Opinion
E072557
02-10-2021
DAVID PEDDER, Plaintiff, Cross-defendant and Appellant, v. FUTURE NISSAN OF FOLSOM, INC., Defendant, Cross-complainant and Respondent.
Berger Harrison, Benjamin Berger, and Richard J. Radcliffe for Plaintiff, Cross-defendant and Appellant. The Costa Law Firm, Daniel P. Costa, and Lisa L. Bradner for Defendant, Cross-complainant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. RIC1706545) OPINION APPEAL from the Superior Court of Riverside County. Elden S. Fox, Judge. Affirmed. Berger Harrison, Benjamin Berger, and Richard J. Radcliffe for Plaintiff, Cross-defendant and Appellant. The Costa Law Firm, Daniel P. Costa, and Lisa L. Bradner for Defendant, Cross-complainant and Respondent.
A prospective buyer of a business cancelled the sale before escrow closed. After a bench trial, the trial court awarded the seller $50,000 in liquidated damages, plus attorney fees and costs. The trial court also denied the buyer's post judgment motion to vacate the judgment pursuant to Code of Civil Procedure section 663.
Undesignated statutory references are to the Code of Civil Procedure.
The buyer—plaintiff, cross defendant and appellant David Pedder—appeals from the judgment and the denial of his post judgment motion. We affirm.
I. BACKGROUND
Pedder entered into an agreement to purchase an automobile dealership from defendant, cross complainant, and respondent Future Nissan of Folsom, Inc. (Future Nissan). Although an exact purchase price does not appear in our record, Future Nissan's counsel represented to the trial court that it "was a multimillion-dollar deal, well in excess of 7 or $8 million." The agreement took the form of two contracts, one regarding real estate, and the other regarding the dealership's other assets. The parties signed the contracts on August 3, 2016, and the transaction was to close on October 1, 2016. Pursuant to the agreement, Pedder deposited $50,000 into an escrow account.
Closing was conditioned on, among other things, the approval of the manufacturer, Nissan North America, Inc. The parties' agreements contemplated that the manufacturer would approve the transaction by September 17, 2016.
September 17, 2016 was also the end of the "Due Diligence Period" for the assets contract, and the "Contingency Date" for the real estate contract. Before that date, Peddler was entitled to terminate the transaction with written notice to Future Nissan. As of that date, however, the contracts provided that the deposit would be "non-refundable" and Future Nissan would be entitled to liquidated damages in the amount of the $50,000 deposit, plus attorney fees and costs, if escrow did not close "in a timely manner for any reason other than the failure of [Future Nissan] to satisfy a specific condition required of [Future Nissan]" within 10 days written notice of the failure.
By September 17, 2016, the manufacturer had not approved the transaction, and Pedder did not exercise his right to terminate the agreement "in [his] sole discretion." The parties have stipulated that Pedder believed Nissan would have approved the sale soon enough to allow for a timely closing, even though it did not do so by September 17, 2016.
On September 26, 2016, however, upon learning that his minority partner was withdrawing from the deal due to medical issues, Peddler asked that Future Nissan agree to extend the closing date by three weeks. Future Nissan was willing to offer only a one week extension. The parties did not reach an agreement to extend the closing date, and, on September 28, 2016, Pedder sent a letter to Future Nissan terminating the two contracts. The letter does not specify a basis for the termination.
Future Nissan requested that Pedder release the $50,000 deposit from escrow, but Pedder refused. On April 13, 2017, Pedder filed a complaint for declaratory relief, seeking "a judicial determination and declaration of the parties' respective rights, duties, and obligations" under the agreements, and specifically a finding that Future Nissan was not entitled to keep the $50,000 deposit, nor entitled to an award of "any damages, liquidated or otherwise." Future Nissan cross complained, alleging breach of contract.
After a bench trial, the trial court ruled in favor of Future Nissan, awarding it $50,000 in liquidated damages, plus contractual attorney fees and costs. Judgment was entered on December 24, 2017, and Future Nissan served Pedder with notice of entry of judgment on January 15, 2019. The parties later stipulated to an amount of attorney fees, costs, and interest to be added to the damages award.
Future Nissan sought $100,000, adding together the $50,000 liquidated damages provisions in each of the parties' two contracts. The trial court rejected that argument, however, and Future Nissan has not challenged that ruling on appeal.
