Opinion
G053276
01-09-2017
CITY OF HUNTINGTON BEACH, Plaintiff and Appellant, v. SHON LEE, Defendant and Respondent.
Michael E. Gates, City Attorney, and Scott F. Field, Assistant City Attorney, for Plaintiff and Appellant. Shulman Bunn and Richard Bunn for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2009-00329477) OPINION Appeal from a postjudgment order of the Superior Court of Orange County, Kim G. Dunning, Judge. Reversed and remanded with directions pursuant to Code of Civil Procedure section 128, subdivision (a)(8). Michael E. Gates, City Attorney, and Scott F. Field, Assistant City Attorney, for Plaintiff and Appellant. Shulman Bunn and Richard Bunn for Defendant and Respondent.
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Before Moore, Acting P.J., Fybel, J., and Ikola, J.
Plaintiff City of Huntington Beach (the City) sued defendants Shon Lee and Delaware II, alleging Lee improperly purchased a condominium in violation of an affordability covenant imposed on the unit by the City. We previously reversed and remanded a judgment of dismissal entered after Lee successfully demurred to the operative complaint. (See City of Huntington Beach v. Lee (Jan. 16, 2014, G046830 & G046977) [nonpub. opn.].)
Upon remand, judgment was entered for defendants after trial. The court's statement of decision explained that the affordability covenant was not enforceable against Lee because it was not properly recorded. Moreover, the City was barred by the applicable statute of limitations from seeking reformation of the covenant. And the City's nuisance and quiet title causes of action likewise failed.
The trial court then granted a motion for attorney fees filed by Lee, awarding him $151,164. The court cited two alternative grounds for the award: (1) a contractual entitlement to reciprocal attorney fees under Civil Code section 1717, building on a hold harmless clause in the affordability covenant (the "City shall be reimbursed by [Delaware II, the developer] for all costs or attorney fees incurred by [the] City in enforcing this obligation"); and (2) a statutory right to attorney fees in common interest development disputes under Civil Code section 5975, subdivision (c) ("In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney's fees and costs").
Plaintiff appealed both the judgment (which resulted in a related appeal pending here, G052903) and the attorney fee award (the instant appeal). On April 4, 2016, the two appeals were consolidated. The record (including an eleven volume joint appendix) and opening brief have been filed.
The parties now assert they have "resolved their dispute" by way of a settlement agreement. According to the parties (a copy of the settlement agreement was not provided), the settlement agreement requires them to apply jointly for a stipulated reversal of the attorney fee award, though "the underlying judgment . . . will remain in place."
Hence, on November 28, 2016, the parties filed a joint application to set aside and vacate the postjudgment attorney fee award. The parties do not seek to vacate the underlying judgment. No opposition to this motion was filed. On January 5, 2017, we severed the two appeals to allow for a ruling on the parties' motion. Presumably, the City will dismiss its appeal of the judgment (in G052903) once we have ruled on the application to reverse the attorney fee award.
The parties' motion failed to include a joint declaration by counsel as required by local rule. (See also Ct. App., Fourth Dist., Div. Three, Internal Practices and Proc., V C, Stipulated Requests for Reversal.) But the parties' joint application, in conjunction with the record already filed on appeal, provided the information that should ordinarily be provided in the joint declaration. We therefore have overlooked the parties' oversight. --------
"An appellate court shall not reverse or vacate a duly entered judgment upon an agreement or stipulation of the parties unless the court finds both of the following: [¶] (A) There is no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal. [¶] (B) The reasons of the parties for requesting reversal outweigh the erosion of public trust that may result from the nullification of a judgment and the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement." (Code Civ. Proc., § 128, subd. (a)(8); see Hardisty v. Hinton & Alfert (2004) 124 Cal.App.4th 999, 1005 [presumption against stipulated reversals].) Under section 128, subdivision (a)(8), the "judgment now belongs to the public — not the parties — and the public indisputably has an interest in its continuing existence." (Muccianti v. Willow Creek Care Center (2003) 108 Cal.App.4th 13, 15.)
