Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Madera County . No. MCV021514 Eric C. Wyatt, Judge.
Motschiedler, Michaelides & Wishon and Russell K. Ryan for Plaintiffs, Cross-defendants and Appellants.
Sagaser, Jones & Helsley, Scott D. Laird and David W. Burnett; and William F. Hancock, Jr. for Defendants, Cross-complainants and Appellants.
No appearance for Cross-defendant and Respondent.
OPINION
HILL, J.
Plaintiffs, John Richard and Diane Boland, and defendants, Earl Don Baker, Cheryl Baker, Tess Baker, as personal representative of the estate of David Baker, and Downtown Coarsegold Development, Inc., appeal the judgment entered after a court trial. The Bolands sued the Bakers, asserting they validly exercised their right of first refusal when the Bakers intended to accept an offer from third parties to purchase the real property subject to that right, but the Bakers refused to follow through and convey the property to the Bolands on the agreed upon terms. The Bakers cross-complained against the Bolands and Chicago Title, the escrow company involved in the sale transaction.
The judgment denied specific performance and damages to all parties, determined the Bolands were the prevailing parties on the contract, and awarded the Bolands their costs and attorney’s fees. The Bolands challenge the finding that they did not exercise their right of first refusal on the same terms and conditions offered by the third parties, so no purchase contract was formed; they also challenge the denial of specific performance of the contract containing the right of first refusal. The Bakers challenge the determination the Bolands were the prevailing parties for purposes of an award of costs and attorney’s fees and the finding that Chicago Title was not negligent. We reverse the award of costs and attorney’s fees to plaintiffs and remand for a redetermination of the prevailing party.
FACTUAL AND PROCEDURAL BACKGROUND
In 1999, plaintiffs John Richard Boland (Richard) and Diane Boland (Diane) entered into an agreement to settle a real property dispute with defendants, Earl Don Baker (Don) and his brother, David Baker (David), who owned property adjacent to the Bolands’ property; the agreement was also signed by Don’s wife, defendant Cheryl Baker (Cheryl), who agreed to be bound by its terms. The agreement included a right of first refusal, by which the Bakers granted the Bolands the right to purchase all or a portion of two parcels of real property totaling approximately 15 acres if the Bakers received and were willing to accept a bona fide purchase offer from a party not affiliated with the Bakers. The provision required the Bakers to give notice to the Bolands that they intended to accept the offer and concurrently therewith to provide the Bolands with a copy of the offer.
We refer to the parties by their first names for convenience and to avoid confusion. No disrespect is intended.
Prior to June 2003, Don advised the Bolands a developer was interested in buying a one-half interest in the property that was subject to the Bolands’ right of first refusal for $500,000 in order to partner with Don in placing a ministorage facility on the property. In June 2003, Don and his potential partners, Don Burgess and Brian Richburg, met with Diane to discuss the plans for the ministorage. Diane expressed interest in the transaction; Don told Diane that Burgess and Richburg would be his partners unless Diane had $500,000. She said she did not.
Burgess and Richburg agreed to purchase a one-half interest in the Bakers’ property from David for $500,000. David was to receive $300,000, consisting of $175,000 in cash and a promissory note for $125,000 secured by a deed of trust on the noncommercial parcel of the property. Burgess and Richburg were to pay an additional $200,000 toward removing an existing encumbrance on the property (the Aegis note). The escrow company, defendant Chicago Title, prepared draft escrow instructions reflecting a purchase price of $300,000. Burgess and Richburg reviewed the instructions and advised Chicago Title that they were also to pay $200,000 toward the encumbrance. The escrow officer, Suzanne Ford, prepared final escrow instructions showing a purchase price of $300,000 (exhibit No. 13) and supplemental escrow instructions reflecting the additional $200,000 payment (exhibit No. 14). The first set of instructions was prepared for the signatures of David, Burgess and Richburg; the supplemental instructions were prepared for the signatures of Don, Cheryl, Burgess and Richburg. Although they were prepared for the same escrow, Ford testified she understood the two sets of instructions to represent separate agreements involving different parties. On July 25, 2003, Burgess and Richburg signed both sets of escrow instructions, deposited $380,000 in escrow, and signed a promissory note to David for $125,000. Don and David signed the escrow instructions on August 5, 2003.
On July 25, 2003, Ford advised Don that the title company needed a release of the Bolands’ right of first refusal. Don called the Bolands that day and outlined the terms of the sale including the $500,000 price. He asked that, if the Bolands were not interested in purchasing on those terms, they provide a release right away so escrow could close. Richard asked for something in writing reflecting the purchase terms. Don created a writing explaining the terms and faxed it to Richard.
