The Coltrains contend defendants were not entitled to attorney's fees because they were not "prevailing defendant[s] on a special motion to strike" within the meaning of Code of Civil Procedure section 425.16, subdivision (c).

The trial court ruled that defendants were the prevailing parties. It explained: "If you look at CCP 1032, [s]ubdivision (a), [s]ubsection (4), it tells you who the prevailing party is. And that' s someone who gets a case dismissed[,] or a case is dismissed and it terminates the case." "[I]t doesn' t say in th[e] [SLAPP] statute that it must be that the defendant is successful in the hearing on the special motion to strike . . . . It just says they must be the prevailing defendant on a special motion to strike. [¶ ] So therefore, I think 1032, [s]ubdivision (a), [s]ubsection (4) does apply."

The issue before us is primarily one of statutory interpretation. Code of Civil Procedure section 425.16, subdivision (c) provides: "In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney' s fees and costs." However, it does not otherwise define "prevailing."

In cases where there has been a voluntary dismissal, "' prevailing party' has no settled technical meaning . . . ." (Santisas v. Goodin (1998) 17 Cal.4th 599, 609.) In some instances, the Legislature has headed the issue off at the pass by specifying in the applicable statute whether a voluntary dismissal makes the defendant the prevailing party. For example, under Code of Civil Procedure section 1032, costs are to be awarded to the "prevailing party." (Code Civ. Proc., § 1032, subd. (b).) As defined in Code of Civil Procedure section 1032, "prevailing party" specifically includes "a defendant in whose favor a dismissal is entered . . . ." (Code Civ. Proc., § 1032, subd. (a)(4); see also Civ. Code, § 798.85 [in action under the Mobilehome Residency Law, "[a] party shall be deemed a prevailing party . . . where the litigation is dismissed in his or her favor prior to or during the trial, unless the parties otherwise agree in the settlement or compromise."].)

On the other hand, under Civil Code section 1717, in an action on a contract with an attorney' s fees provision, attorney' s fees are to be awarded to "the party prevailing on the contract." (Civ. Code, § 1717, subd. (a).) Civil Code section 1717 specifically provides that "[w]here an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party . . . ." (Civ. Code, § 1717, subd. (b)(2); see also Civ. Code, § 3176 [in action on bonded stop notice, "[w]here an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party . . . ." ].)

The vast majority of attorney' s fee statutes do not explicitly provide for the event of a voluntary dismissal. In International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, the Supreme Court was called upon to resolve this issue under Civil Code section 1717 as it then stood, which merely provided: "'[P]revailing party" means the party in whose favor final judgment is rendered.'" (International Industries, Inc. v. Olen, supra, at p. 222, italics omitted, quoting former Civ. Code, § 1717, Stats. 1968, ch. 266, § 1, p. 578.) As the court noted, where the plaintiff voluntarily dismisses before trial, there are three possibilities: (1) automatically awarding attorney's fees to the defendant; (2) "providing for application of equitable considerations . . ."; or (3) automatically denying attorney's fees. (International Industries, Inc. v. Olen, supra, at p. 225.)

The court rejected an automatic award of attorney's fees to the defendant, as inequitable: "Although a plaintiff may voluntarily dismiss before trial because he learns that his action is without merit, obviously other reasons may exist causing him to terminate the action. For example, the defendant may grant plaintiff -- short of trial -- all or substantially all relief sought, or the plaintiff may learn the defendant is insolvent, rendering any judgment hollow. . . . Moreover, permitting recovery of attorney fees by defendant in all cases of voluntary dismissal before trial would encourage plaintiffs to maintain pointless litigation in moot cases or against insolvent defendants to avoid liability for those fees." (International Industries, Inc. v. Olen, supra, 21 Cal.3d at p. 224.)

The court also rejected a case-by-case approach: "It has been suggested that in pretrial dismissal cases the court should determine whether, and to what extent, the complaint is meritorious and award attorney fees accordingly. However, to arrive at that determination would require the court to try the entire case. The purpose of litigation is to resolve participants' disputes, not compensate participating attorneys. Our courts are sufficiently burdened without combat kept alive solely for attorney fees." (International Industries, Inc. v. Olen, supra, 21 Cal.3d at p. 224.)

