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Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 1 of 6 Page ID #:996

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

WUXI CITY RUNYUAN KEJI ZIAOE
DAIKUAN CO. LTD.,

Plaintiff,

v.

XUEWEI XU, an individual;
HAIRONG CAO, an individual;
REPET, INC., a California
corporation,

Defendants.
___________________________

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Case No. EDCV 12-02274 DDP (SPx)

ORDER DENYING MOTION FOR
ATTORNEY’S FEES

[Dkt. No. 41]

Presently before the court is Defendants’ Motion for
Attorney’s Fees (“Motion”). Having reviewed the parties’
submissions, the court DENIES the Motion and adopts the following
Order.
I. Background

The facts are recited in the court’s Order Granting Motion to
Dismiss. (Dkt. No. 38.) Defendants’ motion to dismiss was granted
with leave to amend because Plaintiff’s complaint failed to
adequately plead a RICO predicate act that would allow this court
to exercise jurisdiction over the action. Plaintiff did not timely

Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 2 of 6 Page ID #:997

file an amended complaint, and the action was dismissed without
prejudice. Plaintiff then filed a new complaint (Case No. EDCV 13-
944 DDP). A motion to dismiss the new action is under submission.
II. Legal Standard

Federal courts apply state law in determining whether to award

attorney’s fees in an action on a contract. Ford v. Baroff, 105
F.3d 439, 442 (9th Cir. 1997). Under California law, “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. Cal. Civ. Code §
1717(a) (emphasis added). “The court may also determine that there
is no party prevailing on the contract for purposes of this
section.” Id. § 1717(b)(1).

The California Supreme Court has held that § 1717 entitles a
defendant that has “obtain[ed] a simple, unqualified, victory” to
recover attorney’s fees. Hsu v. Abbara, 9 Cal. 4th 863, 877
(1995).
III. Discussion

For the sake of argument, the court assumes that the contract

in question allows for attorney’s fees to be collected by the
prevailing party on the contract claims. The issue is whether when
this court dismissed Plaintiff’s complaint without prejudice it
conveyed “prevailing party” status upon the Defendants given that

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Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 3 of 6 Page ID #:998

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the Plaintiff has re-filed the complaint and the dismissal focused
on the RICO claims.

A. Prevailing Party
A dismissal without prejudice is not a “simple, unqualified

victory” that would entitle a party to attorney’s fees. However, a
party may be considered to prevail in the absence of a simple
unqualified victory. To determine if a party has prevailed in such
circumstances, the court compares “the relief awarded on the
contract claim or claims with the parties' demands on those same
claims and their litigation objectives as disclosed by the
pleadings, trial briefs, opening statements, and similar sources.”
Id. at 891. “The prevailing party determination is to be made only
upon final resolution of the contract claims and only by ‘a
comparison of the extent to which each party ha[s] succeeded and
failed to succeed in its contentions.’” Id. (emphasis added). A
party can be considered a “prevailing party” on a contract claim if
the claim is dismissed on procedural grounds as long as the claim
is completely resolved in the relevant state. Profit Concepts
Mgmt., Inc. v. Griffith, 162 Cal. App. 4th 950 (2008)(holding that
attorney’s fees were appropriate after a dismissal for lack of
personal jurisdiction because the contract claims, although pending
in Oklahoma, were completely resolved in California).

While some procedural victories are sufficient to support the

award of attorney’s fees, obtaining an interim victory does not
constitute a “final resolution” of contract claims. In re Estate
of Drummond, 149 Cal. App. 4th 46, 49 (2007). In Drummond, a
party's contract claim against will contestants was dismissed as
having been brought in the wrong forum; the contract claim, the

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Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 4 of 6 Page ID #:999

court ruled, must instead be brought in an already pending civil
action. Id. The dismissal of the petition did not defeat the
party’s contract claims; “it merely deflected or forestalled them,”
and was not a final resolution. Id. at 53.

Here, the dismissal of Plaintiff’s complaint was not a final

resolution of the contract claims. Like Drummond, Defendants
sustained an interim victory that ended as soon as Plaintiff re-
filed its claim in this court. Unlike Profit Concepts, in which a
contract claim was completely resolved in California allowing for
the recovery of attorney’s fees, there has been no final resolution
of the contract claims in this or any other forum.

B. Contract Claims

Additionally, while a procedural victory is sometimes

sufficient to allow for attorney’s fees under § 1717, the victory
must pertain to the contract claims. See Vistan Corp. v. Fadei,
USA, Inc., C-10-04862 JCS, 2013 WL 1345023(N.D. Cal. Apr. 2, 2013).
In Vistan, a plaintiff filed an action in federal court that
included both a patent infringement claim and a breach of contract
claim. Id. at *1. The court granted summary judgment in favor of
the defendants on the patent claim and declined to exercise pendant
jurisdiction over the contract claims. Id. The court then
dismissed the case without prejudice for want of federal
jurisdiction. Id. The court did not award attorney’s fees
because, even though the case was dismissed, the defendants did not
prevail on the contract claims; they only “succeeded at moving a
determination on the merits [of the contract claims] from one forum
to another” Id. at *4.

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Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 5 of 6 Page ID #:1000

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Similarly, in Idea Place Corp. v. Fried, plaintiffs filed a

complaint alleging a breach of contract. 390 F. Supp. 2d 903, 904
(N.D. Cal. 2005). The court dismissed the action for lack of
subject matter jurisdiction because the complaint did not state a
cause of action arising under federal law. Id. The court in Idea
Place did not award attorney’s fees, finding that the defendants
“were quite obviously not the prevailing party on the contract[]”
because the court made no findings on the breach of contract claim.
Id. at 905. The court reasoned that a dismissal for lack of
jurisdiction “did not foreclose the possibility that Plaintiff
could pursue its contract claims in state court,” leaving open
“which entity [was] the “prevailing party” on Plaintiff's contract
action.” Id. at 905.

Here, this court dismissed the case after finding that

Plaintiff’s pleading of its RICO claims was deficient. As in
Vistan, in which the court only resolved the infringement claim,
this court likewise did not determine which party prevailed on the
contract claims. The court determined only that Plaintiff had not
stated a claim under RICO and that the court did not otherwise have
jurisdiction over the action.

Thus, the court finds that even if Plaintiff had not re-filed

its complaint in this court, Defendants cannot be considered a
prevailing party with respect to the Plaintiff’s contract claims,
which this court did not address and which Plaintiff could raise in
state court.
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Case 5:12-cv-02274-DDP-SP Document 51 Filed 07/30/13 Page 6 of 6 Page ID #:1001

IV. Conclusion

For the reasons stated above, the Motion for Attorney’s Fees

is DENIED.
IT IS SO ORDERED.

Dated: July 30, 2013

DEAN D. PREGERSON
United States District Judge

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