Opinion
G044474
12-27-2011
M. GRANT BETTINGEN et al., Cross-complainants and Appellants, v. RUBICON FINANCIAL, INC., et al., Cross-defendants and Respondents.
Papp & Lemaster-Farrimond and Eric Michael Papp for Cross-complainants and Appellants. Burris, Schoenberg & Walden, Donald S. Burris, Richard E. Walden, and Laura G. Brys for Cross-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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super. Ct. No. 30-2009-00124138)
OPINION
Appeal from a post-judgment order of the Superior Court of Orange County, David C. Velasquez, Judge. Reversed.
Papp & Lemaster-Farrimond and Eric Michael Papp for Cross-complainants and Appellants.
Burris, Schoenberg & Walden, Donald S. Burris, Richard E. Walden, and Laura G. Brys for Cross-defendants and Respondents.
M. Grant Bettingen and Christi Bettingen appeal from a post-judgment order awarding costs and contract attorney fees to the defendants who successfully demurred to a cross-complaint.In our concurrently filed opinion (Bettingen et al. v. Rubicon Financial, Inc., et al., [Dec. 27, 2011], G044327 (Bettingen #1), we reverse the judgment on the cross-complaint as to some of the defendants on some of the causes of action, including the contract-related causes of action. Accordingly, the post judgment award of costs and attorneys fees is also reversed.
The appellants are cross-complainants M. Grant Bettingen, as an individual and as co-trustee of the Bettingen 1999 Trust (the Bettingen Trust), and his wife Christi Bettingen, also as a co-trustee of the Bettingen Trust. (For convenience only we will refer to M. Grant Bettingen as "Bettingen," to his wife as "Christi," and to the appellants collectively as "the Bettingens," unless the context indicates otherwise.) The respondents are cross-defendants Rubicon Financial, Inc. (Rubicon), Grant Bettingen, Inc. (GBI); and various employees, officers, and/or directors of both companies including Joseph Mangiapane, Jr., Deborah Scott; Suzanne Herring, Kit Kessler, Terrance Davis, and Todd Vande Hei. (For convenience, we will collectively refer to them as "the Defendants," unless the context indicates otherwise.)
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We need not discuss the facts in detail. They are set forth at length in Bettingen #1. Suffice it to say, the Bettingens sold their securities brokerage business, GBI, to Rubicon. The consideration included the Bettingens would receive 1,200,000 shares of Rubicon stock and cash paid in various installments, and Bettingen would continue to be employed by GBI under a five-year contract. There were three written contracts of relevance to this appeal, described in greater detail in Bettingen #1: the Merger Agreement, the Share Purchase Agreement, and the Employment Agreement. After the transaction closed, relationships quickly soured, and Bettingen was fired.
Rubicon filed a complaint against Bettingen as an individual and as trustee of the Bettingen Trust, which had been the sole shareholder of GBI before its sale (Rubicon Financial, Inc. v. Grant Bettingen et al., Orange County Super. Ct. case No. 30-2009-00124138). Rubicon's complaint was not designated as part of the record on this appeal, but we take judicial notice of its first amended complaint filed July 16, 2009. (Evid. Code, §§ 452, subd. (d); 459, subd. (a).) Rubicon's complaint contains causes of action against Bettingen for breach of the Merger Agreement, fraud, declaratory relief, breach of the covenant of good faith and fair dealing, and unjust enrichment, arising out of the sale of GBI to Rubicon. The Bettingens filed a complaint against the Defendants (Orange County Super. Ct. case No. 30-2009-00290797). The two actions were consolidated with the Rubicon action being designated as the lead action, and the Bettingens' complaint was retitled a cross-complaint.
After two rounds of demurrers, the Bettingens' second amended cross-complaint (the SACC) contained 30 causes of action including for breach of all three written contracts (the Merger Agreement, the Share Purchase Agreement, and the Employment Agreement), declaratory relief, breach of implied covenant of good faith and fair dealing, and numerous tort causes of action. The trial court sustained the Defendants' demurrer to the SACC without leave to amend on the grounds it failed to state any cause of action and dismissed the Bettingens' SACC. The Bettingens appealed the order dismissing the SACC.
After the order dismissing the SACC was entered, the Defendants filed a memorandum of costs and a motion for contract attorney fees incurred in obtaining dismissal of the cross-complaint. They asserted as authority the Merger Agreement and the Share Purchase Agreement, each of which contained attorney fees provisions. The Bettingens objected on grounds including, among others, that the contracts were still being litigated (trial on Rubicon's complaint against Bettingen was stayed pending a decision on the appeal in Bettingen #1), and thus there was as yet no prevailing party on the contract. Additionally, none of the individual Defendants were parties to any of the contracts.
The trial court held all the Defendants were the prevailing parties on the breach of contract causes of action alleged in the SACC and no apportionment of costs and attorney fees between any of the SACC's causes of action was necessary. It awarded the Defendants $337,634 in attorney fees and $18,235 in costs incurred in obtaining judgment on the cross-complaint.
We need not address the Bettingens' arguments concerning the propriety of the trial court's order declaring the Defendants to be prevailing parties on the contracts when the contracts (in particular the Merger Agreement) are still being litigated; Rubicon's breach of contract action against Bettingen has not yet been tried. (See In re Estate of Drummond(2007) 149 Cal.App.4th 46, 51 ["'[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"'"].) Nor do we need to address the other arguments the Bettingens raise in this appeal regarding allocation of attorney fees between contract and non-contract claims or the sufficiency of the evidence to support the amount awarded. In Bettingen #1, we reverse the judgment on the cross-complaint. We conclude the Bettingens' SACC adequately plead some causes of action—in particular those for breach of contract. An order awarding attorney fees and costs falls with a reversal of the judgment on which it is based. (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1284; Merced County Taxpayers' Assn. v. Cardella (1990) 218 Cal.App.3d 396, 402.) As a result of our conclusions in Bettingen #1, the post-judgment order awarding attorney fees and costs cannot stand and must be vacated.
DISPOSITION
The order is reversed. In the interests of justice, the parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
O'LEARY, J. WE CONCUR: RYLAARSDAM, ACTING P. J. IKOLA, J.