Opinion
A139933 A140036
11-28-2017
RINCON EV REALTY LLC et al., Plaintiffs and Appellants, v. CP III RINCON TOWERS, INC. et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco City & County Super. Ct. No. CGC 10-496887)
After a bench trial in this commercial real estate dispute, the trial court entered judgment for defendants on all claims and awarded them attorney fees and costs as prevailing parties. Plaintiffs appealed the judgment, and we reversed as to some claims and remanded for further proceedings. (Rincon I, supra, 8 Cal.App.5th at pp. 5, 22.) In the present consolidated appeals, plaintiffs challenge the fee award. We reverse the award because any prevailing-party determination must be based on the final resolution of all claims, including those remanded to the trial court.
The background of the parties' dispute and the resulting litigation is set forth in this court's opinion addressing plaintiffs' appeal of the underlying judgment. (Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2017) 8 Cal.App.5th 1, 5-7 (Rincon I).) The plaintiffs are Rincon EV Realty LLC, Rincon ET Realty LLC, and Rincon Residential Towers LLC. (Id. at p. 5.) The defendants are: (1) CP III Rincon Towers, Inc.; (2) other Carmel Partners entities (Carmel Partners, Inc.; Carmel Partners, LLC; Carmel Management, LLC; and Carmel Partners Investment Fund III, L.P.); (3) U.S. Bank National Association (USB) as trustee of the Maiden Lane Commercial Mortgage-Backed Securities Trust 2008-1 (the Maiden Lane Trust); (4) the Maiden Lane Trust; and (5) Maiden Lane LLC. (Id. at p. 7.)
I. BACKGROUND
In April 2013, the trial court entered judgment for defendants on all of plaintiffs' causes of action, including legal claims (breach of contract, fraud, slander of title, trade secret misappropriation) and equitable claims (unfair competition, to set aside a foreclosure sale, and for an accounting). (See Rincon I, supra, 8 Cal.App.5th at pp. 5, 7.) On April 18, 2013, defendants filed a motion for an award of approximately $11.5 million in prevailing-party attorney fees and costs, relying on provisions in the governing contracts, the "Loan Agreement" and the "Cash Management Agreement." Defendants argued they were "the parties prevailing on the contracts" because they had "defeated recovery by the Plaintiffs on each Cause of Action" in plaintiffs' operative Fifth Amended Complaint. Defendants also filed a memorandum of costs seeking an additional award of approximately $360,000 in statutory costs. Plaintiffs opposed defendants' fee motion and filed a motion to strike or tax the costs claimed in defendants' memorandum of costs.
On August 6, 2013, the court entered an order granting defendants' fee motion in large part and denying plaintiffs' motion to tax costs. The court noted it had entered judgment in favor of defendants on all of plaintiffs' causes of action, and stated "[w]ithout question, Defendants are the prevailing parties in this litigation." On August 15, 2013, the court entered an amended order that revised some of the amounts in the August 6 order. The court awarded defendants $10,392,705.25 in attorney fees and costs pursuant to their fee motion and $306,228.85 in statutory costs pursuant to their memorandum of costs. Plaintiffs appealed.
Plaintiffs filed separate notices of appeal challenging the August 6 and August 15 orders. At the parties' request, we consolidated these two appeals (Nos. A139933 and A140036) for briefing, oral argument, and decision.
In plaintiffs' separate appeal of the underlying judgment in favor of defendants (No. A138463), we reversed the judgment as to plaintiffs' legal claims (based on the trial court's erroneous striking of plaintiffs' demand for a jury trial as to those claims); we affirmed the judgment as to plaintiffs' equitable claims. (Rincon I, supra, 8 Cal.App.5th at pp. 5, 22.) We remanded for further proceedings as to the legal claims. (Ibid.)
II. DISCUSSION
As noted, the court awarded fees and costs to defendants based on its determination defendants were the prevailing parties in the litigation. In their briefs in this appeal, plaintiffs argued that a reversal of the underlying judgment would undermine the finding defendants are prevailing parties, and thus would require reversal of the fee award. After this court partially reversed the judgment, plaintiffs filed a motion (which we will treat as a supplemental brief) urging reversal of the fee award on this ground.
To the extent plaintiffs' motion, which they styled a "Motion for Summary Reversal and Remand," also suggested this court should resolve the present appeal without oral argument, the motion is denied. (Moles v. Regents of University of California (1982) 32 Cal.3d 867, 871; People v. Brigham (1979) 25 Cal.3d 283, 285-289.)
We agree reversal of the fee award is required. Since this court has reversed the judgment on several of plaintiffs' claims (including their claims for breach of contract) and remanded for further proceedings as to those claims, any prevailing-party determination must take into account the final resolution of the remanded claims. (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 [under Civ. Code, § 1717, "[t]he prevailing party determination is to be made only upon final resolution of the contract claims and only by 'a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions' "]; Monster, LLC v. Superior Court (2017) 12 Cal.App.5th 1214, 1229-1230 [prevailing-party determination must await resolution of contract claims]; Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1097 [in light of partial reversal of judgment on the issue of damages, "the trial court must consider anew, at the conclusion of the retrial of damages, the prevailing party issue"]; Gillan v. City of San Marino (2007) 147 Cal.App.4th 1033, 1053-1054.)
