Opinion
NOT TO BE PUBLISHED
APPEAL from orders of the Superior Court of Los Angeles County No. BP097671, Michael I. Levanas, Judge.
Hoffman, Sabban & Watenmaker and Kenneth S. Wolf for Plaintiff and Appellant Claudia E. T. Kleefeld.
Hahn & Hahn and Clark R. Byam for Plaintiff and Appellant Bessemer Trust Company of California, N.A.
Oldman, Cooley, Sallus, Gold, Birnberg & Coleman, Marshal A. Oldman and Susan R. Izenstark for Defendant and Respondent.
CHAVEZ, J.
Claudia E. T. Kleefeld (Kleefeld) and the Bessemer Trust Company of California, N.A. (Bessemer) (collectively “appellants”) appeal from orders of the probate court directing respondent Jilliene Taper Marrero (respondent) to pay Kleefeld $18,600 for indemnity and enforcement legal fees and costs reasonably incurred in this action, and to pay Bessemer $20,000 for indemnity and enforcement legal fees and costs reasonably incurred in this action. We affirm the order of the probate court.
In their notice of appeal, appellants indicated that they intended to appeal only from the award of “enforcement fees and costs” -- not from the award of indemnity fees and costs. Because the two amounts are included as one award, appellants have appealed from the entire order. However, appellants’ arguments only concern the enforcement fees and costs.
CONTENTIONS
Appellants contend that the probate court erred in awarding appellants only a portion of their enforcement fees and costs because the settlement agreement between the parties provides for an award of “actual” costs and expenses, including actual attorney fees. If this court determines that “actual” costs and expenses need not be awarded, appellants ask that the trial court’s order be reversed and remanded for an explanation of the basis by which the court arrived at the amounts set forth in the order.
FACTUAL AND PROCEDURAL BACKGROUND
Kleefeld is the beneficiary of three irrevocable trusts created by her grandfather, S. Mark Taper (the Taper trusts). Respondent was the trustee of the Taper trusts from 1987 until she was suspended by court order in November 2007. Bessemer is currently acting as trustee of the Taper trusts. (See Rutter, Hobbs, & Davidoff Incorporated v. Bessemer Trust Company of California, N.A., as Trustee, etc. (Nov. 24, 2009, B209835) [nonpub. opn.] at p. 3 (Rutter, Hobbs).)
Rutter, Hobbs & Davidoff Incorporated (RHD) represented respondent in her capacity as trustee throughout the pendency of the surcharge actions. After its petitions for unpaid fees and costs were denied, RHD appealed. In Rutter, Hobbs, this court issued an opinion reversing the orders denying RHD’s petitions for payment.
During the time that RHD’s petitions for payment were pending, appellants and respondent entered into a “Global Settlement Agreement” (GSA), dated June 3, 2008. As part of the GSA, respondent agreed to indemnify appellants for defending the RHD claim for attorney fees.
Paragraph 24 of the GSA provides that an award of attorney fees will be made to the prevailing party in any action arising out of the agreement:
“In any action between the parties arising out of or in relation to this Agreement, including any collection attempts should Payment not be timely made, the prevailing party in such action will be awarded his or her actual costs and expenses, including actual attorneys’ fees.”
The GSA was set forth verbatim in an order approving settlement filed on October 2, 2008.
On April 8, 2009, Kleefeld filed a “Motion for Order Directing Reimbursement of Fees and Costs per Indemnity.” Kleefeld claimed that she and Bessemer had incurred costs and attorney fees in “dealing with the RHD claim and appeal.” The nature of such fees and costs were set forth in the attached declarations of Kenneth S. Wolf and Clark Byam. Kleefeld argued that both she and Bessemer had made good faith attempts to obtain reimbursement from respondent.
Mr. Wolf represented Kleefeld during the proceedings; Mr. Byam represented Bessemer.
Respondent filed an opposition to the motion, and filed evidentiary objections to the declarations. A hearing was set for May 18, 2009. At the hearing, respondent requested and was granted an evidentiary hearing, set for August 12, 2009.
