Hamilton Court v. East Olympic CA2/5 ( 2015 )

Filed 3/12/15 Hamilton Court v. East Olympic CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
HAMILTON COURT, LLC et al., B253511
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC437727)
v.
EAST OLYMPIC, L.P. et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los Angeles County, Susan
Bryant-Deason, Judge. Affirmed.
Vivoli Saccuzzo, Michael W. Vivoli and Jason P. Saccuzzo, for Plaintiffs and
Appellants.
Troygould PC, Jeffrey W. Kramer, Annmarie Mori and Jacob M. Harper, for
Defendants and Respondents.
I. INTRODUCTION
Plaintiffs, Hamilton Court, LLC and 3650 Olympic, LLP appeal from an order
imposing attorney’s fees against them. Defendants, East Olympic, L.P. and Jack Wilder,
prevailed on appeal against plaintiffs in a dispute regarding a quiet title cause of action
for an easement. We issued a published decision in favor of defendants in Hamilton
Court, LLC v. East Olympic, L.P. (2013) 215 Cal.App.4th 501, 505-506 (Hamilton
Court). Following remittitur issuance, defendants successfully moved for attorney’s fees
incurred during the trial and on appeal. We affirm the order granting defendants their
attorney’s fees.
II. BACKGROUND
A. Factual and Procedural Background Prior to the Pending Appeal
The prior factual and procedural background in this case is summarized in our
prior published opinion. We recite the background necessary for purposes of our appeal.
East Olympic, L.P. once owned an entire city block in Los Angeles, including two
parcels of adjacent real property; the Angelus (lot 35) and the Wilder (lot 36) properties.
East Olympic, L.P. had a three-story building on the Angelus property. The three-story
building encroached on the Wilder property lot line. The Wilder property consisted of: a
one-story building; a two-story building; and an adjacent yard and shed. The yard and
shed encroached on the Angelus property.
East Olympic, L.P. sold the three-story building on the Angelus property to the
Angelus Building Partnership in 1983. East Olympic, L.P. retained ownership of the
yard and shed on the Wilder property. Rather than legally split the lots, East Olympic,
L.P. and Angelus Building Partnership entered into an easement agreement in 1994. The
easement agreement was recorded on May 12, 1994.
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The easement agreement described the two easements, which we refer to as the
East Olympic easement and the Angelus easement. The East Olympic easement
consisted of the area on lots 35 and 36. This is where the yard and shed belonging to East
Olympic, L.P. encroached on the Angelus property. The Angelus easement was the area
where the three-story building encroached on the Wilder property.
On March 29, 2005, plaintiffs acquired the Angelus property as tenants in
common subject to the easement agreement. On May 16, 2005, East Olympic, L.P. sold
the Wilder property to Hamilton Court, LLC and Venice National Group, LLC as tenants
in common. This sale was memorialized by a February 22, 2005 purchase contract.
East Olympic, L.P. sold the Wilder property for $3.8 million, consisting of $800,000 in
cash and a $3 million promissory note. The $3 million promissory note was payable to
East Olympic, L.P. The purchasers executed a first deed of trust in favor of East
Olympic, L.P. The trust deed created a security interest in the Wilder property and the
East Olympic easement. Before the close of escrow, East Olympic, L.P. approved adding
language to the promissory note and trust deed. This additional language created a
priority in terms of the trust deed. The proviso states, “[If] such transfer is made subject
to the Trustor’s promissory note and this Deed of Trust and does not affect the priority of
this Deed of Trust in any manner whatsoever.”
In July 2005, Venice National Group, LLC quitclaimed its interest in the Wilder
property to 3650 Olympic, LLP. In 2008, plaintiffs ceased making payments due under
the promissory note. East Olympic, L.P. foreclosed under the trust deed and reacquired
the Wilder property in a 2009 foreclosure sale.
On May 14, 2010, plaintiffs filed a complaint against defendants alleging:
contract breach; fraud in inducement; implied covenant breach; and to quiet title. The
quiet title claim concerned whether the East Olympic easement still existed after
plaintiffs owned both the Wilder and Angelus properties. The first three causes of action
concerned the purchase contract involving the Wilder property.
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Plaintiffs filed their second amended complaint on February 9, 2011. Plaintiffs
alleged as their first three causes of action contract breach, fraud in inducement and
rescission. On March 10, 2011, defendants filed a cross-complaint. Defendants asserted
that if plaintiffs prevailed to quiet title as to the East Olympic easement, then the Angelus
easement should likewise be extinguished. On August 11, 2011, plaintiffs dismissed
their first three causes of action pertaining to the purchase contract without prejudice.
On October 4-5, 2011, trial was held. Thereafter, the trial court ruled the merger doctrine
under Civil Code section 811 applied so as to extinguish the East Olympic easement.
