Nilson v. White CA4/1 ( 2021 )

Filed 9/16/21 Nilson v. White CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
DAN NILSON et al., D077046
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2017-
00016057-CU-PN-CTL)
DANIEL M. WHITE et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County,
Richard S. Whitney, Judith F. Hayes, Judges. Affirmed.
Joshua R. Furman Law and Joshua R. Furman for Plaintiffs and
Appellants.
Wingert Grebing Brubaker & Juskie, Charles R. Grebing, Ian R.
Friedman; White & Amundson and Daniel M. White for Defendants and
Respondents.
I.
INTRODUCTION
Appellants Dan and Donna Nilson appeal from a judgment entered in
favor of respondents Daniel M. White and White & Amundson APC (White &
Amundson) on appellants’ complaint against respondents, and on White &
Amundson’s cross-complaint against appellants.
Appellants sued respondents over issues arising from respondents’
representation of appellants in an underlying dispute involving Dan Nilson’s
family’s farming business. Although appellants initially alleged a number of
claims of misconduct by respondents during the representation period, by the
time of trial, appellants’ only remaining claims against respondents alleged
malpractice and breach of fiduciary duties based on a stipulation entered into
by respondents on appellants’ behalf regarding Dan Nilson’s mother’s
decision to move forward with a nonjudicial foreclosure on a parcel of
property that appellants believed belonged to them. Appellants asserted that
respondents’ conduct in entering into the stipulation resulted in appellants’
loss of the property in the nonjudicial foreclosure. White & Amundson cross-
complained against appellants, alleging that appellants continued to owe
them hundreds of thousands of dollars in attorney fees and costs, as well as
interest on those amounts.
After the conclusion of appellants’ case-in-chief at the jury trial, the
trial court granted nonsuit on appellants’ complaint, concluding that
appellants had failed to prove that respondents’ conduct caused appellants to
lose the property to nonjudicial foreclosure. White & Amundson’s case for
attorney fees continued to be litigated before the jury. The jury found in
favor of respondents, concluding that appellants owed White & Amundson
more than $650,000 in attorney fees and costs. After the trial court entered
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judgment on both the complaint and cross-complaint, respondents sought
cost-of-proof sanctions for appellants’ failure to admit certain facts in
response to requests for admission propounded to appellants during
discovery. The trial court granted respondents’ motion for cost-of-proof
sanctions in the amount of $211,032.50, and amended the judgment to
include that award.
Appellants raise four broad categories of claims of error on appeal.
With respect to the trial court’s grant of nonsuit on appellants’ complaint,
appellants contend that the court incorrectly concluded that appellants were
unable to demonstrate that their damages were caused by respondents’
alleged malpractice in stipulating to a 60-year statute of limitations with
respect to the nonjudicial foreclosure, and in waiving any timeliness defenses
to the nonjudicial foreclosure.
With respect to that portion of the judgment awarding respondents
damages pursuant to the cross-complaint, appellants contend that the trial
court erred in excluding opinion testimony of F. Thomas Hovore, the attorney
they retained after White & Amundson withdrew from representing them, on
the reasonableness and necessity of the fees charged by respondents.
Appellants also contend that the trial court erred in excluding evidence that
they believed would demonstrate that their fee agreement with White &
Amundson was subsequently orally modified to extend the due date for any
attorney fees until the resolution of the underlying matter, and in declining
to instruct the jury with CACI No. 313, as requested, regarding modification
of a written agreement through an oral agreement or conduct.
Finally, appellants challenge a number of aspects of the trial court’s
order granting cost-of-proof sanctions. Appellants contend that the award of
any sanctions was an abuse of the court’s discretion because the evidence
3
demonstrated that appellants were justified in not admitting the matters at
issue. They further argue that the court erred in determining the amount of
costs to be awarded to respondents because respondents failed “to segregate
the alleged costs incurred for each of the six requests.” In connection with
this argument, appellants contend that the amount by which the court
reduced the cost-of-proof sanction award with respect to request for
admission No. 34, which the court determined had been properly denied, was
arbitrary. These errors, they suggest, require reversal of the cost-of-proof
sanctions award.
We conclude that appellants have not demonstrated prejudicial error
on appeal. We therefore affirm the judgment.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual background
1. History of the Nilson family farming enterprise
Dan’s father and mother, Charles and Louise Nilson, farmed several
parcels that they owned in Imperial Valley. Charles1 and Louise had three
children—Henry, Rebecca, and Dan, all of whom at some point participated
in the family farming business, Nilson Associates.2
Charles generally oversaw the family businesses. When Charles died
in 2009, Dan and Rebecca continued operating the farm. Henry resigned
from the family businesses, but maintained a limited interest in the family
properties. Rebecca and Dan split income and expenses for Nilson
1 For clarity, we refer to certain individuals by their first names.
2 Separate from Nilson Associates, the family also purchased and rented
farm equipment through another family company, Skona, Inc.
4
Associates, with Dan generally handling the farming and Rebecca handling
the financial side of the business.
