Opinion
D076197
03-30-2020
CAROLE A. CARMODY, Plaintiff and Respondent, v. ROBIN M. MAYNE, Defendant and Appellant.
Anthony A. Sears, for Defendant and Appellant. Ziprick & Associates, Robert H. Ziprick and Jonathan R. Ziprick, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. CIVDS1400811) APPEAL from a judgment of the Superior Court of San Bernardino County, John M. Pacheco, Judge. Affirmed. Anthony A. Sears, for Defendant and Appellant. Ziprick & Associates, Robert H. Ziprick and Jonathan R. Ziprick, for Plaintiff and Respondent.
Per an oral agreement, Robin M. Mayne and Carole A. Carmody purchased a single family house as investment property. Carmody provided the lion's share of the funds for the down payment, and the two investors also obtained $200,000 in financing. Mayne and Carmody contemplated that they would equally control and manage the property, dividing equally expenses and profits. However, when the property was sold, Carmody was to recoup her initial cash investment before they divided any profits.
Sometime after they purchased the investment property, Mayne and Carmody entered into a written agreement whereby Mayne would buy out Carmody's interest subject to Mayne obtaining new financing for the property and escrow closing within a time certain. Escrow did not close within the prescribed time, and then Mayne and Carmody disagreed about the enforceability of the written agreement.
Ultimately, Carmody filed a partition action. Mayne filed a cross-complaint for specific performance, breach of contract, and declaratory relief (essentially seeking to enforce the written agreement). After some procedural issues, including the court granting Carmody relief from default, the court sustained Carmody's demurrer to the operative cross-complaint without leave to amend. The matter than proceeded to a bifurcated bench trial on the partition action. The court found that the property was held in joint tenancy, each owner was to be paid first according to their initial investment, and then any excess proceeds were to be divided according to joint tenancy law. The court entered an interlocutory judgment to allow the parties to appeal any of the issues decided in the partition trial.
Mayne appeals, contending: (1) the superior court improperly granted Carmody relief from default; (2) the superior court abused its discretion in sustaining the demurrer to the second amended cross-complaint without leave to amend; (3) the superior court committed reversible error by failing to prepare a statement of decision; and (4) the superior court erred in failing to award Mayne her attorney fees and costs as the prevailing party under Civil Code section 1717 and the written agreement.
We conclude Mayne's contentions lack merit and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In 2008, Mayne and Carmody decided to purchase investment property together. They located a single family house in the Big Bear lake area (the Property). Per an oral agreement, Carmody made an initial investment of $119,485, and Mayne contributed $64,485 to purchase the Property. A grant deed was recorded on October 24, 2008, evidencing the sale of the Property to Mayne and Carmody, stating they held the Property as joint tenants.
At that time, according to Carmody, the parties agreed to control and manage the Property together, sharing both profits and expenses. However, if the Property were to be sold, each person would receive an amount equal to her respective initial investment before any profits were divided.
Around June 23, 2011, Mayne and Carmody obtained a $196,000 loan from Wells Fargo Bank, N.A., secured by a deed of trust recorded against the Property. Over a year later, Mayne and Carmody decided to end their relationship as investment partners. To this end, on December 10, 2012, they entered into a written agreement entitled, "Conditional Settlement Agreement and Mutual General Release Upon Escrow Closing" (the Settlement Agreement). Under the Settlement Agreement, Mayne was to purchase Carmody's interest in the Property for $35,000 subject to escrow closing within the prescribed time period. Mayne agreed to open an escrow account with Mor Escrow Services, Inc. within 24 hours of executing the Settlement Agreement. Mayne was to be responsible for all escrow fees and costs. Further, the Settlement Agreement provided: "Escrow is to remain open for 12 months from the opening of escrow."
Pursuant to the Settlement Agreement, Mayne would deposit $10,000 upon opening escrow. Within five business days of written confirmation to Carmody of the opening of escrow, Carmody was to deposit a signed and notarized quit claim deed transferring Carmody's interest in the Property to Mayne. This quitclaim deed was not to be recorded until escrow closed.
Under the Settlement Agreement, Mayne also agreed to deposit $10,000 into escrow, which would be available to Carmody on or before February 1, 2013. Additionally, Mayne was to deposit a final $15,000 into escrow, which would be available to Carmody on or before April 30, 2013.
In addition to the $35,000 to be paid to Carmody, Mayne was to obtain financing to pay off the $196,000 Wells Fargo loan and satisfy the related deed of trust.
