Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and order of the Superior Court of Los Angeles County No. SC086606, Joseph S. Biderman, Paul G. Flynn, Judges.
Feldman & Associates, Inc., Mark A. Feldman, Craig C. Lang for Plaintiff and Appellant.
Law Offices of Rosario Perry, Rosario Perry and Robert J. Franklin for Defendant and Respondent.
BOREN, P.J.
In this consolidated appeal, plaintiff Gary Pearl appeals (1) the dismissal of his breach of contract claims following judgment on the pleadings in favor of defendant Donna Deitch (case No. B203762), and (2) the award of attorney fees to Deitch (case No. B206623). We find that judgment on the pleadings was properly granted because the breach of contract matters raised should have been litigated in a compulsory cross-complaint (Code Civ. Proc., § 426.30, subd. (a)) in the prior litigation (see Pearl v. Deitch (Mar. 16, 2007, B189164 [nonpub.opn.]). Also, the trial court did not abuse its broad discretion or otherwise err in awarding attorney fees.
Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
2 In that prior appeal, we affirmed both the appeal and the cross-appeal following a partially successful special motion to strike pursuant to the anti-SLAPP statute. (See § 425.16.)
We thus affirm both the judgment under review and the order awarding attorney fees.
FACTUAL AND PROCEDURAL SUMMARY
Our prior opinion set forth the early factual and procedural posture of the case, and relevant portions of that prior opinion are reiterated herein.
In 1993 Pearl rented a condominium unit in Santa Monica from Deitch with an option to purchase the unit in the future. After several years, Pearl sued Deitch to enforce the option contract, which resulted in a settlement agreement entailing Pearl’s receipt of $62,000, the dismissal of his action, and the stipulation to an entry of judgment. Pearl also agreed to vacate the premises and upon vacating to be responsible for any damage he caused, exclusive of reasonable wear and tear. The parties specified that the agreed to releases of liability did not apply to any damage to the premises that occurred after July 31, 2002, and that the then-current condition of the premises was acceptable. Additionally, the agreement contained a provision permitting the recovery of attorney fees to the prevailing party if any litigation ensued under the settlement agreement.
Thereafter, Deitch sued Pearl, alleging causes of action for Pearl’s breach of the covenant to keep and surrender the premises in good condition, and for waste based on the theory that Pearl’s actions injuriously affected the market value of the property. This lawsuit for waste was based on alleged water and other physical damage to the premises from open windows and doors resulting in exposure to the elements and from a leaking fish tank. Several weeks before the trial, Deitch asked Pearl to stipulate to a continuance because she had a significant business conflict. Pearl would not stipulate to a continuance. After the court denied her request for a continuance, Deitch voluntarily dismissed her action against Pearl without prejudice.
Pearl then filed a lawsuit against Deitch and her attorneys, alleging causes of action for malicious prosecution and fraud. Pearl also alleged causes of action against Deitch only, for breach of contract and restitution after rescission. The cause of action for breach of contract (i.e., the settlement agreement) was premised on Deitch’s having filed a lawsuit against Pearl for damages to the condominium from which Deitch had agreed to release Pearl, causing him to expend money on attorney fees and costs. Pearl’s cause of action for restitution after rescission (i.e., to obtain title to the premises) was based on the theory that the settlement agreement was rescinded by Deitch when she filed her lawsuit against Pearl. Pearl thus sought a ruling permitting him to purchase the condominium at the 1993 option agreement price (approximately $294,000).
Deitch and Deitch’s attorneys then both filed anti-SLAPP motions, and they argued that Pearl could not show a probability of prevailing and that his claims should be stricken. But the trial court agreed with Pearl that the damages sought in the underlying complaint were all prior to the settlement agreement, and concluded that Pearl still had a breach of contract claim against Deitch. Pearl thus showed a probability of prevailing on his claims, which was necessary to survive the anti-SLAPP motion. Therefore, the trial court denied the motion to strike the breach of contract and rescission claims. However, the trial court struck the malicious prosecution claims because Deitch’s voluntary dismissal of the lawsuit against Pearl was for economic reasons and did not constitute a favorable termination. Pursuant to the anti-SLAPP statute, the trial court awarded attorney fees and costs to Deitch ($4,165) and Deitch’s attorneys ($9,270).