The hearing took place on August 12, 2009, September 1, 2009, and September 2, 2009. The court took the matter under submission and on September 23, 2009, the court requested additional points and authorities on five specific questions. The parties complied, filing their additional points and authorities on October 9, 2009.
On November 16, 2009, the court filed its original statement of decision. The court found that the legal services provided by counsel for Kleefeld and Bessemer were “incurred in good faith and in the exercise of a reasonable discretion.” Pursuant to Civil Code section 1717, the court found that Kleefeld and Bessemer were the prevailing parties in the dispute. It awarded Kleefeld $10,000 of the $14,400 indemnity costs and fees that she requested, and awarded Bessemer $12,000 of the $16,076 indemnity costs and fees that it requested. Pursuant to Civil Code 1717, subdivision (a), the court further awarded Kleefeld $13,500 as reasonable enforcement costs and fees, and awarded Bessemer $8,000 as reasonable enforcement costs and fees.
On November 30, 2009, Kleefeld and Bessemer filed a joint motion for reconsideration of the statement of decision for the sole purpose of clarification pursuant to Code of Civil Procedure section 1008. Kleefeld and Bessemer sought clarification of how the court arrived at the amounts awarded.
On December 10, 2009, respondent filed a motion for new trial and new statement of decision. Respondent argued that the court had awarded Kleefeld more than she requested in indemnity fees. Respondent also contested the trial court’s determination that Kleefeld was the prevailing party. The court, on its own motion, set a hearing date of December 28, 2009.
On January 5, 2010, after the hearing, the court filed an amended statement of decision (amended SOD). The court found that Kleefeld reasonably incurred indemnity fees and costs in the amount of $8,400 and Bessemer reasonably incurred indemnity fees and costs in the amount of $12,000 related to their role in the RHD appeal. The court again relied on Civil Code section 1717 in determining that Kleefeld and Bessemer were the prevailing parties, entitled to contractual enforcement fees. The court revised its enforcement award, awarding Kleefeld reasonable fees and costs of $10,200 and awarding Bessemer reasonable fees and costs of $8,000.
Kleefeld’s counsel drafted an order, which was filed February 9, 2010. Notice of entry of the order was dated February 16, 2010. Kleefeld filed her notice of appeal on April 15, 2010, and Bessemer joined on April 16, 2010.
DISCUSSION
I. Actual costs and expenses
A. Appellant’s argument
Appellants ask that we interpret the language of the GSA, which was included in the court’s order approving settlement, to require that the court award them their “actual costs and expenses” disbursed for enforcement of the settlement agreement. Appellants assert that the express use of the word “actual” within paragraph 24 of the GSA shows that the parties specifically intended to avoid application of Civil Code section 1717, which permits only “reasonable” fees to be awarded to the prevailing party on a contract dispute. Appellants argue that, because they were entitled to their “actual” fees, the trial court was only permitted to inquire as to whether such fees were “unconscionable.”
Appellants argue in their opening brief that the court’s verbatim inclusion of the GSA in its order approving settlement renders the language of the GSA “law of the case.” In their reply brief, appellants concede that they used the term “law of the case” loosely, but insist that because the language of the GSA is part of a court order it controls subsequent proceedings seeking enforcement of the GSA. Appellants cite Conservatorship of Edde (2009) 173 Cal.App.4th 883, for the proposition that the settlement order is a final order. We decline to address the parties’ conflicting arguments about the doctrine of “law of the case, ” but agree that the language of the GSA is controlling over the questions presented in this appeal because it was agreed to by the parties and approved by the court.
Civil Code section 1717 specifies: “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... shall be entitled to reasonable attorney’s fees....”