The court concluded, as a matter of "sound public policy and recognized equitable considerations" (International Industries, Inc. v. Olen, supra, 21 Cal.3d at p. 223), that, if the plaintiff voluntarily dismissed before trial, the defendant was not the prevailing party and could not recover attorney' s fees under Civil Code section 1717. (International Industries, Inc. v. Olen, supra, at pp. 223-225.) In 1981, the Legislature amended Civil Code section 1717 so as to adopt the holding of Olen. (Stats. 1981, ch. 888, § 1, p. 3399; see Hsu v. Abbara (1995) 9 Cal.4th 863, 873.)

Recently, however, the Supreme Court retreated from its position in Olen. In Santisas v. Goodin, supra, 17 Cal.4th 599, the plaintiffs asserted both contract and tort causes of action, all based on a contract with an attorney' s fees clause which allowed "the prevailing party" to recover attorney' s fees in any legal action "arising out of" the contract. (Id., at p. 603.) Eventually, the plaintiffs voluntarily dismissed their complaint. The trial court then awarded attorney' s fees to some of the defendants. (Id., at pp. 603-604.) The Supreme Court recognized that, under Olen, as codified in Civil Code section 1717, these defendants were not the prevailing parties on the contract claims. It held, however, the defendants could be the prevailing parties on the tort claims under the contractual attorney' s fee provision and under Code of Civil Procedure sections 1032 and 1033.5, subdivision (a)(10). (Santisas v. Goodin, supra, at pp. 614-623.)

The court explained: "[U]pon fresh consideration of the matter, we are of the view that the practical difficulties associated with contractual attorney fee cost determinations in voluntary pretrial dismissal cases are not as great as suggested by the majority in Olen . . . . The Olen majority soundly reasoned that attorney fees should not be awarded automatically to parties in whose favor a voluntary dismissal has been entered. In particular, it seems inaccurate to characterize the defendant as the 'prevailing party' if the plaintiff dismissed the action only after obtaining, by means of settlement or otherwise, all or most of the requested relief, or if the plaintiff dismissed for reasons, such as the defendant's insolvency, that have nothing to do with the probability of success on the merits. The Olen majority also soundly reasoned that scarce judicial resources should not be used to try the merits of voluntarily dismissed actions merely to determine which party would or should have prevailed had the action not been dismissed. But we do not agree that the only remaining alternative is an inflexible rule denying contractual attorney fees as costs in all voluntary pretrial dismissal cases. Rather, a court may determine whether there is a prevailing party, and if so which party meets that definition, by examining the terms of the contract at issue . . . . If, as here, the contract allows the prevailing party to recover attorney fees but does not define 'prevailing party' or expressly either authorize or bar recovery of attorney fees in the event an action is dismissed, a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement, or otherwise. [Citation.]" (Santisas v. Goodin, supra, 17 Cal.4th at pp. 621-622.)

In the case before it, the court held the defendants were indeed the prevailing parties: "Plaintiffs' objective in bringing this litigation was to obtain the relief requested in the complaint. The objective of the . . . defendants in this litigation was to prevent plaintiffs from obtaining that relief. Because the litigation terminated in voluntary dismissal with prejudice, plaintiffs did not obtain by judgment any of the relief they requested, nor does it appear that plaintiffs obtained this relief by another means, such as a settlement. Therefore, plaintiffs failed in their litigation objective and the . . . defendants succeeded in theirs. Giving the term 'prevailing party' its ordinary or popular meaning, the . . . defendants are the ' prevailing part[ies]' under their agreement with plaintiffs . . . ." (Santisas v. Goodin, supra, 17 Cal.4th at p. 609.)

Even before Santisas, two lower courts had applied a similar approach in construing statutes which did not define "prevailing party." In Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, the statute involved was Civil Code section 1354, subdivision (f), which provides that, in an action to enforce condominium conditions, covenants, and restrictions, "the prevailing party shall be awarded reasonable attorney's fees and costs." As a result of an agreement to settle complex multiparty litigation, the plaintiff voluntarily dismissed the complaint as to all defendants, including one who had not agreed to be bound by the settlement agreement. The trial court found the nonsettling defendant was a prevailing party for purposes of costs, but not for purposes of attorney's fees. (Heather Farms Homeowners Assn. v. Robinson, supra, at pp. 1570-1571.)

