Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. 1-07-CV079571.
PREMO, J.
In this landlord-tenant dispute the trial court entered judgment in favor of the landlord, plaintiff Rudy D. Martin, awarding damages of $23,000 and attorney fees and costs of $374,913. The tenant, defendant Carl J. Taylor, had stipulated to the damages portion of the judgment but opposed plaintiff’s attorney fees motion on the ground that the written lease agreement, the only basis for a fee award, was unenforceable. The trial court rejected the argument, refused to take judicial notice of defendant’s evidence purporting to show the alleged invalidity, and doubled the documented amount of attorney fees based upon defendant’s litigation tactics, which had greatly prolonged and complicated the matter.
On appeal, defendant again argues that the lease agreement is unenforceable. He does not challenge the reasonableness of the fee award. We conclude that the enforceability of the lease agreement was resolved by settlement of the damages portion of the case. Accordingly, we shall affirm the judgment.
I. Factual and Procedural Background
Plaintiff filed this action on September 8, 2005, in the limited division of the superior court. He sought damages for back rent, utilities, and damage to the real property defendant had leased from plaintiff’s predecessor in interest, the Durness Corporation (Durness). The case was subsequently reclassified to the unlimited division of the superior court. Plaintiff’s third amended complaint contains causes of action for breach of contract, fraud, trespass, and negligent damage to real property, among others. The pleading alleges that defendant and his wife signed the lease agreement on October 11, 2003, promising to pay $2,050 per month plus utilities for lease of certain real property located in Morgan Hill, California. Defendant took possession of the property and paid his rent for several months but fell in arrears beginning in July 2004. He also failed to take reasonable steps to maintain the property. In particular, he had allowed the carpet, floors, and subfloors to become saturated with cat urine.
Durness was the original lessor identified in the lease agreement. Durness assigned its rights to plaintiff on or about July 1, 2004. Plaintiff’s third amended complaint prayed for general and special damages, punitive damages, and attorney fees. The pleading did not attach a copy of the lease agreement to which it referred.
In his answer, defendant denied he had any written agreement with plaintiff, pointing to the absence of an exhibit attached to the third amended complaint. Defendant also alleged as an affirmative defense that plaintiff’s causes of action were part of an “illegal scheme” so that plaintiff was not entitled to relief. Defendant eventually admitted that he did not pay his rent but insisted that he was not liable under the lease agreement because Durness did not exist or did not have the right to do business in California, and, therefore, that the lease agreement was void. He obtained and filed documents pertaining to plaintiff’s divorce and to other collateral matters by which defendant sought to prove that Durness was part of plaintiff’s scheme to hide income and avoid paying child support.
On July 23, 2008, the parties entered into an oral agreement before the court. Defendant agreed to a judgment against him for damages of no less than $20,000 and no more than $25,000. He further agreed that plaintiff would be deemed the prevailing party and that plaintiff would be filing a motion for attorney fees.
Plaintiff filed his notice of motion for attorney fees on October 29, 2008. The motion was based upon the attorney fees clause contained in the lease agreement, a copy of which was attached to counsel’s declaration in support of the motion. The lease agreement was signed by defendant and by “James Howard for Durness Corp.” The attorney fees clause allowed fees to the “prevailing party in an action brought for the recovery of rent or other moneys due or to become due under this lease.”
Plaintiff sought a total of $187,456.50 in fees and costs multiplied by two due to the extra effort defendant’s litigation tactics had required. According to plaintiff’s counsel, defendant “took every opportunity to impede the orderly progress of this litigation and in his own deposition stated he spent more than one year researching Plaintiff’s divorce files and personal financial information to find information to use against Plaintiff.” Plaintiff declared, “I originally hired an attorney, Jeffrey Moore, to handle what was expected to be a simple matter of collections on a former tenant. However, as Defendant escalated this action, drawing in my divorce documents and requiring an involvement of the former property owner [Durness] and requiring considerable time spent on the former property owner’s legitimacy to do business as a foreign corporation, this action was drawn out over three years and what should have been a simple collections matter, instead became an excessively and tangentially contested matter of Defendant attacking a corporation’s right to do business in California and Defendant obtaining my divorce records and publicly disseminating my tax records and other personal private information which required me to seek and obtain a protective order and the sealing of my documents.” As a result, plaintiff could not afford to do other than find an attorney willing to work on a partial contingency basis.
