Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Ct. No. NC037739, Deanne Smith Myers, Judge.
Evans, Brizendine & Silver and William D. Evans for Plaintiff and Appellant.
Law Offices of Michael Leight, Michael Leight and John Gloger for Defendant and Respondent.
ARMSTRONG, Acting P. J.
This is an opinion on two consolidated appeals. In B202297, 1365 Obispo LLC appealed from a judgment entered in favor of MMGD Properties. In B204189, MMGD appealed from the trial court's partial denial of its motion for attorney fees. We affirm the judgment in favor of MMGD, and also affirm the fees order.
1365 Obispo's appeal from the judgment in favor of MMGD
The property at issue is commercial property in Long Beach. At one time, there was a gas tank on the property, and in approximately 1997, the owners began remediation of contamination problems caused at least in part by the tank. The process was still underway in 2004, when MMGD, then owner of the property, listed it for sale.
On November 16, 2004, Granite Group of California (which knew about the problems and remediation) submitted a Standard Offer, Agreement, and Escrow Instructions, offering $1.5 million for the property. Robert Bellevue, Chairman of Granite, signed the Offer for Granite. Michael Davis, managing director of MMGD, signed for MMGD, also on that date, although the Offer provided that his signature was subject to the approval of MMGD's attorney.
The Offer included an addendum, prepared on November 16, 2004, by Granite's broker. Paragraph 30.1 of the addendum read: "Seller shall a. leave sufficient funds in escrow for environmental remediation or b. purchase a surety bond or insurance policy to cover the environmental remediation to Buyers' satisfaction."
The Offer stated that close of escrow would be 45 days after waiver of all contingencies by buyer, but in no event later than April 15, 2005. Escrow did not close, or even open. Instead, environmental remediation continued, as did negotiations on the hold back and exchanges of information on the extent of the remediation needed, and the estimated cost and time-table. (Davis investigated the insurance option and determined that it was too expensive.) Counsel exchanged letters and emails, environmental reports were requested and sent, and meetings were held.
On June 9, 2005, the parties added another addendum to the contract. In it, the parties acknowledged that MMGD had disclosed the presence of contaminants in the soil and disclosed that there had been an underground oil storage tank and above ground propane tanks on the property and that "this light industrial facility is to be sold in an 'as is' condition with no warranties or guarantees."
Discussions continued. As of September 7, 2005, escrow had not opened, and lawyers were exchanging emails about the presence of chlorinatids, disagreeing on whether remediation of that contaminant was covered by Paragraph 30.1.
The parties met on October 18, 2005. The trial court found that "the parties agreed to a 'hold back' of $200,000 at this meeting and that it would be held at an account at Smith Barney, but there was no agreement as to the mechanism as to how or when the held back funds would ultimately be released to the seller. Mr. Bellevue testified at trial that this was something that he and Mr. Davis would have to agree upon and that they had not really discussed what would happen if the remediation was not complete." The court also found that no documents were signed at the meeting.
On October 31, 2005, Granite assigned all its rights in the contract to Obispo.
In Obispo's view, MMGD repudiated the contract on November 7, 2005, in a letter from its counsel to Obispo's counsel. Counsel for MMGD wrote that "I am unaware of any written agreement setting forth the terms of any proposed sale of 1365 Obispo, Long Beach, California . . . No sale will be consummated unless and until our respective clients sign one document containing all of the terms of the proposed sale. . . ."
On Granite's suit for specific performance, the court found that the hold back provisions were material to the contract and that while the parties agreed on the amount of the hold back, there was no agreement as to the mechanism for a final accounting and release of the $200,000. The court concluded that there was no mutual assent to material terms, and that no enforceable contract was formed. The court also found, alternatively, that if a contract was formed, it was not specifically enforceable because the terms were uncertain.
Obispo's reply brief cites to several trial exhibits, and it lodged the trial exhibits when it filed that brief. MMGD understandably objects, citing basic fairness and the rule that points raised for the first time in a reply brief will not be considered. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.) MMGD asks us to ignore the exhibits and strike portions of the brief. We see no need to strike the brief, but agree that arguments and record citations made for the first time in the reply brief have no place in our decision making.
Obispo argues that the Offer was sufficiently specific because it identified the buyer, the seller, the property to be sold, the purchase price and the timely manner of payment, the material terms of a contract for the sale of real property. (Blackburn v. Charnley (2004) 117 Cal.App.4th 758, 766.) Next, Obispo cites the rule that "Neither law nor equity requires that every term and condition of an agreement be set forth in the contract" (Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 500) and also cites authority for the proposition that "In determining whether those material factors are sufficiently certain '[t]he modern trend of the law is to favor the enforcement of contracts, to lean against their unenforceability because of uncertainty . . ." (Larwin-Southern California, Inc. v. JGB Investment Co. (1979) 101 Cal.App.3d 626, 641) and that "'If the parties have concluded a transaction in which it appears that they intend to make a contract, the court should not frustrate their intention if it is possible to reach a fair and just result, even though this requires a choice among conflicting meanings and the filling of some gaps that the parties have left.' (1 Corbin on Contracts (1963) § 95, p. 400.)" (Ibid.)