The defendant argued the prevailing party for purposes of attorney's fees should be the same as the prevailing party for purposes of costs, and therefore the court should apply the general costs statute, Code of Civil Procedure section 1032, which provides that after a voluntary dismissal the defendant is the prevailing party. The appellate court disagreed: "[T]he premise for this argument, that a litigant who prevails under the cost statute is necessarily the prevailing party for purposes of attorney fees, has been uniformly rejected by the courts of this state. [Citation.]" (Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at p. 1572.)

The plaintiff, on the other hand, argued the court should be guided by the definition of "prevailing party" in Civil Code section 1717, which provides that after a voluntary dismissal there is no prevailing party. Again, the court disagreed: "While the definition of ' prevailing party' found in section 1717, subdivision (b) or in Code of Civil Procedure section 1032 might otherwise be persuasive as to the meaning intended in section 1354, under the principle that similar language used in statutes 'in pari materia' should be given similar effect [citations], that rule of construction is of little help here. Section 1717, subdivision (b) and Code of Civil Procedure section 1032 are both 'in pari materia' with section 1354 in a broad sense, yet they provide conflicting definitions of the critical term. Neither party to this appeal has supplied a principled reason why we should select one definition over the other." (Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at pp. 1572-1573.)

After reviewing cases dealing with similar statutes, the court summarized them as follows: "In each case, the court declined to adopt a rigid interpretation of the term 'prevailing party' and, instead, analyzed which party had prevailed on a practical level. [Some of the cases] further clarify that the trial court must determine who is the prevailing party, and . . . the court's ruling should be affirmed on appeal absent an abuse of discretion. We conclude similar rules should apply when determining who the 'prevailing party' is under [Code of Civil Procedure] section 1354." (Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at p. 1574.)

The court upheld the trial court's ruling that the defendant had not prevailed: "The [plaintiff] voluntarily dismissed its complaint against [the defendant] as part of a global settlement agreement, not because he succeeded on some procedural issue or otherwise received what he wanted. That dismissal apparently was more the result of [the defendant's] obdurate behavior rather than any successful legal strategy." (Heather Farms Homeowners Assn. v. Robinson, supra, 21 Cal.App.4th at p. 1574.)

Similarly, in Gilbert v. National Enquirer, Inc. (1997) 55 Cal.App.4th 1273, the controlling statute was Civil Code section 3344, subdivision (a), which provides that in an action for commercial misappropriation of name or likeness, "[t]he prevailing party . . . shall also be entitled to attorney's fees and costs." The plaintiff had voluntarily dismissed her commercial misappropriation complaint before trial. The trial court nevertheless denied the defendant's motion for attorney's fees, ruling it was not the prevailing party. (Gilbert v. National Enquirer, Inc., supra, at p. 1275.)

On appeal, the defendant argued the court should look to Code of Civil Procedure section 1032. (Gilbert v. National Enquirer, Inc., supra, 55 Cal.App.4th at p. 1276.) The court, however, declined to do so. It found Heather Farms "on point." (Id., at p. 1277.) It therefore held, quoting Heather Farms: "' [T]he trial court must determine who is the prevailing party' " by "'analyz[ing] which party had prevailed on a practical level.'" (Ibid., quoting Heather Farms Homeowners Assn. Inc. v. Robinson, supra, 21 Cal.App.4th at p. 1574.)

The appellate court upheld the trial court's finding that the defendant was not the prevailing party. It reasoned the plaintiff's commercial misappropriation claims had successfully withstood a demurrer, even though her libel and invasion of privacy claims had not; the plaintiff claimed she dismissed her commercial misappropriation claims to expedite an appeal regarding the libel and invasion of privacy claims; and insufficient discovery had been taken to permit a determination as to who was the prevailing party. (Gilbert v. National Enquirer, Inc., supra, 55 Cal.App.4th at p. 1277; see also Damian v. Tamondong (July 29, 1998) ___ Cal.App.4th ___, ___-___ [1998 WL 426043 at pp. 6-10] [after voluntary dismissal, trial court has discretion to determine prevailing party for purposes of attorney's fees under Rees-Levering Automobile Sales Finance Act (Civ. Code, § 2983.4); neither Civ. Code, § 1717 nor Code Civ. Proc., § 1032 is controlling].)

