Opinion
NOT TO BE PUBLISHED
Super. Ct. No. CV026448
NICHOLSON, Acting P. J.
Defendant Sultan Hameed appeals from a judgment against him in a breach of contract action brought by plaintiff Beck Properties, Inc. (Beck). Beck is a developer of residential properties. Its contract of sale required a purchaser to occupy the home. It cancelled a sales contract with Hameed upon learning Hameed did not intend to occupy the home. Later, in exchange for reinstating the contract, Hameed agreed under a new agreement not to sell or transfer the home for a period of one year following close of escrow. Hameed also agreed to liquidated damages of $50,000 should he breach this promise.
Hameed and his wife sold the home within one year of closing escrow. Beck sued to recover the liquidated damages as well as attorney fees authorized under the contract. Following a court trial, the court concluded Hameed had breached the contract, and it awarded the liquidated damages and attorney fees. We affirm the court’s judgment.
FACTS
Because Hameed does not challenge the sufficiency of the evidence supporting the trial court’s factual findings, we base our discussion of the facts primarily on the trial court’s statement of decision.
Hameed and his wife, Fatima Khan, signed a contract to purchase a home from Beck in October 2003. The home is located at 3131 Sparrow Drive, Sacramento (the Sparrow Drive property). The contract consisted of a sales agreement and an addendum. The addendum stated: “Buyer agrees and understands above property is to be only owner occupied.” Hameed and Khan, however, never intended to occupy the Sparrow Drive property. They always intended to use that property as an investment that would be quickly resold.
In July 2004, Jim Ferguson, Beck’s corporate counsel, learned that Hameed and Khan planned to purchase the Sparrow Drive property for use in a “1031 exchange.” Knowing a 1031 exchange could be used only if Hameed and Khan intended to hold the property for investment purposes, Ferguson believed Hameed and Khan had breached their contract with Beck. Accordingly, Ferguson terminated the contract and returned all deposits to Hameed and Khan.
A “1031 exchange” is a transfer of real property authorized by section 1031 of the federal Internal Revenue Code where neither gain nor loss is recognized for income tax purposes when property held for productive use in a trade or business or for investment is exchanged solely for like-kind property. (26 U.S.C., § 1031.)
Later that month, Hameed and Ferguson spoke with each other and disagreed on whether Hameed and Khan were in breach. To settle their dispute, Beck agreed to reinstate the contract in return for Hameed and Khan executing an additional addendum to the sales agreement. This addendum is entitled “Occupancy Period and Use as Principal Residence & Anti-Speculation Agreement” (Anti-Speculation Agreement). Under the Anti-Speculation Agreement, Hameed and Khan agreed to use the Sparrow Drive property as their principal place of residence and not to lease, sell, or transfer the property before close of escrow, and for one consecutive year following close of escrow, except in certain cases of hardship. A transfer of interest necessitated by a financial emergency was allowed so long as Hameed and Khan provided proof of the emergency and the transfer was approved by Beck.
The Anti-Speculation Agreement also included a liquidated damages clause. Under this provision, the parties agreed to damages of $50,000 in the event of a buyer’s breach.
The Anti-Speculation Agreement was signed by Hameed and a representative of Beck on August 5, 2004. It was not signed by Khan.
On August 6, one day after signing the Anti-Speculation Agreement, Hameed executed a deed purporting to transfer all of his interest in the Sparrow Drive property to Khan. On August 12, Beck closed escrow on the sale.
Seven days later, on August 19, Hameed and Khan notified Beck they intended to sell the Sparrow Drive property due to an alleged financial emergency. Neither Hameed nor Khan provided Beck with any financial information proving the nature of their financial emergency. In January 2005, Hameed and Khan sold the Sparrow Drive property, using a 1031 exchange.
PROCEDURAL HISTORY
Beck filed this action for breach of contract seeking recovery of the liquidated damages provided in the Anti-Speculation Agreement and an award of attorney fees pursuant to the contract. Beck initially named both Hameed and Khan as defendants, but later dismissed the complaint against Khan without prejudice.
