Opinion
B227080
09-23-2011
RONALD SHAFFER et al., Plaintiffs and Appellants, v. STEVEN A. SASSOON et al., Defendants and Respondents.
Proudfoot & Quach, Don A. Proudfoot, Jr., and Lan T. Quach, for Plaintiffs and Appellants. Hill, Farrer & Burrill and Scott L. Gilmore, for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC312164)
APPEAL from an order of the Superior Court of Los Angeles County. Rex Heeseman, Judge. Reversed.
Proudfoot & Quach, Don A. Proudfoot, Jr., and Lan T. Quach, for Plaintiffs and Appellants.
Hill, Farrer & Burrill and Scott L. Gilmore, for Defendants and Respondents.
Plaintiffs Ronald and Debbie Shaffer (the Shaffers) appeal from an order denying them attorney fees. The Shaffers obtained a jury verdict of $1,413 in damages in their action for negligence and other torts arising from their contract for purchase of a residence from defendants Steven and Julie Sassoon. The trial court awarded costs to the Sassoons because the Shaffers' recovery at trial was less than the Sassoons' $23,000 Code of Civil Procedure section 998 offer. In a prior appeal (Shaffer I), we concluded that the Shaffers achieved a more favorable result than the Sassoons' section 998 offer of $23,000 by including the Shaffers' preoffer attorney fees in the calculation of whether they had achieved a more favorable result. We remanded for a determination of the Shaffers' costs. On remand, the trial court refused to award the Shaffers attorney fees because it concluded our opinion in Shaffer I held that the Shaffers had failed to comply with a contractual prerequisite for such an award of fees.
All statutory references herein are to the Code of Civil Procedure unless otherwise indicated.
Shaffer v. Sassoon (Dec. 30, 2009, B207219) [nonpub. opn.].
We reverse, finding that Shaffer I did not address the Shaffers' compliance with the contractual prerequisite, and therefore the trial court erred in refusing to award them costs as the prevailing party.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
1. Shaffer I
In April 2003, the Sassoons agreed to sell and the Shaffers agreed to purchase the Sassoon's residence in Acton pursuant to a standard California Residential Purchase Agreement (Agreement). The Agreement awarded attorney fees to the prevailing party in any litigation, except as limited in paragraph 17A of the Agreement, which provided: "If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action."
After escrow closed, the Sassoons rented back the residence for approximately six weeks, during which time they made repairs to the septic system on the property. Upon moving into the residence, the Shaffers discovered toxic mold in the house. The Shaffers vacated the residence, and in January 2004 sent a request for mediation to the Sassoons, care of their real estate agent. When they received no response, two weeks later they sent a request to arbitrate to the Sassoons, again care of their real estate agent. The Sassoons denied receiving either letter.
Plaintiffs filed their complaint on March 15, 2004 against the Sassoons, the Sassoon's real estate agent, and the property inspector, alleging claims for negligence per se, negligence, and fraudulent concealment.
On October 18, 2005, the Sassoons served the Shaffers with a section 998 offer that provided the Sassoons would pay the Shaffers $23,000 "in full satisfaction of all claims, damages, costs, expenses, attorneys' fees, and/or interest claimed in the underlying complaint."
In the next paragraph, the section 998 offer states that "[e]ach of the settling parties shall bear their own costs and attorneys' fees as to all claims and/or damages claimed in the underlying complaint." Neither party has mentioned this ambiguity.
Trial commenced on April 23, 2007. The jury returned a special verdict finding the Sassoons negligent, and awarded the Shaffers damages in the sum of $1,413.12, "+ Permit Fees." After hearing several posttrial motions relating to the verdict, the trial court found the Shaffers did not achieve a more favorable result for purposes of section 998 because the Shaffers recovered less than the Sassoons' section 998 offer, and awarded the Sassoons $70,000 in attorney fees plus $7,500 for expert fees and deposition costs.
The Shaffers appealed the judgment, contending the verdict was ambiguous in its award of "'$1,413 + Permit Fees.'" They also argued the award of attorney fees must be reversed not only because the Sassoons failed to mediate as required by the Agreement, but also because the Shaffers received a more favorable result than the amount offered in the Sassoons' section 998 offer if the Shaffers' attorney fees were included in the calculation of a more favorable result.