The Settlement Agreement contained a time is of the essence and liquidated damages provision. To this end, the Settlement Agreement provided that if escrow did not close within the time specified in the agreement, "the Agreement by which Carmody agrees to sell her interest in the Subject Property shall automatically terminate and Mayne does hereby agree as a part of the consideration for the awarding of this Agreement, Carmody shall retain as liquidated damages . . . $3,500." After subtracting the $3,500, Carmody was to return the balance of any of the funds she took from escrow. For example, if Mayne deposited the entire $35,000 and Carmody took the $35,000, Carmody would return $31,500 to Mayne if escrow did not close in the time required under the Settlement Agreement.
After signing the Settlement Agreement, Mayne opened escrow and eventually deposited $35,000. However, escrow did not close within a year of opening. Thus, Carmody kept $3,500 as liquidated damages and returned the remaining $31,500 to Mayne.
Mayne and Carmody then disagreed how to proceed. Mayne asserted that the Settlement Agreement was still in effect and escrow was "just on hold." Also, Mayne refused to accept the return of the $31,500 she had deposited in escrow. Carmody, on the other hand, believed that the portion of the Settlement Agreement requiring her to transfer her interest in the Property to Mayne terminated by its own terms.
Unable to resolve their disagreement, Carmody filed a partition action on January 23, 2014. Mayne answered the partition action and filed a cross-complaint. Mayne amended her cross-complaint twice, with the second amended cross-complaint, which was filed December 9, 2014, becoming the operative cross-complaint.
When Carmody did not respond to the cross-complaint within the statutory required time, Mayne requested an entry of default. Default was entered on January 8, 2015. The superior court then denied without prejudice Carmody's ex parte application for relief from default, specifically instructing Carmody to file a noticed motion for relief. Following the court's instructions, Carmody filed a noticed motion for relief from default, which the court granted. Carmody then successfully demurred to the second amended- cross complaint, and the court did not grant Mayne leave to amend. As such, the litigation proceeded to trial on the partition action.
Before trial, the parties stipulated to a bifurcation of the trial, with the issues of the amount of any liens against the Property and each party's respective equity in the Property to be decided first. If necessary, a second trial would be held to determine the fair market value of the Property.
Regarding the first trial, the parties stipulated that Carmody contributed $119,485 and Mayne contributed $64,485 for the initial purchase of the Property. The court heard witnesses, considered evidence submitted at trial, and reviewed post-trial briefs by the parties. The court made the following findings:
"Upon review of the testimony at trial and review of all the exhibits the court finds that neither party, Carmody nor Mayne, understood the legal ramifications of holding the property as joint tenants or tenants in common. In fact it was conceded by the parties that both were amateur real estate investors. The exhibits admitted into evidence show, by a preponderance of the evidence, that the parties signed several documents which described their relationship to the subject property as joint tenants.
"The court concurs with defendant that a rebuttable presumption of a joint tenancy was created and the court further finds as argued by defendant that the four unities of time, title, interest and possession are present in exhibits 3 & 5. The court further finds that there has not been a preponderance of evidence submitted by plaintiff to rebut the presumption of Joint Tenancy. Accordingly the court finds that the subject property is held in joint tenancy but the contributions stipulated to by the parties shall be first paid . . . and any excess proceeds thereafter shall be divided according to . . . Joint Tenancy law."
After various draft proposed judgments, motions, and hearings, the court entered an interlocutory judgment on May 18, 2018. Mayne timely appealed.
DISCUSSION
I
RELIEF FROM DEFAULT
A. Mayne's Contentions
Mayne argues the superior court erred when it granted Carmody's "second" motion to set aside default because that motion did not comply with Code of Civil Procedure section 1008. We disagree.
Statutory references are to the Code of Civil Procedure unless otherwise specified.
B. Background
Mayne filed the second amended cross-complaint on December 9, 2014. It was personally served on Carmody's attorney on December 8, 2014. When Carmody did not respond to the new cross-complaint within the statutorily allotted time, Mayne requested that default be entered. Default was entered as requested on January 8, 2015.
On January 14, 2015, Carmody applied ex parte to set aside the subject default. She argued that the second amended cross-complaint was improper because it did not specify the amount of damages Mayne was seeking, and as such, the default entered based on the "defective" cross-complaint was "void on its face." The next day, the court heard argument on the ex parte application. It ordered Mayne to file an opposition within 10 days of the hearing, and Carmody was to file a reply five days after the filing of the opposition. The court also continued the matter until February 9, 2015.
Mayne filed an opposition to the ex parte application to set aside default, arguing, among other things, Carmody's only mechanism to challenge the default was to file a motion for relief under section 473. In her reply, Carmody maintained that she was not seeking to set aside the default under section 473, but instead, asserting that the default was void on its face.
On February 9, 2015, the superior court denied the ex parte application to set aside default based on the void second amended cross-complaint theory without prejudice to Carmody filing a "proper motion for relief under [section 473, subdivision (b)] including attorney fault."
