Galan v. Wolfriver Holding Corp

In Galan v. Wolfriver Holding Corp. (2000) 80 Cal.App.4th 1124, the plaintiffs sued the owner of a substandard building based on habitability problems. When a new owner, Wolfriver, purchased the building, it was added as a defendant in the action. The plaintiffs settled with the prior owner; as part of that settlement, the plaintiffs agreed to dismiss Wolfriver. The prior owner wanted Wolfriver dismissed because Wolfriver had claims against it for fraud in the transfer; the plaintiffs agreed to dismiss because Wolfriver was uninsured and it was questionable whether any judgment against it would be collectible. (Id. at p. 1126.) After Wolfriver was dismissed, it sought an award of attorney fees pursuant to Civil Code section 1942.4. The trial court denied the motion, finding Wolfriver was not the prevailing party under that section, and the appellate court affirmed. The court declined to use the definition of prevailing party in Code of Civil Procedure section 1032, because it defined the term as used in that section and not for all purposes. Civil Code section 1942.4 did not define the term. "Therefore, it would appear the determination of which party, if either, prevailed in an action brought under section 1942.4 is a matter left to the discretion of the trial court." (Galan, supra, 80 Cal.App.4th at p. 1128.) The trial court acted within its discretion in finding there was no prevailing party on a practical level. (Id. at p. 1129.) The plaintiffs' settlement with other defendants did not exonerate Wolfriver. "Further, having settled, plaintiffs made a practical determination that it was not worth pursuing Wolfriver through what would have been a costly trial." (Ibid.) The merits of the plaintiffs' claims against Wolfriver were never resolved. (Id. at pp. 1129-1130.) Consequently, the trial court did not abuse its discretion in finding Wolfriver was not the prevailing party for purposes of an award of statutory attorney fees. (Id. at p. 1130.)