In Shaffer I we concluded that the Shaffers had forfeited any challenge to the special verdict by failing to object at the time the verdict was rendered. We also rejected the Shaffers' challenge to the attorney fee award to the Sassoons under the authority of Lange v. Schilling (2008) 163 Cal.App.4th 1412, which denied recovery to a party who failed to first mediate as required under the standard California residential property purchase agreement. We found substantial evidence supported the trial court's finding that the Shaffers failed to establish their request for mediation had been sent to and refused by the Sassoons. In particular, although we acknowledged that the Shaffers' letters had been sent to the Sassoons' real estate agent, we noted that "[t]he Shaffers were unable to satisfy the trial court that any request to mediate had ever been made to, and refused by, the Sassoons," and that "the record contains no evidence to establish the letters were correctly addressed or properly mailed."
Finally, we found the Shaffers achieved a more favorable result than the Sassoon's section 998 offer because at the time the offer was made, the Shaffers had incurred approximately $31,000 in attorney fees and costs, which added to the verdict of $1,413, exceed the $23,000 amount of the Sassoons' section 998 offer. In the body of our opinion, we directed that "[o]n remand, the trial court shall determine the Shaffers' costs on proper application and add this sum to the final judgment." We affirmed the judgment, and reversed the award of attorney fees to the Sassoons.
Section 998, subdivision (a) provides: "The costs allowed under sections 1031 and 1032 shall be withheld or augmented as provided in this section." Subdivision (c)(1) provides: "If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer."
2. Shaffer II
On remand, on April 13, 2010, the Shaffers filed a motion for attorney fees and costs based upon Shaffer I's reversal of the Sassoons' attorney fee award, seeking $236,354.50 in attorney fees. This figure consisted of $30,987 in fees for 98 hours of work for the presection 998 offer period. The Shaffers contended that figure had been approved by this court in Shaffer I. They also requested an additional $236,354.50 in postoffer fees and costs.
The Sassoons argued in opposition that the Shaffers' reliance on our language in Shaffer I reversing the attorney fees award was misplaced because the term "costs" in Shaffer I did not include attorney fees. In order to collect attorney fees, they argued the Shaffers needed to establish not only that they were the prevailing party for purposes of section 998, but also that they attempted to mediate the dispute as required by paragraph 17A of the Agreement. The Sassoons specifically referenced Shaffer I's finding that: "The trial court here could reasonably have found that, faced with a denial of receipt of either letter [requesting mediation and arbitration], when the burden of producing evidence shifted to the Shaffers, they failed to carry that burden. Notably, the record contains no evidence to establish the letters were correctly addressed or properly mailed. In these circumstances, the trial court reasonably refused to make the unwarranted leap to the conclusion that the Sassoons had refused a request to mediate which they denied ever receiving." (Shaffer v. Sassoon, supra, B207219 at pp. 17-18.) The Sassoons also challenged the amount and propriety of the Shaffers' claimed fees.
The Shaffers argued in reply that "costs" included attorney fees under section 1033.5, subdivision (a)(10), and further that we could not have reversed the attorney fees awarded to Sassoon on the grounds that the Shaffers recovered more than the section 998 offer without implicitly finding as a predicate that the Shaffers were actually entitled to an attorney fees award. They reasoned that the obligations of paragraph 17A of the Agreement required the party who initiated the litigation had to show they had made an attempt to mediate, while the party against whom the litigation was initiated had to show they did not refuse to mediate. Here, they argued they had shown by their two letters that they attempted to mediate.
In a supplemental response, the Sassoons contended the Shaffers nonetheless had not established compliance with paragraph 17A because as we found in Shafer I, there was no evidence the letters requesting mediation and arbitration were mailed or delivered, let alone received by the Sassoons.
The trial court found that we "affirmed the trial court's finding that 'the Shaffers had not established that the Sassoons ever received a request to mediate' prior to commencing this action, a contractual prerequisite to recover attorney's fees. . . . However, the Court of Appeal reversed the trial court's judgment awarding fees and costs to [the Sassoons] on the grounds that [the Shaffers] had obtained a more favorable outcome than the [section] 998 [offer of $23,000." The trial court concluded the Shaffers conflated "two mutually exclusive issues: which party herein obtained 'a more favorable judgment' for purposes of [section] 998, and whether that party is also entitled to fees under contract, law or statute as permitted by [section] 1033.5." Further, the trial court noted that under Mangano v. Verity, Inc. (2008) 167 Cal.App.4th 944, section 998 did not provide greater rights to attorney fees than those provided by the underlying statute or contract. As a result, under the law of the case, the trial court denied the Shaffers' request for attorney fees.