On March 27, 2015, Carmody filed a noticed motion "for order vacating and setting aside default." Carmody moved to set aside the default on two grounds. First, she again argued that the default was void because it was based on a defective cross-complaint. Specifically, Carmody insisted that the cross-complaint was fatally flawed because it did not state any specific damages that were being demanded; rather, it simply prayed for damages according to proof.
Second, Carmody maintained that relief from default should be granted based on her attorney's "mistake, inadvertence, surprise, and excusable neglect." Carmody's attorney explained that Mayne filed the second amended cross-complaint on December 9, but served it on December 8. Carmody's attorney "mistakenly and inadvertently" thought the service date and filing date were the same (December 9) and calendared a deadline to file a response accordingly. Thus, Carmody's attorney had miscalculated the deadline by one day, and "Mayne filed the entry of default at issue immediately after that deadline had passed." Attached to Carmody's motion was her proposed demurrer to the second amended cross-complaint.
Mayne opposed the motion, contending the motion was an improper attempt to have the court reconsider its prior ruling on the ex parte application. Further, Mayne argued that Carmody did not comply with the requirements of section 1008 to have the court reconsider its prior ruling. Mayne did not address Carmody's claim that the default should be set aside under section 473.
The superior court denied Carmody's motion to set aside default on the basis of a defective second amended cross-complaint and a void default. The court noted it had previously denied Carmody's ex parte application seeking to set aside the default on this ground. However, the court granted the motion to set aside the default based on attorney error under section 473.
C. Analysis
Initially, we observe Mayne's argument is based on a false premise: Carmody's motion to set aside the default was simply a motion for reconsideration of the court's denial of her ex parte application. That was not the case. True, Carmody's motion repeated the same "void second amended cross-complaint" argument that the court found unpersuasive in the ex parte application. However, the court rejected this argument out of hand. As such, to the extent Carmody attempted to repeat the same argument that failed in her ex parte application, the court remained unpersuaded and denied the motion on that ground.
Nonetheless, the court did grant Carmody's motion under section 473: "The Court will, however GRANT Carmody's motion to set aside the default based on attorney error." This is an entirely different argument than what Carmody offered in her ex parte application. Indeed, in ruling on Carmody's motion, the court explicitly stated that "[S]ection 1008 does not apply."
Section 1008, subdivision (a) provides: "When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown."
Here, Mayne does not address Carmody's motion under section 473. An appellant has the burden to provide an adequate record and affirmatively show reversible error. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564; Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) Further, it is the appellant's duty to support arguments in his or her briefs by references to the record on appeal, including citations to specific pages in the record. (Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856.) "Appellate briefs must provide argument and legal authority for the positions taken. 'When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived. [Citations.]' " (Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862 (Nelson).) "We are not bound to develop appellants' argument for them. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived." (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830.)
In the instant matter, except for claiming it was an improper motion for reconsideration, Mayne does not explain how the court erred in granting Carmody relief under section 473. As we discuss above, we reject Mayne's claim that Carmody's motion for relief from default was an improper motion for reconsideration. Mayne does not provide any citation to the record or legal authority indicating that the superior court improperly granted Carmody's motion under section 473. This omission is fatal to Mayne's challenge on this issue. (See Nelson, supra, 172 Cal.App.4th at p. 862; In re Marriage of Falcone & Fyke, supra, 164 Cal.App.4th at p. 830.)
Further, on the record before us, Mayne could offer no cogent argument showing the court erred. In determining whether to grant relief from default under section 473, subdivision (b), for "mistake, inadvertence, surprise, or excusable neglect," courts should inquire whether a reasonably prudent person with no special skill or training under the same or similar circumstances might have made such an error. (Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 671.) However, courts are not "guardians for those who are grossly careless with their affairs." (Conway v. Municipal Court (1980) 107 Cal.App.3d 1009, 1018.) Accordingly, mistake, inadvertence, surprise, or neglect will only justify relief if "upon consideration of all of the evidence it is found to be of the excusable variety." (Id. at p. 1017.) The party seeking relief under section 473 bears the burden of establishing that the mistake, inadvertence, surprise or neglect "that led to his default was excusable." (Ibid.) We review the trial court's order either granting or denying section 473 relief under an abuse of discretion standard. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.)
Here, Carmody's counsel filed a declaration in support of the motion to set aside default. In it, he stated that he incorrectly calculated the response date to the second amended cross-complaint based on the filing date (December 9) not the date of service (December 8). Thus, he missed the response date by one day. On that day, Mayne requested default. Carmody's attorney then immediately applied ex parte for relief from default. These facts support the superior court's exercise of its discretion in setting aside the default based on excusable mistake, inadvertence, surprise, or neglect.