In 2013, Dan indicated to Rebecca that he wanted to reduce the amount
of time that he spent working in the farming business. They attempted to
determine the value of Dan’s interests in the farming businesses so that he
could withdraw from some of the day-to-day farming responsibilities and
instead pay Nilson Associates “to have the work done” by its employees.
According to Dan, during the course of these discussions, Dan and his wife
Donna Nilson began to suspect that there had been accounting irregularities.
By 2014, Dan was accusing Rebecca and her son of mismanagement of the
businesses, mishandling funds, and fraud. After being informed of Dan and
Donna’s allegations, Louise amended the Charles and Louise Nilson Family
Trust to remove Dan as trustee. Louise also modified Dan’s inheritance such
that assets that would otherwise have been distributed to Dan would instead
be held in trust for him and ultimately distributed to his children.
As of late January 2014, Rebecca created a new entity, to which all of
the income from Nilson Associates was diverted.
2. The home on Sandalwood Drive
Dan Nilson purchased a home on Sandalwood Drive in El Centro (the
Sandalwood property) in the spring of 1994 with a loan of $93,138.75 from
Charles Nilson. The terms of the loan were set forth in a note that was
secured by a deed of trust. The note called for monthly payments of $1,000
commencing on May 28, 1994, at an interest rate of .645 percent calculated
monthly, until the loan was paid in full. The note was not recorded, but the
deed of trust was.
At trial, Dan testified that the family’s practice with respect to the
repayment of personal loans was that Charles would withhold money that
5
was otherwise due to Dan from his earnings from the family farming
businesses.3
While the family dispute over the farming businesses was ongoing,
appellants decided that they wanted to sell the Sandalwood property. In
March 2014, appellants received an offer of $190,000. In the process of
attempting to finalize the sale, a title report identified that the deed of trust
in favor of Charles Nilson had not been removed from the title to the
property. As a result, the sale was not completed.
3. Appellants retain White & Amundson to represent them in the
family dispute
Appellants retained White & Amundson to represent them with respect
to the family dispute, and signed a written Legal Services Retainer
Agreement in June 2014. Appellants paid respondents a $25,000 fee deposit.
The scope of services included representing Dan in his dispute with Rebecca
and Ryan, which involved questions of financial accounting, misuse,
misapplication of funds and ownership of Nilson Associates and Skona.
White & Amundson gathered information, filed a lawsuit in July 2014,
participated in pretrial mediation, conducted a Phase I trial, and engaged in
a subsequent mediation. White & Amundson also moved for, and obtained, a
temporary restraining order against Rebecca and her son to prevent them
from disposing of funds from the businesses. Respondents filed three
lawsuits on behalf of appellants.
At the end of 2014, appellants informed respondents that they could no
longer afford to pay respondents for their representation. Attorney White
3 The trial court sustained hearsay objections to Dan’s attempt to testify
that his father accepted this method of repayment for the loan on the
Sandalwood property. However, Dan was permitted to testify that it was his
understanding that the note had been paid off according to this arrangement.
6
agreed to continue to represent appellants in the underlying dispute and to
defer appellants’ obligation to pay his bills on a monthly basis. At trial,
White explained that he agreed to continue to represent appellants because
he was “not going to let Rebecca Nilson grind these people up and spit them
out. . . . I wasn’t going to tolerate it, period.”
Respondents’ billing administrator continued to send appellants
invoices for attorney fees and costs incurred after this point in time, but
indicated in an e-mail sent to appellants that the invoices were
“informational so that you are kept in the loop of work being done on your
matter.” The billing administrator further indicated that the law firm
“realize[d that] we have exhausted the trust fund monies and will await
resolution of this matter before expecting payment.”4
4. The negotiations and stipulation regarding the Sandalwood
property
Louise, as trustee of the Nilson Family Trust, became holder of the note
and beneficiary of the deed of trust after Charles’s death. In a December
2015 letter, Louise’s lawyer informed appellants that “[t]he principal loan
amount on the note is $93,138.75. The interest payable under the note is
7.75% per anum [sic]. The loan under the note is to be paid in installments of
$1,000.00 on the 28th day of each month, beginning May 28, 1994 until paid
in full. Dan Nilson never made any payments on the note.” The attorney
indicated that Louise’s position was that “the total amount due on the note is
$492,156.82” and that “[i]f the past due amount is not paid, then Louise
Nilson will instruct the trustee to exercise the power of sale and proceed with
4 Dan referenced a “trust fund” during his testimony at trial; he
explained that he was referring to the money appellants paid as a retainer
fee, which was initially $25,000 but ultimately totaled $40,000, and which
had been placed in a trust account.
7
a non-judicial foreclosure on the property.” Appellants’ response, if any, is
not in the record on appeal. However, on January 11, 2016, Louise’s attorney
confirmed in a letter to appellants that Louise would agree to participate in
mediation of “all outstanding family disputes,” including the unpaid note for
the loan for the Sandalwood property, if Dan and the other family members
would stipulate to attend a mediation regarding all of the outstanding issues.