Appellants explain that the GSA was the culmination of a long and arduous negotiation. The language relating to “indemnity fees” contained in paragraph 5(b) of the GSA uses the terms “fees and expenses” without use of the word “actual” to modify those terms. Thus, appellants admit, the court properly used a “reasonable fee” standard in assessing the award of indemnity fees. However, appellants argue, the parties used different language in connection with enforcement fees. In an action to enforce the terms of the GSA, the prevailing party is to recover his or her “actual costs and expenses, including actual attorneys’ fees.” Appellants insist that the use of the term “actual” was intentional and purposeful.
B. The trial court proceedings
Our review of the record indicates that appellants failed to preserve this issue for appeal. The parties did not brief or otherwise present to the trial court any argument regarding appellants’ current claims that the word “actual” serves to override the “reasonable” requirement set forth in Civil Code section 1717. In addition, appellants did not present to the trial court their present argument that their request for enforcement fees should be limited only by a determination of “unconscionability.” In fact, appellants conceded that their claims for enforcement fees were subject to the court’s analysis of the reasonableness of those claims.
The trial court made it clear to appellants that it felt it had an obligation to determine the reasonableness of attorney fees regardless of the language of the contract. Nevertheless, the court gave appellants the opportunity to fully address the meaning of the term “actual” as it related to enforcement fees:
“MR. WOLF: Your Honor, the reasonableness issue is only the indemnity claims. The enforcement claims are... actual because the settlement agreement in paragraph 24 specifically states that [in] any action to enforce the terms of the agreement, the prevailing party is entitled to actual attorneys’ [fees] and costs.
“THE COURT: Don’t you think the court also has the responsibility to determine reasonableness?
“MR. BYAM: Well, but contractually, the issue, I think, is a much different standard if, in fact, there’s an issue. It’s not an issue of reasonable. It’s whether the actual will be unconscious because when it was negotiated, when you negotiate those kinds of contracts
“THE COURT: Okay. Let me do this: you can start -- you can prepare or present your argument as to how the court should evaluate the different portions of the proposed billing, and I’ll be happy to hear further argument on that issue.
“MR. WOLF: That’s fine....”
The following day, having researched the issue, Mr. Wolf indicated that, “particularly in a probate court” which is “a court of equity, ” the court has “the ability to look to the reasonableness of the fees, even though it does say actual.”
The issue was raised again during the hearing on appellants’ motion for reconsideration of the statement of decision:
“THE COURT: [W]hy is it that if the court determines that... [appellants are] not entitled to all of their indemnity fees as requested and that’s a significant reduction, why shouldn’t that affect the court’s awarding enforcement fees?
“MR. WOLF: Well, I think there is a difference, your Honor. First of all, once you move away from the indemnity fees, which are defined under 5-b of the Global Settlement Agreement, you move to enforcement fees, which are defined under paragraph 24. Those are different because what the enforcement fees provision specifically says, and since I negotiated it, I know what went into that, it uses the term ‘actual attorneys’ fees.’
“THE COURT: The court always has to determine what’s reasonable.
“MR. WOLF: But let me offer this, your Honor: I think the reasonable issue goes to the question of were the actual fees incurred reasonable under the circumstances, not were the fees reasonable in a vacuum. Because if you don’t go to actual fees and compare that in terms of reasonability, then you’ve made a word, a very important word of the agreement meaningless. And I don’t think the court should be taking words out of -- you know, they have to give some meaning to that. It was negotiated, and I think it has to mean something.
“THE COURT: Let me just stop you there because I think what you’re saying is, because the language says ‘actual, ’ you’re saying it has to be actual, reasonable fees.
“MR. WOLF: No. In other words, the test is, are the actual fees reasonable.
“THE COURT: Okay. Are the actual fees reasonable. Okay. I understand that. But the question of prevailing party is really what I’m driving at.”
This exchange, set forth in full in appellants’ opening brief, shows Kleefeld’s counsel and the court in full agreement that a determination of reasonableness was required. The court established its obligation to determine reasonableness, and Mr. Wolf agreed that the court must determine whether the actual enforcement fees are reasonable. At no time did Mr. Wolf specifically argue that the word “actual” rendered the enforcement fees exempt from the reasonableness requirement of Civil Code section 1717.