The case was tried to the trial court. In lieu of closing argument, the parties stipulated to submit proposed statements of decision simultaneously for the court to use in deciding the case and issuing a final decision. The oral stipulation was reached as follows:
“MR. PARISH [Counsel for Beck]: I spoke briefly with Mr. Cox [counsel for Hameed] and my proposal would be this.
“In lieu of closing argument, that each of us submit a proposed statement of decision to the Court, hard copy with a disk by a deadline for the Court to use to decide the case.
“THE COURT: Mr. Cox, is that agreeable?
“MR. COX: I think it’s reasonable. I mean, I have no problem providing a short closing from both sides and also providing that information on-line which will be of assistance to the Court.
“THE COURT: I think I need closing statements.
“And you want to provide -- each provide a -- I can’t talk.
“The disk and a proposed statement of -- tentative statement of decision, that would be fine.”
Neither party actually requested the court issue a statement of decision.
Nevertheless, the court issued a statement of decision, and it ruled in favor of Beck. It determined Hameed breached the contract by reselling the Sparrow Drive property and by purporting to transfer title to Khan, a transaction the court ruled was a sham. It also determined Hameed had failed to prove any defense. It awarded liquidated damages of $50,000 plus interest, along with attorney fees and costs.
In addition to the facts mentioned above, the trial court determined that Hameed and Khan were not credible witnesses. Despite testifying they intended to live in the Sparrow Drive house, Hameed and Kahn always intended to buy the Sparrow Drive property as investment property and never intended to own and occupy it as their principal residence. They owned a house at 5071 Monetta Lane in Sacramento. According to Khan, this house was their full-time residence throughout 2003, 2004, and 2005, and it continues to be their principal residence.
The court also relied on circumstantial evidence to conclude Hameed breached the contract by buying and selling the home as an investment. While living in the Monetta Lane house, Hameed and Khan bought a house at 2933 Frigate Bird in Sacramento as an investment. They sold this home within one year of its purchase. This fact showed that Hameed and Khan were familiar with the use of 1031 exchanges. They proposed to use the Frigate Bird property as the first leg of a 1031 exchange to purchase the Sparrow Drive property. Their proposed use of the Sparrow Drive property in a 1031 exchange showed their intent was to hold that property as an investment.
Additionally, Hameed and Khan’s loan to purchase the Sparrow Drive property was an “option-ARM” that provided for negative amortization of debt and interest-only payments of 1.25 percent. This type of loan is normally used only by investors. Hameed and Khan paid an additional one-half point in loan fees to allow them to pay off the loan within one year without penalty.
Hameed objected to the court’s statement of decision and requested the court address certain issues. The trial court treated the objection as a request to augment the final statement of decision and it denied the request. It thereafter entered judgment in favor of Beck.
On appeal, Hameed asserts the trial court erred by:
(1) Not addressing material issues in its statement of decision and not modifying it upon Hameed’s request;
(2) Determining Hameed breached the contract where the Anti-Speculation Agreement:
(a) was void ab initio as an unlawful attempt to impose conditions on the reinstatement of the contract;
(b) was not supported by consideration;
(c) was not signed by both Hameed and Khan as required by the original contract for modifications; and
(d) could not have applied to Hameed after the close of escrow because he did not hold title to the Sparrow Drive property;
(3) Awarding damages under an unenforceable liquidated damages clause; and
(4) Granting an unreasonable amount of attorney fees.
We address each assertion.
DISCUSSION
I
Adequacy of Statement of Decision
Hameed challenges the adequacy of the trial court’s statement of decision. However, Hameed did not request a statement of decision pursuant to Code of Civil Procedure section 632. Instead, he and Beck stipulated to a procedure completely outside what is provided in Code of Civil Procedure section 632 and its supporting Rule of Court, rule 3.1590. Under their stipulated procedure, each side agreed to submit their own proposed statements of decision for the trial court to use in fashioning a final decision. In so doing, Hameed forfeited his rights to object to the adequacy of the court’s statement of decision.
