Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco County Super. Ct. No. 410145
Haerle, Acting P.J.
I. INTRODUCTION
Attorneys Sean Ellis and David Kahn represented Contemporary Services Corporation, Damon Zumwalt and Peter Kranske (collectively CSC) in an attorney malpractice action. After the malpractice action settled, a dispute arose regarding these parties’ respective rights to the settlement monies. That dispute led to litigation, a jury trial and a November 14, 2003, judgment, pursuant to which Ellis and Kahn were awarded reasonable attorney fees in the amount of $369,000 under the doctrine of quantum meruit. This court affirmed the judgment in March 2006. (Contemporary Services Corporation, et al. v. The Law Offices of Sean Ellis, et al. (Mar. 21, 2006, A105410) [nonpub. opn.] (CSC I).)
Thereafter, Ellis and Kahn sought post-judgment interest at the statutory rate. Instead, the trial court issued an order providing that interest which had actually accrued on the settlement monies while they were held in a client trust account was to be divided pro rata between the parties. Ellis and Kahn appeal, maintaining they are entitled to interest at the statutory rate. We agree and, therefore, reverse the post-judgment order.
II. STATEMENT OF FACTS
A. Background
Our decision in CSC I contains a detailed factual statement regarding the tumultuous relationship between these parties. For present purposes, a brief summary of the salient events will suffice.
Contemporary Services Corporation provides crowd management and security services for entertainment and sport events. In 1985, CSC sued a competitor for unfair competition and other business torts (the 1985 action). Baker & McKenzie represented CSC in the 1985 action, which was resolved pursuant to a settlement.
In 1994, Baker & McKenzie sued CSC for unpaid attorney fees and CSC filed a cross complaint alleging legal malpractice (the Baker & McKenzie action). The Baker & McKenzie action was protracted. Prior to a June 1998 jury trial, CSC’s malpractice claim was dismissed pursuant to a nonsuit. Thereafter, the jury rejected Baker & McKenzie’s claim for unpaid fees. The jury verdict was affirmed on appeal but the nonsuit was reversed in December 2000, and the case was remanded for further proceedings. In or around October 2001, Baker & McKenzie paid $2 million to resolve the case.
The settlement of the Baker & McKenzie action gave rise to another dispute, this time between the parties to this action. Ellis and Kahn had represented CSC during various stages of the Baker & McKenzie action. After it settled, they claimed they were entitled to 45 percent of the settlement monies pursuant to a 1994 attorney fee agreement they had entered into with CSC. CSC maintained the 1994 fee agreement had expired, that Ellis and Kahn had been paid for their services and that nothing more was owed. While the parties attempted to resolve this dispute, they agreed to deposit 45 percent of the gross settlement, i.e., $900,000, into an interest-bearing trust account.
The present action commenced in March 2002. CSC sued Ellis and Kahn for declaratory relief and also alleged causes of action against Ellis for an accounting, fraud, breach of fiduciary duty and breach of contract. Ellis and Kahn filed a cross complaint alleging breach of the 1994 fee agreement and, alternatively, a right to quantum meruit recovery. Trial commenced in September 2003. Before the jury reached a verdict, CSC’s declaratory relief claim was dismissed and the trial court granted a nonsuit as to the claims against Ellis for fraud and breach of fiduciary duty.
The jury reached a verdict on October 3, 2003. It found, among other things, that at the time of the Baker & McKenzie settlement, the 1994 fee agreement was not in effect but that Ellis and Kahn were entitled to reasonable attorney fees under the doctrine of quantum meruit in the amount of $369,000. Judgment was entered on November 14, 2003. Both parties appealed and, on March 21, 2006, this court issued our decision in CSC I pursuant to which we affirmed the judgment.
On May 22, 2006, the remittitur issued. The next day, Ellis was paid $369,000 from the client trust account. In their opening brief, appellants state that CSC expressly authorized this payment. CSC does not dispute this assertion. On May 26, 2006, Ellis and Kahn filed a memorandum of costs in which they acknowledged they had been paid $369,000 in partial satisfaction of the judgment but claimed they were owed interest on the judgment, accruing at the legal rate, in the amount of $93,009.00.
That same day, CSC was paid $501,339.51 out of the client trust account.
On June 13, 2006, CSC filed a motion to tax costs on the ground that Ellis and Kahn were not entitled to statutory interest. CSC characterized the judgment as resolving a fee dispute, underscored that there was no prevailing party, and pointed out that the parties had agreed that the disputed monies would be held in an interest-bearing trust account pending a final resolution of their dispute. Therefore, CSC maintained, the interest in the trust account was to be divided pro rata.
A hearing on the motion to tax costs was held on August 16, 2006. After argument was presented and the matter was submitted, the court granted CSC’s motion to tax costs. An order filed on August 31, 2006, states, in part: “No statutory interest accrued upon the Judgment. Interest actually earned in the Smith Barney Trust Account which held the disputed $900,000 is to be split on a pro rata basis 59% to Plaintiffs and 41% to Defendants.”