Counsel explained that he “was several times compelled to seek and obtain an order compelling [defendant] to properly respond to discovery as well as seal documents that were maliciously put into the record and were irrelevant to this case. [Defendant] also caused excessive discovery surrounding his year-long research of Plaintiff’s divorce records and claims of defenses relating to the Durness Corporation’s unlawfully doing business within the state of California. Plaintiff was also awarded sanctions and attorney’s fees from Defendant having to be compelled to respond in discovery and for an unmeritorious motion for summary judgment.”
Defendant opposed the attorney fees motion, attacking the enforceability of the lease agreement and arguing that none of his affirmative defenses pertaining to enforceability had ever been adjudicated. He asked the court to allow oral testimony at the hearing. In particular, defendant wanted to introduce the testimony of a handwriting expert who would give the opinion that the “James Howard” signature on the lease agreement was actually written by plaintiff. Defendant also sought judicial notice of 19 documents, all of which supposedly showed that the written lease agreement was unenforceable.
Plaintiff responded with evidence of the terms of the settlement. According to plaintiff, the transcript of the hearing at which the parties entered into the settlement showed that the only issue remaining to be litigated was the amountof fees. The transcript includes the trial court’s recitation of the terms of the agreement, which is as follows:
“The agreement, as I understand it--and I’d like Mr. Taylor and Mr. Martin to really listen up to this. First of all, this agreement is going to cover all disputes existing between each of you except the issue of attorney’s fees.
“With respect to attorney’s fees, Mr. Martin will be adjudged to be the prevailing party, and there will be a motion for attorney’s fees. The motion will probably be before me. And I can’t give either one of you an estimate of what that’s going to be because I haven’t heard any evidence. I’ll decide it on the facts and on the law, but that isn’t part of the agreement.
“The agreement is that you’re going to settle your disputes on rent, past rent, damages to the premises, and utility bills for between 20 and $25,000, meaning that the minimum that Mr. Martin will receive as a result of your settlement is the sum of $20,000, and the maximum he will receive will be $25,000.”
The transcript further shows that plaintiff’s counsel conducted voir dire of plaintiff, who asked for confirmation that the settlement would be “acknowledging me as the prevailing party that I will have the right, myself, Rudy Martin, to pursue the legal fees under the rental agreement, and there’s no longer any issue of the Durness Corporation in that.” Defendant’s attorney replied, “That would be correct.” When asked if he understood the agreement to be as the court stated, defendant replied in the affirmative. When asked if he had any questions, defendant said, “No.”
The clerk’s minutes of the hearing state that the parties had reached a “judicially-supervised settlement” and that “[a]ll issues are resolved inclusive of rent, past rent, damages, and utility bills.... Regarding attorney fees, plaintiff shall file a motion on attorney fees. [¶] The Court shall decide the exact amount owed to the plaintiff by the defendant. This issue is taken under submission.”
The attorney fees motion was heard on May 4, 2009, by the same judge, the Honorable Marc Poche, who presided over the settlement. Defendant insisted that the enforceability of the lease agreement had yet to be adjudicated. His argument this time was that the lease agreement was unenforceable due to a failure of consideration. The trial court stated that it would decide the question of entitlement to and the amount of attorney fees based upon the papers submitted. The court took the matter under submission.
In its written order the trial court referred to the transcript of the settlement hearing and noted, “As an initial matter the Court notes that the sole issue remaining for decision is that of the amount (if any) of attorney’s fees and costs to be awarded to Plaintiff. All other issues were addressed by the stipulated settlement between the parties reached on July 23, 2008.” The court denied defendant’s request for judicial notice of the 19 documents. Documents 12-19 of the request, which pertained to the Durness issue and collateral legal matters in which plaintiff had been involved, were not supplied to the court until after the matter was submitted. “More fundamentally,” the documents were not relevant to the issue of attorney fees.
The court went on to find that the “primary basis for recovery” of attorney fees was the attorney fees clause in the lease agreement, which had been attached to the declaration of counsel submitted in connection with the motion. The clause allowed fees to the prevailing party and, since the settlement provided that plaintiff was the prevailing party, the only remaining question was the amount of fees to which plaintiff was entitled.