The trial court entered judgment in favor of plaintiffs and against defendants.
On appeal, we held the merger doctrine was inapplicable because “plaintiffs in
effect stipulated that there would be no merger under Civil Code section 811” so long as
the trust deed remained in effect. (Hamilton Court, supra, 215 Cal.App.4th at p. 506.)
We instructed the trial court to quiet title over the East Olympic easement in favor of East
Olympic, L.P. As a result, the judgment was reversed.
B. Defendants’ Attorney’s Fees Motion
Following the reversal, defendants filed their attorney’s fees motion on October 7,
2013. In their moving papers, defendants argued contractual attorney’s fees were
authorized pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A).
Defendants relied upon provisions in both the easement agreement and the trust deed.
Section 13.4 of the easement agreement provides, “Should it be necessary for either party
to commence any legal action or arbitration proceeding to enforce the terms or conditions
hereof, the prevailing party in such action or arbitration shall be entitled to recover from
the unsuccessful party reasonable legal fees, costs and expenses incurred by the
prevailing party in the prosecution, defense, or arbitration of such action.” Section A(3)
of the trust deed states: “To protect the security of the Deed of Trust, Trustor [plaintiffs]
agrees: [¶] . . . [¶] (3) To appear in and defend any action or proceeding purporting to
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affect the security hereof . . .; and to pay all costs and expenses, including . . . attorney’s
fees in a reasonable sum, in any action or proceeding in which Beneficiary [East
Olympic, L.P.] . . . may appear, and in any suit brought by Beneficiary to foreclose this
Deed.” Defendants argued both provisions provided independent bases to recover
attorney’s fees from plaintiffs.
Plaintiffs opposed defendants’ attorney’s fees motion. They argued the easement
agreement provision did not apply because they did not commence a legal action to
enforce the terms of the contract. Plaintiffs asserted the trust deed provision did not
apply under the anti-deficiency rule of Code of Civil Procedure section 580d. Code of
Civil Procedure section 580d bars a creditor who has foreclosed on a trustee from seeking
any deficiency or additional compensation under the instrument. Alternatively, plaintiffs
argued defendants’ requested attorney’s fees were unreasonable. Plaintiff contended a
large percentage of fees incurred by defendants were unrelated to the quiet title cause of
action.
In reply, defendants asserted a third contractual basis for recovering attorney’s
fees, the purchase contract for the Wilder property. Paragraph 16 of the purchase
contract provides, “If any Party or Broker brings an action or proceeding (including
arbitration) involving the Property whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees.”
“Property” includes the shed on the East Olympic easement. Defendants also argued
apportionment of fees was unnecessary. Defendants expressly argued the three dismissed
causes of action and the quiet title claim in the second amended complaint were
inextricably intertwined.
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C. Trial Court’s Ruling
On November 6, 2013 defendants’ attorney’s fees motion was granted. The trial
court ruled defendants were entitled to recover attorney’s fees pursuant to both the
easement agreement and trust deed. The trial court awarded as fees $291,355.62 to
defendants for work performed by defense counsel at trial and on appeal. Plaintiffs
appealed the order.
III. DISCUSSION
A. Defendants Were Entitled to Recovery of Attorney’s Fees by Contract
Attorney’s fees based upon a contract, incurred in litigation, may be recovered as
costs pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A).
(Kaufman v. Diskeeper Corp. (2014) 229 Cal.App.4th 1, 7; Maynard v. BTI Group, Inc.
(2013) 216 Cal.App.4th 984, 993-994.) Judgments of the trial court are presumed to be
correct. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; Conservatorship of
Rand (1996) 49 Cal.App.4th 853, 841.) Generally, we review a trial court’s order
awarding attorney’s fees for an abuse of discretion. (Nemecek & Cole v. Horn (2012)
208 Cal.App.4th 641, 651; Cruz v. Ayromloo (2007) 155 Cal.App.4th 1290, 1274.) But,
we review a determination of the legal basis for an attorney’s fees award de novo. (Toro
Enterprises, Inc. v. Pavement Recycling Systems, Inc. (2012) 205 Cal.App.4th 954, 957;
Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th
671, 677.) An issue of apportionment of fees though is a matter of discretion. (In re
Tobacco Cases I (2013) 216 Cal.App.4th 570, 586; Acree v. General Motors Acceptance
Corp. (2001) 92 Cal.App.4th 385, 405.)
Plaintiffs assert none of the three provisions cited by defendants permit defendants
to recover attorney’s fees in this action. As we have explained, we first examine the
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purchase contract’s attorney’s fees provision de novo. The purchase agreement was
submitted with plaintiffs’ second amended complaint and was a part of the record before
the trial court. As noted, paragraph 16 of the purchase contract provides attorney’s fees
to the prevailing party, “If any Party . . . brings an action or proceeding (including
arbitration) involving the Property whether founded in tort, contract or equity . . . .”
