Filed 6/23/14 2845 Monterey Road, LLC v. Posada CA6
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      SIXTH APPELLATE DISTRICT


2845 MONTEREY ROAD, LLC,                                             H039053
                                                                    (Santa Clara County
         Plaintiff and Respondent,                                   Super. Ct. No. CV195218)

         v.

CARLOS POSADA,

         Defendant and Appellant.


         After a court trial, appellant Carlos Posada and his cousin, Camilo Posada, were
found liable in an action for breach of contract brought by respondent 2845 Monterey
Road LLC. Appellant challenges only the award of attorney fees to respondent under a
prior lease pursuant to Civil Code section 1717. Appellant contends that he was the
prevailing party entitled to attorney fees because he successfully defended against
respondent's claim that the lease had been extended. We will affirm the judgment.
                                                     Background
         The facts of the underlying litigation are not disputed. In April 2001 appellant and
respondent's predecessor, Michel Developments, executed a commercial lease permitting
appellant to operate Alfa Autoland, an automobile heating and air conditioning repair
business in San Jose. The lease provided for a five-year term with an option to renew for
another five years. Among its terms was a provision for attorney fees, which stated, "If
Landlord incurs any expense, including attorneys' fees and costs, as a result of a default
by Tenant hereunder, the sum or expense incurred by Landlord, shall be due immediately
from Tenant to Landlord."
       In September 2004 appellant's cousin, Camilo Posada, took over the operation of
appellant's business and assumed the obligations of the lease. The five-year term expired
on April 30, 2006, and the lease terminated, no one having exercised the option to renew.
Thereafter, the court found, Camilo Posada occupied the premises under a month-to-
month tenancy. On July 26, 2010, Camilo Posada's business license was revoked. He
paid the rent for August, but then appellant moved back into the property, and while
conducting business on the premises he paid the rent for September and October 2010.
Thus, appellant began a new month-to-month tenancy in September 2010.
       On November 3, 2010, appellant gave written 30-day notice of his intention to
terminate the tenancy. As instructed by Paul Michel, appellant returned possession of the
premises to respondent on December 7, 2010, by leaving the keys with another tenant.
The property, however, was in a damaged condition, "beyond normal wear and tear."
The court therefore found appellant liable for repairs that totaled $4,900. Although the
lease had not been extended, the court found that appellant "had an obligation under the
lease to return the premises in satisfactory condition." 1 Appellant also owed respondent
$6,131 in unpaid rent, from which was deducted appellant's $4,260 security deposit,
leaving $1,871 due to respondent. Appellant was deemed liable for the $1,871, while he
and Camilo Posada were jointly and severally liable for the $4,900 property damage.
       Both appellant and respondent moved for attorney fees, claiming prevailing party
status pursuant to the lease and section 1717.2 The court found respondent to be the


1 The lease had required the tenant to keep the premises in a "good and clean condition"
and make any needed repairs upon termination.
2 The court indicated in its ruling that Camilo Posada had also moved for costs and
attorney fees, but that motion is not in the record on appeal. The motion is unnecessary
to our appellate review, however, as Camilo Posada has not appealed. Respondent's

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prevailing party and denied appellant's motion. The court determined that of the total
damages award, appellant was responsible for 72.36 percent. That percentage of the
$29,536 in attorney fees claimed by respondent yielded an amount owed by appellant of
$21,372.25. The court entered an order awarding that amount to respondent and entered
judgment the same day. Appellant filed a timely notice of appeal challenging only the
award of attorney fees.
                                             Discussion
       At the outset the parties dispute the standard of review. Appellant believes that we
should examine the attorney fees issue de novo, while respondent maintains that abuse of
discretion is the proper standard. In the circumstances presented here, the controversy
over which party prevailed does not, as appellant assumes, depend on "statutory
construction and a question of law." Accordingly, the trial court's ruling in this case was
a discretionary one, which may not be overturned "absent 'a manifest abuse of discretion,
a prejudicial error of law, or necessary findings not supported by substantial evidence.'
[Citation.]" (Silver Creek, LLC v. BlackRock Realty Advisors, Inc. (2009) 173 Cal. App.
4th 1533, 1539, quoting Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154
Cal.App.4th 547, 577; Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008)
162 Cal. App. 4th 858, 894.)
       Appellant maintains, however, that the trial court erred even under an abuse-of-
discretion standard. He initially asserts that "[i]n fact, [a]ppellant was the prevailing
party on [r]espondent's action on the 2001 written contract—the only contract containing
an attorney's fee clause." In his discussion, however, he argues that respondent could not
have been the prevailing party because the 2001 lease on which it sued did not exist, the