II
THE DEMURRER TO THE SECOND AMENDED CROSS-COMPLAINT
A. Mayne's Contentions
Mayne argues the superior court abused its discretion when it sustained Carmody's demurrer to the second amended cross-complaint without leave to amend. We disagree.
B. Background
Mayne filed a first amended cross-complaint on August 13, 2014. In that cross-complaint, she alleged three causes of action: specific performance, breach of contract, and declaratory relief. All three causes of action were based on the enforcement of the Settlement Agreement. Mayne alleged that, per the Settlement Agreement, she agreed to buy and Carmody agreed to sell Carmody's interest in the Property for $35,000. Mayne further averred that she performed all conditions precedent as required under the Settlement Agreement, except for those she was "not legally obligated to perform." According to Mayne, Carmody "repudiated and breached" the Settlement Agreement when she filed her partition action. Among other documents, Mayne attached the Settlement Agreement as an exhibit to the first amended cross-complaint.
Carmody demurred to the first amended cross-complaint, arguing each cause of action did not state a cause of action and was uncertain. The court overruled the demurrer on the grounds that the causes of action were uncertain. It also overruled the demurrer as to the declaratory relief claim on the grounds that it failed to state a cause of action. However, the court sustained the demurrer as to the claims for specific performance and breach of contract but gave Mayne 20 days to file an amended complaint.
On December 9, 2014, Mayne filed the second amended cross-complaint, alleging four causes of action: specific performance, breach of contract, quiet title, and declaratory relief. Like the previous cross-complaint, all four causes of action relied on the enforcement of the Settlement Agreement and included similar allegations regarding the Settlement Agreement requiring Carmody to transfer her interest in the Property to Mayne in exchange for $35,000. Also, Mayne alleged that, prior to December 10, 2013, she had performed all conditions precedent that she agreed to perform in paragraph 1 of the Settlement Agreement. She further averred that Carmody breached the Settlement Agreement by sending an email on December 21, 2013, "demanding new terms for the transfer of her interest" in the Property. In addition, Mayne stated that on or about January 30, 2014, she had obtained "replacement financing pursuant to paragraph 2" of the Settlement Agreement.
As part of the second amended cross-complaint, Mayne attached a grant deed, quit claim deed, the Settlement Agreement, various emails between Carmody and Mayne, and an email Mayne claimed evidences she received financing for the Property on January 29, 2014 as exhibits to the cross-complaint.
Carmody demurred to the second amended cross-complaint, arguing that the allegations in the cross-complaint as well its exhibits show that the Settlement Agreement expired on its own terms. Specifically, Carmody pointed out: (1) the Settlement Agreement required escrow to open 24 hours after the agreement was signed and remain open for 12 months; (2) the Settlement Agreement was signed on December 10, 2012; thus, per the agreement, escrow had to open on December 11, 2012 and close by December 11, 2013 (at the latest); (3) under the Settlement Agreement, if escrow did not close within the specified time, the agreement automatically terminated and Carmody would retain $3,500 as liquidated damage; and (4) Mayne admitted in an email dated December 21, 2013 that she had not closed escrow. Because the Settlement Agreement expired by its own terms, Carmody maintained that all of Mayne's causes of action based on the existence of that agreement must fail.
In opposing the demurrer, Mayne asserted that paragraph 2 of the Settlement Agreement required her to obtain financing to replace the existing loan with Wells Fargo, but did not impose any deadline by which she had to do so. Also, Mayne insisted that the financing obligation in paragraph 2 was unrelated to the transfer of ownership provisions in the Settlement Agreement (found in paragraph 1). Thus, Mayne argued the Settlement Agreement did not terminate by its own terms and remained enforceable.
In a thorough minute order, the superior court sustained the demurrer to the second amended cross-complaint as to all causes of action without leave to amend. As to the causes of action for specific performance, breach of contract, and declaratory relief, the court found that the Settlement Agreement (attached as Exhibit 3), on which those claims relied, automatically terminated when escrow did not close within a year of opening. Based on the allegations of the second amended cross-complaint and attached exhibits, escrow should have opened on December 11, 2012 and closed no later than December 11, 2013. If escrow did not close by December 11, 2013, the Settlement Agreement would automatically terminate and Carmody would retain $3,500 in liquidated damages. The court further noted that, in Exhibit 4 to the second amended-cross complaint, Mayne admitted in an email that escrow had not closed as of December 21, 2013. The court summarized:
"[T]he agreement, Exhibit 3 and the chain of emails Exhibit 4, clearly show that the agreement had terminated automatically by its own terms ten (10) days prior to Carmody's proposed offer of December 21, 2013 in that email as a result of the failure to close escrow before December 10, 2013. Further, Carmody's tender of the purchase money minus the liquidated damages of $3,500.00 to Mayne at the time she did, was exactly what was contemplated and called for by the contract and was [in] compliance with the terms of the contact and did [not] breach as alleged by Mayne as alleged in her opposition.