In addition, the quoted exchange between the court and Kleefeld’s counsel undermines appellants’ argument that the trial court “ignored” the term “actual” as a modifier to “fees and costs” in the GSA and settlement order. Instead, the record reveals that the court considered the term and weighed counsel’s views on its meaning. The parties agreed with the court’s conclusion that a determination of reasonableness was necessary despite the use of the term “actual.” Therefore, the court had no reason to believe that the meaning of the phrase “actual costs and expenses, including actual attorneys’ fees” was in dispute.
A reviewing court ordinarily will not consider a challenge to a ruling if an objection could have been but was not made in the trial court. (In re S.B. (2004) 32 Cal.4th 1287, 1293.) This rule is “‘founded upon considerations of practical necessity in the orderly administration of the law and fairness to the court and the opposite party, and upon the principles underlying the doctrines of waiver and estoppel.’ [Citation.]” (Glendale Unified School Dist. v. Vista Del Rossmoyne Co. (1965) 232 Cal.App.2d 493, 496.) Appellants’ concession that the trial court should perform an analysis of reasonableness with respect to any claim for enforcement fees constitutes forfeiture of the issues of contractual interpretation that appellants have raised on appeal.
C. Contract interpretation
We have determined that appellants have forfeited their claim that the word “actual” in paragraph 24 of the GSA renders the award of enforcement fees exempt from Civil Code section 1717 and subject only to a determination of unconscionability. However, in this section, we conclude that even if appellants had preserved this issue for appeal, a de novo review of the contractual language does not support their interpretation of the phrase “actual costs and expenses, including actual attorneys’ fees.”
In determining the meaning of the phrase “actual costs and expenses, including actual attorneys’ fees, ” we are bound by the rules of contract interpretation. When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is reasonably susceptible to the interpretation urged. If the language is reasonably susceptible to the interpretation urged, the next question the court must address is what the parties intended the language to mean. (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 524.) Interpretation of a contract is solely a question of law unless the interpretation turns on the credibility of extrinsic evidence. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 799.)
“A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) “The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.” (§ 1638.) “The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (§ 1641.) In sum, the court must give a reasonable and commonsense interpretation of the language, “as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.” (§ 1643.)
Bearing these rules in mind, we find that, at the time the GSA was entered into, the parties did not intend that the word “actual” should be interpreted to avoid application of Civil Code section 1717. The parties agreed that the GSA would “in all respects be interpreted, enforced and governed by and under the laws of the State of California.” Civil Code section 1717 governs the application of contractual attorney fee provisions in the State of California, and specifies that a prevailing party on a contract which specifically provides for attorney fees is entitled to “reasonable” fees. Had the parties intended to avoid application of section 1717, they should have included an express waiver.
In addition, implicit in appellants’ argument is a request that we interpret “actual” costs and expenses to include “unreasonable” costs and expenses. Pursuant to Civil Code section 1643, it is our obligation to interpret the contract so that its meaning is both lawful and reasonable. An interpretation of the GSA which allows for an award of actual attorney fees, no matter how excessive or unwarranted, conflicts with our obligation under section 1643. We decline to interpret the contract to include such an absurd meaning.
Appellants argue that their award of “actual attorneys’ fees” should be limited only if the fees are found to be “unconscionable.” Appellants find the word “unconscionable” in rule 4-200(A) of the Rules of Professional Conduct, which provides that an attorney shall not charge or collect “an illegal or unconscionable fee.” Appellants provide no authority for their suggestion that the Rules of Professional Conduct should be applied in determining the intent of the parties to this contract. Nor do appellants provide any precedent wherein courts have used this standard in interpreting contractual attorney fee provisions. Therefore we reject this argument.
