Opinion
B186723
12-5-2006
DAVID PAUL, Defendant and Appellant, v. RHONDA HICKS, Plaintiff and Respondent.
Burke-Molina, Gregory M. Burke for Defendant and Appellant. Law Office of Steven Berkowitz, Steven Berkowitz for Plaintiff and Respondent.
Defendant and appellant David Paul (Paul) appeals from an order of the trial court denying him leave to file a cross-complaint against plaintiff and respondent Rhonda Hicks (Hicks); her attorney, Steven Berkowitz (Berkowitz); her mortgagor, First City Funding (doing business as and referred to herein as Credit Corp.); and Credit Corp.s chief executive officer, Mitchell Stewart. Paul also appeals from the trial courts order denying his petition to file an attorney conspiracy claim under Civil Code section 1714.10. We dismiss the appeal.
All further statutory references are to the Civil Code, unless stated otherwise.
FACTUAL AND PROCEDURAL BACKGROUND
As described in the Discussion, Part A, infra, we have augmented the record on appeal with appellants appendix, filed November 6, 2006.
A. The Complaint
On October 8, 2004, Hicks sued Paul. The complaint stated eight causes of action, all related to a piece of property in Topanga Canyon (the "property"). In the complaint, Hicks alleged that she and Paul were previously married and had divorced in September of 1999. Between September of 1999 and December of 2002, a two-thirds interest in the property was held by the Rhonda Living Trust, of which Hicks was trustee. The remaining one-third interest was held by Paul. Paul resided at the property, and was responsible for paying the mortgage and otherwise maintaining the property.
Hicks further alleged that, as of October of 2002, Paul had defaulted on the mortgage, and the holder of the first trust deed had issued a notice of foreclosure. In early October, Hicks and Paul entered into oral and written agreements, pursuant to which Hicks agreed to transfer to Paul a one-sixth interest in the property. In return, Paul agreed to cure the existing delinquency; to keep the mortgage, insurance and property taxes current, or to vacate the property within ten business days if he failed to do so; to pay Hicks $100,000 that he had previously agreed to pay her; and to prevent his "girlfriends" and brother from living at or visiting the property. The parties also agreed to list the property for sale for $900,000, with the proceeds from any sale to be divided equally. Paul promised to cooperate in attempts to sell the property.
Hicks alleged that she complied with the agreement by transferring the one-sixth interest in the property to Paul. Paul, however, breached all of his obligations. Hicks sought damages for intentional and negligent misrepresentation, a constructive trust against the one-sixth interest she had transferred, cancellation of the deed transferring that interest, a judicial sale of the property, Pauls ejectment from the property, and to recover the $100,000 that Paul had agreed to pay her.
B. The Proposed Cross-Complaint
On May 31, 2005, the trial court set a trial date of December 19, 2005 on Hickss complaint. On August 29, 2005, Paul moved the trial court for leave to file his proposed cross-complaint and petitioned the trial court, pursuant to section 1714.10, for leave to file a conspiracy claim against Berkowitz.
Section 1714.10, subdivision (a) provides in relevant part: "No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorneys representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action. The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based. . . ."
In the proposed cross-complaint, Paul alleged that, in a written agreement dated October 4, 2002, he and Hicks agreed to sell the property for $900,000 and split the proceeds. At that time, the property had an existing mortgage of approximately $324,000. They found a buyer some eighteen months later, in April of 2004, but the buyer withdrew from the deal and cancelled escrow in July of 2004. Paul alleged that Hicks was "desperate" to get her share of the sale proceeds. She therefore "surreptitiously obtained" a second mortgage on the property in the amount of $800,000 in September of 2004. She then obtained two additional mortgages through Credit Corp., which she allegedly used to pay off the September mortgage. Paul alleged that he told Mitchell, Credit Corp.s chief executive officer, that he did not consent to the mortgages, but that Hicks nevertheless obtained the mortgages by "forging, altering or manipulating loan documents and/or inflating the appraisal." Paul alleged that Berkowitz represented both Hicks and Credit Corp., and that Berkowitz filed the complaint against him as part of a conspiracy "to terminate [Pauls] interest in the [property]."
