Judge: Holly J. Fujie, Case: 20STCV41331, Date: 2022-10-06 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 20STCV41331    Hearing Date: October 6, 2022    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendant Hana Escrow Company, Inc. (“Moving Defendant”)

RESPONDING PARTY: Plaintiffs Sushi KJ Corporation (“Sushi KJ”) and Sang Woo Lee (“Lee”) (collectively, “Plaintiffs”)

The Court has considered the moving, opposition and reply papers.

BACKGROUND

            This action arises out of a dispute concerning the sale of a restaurant business (the “Restaurant”).  On April 27, 2022, the Court granted Moving Defendant’s demurrer (the “Demurrer”) to the negligent misrepresentation claim in Plaintiffs’ third amended complaint (the “TAC”).  On May 10, 2022, the Court entered judgment in favor of Moving Defendant and found that it was the prevailing party who was entitled to costs.  On July 20, 2022, Moving Defendant filed a motion for attorney’s fees (the “Motion”).  Moving Defendant argues that it is entitled to an award of attorney’s fees pursuant to the Escrow Instructions and Amended Escrow Instructions (collectively, the “Escrow Instructions”) executed on December 20, 2017 and April 11, 2018, respectively.  (See Declaration of Glenn A. Williams (“Williams Decl.”), Exhibits 1-2.)

As a preliminary matter, the pendency of Plaintiffs’ appeal of the Court’s ruling on the Demurrer to the TAC does not deprive the Court of jurisdiction over the Motion.  (See Bankes v. Lucas (1992) 9 Cal.App.4th 365, 368.)

DISCUSSION

Under California Code of Civil Procedure (“CCP”) section 1033.5, reasonable attorney’s fees may be awarded where they are authorized by a contract, statute, or law.  (CCP § 1033.5, subd. (a)(10).)  Unless authorized by either statute or agreement, attorney’s fees ordinarily are not recoverable as costs.  (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128.)  Civil Code section 1717 provides: in any action on a contract, where such contract specifically provides that attorney’s fees and costs, which are incurred to enforce the provisions of such contract, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to costs and necessary disbursements.  (Civ. Code § 1717, subd. (a).)  The phrase “action on a contract” in Civil Code section 1717 includes not only a traditional action for damages for breach of a contract containing an attorney fees clause, 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.  (Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal. App. 4th 418, 426-27.)  An action for fraud sounds in tort and is not “on a contract” for purposes of an attorney fee award, even though the underlying transaction in which the fraud occurred involved a contract containing an attorney fee clause.  (Cussler v. Crusader Entertainment, LLC (2012) 212 Cal.App.4th 356, 366.)

The Court finds that Moving Defendant has not set forth a basis for the recovery of attorney’s fees in connection this action.  The cause of action it prevailed on sounded in fraud and was therefore a tort rather than a claim arising out of a contract.  Furthermore, although the TAC alleges that Plaintiffs are entitled to an award of attorney’s fees in connection to the negligent misrepresentation cause of action, neither Moving Defendant nor Plaintiffs have identified a provision in the Escrow Instructions that would entitle Plaintiffs to such an award. 

The Court therefore DENIES the Motion.

Moving party is ordered to give notice of this ruling. 

In consideration of the current COVID-19 pandemic situation, the Court¿strongly¿encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.¿¿If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to¿SMC_DEPT56@lacourt.org¿stating your intention to appear in person.¿ The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.¿ This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

              Dated this 6th day of October 2022