The Bolands left on a trip to Australia the next day; while they were gone, their attorney, Don Lescoulie, asked Don for a copy of the written purchase offer. Don stated there was no written offer, and Lescoulie asked for a copy of the escrow instructions; Lescoulie stated Ford would not release the escrow instructions to him without authorization. Don called Ford and asked her to fax a copy of the escrow instructions, which he had not yet seen, to Lescoulie. Ford sent Lescoulie only the first set of instructions, reflecting a purchase price of $300,000; she did not provide the supplemental instructions reflecting the additional $200,000 payment.
During the litigation, Chicago Title produced a letter agreement (exhibit No. 5), signed by David, Burgess, and Richburg, in which Burgess and Richburg agreed to purchase David’s 50 percent interest in the property for $300,000. Don was not aware of the existence of the letter agreement when Lescoulie asked him for a copy of the written agreement. Richburg testified he prepared exhibit No. 5 at David’s request, because David wanted something in writing to show what he would be netting. Richburg prepared it hastily, while David was in his office. The letter agreement did not contain all the terms of the transaction. Burgess also testified the purpose of the letter agreement was to show what David was going to get from the transaction.
Because the escrow instructions he received reflected a sale of David’s interest in the property and David had not yet signed the escrow instructions, Lescoulie called Don on August 4 and asked for something in writing from David indicating he intended to accept the offer from Burgess and Richburg. Don wrote down the words suggested by Lescoulie for the writing; the writing stated David intended to accept the offer to sell his interest in the property, and the sale price was “indicated in the escrow instructions which you now have.” Don asked why Lescoulie needed this writing; Lescoulie said there was a discrepancy between the information in Don’s fax and the information the title company provided. Lescoulie assured Don it was a minor matter and the signed statement from David would take care of it. Don had David sign the written statement, and then sent it to Lescoulie.
Don helped David with the transaction because David was terminally ill, although Don did not have a power of attorney to act on David’s behalf.
On August 5, 2003, the Bolands gave the escrow company notice they were exercising their right of first refusal and asked that escrow instructions be prepared on the same terms as those in the instructions they had - the first set of instructions reflecting a $300,000 purchase price. On the same date, Don called Richard and said he was missing some of the instructions for the transaction. On August 6, 2003, the Bolands signed their escrow instructions and deposited $181,000 in escrow, along with a note secured by deed of trust to David for $125,000. Before signing, Richard asked Ford three times whether there were any other papers for this escrow. Ford answered “no” each time.
On August 13, 2003, David’s attorney, William Hancock, faxed a letter to Lescoulie stating that the price for the 50 percent interest in the property was $500,000, and enclosing the supplemental escrow instructions; Lescoulie faxed this to Richard. The Bolands did not attempt to exercise their right of first refusal at the $500,000 price; they testified that, at that time, they probably were not interested in buying a one-half interest in the property for $500,000.
The Bolands filed suit against David, Don, Cheryl, Coarsegold Development, Inc., a corporation to which the Bakers transferred ownership of the subject property in August 2003, and Chicago Title Company. After David’s death, Tess Baker (Tess), as personal representative of David’s estate, was apparently substituted in as a defendant in lieu of David. The Bolands’ second amended complaint alleged causes of action for breach of contract, declaratory relief, constructive trust, fraud, and interference with economic advantage against the Baker defendants, and negligence and negligent misrepresentation against Chicago Title. The causes of action against the Baker defendants were all based on an alleged failure to transfer the subject property to the Bolands after their valid exercise of the right of first refusal. The causes of action against Chicago Title allege that, if, as the Baker defendants contended, the Burgess and Richburg offer to purchase was for a price of $500,000 rather than $300,000, then Chicago Title negligently prepared the escrow instructions, negligently provided only a portion of them to the Bolands, and negligently misrepresented there were no other escrow instructions, so as to lead the Bolands to believe the price was $300,000. The Baker defendants cross-complained against the Bolands and Chicago Title, alleging causes of action for breach of contract, fraud, and interference with economic advantage against the Bolands and negligence against Chicago Title.
“The Baker defendants,” as used herein, refers to Don, Cheryl, David, and Tess, as well as Downtown Coarsegold Development.
The case was tried by the court, which concluded the total price to be paid pursuant to the Burgess-Richburg offer was $500,000 and, since the Bolands did not exercise their right of first refusal on the same terms and conditions as that offer, no valid contract for the purchase of the property by the Bolands was formed. Consequently, there was no breach of any such contract by the Baker defendants. The court also concluded there was no breach of contract by the Bolands; to the extent the Bolands attempted to exercise their right of first refusal on terms different from those in the Burgess-Richburg offer, this was not a breach of contract, but simply resulted in their failure to accept the offer, so that no contract was formed.