On January 23, 2019, Pedder filed a "Notice of Intention to Move to Vacate Judgment and Enter New Judgment" pursuant to section 663, subdivision (a). The trial court denied the motion on April 8, 2019. The trial court found that, although styled as a motion pursuant to section 663, Pedder was "essentially asking the court to reweigh the evidence." As such, the motion was "not a proper motion to vacate." Moreover, the judge who had presided over the bench trial was "unavailable," and Pedder had not provided a transcript of the trial along with his motion, so the trial court could not treat the motion as a motion for new trial.
Pedder filed an April 19, 2019, notice of appeal that specified that he was appealing from both the judgment entered after trial and the denial of his postjudgment motion.
II. DISCUSSION
A. Timeliness of Appeal
The timely filing of a notice of appeal is jurisdictional, and a Court of Appeal has no power to entertain an appeal filed after the deadline. (Van Beurden Ins. Services, Inc. v. Customized Worldwide Weather Ins. Agency, Inc. (1997) 15 Cal.4th 51, 56.)
Ordinarily, a notice of appeal must be filed no later than 60 days after the superior court clerk serves on the appealing party a notice of entry of judgment or a file-stamped copy of the judgment, 60 days after the appealing party serves or is served with a notice of entry of judgment, or 180 days after entry of judgment, whichever is earliest. (Cal. Rules of Court, rule 8.104(a).) Here, Future Nissan served Pedder with notice of entry of judgment on January 15, 2019, so absent an applicable exception, his time to appeal from the judgment expired on March 18, 2019. (Cal. Rules of Court, rule 8.104(a)(2).) Pedder's notice of appeal was filed after that date.
The Rules of Court provide several bases for extending the time to appeal. (Cal. Rules of Court, rule 8.108.) As relevant here, if a party serves and files a "valid notice of intention to move—or a valid motion—to vacate the judgment," the time to appeal is extended to the earliest of several alternative deadlines. Here, the applicable alternative is 90 days after filing of the first notice of intention to move, or motion, to vacate. (Cal. Rules of Court, rule 8.108(c).) Pedder's notice of appeal was filed within this extended period.
In substance, Pedder's motion was—at least in part—a valid motion under Code of Civil Procedure section 663, subdivision (a), as its title announced. As relevant here, section 663 authorizes the court to set aside the judgment and enter a new and different judgment where there was an "[i]ncorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts." (§ 663, subd. (1).) Some of the arguments asserted in Pedder's motion do not fall within the scope of this statutory language. For example, Pedder argued that trial court had "made mistaken findings of fact," and that the trial court should take "a fresh look at the limited facts." (Bolding and capitalization altered.) As the trial court correctly observed, such arguments are properly raised on a motion for new trial, where the trial court is authorized to reweigh the evidence, not a motion to vacate. (See § 657; Tice v. Kaiser Co. (1951) 102 Cal.App.2d 44, 46.) Those arguments would not constitute a valid section 663 motion.
Nevertheless, Pedder's motion is also fairly read to argue, as appropriate on a section 663 motion to vacate, that the trial court had "draw[n] incorrect conclusions of law or render[ed] an erroneous judgment on the basis of uncontroverted evidence." (Simac Design, Inc. v. Alciati (1979) 92 Cal.App.3d 146, 153.) Albeit with other, inappropriate arguments muddled in, Pedder's motion asserts that, as a matter of law, under the terms of the parties' contracts and given the parties' stipulated facts, he was permitted to terminate the contracts when he did, so the liquidated damages provision that was the basis for the award did not apply and judgment should have been in his favor. Viewed from this perspective, Pedder's motion argued that a "'different judgment'" was "compelled by the facts" either found by the trial court or stipulated by the parties, which is a proper basis for a section 663 motion to vacate. (Payne v. Rader (2008) 167 Cal.App.4th 1569, 1574.)
We conclude that Pedder's appeal was timely filed because his motion to vacate the judgment was a "valid" motion within the meaning of Rules of Court, rule 8.108(c), and the notice of appeal was filed within the extension provided by that rule. B. Merits
The fundamental premise underlying Pedder's arguments on appeal, as in the trial court, is that the failure of the manufacturer to approve the transaction prior to the end of the Due Diligence period on September 17, 2016, gave him an absolute right to terminate the transaction at any time thereafter without triggering any liquidated damages clause. He asserts, for example, that the "failure of the Nissan Approval Contingency" was "carved in stone" once its due date passed, so he had "the right to terminate," and the assets contract "does not condition that right on the presence, absence or combination of reasons which motivated [him] to exercise it." We disagree with Pedder's interpretation.
