Judge: Gail Killefer, Case: 22STCV32363, Date: 2025-01-30 Tentative Ruling
Case Number: 22STCV32363 Hearing Date: January 30, 2025 Dept: 37
HEARING DATE: Thursday, January 30, 2025
CASE NUMBER: 22STCV32363
CASE NAME: Boyle
Flats Food & Beverage, Inc., et al. v. Alex Koons
MOVING PARTY: Defendant Daleyn
Accountancy, Inc.
OPPOSING PARTY: Plaintiffs/Cross-Defendants
Boyle Flats Food & Beverage, Inc. and Ted Yenawine
TRIAL DATE: 22 July 2025
PROOF OF SERVICE: OK
PROCEEDING: Motion for Attorney’s
Fees
OPPOSITION: 13 January 2025
REPLY: 16 January
2025
TENTATIVE: Defendant Daleyn’s motion for attorney’s fees
is denied and its request for costs is granted in the sum of $2,007.20.
Background
This action arises from the formation by Plaintiff Tad
Yenawine (“Yenawine”) and Defendant Alex Koons (“Koons”) of a California
entity, Plaintiff Boyle Flats Food and Beverage, Inc dba Purgatory Pizza
(“BFFB”). Plaintiffs and Defendant operated a restaurant business thus called
“Purgatory Pizza.” The Complaint alleges Defendant took monies from Plaintiff
BFFB’s bank accounts for expenses to open his own pizza restaurant in 2020.
On August 28, 2024, Plaintiffs filed the operative Fourth
Amended Complaint (“4AC”) alleging eight causes of action against Defendant
Koons and Defendant Daleyn Accountancy, Inc. (“Daleyn”); and Does 2 to 10. The
TAC alleges:
1) Breach of Contract – against Defendant Koons;
2) Conversion - against Defendant Koons;
3) Fraud - against Defendant Koons;
4) Breach of Fiduciary Duty;
5) Breach of Contract – against Defendant
Daleyn;
6) Conversion – against Defendant Daleyn;
7) Fraud – against Defendant Daleyn; and
8) Breach of Fiduciary Duty - against Defendant
Daleyn;
On November 5, 2024, the court sustained without leave to
amend Defendant Daleyn’s demurrer to the 4AC without leave to amend. Consequently,
on November 27, 2024, the court entered a dismissal with prejudice in favor of
Defendant Daleyn and against Plaintiffs Boyle Falts & Food Beverage, Inc.
and Tad Yenawine.
Defendant Daleyn filed a motion for attorney’s fees.
Plaintiffs oppose the Motion. The matter is now before the court.
I. Legal Standard
A prevailing party is entitled to recover costs, including
attorneys’ fees, as a matter of right.¿ (CCP, §§ 1032(a)(4), 1032(b),
1033.5.)¿Attorney fees may be recovered as costs when authorized by contract,
statute, or law. (CCP, § 1033.5(a)(10).)¿The prevailing party on a contract,
which specifically provides for attorney fees and costs incurred to enforce the
agreement, is entitled to reasonable attorney fees in addition to other costs.¿
(Civ. Code, § 1717(a); CCP, §§ 1032, 1033.5(a)(10)(A).)¿ The court, upon notice
and motion by a party, shall determine the prevailing party and shall fix, as
an element of the costs of the suit, the reasonable attorney fees.¿ (Civ. Code,
§ 1717(a), (b).)¿¿¿¿
The fee setting inquiry in California ordinarily “begins with
the ‘lodestar’ [method], i.e., the number of hours reasonably expended
multiplied by the reasonable hourly rate.”¿(Graciano v. Robinson Ford Sales,
Inc. (2006) 144 Cal.App.4th 140, 154.)¿ The lodestar figure may then be
adjusted, based on consideration of factors specific to the case, in order to
fix the fee at the fair market value for the legal services provided.¿ (See Serrano
v. Priest (1977) 20 Cal.3d 25, 49 (discussing factors relevant to proper
attorneys’ fees award).)¿ The factors considered in determining the
modification of the lodestar include “(1) the novelty and difficulty of the
questions involved, (2) the skill displayed in presenting them, (3) the extent
to which the nature of the litigation precluded other employment by the
attorneys, and (4) the contingent nature of the fee award.”¿(Mountjoy v.
Bank of Am. (2016) 245 Cal.App.4th 266, 271.)