The transcript of the hearing reflects that the matter was heard by the Honorable James A. Robertson II. However, the minute order for the hearing states that the Honorable John J. Conway heard the matter. Judge Conway signed the formal order granting the motion to tax costs.
III. DISCUSSION
Ellis and Kahn contend that they obtained a money judgment and were, therefore, entitled to statutory interest pursuant to Code of Civil Procedure sections 685.010 and 685.030. We agree.
Undesignated statutory references are to the Code of Civil Procedure.
A “money judgment” is defined by statute as “that part of a judgment that requires the payment of money.” (§ 680.270.) The judgment in this case states, in part: “[J]udgment shall be, and hereby is, entered herein in favor of Cross-Complainants SEAN ELLIS and DAVID KAHN, and against Cross-Defendants CONTEMPORARY SERVICES CORPORATION, DAMON ZUMWALT and PETER KRANSKE, in the amount of $369,000.00 plus interest.” By its express terms, this judgment is a money judgment as it requires the payment of money to Ellis and Kahn. (§ 680.270.)
The judgment in this case also expressly provides for the payment of interest. But, even if it didn’t, the obligation to pay interest “follows automatically.” (Pinecrest Productions, Inc. v. RKO Teleradio Pictures, Inc. (1970) 14 Cal.App.3d 6, 11; see also In re Marriage of Hoffee (1976) 60 Cal.App.3d 337, 339-340; Jonathan Neil & Associates, Inc. v. Jones (2006) 138 Cal.App.4th 1481, 1489-1490.) “As the California Supreme Court stated long ago in Glenn v. Rice [(1917)] 174 Cal. [269,] 276: ‘In entering a judgment, it is not necessary to declare therein that it shall bear interest. It bears interest at the [legal] rate . . . from its date by force of law and not by reason of any declaration it may contain to that effect.’” (County of Los Angeles v. Salas (1995) 38 Cal.App.4th 510, 515-516.)
A money judgment requires the payment of post-judgment interest at the statutory rate of 10 percent. (§ 695.210, subd. (b) [“[t]he amount required to satisfy a money judgment” includes “interest added to the judgment as it accrues pursuant to Sections 685.010 to 685.030, inclusive.”]; § 685.020, subd (a) [interest commences to accrue from the date of entry of judgment]; § 685.010, subd. (a) [“[i]nterest accrues at the rate of 10 percent per annum on the principal amount of the money judgment remaining unsatisfied.”].) Therefore, we find that Ellis and Kahn did obtain a money judgment which entitles them to post-judgment interest at the statutory rate of 10 percent.
Ignoring both the plain language of the judgment as well as the statutes discussed above, CSC argues that the trial court had a reasonable basis for determining that the judgment was not intended to be a money judgment. CSC maintains that neither party sought a money judgment and the jury did not intend to award a money judgment. Rather, under CSC’s view of the case, the judgment was for an apportionment of settlement monies held in a trust account, an account that was at all times under the control of Ellis and Kahn. Indeed, CSC maintains that its former attorneys “withheld $900,000 of a $2,000,000 settlement claiming it as theirs” and that the jury rejected their claim to those funds. There are several problems with this argument.
First, contrary to CSC’s argument, the trial court did not find that a money judgment was not intended or even that the judgment is not a money judgment. Rather it simply determined, without explanation, that no statutory interest accrued on the judgment. Because Ellis and Kahn did obtain a money judgment, we can find no basis upon which to affirm the ruling that they were not entitled to statutory interest. Second, we are perplexed by CSC’s contention that neither party sought a money judgment as both clearly did. Third, CSC finds support in the record for its contention that the jury believed that any amount it awarded to Ellis and Kahn would be paid out of the client trust account. However, this factual contention is legally irrelevant. Post-judgment interest is determined by statute, not by a jury.
In other words, the thought process of the jury in the present case does not alter the legal consequences of its findings, one of which is that a money judgment was entered in favor of Ellis and Kahn and against CSC. In this regard, the jury expressly found that Ellis and Kahn were “entitled to reasonable attorney fees under the doctrine of quantum meruit” and it awarded them fees in the amount of $369,000. These findings were incorporated into the judgment which, as noted above, provided that judgment was entered in favor of Ellis and Kahn and against CSC in the amount of $369,000 plus interest.
Fourth, CSC’s contention that Ellis and Kahn wrongfully withheld a portion of the settlement funds during the pendency of this litigation is a claim they failed to substantiate at trial. (See CSC I, supra, at pp. 12-14.) It is also inconsistent with evidence before us which shows that the parties agreed to leave the $900,000 in a client trust account pending resolution of their dispute. CSC has failed to provide any authority for the proposition that the agreement to place a portion of the Baker & McKenzie settlement monies in an interest-bearing account pending resolution of the fee dispute somehow alters the legal nature of the judgment itself. In this regard, it is important to note that there is no evidence, nor even a contention on appeal, that the parties entered into an agreement or stipulation with respect to the subject of post-judgment interest.