In a separate letter dated that same day, Louise’s attorney specifically
addressed the Sandalwood property. The attorney indicated that Louise
would agree to “refrain from recording the notice of default” on the unpaid
note, which was scheduled to be recorded on January 21, 2016, if Dan would
agree to do the following by January 19, 2016:
“1. Dan Nilson pays $1,366.69 to this office [as
reimbursement for amounts paid to commence foreclosure
proceeding].
“2. Dan Nilson stipulates that the statute of limitations
applicable to the non-judicial foreclosure proceeding by the
trustee under the power of sale under the trust deed
associated with the April 28, 1994 note is established under
C.C. 882.020 and is 60 years from the date of recordation of
the trust deed.
“3. Dan Nilson stipulates that he waives any defenses as to
the non-judicial foreclosure proceeding under the trust deed
associated with the April 28, 1994 note, to the extent that
such defenses relate to the statute of limitations, laches or
the timeliness of the non-judicial foreclosure.
“4. The above-referenced parties all stipulate to attend
mediation before an identified mediator, the first mediation
to take place by March 15, 2016 to reasonably address all
outstanding family legal disputes (see list below)[.]
“[¶] . . . [¶]
8
“Thereafter, Louise Nilson will continue stand down on the
foreclosure, as long as meaningful settlement negotiations
referenced above remain ongoing.”
Respondents forwarded this letter to appellants. Initially, Donna
indicated to respondents that Dan would not accept Louise’s offer.
White wrote to appellants, stating that he felt that they would not be
“giv[ing] up any legal rights which you would otherwise have in defense to
the nonjudicial foreclosure” if they were to agree to Louise’s offer. After a
telephone call with Donna explaining that the stipulation asked appellants to
give up something that “the law already granted” and that it was “little more
than a lawyer trying to ensure that he had dotted his ‘Is’ and crossed his
‘Ts,’ ” White recorded in his notes that “Donna stated she understood, really
seemed to do so and advised that she would share the information with Dan.”
At trial, the parties disputed whether appellants ever gave respondents
approval to agree to Louise’s proposed stipulation. Appellants contended that
they never gave their approval, while White contended that he received
appellants’ approval to enter into the stipulation. It is undisputed that the
record contains no written approval from appellants.
It is also undisputed that White executed the stipulation on behalf of
appellants and forwarded the $1,366.69 requested by Louise’s attorney.
White & Amundson billed appellants for this expense.5
Formal signed stipulations were e-mailed to Donna on January 20,
2016.6 Appellants did not indicate to respondents after they presumably
5 The record does not disclose that appellants paid the bill.
6 In fact, three substantively identical signed stipulations were sent to
Donna because a document identifying the terms of the stipulation had to be
9
received this e-mail that they had not agreed to the terms of the stipulation,
or that respondents should not have agreed to the terms of the stipulation on
appellants’ behalf.
On April 13, 2016, appellants authorized respondents to make a global
settlement offer, which included a condition that Louise could foreclose on the
Sandalwood property and retain any proceeds from the sale. This offer was
not revoked while respondents continued to represent appellants in the
underlying family dispute.
5. The termination of respondents’ representation of appellants and
foreclosure on the Sandalwood property
On May 4, 2016, respondents received an e-mail from Donna in which
she raised issues with several of respondents’ April 2016 billing entries.
Donna stated, “I think you can understand why our confidence is gone.”
On May 6, White wrote a disengagement letter to appellants, and
provided them with instructions regarding the things that new counsel would
have to do, including the following:
“[O]ur withdrawal means that settlement negotiations will
be suspended. . . . Your new lawyer should immediately
address this with [Louise’s attorney] to determine if Louise
will continue to defer the foreclosure. If [Louise’s attorney]
refuses to further deter foreclosure, your new counsel may
wish to consider an application for injunctive relief.”
Appellants, through their new attorney F. Thomas Hovore, filed a
Substitution of Counsel on June 13, 2016. Also on June 13, respondents
received, via certified mail, “a Notice of Default and Election to Sell Under
Deed of Trust with respect to the . . . Sandalwood Drive, El Centro, California
property” (Notice of Default) that had been initiated by Louise in her capacity
filed in each of the three pending cases involving the family disputes. We will
refer to a single “stipulation.”
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as Trustee of the Charles and Louise Nilson Family Trust. That same day,
White forwarded the Notice of Default to appellants with a letter stating:
“[W]e will not represent you on this and are notifying the sender to direct
future correspondence to you.” White also forwarded the information by e-
mail to Hovore on June 14, 2016.
Hovore testified at trial that his office did nothing to attempt to delay
or prevent the nonjudicial foreclosure. At some point, Louise completed the
nonjudicial foreclosure and appellants lost any right to the Sandalwood
property.
