Opinion
A149571
05-17-2018
RONALD HOGAN, et al., Plaintiffs and Appellants, v. CLAYTON ENGSTROM, JR., et al., 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SCV230846)
This is our sixth opinion in this action. The appeal involves an effort by the Hogans to thwart execution of the judgment in their longstanding litigation. In 2009, respondents Clayton Engstrom, et al. (the Engstroms or the realtors), who are jointly and severally responsible for $65,000 of the Hogans' damages, tendered that amount, plus accrued interest. The Hogans refused to accept it. The Engstroms deposited the funds in trust with the court, where they sat until the Hogans obtained their release in 2015. Although the Hogans received all of the damages they were entitled to from the realtors under the judgment, they refused to acknowledge satisfaction of judgment under Code of Civil Procedure section 724.010 et seq. The Engstroms made a motion to compel, which the court granted, awarding statutory damages to the Engstroms. The Hogans appeal. We affirm.
All statutory references are to the Code of Civil Procedure.
I. FACTUAL AND PROCEDURAL BACKGROUND
As the full procedural history of this case has been set forth in five prior opinions, we recite here only those facts germane to this appeal. In 2000, Ronald and Victoria Hogan purchased a home in Santa Rosa (the property). (Hogan I, supra, at p. 3.) After discovering various defects, the Hogans sought to rescind the sale and to obtain damages from DeAngelis Construction, Inc., et al. (the developers) and Clayton Engstrom, Jr., et al. (the Engstroms or the realtors). (Id. at pp. 3-4.) The trial court affirmed the validity of the Hogans' unilateral rescission in 2004, deferring enforcement until the Hogans' damages claims were tried. (Id. at p. 5.) After jury trial, the judgment, as amended and entered in June 2007, made the Engstroms liable to Ronald and Victoria Hogan for a total of $65,000. (Id. at pp. 14-15.)
Hogan, et al. v. DeAngelis Construction, Inc., et al. (A117321, A118257, A120840, May 20, 2009) [nonpub. opn.] (Hogan I); Hogan, et al. v. DeAngelis Construction, Inc., et al. (A128451, A130351, Apr. 18, 2012) [nonpub. opn.] (Hogan II); Hogan, et al. v. DeAngelis Construction, Inc., et al. (A138118, Jan. 13, 2016) [nonpub. opn.] (Hogan III); Hogan, et al. v. DeAngelis Construction, Inc., et al. (A143637, Jan. 13, 2016) [nonpub. opn.] (Hogan IV); and, our latest opinion, issued concurrently with this one, Hogan, et al. v. DeAngelis Construction, Inc., et al. (A146057, A146582, A147273) [nonpub. opn.] (Hogan V).)
In May 2009, we resolved several appeals and cross-appeals in Hogan I. Among other things, we ordered the trial court to "modify the amended judgement to . . . provide that the Engstroms are jointly and severally liable for a portion of the Hogans' consequential damages awarded against the Developers, and that the Engstroms' share of that joint and several liability is equivalent to the damages awarded against them for intentional concealment and breach of contract." (Hogan I, supra, at p. 57.)
In October 2009 the Engstroms attempted to pay the Hogans $81,972 ($65,000 plus accrued interest) in full satisfaction of the judgment, but the Hogans refused. The Engstroms then deposited the funds into a court account, in trust for the Hogans (the court deposit).
Initially, the clerk of the court refused the deposit, but following the submission of letters by both sides (including objections by the Hogans on various grounds, including that they were entitled to additional fees and costs, that they asserted a lien on the property, and that no authority exists to support such a deposit), the check was apparently deposited.
In April 2010, in accordance with our earlier instructions in Hogan I, the trial court entered an order modifying the judgment which, as to the Engstroms, provides: "The Engstrom defendants are jointly and severally liable for a portion of the Hogans' consequential damages awarded against the Developers, and . . . the Engstroms' share of that joint and several liability is equivalent to the damages awarded against them, in the collective amount of $65,000 (sixty-five thousand), for intentional concealment and breach of contract in the Judgment and Amended Judgment." The Hogans then applied, ex parte, for a release of the Engstroms' court deposit as "partial" payment for the Engstroms' liability (which according to the Hogans had now increased to $722,155.43). (Hogan II, supra, at p. 11.) That application was denied. (Ibid.)