"Based upon the foregoing alone, the court will grant Carmody's demurrer to the [second amended cross-complaint] in its entirety without leave to amend, as there is no way based upon the evidence Mayne could amend her cross-complaint to survive. '[A] trial court does not abuse its discretion by sustaining a general demurrer without leave to amend if it appears from the complaint that under applicable substantive law there is no reasonable possibility that an
amendment could cure the complaint's defect.' (Hacienda v. City of San Marino (1986) 42 Cal.3d 481, 486.)"The court also stated that, in sustaining Carmody's demurrer to the first amended cross-complaint with leave to amend, it did not grant Mayne leave to add any additional causes of action. Thus, it also sustained Carmody's demurrer to the quiet title cause of action in the second amended cross-complaint because Mayne did not obtain the court's permission to add a new cause of action.
On appeal, Mayne does not address this ground for sustaining the demurrer as to the quiet title cause of action. Because the quiet title action was contingent on an existing Settlement Agreement and we agree the Settlement Agreement expired on its own terms based on the allegations in and exhibits to the second amended cross-complaint, we do not weigh in on this issue.
C. Standard of Review
"On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]" (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) If a complaint's allegations conflict with exhibits attached to the complaint, we may accept the exhibits as true on demurrer. (SC Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th 68, 83.)
"[W]hen [a demurrer] is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse. [Citation.]" (City of Dinuba v. County of Tulare, supra, 41 Cal.4th at p. 865.) In reviewing the sustaining of a demurrer, we review the trial court's result for error, and not its legal reasoning. (Mendoza v. Town of Ross (2005) 128 Cal.App.4th 625, 631.)
D. Analysis
In the second amended cross-complaint, Mayne alleged four causes of action. All of these claims were dependent on the existence and enforceability of the Settlement Agreement. For example, in Mayne's cause of action for specific performance, she asked the court to enforce the terms of the Settlement Agreement and order Carmody to convey her interest in the Property as required under the agreement. In her claim for breach of contract, Mayne averred that Carmody breached the Settlement Agreement. Likewise, Mayne's causes of action for quiet title and declaratory relief relied on Mayne's claim of right under the Settlement Agreement or a dispute regarding her rights under that agreement.
Mayne alleged that Carmody breached the Settlement Agreement by demanding new terms to transfer her interest in the Property as evidenced by an email dated December 21, 2013. That email, among others, is attached to the second amended cross-complaint as Exhibit 4. Mayne also averred that, on or about January 30, 2014, she obtained "replacement financing" as required under paragraph 2 of the Settlement Agreement. Further, she alleged she "has performed all she is required to do under the [Settlement Agreement] because of the anticipatory repudiation of the [Settlement Agreement] as alleged in paragraph 15, [Mayne] is excused from further performance of her obligation to obtain replacement financing under paragraph 2 of the [Settlement Agreement]."
In paragraph 15 of the second amended cross-complaint, Mayne alleged that Carmody breached the Settlement Agreement on December 21, 2013 by asking for new terms.
On appeal, Mayne insists Carmody "is hung up on the notion that the [sic] Ms. Mayne did not obtain replacement financing required under paragraph 2 of the Settlement Agreement." She further maintains that her obligation to obtain financing in paragraph 2 is not contained in the obligations imposed on Mayne in paragraph 1 of the Settlement Agreement. Mayne argues paragraph 1 addressed the purchase of Carmody's interest in the Property and merely required Mayne to pay Carmody $35,000. To this end, Mayne simply points us to the allegations in the second amended cross-complaint and maintains she has sufficiently pled Carmody's breach and/or repudiation of the contract:
"In paragraph 13 of the [second amended cross-complaint], Ms. Mayne has alleged that upon the payment of the $35,000.00, Ms. Carmody was obligated to transfer her interest in the subject property to Ms. Mayne, right then and there.
"Ms. Mayne then alleges, in paragraphs 15 and 16 of the [second amended cross-complaint], the repudiation of the contract (settlement agreement) by Ms. Carmody. Since there is no date specified in paragraph 2 (as opposed to the paragraph 1 deadlines for Ms. Mayne to pay the $35,000.00) for Ms. Mayne to obtain replacement financing, Ms. Mayne is not 'in default' of her obligation to obtain replacement financing under paragraph 2.
"Thus, Ms. Carmody's repudiation of the settlement agreement . . . relieved Ms. Mayne of her obligation under paragraph 2 'obtaining financing' until such time as Ms. Carmody fulfills her obligation to transfer her interest in the subject property."