B. Procedural background
Appellants filed a complaint against respondents claiming legal
malpractice and breach of fiduciary duty, and seeking declaratory relief. The
complaint as originally framed alleged several acts of alleged malpractice and
breaches of fiduciary duty, including allegations related to claims that White
& Amundson mishandled money held in trust; failed to pursue relevant
discovery; failed to take depositions; failed to pursue appellants’ damages
claims; hired improper expert witnesses; had a conflict of interest based on a
claimed personal relationship with opposing counsel; and allowed the
foreclosure of the Sandalwood rental property.
Respondents answered the complaint, and White & Amundson filed a
cross-complaint for the attorneys’ fees that it claimed appellants owed.7
The parties engaged in discovery, and after the disclosure of the
parties’ experts, the parties entered into a stipulation in which appellants
agreed to withdraw virtually all of their claims for malpractice and breach of
fiduciary duty, with the exception of those claims relating to the foreclosure
7 A few months later, White & Amundson filed an amended cross-
complaint that became the operative cross-complaint.
11
of the Sandalwood property.8 Appellants also agreed to withdraw certain
affirmative defenses to the cross-complaint (“numbers 9, 11, 13, 14, 18 and
29”), and indicated that their other “affirmative defenses, while not subject to
an agreement to withdraw, generally relate to the reasonableness and
necessity of the fees, costs, and expenses incurred by the Cross-Complainant
and/or any of the experts retained during the course of the Cross-
Complainant’s representation of Cross-Defendants, as well as any and all
general defense to claims for breach of contract and common counts.”
Immediately prior to trial, respondents brought multiple motions in
limine. Relevant to the issues raised by appellants in this appeal, in
respondents’ motion in limine No. 1, respondents sought to exclude expert
opinion testimony to be offered by appellants’ current retained counsel,
F. Thomas Hovore, to the extent that he would offer nonpercipient expert
opinion testimony, and respondents’ motion in limine No. 4, in which
respondents sought to exclude evidence that “there was any oral or un-signed
amendment, modification or waiver of the terms of the Legal Services
Retainer Agreement” that the parties had executed in 2014.9
8 During arguments regarding motions in limine, counsel for appellants
indicated that the underlying case had, for the most part, settled, and that
there was only a single remaining malpractice claim and breach of fiduciary
duty claim, which involved the allegations that “ha[d] to do with the handling
of this foreclosure [of the Sandalwood property].”
9 Respondent’s motion in limine No. 4 argued that evidence of an oral
agreement constituted inadmissible parol evidence, and also argued that the
Legal Services Retainer Agreement included a provision that required that
any modification, amendment, change, or waiver be made in writing and
signed by the parties.
12
The trial court tentatively granted respondents’ motion in limine No. 1,
precluding Hovore from providing nonpercipient expert witness testimony on
the ground that appellants had not provided respondents with a declaration
as to the content of his proposed testimony, as required by statute.10 The
court also tentatively granted motion in limine No. 4, without prejudice, to
preclude evidence to the effect that the Legal Services Retainer Agreement
had been modified by a subsequent oral agreement.11
A jury trial commenced on June 19, 2019. On July 2, 2019, after
multiple days of testimony, respondents moved for nonsuit on appellants’
remaining claims. The court granted the nonsuit that same day. As a result
of the trial court’s rulings, the only claims that remained for the jury to
determine were White & Amundson’s claims for breach of contract and
common counts related to the attorney fees that White & Amundson was
seeking from appellants.
Appellants requested that the trial court instruct the jury with CACI
No. 313, regarding the modification of a written agreement through an oral
agreement or by conduct. The trial court denied the request.
The jury returned a verdict on White & Amundson’s contract claim
against appellants in favor of White & Amundson, awarding the firm
$650,000 in attorney fees.
The trial court entered a “Final Judgment” (some capitalization
omitted) in favor of respondents on both of appellants claims against
10 The parties have not cited to any portion of the record to indicate that
the trial court deviated from its initial tentative ruling granting motion in
limine No. 1.
11 Although the trial court left open the possibility of “additional briefing”
on this issue as trial progressed, the record on appeal does not demonstrate
that the parties filed further briefing on this issue.
13
respondents, as well as on White & Amundson’s claims against appellants, on
August 23, 2019.
Approximately two weeks later, on September 11, 2019, White &
Amundson filed a motion seeking cost-of-proof sanctions against appellants
for failing to admit the truth of matters in their responses to requests for
admission, which respondents proved at trial.
Appellants filed a timely notice of appeal from the judgment on
December 10, 2019.
On January 3, 2020, the trial court granted White & Amundson’s
motion for cost-of-proof sanctions in the amount of $211,032.50. Appellants
filed a timely notice of appeal from the court’s postjudgment order granting
sanctions.12
III.
DISCUSSION
A. The trial court did not err in granting nonsuit
Appellants contend that the trial court erred in granting respondents’
motion for nonsuit after the presentation of appellants’ case at trial. They
argue that the trial court misunderstood the applicable law, including the
Marketable Record Title Act, and as a result, incorrectly concluded that
appellants were unable to prove the element of causation with respect to
their claims. Appellants maintain that the “other grounds in the
[respondents’] nonsuit motion are meritless” (boldface and some
capitalization omitted).