II. Discussion
Defendant Daleyn seeks $80,025.00
in attorney’s fees for defending this action pursuant to the attorney’s fees
provision in the Accounting Agreement, which Plaintiffs alleged Daleyn
breached. (4AC, ¶¶ 47-52, Ex. 2.) The Accounting Agreement was entered between
Plaintiff BFFB and Daleyn and provides in relevant part:
f) Attorney’s Fees: If any action at law or in equity is
brought to enforce or interpret the provisions of this Contract, the prevailing
party will be entitled to reasonable attorneys’ fees in addition to any other
relief to which that party may be entitled.
(4AC, Ex. 2, § IX(f).)
Plaintiff BFFB asserts that it is
not liable for Daleyn’s attorney’s fees because the demurrer effectively found
that Plaintiff Yenawine had no standing to bring an action against Daleyn,
including a claim for breach of contract. “As Defendant Daleyn successfully
argued that Boyle Flats was not properly brought into this suit, Boyle Flats
cannot be said to have sued on its contract with Daleyn, or for any torts
alleged in the suit.” (Opposition at p. 5:1-3.)
Plaintiff Yenawine asserts that he
is not liable for Daleyn’s attorney’s fees because there is no contract between
Yenawine and Daleyn.
A. Daleyn
is A Prevailing Party
“[A] dismissal with prejudice which has the effect
of a final judgment.” (Winick Corp. v. Safeco Insurance Co. (1986) 187
Cal.App.3d 1502, 1508 [italics original].) Defendant Daleyn prevailed on the
breach of contract claim against Plaintiffs because he obtained a dismissal of
the entire action with prejudice. “A procedural victory that finally disposes
of the parties' contractual dispute, such as an involuntary dismissal with
prejudice and without any likelihood of refiling the same litigation in another
forum, may merit a prevailing party award of fees under section 1717.” (DisputeSuite.com,
LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 981.)
In Elms v. Builders
Disbursements, Inc. (1991) 232 Cal.App.3d 671, the Appeal Court agreed that
Builders Disbursement Inc. was entitled to attorney’s fees as a prevailing
party even though the dismissal was due to the failure to prosecute within five
years under CCP § 583.360:
Builders obtained all the
relief it requested, and the Elms were denied all of their demands.
Pragmatically, and legally, Builders was the prevailing party under section
1717 and is entitled to the benefits of its provisions.
(Id. at p. 675.)
Similarly, in Winick
Corp. v. Safeco Insurance Co. (1986) 187 Cal.App.3d 1502, the Appeal Court
found that a party who obtained a dismissal with prejudice due to the other parties’
failure to timely serve summons was a prevailing party entitled to attorney’s
the party obtained all the relief it requested, a dismissal of the entire
action. (Id., at p. 1508.) Ordinarily, Defendant Daleyn would be the prevailing
party as to the claim for breach of the Accounting Agreement because it
obtained all the relief it requested and there was dismissal with prejudice,
resulting in a final judgment in favor of Daleyn as to the breach of contract
claim. However, for the reasons outlined below we find that Daleyn is not
entitled to attorney’s fees against either Plaintiff.
B. BFFB was Not a
Proper Party to the Breach of Contract Claim And Dismissal with Prejudice was
an Error of the Court
The court sustained Daleyn’s demurrer on the basis that Plaintiff
Yenawine lacked standing to bring any action on behalf of BFFB because BFFB’s
bylaws did not permit Yenawine to act without board approval. (See Anmaco, Inc. v. Bohlken (1993) 13 Cal.App.4th 891, 900.) The effect of the November 5, 2024
Order sustaining the demurrer without leave to amend was that the breach of
contract action was invalid because it was not brought by BFFB but by Yenawine
without board approval. In effect, BFFB
never approved the filing of this action because there was no board
resolution permitting BFFB to sue for contracts entered on its behalf.
Consequently, Yenawine’s attorney acted
without BFFB’s consent in bring any actions on BFFB’s behalf and asserting a
breach of contract claim against Daleyn. “[T]he unauthorized acts of the
attorney did not bind the client.” (Romadka v. Hoge (1991) 232
Cal.App.3d 1231, 1237.)
Daleyn cannot be said to have prevailed on a
contract claim against BFFB where BFFB never authorized or ratified the filing
of any action on its behalf. “ ‘[D]ismissal of a cause of action by an attorney
acting without any authority from his client is an act beyond the scope of his
authority which, on proper proof, may be vacated at any time.’ ” (Romadka,
at p. 880 [italics original].)
Even though the court dismissed BFFB’s claims
against Daleyn’s with prejudice, the dismissal may be vacated at any time because
BFFB’s board did not authorized the filing of this action, nor did it authorize
Yenawine to file the action on its behalf. Because Yenawine had no standing to
bring a breach of contract claim—or any other claim—on BFFB’s behalf, Daleyn
cannot be a prevailing party on a breach of contract that was never asserted or
ratified by BFFB.