The court found, however, that the Baker defendants breached the 1999 contract by failing to give the Bolands a copy of the offer they received from Burgess and Richburg to purchase the property for $500,000. It concluded plaintiffs were not entitled to specific performance at the $300,000 purchase price because of that breach, but they were entitled to “normal contract damages which in this case may only consist of declaratory relief regarding the status of the current title of the property.” Because of this finding, the court determined the Bolands were the prevailing parties on the contract, and were entitled to attorney’s fees from Don and David pursuant to a provision in the 1999 contract. The court found against the Bolands on their other causes of action against the Baker defendants.
The court found that plaintiffs failed to establish their causes of action against Chicago Title, because they did not demonstrate they suffered any damage as a result of Chicago Title’s alleged negligence. It also found in favor of Chicago Title on the Bakers’ cross-complaint, concluding Ford acted reasonably under the circumstances in furnishing the Bolands with only the first set of escrow instructions and in informing them that there were no other escrow instructions.
After the court issued its tentative statement of decision, the Bolands asked that, as the remedy for the Bakers’ breach of the 1999 contract, they be granted specific performance of the requirement that the Bakers give notice of their intent to accept an offer for the purchase of the property, including furnishing them a copy of the offer. The Bakers would be required to give the Bolands a copy of the $500,000 offer, and the Bolands would then have the seven days provided for in the 1999 contract within which to exercise their right of first refusal, if they chose to do so. In its final statement of decision, the court denied that request, concluding specific performance could not be ordered where the party requesting it had not shown it was ready, willing and able to perform at the relevant time. Plaintiffs’ testimony was that they probably would not have exercised their right in 2003 at a purchase price of $500,000.
Judgment was entered in accordance with the court’s statement of decision, and both the Baker defendants and the Bolands appealed. The Bolands contend substantial evidence does not support the court’s conclusion that Burgess and Richburg offered to purchase at a price of $500,000; the Bolands should have been granted specific performance to permit them to exercise their right of first refusal even if the price was $500,000; the trial court correctly found that the Bolands were the prevailing parties on the contract cause of action for purposes of the award of attorney’s fees; and, in any event, the Baker defendants failed to appeal the postjudgment order awarding attorney’s fees, leaving this court without jurisdiction to determine this issue. The Bakers contend the trial court abused its discretion in designating the Bolands as the prevailing parties on the contract and awarding them their attorney’s fees; substantial evidence does not support the finding that the Bakers breached the 1999 contract; and the court applied the wrong legal standard in determining Chicago Title was not negligent, and application of the correct standard would have resulted in a finding that Chicago Title breached its duties to the Bakers.
DISCUSSION
I. The Finding That Burgess and Richburg’s Offer was for $500,000
The Bolands contend substantial evidence does not support the trial court’s finding that the amount offered by Burgess and Richburg to purchase a 50 percent interest in the property subject to the right of first refusal was $500,000. Under the substantial evidence standard of review, the appellate court “must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the judgment.” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) “When a trial court’s factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination.” (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.) If substantial evidence supports the judgment, the appellate court must affirm, even if there is substantial contrary evidence. (Donovan v. Poway Unified School Dist. (2008) 167 Cal.App.4th 567, 582.)
A party challenging the sufficiency of the evidence to support a finding of fact must present in his brief all the evidence material to that finding, not just the evidence favorable to that party’s position. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) Otherwise, the error is deemed to be waived. (Ibid.)
The Bolands’ statement of facts does not contain all the material evidence supporting the trial court’s finding that the Burgess-Richburg purchase offer was for a total price of $500,000. It makes no mention of the testimony of Don, Burgess and Richburg, all of whom repeatedly testified that $500,000 was required to complete the purchase, with $300,000 going to David and $200,000 to be used to remove the existing encumbrance. It also fails to mention Ford’s testimony consistent with that finding, including testimony that she prepared the supplemental escrow instructions after Burgess advised her it was going to cost him $500,000 to buy the property, that she understood David was to net $300,000 from the transaction, and that the purchase was contingent on Burgess and Richburg’s payment of the Aegis note.
“Judgments and orders are presumed correct on appeal, and the appellant bears the burden of overcoming that presumption by affirmatively demonstrating reversible error.” (Forrest v. Department of Corporations (2007) 150 Cal.App.4th 183, 194.) The Bolands have not met that burden. At most, they have shown there was substantial contrary evidence. Our review of the evidence discloses substantial evidence supporting the finding that the total purchase price was $500,000. We find no error.