12 The trial court entered an amended judgment on January 10, 2020, to
incorporate the cost-of-proof sanction award.
14
1. Legal standards
A motion for judgment of nonsuit is a motion made after the plaintiff’s
opening statement, or after the plaintiff has presented his or her evidence.
(Code Civ. Proc., § 581c, subd. (a).) The motion concedes the truth of the facts
asserted (if the motion is made after the opening statement) or shown (if the
motion is made after the presentation of the plaintiff’s evidence), but claims
that they fail as a matter of law to support the plaintiff’s cause of action.
(Gray v. Kircher (1987) 193 Cal.App.3d 1069, 1071.) “A defendant is entitled
to a nonsuit if the trial court determines that, as a matter of law, the
evidence presented by [the] plaintiff is insufficient to permit a jury to find in
his favor.” (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291.)
“A motion for nonsuit allows a defendant to test the sufficiency of the
plaintiff’s evidence before presenting his or her case. Because a successful
nonsuit motion precludes submission of plaintiff’s case to the jury, courts
grant motions for nonsuit only under very limited circumstances. [Citation.]
A trial court must not grant a motion for nonsuit if the evidence presented by
the plaintiff would support a jury verdict in the plaintiff’s favor. [Citations.]
[¶] ‘In determining whether plaintiff’s evidence is sufficient, the court may
not weigh the evidence or consider the credibility of witnesses. Instead, the
evidence most favorable to plaintiff must be accepted as true and conflicting
evidence must be disregarded. The court must give “to the [plaintiff’s]
evidence all the value to which it is legally entitled, . . . indulging every
legitimate inference which may be drawn from the evidence in [plaintiff’s]
favor . . . .” ’ [Citations.]” (Carson v. Facilities Development Co. (1984)
36 Cal.3d 830, 838–839 (Carson).)
“In an appeal from a judgment of nonsuit, the reviewing court is guided
by the same rule requiring evaluation of the evidence in the light most
15
favorable to the plaintiff. ‘The judgment of the trial court cannot be
sustained unless interpreting the evidence most favorably to plaintiff’s case
and most strongly against the defendant and resolving all presumptions,
inferences and doubts in favor of the plaintiff a judgment for the defendant is
required as a matter of law.’ [Citations.] [¶] Although a judgment of nonsuit
must not be reversed if plaintiff’s proof raises nothing more than speculation,
suspicion, or conjecture, reversal is warranted if there is ‘some substance to
plaintiff’s evidence upon which reasonable minds could differ . . . .’
[Citations.]” (Carson, supra, 36 Cal.3d at p. 839.)
Appellants’ only remaining claims at the time of trial were for legal
malpractice and breach of fiduciary duty arising from White’s alleged failure
to “take action to prevent foreclosure of” the Sandalwood property, as well as
his alleged “affirmative steps that allowed the foreclosure to take place,
resulting in the loss of the property.” Appellants claimed that White had
“waived the time bar, paid claiming family members money (billing
[appellants] for the expense), and told [appellants] he had acted despite their
instructions,” and that, as a result of White’s actions, “family members were
able to foreclose on the trust deed and [appellants] lost the property.”
Causes of action for legal malpractice and breach of fiduciary duty both
require a plaintiff to prove that the alleged breach of a duty caused the
plaintiffs’ damages. (See, e.g., Fox v. Ethicon Endo-Surgery, Inc. (2005)
35 Cal.4th 797, 807 [the generic elements of a tort claim are “wrongdoing,
causation and harm”]; see also Mattco Forge, Inc. v. Arthur Young & Co.
(1997) 52 Cal.App.4th 820, 833 [“ ‘The elements of a cause of action in tort for
professional negligence’ ” include “ ‘a proximate causal connection between
the negligent conduct and the resulting injury; and (4) actual loss or damage
resulting from the professional’s negligence’ ”]; Wittenberg v. Bornstein (2020)
16
50 Cal.App.5th 303, 312, fn. 7 [the elements of a cause of action for breach of
fiduciary duty include “damage proximately caused by that breach” of duty].)
2. Analysis
a. Appellants cannot, as a matter of law, demonstrate the
element of causation with respect to their claim for attorney
professional negligence
To prevail on a legal malpractice claim, “the plaintiff must establish
that but for the alleged negligence of the defendant attorney, the plaintiff
would have obtained a more favorable judgment or settlement in the action in
which the malpractice allegedly occurred.” (Viner v. Sweet (2003) 30 Cal.4th
1232, 1235, 1241.) This standard requires that a plaintiff “prove what the
better outcome would have been.” (Marshak v. Ballesteros (1999)
72 Cal.App.4th 1514, 1518.) “It is not enough for [a plaintiff] to simply
claim . . . that it was possible to obtain a better settlement or a better result
at trial. The mere probability that a certain event would have happened will
not furnish the foundation for malpractice damages.” (Barnard v. Langer
(2003) 109 Cal.App.4th 1453, 1461.)