The parties continued to litigate enforcement issues, some of which we addressed in Hogan II. Shortly thereafter, the Hogans ceased paying the mortgage, which triggered foreclosure proceedings, culminating in a nonjudicial foreclosure sale of the property in October 2014. (Hogan V, supra, at pp. 7-8.) In 2015, despite not having returned the property to the developers (as required by the judgment), the Hogans moved for and obtained an order to release the Engstroms' court deposit. The funds were released to the Hogans. Defendants appealed.
In Hogan II, we held that under the modified amended judgment, the developers' obligation to pay damages does not mature "until the Hogans return the . . . property"; we held the same to be true for the Engstrom defendants. (Hogan II, supra, at pp. 29-30.) Indeed, we observed that until the Hogans returned the home, it could not even be considered a "money judgment" for the purposes of interest. (Id. at p. 25.)
Once the Hogans received the court deposit, the Engstroms demanded that the Hogans provide an acknowledgement of satisfaction of judgment. The Hogans objected, insisting the Engstroms (1) demonstrate that their (new) attorney had formally appeared as counsel of record, and (2) withdraw two pending appeals, including one appealing the trial court's order to release the deposit. After advising the Hogans that their attorney had substituted as counsel of record, the Engstroms withdrew the appeals and served a new demand for acknowledgement of satisfaction of judgment (the Engstrom demand).
The Judicial Council form, as completed by the Engstroms, requested a "full" satisfaction of judgment as to the following judgment debtors: "Clayton Engstrom, Jr. dba Signature Properties, Inc., and Mary Engstrom dba Signature Properties, Inc." Although nothing on the form indicates that the judgment obligations of any other defendant (such as the developer defendants) are satisfied, the Hogans objected that the Engstroms had only "partial[ly]" satisfied the judgment, and refused to sign the satisfaction of judgment.
The Engstroms made a motion to compel the Hogans to provide an acknowledgement of satisfaction of judgment under section 724.010 et seq. and, arguing that the refusal to provide such an acknowledgement was "without just cause," sought a statutory award of damages. (§§ 724.010, 724.030, 724.050.)
On the same date that the motion was filed, the court ordered the parties to meet and confer and engage in good faith efforts to informally resolve the dispute. The record does not indicate whether this occurred.
The Hogans opposed the motion. They asserted they were entitled to "complete relief," that the foreclosure rendered some of the offsets the jury had awarded to the developers "no longer enforceable," and that "the amount of consequential damages needs to be recalculated" in light of "supervening circumstances." They also argued that the manner of the payment invalidated the tender, because there was no legal basis for making a court deposit, which was made under "false pretense," and because the payment came from the court, not directly from the Engstroms. In addition, they cited the Engstroms' prior failed attempts to obtain satisfaction of judgment, and argued the pending appeals (by the developers) deprived the trial court of jurisdiction to hear the motion under section 916. Finally, the Hogans asserted the requested damages award, consisting of the Engstroms' claimed fees and costs, was inflated, unreasonable, and subject to a right of offset for the fees and costs the Hogans have incurred litigating this action, as well as relief they were pursuing in related litigation.
At the hearing, the Hogans argued they had incurred significant fees in reviewing the Engstroms' "frivolous" appeals and intended to move for sanctions, and asked the court to defer ruling on the motion. The developers appeared at the hearing and supported the court's tentative decision to grant the Engstroms' motion but objected to the tentative ruling's observation that the judgment was not satisfied as to the developers. The court agreed that this language was unnecessary, modified the tentative ruling to strike it, and affirmed its tentative ruling to grant the motion in all other respects.
In its written order, the court stated that the judgment was satisfied in full as to the Engstroms and, because the Hogans had no just cause for their refusal to execute the requested acknowledgement, an award of statutory damages was appropriate. It also concluded that the Engstroms' fees and costs were reasonable and awarded them $6,315.