II. Failure to Order Specific Performance of the 1999 Contract
Plaintiffs argue that, because the trial court found the Baker defendants breached the 1999 contract by failing to provide them a copy of the $500,000 offer, plaintiffs should have been granted specific performance of that contract; they contend the Bakers should have been required to give them a copy of the $500,000 offer and the Bolands then should have been allowed seven days within which to exercise their right of first refusal if they chose to do so.
“A grant or denial of specific performance is reviewed under an abuse of discretion standard.” (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.) Specific performance is not a matter of absolute right, but rests within the sound discretion of the court, and is to be granted only in accordance with established principles of equity and always with reference to the facts of the particular case. (Pasqualetti v. Galbraith (1962) 200 Cal.App.2d 378, 382.)
Specific performance is a remedy that may be sought as an alternative to damages. When sought as a remedy for breach of contract, in addition to establishing the contract breach, the plaintiff must show “(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract.” (Tamarind Lithography Workshop, Inc. v. Sanders (1983) 143 Cal.App.3d 571, 575.)
That the court did not grant specific performance in its tentative statement of decision is hardly surprising, since plaintiffs did not request it until a hearing that occurred after trial and after the court issued its tentative statement of decision. In its final statement of decision, the court denied specific performance of the 1999 contract. It concluded the Bolands had not demonstrated their own performance of, or willingness to perform, the contract, because they had not established they were ready, willing and able to perform at the time of the breach and subsequently. The court stated: “While I appreciate their position to advocate for the $300,000 amount, this does not change the testimony that the plaintiffs probably would not have exercised the option at $500,000. I do not see how the court could find this statement to establish that it was more likely than not that had the defendants given proper notice in 2003 that plaintiffs would have been ready and willing to perform on the deal they are now requesting specific performance of. The evidence is exactly to the contrary, it is more likely than not that the plaintiffs would not have exercised the option at $500,000. Because the plaintiffs did not prove that they were ready willing and able to perform at both the time of the defendants’ breach and throughout the action, their request for an order of specific performance that defendants must now offer them the property at $500,000 is denied.”
Plaintiffs argue that, as to their request for specific performance of the right of first refusal, unlike a request for specific performance of a contract for the sale of the property to them, they were not required to demonstrate they were ready, willing and able, at the time of the breach and subsequently, to purchase the property on the terms offered by Burgess and Richburg. They assert their only obligation, if the Baker defendants were required to give them a copy of the $500,000 offer, was to decide whether or not to exercise their right of first refusal. This ignores the reality that, if specific performance had been ordered and the Bolands had exercised their right of first refusal, the Baker defendants would have been required to sell, and the Bolands to buy, the property on the terms offered in August 2003.
The goal of specific performance is to put the parties back in the position they would have been in if the contract had been timely performed. (BD Inns v. Pooley (1990) 218 Cal.App.3d 289, 298.) Don informed the Bolands more than once prior to their attempt to exercise their right of first refusal that the Bakers had received an offer to purchase a 50 percent interest in the property for $500,000. At the time, the Bolands did not express any interest in exercising their right at that price. As the trial court noted, plaintiffs testified at trial that they probably would not have purchased the property for $500,000 in August 2003. Richard testified he thought the Bakers’ entire 15-acre property was worth approximately $600,000 then, and even $300,000 was a high price for a 50 percent interest. Plaintiffs’ appraiser opined that the value of a 50 percent interest in the property in August 2003 was less than $300,000.
Whether phrased as a failure to demonstrate plaintiffs’ willingness to perform at the time of the breach or as an exercise of the court’s discretion to deny specific performance on equitable grounds, the trial court’s decision effectively refused to grant a remedy that would have placed plaintiffs in a better position than they would have been in had the contract been timely performed. As the court determined, plaintiffs’ own evidence demonstrated it was more likely than not they would not have exercised their right of first refusal in August 2003 if they had been provided a copy of a all of the escrow instructions containing all of the terms of the offer, including the $500,000 price. We find no abuse of discretion in the trial court’s denial of the remedy of specific performance of the 1999 contract.
III. The Finding That the Bolands Were the Prevailing Parties on the Contract
The trial court's determination of the prevailing party for purposes of awarding attorney fees is an exercise of discretion which should not be disturbed on appeal absent a clear showing of abuse of discretion. (Ritter & Ritter, Inc. Pension & Profit Plan v. The Churchill Condominium Assn. (2008) 166 Cal.App.4th 103, 126.) The trial court has broad equitable discretion to determine which party prevailed, or to determine that there was no prevailing party in a particular situation. (Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 787.)