The “ ‘causation inquiry has two facets: whether the defendant’s
conduct was the “cause in fact” of the injury; and, if so, whether as a matter
of social policy the defendant should be held legally responsible for the
injury.’ ” (Kumaraperu v. Feldsted (2015) 237 Cal.App.4th 60, 68.) For
“causation in fact” the conduct must be a “substantial factor” or conduct
bringing about harm that “is ‘recognizable as having an appreciable effect in
bringing it about.’ ” (Ibid.)
Even assuming that respondents breached a duty owed to appellants by
entering into the stipulation in which they agreed to a 60-year statute of
limitations as well as to the waiver of timeliness defenses, including laches,
without appellants consent, in order to prevail, appellants would have had to
17
establish that respondents’ entering into the stipulation brought about the
nonjudicial foreclosure. We conclude that appellants did not make that
showing.
i. A 60-year limitation period applied; therefore, a
stipulation to that limitation period could not have
caused harm to appellants
Appellants contend that a ten-year statute of limitations in the
Marketable Record Title Act, rather than the 60-year limit to which
respondents stipulated, applied to the enforcement of the deed of trust and
that respondents failed to establish that the ten-year statute did not apply.
Specifically, appellants argue that there was “no evidence upon which the
jury could determine whether the note was recorded,” and, if the note was
recorded, the ten-year statute of limitations would apply.
The applicable statute of limitations for enforcement of a deed of trust
is governed by the Marketable Record Title Act. A lien, and with it an
accompanying power of sale provided for in a deed of trust, expires either:
(1) ten years after the final maturity date of the obligation or date of the final
fixed payment, if that information is “ascertainable from the recorded
evidence of indebtedness”; (2) 60 years from the recording date of the security
instrument if the maturity date is not “ascertainable from the recorded
evidence of indebtedness”; or (3) ten years after a notice of intent to preserve
the security interest is recorded, but only if such notice is filed within the
appropriate time limitations set forth above. (Civ. Code, § 882.020. subd. (a).)
The expiration of the lien renders it unenforceable by any means. (Civ. Code,
§ 882.030.)13
13 Prior to the enactment of the Marketable Record Title Act in 1982,
“California cases had continuously held that the power of sale under a deed of
trust was not barred, or ‘never outlaws,’ and that the power of sale might be
18
Pursuant to the statutory scheme, in order for the ten-year limitation
period to apply to preclude any judicial or nonjudicial action on a lien, the
“recorded evidence of indebtedness” must expressly state the maturity date or
the date of the final fixed payment. (Civ. Code, § 882.020, subd. (a).) The
legislative history of the statute demonstrates that the term “ ‘ “recorded
evidence of indebtedness” ’ ” is “ ‘synonymous with deed of trust.’ ” (Schmidli
v. Pearce (2009) 178 Cal.App.4th 305, 315, 316.) Even where a party has
“actual notice of the date when an underlying obligation is due,” this is
insufficient to meet the terms of Civil Code section 882.020, subdivision (a)
because the “recorded document must reveal that date.” (Trenk v. Soheili
(2020) 58 Cal.App.5th 1033, 1039–1044, italics added [unrecorded note that
specified “36 monthly payments of $2,500” was insufficient to state when an
obligation is due pursuant to the terms of relevant statutory provision
because “document stating the last date for payment of the underlying
obligation must be recorded for the 10-year period to apply”].)
If a recorded deed of trust or other contemporaneously recorded
document fails to state the maturity date or the date for a final fixed payment
of the debt, “the maturity date of the obligation is not ascertainable from the
record and the lien on the collateral property expires 60 years after
recordation of the deed.” (Miller, supra, 26 Cal.App.4th at p. 1709.) “[T]he
term ‘ascertainable from the record’ does not include the contents of
unrecorded documents referred to in a recorded document.” (Nicolopulos v.
Superior Court (2003) 106 Cal.App.4th 304, 310 (Nicolopulos); see Miller,
supra, 26 Cal.App.4th 1703 [the reference to or attempted incorporation of
unrecorded documents, such as a note, do not render the maturity date of
exercised by the trustee who held the title even though the statute of
limitations had barred any action on the debt.” (Miller v. Provost (1994)
26 Cal.App.4th 1703, 1707 (Miller).)
19
debt underlying a recorded deed of trust ascertainable because the
unrecorded documents do not put the public on notice of that date].)
The only recorded document in the record in this case is the deed of
trust. The deed of trust “irrevocably grants, transfers and assigns to Trustee
in Trust, with Power of Sale[,]” the Sandalwood property. There is nothing in
the Deed of Trust that indicates the maturity date of the underlying debt.
Further, the only copy of the promissory note entered in evidence does not
show any recording stamp. Other evidence in the record demonstrates that
only the deed of trust, and not the promissory note, was recorded.14 In
essence, there was no evidence presented at trial from which a fact-finder
could determine that the promissory note was recorded, or that any other
document with an ascertainable maturity date for the debt was recorded.15
In their opening brief, appellants assert that respondents failed to
establish that Civil Code section 2911 did not apply to limit the time within
14 An acknowledgment signed and dated by a notary indicates that the
notary certified the signature of Dan Nilson on a single document, the Deed
of Trust, for recording. In addition, a title report admitted in evidence
included only recordation of the deed of trust, and no recordation of a
promissory note.