After the trial court's order denying their attorney fees, the Shaffers sought review of the order by writ petition. The Sassoons point to this denial and argue that it indicates we do not agree with the Shaffers' interpretation of Shaffer I. This argument is misplaced. "A summary denial of a writ petition does not establish law of the case whether or not that denial is intended to be on the merits or is based on some other reason." (Kowis v. Howard (1992) 3 Cal.4th 888, 899.)
DISCUSSION
The Shaffers argue that the trial court erred in finding that Shaffer I's holding that they obtained a more favorable judgment under section 998 did not control the issue of whether they were entitled to attorney fees based upon their failure to request mediation, and that there was substantial undisputed evidence before the trial court that they did attempt to mediate, and that we should so hold. Respondents assert that the "costs" of Shaffer I do not include attorney fees; Shaffer I does not impliedly hold that the Shaffers complied with paragraph 17A such that they are entitled to attorney fees as costs, but rather found that they failed to comply with paragraph 17A, and this holding, which is now law of the case, precludes their recovery of attorney fees.
I.
Section 998 provides that the costs allowed under section 1032 shall be withheld or augmented when offers to compromise are made and not accepted, if the party not accepting the offer to compromise ultimately fails to obtain a more favorable judgment or award. (§ 998, subd. (c)(1).) A plaintiff who refuses a reasonable pretrial settlement offer and subsequently fails to obtain a "more favorable judgment" is penalized through the loss of prevailing party postoffer costs and an award of postoffer costs to the defendant. (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1110; Heritage Engineering Construction, Inc. v. City of Industry (1998) 65 Cal.App.4th 1435, 1439.) The purpose of these provisions is to "encourage settlement by providing a strong financial disincentive to a party—whether it be a plaintiff or a defendant—who fails to achieve a better result than that party could have achieved by accepting his or her opponent's settlement offer." (Bank of San Pedro v. Superior Court (1992) 3 Cal.4th 797, 804.)
Section 1032, subdivision (b) provides: "Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." Section 1033.5, subdivision (a)(10) provides that attorney fees are recoverable as costs if authorized by contract, statute, or law.
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In determining whether a plaintiff obtained a more favorable judgment than the section 998 offer, we consider the status of the litigation at the time the offer was made. (Guerrero v. Rodan Termite Control, Inc. (2008) 163 Cal.App.4th 1435, 1441.) As section 998 never cuts off a plaintiffs' right to preoffer costs, and only limits postoffer costs even if it is a prevailing party (Scott Co. v. Blount, Inc., supra, 20 Cal.App.4th at p. 1110), we include preoffer costs in the calculus to determine whether judgment is more favorable than the section 998 offer. Such preoffer costs may include attorney fees if such fees are awardable by statute or contract. (Heritage Engineering Construction, Inc. v. City of Industry, supra, 65 Cal.App.4th at pp. 1441-1442.)
II.
"Under the doctrine of the law of the case, a principle or rule that a reviewing court states in an opinion and that is necessary to the reviewing court's decision must be applied throughout all later proceedings in the same case, both in the trial court and on a later appeal. [Citations.]" (People v. Jurado (2006) 38 Cal.4th 72, 94.) The doctrine does not apply to points of law that might have been determined, but were not decided in the prior appeal. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 302.) However, the doctrine does extend to questions that were implicitly determined because they were essential to the prior decision. (Estate of Horman (1971) 5 Cal.3d 62, 73.) Pursuant to the doctrine, absent applicable exception, both the trial and appellate courts must follow the rules laid down upon a former appeal. (Gunn v. Mariners Church, Inc. (2008) 167 Cal.App.4th 206, 213.)
Here, our prior opinion in Shaffer I only decided the issue of whether the Sassoons had refused to mediate, not whether the Shaffers had attempted to mediate the dispute. Paragraph 17A specifically provides that it applies to two situations. First, it applies where "[a] party commences an action without first attempting to resolve the matter through mediation," and it also applies where a "party refuses to mediate after a request has been made." (Italics added.) Shaffer I framed the issue to be decided as the latter instance, stating: "The Shaffers contend the award to the Sassoons of attorney's fees and costs must be reversed because the Sassoons refused to mediate the dispute with the Shaffers, as required under the Agreement." (Italics added.)