Code of Civil Procedure section 1032 “is the fundamental authority for awarding costs in civil actions.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1108 (Scott Co.).) It provides that “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (§ 1032, subd. (b).) Costs include attorney’s fees, when authorized by contract. (§ 1033.5, subd. (a)(10)(A).) Section 1032 defines “‘prevailing party’” to include “a defendant where neither plaintiff nor defendant obtains any relief.” (§ 1032, subd. (a)(4).) When a plaintiff files a complaint, a defendant files a cross-complaint against the plaintiff, and neither party prevails on his or her affirmative claims against the other, the defendant is the prevailing party entitled to costs. (McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1454.) The McLarand court explained:
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.
“In Schrader v. Neville (1949) 34 Cal.2d 112, the plaintiffs sued the defendants for damages sustained in an automobile accident. The defendants cross-complained for damages resulting from the same accident. The jury returned a verdict denying relief to both. The trial court awarded the plaintiffs their costs because they had prevailed on the cross-complaint. The Supreme Court reversed, holding the defendants were the prevailing party under the circumstances. [Citation.] The court reasoned that had the plaintiffs not commenced the litigation by filing their complaint, the defendants might never have filed suit. Once the plaintiffs filed suit, however, the defendants were compelled to assert their claims against them. Therefore, although the defendants did not prevail on their cross-complaint, they were the prevailing party because the plaintiffs were denied recovery on their complaint.” (McLarand, supra, 231 Cal.App.3d at pp. 1454-1455.)
Section 1032 defines “‘prevailing party’” only as used in that section; it does not define the term for all purposes. (Galan v. Wolfriver Holding Corp. (2000) 80 Cal.App.4th 1124, 1128.) The prevailing party for an award of costs under section 1032 is not necessarily the prevailing party for an award of attorney’s fees under Civil Code section 1717. (McLarand, supra, 231 Cal.App.3d at p. 1456; accord, Galan, supra, at pp. 1128-1129.) Civil Code section 1717 is the applicable statute when determining whether and how attorney’s fees should be awarded under a contract. (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1157.)
Civil Code section 1717 provides:
“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, § 1717, subd. (a).)
It defines “party prevailing on the contract” as “the party who recovered a greater relief in the action on the contract,” and adds that “[t]he court may also determine that there is no party prevailing on the contract for purposes of this section.” (Civ. Code, § 1717, subd. (b)(1).)
“If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.” (Scott Co., supra, 20 Cal.4th at p. 1109.) “[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The 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.’ [Citation.]” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 (Hsu).)
A. Relief requested by plaintiffs
In plaintiffs’ breach of contract cause of action, they alleged: The Bakers entered into the 1999 contract, which contained the right of first refusal; David gave plaintiffs written notice he intended to accept an offer for the sale of an undivided one-half interest in the property for $300,000, and plaintiffs gave notice of their exercise of the right of first refusal. That exercise gave rise to a valid and binding agreement, which plaintiffs were ready, willing, and able to perform. The Baker defendants refused to convey an undivided one-half interest in the property to plaintiffs and, as a result, plaintiffs were damaged in an undetermined amount, believed to be in excess of $500,000. The real property is unique and adjacent to other real property owned by plaintiffs; plaintiffs have no adequate remedy at law, and are therefore entitled to have the Baker defendants specifically perform the contract and convey an undivided one-half interest in the property to plaintiffs on the agreed terms.
Plaintiffs’ declaratory relief cause of action alleged there was an actual controversy between the parties because plaintiffs contended they were the owners of an undivided one-half interest in the property, while defendants contended plaintiffs were not the lawful or equitable owners and defendants had no obligation to convey the 50 percent interest in the property to plaintiffs. Plaintiffs asked for a judicial determination as to whether plaintiffs are the owners of an undivided one-half interest in the property.
The prayer of the second amended complaint asked that defendants be ordered to execute and deliver a conveyance of the property to plaintiffs, that an equitable accounting be made of all losses incurred by plaintiffs as a result of delay in making the conveyance, and that the court declare plaintiffs to be the owners of the property.
In their trial brief, plaintiffs argued that the Baker defendants breached the right of first refusal first by failing to give plaintiffs proper notice and a copy of either a $300,000 offer or a $500,000 offer, then by failing to convey the property after the Bolands exercised their right of first refusal. Plaintiffs asserted their remedy should be specific performance (conveyance of a 50 percent interest in the property) or damages (the difference between the price agreed to be paid and the value of the property at the time of the breach, plus out-of-pocket costs and attorney’s fees).
In a posttrial brief, plaintiffs asserted the third-party offer was for $300,000, they exercised their right of first refusal, and they were entitled to specific performance in the form of conveyance of a 50 percent interest to them. The only damages for breach of contract they requested were those in addition to specific performance, i.e., rents and profits from the time they were entitled to conveyance.