Having reviewed the application, we conclude the parties have met their burden. We therefore reverse the postjudgment attorney fee award.
First, "[t]here is no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal." (Code Civ. Proc., § 128, subd. (a)(8)(A); see Union Bank of California v. Braille Inst. of America, Inc. (2001) 92 Cal.App.4th 1324, 1328-1329 (Union Bank).) The parties have apparently settled this dispute. As part of the settlement, they seek to reverse the attorney fee award, not the underlying judgment (which plausibly might affect other affordability covenant disputes between the City and its residents). As explained in the application, the collateral estoppel effect of the attorney fee ruling is unclear, given the variety of scenarios in which affordable housing covenants have been enforced in the past and are likely to be enforced in the future.
And though the City's pleadings in this case requested attorney fees as a matter of course, the City represents that this is the first action in which attorney fees have been "sought" by either party in an affordable housing dispute between the City and its residents (presumably, the City means this is the first time anyone has actually moved for attorney fees after judgment has been entered). Attorney fees are a two way street. If the covenant really allows residents to obtain attorney fees from the City upon a successful defense of a similar action, it likewise would allow the City to recover its attorney fees against its residents in actions where the City succeeds. This double-edged sword supports a conclusion that there is no realistic prospect that the stipulated reversal will adversely affect the nonparties or the public.
Moreover, as set forth in the application and opening brief, the City raises substantial questions as to whether the attorney fee award was legally appropriate. The City contends the hold harmless clause was intended to be a non-reciprocal indemnity clause with the developer, not a reciprocal attorney fee clause. The City also contends Civil Code section 5975 applies only to disputes within common interest developments, not to a dispute with a government entity attempting to enforce a covenant that is not actually part of the common interest development's declaration. Without explicitly entertaining these arguments, it is fair to observe that if the attorney fee award would have been reversed after a full review of these plausible contentions on appeal, the public and nonparties are not harmed by a stipulated reversal. (See Union Bank, supra, 92 Cal.App.4th at p. 1330 ["[i]f there is reversible error, prompt resolution of the appeal without the considerable expense to the parties of briefing and taxpayer incurred costs of the internal decisionmaking process within the court certainly serves the public interest"].)
The second statutory inquiry is whether "[t]he reasons of the parties for requesting reversal outweigh the erosion of public trust that may result from the nullification of a judgment and the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement." (Code Civ. Proc., § 128, subd. (a)(8)(B).) The relief sought would allow final settlement of lengthy, contentious litigation — this case has been pending since 2009. The parties' effort to settle this matter is to be commended. Though the precise terms of the settlement have not been revealed, it is clear that both parties face significant risk in litigating this appeal to the bitter end. "When lawyers responsibly settle litigation, public trust in the courts is advanced." (Union Bank, supra, 92 Cal.App.4th at p. 1331.) Moreover, the parties do not ask us to reverse the underlying judgment in this case. The judgment and associated statement of decision will not be undone. To the extent this case reflects poorly on the City, it is the judgment and statement of decision that do so, not the award of attorney fees. (Cf. Muccianti v. Willow Creek Care Center, supra, 108 Cal.App.4th at pp. 15-17, 22 [stipulated reversal would hide care center's treatment of elderly patient].) The attorney fee award merely reflects the fact that Lee prevailed. Thus, a reversal here will not reduce the incentive for pretrial settlement or erode public trust in the judicial system.
DISPOSITION
Pursuant to the parties' stipulation, the postjudgment order awarding attorney fees is reversed. On remand, the trial court is directed to enter an order consistent with this opinion. On stipulation of the parties, the court orders early finality of its decision by opinion as to this court. The clerk of this court is directed to issue the remittitur immediately. (Cal. Rules of Court, rule 8.272(c)(1).) The parties shall bear their own costs on appeal.