Obispo further argues that the terms of the hold back were sufficiently established, contending that "the plain language of paragraph 30.1a and the uncontradicted parol evidence establish that $200,000 would be held until the issuance of a No Further Action letter by the applicable agency, certifying completion of environmental remediation." In factual support, Obispo cites testimony from Richard Brizendine, who represented Granite and Obispo in the real estate transaction, Dr. David Leu, the remediation contractor hired by MMGD, and Robert Bellevue of Granite.
In the cited portions of the record, Brizendine testified that with the Offer and its November addendum, the parties agreed that the money would be held until the Water Quality Control Board issued a No Further Action letter. He conceded that no writing said that, but testified that "remediation" in the November addendum meant remediation to the satisfaction of the Water Quality Control Board, evidenced by that Board's issuance of a No Further Action letter.
Leu testified that his goal was to bring the contamination level down to a level where the cost of remediation exceeded the benefit, "envisioned as means to obtain a NFA letter" for the site.
Bellevue testified that prior to the October 2005 meeting he thought that the funds would be released when a No Further Action letter was issued.
Discussion
The trial courts' interpretation of a contract is a question of law which we review de novo. To the extent that the parol evidence is in conflict, requiring the resolution of credibility issues, we apply the substantial evidence test. (Appleton v. Waessil (1994) 27 Cal.App.4th 551, 556.)
Under those standards, we reach the same conclusion as the trial court did. First, while the Offer identified the buyer, seller, and property, the hold back provision meant that it did not fully identify the price or the manner of payment, two other material terms. Thus, no contract was formed on November 16, 2004.
We note that when Bellevue was asked whether, prior to the October 2005 meeting, there was an agreement on how long the held back funds would be held back, he testified that he did not remember. When asked whether prior to that meeting, there was any agreement about what would happen in the event of a dispute about disbursement of the held back funds, he answered "not that I remember."
The trial court found that agreement was later reached on one of the open terms, the amount of the hold back, but that other terms, including the conditions for disbursement of the money, were left open. (The trial court held that those terms were material. We agree.) Again, we agree. The parol evidence Obispo cites does not fill the gaps in the contract. At best, Obispo offered evidence of the meaning it ascribed to the Offer. One party's unexpressed belief, not outwardly manifested, cannot give rise to a finding of mutual consent, and without mutual consent, there is no contract. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811.)
What is more, MMGD presented evidence disputing Obispo's interpretation of the contract. Davis testified there was never any agreement, written or oral, on the terms for disbursement of the money held back, or on the length of time that the money could be held back, or on what would be done if there was a dispute about the disbursement of the hold back funds. The trial court clearly believed him, a finding to which we defer.
Citing Goodwest Rubber Corp. v. Munoz (1985) 170 Cal.App.3d 919 and Larwin-Southern California, Inc. v. JGB Investment Co., supra, 101 Cal.App.3d 626, Obispo argues that an "objective third party" can supply the missing terms of a contract. Goodwest held that a contract which provided for a price at "fair market value" is sufficiently certain to support specific performance of an option, given that it is a "well-established means of property valuation and is a common task performed by courts on a daily basis." (Id. at p. 921.) Larwin concerned a demurrer, and held only that "each provision which defendants characterize as fatally uncertain, is either sufficiently certain on its face, or reasonably susceptible to being made sufficiently certain by use of extrinsic evidence presented in an amended complaint concerning the parties' intentions." (Larwin-Southern California, supra, 101 Cal.App.3d at p. 641.)
Obispo's argument, clarified in its reply brief, is that the Water Quality Board is an objective third party which will determine the end of the remediation, and by extension the date release of the funds held back. The difficulty with the argument is that Obispo did not establish that both parties agreed that the No Further Action letter would trigger the release of the held back funds.
MMGD's appeal from the order partially denying its fees motion
MMGD moved for attorney fees from both Granite and Obispo, based on a fees clause in the Offer, which reads that "If any Party . . . brings an action or proceeding . . . involving the Property whether founded in tort, contract, or equity . . . the Prevailing Party . . . shall be entitled to reasonable attorney's fees." The clause defines "prevailing party" to include a party who substantially obtains or defeats the relief sought "or the abandonment by the other Party of its claim or defense."
