Marina Glencoe, L.P. v. Neue Sentimental Film AG

In this case, we hold that when a contract provides that the prevailing party is entitled to attorney fees and the plaintiff dismisses the action with prejudice after the start of trial, the defendant is not entitled to attorney fees as the prevailing party. We also find that in this case defendant did not make a statutory offer to compromise within the meaning of Code of Civil Procedure section 998, and hence cannot recover attorney fees as costs under that statute.

FACTUAL AND PROCEDURAL SUMMARY

Neue Sentimental Film USA (NSF-USA) leased a commercial property from Marina Glencoe, L.P. The lease contained a provision for an award of attorney fees and costs to the prevailing party “if any action for breach of or to enforce the provisions of this Lease is commenced . . . .” NSF-USA fell behind in rent, and in May 2003, Marina Glencoe sued NSF-USA and two related companies, Neue Sentimental Film AG (NSF-AG) and Neue Sentimental Film N.Y., Inc. (NSF-NY), for breach of the lease. Marina Glencoe’s theory was that each of these related companies also owed rent as the alter ego of NSF-USA. NSF-USA filed bankruptcy in August 2003, and NSF-AG answered the complaint on September…