We apply here the de novo standard of review, exercising our independent judgment, as to the meaning of the parties' contracts. (See The Fifth Day, LLC v. Bolotin (2009) 172 Cal.App.4th 939, 946 ["Contract interpretation on undisputed facts is a question of law that we review de novo"].) "'"The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.] When a contract is reduced to writing, the parties' intention is determined from the writing alone, if possible."" (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1009.) "A contract must receive such an interpretation 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." (Civ. Code, § 1643; Beverly Hills Oil Co. v. Beverly Hills Unified Sch. Dist. (1968) 264 Cal.App.2d 603, 609.)
Section 9 of the assets contract lists various "conditions to closing." One of the "Conditions to Buyer's Obligations," described in section 9.1.3, is the condition requiring manufacturer's consent to be obtained by September 17, 2016. Section 9.1 states that if such conditions "are not fulfilled by the Close of Escrow, Buyer may terminate this agreement." Taken in isolation, this language arguably tends to support Pedder's contention that he had the right to terminate the contract once the manufacturer's consent was not obtained by September 17, 2016, as contemplated by section 9.1.3.
Section 9.1.3 of the assets contract provides: " Manufacturer Consent. Manufacturer shall have offered, prior to the end of the Due Diligence Period, to enter into a standard Dealer Sales and Service Agreement ("Dealer Agreement") reasonably acceptable to Buyer, approving and naming the person designated by Buyer as the Dealer Operator."
Nevertheless, the right to terminate for failure to fulfill a condition is qualified by other provisions of the contract. (See, e.g., American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 1239, 1245 ["We consider the contract as a whole and interpret the language in context, rather than interpret a provision in isolation"].) Section 9.5 provides that the "non-occurrence of any of the conditions stated above on or before closing, at the discretion of the Party in whose favor the conditions are to occur, shall result in the right of termination of this Agreement, subject to the provisions of Paragraphs 6.2 [...] of this Agreement." (Italics added.) Section 6.2 of the contract provides that, within the "Due Diligence Period" ending September 17, 2016, "Buyer may, in its sole discretion, terminate this Agreement by written notice to Seller, whereupon this Agreement shall terminate, and neither Party shall have any further rights hereunder or obligation to the other . . . ." After September 17, 2016, however, the $50,000 deposit becomes "non-refundable" and Future Nissan is entitled to "liquidated damages" in that amount if the transaction does not close "in a timely manner for any reason other than the failure of [Future Nissan] to satisfy a specific condition required of [Future Nissan]," after ten days written notice of the failure. The real estate contract has matching liquidated damages provisions.
We here elide mention of section 6.5.6, which deals with the parties' allocation of actual fees and costs upon termination of the agreement. We do not find that section pertinent to our analysis of the liquidated damages provisions that are the focus of the present dispute, Pedder's assertions to the contrary in briefing and at oral argument notwithstanding. How fees and costs are allocated is a question independent of whether the $50,000 of liquidated damages is to be awarded.
In relevant part, section 6.2 of the assets contract provides: "From and after the expiration of the Due Diligence Period, the Deposit is non-refundable and liquidated damages to Seller in the event Escrow does not Close escrow [sic] in a timely manner for any reason other than the failure of Seller to satisfy a specific condition required of Seller hereunder, which alleged failure continues for a period of ten (10) days after Seller has received written notice thereof from Buyer." The amount of liquidated damages are set by same section, which ends with the following: "THE $50,000 DEPOSIT REPRESENTS A REASONABLE ESTIMATE BY BUYER AND SELLER OF SELLER'S DAMAGES IN THE EVENT ESCROW DOES NOT CLOSE FOR ANY REASON OTHER THAN A SELLER DEFAULT, IT BEING EXTREMELY DIFFICULT TO ASCERTAIN SELLER'S PRECISE DAMAGES."
Section 4.1.3 of the real estate contract provides that, if the Buyer does not deliver a written termination notice before the "Contingency Date," the deposit "becomes non-refundable if escrow fails to close in a timely manner for any reason other than the failure of Seller to satisfy a specific condition required of Seller hereunder, which alleged failure continues for a period of ten (10) days after Seller has received written notice thereof from Buyer." Separately, in section 16.2, the real estate contract sets $50,000 as the amount of liquidated damages to be awarded "IN THE EVENT THE CLOSE OF ESCROW AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DO NOT OCCUR AS HEREIN PROVIDED FOR ANY REASON OTHER THAN A DEFAULT OF SELLER AS PROVIDED IN SECTION 4.1.3" as Future Nissan's "SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY)."