Pearl then appealed from the orders granting the anti-SLAPP motions as to the malicious prosecution causes of action and from the subsequent orders awarding attorney fees and costs. Deitch cross-appealed, alleging that Pearl’s remaining causes of action for breach of contract and rescission should also have been dismissed.
In that prior appellate matter before this court, we found unavailing both the appeal and the cross-appeal. In pertinent part, we observed that as to the breach of contract and rescission causes of action, Deitch had urged that Pearl’s contract claims were legally insufficient because Pearl had waived them by not counterclaiming in Deitch’s lawsuit against Pearl. As found in our prior opinion, “However, Deitch’s compulsory counter claim argument (see § 426.30, subd. (a)) was not brought before the trial court in her anti-SLAPP motion to strike. Thus, Pearl was denied the opportunity to respond at the trial level, and we are now properly precluded from belated consideration of the issue on appeal. [Citations.] Indeed, Pearl asserts that if this argument had been raised in the trial court, he ‘would have been able to explain to the trial court that he did seek leave to file a cross-complaint, but the motion was denied as premature and Mr. Pearl was directed to file his complaint after’ his defense of Deitch’s action against him. Also, Deitch’s lawsuit was ultimately dismissed without prejudice, with no conclusion on the merits, allowing either party to file any timely lawsuit in relation to the agreements at issue.” (Pearl v. Deitch, supra, B189164,at p. 10.)
After our opinion in the prior appeal and cross-appeal, Deitch moved in the trial court for judgment on the pleadings without leave to amend, based on the compulsory counterclaim requirement. (See § 426.30.) Deitch again urged that Pearl had waived his right to assert his breach of contract and restitution after rescission causes of action against Deitch because he did not raise them in a compulsory cross-complaint in Deitch’s original lawsuit.
The trial court granted Deitch’s motion for judgment on the pleadings without leave to amend based on Pearl’s failure to have filed his contract claims as counterclaims in Deitch’s original lawsuit for waste. The trial court reasoned that Pearl’s remaining claims for breach of contract and restitution were “related” to the claims Deitch asserted in her lawsuit for waste, as the term “related” is defined by the compulsory cross-complaint statute, because they arose “out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (§ 426.10, subd. (c).) The trial court quoted our prior characterization of the contract claims: “‘The cause of action for breach of contract (i.e. the settlement agreement) [is] based on Deitch’s having filed [the Waste Action] against Pearl for damages to the condominium from which Deitch had agreed to release Pearl.... The cause of action for rescission... [is] based on the ground that the settlement agreement was rescinded by Deitch when she filed her lawsuit against Pearl.’” The trial court further quoted and relied upon this additional observation in our prior opinion: “‘[W]hen Deitch signed the settlement agreement, she waived her right to seek damages for any pre-existing conditions, and a lawsuit by Deitch contrary to that waiver would constitute a breach of the settlement agreement permitting a breach of the contract claim (as well as the rescission and restitution claim’).”
The trial court also remarked, in pertinent part, that “even assuming that, at the time of answering Deitch’s complaint in the waste action, Pearl did not know the full extent of his contract damages, a workable solution would have been to stay Pearl’s cross-complaint for breach of contract pending determination of the main action.” And, the trial court chided counsel, particularly Pearl’s counsel, for numerous meritless and unsupported arguments, and urged counsel to informally resolve the remaining issue of the amount of fees and costs to be awarded to Deitch under the attorney fees provision in the settlement agreement (as a result of prevailing on the motion for judgment on the pleadings). The court thus granted judgment on the pleadings in favor of Deitch.
