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People ex rel. Dept. of Corporations v. Speedee Oil Change Systems, Inc., 147 Cal.App.4th 424, 54 Cal.Rptr.3d 225, 07 Cal. Daily Op. Serv. 1227

Facts

This action was initiated by the Department of Corporations against a franchisor for violations of the Franchise Investment Law. Several franchisees intervened, asserting claims for fraud and negligent misrepresentation. After a judgment in favor of the defendants was affirmed, the defendants sought attorney fees, which were initially awarded but later reversed. The interveners then sought attorney fees based on the franchise agreements, leading to the current appeal.

This action was commenced on July 29, 1994, by the Department of Corporations on behalf of the People of the State of California.

Issue

Whether the reversal of the attorney fee award constituted a 'final judgment' under the attorney fee clause in the franchise agreements, thereby entitling the interveners to recover attorney fees incurred on appeal.

The parties present two contrasting arguments as to the meaning of the term 'final judgment' in the attorney fee clause.

Rule

The term 'final judgment' in the context of the attorney fee clause refers to the judgment that conclusively resolves the merits of the case, and not to subsequent rulings or reversals.

The term 'final judgment' has varying definitions.

Analysis

The court analyzed the language of the attorney fee clause and determined that the only 'final judgment' relevant to the fee recovery was the one entered on July 12, 2000, in favor of the defendants. The court reasoned that while the interveners' appeal resulted in a reversal of a prior fee award, it did not constitute a final judgment that would trigger the right to recover attorney fees under the franchise agreements.

Reason tells us that the term 'final judgment' as used by the parties in the franchise agreements refers to the July 12, 2000 judgment in favor of defendants signed by Retired Judge Kalin.

Conclusion

The court reversed the attorney fee awards to the interveners, affirming the cost awards, and determined that the defendants were the prevailing parties entitled to recover their costs incurred on appeal.

The attorney fee awards are reversed.

Who won?

Defendants, SpeeDee Oil Change Systems, Inc., NoCal, Inc., Gary L. Copp, and Kevin M. Bennett, prevailed because the court found that the only final judgment was in their favor, thus entitling them to recover costs.

Since Retired Judge Kalin's July 12, 2000 judgment was in favor of defendants, they are the prevailing parties for purposes of the recovery of attorney fees.

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