Opinion
NOT TO BE PUBLISHED
Appeal from judgment of the Superior Court of Los Angeles County No. GC307734, Joseph De Vanon, Judge. Affirmed and remanded with directions.
Diversity Law Group and Craig S. Hubble for Plaintiffs and Respondents.
Cathy Tao, in pro. per., for Defendant and Appellant.
CROSKEY, Acting P. J.
The buyers of a house chose not to go through with the purchase when their inspection revealed unexpected defects. They timely cancelled the sale. Pursuant to their purchase agreement, buyers were to be refunded their initial deposit. However, the seller refused to execute escrow cancellation instructions which would have resulted in the deposit being refunded to the buyers. The buyers brought suit against the seller for breach of contract and specific performance. Seven months later, the seller executed the cancellation instructions and the buyers were refunded their deposit. The buyers then sought, and were awarded, their attorney fees, as prevailing parties, pursuant to an attorney fee clause in the purchase agreement. The seller appeals, arguing that the escrow cancellation instructions executed by both parties contained a mutual release which extended to the claim for attorney fees. We disagree and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The relevant facts are undisputed.
On May 30, 2006, plaintiffs and respondents Lilly Kim and Matthew Tullis (“buyers”) executed a form entitled “Residential Purchase Agreement and Joint Escrow Instructions,” which constituted an offer to purchase a house owned by defendant and appellant Cathy Tao (“seller”). With their offer, buyers submitted a deposit of $30,000. Seller made a counter-offer, which did not affect the terms of the agreement in any way material to this appeal. The counter-offer was accepted on June 1, 2006. Communication of the acceptance was made on June 2, 2006.
Pursuant to the Residential Purchase Agreement, buyers had ten days to conduct all necessary inspections of the property. During that time, buyers could cancel the agreement. Pursuant to paragraph 14E of the agreement, if Buyer “gives written notice of cancellation pursuant to rights duly exercised under the terms of this Agreement, Buyer and Seller agree to Sign mutual instructions to cancel the sale and escrow and release deposits to the party entitled to the funds, less fees and costs incurred by that party. . . . Release of funds will require mutual Signed release instructions from Buyer and Seller, judicial decision or arbitration award. A party may be subject to a civil penalty of up to $1,000 for refusal to sign such instructions if no good faith dispute exists as to who is entitled to the deposited funds.” (Emphasis omitted.)
The Residential Purchase Agreement contained a mediation clause and an arbitration clause. It also contained an attorney fee clause. Paragraph 22 of the agreement states, “In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller . . . .”
Some, but not all, paragraphs of the Residential Purchase Agreement were designated as “the joint escrow Instructions of Buyer and Seller to Escrow Holder.” Specifically, paragraph 14E, governing the execution of cancellation instructions, was designated as a joint escrow instruction. Paragraph 22, the attorney fee provision, was not.
The buyers conducted their inspection of the property on June 8, 2006. They were concerned with the results of the inspection and sought additional inspections. Attempts to resolve the dispute with seller failed, and buyers cancelled the transaction. On June 12, 2006, buyers had the escrow company prepare cancellation instructions, which buyers executed and forwarded to seller for her signature. The cancellation instructions provided, in pertinent part, “The undersigned hereby mutually agree and instruct Escrow Holder to cancel this escrow and Purchase Agreement in its entirety. Upon cancellation of this escrow all parties hereby release each other, Real Estate Broker, if any, Mortgage Broker, if any, and Landmark Escrow and its officers from any and all liability and/or responsibility both legally and equitable in connection therewith and hold said entities or individuals harmless from any and all respects relating to this transaction and they do hereby, both jointly and severally, indemnify Landmark Escrow against any loss, cost or liability, of any kind or nature, including reasonable attorneys fees that it might sustain in complying with these instructions.” The cancellation instructions provided that, upon receipt of cancellation instructions executed by all parties, buyers’ $30,000 deposit would be refunded to them.
The cancellation instructions also indicated that if the deposit had been placed in an interest bearing account, buyers would receive any interest earned thereon.
Seller refused to execute the cancellation instructions. On June 19, 2006, buyers’ counsel wrote seller informing her of her obligation to execute the cancellation instructions. The letter threatened “legal action” if seller failed to sign, and indicated, “Should legal action be necessary, you will be liable for all attorney’s fees and costs and penalties incurred as a result, pursuant to the terms of the Agreement.” Seller was informed that if she did not sign and return the cancellation instructions within five days, legal action would be initiated.
On June 26, 2006, seller responded, stating that she did “not consider [buyers’] stated reason for refusing to proceed with the purchase of [the] home to be a valid lawful reason.” She indicated that she had since sold the home “at a substantially lower price” and is therefore entitled to the $30,000 “as liquidated damages.” She refused to execute the proposed cancellation instructions.
Seller is licensed attorney. Although she briefly retained an attorney at some point during the pre-litigation phase of this dispute, she acted in pro. per. before the trial court and in this appeal. Buyer Kim is also an attorney.
On July 7, 2006, an unsuccessful mediation was held. Attempts to arbitrate were unsuccessful, due to the parties’ inability to agree on an arbitrator.
On September 6, 2006, buyers filed the instant action. The complaint alleged three causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) specific performance. Buyers alleged that seller breached the contract, and the implied covenant, by not executing the mutual cancellation instructions. Sellers sought $30,000 in damages, plus interest, plus the $1,000 civil penalty. Sellers also sought their attorney fees.
Similarly, the specific performance cause of action sought specific performance of the requirement to execute the mutual cancellation instructions.