15 Appellants’ argument that “there was no evidence upon which the jury
could determine whether the note was recorded” is unavailing. The question
on a nonsuit is whether “the evidence presented by the plaintiff would support
a jury verdict in the plaintiff’s favor. [Citations.]” (Carson, supra, 36 Cal.3d
at p. 838, italics added.) Appellants had the burden to demonstrate in their
case-in-chief that respondents’ conduct caused them harm. Appellants
therefore had to present evidence from which a fact-finder could find that the
60-year limitation period for nonjudicial foreclosure on the Sandalwood
property did not apply, and that instead, the ten-year period applied. The
absence of any evidence on this point precludes appellants from being able to
prove their claim.
20
which Louise could have quieted title to the property. Appellants suggest
that Civil Code section 2911’s limitation of the time frame during which title
could be quieted would have allowed appellants to retain “possession” of the
Sandalwood property, regardless of the applicability of the 60-year limitation
period in the Marketable Record Title Act.16 Appellants assert that “but for
the waiver by [respondents], [appellants] could have maintained possession of
the Sandalwood House despite any application of the Marketable Record
Title Act because the ostensible foreclosers were powerless to quiet title.”
Civil Code section 2911 states in relevant part: “A lien is extinguished by the
lapse of time within which, under the provisions of the Code of Civil
Procedure . . . . [¶] 1. An action can be brought upon the principal obligation.”
Appellants rely on Robin v. Crowell (2020) 55 Cal.App.5th 727, but this
authority makes clear that a trustee may conduct a nonjudicial foreclosure
through the power of sale within the limitations period set forth in the
Marketable Record Title Act, despite the fact that the time period for
bringing an action to enforce the lien has expired. Robin states: “Civil Code
section 2911 has been interpreted to extinguish only the lien of the deed of
trust, i.e., the security interest enforceable through judicial foreclosure, and
not the power of sale. [Citation] Consequently, the phrase ‘[u]nless the lien
of a . . . deed of trust . . . [in Civil Code section 882.020] has earlier expired
pursuant to Section 2911]’ refers to the expiration of the statute of limitations
on a judicial action to enforce the lien. The effect of Civil Code section
882.020 is to (1) limit the time within which the trustee can exercise of the
power of sale, which is unaffected by Civil Code section 2911, and (2) set an
outside limit on the time to bring a judicial action, in the event the basic
16 Appellants do not make further argument in this regard in their reply
brief.
21
statutory limitations period has been extended or tolled (such as, by waiver,
agreement of the parties, partial payment, or the defendant’s absence from
the state) and Civil Code section 2911 has not yet barred a judicial action.
[Citation.]” (Robin, supra, 55 cal.App.5th at p. 750, italics added.) Here,
because the foreclosure that occurred was a nonjudicial foreclosure conducted
through the exercise of the power of sale, Civil Code section 2911 could not
have assisted appellants in preventing the foreclosure sale.
ii. Despite appellants’ claims otherwise, a laches defense
was not available to them; thus, any waiver of such a
defense could not have caused appellants’ asserted
harm—i.e., loss of the property
Although a laches defense might potentially be available under the
Marketable Record Title Act in the context of a judicial foreclosure, we agree
with the court in Nicolopulos, supra, 106 Cal.App.4th 304, 312, that it is at
best unclear that the equitable defense of laches may be used in the context
of a nonjudicial foreclosure. “ ‘Laches is an unreasonable delay in asserting
an equitable right, causing prejudice to an adverse party such as to render
the granting of relief to the other party inequitable.’ ” (Id. at p. 312, quoting
Wells Fargo Bank v. Bank of America (1995) 32 Cal.App.4th 424, 439, italics
added.) Laches, therefore, is available as a defense to a lawsuit by a plaintiff
seeking equitable relief. A trustee exercising a right of the power of sale
pursuant to a deed of trust to execute a nonjudicial foreclosure is not
asserting an equitable right in a judicial forum. There is thus no authority to
support the idea that a “laches defense” could have prevented Louise from
exercising the power of sale in the Deed of Trust and conducting a trustee’s
sale.