Put differently, Mayne alleges that paragraph 1 of the Settlement Agreement required Carmody to transfer her interest in the Property upon receipt of Mayne's payment of $35,000. Nothing else was required in paragraph 1 to effectuate this transfer. And once Carmody refused to transfer her interest, Mayne was relieved of complying with any further obligations under the Settlement Agreement.
Carmody counters that paragraph 1 of the Settlement Agreement contained a time is of the essence clause and required escrow to close no later than a year after it opened. She further notes that Mayne admits escrow did not close within the required time; thus, the Settlement Agreement automatically terminated by its own terms.
The parties therefore present competing interpretations of the Settlement Agreement, which we must resolve to address whether the superior court abused its discretion in sustaining Carmody's demurrer to the second amended cross-complaint without leave to amend. "The fundamental goal of contract interpretation is to give effect to the mutual intention of the parties as it existed at the time they entered into the contract. [Citations.] That intent is interpreted according to objective, rather than subjective, criteria. [Citation.] When the contract is clear and explicit, the parties' intent is determined solely by reference to the language of the agreement. (Civ. Code, §§ 1638 ['language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity'], 1639 ['[w]hen a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible . . .'].) The words are to be understood 'in their ordinary and popular sense.' (Civ. Code, § 1644.)" (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1385.)
When reviewing whether a plaintiff has properly stated a cause of action for breach of contract, we must determine whether the alleged agreement is reasonably susceptible to the meaning ascribed to it in the complaint. (Hervey v. Mercury Casualty Co. (2010) 185 Cal.App.4th 954, 964.) " 'So long as the pleading does not place a clearly erroneous construction upon the provisions of the contract, in passing upon the sufficiency of the complaint, we must accept as correct plaintiff's allegations as to the meaning of the agreement.' [Citation.]" (Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239.) Thus, to survive demurrer, Mayne need only set forth a reasonable interpretation of the Settlement Agreement. Here, she has failed to do so.
Mayne's suggested interpretation of the Settlement Agreement is neither reasonable nor supported by a plain reading of the contract. Indeed, Mayne's basic premise, that the agreement required Carmody to transfer her interest upon receipt of the $35,000 is incorrect. Paragraph 1 of the Settlement Agreement set forth the terms by which Carmody would transfer her interest under certain specified conditions: "Mayne agrees to purchase Carmody's interest in the Subject Property from Carmody for a total amount of $35,000.00, subject to escrow closing on such buy-out of Carmody's interest, as follows . . ." Under subsection (a) of paragraph 1, Mayne was required to open an escrow account within 24 hours of executing the Settlement Agreement, and escrow was "to remain open for 12 months from the opening of escrow." Per subsections (b), (e), and (f), Mayne was required to deposit a total of $35,000 into escrow, which would eventually be released to Carmody as payment for her interest in the Property. Pursuant to subsection (c), within five business days after receiving written confirmation of the opening of escrow, Carmody was to deposit a quitclaim deed transferring her interest in the Property to Mayne, but the quitclaim deed was not to be recorded until escrow closed. Thus, the Settlement Agreement explicitly did not call for the transfer of Carmody's interest to Mayne upon receipt of the $35,000. Mayne's allegations and arguments otherwise are made of whole cloth and do not override the terms of the Settlement Agreement. Rather, we shall disregard Mayne's allegations in the second amended cross-complaint that contradict the attached exhibits (in this case, Exhibit 3 the Settlement Agreement). (See SC Manufactured Homes, Inc. v. Liebert, supra, 162 Cal.App.4th at p. 83.)
Further undermining Mayne's suggested interpretation of the Settlement Agreement is her utter failure to address subsection (g) of paragraph 1. That subsection is entitled "Time is of the Essence and Liquidated Damages." Among other things, this subsection provided:
"If escrow shall not close within the time specified in this Agreement, then the Agreement by which Carmody agrees to sell her interest in the Subject Property shall automatically terminate and Mayne does hereby agree as a part of consideration for the awarding of this Agreement, Carmody shall retain as liquidated damages and not as a penalty, the sum of Three Thousand Five Hundred Dollars ($3,500.00)."
Thus, the Settlement Agreement explicitly set forth that it would terminate if escrow did not close within the specified time period (one year from its opening) and Carmody would receive liquidated damages upon its termination. According to the exhibits to the second amended cross-complaint, this is precisely what occurred.
Mayne alleges the parties entered into the Settlement Agreement on December 10, 2012, which would have required Mayne to open escrow no later than December 11, 2012. The Settlement Agreement provides that escrow would be required to remain open no longer than December 11, 2013. If escrow did not close by that date, then Carmody would keep $3,500 in liquidated damages, and the Settlement Agreement would automatically terminate. In an email dated December 21, 2013, which is attached to the cross-complaint as Exhibit 4, Mayne admits that escrow has not closed. Consequently, any requirement under the Settlement Agreement that Carmody was to transfer her interest in the Property to Mayne terminated on December 11, 2013. In other words, based on the allegations of the operative cross-complaint and the attached exhibits, the Settlement Agreement terminated under its own terms when escrow did not close by a time certain.