II. DISCUSSION
We review de novo the court's interpretation of the applicable statutes and utilize the substantial evidence standard in reviewing the court's factual findings. (Jhaveri v. Teitelbaum (2009) 176 Cal.App.4th 740, 748-749 (Jhaveri).) As to the latter, we presume the existence of every fact the finder of fact could reasonably deduce from the evidence in support of the judgment or order; on matters as to which the record is silent, we indulge all intendments and presumptions in support of the judgment or order; and error must be affirmatively shown. (Ibid., citing authorities.) The appellant has the burden to demonstrate there is no substantial evidence to support the findings under attack. (Ibid., citing Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) As to the decision to award damages and the appropriate amount of such damages, we review for an abuse of discretion. (See George S. Nolte Consulting Civil Engineers, Inc. v. Magliocco (1979) 93 Cal.App.3d 190, 195 (Nolte) [construing prior version of statute].)
A. The Statutes Governing Satisfaction of Judgment
The Hogans contend the trial court erred in construing and applying the statutes governing satisfaction of judgment. The statutory scheme provides, "A money judgment may be satisfied by payment of the full amount required to satisfy the judgment or by acceptance by the judgment creditor of a lesser sum in full satisfaction of the judgment." (§ 724.010, subd. (a).) A judgment debtor may demand an acknowledgement of satisfaction of judgment by "serv[ing] personally or by mail on the judgment creditor a demand in writing that the judgment creditor do one or both of the following: [¶] (1) File an acknowledgment of satisfaction of judgment with the court. [¶] (2) Execute, acknowledge, and deliver an acknowledgment of satisfaction of judgment to the person who made the demand." (§ 724.050, subd. (a).) If the judgment has been satisfied, the judgment creditor "shall comply with the demand not later than 15 days after actual receipt of the demand." (Id., subd. (c).)
There is a remedy for a judgment creditor's failure to comply: "the person making the demand may apply to the court on noticed motion for an order requiring the judgment creditor to comply with the demand." (§ 724.050, subd. (d).) "If the court determines that the judgment has been satisfied and that the judgment creditor has not complied with the demand, the court shall either (1) order the judgment creditor to comply with the demand or (2) order the court clerk to enter satisfaction of the judgment." (Ibid.) If the court finds that the judgment debtor's refusal to provide an acknowledgement of satisfaction was without just cause, "the judgment creditor is liable to the person who made the demand for all damages sustained by reason of such failure and shall also forfeit one hundred dollars ($100) to such person." (Id., subd. (e).) Such amounts may be sought by motion or in an action. (Ibid.)
Partial satisfaction of judgment is governed by similar, but not identical, rules. When a judgment is partially satisfied, a judgment debtor may demand an acknowledgement of partial satisfaction be executed and delivered—but there is no provision for filing the acknowledgement with the court. (§ 724.110, subd. (a).) If the judgment creditor does not timely provide an acknowledgement, the judgment debtor may move to compel; however, unlike the provisions governing full satisfaction, the statute makes no provision for recovery of damages sustained because of the judgment creditor's failure to provide an acknowledgement of partial satisfaction of judgment. (Id., subd. (b).)
B. The Realtors were Entitled to Acknowledgement of Full —Not Partial—Satisfaction of Judgment
The Hogans primarily challenge the order compelling entry of satisfaction of judgment as to the Engstroms on the grounds that the developers—different parties with distinct obligations under the judgment—had not paid their share of damages; thus, they argue, the Engstroms were only entitled to a partial satisfaction of judgment. They also contend the Engstrom demand failed to preserve the Hogans' rights in the judgment rendered against the developer defendants and/or to indicate that the judgment was satisfied solely as to the Engstroms' liability.
The Hogans' arguments are not well taken. While it is generally accepted that satisfaction of an entire debt by one tortfeasor extinguishes the obligation as to all others, this rule functions as a limitation on the plaintiffs' recovery. (5 Witkin, Summary of Cal. Law (11th ed. 2017) Torts, § 177, pp. 312-313; see also Milicevich v. Sacramento Med. Ctr. (1984) 155 Cal.App.3d 997, 1003 [prevention of judgment creditor from obtaining double recovery].) The Hogans cite to no authority, and we find none, supporting their contention that the single judgment rule means that only one full satisfaction of judgment may be entered in a case, and then only once all of the judgment debtors have satisfied their obligations under the judgment.
