FACTUAL AND PROCEDURAL BACKGROUND
Greene and Carriere were close friends for many years. In 1997, Greene agreed to loan Carriere $175,000 to help her purchase a home. As part of the agreement, Carriere executed a promissory note (Note) and deed of trust (Trust Deed), which named Greene's retirement trust-R & R Trust-as beneficiary, and his consulting business-CCG-as trustee. The interest rate on the loan was 14.5 percent, and the loan came due in 2008.
In 2012, the parties' relationship soured, and Greene demanded payment on the loan. By that time, Carriere had made only a few payments, all of which went to interest. Greene threatened to foreclose Carriere's property if she did not pay the full amount due.
On October 5, 2012, Carriere filed a complaint against Greene, seeking to void the Note and Trust Deed. Greene, in turn, filed a cross-complaint against Carriere, asserting a claim for breach of the Note.
The court additionally awarded Greene $123,975 in attorney fees pursuant to a provision in the Note stating "[i]f any action is instituted on this note, the undersigned promise(s) to pay such sum as the Court may fix as attorney's fees." The court explained the basis for its decision: "Carriere commenced this action with a complaint that asserted incendiary claims such as forgery, self-dealing and breach of professional responsibilities. The Defendants have defeated those claims, and CCG has recovered affirmative relief on its cross-complaint. Under these circumstances, the Court rules that Greene, R & R Trust and CCG are the prevailing parties within the meaning of [Civil Code] § 1717(b)(1)."
Carriere and Greene filed cross notices of appeal. (Case No. B267781.) In his opening brief on appeal, Greene argued the trial court erred in subtracting intеrest payments from the principal owed under the Note.
While the appeals were pending, Carriere paid Greene the full amount owed under the judgment and as attorney fees. Greene, in turn, executed an acknowledgement of full satisfaction of judgment (acknowledgment of satisfaction), which Carriere
Around the same time, Carriere filed a motion in this court to dismiss Greene's appeal as moot. We issued an order to show cause (OSC) inviting Greene to address why the appeal should not be dismissed. We noted the general rule that a party cannot accept the benefits of a judgment while challenging it on appeal, but noted there are exceptions to this rule. Rather than respond to the OSC, Greene requested dismissal of his appeal, which we granted. The remittitur noted that Carriere "shall recover costs on appeal." The next day, Carriere requested dismissal of her cross-appeal.
Carriere then filed in the trial court a motion for attorney fees incurred in Greene's appeal and her post-trial motion to expunge lis pendens and compel reconveyance of encumbrances. She made the request pursuant to
Greene opposed the motion, arguing the trial court had already determined he was the prevailing party in the lawsuit. He also argued that Carriere was not the prevailing party on appeal given he had voluntarily dismissed his appеal.
The trial court awarded Carriere $67,238 in attorney fees, explaining: "[A]ppeal and post-judgment are separate phases of the proceedings. [ California Rules of Court, rule 8.278 ] designates the standards for determining the prevailing party for recovering costs on appeal, and the Court of Appeal's remittitur specifiсally designated de la Carriere as the prevailing party entitled to costs on appeal. Based on this court's review of the post-trial proceedings related to the lis pendens, de la Carriere was the prevailing party for those procedures as well. [Citation.] As the prevailing party, de la Carriere is entitled to recover fees under Civ. Code § 1717."
Greene timely appealed.
DISCUSSION
I. Carriere is Not Entitled to Attorney Fees under Civil Code section 1717
Greene contends the trial court erred in awarding Carriere attorney fees given he is the prevailing party in the action. We agree.