Therefore, Daleyn is not entitled to attorney’s fees against BFFB
because it did not prevail on a breach of contract claim asserted by BFFB.
C. Plaintiffs’ Liability Under Civ. Code §
1717 for Daleyn’s Attorney’s Fees
Civ. Code § 1717 states in relevant part:
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.
(Civ. Code, § 1717(a).)
Ordinarily, Plaintiff Yenawine is
liable for Daleyn’s attorney’s fees regardless of “he []is the party specified
in the contract or not . . .” (Civ. Code, § 1717(a).) “Section 1717 was enacted
to establish mutuality of remedy where contractual provision makes recovery of
attorney's fees available for only one party [citations], and to prevent
oppressive use of one-sided attorney's fees provisions.” (Reynolds Metals
Co. v. Alperson (1979) 25 Cal.3d 124, 128.)
A party is entitled to recover its attorney's fees pursuant
to a contractual provision only when the party would have been liable for the
fees of the opposing party if the opposing party had prevailed. Where a
nonsignatory plaintiff sues a signatory defendant in an action on a contract
and the signatory defendant prevails, the signatory defendant is entitled to
attorney's fees only if the nonsignatory plaintiff would have been entitled to
its fees if the plaintiff had prevailed.
(Real Property Services Corp.
v. City of Pasadena (1994) 25 Cal.App.4th 375, 382.)
Plaintiff Yenawine is liable for
Daleyn’s attorney’s fees under § 1717 only if the Yenawine would also have been
entitled to attorney’s fees had it prevailed under the Accounting Agreement. “[S]ection
1717 permits that party's recovery of attorney fees whenever the opposing
parties would have been entitled to attorney fees under the contract had they
prevailed.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.)
Defendant Daleyn may be entitled
to attorney’s fees if “the nonsignatory party ‘stands in the shoes of a party
to the contract.’ ” (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962,
966.) Here, the demurrer was sustained without leave to amend because Yenawine
had no standing to assert a breach of contract claim on behalf of BFFB.
Therefore, Yenawine did not stand in the shows of BFFB when it brought its
claims against Daleyn.
Second, Daleyn may be entitled to
attorney’s fees “where the nonsignatory party is a third party beneficiary of
the contract.” (Ibid.) Daleyn does not assert that Yenawine is a third
party beneficiary under the Accounting Agreement. Therefore, Yenawine is not
liable for Daleyn’s attorney’s fees under § 1717 because Yenawine would not
have been entitled to attorney’s fees under the Accounting Agreement.
Accordingly, Daleyn’s motion for
attorney’s fees is denied.
D. Costs
Defendant
Daleyn request for costs, including costs pursuant to CCP § 1032(b):
Except as otherwise
expressly provided by statute, a prevailing party is entitled as a matter of
right to recover costs in any action or proceeding.
On
December 11, 2024, Defendant Daleyn filed a Memorandum of Costs seeking
$2,007.20 in attorney’s fees.
Plaintiffs
object to the following costs and requests that they be taxed:
·
$635.50 as an asserted
filing fee which is ten times the court’s posted filing fee (and in addition to
the posted filing fee).
·
$376.50 for “Courtesy
Copies.”
Defendant
Daleyn asserts the request to tax costs should be denied because the request is
untimely under Cal. Rules of Court, rule 3.1700(b)(1) which requires a motion
to strike or tax costs to be filed and served within 15 days after service of
the memorandum of costs. Daleyn asserts that Plaintiffs had until December 28,
2024 to file a motion to tax costs, the Plaintiffs’ request is untimely as the
request to strike costs was not filed until January 13, 2025.
Cal.
Rules of Court, rule 3.1700(b)(4) states: “After the time has passed for a
motion to strike or tax costs or for determination of that motion, the clerk
must immediately enter the costs on the judgment.” Consequently, Plaintiffs untimely
objections resulted in waived the right to object to the costs. (Douglas v.
Willis (1994) 27 Cal.App.4th 287, 290; see also Briggs v. Elliott
(2023) 92 Cal.App.5th 683, 694 [“We agree with Elliott that Briggs forfeited
his arguments pertaining to the costs claimed . . . because he did not file a
timely motion to tax those costs.”].)
Consequently,
the court grants Daleyn’s request for costs in the amount of $2,007.20.
Conclusion
Defendant Daleyn’s motion for
attorney’s fees is denied put its request for costs is granted in the sum of $2,007.20.