Pauls sole evidentiary support for his motion and section 1714.10 petition was the declaration of his attorney, Gregory Burke. Burke declared that he had become involved in the case on August 3, 2005, that Paul had been in pro per up to that time, and that Burke had discovered the allegedly "fraudulent" mortgage only after conducting a title search. Burke further declared that (a) Berkowitz was counsel for Credit Corp. and maintained an office at Credit Corp.; (b) on information and belief, Berkowitz was a shareholder, officer and director of Credit Corp.; (c) Berkowitz had telephoned Paul on behalf of Credit Corp. to obtain Pauls consent to the mortgage; (d) that the "mortgage was fraudulently obtained" because Paul had not given consent and the property was over encumbered; and (e) Berkowitz had filed the complaint against Paul.
This allegation is not contained in the proposed cross-complaint, in which Paul alleges that Paul "was contacted by and informed Mitchell that he did not consent to the mortgage" (italics added).
In opposition, Hicks declared that she had been forced to mortgage the property to obtain funds to relocate because Paul had breached the October 2002 agreement; that the mortgage was secured solely by her one-half interest in the property; and that she was solely responsible for repayment. She submitted the trust deed securing the mortgage to support her testimony. Berkowitz declared that he was not an officer, director or shareholder of Credit Corp. He denied any involvement in the mortgage transaction, although he testified that he undertook to represent Hicks in connection with her claim against Paul before the mortgage transaction occurred. Berkowitz also testified regarding threats made against him and an employee of Credit Corp. by Paul, and instances of discovery abuse that had resulted in sanctions against Paul and his attorneys.
Paul replied, submitting another declaration from Burke, who declared that he had called Credit Corp. and asked for the general counsel, and had been routed to Berkowitz. He also declared that his attorney service had informed him that it had been unable to serve Berkowitz at Berkowitzs office. Burke declared that Berkowitzs office was owned by the owners of Credit Corp.
Paul also submitted a "supplemental reply," but has not made it part of the record on appeal. See Discussion, Part A, infra.
C. The Denial of the Motion and Section 1714.10 Petition
The trial court heard Pauls motion and section 1714.10 petition on September 26, 2005. In a written order dated October 4, 2005, the trial court sustained Hickss evidentiary objections to Burkes declarations, and then denied both the motion and the petition because they were "without sufficient evidentiary support." With respect to the motion, the trial court concluded that Pauls proposed cross-complaint was permissive rather than compulsory, and that "the interests of justice do not weigh in favor granting the [m]otion." Further, the trial court held, even if the cross-complaint were compulsory, Paul failed to establish that he acted in good faith because he "did not submit sufficient competent evidence." With respect to the section 1714.10 petition, the trial court denied it on two grounds: (1) Paul failed "meet his burden of showing the inapplicability of [s]ection 1714.10," and (2) the trial court had denied Paul leave to file the cross-complaint. Paul then filed his notice of appeal.
Paul does not challenge the trial courts evidentiary rulings.
DISCUSSION
Pauls notice of appeal seeks review of the trial courts October 4 order. That document, however, contains two discrete orders: (1) the order denying Pauls motion for leave to file his cross-complaint, which stated seven different claims against four different parties, and (2) the order denying Pauls section 1714.10 petition, which related, at most, to two claims against one party (that is, Pauls fraud and conspiracy to defraud claims against Berkowitz). In his brief, Paul asks us to reverse both of these orders.
A. Pauls Failure to Comply with the California Rules of Court
Hicks urges us to dismiss the appeal because Paul violated numerous provisions of the California Rules of Court in presenting the record and his arguments on appeal. Paul filed his notice of appeal and a notice designating record on appeal, both on October 14, 2005. The notice designating record indicates Pauls election to proceed with a clerks transcript under California Rules of Court ("CRC"), rule 5. It does not indicate an election to proceed under CRC, rule 5.1 with an appendix in lieu of the clerks transcript.
The clerks transcript, filed on May 16, 2006, is 21 pages, and includes only the register of actions, the trial courts October 4 order, the notice of appeal and the notice designating the record. It does not contain the complaint, the proposed cross-complaint, or the declarations and exhibits relevant to the motion and petition.
