitration and the plaintiff had failed to exhaust his arbitration remedy. The trial court further found that the plaintiff had waived his right to arbitrate the dispute by initiating the civil action and awarded the defendant attorneys' fees as the prevailing party based upon an equitable understanding of an attorneys' fees provision in the arbitration agreement. In reversing the trial court's decision, the Fourth District Court of Appeal noted that '[t]he parties' agreement allows for an award of fees only in favor of the 'prevailing party to [the a]rbitration.' Simply put, there has not yet been a prevailing party to the arbitration, because there has not been an arbitration.' See Kalai, 109 Cal. App. 4th at 777. While the Kalai court went on to note that the defendant could recover his attorneys' fees incurred in civil court, ¶ 14 of the Purchase Agreement cannot be read as broadly as the arbitration clause at issue in Kalai. Defendants, in their reply, do not address Kalai or provide any persuasive argument or evidence supporting their blanket assertion that ¶ 14 of the Purchase Agreement 'should apply to this chosen forum instead.' In light of the foregoing, the court denies Defendants' motion for attorneys' fees.

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, November 17, 2023. If no party appears at the hearing, this tentative ruling will become the order of the court as of November 17, 2023.

If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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