The Coltrains try to distinguish Heather Farms and Gilbert, arguing the statutes involved in those cases allowed attorney's fees to the party who prevailed in the entire action, whereas here the SLAPP statute merely allows attorney's fees to the party who prevails on a motion. We fail to see the distinction. The motion at issue is, after all, a motion to strike the complaint. Thus, in both situations, when the plaintiff dismisses the complaint, it voluntarily cedes to the defendant all the relief the trial court could have granted if the matter had been pressed to a ruling. The principle that the defendant need not obtain a ruling from the court in order to "prevail" for attorney's fees purposes applies equally in both situations.

We do not believe the policies behind the SLAPP statute call for any different result. Certainly these policies do not support the Coltrains' contention that a voluntary dismissal should automatically preclude an award of attorney's fees to the defendant. Otherwise, SLAPP plaintiffs could achieve most of their objective with little risk -- by filing a SLAPP suit, forcing the defendant to incur the effort and expense of preparing a special motion to strike, then dismissing the action without prejudice. The specter of the action being refiled (at least until the statute of limitations had run) would continue to have a significant chilling effect on the defendant' s exercise of its First Amendment rights. At that point, the plaintiff would have accomplished all the wrongdoing that triggers the defendant's eligibility for attorney's fees, but the defendant would be cheated of redress.

On the other hand, these policies likewise do not support defendants' contention that a voluntary dismissal while a special motion to strike is pending should automatically entitle a defendant to attorney's fees. At that point, there has been no judicial determination that the action is in fact a SLAPP suit. Also, regardless of whether the action is a SLAPP suit or not, the plaintiff may have good-faith reasons for the dismissal that have nothing to do with oppressing the defendant or avoiding liability for attorney's fees.

We conclude that where the plaintiff voluntarily dismisses an alleged SLAPP suit while a special motion to strike is pending, the trial court has discretion to determine whether the defendant is the prevailing party for purposes of attorney's fees under Code of Civil Procedure section 425.16, subdivision (c). In making that determination, the critical issue is which party realized its objectives in the litigation. Since the defendant's goal is to make the plaintiff go away with its tail between its legs, ordinarily the prevailing party will be the defendant. The plaintiff, however, may try to show it actually dismissed because it had substantially achieved its goals through a settlement or other means, because the defendant was insolvent, or for other reasons unrelated to the probability of success on the merits.

Here, the trial court applied an erroneous legal standard. It deemed Code of Civil Procedure section 1032 controlling; thus, it failed to exercise its discretion to find that defendants were not the prevailing parties. Nevertheless, we believe it reached the correct result. "'There is perhaps no rule of review more firmly established than the principle that a ruling or decision correct in law will not be disturbed on appeal merely because it was given for the wrong reason. If correct upon any theory of law applicable to the case, the judgment will be sustained regardless of the considerations that moved the lower court to its conclusion.' [Citation.]" (Tippett v. Terich (1995) 37 Cal.App.4th 1517, 1539, quoting Belair v. Riverside County Flood Control Dist. (1988) 47 Cal.3d 550, 568.)

Upon the Coltrains' voluntary dismissal, a presumption arose that defendants were the prevailing parties. There was no evidence that the Coltrains' reasons for dismissing were such as to dispel this presumption. The Coltrains claim they dismissed because they had run out of money. However, they introduced no evidence to support this claim. In any event, this reason, if proved, would only confirm that defendants were the prevailing parties on the motion to strike. The Coltrains are essentially admitting they filed an action they could not afford to win. Indeed, this arguably proves it was a pure SLAPP suit.

There was some evidence the Coltrains dismissed the action because they had agreed to install lighting, to install a fence around the apartments, and to participate in the city's Crime Free Multi-Housing Program. The Coltrains do not mention this evidence in this appeal; they maintain they dismissed solely and exclusively because they had run out of money. Thus, they have waived any claim the trial court erred by failing to consider this evidence. In any event, this reason would mean the Coltrains not only dismissed their action against defendants, but also gave defendants everything they were really seeking in the small claims actions. Thus, this reason, too, would confirm that defendants were the prevailing parties on the motion to strike.

We conclude the trial court correctly found that defendants were the prevailing parties on the special motion to strike.