National Computer Rental, Ltd. v. Bergen Brunswig Corp

In National Computer Rental, Ltd. v. Bergen Brunswig Corp. (1976) 59 Cal.App.3d 58, the plaintiff sued the defendant in a contract action concerning an equipment lease. The plaintiff sought three items of recovery. The defendant admitted the first two items--unpaid rent and taxes--but denied any obligation for the third, a termination fee. Following a court trial, the plaintiff was denied recovery for the termination fee, but was granted judgment for the unpaid rent and taxes. The court determined the defendant was the prevailing party, and, pursuant to an attorney fee provision in the contract and Civil Code section 1717, awarded the defendant attorney fees. The reviewing court affirmed the prevailing party determination. The court explained the defendant had tendered the unpaid rent in connection with a section 998 offer; the plaintiff rejected the tender because it sought the taxes and termination fee. Because of the defendant's admission, "liability for the unpaid rent and the taxes was never litigated at the trial, which proceeded only on the termination fee issue." (59 Cal.App.3d at p. 63.) The court thus concluded: "Defendant prevailed on the only issue in the case; it is the 'prevailing party' within the meaning of section 1717, even though plaintiff nominally holds a judgment for an amount never disputed and never litigated." (Ibid.)