motion and accompanying points and authorities were also missing from the record,
although it was requested by appellant. We have augmented the record to include the
missing documents.

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court having found that it terminated on April 30, 2006. Instead of reasoning that he
prevailed under the attorney fees provision in the lease, he argues that this contract was
"non-existent," "no longer valid," and "unenforceable," replaced by a "month-to-month
tenancy between Appellant and Respondent that was in effect when the breach –
consisting of 37 days unpaid rent and certain unrepaired property damage beyond normal
wear and tear—occurred as of Appellant's returning to [sic] the premises on December 7,
2010." In other words, he was the prevailing party because he "prevailed on the only
relief he [had] sought on the written contract: that the contract was not extended as
Respondent claimed, and thus was no longer enforceable." According to appellant, the
damages awarded to respondent were based solely on "the common law wear and tear
standard," which did not allow for attorney fees. Nevertheless, had respondent succeeded
in proving the continued existence of the lease, it would have been entitled to attorney
fees; consequently, appellant maintains that he was entitled to fees under the reciprocity
principle codified in Civil Code section 1717.3 (See Santisas v. Goodin (1998) 17
Cal.4th 599, 611; North Associates v. Bell (1986) 184 Cal.App.3d 860, 865.)
       Appellant's argument fails with each premise on which it depends. First, his
representation that he "sought" relief is unfounded, since appellant did not seek anything
except a defense judgment. More significantly, he misrepresents the court's ruling as
being in his favor. He did successfully argue that the term of the lease expired in 2006;
but that point did not mean that the lease was unenforceable or that appellant could not be
found to have breached his contractual obligations during his occupancy. On the


3 Civil Code section 1717 states: "(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. [¶] Reasonable attorney's fees shall be fixed by the court, and
shall be an element of the costs of suit."

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contrary, the court determined that respondent was entitled to its attorney fees "under the
lease to pursue its claim for damages to the premises." (Italics added.) Appellant's
reference to the court's award of "only damages based on the common law wear and tear
standard" is inaccurate; as the court explained, it was only Camilo Posada's obligation
that was a common law one because he, unlike appellant, had not signed the lease.
       Appellant's reliance on North Associates v. Bell, supra, 184 Cal.App.3d at pp. 865-
66 is misplaced. Although the appellate court did apply the mutuality principle embodied
in Civil Code section 1717, in its holding it acknowledged the reverse of the outcome
occurring here. There the plaintiff landlord succeeded in showing that the lease had
expired, and it was awarded unpaid rent and other relief. And because the defendant
would have been entitled to fees if he had shown that the lease period had been extended,
the plaintiff was entitled to its attorney fees. The circumstances here present a different
situation: Unlike the successful plaintiff in North Associates, appellant did not prevail in
any sense; his defense to respondent's assertion that the lease had been extended did not
afford him any relief from respondent's claim for unpaid rent and property damage. Nor
does he contest the amount of the damages awarded to respondent. Thus, in no way can
appellant rightfully claim the status of prevailing party.
       We thus conclude that it was well within the court's discretion to determine that
respondent prevailed on its contract claim by recovering damages for appellant's breach
of the provision governing maintenance and repair of the premises.4 As appellant does
not take issue with the amount of the fees awarded, the trial court's order must be upheld.
                                         Disposition
       The judgment is affirmed.



4 By focusing on its $4,900 recovery for property damage, respondent avoids and
implicitly concedes the point appellant makes regarding the contractual basis of the
liability for unpaid rent.

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                               _____________________________
                               ELIA, J.


WE CONCUR:




____________________________
RUSHING, P. J.




____________________________
PREMO, J.




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