Even were we to consider Hameed’s argument, we would reject it. “The trial court is not required to respond point by point to the issues posed in a request for statement of decision. The court’s statement of decision is sufficient if it fairly discloses the court’s determination as to the ultimate facts and material issues in the case.” (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1379-1380 (Golden Eagle).)
The court’s statement of decision in this matter satisfies this standard. The court found the existence of a contract, breach of that contract by Hameed reselling the property, and the application of the liquidated damages clause. It also found that Hameed and his wife, Khan, were unreliable as witnesses and that Hameed had not prevailed in any of his defenses. Nothing more was required.
II
Breach of Contract
Hameed raises numerous contentions as to why the court’s finding of breach is erroneous as a matter of law. We review and reject each one.
A. Unlawful imposition of conditions on reinstatement
Hameed claims the Anti-Speculation Agreement was void ab initio because Beck used it to impose new conditions on reinstating the original contract after having repudiated it, a practice Hameed claims is contrary to contract law. However, according to the cases on which Hameed relies, that rule applies only where the party who repudiated the contract did so wrongfully. (Pichignau v. City of Paris (1968) 264 Cal.App.2d 138, 142; McWilliams v. Holton (1967) 248 Cal.App.2d 447, 451.)
Here, there is no evidence Beck wrongfully terminated the contract upon discovering Hameed and Khan did not plan to occupy the home. The Anti-Speculation Agreement was not void ab initio on this basis.
B. Lack of consideration
Hameed asserts the Anti-Speculation Agreement is void for lack of consideration. He argues the agreement was a modification of the original contract that lacked any new consideration beyond what was given for the original contract. This is not correct.
The compromise and release of a claim disputed in good faith is valid consideration in support of the settlement. (Dominguez Estate Co. v. Los Angeles Turf Club, Inc. (1953) 119 Cal.App.2d 530, 541.) The parties entered into the Anti-Speculation Agreement as a resolution and compromise of their dispute over whether Hameed had breached the original contract. Beck had terminated the contract because it believed Hameed was in breach of the addendum requiring owner occupancy. Hameed disagreed. To settle this dispute, Beck agreed to reinstate the contract and Hameed agreed not to transfer the property for a period of one year. This was sufficient consideration.
At oral argument, Hameed claimed there could not have been valid consideration because Beck had no basis upon which to terminate the original agreement. This argument misses the point. Whether or not Beck had a valid ground for terminating the original contract is part of the dispute the parties settled. Thus, the Anti-Speculation Agreement was not merely a retraction of Beck’s repudiation of the original agreement. It was a new agreement.
C. Lack of Kahn’s signature
Hameed claims the Anti-Speculation Agreement is an unenforceable modification of the original contract. By its terms, the Anti-Speculation Agreement incorporates the original contract, but the original contract states it cannot be modified except “by a written instrument signed by both parties.” Kahn was a party to the original contract but did not sign the Anti-Speculation Agreement. Thus, Hameed argues, the Anti-Speculation Agreement was not a valid modification of the original contract.
Hameed also claims Kahn could not be a party to the Anti-Speculation Agreement under principles of ostensible agency. He cites to Kahn’s testimony at trial where she stated she had never seen the Anti-Speculation Agreement until this action was filed, had never met Ferguson, and had never talked with Hameed about the Anti-Speculation Agreement.
Substantial evidence, however, indicates Kahn agreed to the Anti-Speculation Agreement through the actions of Hameed acting as her ostensible agent, and thus the Anti-Speculation Agreement was a valid modification of the original agreement. On August 19, 2004, only seven days after close of escrow, Hameed forwarded a letter to Beck stating he needed to sell the Sparrow Drive property due to a financial emergency. By this time, however, Hameed had purportedly transferred all of his interest in the property to Khan. Thus, he would have sent this letter only in a representative capacity as Kahn’s agent (assuming his attempt to transfer his interest was valid), and the letter was required only if Khan was a party to the Anti-Speculation Agreement.