Obispo and Granite opposed the motion, Granite terming its opposition a special appearance. The opposition did not challenge MMGD's entitlement to fees or the amount of the fees, but only argued that Granite was not liable for fees. The court awarded fees, but made the award against Obispo only, finding that Granite was not a party.
This is the history: The original complaint named two plaintiffs, Obispo and Granite. The complaint also alleged that Granite had assigned its interest in the Offer to Obispo, and the parties stipulated that Obispo was the "proper party plaintiff," and would file a first amended complaint.
The first amended complaint bears the same caption as did the original complaint, but begins "Plaintiff, 1365 Obispo, LLC, A California Limited Liability Company (hereinafter Obispo or sometimes referred to as Plaintiff) alleges as follows . . . ." The judgment is against plaintiffs, in the plural. At oral argument on the fees motion, the trial court found that that was error and the court invited counsel for Obispo and Granite to move to amend the judgment. Counsel said that he would, but also noted that the judgment was already on appeal.
The issues presented by this appeal involve statutory and case law respecting an award of attorney fees, and our review is de novo. (Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 448.)
Granite relied, and relies, largely on Santisas v. Goodin (1998) 17 Cal.4th 599, which held that "When a plaintiff files a complaint containing causes of action within the scope of [Civil Code] section 1717 (that is, causes of action sounding in contract and based on a contract containing an attorney fee provision), and the plaintiff thereafter voluntarily dismisses the action, [Civil Code] section 1717 bars the defendant from recovering attorney fees incurred in defending those causes of action, even though the contract on its own terms authorizes recovery of those fees." (Id. at p. 617, emphasis in the original.)
MMGD argues that Granite was never dismissed, and that even if it was, the action itself was not dismissed. Granite essentially argues that the stipulation and first amended complaint amounted to a dismissal, and that Santisas applies where a party dismisses the only thing it can dismiss, its own action.
We think that Granite has the better argument. With the stipulation, all parties, including MMGD, recognized that Granite was no longer a part of the action. The stipulation was thus tantamount to a dismissal for purposes of Santisas. Moreover, Granite cannot be held liable for fees because Obispo did not dismiss its action.
MMGD argues that under Catello v. I.T.T. General Controls (1984) 152 Cal.App.3d 1009 and Spreckels v. Spreckels (1916) 172 Cal. 789, "The voluntary dismissal of an action by one of several plaintiffs creates liability for costs, even though the balance of the action proceeds to trial." (Catello, supra, at p. 1014.) The cases pre-date Santisas, and are not controlling.
MMGD also relies on cases which concern fees awards against non-signatories to contracts, and the circumstances under which a Civil Code section 1717 provides a remedy for a nonsignatory who is sued on a contract as if he were a party to it. (See Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101; Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 380.) Granite was not a nonsignatory, and the cases have no application.
Finally, MMGD argues that Granite is liable for fees under the law of assignments. We express no opinion on that point, because that body of law is not relevant to fees motion under the Code of Civil Procedure.
Disposition
The judgment is affirmed. The order on MMGD's fees motion is affirmed. Each party to bear own costs on appeal.
We concur: MOSK, J. KRIEGLER, J.
MOSK, J., Concurring
I concur.
There are three issues in this case: whether there was a meeting of the minds so that a contract was formed; if there was an agreement, whether it was sufficiently definite to enforce; and if there was an agreement, whether it was sufficiently definite so as to support an action at law for damages. The trial court concluded there was no contract; if there was a contract, it was too indefinite to enforce; and there was no need to resolve the last issue because the plaintiff offered no evidence of damages.
Although whether a contact is formed is based on an objective test (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 116, p. 155) at least when there is conflicting parol evidence, whether there was a meeting of the minds generally is a question of fact. (See Terry v. Conlan (2005) 131 Cal.App.4th 1445, 1454; Citizens Utilities Co. v. Wheeler (1957) 156 Cal.App.2d 423, 432.) Here there was conflicting evidence, especially as to whether all necessary parties had approved what was to be remediated and as to the hold-back terms. Thus, whether the trial court correctly determined that there was no meeting of the minds is subject to the substantial evidence test.
There is evidence that the parties did not agree on whether remediation refers to chlorinateds. Whether or not this is simply an interpretation issue, which would be a question of law, or a lack of agreement is not easily resolved. But the conflict over this item suggests that the parties did not agree on the mechanics and use of any hold-back monies.
Because there was sufficient evidence to support the trial court’s conclusion that there was no contract the judgment should be affirmed. We do not have to reach the questions as to whether, if there was a contract, it was sufficiently definite to enforce or to support an action at law. I would not reach those issues.