Thus, the primary relief sought by plaintiffs was specific performance of a contract to purchase a 50 percent interest in the Bakers’ property for $300,000. Alternatively or in addition, they sought damages for breach of that contract and a declaration that plaintiffs were owners of a 50 percent interest in the property. Although in their trial brief plaintiffs also asserted defendants breached the 1999 contract by failing to give them a copy of the $500,000 offer, the remedies they sought were those applicable to breach of a contract of sale – specific performance by conveyance of the property interest to them or damages measured by the difference in value between the contract price and the value of the property interest at the time of breach.
B. Relief granted plaintiffs
Plaintiffs were granted none of the relief they sought. The trial court found that the Burgess-Richburg offer was for $500,000 and plaintiffs did not exercise their right of first refusal on the same terms offered by Burgess and Richburg, so no purchase contract was formed by plaintiffs’ attempt to exercise that right. Accordingly, the court did not order specific performance of a contract to purchase a 50 percent interest in the property for $300,000 or damages for breach of such a contract. Thus, the primary relief sought by plaintiffs was denied.
While the trial court concluded the Baker defendants breached the 1999 contract by failing to provide plaintiffs with a copy of the $500,000 offer, it did not award any of the relief plaintiffs requested for that breach. It did not order specific performance of the 1999 contract by requiring the Baker defendants to give the Bolands a copy of the $500,000 offer and affording plaintiffs an opportunity to exercise their right of first refusal at that price. As discussed above, the denial of specific performance was not an abuse of discretion.
The trial court also did not award plaintiffs any damages for that breach. In its statement of decision, it stated: “Nevertheless, the breach of the 1999 contract did result in damages to the plaintiffs because they were never given the opportunity to purchase the property on identical terms and conditions.… [T]he plaintiffs are entitled to normal contract damages which in this case may only consist of declaratory relief regarding the status of the current title of the property.” The court then stated that the right of first refusal had not been terminated by plaintiffs’ failure to exercise it on the same terms as the offer, and therefore “[t]he first right of refusal survives and remains with the property.”
Although the court seemed to find that plaintiffs sustained damages as a result of the breach of the 1999 contract, it did not award any damages to plaintiffs. Damages for breach of contract can be awarded only for detriment proximately caused by the breach. (Civ. Code, § 3300.) Plaintiffs failed to prove they suffered any harm as a result of the Baker defendants’ failure to provide them a copy of the $500,000 offer; the evidence showed plaintiffs probably would not have exercised their right of first refusal in August 2003 at the $500,000 purchase price.
A declaration that the right of first refusal survived plaintiffs’ failure to exercise it on the same terms as the third-party offer does not constitute an award of damages. It also was not relief sought by plaintiffs in this case. Plaintiffs’ second amended complaint did not allege any controversy between the parties regarding whether the right of first refusal was terminated because plaintiffs did not exercise it on the same terms as the third-party offer; it contained no request for a declaration that the right of first refusal survived this dispute. The parties’ trial and posttrial briefs did not raise such an issue, nor was it mentioned at trial. The declaration made by the court did not resolve any dispute or issue raised in the litigation. Thus, plaintiffs were granted none of the relief they requested on their contract cause of action.
C. Relief granted defendants
The Baker defendants cross-complained against the Bolands, alleging the Bolands breached the 1999 contract by attempting to exercise the right of first refusal on terms and conditions different from those contained in the third-party offer the Bakers intended to accept. The trial court found in favor of the Bolands on the cross-complaint, and the Baker defendants were granted no relief.
D. Comparison of relief
For purposes of an award of costs under section 1032, the definition of “‘prevailing party’” expressly includes four categories of parties, one of which is “a defendant where neither plaintiff nor defendant obtains any relief.” (§ 1032, subd. (a)(4).) “‘[C]osts are available as “a matter of right” when the prevailing party is within one of the four categories designated by statute. [Citation.]’ [Citation.] Generally, when a party falls squarely within one of the four situations enumerated in the definition of a prevailing party under section 1032, that party is entitled to recover costs as a matter of right.” (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 188.)
Plaintiffs obtained no relief on their complaint, and the Baker defendants obtained no relief on their cross-complaint. Since neither plaintiff nor defendant obtained any relief on their affirmative claims, the Baker defendants were the prevailing parties under section 1032, and were entitled to an award of their costs as a matter of right. (McLarand, supra, 231 Cal.App.3d at p. 1454.) The court abused its discretion to the extent it determined plaintiffs were the prevailing parties for the purposes of an award of costs under section 1032.