We recognize the abstruse problem presented by our holding in Shaffer I and understand the trial court's difficulty in resolving the issue when faced with the interpretation of Shaffer I made by the Sassoons. In Shaffer I, we found substantial evidence supported the trial court's conclusion that the Shaffers had not shown the Sassoons had refused to mediate. We pointed to the fact that the "Shaffers were unable to satisfy the trial court that any request to mediate had ever been made to, and refused by, the Sassoons." (Italics added.) However, our conclusion that the Shaffers had not established the Sassoons had refused to mediate did not embrace the issue of whether the Shaffers had attempted to mediate in the first instance, which would involve a determination of their attempts to contact the Sassoons to mediate (as opposed to the Sassoons' refusal to mediate). Although the facts in the record of Shaffer I might have established that they failed in such attempt (indeed, we refer to the lack of evidence that their letters were properly addressed and/or mailed), this precise issue was not raised or briefed by the parties, we did not address it, and we did not rule on it. Opinions may not be cited, even as law of the case, for propositions not decided therein. (Flatley v. Mauro (2006) 39 Cal.4th 299, 320.)
Furthermore, implicit in our holding reversing on the issue of attorney fees and finding that the Shaffers, if their preoffer attorney fees were considered, obtained a greater recovery than the Sassoon's section 998 offer, is a finding that they did attempt to mediate in accordance with paragraph 17A. This conclusion was essential to our holding in Shaffer I. Indeed, as section 998 states, a party could not obtain recovery of costs under section 998 unless such costs were already recoverable in accordance with sections 1032 and 1033.5. (See Scott Co. v. Blount, Inc., supra, 20 Cal.4th at p. 1108.) In this case, costs under section 1032 were recoverable by contract pursuant to section 1033.5, subdivision (a)(10) and subject to the limitation imposed by paragraph 17A of the Agreement. If we had determined that the Shaffers were not entitled to attorney fees because of their failure to adhere to the conditions of paragraph 17A, we would not have found they obtained a more favorable result than the Sassoons' section 998 offer. As a result, section 998 has no application to this case to limit the Shaffers' attorney fees, nor does paragraph 17A of the Agreement.
III.
Finally, in that regard, we do not read the term "costs" in Shaffer I as applying only to out of pocket costs for nonfees. In Shaffer I, we reversed the Sassoons' attorney fees and directed the trial court on remand to "determine the Shaffers' costs on proper application and add this sum to the final judgment." When an appellate court's reversal is accompanied by directions requiring specific proceedings on remand, those directions are binding on the trial court and must be followed. Any material variance from the directions is unauthorized and void. (Hampton v. Superior Court (1952) 38 Cal.2d 652, 655-656; In re Candace P. (1994) 24 Cal.App.4th 1128, 1131.) Our task as reviewing court is to ascertain whether there was a material variance in the trial court's execution of the prior appellate ruling. We will examine the appellate opinion as a whole to determine the intent of the judgment or order. We will not disturb a subsequent trial court judgment after remand for an immaterial departure from its directions in the prior appeal. (In re Candace P., at pp. 1131-1132.) Where the directions to the trial court are ambiguous, we will interpret them in accordance with the views, reasoning, and holdings expressed in the opinion as a whole. (Lesny Development Co. v. Kendall (1985) 164 Cal.App.3d 1010, 1021.)
Here, nothing in Shaffer I suggests that their "costs" on remand be limited to nonfee, out of pocket expenses. Rather, the opinion as a whole leads to the conclusion that in Shaffer I we implicitly found (because we did not directly address the issue of their compliance with paragraph 17A) that the Shaffers were entitled to their attorney fees under the Agreement because we used their preoffer fees to designate them as having obtained a better result at trial for purposes of section 998. Section 1032 defines "costs" to include attorney fees via the directive of section 1033.5, subdivision (a)(10). Thus, if the Shaffers are "'[p]revailing parties'" who obtained a "net monetary recovery," they would be entitled to their attorney fees on remand. (§ 1032, subd. (a)(4); Goodman v. Lozano (2010) 47 Cal.4th 1327, 1333.) We therefore remand this matter to the trial court for a determination of the Shaffers' attorney fees.
DISPOSITION
The order is reversed. Appellants are to recover their costs on appeal. NOT TO BE PUBLISHED.
JOHNSON, J. We concur:
MALLANO, P. J.
ROTHSCHILD, J.