Moreover, the letter is signed by both Hameed and Khan. This fact indicates Khan was attempting to comply with the demands of the Anti-Speculation Agreement. She would not have done so had she not been a party to that agreement. Her acceptance of the consideration given her under that agreement, i.e., the house, and her ratification of the agreement by her attempting to comply with it bound her as a party to that agreement as if she had signed it. (McAulay v. Jones (1952) 110 Cal.App.2d 302, 306; Civ. Code, §§ 1584, 1589.) The Anti-Speculation Agreement thus did not violate the requirements of the original contract for modifying its terms.
D. Application of Anti-Speculation Agreement to Hameed after transferring his interest to Khan
Hameed claims he could not have breached the Anti-Speculation Agreement because he did not hold title to the Sparrow Drive property when it was resold. The trial court, however, determined this was not true. Substantial evidence supports the trial court’s determination.
The court’s statement of decision addressed this point: “Mr. Hameed’s claim that he transferred his interest in the Sparrow Property to Ms. Khan is a sham. Mr. Hameed received no consideration for signing the inter-spousal deed. Mr. Hameed controlled the resale of the Sparrow Property. Mr. Hameed wrote the letter of August 19, 2004 announcing his and his wife’s intention to sell the Sparrow Property. Mr. Hameed was the sole contact for the real estate agent retained to sell the Sparrow Property. Mr. Hameed and Ms. Khan both signed documents relating to the sale of the Sparrow Property. All proceeds from the sale of the Sparrow Property were used to pay joint indebtedness. Mr. Hameed’s and Ms. Khan’s testimony that Ms. Khan was the sole owner of the Sparrow Property is not credible.”
Having determined based upon sufficient evidence that Hameed retained his interest in the Sparrow Drive Property, the trial court correctly concluded that Hameed breached the Anti-Speculation Agreement by reselling the property within one year of close of escrow.
Hameed also claims Beck waived any breach that occurred by his transferring title to Khan prior to the close of escrow because Beck, with knowledge of the transfer, proceeded to close escrow and issue title solely to Kahn. Because we affirm that Hameed breached the Anti-Speculation Agreement by reselling the property within one year, we need not address this argument.
III
Validity of Liquidated Damages Clause
Hameed contends the liquidated damages clause contained in the Anti-Speculation Agreement is unreasonable and therefore unenforceable. He claims the assignment of $50,000 as damages was arbitrary and bore no reasonable relationship to the range of actual damages the parties could have anticipated would flow from a breach. The provision, he asserts, works as an invalid penalty, not a valid liquidated damages clause. We disagree.
In general, liquidated damages clauses are presumed valid “unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.” (Civ. Code, § 1671, subd. (b).)
Certain limitations apply if the damages clause converts a portion of a deposit in a purchase agreement for “residential property” into liquidated damages. (Civ. Code, § 1675.) This statute, however, applies only if the buyer intended to occupy the dwelling as his residence at the time the contract to purchase the property was made. (Civ. Code, § 1675, subd. (a)(2).) Because the trial court determined Hameed did not intend to occupy the Sparrow Drive property as his residence at the time he purchased it, the limitations of Civil Code section 1675 do not apply, and this case is governed by the general provisions of Civil Code section 1671.
The California Law Revision Commission explained the scope and operation of Civil Code section 1671, subdivision (b) as follows: “The validity of the liquidated damages provision depends upon its reasonableness at the time the contract was made and not as it appears in retrospect. Accordingly, the amount of damages actually suffered has no bearing on the validity of the liquidated damages provision.... [¶]... [S]ubdivision (b) gives the parties considerable leeway in determining the damages for breach. All the circumstances existing at the time of the making of the contract are considered, including the relationship that the damages provided in the contract bear to the range of harm that reasonably could be anticipated at the time of the making of the contract. Other relevant considerations in the determination of whether the amount of liquidated damages is so high or so low as to be unreasonable include, but are not limited to, such matters as the relative equality of the bargaining power of the parties, whether the parties were represented by lawyers at the time the contract was made, the anticipation of the parties that proof of actual damages would be costly or inconvenient, the difficulty of proving causation and foreseeability, and whether the liquidated damages provision is included in a form contract.” (Cal. Law Revision Com. com., 9 West’s Ann. Civ. Code (2001 ed.) foll. § 1671, p. 498.)