As to an award of attorney’s fees, “the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (Civ. Code, § 1717, subd. (b)(1).) The court has discretion to determine there was no prevailing party. (Ibid.) “When there are cross-actions on a contract containing an attorney fees provision, and no relief is awarded in either action, a trial court is not obligated to find that there is no party prevailing on the contract for purposes of [Civil Code] section 1717. If the court concludes that the defendant’s cross-action against the plaintiff was essentially defensive in nature, it may properly find the defendant to be the party prevailing on the contract.” (Hsu, supra, 9 Cal.4th at p. 875, fn. 10.)
The court abused its discretion in determining that plaintiffs were the prevailing parties for purposes of an award of attorney’s fees. The court did not determine the prevailing party by comparing the relief awarded to the parties on their contract claims with their respective demands and litigation objectives, and then comparing the extent to which each party succeeded and failed to succeed in its contentions. (Hsu, supra, 9 Cal.4th at p. 876.) The court merely determined that, because plaintiffs had established the Baker defendants’ liability for breach of the 1999 contract (although without establishing damages or obtaining other relief), plaintiffs were the prevailing parties for purposes of an award of attorney’s fees. Accordingly, we will remand the matter to the trial court for it to exercise its discretion to determine whether there was a prevailing party in the contract for purposes of an award of attorney’s fees, based upon a consideration of the proper factors.
“Winning on liability but failing to prove any damages does not result in any benefit to a plaintiff. Proving liability proves only an element of a cause of action, not the cause of action itself.” (Childers v. Edwards (1996) 48 Cal.App.4th 1544, 1550.)
IV. Failure to Separately Appeal Attorney’s Fee Award
The Bolands contend Don and David cannot challenge the award of attorney’s fees to the Bolands because they did not separately appeal the postjudgment order determining the amount of fees to be awarded. Their contention is without merit. “A postjudgment order awarding attorney fees is separately appealable. [Citations.] The failure to appeal an appealable order ordinarily deprives the appellate court of jurisdiction to review the order. [Citation.] However, when the judgment awards attorney fees but does not determine the amount, the judgment is deemed to subsume the postjudgment order determining the amount awarded, and an appeal from the judgment encompasses the postjudgment order. [Citation.]” (R. P. Richards, Inc. v. Chartered Construction Corp. (2000) 83 Cal.App.4th 146, 158.)
The judgment expressly determined the Bolands to be the prevailing parties and entitled to an award of attorney’s fees. The trial court considered the prevailing party determination expressed in the judgment to be its final determination on that issue. The court’s ruling on the Bolands’ subsequent motion for fees merely established the amount of fees to be awarded. The Bakers challenge the determination that the Bolands were the prevailing parties, not the amount of fees awarded. The determination that the Bolands were the prevailing parties is properly challenged on appeal from the judgment which contains that determination.
V. Judgment in Favor of Chicago Title
The Baker defendants contend that, in finding Chicago Title was not negligent, the trial court applied the wrong legal standard; they contend the court improperly found Chicago Title had no duty to provide the Bolands with a complete copy of the Burgess-Richburg offer.
“‘An escrow involves the deposit of documents and/or money with a third party to be delivered on the occurrence of some condition.’” (Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 711 (Summit).) “Escrow instructions are interpreted under the rules applicable to contracts. [Citation.] ‘The duties of a depositee... are created and measured by the instructions of the depositor. By accepting the deposit and by acquiescence in the instructions the depositee undertakes to perform according to the terms thereof. There is a meeting of the minds and the birth of a contract.’ [Citation.]” (Claussen v. First American Title Guaranty Co. (1986) 186 Cal.App.3d 429, 437 (Claussen).)
An escrow holder is an agent and fiduciary of the parties to the escrow, but the agency is limited to the obligation of the escrow holder to carry out the instructions of each of the parties to the escrow. (Summit, supra, 27 Cal.4th at p. 711.) “‘An escrow holder must comply strictly with the instructions of the parties,’” which may be written, oral, or implicit in the express instructions given. (Claussen, supra, 186 Cal.App.3d at pp. 435, 436.) A breach of the instructions exposes the escrow holder to liability for breach of contract. (Id. at p. 435.) If the escrow holder acts negligently, it may be liable for any resulting loss. (Ibid.) “An escrow holder has no general duty to police the affairs of its depositors, however.” (Ibid.) “In the event of a conflict or apparent error in instructions, the escrow holder is obliged to take corrective steps before obeying questionable instructions.” (Id. at p. 436.)