We are perplexed why Mayne does not directly address the time is of the essence clause of the Settlement Agreement or the requirement that escrow remain upon for only a year. Instead, she offers an argument that is untenable. She alleges Carmody breached the Settlement Agreement by offering new terms on December 21, 2013. However, Carmody's proposal of new terms could not have breached the Settlement Agreement because the agreement had terminated by its own terms on December 11, 2013. Alternatively stated, when Carmody made an offer for new terms, there was no agreement to breach.
In addition, our interpretation of the Settlement Agreement is not affected by Mayne's focus on paragraph 2 of that agreement. Mayne emphasizes that paragraph 2 required her to obtain replacement financing, but that paragraph contained no time restriction. Therefore, according to Mayne, she had no obligation to obtain financing within a time certain. However, paragraph 2 is not of the moment. Nothing in it operated to relieve Mayne of her obligation to close escrow within a year of it opening as required in paragraph 1 of the Settlement Agreement.
In short, on the record before us, looking at the exhibits to the second amended cross-complaint as well as the allegations that do not contradict the exhibits, it is undisputed that Mayne did not close escrow. Further, the Settlement Agreement required escrow to close no later than December 11, 2013. When escrow did not close by that date, the Settlement Agreement automatically terminated. As such, it is no longer enforceable. Because all four of Mayne's causes of action depend on an unreasonable interpretation of the Settlement Agreement and/or allegations that contradict the exhibits attached to the cross-complaint, the court did not err in sustaining Carmody's demurrer. Moreover, as Mayne's theory of liability against Carmody hinges on a fatally flawed interpretation of the Settlement Agreement and she did not argue she could plead additional facts to state a valid claim against Carmody, the superior court did not abuse its discretion in denying Mayne leave to amend the cross-complaint.
III
STATEMENT OF DECISION
A. Mayne's Contentions
Mayne argues we must reverse the judgment here because the trial court failed to provide a statement of decision. We disagree.
B. Background
After the superior court sustained Carmody's demurrer to the second amended cross-compliant without leave to amend, the only operative complaint before the court was Carmody's partition action. Before the matter went to trial, the parties stipulated to a bifurcation of the trial, with the issues of the amount of any liens against the Property and each party's respective equity in the Property to be decided first. If necessary, a second trial would be held to determine the fair market value of the Property.
Before the first trial, Mayne requested a statement of decision under section 632, specifically asking the court to address 17 separate issues. The first issue on which the statement of decision was requested stated the following: "Since 24 October 2008, have the parties owned the subject property as joint tenants, each with an undivided 1/2 interest in the subject property?" The remaining 16 issues concerned the Settlement Agreement or expenses incurred and rental incomes received from the Property.
For example, Mayne asked the court to determine: "In December 2012, did the parties enter into a written settlement agreement regarding the subject party?" and "Does the settlement agreement constitute an accord and satisfaction between the parties, so as to deem Ms. Mayne the 100% owner of the subject property?"
In a minute order, the court denied Mayne's request for a written statement of decision: "Defendant Mayne's request for a written statement of decision is denied. Actual testimony was less than 4 hours on the limited issue, before the court, of the type of tenancy created between the parties."
C. Analysis
Section 632 provides that "upon the trial of a question of fact by the court," the court "shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial." Here, Mayne contends the court did not provide any statement of decision, and, as such, the court "committed reversable error per se." Mayne, however, provides no authority to support her argument that this type of error requires automatic reversal. Further, in her reply brief, Mayne acknowledges that our high court recently addressed this issue in F.P. v. Monier (2017) 3 Cal.5th 1099 (Monier). Without any discussion of Monier, Mayne states that she "submits on this issue."
The court issued its opinion in Monier, supra, 3 Cal.5th 1099 before Mayne filed her opening brief.
In Monier, our Supreme Court considered whether the failure to issue a statement of decision as required by section 632 is reversible per se. (Monier, supra, 3 Cal.5th at p. 1102.) The court held such a failure is amenable to harmless error analysis and does not invariably necessitate reversal. (Id. at p. 1108.)
In the instant action, Mayne has not argued she was harmed by the court's failure to issue a statement of decision. In the absence of any such argument, Mayne has waived this challenge here. (See Nelson, supra, 172 Cal.App.4th at p. 862; In re Marriage of Falcone & Fyke, supra, 164 Cal.App.4th at p. 830.)