The Hogans also argue that the Engstrom demand failed to preserve their rights against other judgment debtors and would somehow allow the developer defendants (who had not paid on the judgment) to be released "for any liability connected to the rescission . . . ." The argument defies reality, as the Engstrom demand clearly conveys the intention to obtain satisfaction only for the Engstroms, who are the only persons listed as "the judgment debtor being fully or partially released." To the extent the term "full satisfaction" was ambiguous, any potential confusion was resolved in section 4 of the demand, which plainly limited satisfaction to the enumerated parties (the Engstroms). As the Hogans admit, "[a] release of one of two or more joint debtors does not extinguish the obligations of any of the others . . . ." (Quoting McCall v. Four Star Music Co., supra, 51 Cal.App.4th at p. 1399.) Thus, the contention that the Engstrom demand somehow impaired the Hogans' rights in the judgment against the developers is entirely unsupported.
The Hogans also argue that to ensure the parties' intent was clear, "the words 'in full satisfaction of judgment debtor's pro rata liability on the judgment' should be added" to the acknowledgement. (See McCall v. Four Star Music Co. (1996) 51 Cal.App.4th 1394, 1401.) However, we believe that here, as required by McCall, "the intent was clearly indicated" to release only the Engstroms, such that the additional language quoted in McCall was not necessary. (Ibid.) That intent was also clearly communicated during the parties' pre-motion meet and confer correspondence, in the realtors' motion to compel, and ultimately, in the trial court's order, which found that the "judgment, as to the moving parties, is satisfied in full . . . ." and directed the Hogans "to execute and deliver a duly notarized acknowledgment of satisfaction of judgment, as to the moving parties, within 30 days." (Italics added.)
Nor can the Hogans' ill will towards defendants or their suspicions regarding the defendants' motives and ultimate litigation objectives alter the terms of the demand for acknowledgement of satisfaction or change their legal effect.
This argument is also dispensed with by our holding in Hogan V that because the Hogans never complied with the judgment's condition precedent requiring them to return the property, the Hogans' right to receive restitution and damages under the judgment never matured. (Hogan V, supra, at p. 14.) That is, when the Engstroms tendered their demand, the Hogans had no right to payment from the developers; thus, they had no basis for contending that a partial satisfaction, as opposed to a full satisfaction, was appropriate.
The Hogans' interpretation of the applicable statutes is also unsupported by any legal authority. When a joint tortfeasor has satisfied the full extent of its judgment liability, it is entitled to a satisfaction of judgment (not a partial satisfaction), regardless of the other debtors' unsatisfied liabilities. (See, e.g., Cal. Judges Benchbook, Civ. Proc. After Trial (CJER 2017) (Judges Benchbook) § 9.8 [so long it is made clear that the judgment remains in effect as against the other joint debtors, "[a] judgment creditor may file an acknowledgment of satisfaction of judgment with respect to the satisfying debtors only and may have the balance due on the judgment remain in full force and effect as to the other debtors."], italics added.)
Security Pacific National Bank v. Lyon (1980) 105 Cal.App.3d Supp. 8 (cited in the Judges Benchbook) is in accord. There, a plaintiff bank obtained a default judgment against defendant husband, who then appealed. Former codefendant wife did not join in the husband's appeal because the plaintiff bank had filed a "full satisfaction of judgment" as to her, since she had paid her share of the loan balance. (Id. at p. 10, fn. 1.) The satisfaction indicated the plaintiff's intent "to have the balance due on the judgment to remain in full force and effect as to the [husband] defendant." (Ibid.) Although, as here, the judgment was not fully satisfied by all defendants, the Court of Appeal observed that the entry of full satisfaction as to the wife was "a proper use of the satisfaction of judgment procedure." (Ibid.)