Following judgment on the pleadings and a dismissal in favor of Deitch, Deitch and her attorneys moved to recover attorney fees in the amount of $124,903. Deitch claimed she was now the prevailing party and entitled to fees as provided for in the settlement agreement under Civil Code section 1717. Pearl did not dispute she was the prevailing party but argued as follows: (1) Deitch had not prevailed on the SLAPP appeal; (2) her fees should be reduced because she could and should have raised earlier the issue of waiver based on the compulsory cross-complaint theory; (3) the fee requests were previously denied and there was no ground for reconsideration; (4) the time to seek SLAPP attorney fees had expired; and (5) the attorney fees requests were excessive. Pearl’s attorney deemed the $390 per hour rate charged by Deitch’s attorney as unreasonable for this type of litigation and noted that he was charging only a rate of $265 per hour, apparently suggesting that as an appropriate lodestar rate.
The trial court agreed that Deitch’s requests were excessive and substantially reduced Deitch’s fee to reflect her failure to have previously raised the issue of waiver based on the compulsory cross-complaint theory. The trial court used the lodestar method and accepted Pearl’s figure of $265 per hour with reductions it deemed appropriate, and also found that Deitch was “entitled to seek previously requested or excluded fees” under Civil Code section 1717. Using the lodestar method, the court awarded Deitch a total of $55,613 in attorney fees, which was less than half the amount requested.
Pearl now appeals the dismissal after the judgment on the pleadings in favor of Deitch and also appeals the award of attorney fees.
DISCUSSION
I. The trial court properly granted the motion for judgment on the pleadings without leave to amend.
“The standard of review for a motion for judgment on the pleadings is the same as that for a general demurrer: We treat the pleadings as admitting all of the material facts properly pleaded, but not any contentions, deductions or conclusions of fact or law contained therein.... We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any theory.” (Dunn v. County of Santa Barbara (2006) 135 Cal.App.4th 1281, 1298; see Baker v. Hull (1987) 191 Cal.App.3d 221, 224.) The ultimate question on appeal “‘... is whether, disregarding imperfections of form which could be cured by amendment, the facts pleaded and judicially noticed entitle [plaintiff] to any relief....” (Pacific Architects Collaborative v. State of California (1979) 100 Cal.App.3d 110, 118.)
In the present case, the heart of the judgment on the pleadings issue is whether Pearl should have filed his contract claims as a counterclaim to Deitch’s original lawsuit for waste. Section 426.30, subdivision (a) sets forth the circumstances requiring a compulsory cross-complaint: “[I]f a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.” The purpose of the compulsory cross-complaint requirement is to prevent a multiplicity of lawsuits and is liberally construed to accomplish that purpose. (Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.App.2d 324, 334-336.)
Pearl claims he could not have filed his contract claims until August of 2005—approximately two years eight months after Deitch’s alleged breach of the settlement agreement (the breach occurring by Deitch’s filing her lawsuit for waste)—because it “was only until virtually two years later that Mr. Pearl and his counsel were convinced... Ms. Deitch’s filing and prosecuting of her lawsuit clearly was a breach of the settlement agreement.” Also, not until two years after Deitch filed her original lawsuit for waste did “the damages incurred by Mr. Pearl because of this breach... become fully realized.”
However, Pearl asserted in his opposition to the judgment on the pleadings that Deitch’s lawsuit for waste sought recovery for damages from a number of conditions that preexisted his occupancy of the residence. Apart from the extent to which Pearl is bound by such admissions now (see Setliff v. E. I. Du Pont de Nemours & Co. (1995) 32 Cal.App.4th 1525, 1536), Pearl’s contract claims accrued regardless of whether he was cognizant of them. A “cause of action for breach of contract ordinarily accrues at the time of breach even though the injured party is unaware of his right to sue.” (Donahue v. United Artists Corp. (1969) 2 Cal.App.3d 794, 802.) The cause of action for breach of contract generally “accrues at the time of breach regardless of whether any substantial damage is apparent or ascertainable.” (Menefee v. Ostawari (1991) 228 Cal.App.3d 239, 246.)