In addition, on the record before us, we fail to see how Mayne could reasonably argue she was harmed by the court's failure to provide a statement of decision. All the substantive issues Mayne raises in the instant appeal concern her unsuccessful attempt to enforce the Settlement Agreement. She does not challenge anything that occurred during her trial beyond the trial court's failure to provide a statement of decision.
IV
ATTORNEY FEES AND COSTS
After the end of the first trial, Mayne moved for attorney fees and costs, arguing she was entitled to such fees and costs under the Settlement Agreement and Civil Code section 1717. Carmody opposed the motion, contending she was the prevailing party and that Mayne could not be entitled to attorney fees and costs under the Settlement Agreement because her suit to enforce that agreement was unsuccessful. The superior court denied Mayne's motion for attorney fees without prejudice, noting the motion was "premature as not all issues have been addressed and decided by the court in the partition action." However, in regard to Mayne's claim that she was entitled to attorney fees and costs under the Settlement Agreement, the court found that Mayne "improperly" moved under Civil Code section 1717 because there were "no remaining viable causes of action based upon" the Settlement Agreement and "the second amended cross-complaint was dismissed with prejudice."
Mayne contends the court erred in denying her motion for attorney fees, maintaining that she should be awarded her fees under the Settlement Agreement. We reject this contention.
As a threshold matter, we note the court made two separate rulings on Mayne's motion for attorney fees. First, the court denied Mayne's motion for attorney fees and costs without prejudice because it was premature as there remain further issues to be litigated. Therefore, the court was not denying fees and costs altogether, but was denying Mayne's request as presented at that particular time, allowing Mayne the opportunity to reassert her request in a subsequent motion. As such, we conclude the order denying without prejudice the motion for attorney fees is not an appealable order.
Second, the court definitively concluded that Mayne is not entitled to attorney fees under Civil Code section 1717 and the Settlement Agreement. Accordingly, Mayne cannot bring any future motion for attorney fees and costs based on the Settlement Agreement. Mayne challenges this conclusion. We deem this an appealable order and address Mayne's claim on the merits.
The determination of the legal basis for an award of attorney's fees is a question of law subject to de novo review. (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966; Sessions Payroll Management v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677-678.) Ordinarily, each party to a lawsuit must bear its own attorney fees except where a statute or contract provides otherwise. (Code Civ. Proc., § 1021; Reynolds Metal Co. v. Alperson (1979) 25 Cal.3d 124, 127.) Where there is a contractual fee provision, Civil Code section 1717, subdivision (a) states, in pertinent part, as follows: "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."
"The primary purpose of [Civil Code] section 1717 is to ensure mutuality of remedy for attorney fee claims under contractual attorney fee provisions. [Citation.] Courts have recognized that [Civil Code] section 1717 has this effect in at least two distinct situations. [¶] The first situation . . . is 'when the contract provides the right to one party but not to the other.' [Citation.] In this situation, the effect of [Civil Code] section 1717 is to allow recovery of attorney fees by whichever contracting party prevails, 'whether he or she is the party specified in the contract or not.' [Citation.] [¶] The second situation . . . is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation 'by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.' [Citation.] . . . To ensure mutuality of remedy in this situation, it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, [Civil Code] section 1717 permits that party's recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed. [Citations.]" (Santisas v. Goodin (1998) 17 Cal.4th 599, 610-611.)
The Settlement Agreement contained an attorney fees provision that provided, in part: "If any legal action or other proceeding is brought for the enforcement of this Agreement, the successful or prevailing Party or Parties shall be entitled to recover actual attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled." Mayne sought to enforce the Settlement Agreement by way of the second amended cross-complaint. As discussed above, Mayne brought four causes of action in that cross-complaint that were based on the enforceability of the Settlement Agreement. In sustaining Carmody's demurrer to the second amended cross-complaint without leave to amend, the court found, based on the allegations in the cross-complaint and the attached exhibits, that the Settlement Agreement terminated by its own terms. We agree with this conclusion. Accordingly, Mayne was not successful in enforcing the Settlement Agreement and is not entitled to attorney fees and costs under that contract. The court did not err in denying Mayne's motion for attorney fees under Civil Code section 1717.
Because Carmody prevailed in getting the second amended cross-complaint dismissed with prejudice by arguing the Settlement Agreement had terminated, she could be entitled to her attorney fees and costs under the agreement and Civil Code section 1717. (See Santisas v. Goodin, supra, 17 Cal.4th at p. 610-611.) Nothing in this opinion should be read as prohibiting such a motion. We offer no opinion on how the superior court should rule on such a motion if it is brought. --------
DISPOSITION
The judgment is affirmed. Carmody is entitled to her costs on appeal.
HUFFMAN, J. WE CONCUR: McCONNELL, P. J. HALLER, J.