Our interpretation does not render the word “actual” to be meaningless, as appellants argue. The word “actual, ” as defined in Merriam-Webster, is: “existing in act and not merely potentially” (). Giving the word “actual” its ordinary meaning, the parties’ use of the term suggests that the prevailing party was limited to fees and costs actually incurred, without speculation as to future expenses or unbilled fees. The use of the term “actual” ensures that potential future costs and fees related to enforcement may not be awarded.
Appellants admit that, with regard to indemnity fees, the insertion of the term “reasonable” before the words “attorney fees and costs” would be superfluous, since the court “would always consider a ‘reasonable’ standard under Civil Code section 1717.” Appellants do not explain how the word “reasonable” is not also implicit in the enforcement fee provision. The word “reasonable” does not conflict with the word “actual.” In fact, the words “reasonable” and “actual” have been used together to describe an appropriate award of attorney fees. (See, e.g., Andre v. City of West Sacramento (2001) 92 Cal.App.4th 532, 536 [noting that, in inverse condemnation proceeding, plaintiff is entitled to reasonable attorney fees that are actually incurred].) There is no reason that the word “reasonable” should not be read into the enforcement fee provision of the GSA as well as the indemnity provision.
In sum, a de novo review of the language of the GSA reveals no intention to avoid the application of Civil Code section 1717. Nor does the insertion of the word “actual” into the clause regarding enforcement costs and expenses suggest that those costs and expenses must be paid regardless of their unreasonableness. The parties contracted under the laws of the State of California, which mandate that a court may only award contractual attorney fees to the extent that they are reasonable. The trial court did not err in analyzing the reasonableness of appellants’ actual enforcement fees in this matter.
We have determined that the trial court was correct in concluding that the GSA does not permit an award of unreasonable attorney fees and costs. Therefore, we do not address the parties’ conflicting arguments as to whether such a contract would violate public policy.
II. No abuse of discretion occurred and further explanation of the court’s order is not warranted
Appellants explain that the court’s original statement of decision left them unable to determine: (1) the amount of requested enforcement fees considered by the court in arriving at its decision, (2) the cut-off date the court considered in reviewing enforcement fees, or (3) the basis for the court’s enforcement fee award. Appellants argue that the amended SOD did not clarify any of these issues. Appellants insist that the award of only a portion of their enforcement fees constitutes an abuse of discretion, and that reversal is necessary in order to guide the court in making future enforcement fee awards.
Appellants cite Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 149 for the proposition that “[w]hen the record is unclear whether the trial court’s award of attorney fees is consistent with the applicable legal principles, we may reverse the award and remand the case to the trial court for further consideration and amplification of its reasoning. [Citation.]” However, such action is necessary only where the reviewing court is unable to determine whether an abuse of discretion has occurred. As set forth in In re Vitamin Cases (2003) 110 Cal.App.4th 1041, 1052, an attorney fee award is reversible only if the trial court’s action “‘“transgresses the confines of the applicable principles of law.”’”
In Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44 (Gorman), also cited by appellants, the court indicated, “[a] trial court’s award of attorney fees must be able to be rationalized to be affirmed on appeal.” (Id. at p. 101.) In Gorman, the Court of Appeal, “after much puzzlement and frustration, ” was “unable to surmise any mathematical or logical explanation for the trial court’s award of $416,581.37. Instead, the number appears to have been snatched whimsically from thin air.” (Ibid.) The award could not be justified by the plaintiffs’ request, the supporting bills, or the defendant’s opposition. In sum, the court was simply unable to ascertain a reasonable basis for the award. (Ibid.)
That is not the case here. The enforcement fees requested by appellants in their trial brief were as follows: enforcement fees and costs through May 31, 2009, of $14,620 for Kleefeld, and enforcement fees and costs through July 31, 2009, of $4,872.65 for Bessemer. Appellants indicated that they sought “Additional Enforcement Fees for [Kleefeld] from June 1, 2009 through trial and for Bessemer from August 1, 2009 through trial” which would be subject to proof at the time of trial.