Paul filed his opening brief on July 19, 2006. Pauls opening brief does not contain a table of authorities, in violation of CRC, rule 14, subdivision (a)(1)(A), or a "summary of the significant facts," in violation of CRC, rule 14, subdivision (a)(2)(c). In violation of CRC, rule 14, subdivision (a)(1)(c), Paul only sporadically cites to the trial court record. The documents to which Paul cites (primarily the complaint and proposed cross-complaint) are not part of the clerks transcript.
Hicks filed her brief on September 20, 2006. Throughout her brief, she refers to an "appellants appendix" that had not been filed with this court. The court subsequently permitted Paul to file his appendix, which he did on November 6, 2006. The appendix contains the complaint, the proposed cross-complaint, and the declarations and exhibits relevant to the motion and petition. We order the record augmented with this appendix. (CRC, rule 12, subd. (a)(1)(A).)
Although we permitted Paul to file the appendix, it does not comply with CRC, rule 5.1, subdivision (d)(1) in that it lacks consecutive page numbers (CRC, rule 9, subd.(a)(1)) and has neither an alphabetical nor chronological index (CRC, rule 9, subd. (b)(1)). Further, the appendix reproduces only the face page and proof of service of Pauls "supplemental reply" on the motion and petition. This violates CRC, rule 5.1, subdivision (g) ("Filing an appendix constitutes a representation that the appendix consists of accurate copies of documents in the superior court file.")
Finally, on November 16, 2006, this court requested that the parties provide supplemental briefing on two issues. Paul failed to file any response to that request.
"While appellate courts are loath to dismiss appeals, without consideration on the merits, for failure to comply with rules of procedure, such rules are essential to the orderly handling and dispatch of the courts business and create rights which an adverse party is entitled to enforce." (Murphy v. Krumm (1943) 21 Cal.2d 846, 850.) We need not determine whether to dismiss the appeal for these deficiencies, however, because we conclude that we lack jurisdiction to hear this appeal.
B. The Trial Courts Order Denying Paul Leave to File a Cross-Complaint is Not Appealable
"The existence of an appealable judgment is a jurisdictional prerequisite to an appeal. A reviewing court must raise the issue on its own initiative whenever a doubt exists as to whether the trial court has entered a final judgment or other order or judgment made appealable by Code of Civil Procedure section 904.1." (Jennings v. Marralle (1994) 8 Cal.4th 121, 126; Conlan v. Shewry (2005) 131 Cal.App.4th 1354, 1365.)
The general rule is that an order denying leave to file a cross-complaint is not appealable, and will be reviewed only upon appeal from a final judgment (Marx v. McKinney (1943) 23 Cal.2d 439, 443-44; Black Diamond Asphalt, Inc. v. Superior Court (2003) 114 Cal.App.4th 109, 114) or upon writ of mandate. (Foots Transfer & Storage Co. v. Superior Court (1980) 114 Cal.App.3d 897, 901.) This rule obtains even when the proposed cross-complaint asserts claims against one or more third-party defendants if, as in this case, those third-party defendants were not served with the cross-complaint and did not appear in the action. (See Kennedy v. Owen (1948) 85 Cal.App.2d 517, 519-20 [appealability of order striking cross complaint turns on "whether it amounts to a final judgment"; order was not final adjudication when third-party defendants "were not parties to the action, were not served with process on the cross complaint, and made no appearance"]; People ex rel. Dept. Pub. Wks. v. Clausen (1967) 248 Cal.App.2d 770, 776-77 [same].) Nor does this rule distinguish between compulsory and permissive cross-complaints. (Security Pacific National Bank v. Adamo (1983) 142 Cal.App.3d 492, 496-97.)
The sole basis for appellate jurisdiction cited in Pauls notice of appeal is section 1714.10, subdivision (d). That subsection provides: "This section establishes a special proceeding of a civil nature. Any order made under subdivision (a), (b), or (c) which determines the rights of a petitioner or an attorney against whom a pleading has been or is proposed to be filed, shall be appealable as a final judgment in a civil action." The issue thus arises whether the general rule described above is altered when a party includes a conspiracy claim arguably subject to section 1714.10 in a proposed cross-complaint.
In Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802 ("Berg & Berg"), plaintiff Berg, the largest creditor of a debtor corporation, sued defendant Sherwood Partners for breach of fiduciary duty arising from Sherwoods performance as the assignee of the debtors assets for the benefit of its creditors. Berg later sought leave to amend its complaint to name Sherwoods counsel, the law firm of SulmeyerKupetz (Sulmeyer), as a defendant in causes of action for declaratory relief, accounting, waste of corporate assets, and conspiracy to waste corporate assets. The essence of Bergs claims was that Sulmeyer had performed unnecessary and unreasonable services and charged excessive fees for those services, which were paid by Sherwood from the assigned assets. (Id. at p. 813.) Sherwood, represented by Sulmeyer, opposed Bergs motion for leave to amend, arguing that Berg had failed to comply with section 1714.10 or meet its burden of proof thereunder. The trial court granted leave to amend without deciding the section 1714.10 issues. Sherwood and Sulmeyer both appealed from the order granting leave to amend. (Id. at pp. 809-10.)
The court noted first the general rule that "[a]n order allowing an amended pleading is not ordinarily appealable." (Berg & Berg, supra, 131 Cal.App.4th at p. 818.) In contrast, an order under section 1714.10 that "`determines the rights of a petitioner or an attorney against whom a pleading has been or is proposed to be filed" is appealable. (Id. at pp. 818-19, quoting § 1714.10, subd. (d).) The court concluded that the motion for leave to amend was the functional equivalent of a section 1714.10 petition. The order granting leave to amend had undoubtedly "determine[d] the rights of a petitioner or an attorney," and the parties had specifically litigated the section 1714.10 issue on the motion for leave to amend. (Id. at pp. 818-819.)
Furthermore, the court concluded, all of the claims stated against Sulmeyer in the amended pleading "arose out of [Sulmeyers] agreement to represent Sherwood and conduct in which it jointly engaged with its client . . . in the course of that legal representation." (Berg & Berg, supra, 131 Cal.App.4th at p. 820.) "In other words, all the claims alleged against Sulmeyer involve conduct that falls within the ambit of the statute regardless of the labels attached to the particular causes of action." (Id. at p. 821.) The court distinguished prior cases that had applied a narrower scope of review, concluding that the claims in those cases, other than the conspiracy claims, "were beyond the reach of section 1714.10." (Ibid.) The court thus held that it could review "the entire order of the trial court allowing the amended pleading and not just that portion of it" relating to the conspiracy claim. (Id. at p. 822.)
Here, unlike Berg & Berg, supra, 131 Cal.App.4th 802, Paul and Hicks argued before the trial court the motion for leave to file a cross-complaint and the section 1714.10 petition as separate and distinct issues. The trial court did not cite section 1714.10 as a basis for denying Paul leave to file his cross-complaint. Further, in Berg & Berg, the only parties to the amended complaint were Sherwood, the client, and Sherwoods attorney, Sulmeyer. Here, the proposed cross-complaint named not only the client, Hicks, and her attorney, Berkowitz, but also Credit Corp. and Stewart, both third-parties to the Hicks-Berkowitz attorney-client relationship. In Berg & Berg, "all the claims alleged against Sulmeyer involve[d] conduct that [fell] within the ambit of" section 1714.10. Here, only two of Pauls seven cross-claims (specifically, his first and second causes of action for fraud and conspiracy to defraud) were arguably subject to section 1714.10, and Paul argues that all of his claims are beyond the scope of section 1714.10.
Accordingly, the trial courts order denying Paul leave to file his cross-complaint was not the functional equivalent of an order denying a section 1714.10 petition. That order therefore did not "determine[] the rights of a petitioner or an attorney" under section 1714.10. As a result, section 1714.10, subdivision (d) does not authorize this court to review that order.
The trial court denied Pauls section 1714.10 petition because, inter alia, it had denied Paul leave to file his cross-complaint. The trial court thus recognized that, regardless of its disposition of Pauls section 1714.10 petition, Paul would still be unable to assert his conspiracy claim. Under these circumstances, we need not address whether the trial court erred in denying the section 1714.10 petition.
DISPOSITION
The appeal is dismissed. Hicks to recover costs on appeal.
We Concur:
TURNER, P. J.
ARMSTRONG, J.