Jhaveri, supra, 176 Cal.App.4th 740, relied upon by the Hogans, is inapposite. There, the settling party (Dubois) did not pay 100 percent of his share of liability under the judgment, nor did he pay 100 percent of the amount the plaintiffs later agreed to accept in settlement in lieu of his liability in that case and another. (Id. at pp. 744-745.) Instead, he paid only a small portion of the agreed settlement amount. (Id. at pp. 747-748.) Because Dubois' settlement payment was less than the joint and several liability attributed to him in the settlement, he was entitled to only a partial satisfaction. Here, however, there is no dispute that the Engstroms' deposit was equal to their maximum liability under the judgment ($65,000 plus accrued interest to the date of the deposit).
Passanisi v. Merit-McBride Realtors, Inc. (1987) 190 Cal.App.3d 1496 is also inapplicable. It holds that when there was a surplus after a judicial foreclosure, the debtors were entitled to litigate the amount of the surplus via a motion to compel the acknowledgment of satisfaction or partial satisfaction of judgment. (Id. at p. 1513.)
Nor do the statutory language or the legislative committee comments discussed by the Hogans support their contention that they were only obligated to acknowledge partial satisfaction. In sum, the Hogans' contention that "partial satisfaction" was a "better fit" is not supported by any legal authority.
The Hogans repeatedly rely upon Lacher v. East County Investigations (Cal.Ct.App. Dec. 17, 2007) No. D048386, 2007 WL 4377032, an unpublished opinion. (Cal. Rules of Court, rule 8.1115(a).) Although the Hogans are in propria persona, they must follow the same procedural rules as represented litigants. (Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1284-1285.)
The Hogans' position also defies common sense and undermines the policy reasons for requiring satisfaction. An acknowledgement of satisfaction of judgment not only provides a conclusive ending to the litigation as to the satisfying party (see, e.g., Schwing, 2 Cal. Affirmative Def. (2d ed. 2017) § 42:18), it also allows that party to prove to third parties (such as potential lenders, employers, and business partners) that it has fully satisfied the judgment, and to obtain the release of any liens recorded against the judgment debtor's real property or filed with the Secretary of State against the debtor's personal property. (See, e.g., §§ 724.060, subds. (a)(3), (6), (7) [specific requirements pertaining to recorded abstracts and notices filed with the Secretary of State]; 697.400, subd. (a) [release of lien on real property], 697.640, subd. (a) [release of lien on personal property].) Without such proof, the debtor cannot conduct its affairs free of the cloud cast by the judgment over its business dealings and property rights. (See Nolte, supra, 93 Cal.App.3d at p. 194 [observing that where a judgment remains technically unsatisfied, it may have the effect of "impairing the debtor's credit, deterring others from trading with the debtor, or restraining the alienation of property subject to the judgment"].) The fact that a different defendant, with independent obligations under the judgment, may not have satisfied its obligations is irrelevant to these purposes. Under these circumstances, an acknowledgement that the Engstroms only "partially" satisfied the judgment (particularly in the manner proposed by the Hogans here) would be inaccurate and would not provide the Engstroms with the relief to which they are entitled under the statute.
The Hogans also argue that this decision involved the court's exercise of its equitable discretion, which it abused in granting the motion to compel. This contention is problematic because we review the court's construction of law de novo and its factual findings under a substantial evidence standard. (See § II, p. 5, ante.) Only the question of damages is discretionary. (Ibid.)
We also take issue with the Hogans' suggestion that in light of changed circumstances (including the foreclosure) and the Engstroms' conduct in the litigation (which the Hogans characterize as collusive and duplicitous), the court was free to weigh the equities and modify defendants' obligations under the judgment. The Hogans' authorities have no connection whatsoever with the issues presented here. (See Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1450 [probate case; trial court decision not an abuse of discretion]; Blank v. Kirwan (1985) 39 Cal.3d 311 [decision to dismiss for failure to prosecute was not an abuse of discretion]; Bailey v. Taaffe (1866) 29 Cal. 422, 427 [order setting aside judgment constituted abuse of discretion]; Children's Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 777 [review of the amount of fees sought in a fee application under section 1021.5 is reviewed under an "abuse of discretion" standard], disagreed with on other grounds in Asante v. California Dept. of Health Care Services (9th Cir. 2018) 886 F.3d 795, 802, fn. 14.) To the extent the Hogans assert that the trial court abused its discretion by failing to reweigh the equities and unilaterally modify the Engstroms' liability under the judgment, we found in Hogan V that the trial court lacked authority to do so. (See Hogan V, supra, at pp. 1921.)