The trial court acknowledged that plaintiff had requested fees be multiplied by a factor of two “to reflect the contingency nature of the representation and the complications that arose in the course of pursuing this matter.” The court found plaintiff’s description of the complications of this litigation to be “generally accurate, consistent with the Court’s observations and sufficient justification for use of a multiplier.” The court granted the motion. Judgment was entered on August 10, 2009, awarding plaintiff $23,000 in damages and $374,913 in attorney fees and costs. This timely appeal followed.
II. Discussion
A. The Enforceability of the Lease Agreement Was Resolved by the Settlement
Defendant’s first argument is that the court should have rejected plaintiff’s attorney fees motion because the lease agreement upon which it was based was illegal. Defendant maintains that the lease agreement was illegal because it was part of plaintiff’s scheme to defeat the child support laws by diverting his income to Durness. Plaintiff argues that defendant waived the objection by his failure to raise it in connection with the attorney fees motion (his only argument then was failure of consideration) and that the issue was resolved by the settlement. Defendant responds that his objection is not waivable.
To the extent the facts pertinent to the questions are undisputed we shall apply the de novo standard of review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) Where the parties disagree on the relevant facts, we defer to the trial court’s factual determinations so long as there is substantial evidence to support them. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479.)
Turning first to the question of illegality, we note that this court has explained the rules this way: “A contract must have a lawful object. (Civ. Code, § 1550.) Any contract which has as its object the violation of an express provision of law is unlawful. (Civ. Code, § 1667, subd. 1.) The object of a contract is the thing which it is agreed, on the part of the party receiving the consideration, to do or not to do. (Civ. Code, § 1595.) The object must be lawful when the contract is made. (Civ. Code, § 1596.) And that part of the contract which is unlawful is void. (Civ. Code, § 1599.)” (Homami v. Iranzadi (1989) 211 Cal.App.3d 1104, 1109.) An illegal contract is also a contract founded upon illegal consideration. “It makes no difference whether the contract has been partially or wholly performed. Rather, the test is ‘ “ ‘whether the plaintiff requires the aid of the illegal transaction to establish his case. If the plaintiff cannot open his case without showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant.’ ” ’ (C.I.T. Corp. v. Breckenridge [(1944)]63 Cal.App.2d 198, 200.)” (Ibid.)
It is true, as defendant contends, that one cannot waive objection to the enforcement of an illegal contract. Thus, for example, where the object of a contract is the sale of counterfeit goods, the court may not grant relief and must raise the issue of illegality on its own motion if the parties fail to address it. (Yoo v. Jho (2007) 147 Cal.App.4th 1249, 1251.) But the object of the instant contract, the thing that was agreed, was the lease of real property in exchange for monthly rent in dollars. There is nothing illegal about that.
“The true rule applicable to this situation was stated in Wayman Inv. Co. v. Wessinger [(1910)] 13 Cal.App. 108, 110, as follows: ‘Although there may be some illegal features indirectly connected with a transaction involved in a suit, yet the plaintiff may recover if his cause of action is otherwise legitimate, and he can make out his case without calling to his aid the illegal agreement. The test of whether the demand can be enforced at law is whether the plaintiff requires the aid of the illegal contract to establish his case.’ ” (Aaker v. Smith (1948) 87 Cal.App.2d 36, 47.) In Aaker v. Smith, the defendants were bar owners who leased part of their premises to a restaurant. In a suit by the restaurant operator for wrongful eviction, the defendants sought to avoid the terms of a lease by showing that the lease violated the requirements of state law pertaining to the operation of the bar. (Id. at p. 46.) The appellate court rejected the argument noting, “A leasing of premises--even of premises upon which a bar is located--for restaurant purposes is certainly legal. The restaurant could be operated whether or not a bar was also operated. The plaintiff’s right to occupy such premises for restaurant purposes must be considered separate and apart from any intention on the part of defendants to violate the law in the respect that they now so cheerfully admit.” (Id. at pp. 46-47.)
The same is true here. Plaintiff’s cause of action for breach of the lease is entirely legitimate. His alleged conduct with respect to his child support obligations or other supposedly improper acts are completely separate and apart from his intent in leasing the property to defendant. Thus, defendant’s principal argument fails on its merits.