A prevailing party is entitled to recover costs in any action or proceeding, "[e]xcept as othеrwise expressly provided by statute." ( Code Civ. Proc., § 1032, subd. (b).) "These costs, however, do not include the attorney fees the prevailing party has incurred in the litigation unless (1) an agreement between the parties provides for the recovery of those fees, or (2) a statute creates a right of recovery." ( Butler-Rupp v. Lourdeaux (2007)
Here, Carriere sought attorney fees pursuant to the terms of the Note and Civil Code section 1717, which provides generally that, "in any action on a contract" with an attorney fees provision, the party "prevailing
An "action on a contract," as used in Civil Codе section 1717, refers to "the whole of a lawsuit rather than to discrete proceedings within a lawsuit." ( Frog Creek, supra ,
In Wood, supra ,
In affirming the trial court's order, the Court of Appeal rejected the plaintiff's argument that his success on appeal entitled him to attorney fees, regardless of the outcome of the underlying lawsuit. (See Wood , supra ,
The same is true here. The trial court determined that Greene was the prevailing party in the lawsuit after finding he defeated Carriere's claims and obtained affirmative relief on the cross-complaint. Carriere's subsequent success on appeal and her post-judgment motion did not affect that determination. Indeed, both before and after appeal, Greene received a net judgment of
Contrary to Carriere's suggestions, the fact that we awarded her costs in connection with the prior appeal does not conclusively establish her entitlement to attorney fees. California Rules of Court, rule 8.278(d)(2), provides that "[u]nless the
Nor are we persuaded by Carriere's contention that, because Greenе executed an acknowledgement of satisfaction, the underlying action was "fully resolved" and the appeal constituted a "separate matter, standing on its own merits" for purposes of awarding attorney fees. Initially, Carriere cites no authority-nor have we found any in our independent research-to support her assertiоn that an appeal constitutes a new matter separate from the underlying lawsuit upon execution of an acknowledgement of satisfaction. Moreover, the underlying action was not "fully resolved" when Greene executed the acknowledgment of satisfaction, as Carriere claims. Even assuming Greene's appeal was barred at that point, Carriere's cross-appeal remained pending, which could have resulted in reversal of the judgment.
Even if we accepted Carriere's contention that the appeal constituted a separate "action," she still would not be entitled to attorney fees. Civil Code section 1717, subdivision (b)(2), provides there "shall be no prevailing party" for purposes of contractual attorney fees where "an action has been voluntarily dismissed ...." Here, Greene voluntarily dismissed his appeal.
Equally meritless is Carriere's suggestion that, absent an award of attorney fees under Civil Code section 1717, a party could "indefinitely drag
II. Carriere is Not Entitled to Attorney Fees under Code of Civil Procedure Section 128.5
In her respondent's brief, Carriere аsserts that, even if she is not entitled to attorney fees under Civil Code section 1717, "this Court could award fees under Code of Civil Procedure section 128.5." Section 128.5 provides that a "trial court may order a party, the party's attorney, or both, to pay the reasonable expenses, including attorney's fees, incurred by another
Initially, it is not clear whether Carriere is urging us to affirm the trial court's order under Code of Civil Procedure section 128.5 ( section 128.5 ), or if she is asking us to impose such sanctions in the first instance. If the latter, we reject her request; section 128.5 expressly vests the sanctioning power in the trial court. ( Code Civ. Proc., § 128.5, subd. (a).)
We would also decline any invitation to affirm the trial court's order under section 128.5. Because the trial court awаrded Carriere attorney fees under Civil Code section 1717, it did not consider imposing sanctions under section 128.5. The trial court has broad discretion under section 128.5 (see Olson Partnership v. Gaylord Plating Lab, Inc. (1990)
Although we would typically end our analysis there, in order to foreclose more wasteful litigation, we further note that Carriere failed to show that sanctions are warranted. Section 128.5 does not explicitly permit the trial court to impose sanctions against a party for pursuing a frivolous appeal, and Carriere has not provided any authority suggesting it does so
Even if the trial court had such authority, Carriere failed to show that Greene's appeal was frivolous. An action or tactic is frivolous for purposes of section 128.5 if it is "totally and completely without merit or for the sole purpose of harassing an opposing party." ( Code Civ. Proc., § 128.5, subd. (b)(2).) Carriere asserts that Greene's appeal was frivolous because it was moot once he accepted full payment on the judgment and executed the acknowledgment of satisfaction. However, in Heacock v. Ivorette-Texas, Inc. (1993)
DISPOSITION
The order awarding attorney fees is reversed. Appellants are awarded costs on appeal.
We Concur:
GRIMES, J.
STRATTON, J.
Notes
For the sake of simplicity, we refer to the appellants interchangeably as "Greene."
Relying on Cravens v. State Bd. of Equalization (1997)