Pearl’s assertion that he had only nominal damages at the date of breach is of no consequence because he had a breach of contract claim for his future “prospective damage” as soon as Deitch filed suit, and because his future damages “‘relate back to the injury itself.’” (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 832.) “While incurring a loss has always been a prerequisite to accrual of a cause of action in tort, it has never been a requirement in contract law.” (Tabachnick v. Ticor Title Ins. Co. (1994) 24 Cal.App.4th 70, 76.) Pearl had a claim for “all the detriment... likely to result” (Civ. Code, § 3300) from Deitch’s alleged breach the moment she filed suit. By not claiming these damages with a cross-complaint when he answered her lawsuit, Pearl waived them.
Similarly, the restitution claim also accrued when Deitch allegedly breached the settlement agreement. (See Pennel v. Pond Union School Dist. (1973) 29 Cal.App.3d 832, 838.) As we observed in our prior opinion, “[t]o the extent Deitch has breached the settlement agreement by failing to honor the releases therein, this would constitute a material breach and warrant seeking relief based on rescission.” (Pearl v. Deitch, supra, B189164,at p. 12.)
Moreover, the two actions at issue are “related” (Civ. Code, § 426.30, subd. (a)), within the meaning of the compulsory cross-complaint statute. A related cause of action “arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (§ 426.10, subd. (c).) The term transaction “is not confined to a single, isolated act or occurrence... but may embrace a series of acts or occurrences logically interrelated.” (Saunders v. New Capital for Small Businesses, Inc., supra, 231 Cal.App.2d at p. 336.)
The issue in Deitch’s lawsuit for waste was whether the damages to the condominium occurred prior to July 31, 2002, and had been deemed acceptable by the settlement agreement, as Pearl claimed, or whether the damages had occurred after the settlement agreement and were not normal wear and tear permissible under the rental agreement, as Deitch claimed. As Pearl acknowledges in his opening brief, “During the course of [Pearl’s lawsuit], Ms. Deitch and her attorneys continued to allege, through pleadings, discovery and communications with Mr. Pearl’s counsel, that the Settlement Agreement was not binding on the damages alleged....” Thus, the legal and factual issues in the two lawsuits are identical; Pearl’s claims and Deitch’s claims are reciprocal and were required to have been adjudicated in a single action.
Pearl admits that the complaint does “relate to the Lease and purchase option within it,” but insists the two actions are unrelated because the second action contains additional transactions—the settlement agreement and the filing and prosecution of Deitch’s lawsuit—which were not referred to in Deitch’s complaint. However, the common transaction between the two lawsuits is the “series of acts or occurrences” (Saunders v. New Capital for Small Businesses, Inc., supra, 231 Cal.App.2d at p. 336) defining the parties’ landlord-tenant relationship and their acts, rights, and obligations involving the condominium. Such acts or occurrences include the rental, option, and settlement agreements, the damages to the condominium, and Deitch’s lawsuit.
“[T]he presence of a common transaction”—and Pearl acknowledges that the two actions arise from the rental and option agreements—“renders the counterclaim compulsory.” (Currie Medical Specialties, Inc. v. Bowen (1982) 136 Cal.App.3d 774, 777.) The compulsory counterclaim statute does not require “‘an absolute identity of factual backgrounds for the two claims, but only a logical relationship between them.’” (Ibid.) Both suits are further related because they arose from the parties’ landlord-tenant relationship regarding the condominium, and both suits relate to the legal action between the parties regarding that relationship. (See Sylvester v. Soulsburg (1967) 252 Cal.App.2d 185, 192.)
Moreover, the dismissal without prejudice of Deitch’s lawsuit 18 months after Pearl answered has no bearing on the compulsory cross-complaint requirement. (See Hill v. City of Clovis (1998) 63 Cal.App.4th 434, 445; Carroll v. Import Motors, Inc. (1995) 33 Cal.App.4th 1429, 1437.) Nor is the compulsory cross-complaint requirement obviated by the general policy favoring disposition of claims on their merits. (Carroll, at p. 1437.) And, denying Pearl leave to amend was warranted because, for example, the suggested amendment of permitting Pearl to seek a declaration that Deitch had breached the settlement agreement by filing and prosecuting her lawsuit would not prevent Deitch from refiling and reprosecuting her waste action. That is because, as Deitch concedes, the statutes of limitations already prevent her from refiling and reprosecuting those actions. (See §§ 337, 338.)