Any other question pertaining to the enforceability of the lease agreement was decided in favor of plaintiff when the parties settled the damages portion of the case. The parties presumably intended the oral settlement agreement to be reduced to judgment pursuant to Code of Civil Procedure section 664.6. Under that section, a trial court may enter judgment pursuant to the terms of a settlement agreement entered into orally before the court if it determines that the parties have entered into a valid and binding settlement agreement. (Code Civ. Proc., § 664.6; Estate of Dipinto (1986) 188 Cal.App.3d 625, 629.) When the judge before whom the settlement agreement was made hears the motion to enter judgment on the settlement, he or she may consult his or her memory in determining the facts. (Osumi v. Sutton (2007)151 Cal.App.4th 1355, 1360.) On appeal, the trial court’s factual findings are subject to substantial evidence review. (Ibid.)
Here, the trial court was asked to decide the terms of the oral settlement in order to decide which issues remained for decision. The court consulted the evidence and concluded that the “sole issue remaining for decision” was “the amount (if any) of attorney’s fees” to be awarded. Substantial evidence supports that finding. When reciting the terms of the settlement on the record, the trial court noted that the fee motion would be filed but that the court could not then give an “estimate of what that’s going to be,” implying that the anticipated motion would decide the amount of fees. The clerk’s minutes explain that the court was yet to decide the “exact amount” of fees that were due to plaintiff. And defendant’s counsel agreed that “there’s no longer any issue of the Durness Corporation.” If defendant had intended to reserve the right to challenge the enforceability of the lease agreement in connection with the attorney fees motion, there was no objective manifestation of that intent in the record.
We conclude that the lease agreement is not an illegal contract and any other challenge to its enforceability was eliminated when the parties settled the damages portion of the case.
B. Sufficiency of the Evidence of the Lease Agreement
Defendant next argues that the lease agreement attached to counsel’s declaration is insufficient as evidence to support the judgment because there is no explanation as to why plaintiff did not authenticate the document himself. But as plaintiff points out, the validity of the lease agreement, and the terms contained therein, were facts resolved by the settlement and were, therefore, undisputed by the time the attorney fees motion was heard. Furthermore, as plaintiff also points out, defendant did not object to counsel’s declaration attaching the agreement and, therefore, defendant did not preserve this particular objection for appeal.
It is the rule that an appellant may be held to have waived a claim of error by failure to take proper steps in the trial court to avoid or cure the error. (Telles Transport, Inc. v. Workers’ Comp. Appeals Bd. (2001) 92 Cal.App.4th 1159, 1167.) “Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider.” (JRS Products, Inc. v. Matsushita Electric Corp. of America (2004) 115 Cal.App.4th 168, 178.) In the present case, the trial court should not be asked to spend time deciding an evidentiary question that could have been addressed in the first instance had defendant brought it to the court’s attention. Accordingly, we find defendant waived this particular argument by failing to raise it below.
C. Denial of Defendant’s Request for Judicial Notice
Finally, defendant argues that the trial court erred in failing to take judicial notice of the 19 documents he submitted. The sole basis of the argument is that the documents would have shown that the contract was illegal. The trial court held that the documents were irrelevant. The trial court was correct.
“Broadly speaking, an appellate court applies the abuse of discretion standard of review to any ruling by a trial court on the admissibility of evidence. [Citations.] Speaking more particularly, it examines for abuse of discretion a decision on admissibility that turns on the relevance of the evidence in question. [Citations.] That is because it so examines the underlying determination as to relevance itself. [Citations.] Evidence is relevant if it has any tendency in reason to prove a disputed material fact.” (People v. Waidla (2000) 22 Cal.4th 690, 717-718.)
We have examined the list of documents defendant submitted and find, as the trial court did, that they have no tendency in reason to prove the only disputed material fact, which was the amount of attorney fees to which plaintiff was entitled. The documents pertain only to the defendant’s contention that plaintiff was involved in some illegal scheme collateral to the terms of the lease agreement. The trial court did not abuse its discretion in refusing to consider them.
III. Disposition
The judgment is affirmed. Plaintiff is awarded his costs on appeal.
WE CONCUR: Rushing, P.J., Elia, J.