In their motion for reconsideration of the trial court’s statement of decision, appellants set forth enforcement fees incurred by Kleefeld from April 1, 2009 through October 31, 2009, of approximately $45,000, and enforcement fees incurred by Bessemer from April 1, 2009 through October 31, 2009, of approximately $20,000. These numbers included amounts incurred after the evidentiary hearing, which ended September 2, 2009. These fees admittedly had “not been previously presented to the Court.” Appellants’ motion was denied. There is no indication that, at the time of the issuance of its amended SOD, the court had considered any enforcement fees accrued by appellants after the conclusion of the evidentiary hearing. In the absence of a specific motion for such fees, we assume the trial court did not consider them in reaching its decision. In fact, the court specified at the December 28, 2009 hearing that it did not intend to consider further evidence, and that it did not want any further argument on enforcement fees.
At the hearing the evidence indicated that, by that time, Bessemer’s enforcement fees and costs totaled approximately $16,000, and Kleefeld’s enforcement fees totaled approximately $37,000.
This evidence included bills which had been previously submitted to the court, as well as oral testimony regarding the approximate amounts accrued through the trial.
The court indicated in its amended SOD that it had reviewed the evidence presented on enforcement costs. It awarded Bessemer $8,000 and Kleefeld $10,200. While these amounts are significantly less than the parties requested, we cannot find an abuse of discretion or a violation of law under the circumstances. “The trial court is the best judge of the value of professional services rendered in its court, and while its judgment is subject to our review, we will not disturb that determination unless we are convinced that it is clearly wrong. [Citations.]” (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1134.) The only proper basis for reversal of an attorney fee award is “if the amount awarded is so large or small that it shocks the conscience and suggests that passion and prejudice influenced the determination. [Citation.]” (Ibid.)
The court’s award in this case is not so small as to shock the conscience. Thus, we do not disturb it. (See 11382 Beach Partnership v. Libaw (1999) 70 Cal.App.4th 212, 220.) Nor is the court required to make specific factual findings as to the basis of its decision. (California Common Cause v. Duffy (1987) 200 Cal.App.3d 730, 754.) When confronted with extensive legal bills, “courts are not required to identify each charge they find to be reasonable or unreasonable, necessary or unnecessary.” (Gorman, supra, 178 Cal.App.4th at p. 101.) “A reduced award might be fully justified by a general observation that an attorney overlitigated a case or submitted a padded bill or that the opposing party has stated valid objections.” (Ibid.) The court made a clear judgment as to the reasonableness of the resources expended on these proceedings when it stated: “This hearing has taken an enormous amount of time for what is a modest amount, given the resources that have been put to bear on this issue.”
Donahue v. Donahue (2010) 182 Cal.App.4th 259, is distinguishable. The case involved “some $5 million” in attorney fees charged against a trust on behalf of a former trustee in defending against the beneficiary’s allegations of self-dealing and conflict of interest. (Id. at p. 262.) The court considered the trustee’s fiduciary duties to act for the benefit of the trust, and determined that the court below had not undertaken sufficient “close scrutiny on questions of reasonableness, proportionality and trust benefit” in making its award of attorney fees. (Id. at p. 273.) The trustee had retained two major law firms to represent him concurrently and maintained a “spare-no-expense” strategy resulting in the extremely large award. The Court of Appeal expressed a sense that the trial court was “overly deferential” in its approach and essentially gave a “rubberstamp” to the request for attorney fees, effectively thwarting meaningful appellate review. (Id. at p. 271.) In the matter before us, there is no concern that the trial court exhibited an overly deferential attitude. Donahue does not convince us that further scrutiny of the trial court’s fee award is required.
Mr. Wolf also admitted that “the collection aspect of the fees, particularly from my office, are probably three times as great as the request for the indemnity to begin with.”
In the absence of an apparent abuse of discretion, a remand for an explanation of the court’s enforcement fee award is not warranted. We affirm the award.
DISPOSITION
The orders are affirmed. Respondent is entitled to her costs of appeal.
We concur: DOI TODD, Acting P. J., ASHMANN-GERST, J.