The Bakers contend the trial court incorrectly failed to impose on Chicago Title a duty to give proper notice to, and provide the Bolands with a complete copy of, the Burgess-Richburg offer, in accordance with the 1999 contract provision regarding the right of first refusal. The Bakers cite no authority imposing such a duty on Chicago Title. The written escrow instructions did not require Chicago Title to perform that obligation. The Bakers apparently contend the duty arose as a result of oral instructions given to Ford by Don. There is no substantial evidence that Don gave Ford such an instruction or that Ford agreed to comply with it.
Don testified Lescoulie tried to obtain a copy of the escrow instructions from Ford, but Ford would not release them without authorization. Don then contacted Ford and authorized her to release “the escrow instructions” to Lescoulie. Ford testified she generally treats escrow instructions as confidential, disclosing them only to the parties to that escrow, to attorneys, real estate brokers, and lenders involved in the escrow, and to persons authorized to see them. She testified Don authorized her to release a copy of the sale escrow instructions to Lescoulie and the Bolands. Thus, the testimony established only that Don authorized Ford to release the escrow instructions or the sale escrow instructions to Lescoulie. It does not establish that Ford or Chicago Title was instructed or agreed to perform the Bakers’ obligation under the 1999 contract to give notice of the Bakers’ intent to accept the Burgess-Richburg offer and provide a copy of the written offer to the Bolands or their attorney. There was no error in the trial court’s conclusion that that obligation remained with the Bakers and neither the escrow relationship nor any escrow instructions imposed the obligation on Chicago Title.
The Bakers contend Chicago Title breached its duties as escrow holder by (1) drafting escrow instructions inconsistent with the terms of the sale; (2) failing to provide complete escrow instructions to the Bolands when Don asked Ford to fax a copy of the escrow instructions to the Bolands’ attorney; (3) telling the Bolands, when they were about to sign escrow instructions and other documents necessary to complete the exercise of their right of first refusal, that there were no additional escrow instructions, when there actually were; and (4) failing to seek clarification from the Bakers when the Bolands repeatedly asked if there were additional instructions.
Substantial evidence supports the trial court’s finding that Chicago Title was not negligent. Regarding the drafting of the escrow instructions, Chicago Title received the information to be included in the instructions from Burgess and Richburg piecemeal. Burgess and Richburg made changes to the original draft of the instructions then signed the final instructions (exhibit Nos. 13 & 14) without challenging or expressing dissatisfaction with the content. Don also signed the escrow instructions without expressing concern about the wording of the documents. At trial, they all explained their understanding of the instructions, which was consistent with their description of the purchase offer. Burgess and Richburg testified the instructions, both sets together, accurately reflected their transaction.
There was evidence Burgess told Ford the additional $200,000 payment reflected in the supplemental instructions was not purchase money, and Ford understood it to be part of an outside agreement between Burgess and Don. Ford testified she released only the initial instructions, exhibit No. 13, to the Bolands’ attorney because she believed the supplemental instructions were separate and apart from the other escrow instructions. She explained the confidentiality of escrows and stated she did not reveal that other instructions existed because she had been taught not to acknowledge one way or another that there was an escrow. Ford also testified it was clear to her, based on the information she was given, that the $200,000 transaction was a separate agreement between Burgess and Don, which had nothing to do with David.
Substantial evidence supports the trial court’s conclusion that, based on the information given to Ford and the haphazard manner in which it was given, Ford acted reasonably in releasing only the main escrow instructions, which she understood to reflect the sale of the property by David, in response to Don’s request that she fax the escrow instructions to Lescoulie, and in failing to release the supplemental instructions, which she understood to represent a separate agreement between different parties. That evidence also supports the trial court’s conclusion Ford did not act negligently in failing to disclose the existence of additional escrow instructions when asked by Richard. Finally, substantial evidence supports the court’s finding that Ford was not negligent in failing to seek clarification from the Bakers when the Bolands repeatedly asked if there were additional instructions. A duty to seek clarification arises when there is a conflict or apparent error in the escrow instructions. None of the parties to the escrow questioned the instructions or pointed out any errors or ambiguities in them, and Ford believed she had a clear understanding of the transaction and acted in accordance with that understanding.
The trial court applied the correct standard in determining what legal duty Chicago Title, in its role as escrow holder, owed to the Bakers, and substantial evidence supports its conclusion that Chicago Title did not breach any duty owed to them.
DISPOSITION
The judgment is reversed and remanded for the limited purposes of allowing the trial court to determine the amount of costs to be awarded to defendants, allowing the trial court to exercise its discretion, in accordance with this opinion, to determine the prevailing party for purposes of an award of attorney’s fees and, if it determines there was a prevailing party, allowing it to determine the amount of attorney’s fees they will be awarded. The parties shall bear their own costs on appeal.
WE CONCUR LEVY, Acting P.J., KANE, J.