C. The Hogans Lacked "Just Cause" for Refusing to Acknowledge Satisfaction
When a judgment creditor has refused to comply with the demand for full satisfaction of judgment, and upon motion the court finds that the judgment debtor's failure was "without just cause," "the judgment creditor is liable to the person who made the demand for all damages sustained by reason of such failure and shall also forfeit one hundred dollars ($100) to such person." (§ 724.050, subd. (e).)
The trial court found no "just cause" for the Hogans' failure to acknowledge full satisfaction of judgment because, "as between Plaintiffs and the [Engstroms], now that the [Engstroms] have dismissed their appeals, there remains nothing left to be determined except possibly the Plaintiffs' recovery of costs on appeal per the order of the appellate court." The Hogans challenge this finding and the court's decision to award the Engstroms their reasonable fees and costs.
The Engstroms paid all of the monies they owed under the modified amended judgment. We held in Hogan I that the Engstroms were jointly and severally liable for $65,000 of the consequential damages awarded (Hogan I, supra, at pp. 54, 57) and in our subsequent opinions, we soundly rejected the Hogans' various attempts to obtain additional damages, interest, fees and costs. (See generally Hogan II & Hogan IV.) The Hogans have identified no other basis for finding the Engstroms had any additional obligations under the judgment. Nor do the Hogans dispute that in 2009, the Engstroms deposited $65,000 plus accrued interest with the court in trust for the Hogans.
The Hogans contend they rightly refused to sign the Engstrom demand because the realtors' attorney was not yet counsel of record. However, even assuming this is a valid basis for refusal (which we doubt), the Engstroms resolved that issue before presenting a second demand which is the subject of this appeal. The Hogans' argument that two Engstrom appeals were then pending was similarly resolved at the time the Engstroms' second (operative) demand was served.
The Hogans also suggest that they were justifiably wary of signing the Engstrom demand because "the status of a rescission judgment after a foreclosure" was uncertain. First, they argue that after a foreclosure, the law presumes the rescinding buyer received nothing for its consideration, suggesting that the offsets the jury previously assessed against them at trial were no longer owed. However, the authorities cited for this proposition are inapposite, as they involved purchasers whose default was the result of seller misrepresentations. (See Garrett v. Perry (1959) 53 Cal.2d 178, 182-186; Feckenscher v. Gamble (1938) 12 Cal.2d 482, 500.) Nor do these cases address whether the trial court has authority, after judgment, to unilaterally modify the substantive relief awarded in the judgment.
The Hogans do not argue that defendants' fraud somehow caused them to default on their mortgage obligations. And as we concluded in Hogan V, under the modified amended judgment, the developers' obligation to assume the outstanding mortgage debt never matured. (Hogan V, supra, at pp. 21-22.)
The Hogans discuss other authorities (such as former Code of Civil Procedure section 675), the relevance of which is not explained or readily apparent. (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 ["[t]he absence of cogent legal argument or citation to authority allows this court to treat the contention as waived"].)
The Hogans have not shown that the trial court abused its discretion in concluding their refusal to acknowledge full satisfaction of judgment was without "just cause" or in awarding to the Engstroms the damages proximately caused by the Hogans' refusal.
The Hogans do not challenge the amount of damages awarded in their opening brief on appeal and raise it only in passing, without citation to the record or authority, in their reply brief. We treat this argument as waived. (Children's Hospital & Medical Center v. Bonta, supra, 97 Cal.App.4th at p. 777.) --------
III. DISPOSITION
We affirm the trial court's order in all respects. As the Engstroms were entitled to a full satisfaction of judgment, this finally concludes the Hogans' litigation against the Engstroms with regard to the Gardenview property.
Respondents' motion for sanctions is denied. Respondents shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
/s/_________
Miller, J. We concur: /s/_________
Richman, Acting P.J. /s/_________
Stewart, J.