In other words, the parties' contracts contemplate that Pedder could have terminated the transaction for any reason or none at all, and without incurring any responsibility for damages to Future Nissan, during the Due Diligence Period described in the assets contract, and prior to the Contingency Date of the real estate contract—that is, prior to September 17, 2016. The parties further agreed, however, that (1) late termination (that is, termination after September 17, 2016) or a delay in closing would damage Future Nissan; (2) Future Nissan should be compensated for those damages if the late termination or delay in closing was not caused by Future Nissan's failure to satisfy a condition required of it; and (3) and $50,000 was a reasonable estimate of those damages. Thus, if Pedder chose not to terminate the transaction prior to September 17, 2016, he was incentivized to quickly resolve any impediment to a timely closing and go forward with the deal unless the impediment was among those specifically allocated as Future Nissan's responsibility.
Further, it is undisputed that Future Nissan did not fail to satisfy any of the specific conditions required of it. Obviously, Future Nissan is not responsible for one of Pedder's minority partners withdrawing from the transaction due to illness, or for Pedder deciding not to proceed with the transaction without that partner. Pedder also has not argued that Future Nissan was responsible for obtaining the manufacturer's approval for the transaction. No other potential basis for the transaction failing to close is supported by the record. Moreover, nothing in evidence suggests Pedder ever gave Future Nissan notice that it was in default on any of its obligations. Thus, the trial court correctly determined that, because the termination was for a reason other than the failure of Future Nissan to satisfy a condition required of it even after written notice of such a failure, Future Nissan was entitled to recover $50,000 under the terms of the parties' contracts.
Pedder contends that there is no evidence that he breached the parties' contracts, so no award of liquidated damages could be appropriate. (See Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1315 [stating "to constitute a liquidated damage clause the conduct triggering the payment must in some manner breach the contract.") Not so. As discussed, the parties expressly agreed that (1) prior to September 17, 2016, Pedder could simply walk away from the transaction, but (2) after September 17, 2016, if the transaction failed to timely close for any reason other than default by Future Nissan after ten days written notice, Future Nissan would be entitled to a payment of "liquidated damages." The only reasonable inference here is that the parties intended for Pedder, after September 17, 2016, to have a contractual duty to proceed with the transaction, and not to terminate it, unless there was a default by Future Nissan. By terminating the transaction after September 17, 2016 for a reason other than a default by Future Nissan despite written notice, Pedder breached that duty.
Pedder's assertion that the liquidated damages clause is "tantamount to an unenforceable penalty and/or forfeiture" is also without merit. (Capitalization and holding altered.) The parties expressly agreed that $50,000 represented a reasonable estimate of Future Nissan's damages in the event of a late or cancelled closing of the transaction. Pedder has articulated no reason—other than his contention that there was no breach of contract, which we rejected above—why this amount should be considered unreasonable under the circumstances. (See Civ. Code, § 1671, subd. (b) [with exceptions not relevant here, "a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made"].) The parties—both sophisticated, both represented by counsel, and engaged in an arm's length negotiation for a multi-million dollar transaction—agreed in their contracts that $50,000 was a reasonable estimate of Future Nissan's damages from a late cancellation of the deal. (See El Centro Mall, LLC v. Payless ShoeSource, Inc. (2009) 174 Cal.App.4th 58, 63 ["The objective of a liquidated damages clause is to 'stipulate [] a pre-estimate of damages in order that the [contracting] parties may know with reasonable certainty the extent of liability' in the event of breach"].) Pedder has not identified, and our examination of the record has not revealed, any basis for us to disturb the parties' estimate.
In trial court briefing, Future Nissan described such damages as including costs related to the imminent transition of the dealership to its new owner and the expense of facilitating the buyer's due diligence investigation, as well as the opportunity cost of refraining from marketing the dealership to other potential buyers during escrow. So far as we can determine from the record, Pedder has not disputed that characterization. --------
We conclude Pedder has demonstrated no error in the judgment. On the contrary, the undisputed facts, together with the terms of the parties' contracts, lead us to conclude that the judgment's award of $50,000 in liquidated damages, plus attorney fees and costs, was correct. For the same reasons, denial of Pedder's post judgment motion to vacate the judgment was also correct.
III. DISPOSITION
The judgment, as well as the trial court's order denying Pedder's motion to vacate the judgment, are affirmed. Future Nissan is awarded costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
RAPHAEL
J.
We concur:
RAMIREZ
P. J.
MILLER
J.