On September 8, 2006, buyers’ counsel wrote seller, indicating that, given seller’s refusal to agree to an arbitrator, buyers had no option but to file suit. Buyers’ counsel attached a copy of the complaint to his letter, along with a Notice and Acknowledgement and Receipt of service. The letter again indicated that, should buyers prevail in the action, they would “seek recovery of costs and attorney’s fees that could far exceed their escrow deposit.” Seller was urged to “simply execute the mutual cancellation instructions” to resolve the matter.
Seller did not execute the cancellation instructions and the case proceeded. In February 2007, buyers served seller with discovery requests. Seller failed to timely respond. On April 3, 2007, buyers’ counsel wrote seller a letter, indicating that if complete responses were not received by April 9, 2007, buyers would file a motion to compel and seek sanctions.
On April 6, 2007, seller executed the escrow cancellation instructions and forwarded them directly to the escrow holder. She wrote buyers’ counsel, indicating that she had done so. In her letter, she asserted that, now that both parties had executed the escrow cancellation instructions, the “mutually binding provisions” of the cancellation instructions “amend the terms of the earlier” residential purchase agreement. She specifically called attention to the language of the cancellation instructions indicating that, upon cancellation of the escrow, all parties release each other from liability. In reliance on that language, seller requested buyers to file a request for dismissal with prejudice of the pending action.
The escrow was cancelled and buyers received their $30,000 deposit. Buyers did not filed a request for dismissal. Instead, they filed a motion for attorney fees and costs. Buyers argued that seller’s eventual execution of the mutual cancellation instructions rendered them the prevailing party. Buyers reasoned that they had recovered “virtually” all amounts they had sought, and that the “litigation effectively has been rendered moot.” Buyers relied on the clause in the Residential Purchase Agreement providing that the prevailing party was entitled to attorney fees.
The record does not indicate whether the $30,000 deposit had been placed in an interest bearing account and, therefore, whether buyers received any interest on their funds.
Buyers indicated that, given the execution of the mutual cancellation instructions, “it would not be practical for [buyers] to continue to pursue this action solely to recover the $1,000 penalty.”
Seller opposed the motion for attorney fees. She did not argue that buyers were not the prevailing party, nor did she argue that the amount sought for attorney fees was unreasonable. Seller’s sole basis for opposition was that the mutual cancellation instructions “expressly released [the parties] from any and all liability in connection with the failed escrow,” and that this release extended to the claim for attorney fees. Seller noted that buyers had accepted the $30,000 refunded from escrow, and therefore argued that buyers had received the benefit of the release and must therefore be bound by its terms.
Buyers filed a reply memorandum, in which they argued that their execution of the escrow instructions was in June 2006 – long before they had incurred any of the attorney fees which they sought in this case. Buyers argued that their execution of the release in June 2006 did not operate to release their future claim for attorney fees.
A hearing was held on the motion. The trial court entered judgment in favor of buyers in the amount of $18,261.47 for costs and attorney fees. Seller filed a timely notice of appeal.
Seller has chosen not to designate the reporter’s transcript of that hearing as part of the record on appeal.
CONTENTIONS OF THE PARTIES
On appeal, seller argues the award of attorney fees was improper on two bases. First, she argues that the release language contained in the mutual cancellation instructions bars buyers’ claim for attorney fees. Second, she argues that the trial court had no jurisdiction over this matter, as any disputes should have been resolved by arbitration, pursuant to the arbitration clause in the Residential Purchase Agreement. We reject both arguments.
DISCUSSION
1. The Arbitration Clause is Not a Jurisdictional Bar
Before discussing seller’s main argument, we briefly address her contention that the trial court lacked jurisdiction due to the arbitration clause in the Residential Purchase Agreement. The contention is meritless. “[A]n arbitration provision does not oust the court of jurisdiction to hear the matter but merely means if one party chooses to arbitrate, a petition may be filed to stay the proceedings, order arbitration and then confirm the award.” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 45.) No petition to arbitrate was filed; and the trial court was not deprived of jurisdiction by the existence of the arbitration clause alone.
2. Standard of Review
“We review de novo a determination of an award of attorney fees under a contractual provision where, as here, no extrinsic evidence has been offered to interpret the contract, and the facts are not in dispute.” (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 1177.) Here, there is no dispute that: (1) buyers are the prevailing party; (2) paragraph 22 of the Residential Purchase Agreement entitles the prevailing party to recover reasonable attorney fees; and (3) buyers’ attorney fees are reasonable. The sole disputed issue is whether the release language of the mutual cancellation escrow instructions precludes the buyers from recovering their fees under paragraph 22 of the Residential Purchase Agreement.
3. The Release Does Not Bar the Award of Attorney Fees
We consider the language of the release on which seller relies. The release states: “Upon cancellation of this escrow all parties hereby release each other . . . from any and all liability and/or responsibility both legally and equitable in connection therewith.” The “therewith” at the end of the sentence refers to the subject of the sentence: the escrow. In other words, the parties release each other from all liability or responsibility in connection with the escrow. This fact is dispositive because the attorney fee clause in the Residential Purchase Agreement was not incorporated into the joint escrow instructions. In short: (1) buyers sued seller for breaching her duty under both the Residential Purchase Agreement and the escrow; (2) the Residential Purchase Agreement provided for an award of attorney fees to the prevailing party; and (3) the parties released each other from their obligations under the escrow. The language of the release does not impact obligations arising solely under the Residential Purchase Agreement, and therefore can have no effect on the prevailing party’s right to attorney fees. The trial court therefore did not err in awarding buyers their attorney fees. Buyers are similarly entitled to their reasonable attorney fees incurred on appeal.
DISPOSITION
The judgment is affirmed. Seller is to pay buyer’s costs and attorney fees on appeal. The matter is remanded to the trial court for a determination of these amounts.
We Concur: KITCHING, J. ALDRICH, J.