CSC complains that there was no prevailing party in this litigation and that, although Ellis and Kahn did obtain some relief, that relief was granted pursuant to the equitable doctrine of quantum meruit. However, CSC fails to articulate how these circumstances are in any way relevant to the dispositive fact which is that Ellis and Kahn obtained a money judgment. Although both parties failed to prove their primary claims and pursued unsuccessful appeals, it is indisputable that Ellis and Kahn did allege and prove their quantum meruit claim. Furthermore, the equitable nature of the quantum meruit doctrine does not alter the fact that a money judgment was awarded.
Indeed, the fact that the monetary award was made pursuant to the quantum meruit doctrine undercuts CSC’s theory that the judgment was an apportionment of the settlement funds. By finding the 1994 contingency fee agreement was not in effect at the time of the settlement, the jury necessarily determined that Ellis and Kahn were not contractually entitled to a percentage of the Baker & McKenzie settlement funds. Thus, the jury did not apportion the settlement funds but, instead, found that, although there was no contract in place, CSC owed their attorneys money for the work they did.
CSC argues that, even if the judgment is a money judgment, the “trial court was within its discretion to look at the totality of the circumstances - use a ‘common sense application’ of the statutes - and deny postjugment interest.” CSC fails to cite any authority to support the legal proposition that a trial court has discretion not to award statutory interest on a money judgment. Such a proposition is inconsistent with the express language of the controlling statutory provisions discussed above.
CSC relies on Bell v. Farmers Insurance Exchange (2006) 137 Cal.App.4th 835 (Bell), a case which says nothing about discretion to deny postjudgment interest and is, in any event, inapposite. Bell was an appeal from a postjugment order in a complex class action. A jury awarded substantial damages to a class of claim representatives employed by Farmers Insurance Exchange (FIE). FIE was ordered to pay interest on the judgment, at the statutory rate, until the judgment was paid in full. After FIE deposited funds to satisfy the judgment into a trust account controlled by a court-appointed administrator, it sought an order authorizing an alternative distribution method that would address previously unforeseen tax issues. The court approved the alternate method and also denied plaintiffs’ request that FIE pay additional interest on the judgment until the funds were actually paid to the class members. (Id. at pp. 838-839.) The plaintiff class appealed.
The Bell court resolved the appeal by deciding a “single issue,” i.e., the date upon which the judgment had been “satisfied.” (Bell, supra, 137 Cal.App.4th at p. 839.) The court applied section 685.030, subdivision (d), which provides that a money judgment is satisfied in full or in part at the earliest of the following times: “(1) The date satisfaction is actually received by the judgment creditor. [¶] (2) The date satisfaction is tendered to the judgment creditor or deposited in court for the judgment creditor. [¶] (3) The date of any other performance that has the effect of satisfaction.” (§ 685.030, subd. (d)(1)-(3).) The court construed the second option, pertaining to the deposit in court as “embrac[ing] payment of funds in satisfaction of the judgment to the damages fund managed by the claims administrator” for the class. (Bell, supra, 137 Cal.App.4th at p. 839.) The court noted, among other things, that the claims administrator had been appointed by the court and the court had retained full power over the administrator’s performance of its duties. (Ibid.)
Bell does not assist CSC. As noted above, the sole task of the Bell court was to determine when the money judgment in that case was satisfied. (Bell, supra, 137 Cal.App.4th at p. 839.) The court did not hold or even consider whether a trial court has discretion to deny a party who has obtained a money judgment post-judgment interest at the statutory rate.
Nevertheless, CSC seeks refuge in Bell on the theory that CSC stands in the same position as the judgment-debtor in that case. CSC reasons that, just as FIE relinquished control of the money it deposited into the trust account, so too did CSC give up its “control or right to withdraw” the portion of the Baker & McKenzie settlement monies that was deposited into Ellis’s client trust account. Therefore, CSC appears to reason, its obligation to pay a judgment to appellants was essentially satisfied as soon as the Baker & McKenzie settlement funds were deposited into the trust account.
CSC has never established that it relinquished control of the settlement monies in the client trust account. As we have already explained, the evidence shows that the parties agreed to deposit that money into a client trust account before litigation was resolved and before a judgment was entered. That collateral agreement, regardless of its intent or purpose, simply did not mutate into the payment of a money judgment.
Once judgment was entered against CSC, the obligation to pay post-judgment interest arose. At that point, CSC did not take any of the steps for satisfying a money judgment that are set forth in section 685.030, subdivision (d). In particular, we reject any notion that CSC’s agreement to leave the money in the client trust account pending resolution of the appeals was tantamount to depositing the full amount of the money judgment with the court for the judgment creditor.
CSC contends that “the non-prevailing party can avoid or terminate its liability to pay interest by showing that such a tender [of the amount of the judgment] is impossible or futile.” (Italics and bolding omitted.) We needn’t test this proposition, however, as there is no basis in the record before us for finding that it was not possible for CSC to pay the money judgment at any time after that judgment was entered or that tendering such a payment would have been futile.
IV. DISPOSITION
The post-judgment order taxing costs is reversed and this case is remanded to the trial court for further proceedings consistent with this opinion.
We concur: Lambden, J., Richman, J.