Accordingly, Pearl should have asserted his demands by counterclaim in his answer in the first case, and by failing to do so he lost the right to sue separately in his later action. (Ibid.) The trial court properly granted the motion for judgment on the pleadings without leave to amend.
II. The trial court did not abuse its broad discretion in awarding attorney fees.
Deitch requested $124,903 in attorney fees, and the court awarded a total of $55,613 in attorney fees. Pearl complains that the trial court erred by allowing Deitch to collect attorney fees that it had already denied, that many of the fees sought by Deitch were excessive and unreasonable, and that the award should have been no more than $5,000.
The trial court did not abuse its discretion in granting Deitch’s renewed fee request, a motion for reconsideration pursuant to section 1008, subdivision (b). Both Deitch and Pearl had filed motions to recover attorney fees in relation to the prior appeal and cross-appeal of the ruling on the anti-SLAPP motion to strike. Both of these fee requests were denied on the ground that neither party had prevailed in the prior appeal. The court, however, also at the same time ruled in favor of Deitch on the motion for judgment on the pleadings. Deitch then moved to recover her attorney fees based on the fact that she had now prevailed in the breach of contract cause of action. Deitch’s motion for reconsideration sought recovery for all the fees she incurred in relation to the appeal and cross-appeal, even though the court had previously denied such a request.
The new fee request was based on the fact that Deitch had now prevailed in the action (a new fact) and was thus entitled to contractual attorney fees under Civil Code section 1717 (a different statute supporting attorney fees than the section 425.16, subdivision (c) anti-SLAPP attorney fees provision). Although the status of the prior appeal did not change—and still neither party had prevailed in that prior appellate matter— the consequences ensuing from that appeal did change who became “the party prevailing on the contract.” (Civ. Code, § 1717, subd. (a).) Thus, although Deitch may not have been on appeal a “prevailing defendant on a special motion to strike” (§ 425.16, subd. (c)), she nonetheless was a prevailing party “on the contract” (Civ. Code, § 1717, subd. (a)) and entitled to recover under a different statute and a different theory all reasonable attorney fees incurred.
Nor is there any merit to the argument that the fees sought were excessive. Pearl’s piecemeal attack on the various individual fees sought is unavailing because the court reviewed but did not rely on Deitch’s hours billed. Rather, the court specifically calculated the fee award using the lodestar method, which considered the difficulty and nature of the case, the skills required for the litigation, and other relevant circumstances of the case. (See PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) The court compiled a worksheet, which “looked at how many hours can I find are reasonable for various tasks that were done and then what would be a reasonable hourly rate” and other factors. It calculated a lodestar rate of $265 per hour. Although the court acknowledged reviewing the invoices and finding them helpful (Deitch provided approximately 60 pages of invoices and declarations), the court followed its own estimates of reasonable hours billed and indicated it was not bound by counsel’s evidence in support of the fees request.
The court agreed with Pearl that Deitch’s $124,903 request for attorney fees was excessive. A significant factor supporting reduction of the fees was the belated resolution of the judgment on the pleadings, which could have avoided “major expenditure by either side” if it had been brought earlier. As the court further observed: “So the concern I have is if this was something that was so easily resolved by way of a motion for judgment on the pleadings, why would that not have been done not only a long time ago in months, but in thousands and thousands of dollars.... I don’t know if that changes the entitlement to fees but it certainly would impact the amount of fees that would be appropriate.”
Accordingly, the trial court did not abuse its broad discretion in its award of attorney fees to Deitch.
Finally, we deny Deitch’s request to sanction Pearl and dismiss his appeals for an allegedly unnecessarily lengthy appellant’s appendix containing improper transcripts and some material the trial court had stricken from its file. (Cal. Rules of Court, rules 8.124(b)(2)(A) & (B), 8.124(g).) Such a request should have been addressed to this court in a separate motion. (Cal. Rules of Court, rule 8.276(a)(2) & (b).)
DISPOSITION
The judgment is affirmed, and the order awarding attorney fees is affirmed.
We concur: DOI TODD, J., ASHMANN-GERST, J.