Plaintiffs and defendants are parties to the purchase contract. “Property” includes the
yard and shed on the East Olympic easement for which the plaintiffs attempted to quiet
title. The plain language of the attorney’s fees provision in the purchase agreement
applies to plaintiffs’ unsuccessful quiet title cause of action. The quiet title cause of
action was an action founded in equity involving the yard and shed on the East Olympic
easement. Defendants, as the prevailing party, are entitled to recover attorney’s fees
under paragraph 16 of the purchase contract against plaintiffs. We need not discuss
defendants’ rights to attorney’s fees under the trust deed or the easement agreement.
B. The Trial Court Did Not Abuse Its Discretion by Not Apportioning Fees
As previously stated, generally, an attorney’s fees award is reviewed for an abuse
of discretion. Plaintiffs assert the trial court should have apportioned attorney’s fees and
the failure to do so was an abuse of discretion. Under Civil Code section 1717,
subdivision (b)(2), “Where an action has been voluntarily dismissed . . . , there shall be
no prevailing party for purposes of this section [recovery of attorney’s fees in action on
contract].” As previously mentioned, plaintiffs had brought four causes of action, three
based on the purchase contract, and one premised on a quiet title. Plaintiffs dismissed
without prejudice the first three causes of action.
The trial court has broad discretion to apportion fees. (Zintel Holdings, LLC v.
McLean (2012) 209 Cal.App.4th 431, 443; Amtower v. Photon Dynamics, Inc. (2008) 158
Cal.App.4th 1582, 1604.) Division One for the Court of Appeal of the Fourth Appellate
District has explained: “[A]pportionment [of attorney’s fees] is not required when the
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claims for relief are so intertwined that it would be impracticable, if not impossible, to
separate the attorney’s time into compensable and noncompensable units. [Citations.]”
(Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 687; accord, Akins v.
Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133.) Our Supreme Court
held, “Attorney’s fees need not be apportioned when incurred for representation on an
issue common to both a cause of action in which fees are proper and one in which they
are not allowed.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130; see
Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1322.) A trial court’s
exercise of discretion is abused when its ruling exceeds the bounds of reason after
considering all the circumstances before it. (Amtower v. Photon Dynamics, Inc., supra,
158 Cal.App.4th at p. 1604; Pellegrino v. Robert Half Internat., Inc. (2010) 182
Cal.App.4th 278, 289.)
Plaintiffs allege in their three dismissed causes of action that: defendants breached
the purchase contract; defendants did so by refusing to permit plaintiffs to demolish the
buildings on the Wilder property, including the yard and shed on the East Olympic
easement; defendants fraudulently induced plaintiffs to purchase the Wilder property by
falsely claiming improvements could be constructed on the East Olympic easement; and
rescission should be granted because there was a material failure of consideration due to
defendants’ misrepresentations about plaintiffs’ right to demolish the buildings on the
Wilder property. Plaintiffs’ quiet title cause of action sought to extinguish the East
Olympic easement by reason of the merger doctrine.
All three dismissed causes of action involve claims that defendants had wrongfully
prevented plaintiffs from demolishing the buildings on the Wilder property, including the
shed on the East Olympic easement. Plaintiffs allege in the second amended complaint:
“In or about August of 2005, following the close on their purchase of the Wilder
property, Plaintiffs informed Defendants that they wished to take the first step towards
unlocking the true value of the [Angelus property]. To that end, Plaintiffs informed
Defendants they planned to demolish two dilapidated structures located on the Wilder
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Property to create additional parking to service the [Angelus property], which Defendants
knew was Plaintiffs’ plan all along. Plaintiffs also informed Defendants that Plaintiffs
wished to install an elevator to service their own [Angelus property]. Installing this
elevator would require demolishing a small shack structure within the [East Olympic
easement]. . . .” The fourth cause of action for quiet title was another means of
accomplishing plaintiffs’ purpose of claiming property rights over the shed on the East
Olympic easement. The trial court’s award of attorney’s fees did not exceed the bounds
of reason. The trial court could reasonably have found the three dismissed causes of
action to be so intertwined with the fourth cause of action that no apportionment of fees
was practicable.
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IV. DISPOSITION
The November 6, 2013 order awarding attorney’s fees is affirmed. Defendants,
East Olympic, L.P. and Jack Wilder, are to recover their appellate costs from plaintiffs,
Hamilton Court, LLC, and 3650 Olympic, L.P. Any request for attorney’s fees incurred
on appeal may be recovered pursuant to California Rules of Court, rules 3.1702(c) and
8.278(c)(1).
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER, P. J.
We concur:
MOSK, J.
GOODMAN, J.*
*
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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