In response to this court's order scheduling oral argument in this appeal, counsel for defendants submitted a letter stating that after we issued our opinion partially reversing the underlying judgment, defendants filed, and the trial court granted, a motion for summary judgment or summary adjudication as to the remanded legal claims. The letter attaches a copy of the trial court's order filed on September 18, 2017. The letter also states that defendants have submitted a proposed judgment and that, following its entry, they will file a motion for attorney fees and a memorandum of costs "regarding the remanded legal claims."
Defendants' counsel's letter does not ask that this court take judicial notice of the summary judgment order, but we do so on our own motion. (See Evid. Code, §§ 452, subd. (d), 459, subd. (a).) We conclude, however, that the order does not affect the proper disposition of the present appeal. Because the trial court's recent resolution of the legal claims in defendants' favor is still subject to appellate review, we cannot at present make a final appellate determination that defendants are prevailing parties entitled to fees and costs. If the summary judgment were reversed in a subsequent appeal, an award of prevailing-party fees based on the summary judgment also would be subject to appellate attack. (See Zagami, Inc. v. James A. Crone, Inc., supra, 160 Cal.App.4th at p. 1097.) For the reasons we have discussed, we must reverse the fee award that is challenged in the present appeal and remand for further proceedings as to attorney fees and costs. (See ibid.)
Seeking to avoid this result, defendants argue this court should affirm the existing fee award because: this court affirmed the judgment in their favor on the equitable claims; they are entitled to recover their fees and costs incurred in defending those claims; and those claims were "intertwined" with plaintiffs' contract and other legal claims, so no reversal or reduction of the fee award is appropriate. In support of this argument, defendants cite cases concluding a trial court does not abuse its discretion by declining to apportion or reduce fees arising from legal work performed for multiple parties (only some of whom have a contractual right to recover fees) (see Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1273-1274, 1277-1278 & fn. 6) or fees incurred in connection with both contract claims and noncontract claims but involving the same issues (see Erickson v. R.E.M. Concepts, Inc. (2005) 126 Cal.App.4th 1073, 1083-1086; Wilshire Westwood Associates v. Atlantic Richfield Co. (1993) 20 Cal.App.4th 732, 747 (Wilshire)).
In Wilshire, the judgment was partially reversed on appeal (Wilshire, supra, 20 Cal.App.4th at p. 747), but the Court of Appeal's opinion does not reflect that any party argued a partial reversal of the judgment required reversal of the fee award (the argument raised by plaintiffs in this appeal). Instead, the appellate court in Wilshire addressed only an argument that the trial court erred by failing to separate fees attributable to contract claims from those attributable to noncontract claims (id. at pp. 746-747).
These cases are inapposite. Here, we are not reviewing a trial court determination as to whether fees incurred in connection with certain claims or the representation of certain parties should be separated from fees related to other claims or parties. We also do not hold defendants' success on the equitable claims will be irrelevant to the ultimate determination whether one side or the other is a prevailing party entitled to fees. We hold only that, since we have reversed the judgment on several claims (including the breach of contract claims), the trial court's initial prevailing-party determination—which was based on the fact defendants had won on every claim at the bench trial—cannot stand. The trial court must make a new prevailing-party determination based on the resolution of all claims, including the remanded claims. (See Civ. Code, § 1717, subd. (b)(1); Hsu v. Abbara, supra, 9 Cal.4th at p. 876.) We will reverse the award of fees and costs.
In seeking fees in the trial court, defendants relied on both California law (including Civil Code section 1717) and New York law (which they argued was applicable pursuant to choice-of-law provisions in the governing contracts). The trial court concluded both California and New York law provide a prevailing party can collect reasonable attorney fees authorized by agreement with the opposing party. On appeal, defendants again cite both California and New York law. But as to the dispositive issue in the present appeal (i.e., whether the partial reversal of the underlying judgment requires reversal of the fee award and a redetermination of the prevailing-party issue), defendants do not argue New York law is different or more favorable to them than the California statutory and case law that we discuss in the text. Indeed, in their opposition to plaintiffs' motion addressing this issue, defendants rely solely on California law. And the few New York cases cited by defendants in their principal appellate brief do not show New York law supports their position on this issue. (See Nestor v. McDowell (1993) 81 N.Y.2d 410, 415-416 [599 N.Y.S.2d 507, 510; 615 N.E.2d 991, 994]; LeVine v. Catskill Off-Track Betting (2008) 57 A.D.3d 624, 626 [871 N.Y.S.2d 191, 193]; 25 East 83 Corp. v. 83rd Street Associates (1995) 213 A.D.2d 269, 269 [624 N.Y.S.2d 125, 125].) We therefore need not address whether New York law could be applied to this question. (Compare ABF Capital Corp. v. Grove Properties Co. (2005) 126 Cal.App.4th 204, 217, 223, with ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 839.)
Because we reverse on this ground, we do not reach plaintiffs' other asserted grounds for reversal. (See Creative Ventures, LLC v. Jim Ward & Associates (2011) 195 Cal.App.4th 1430, 1452-1453.)
III. DISPOSITION
The orders awarding attorney fees and costs to defendants as prevailing parties are reversed, and the matter is remanded for further proceedings consistent with this opinion. Plaintiffs shall recover their costs on appeal.
/s/_________
Streeter, J. We concur: /s/_________
Kennedy, J. /s/_________
Rivera, Acting P.J.
Judge of the Superior Court of California, County of Contra Costa, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------