Substantial evidence supports the trial court’s implicit finding that the liquidated damages clause was reasonable, and therefore valid. Beck had a number of legitimate reasons that support the reasonableness of the liquidated damages clause when it executed the Anti-Speculation Agreement. As the trial court found, speculators hurt Beck’s residential development projects because, among other things, “(a) speculators rarely maintain their property to the standard of a person who buys the house for their personal use, reducing the attractiveness of the project; (b) speculators commonly list their property for sale before the completion of the project, leading prospective buyers to wonder why purchasers want to leave the subdivision so soon; (c) speculators’ efforts to resell their property compete with the builder’s efforts to sell the remaining homes in the project; and (d) speculators generally invest very little in the house and are willing to abandon the house to foreclosure in a declining market, adversely affecting the desirability of the project.”
By agreeing to the liquidated damages provision, Hameed acknowledged and understood that Beck would be damaged as explained above by his reselling the property in violation of the Anti-Speculation Agreement and those damages would be impractical or extremely difficult to fix. Hameed desired to limit the amount of damages for which he could be liable, and Hameed acknowledged that Beck desired to avoid the costs and delays that would result in a lawsuit to prove up the damages. Both parties agreed the sum of $50,000 was reasonable considering all of the circumstances. Hameed provided no facts to the contrary.
Thus, this is sufficient evidence to support the court’s determination that the liquidated damages clause was not unreasonable.
IV
Attorney Fees
The trial court awarded Beck $88,485 in attorney fees under an attorney fee clause contained in the contract. Hameed claims the trial court awarded Beck an unreasonable amount in attorney fees. He raises a number of arguments, each of which we reject.
Hameed asserts Beck was not entitled to an award of fees because he filed his memorandum of costs prematurely. He argues rule 3.1700 of the California Rules of Court required the memorandum to be filed within 15 days after the date the notice of entry of judgment is mailed, and he claims reversal is required where the memorandum is filed before entry of judgment, as occurred here. Hameed’s argument is incorrect. A premature filing of a cost memorandum is a “mere irregularity” and “cannot rise to the stature of reversible error.” (Parker v. City of Los Angeles (1974) 44 Cal.App.3d 556, 566.)
Hameed claims the court wrongfully awarded as fees certain costs that Beck’s exhibit of fees had labeled as “additional charges.” However, these “additional charges” were not sought by Beck nor awarded by the court.
Hameed argues that the testimony provided by Beck’s attorney, William Parish, was inadequate to support an award of fees because much of the legal work was performed by one of Parish’s associates who did not file a supporting declaration. We conclude Parish’s testimony was sufficient. Parish personally supervised the work of all the attorneys in his office who performed services on this matter. All attorney time was recorded and entered into his firm’s time billing system at the time services were rendered by each attorney in the normal course of business. The trial court was well within its discretion in accepting this evidence in support of all of the fees requested.
Lastly, Hameed faults the trial court for not reducing the fee award by striking those fees incurred related to pursuing the action against Khan, who Beck later dismissed before trial. However, Parish declared there was no basis for allocating the fees incurred between those spent prosecuting the action against Hameed and those for prosecuting the action against Khan. No work was performed regarding Khan that was not equally necessary for prosecuting the case against Hameed.
Hameed submitted no competent evidence against Parish’s declaration. On this record, the trial court did not abuse its discretion in awarding all of the attorney fees requested by Beck.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to Beck. (Cal. Rules of Court, rule 8.278(a).)
We concur: HULL, J., BUTZ, J.