Appellants suggest that courts have “permitted equitable claims in
defense of a nonjudicial foreclosure.” However, the authorities that
22
appellants cite indicate that courts have permitted trustors to bring judicial
actions for declaratory and injunctive relief in an attempt to forestall a
nonjudicial foreclosure (see Pfeifer v. Countrywide Home Loans, Inc. (2012)
211 Cal.App.4th 1250, 1268, 1281) or to undo a completed trustee sale (see
Fonteno v. Wells Fargo Bank, N.A. (2014) 228 Cal.App.4th 1358, 1369), not
that an individual may bring equitable claims to “defend” against a
nonjudicial foreclosure process. Further, such a contention misses the point
as to why laches cannot apply in the context of a nonjudicial foreclosure. The
issue is not that equitable defenses or claims are never available to those
attempting to prevent or overturn a trustee’s sale, but rather, that laches is
an equitable defense to an equitable claim brought in a judicial forum. (See,
e.g., Highland Springs Conference & Training Center v. City of Banning
(2016) 244 Cal.App.4th 267, 288 (Highland Springs) [“[a]n action on a
judgment is an action at law, and the defense of laches may not be raised in
actions at law, including an action on a judgment”]; People v. Koontz (2002)
27 Cal.4th 1041, 1088 [laches may be asserted only in a suit in equity];
United States Capital Corp. v. Nickelberry (1981) 120 Cal.App.3d 864, 867–
868 [the defense of laches may not be raised in actions at law, but only
actions in equity]; Pratali v. Gates (1992) 4 Cal.App.4th 632, 644–645 [same].)
A trustee’s sale is not an equitable claim against which a laches defense
would be cognizable.
However, even if we were to assume that a laches defense was
somehow applicable to prevent a trustee’s sale, more than mere delay on the
part of the foreclosing party must be demonstrated in order for laches to
apply. (See Lam v. Bureau of Security & Investigative Services (1995)
34 Cal.App.4th 29, 36 [delay alone ordinarily does not constitute laches
because a lapse of time is separately embodied in statutes of limitation].) To
23
establish laches as an affirmative defense, the party asserting it must
demonstrate both unreasonable delay by the party bringing suit against
them, and also “ ‘either acquiescence in the act about which plaintiff
complains or prejudice to the defendant resulting from the delay.’ [Citation.]”
(Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624 (Miller); Mt.
San Antonio Community College Dist. v. Public Employment Relations Bd.
(1989) 210 Cal.App.3d 178, 188.)
A party asserting laches bears the burden of production and proof on
each element of the defense (Miller, supra, 27 Cal.3d at p. 624), and
“[p]rejudice is never presumed; rather it must be affirmatively demonstrated
by the defendant in order to sustain his burdens of proof and the production
of evidence on the issue.” (Ibid.)17 Further, prejudice in this context
requires a demonstration that “ ‘ “ ‘the assertion of a claim available some
time ago would be “inequitable” in light of the delay in bringing that
claim . . . [and the] defendant has changed his position in a way that would
not have occurred if the plaintiff had not delayed.’ ” ’ ” (George v. Shams-
Shirazi (2020) 45 Cal.App.5th 134, 142.) For example, a defendant can
establish prejudice by showing detrimental reliance on the status quo.
(Brown v. State Personnel Bd. (1985) 166 Cal.App.3d 1151, 1162.)
Therefore, in order to demonstrate that laches was an available defense
and that it would have been successful, thereby allowing appellants to
prevent the nonjudicial foreclosure of the Sandalwood property, appellants
would have had to either put forth evidence demonstrating that they changed
17 As one court explained, “Though it may seem fair and reasonable to
presume prejudice based solely on a party’s unreasonable delay in asserting a
right, particularly when, as here, the relevant facts were known to or should
have been discovered by the party asserting the right, prejudice simply may
not be presumed based solely on an unreasonable delay in asserting the
right.” (Highland Springs, supra, 244 Cal.App.4th at p. 283.)
24
their position with respect to the Sandalwood property in a way that they
would not have done if Louise had not waited to institute the nonjudicial
foreclosure, or present affirmative evidence of Louise’s acquiescence in Dan’s
failure to make the monthly payments due under the note. On appeal,
appellants do not address these issues, and do not cite to the record to
demonstrate where they introduced evidence of the necessary showing of
prejudice or acquiescence. In the absence of such evidence, we cannot
presume prejudice. (See Miller, supra, 27 Cal.3d at p. 624.) Given the
absence of any showing with respect to these elements of a laches defense,
appellants cannot demonstrate that the trial court erred in granting nonsuit
with respect to their claim for attorney malpractice based on respondents’
waiving of a possible laches defense, even if the court were to presume that
laches is available as a defense to a nonjudicial foreclosure.
iii. Appellants have not set forth any theory as to how
nonsuit was granted in error with respect to their
malpractice claim based on waiver of any general
“timeliness” defense
Although the stipulation at issue with respect to appellants’
malpractice claim also generally waived any “timeliness” defenses to the
nonjudicial foreclosure, appellants did not put forward any legal theory of a
“timeliness” defense other than laches. Absent any argument on this ground,
we conclude that appellants have forfeited any contention that the nonsuit
was granted in error with respect to the malpractice claim on the theory that
respondents improperly waived any “timeliness” defense.
iv. Appellants forfeited any contention that the granting
of the nonsuit was erroneous on the ground that
respondents’ malpractice caused appellants harm in
the amount of $1,366.69, due to respondents’ payment
of this amount to Louise as part of the agreement for
25
her to delay moving forward with the nonjudicial
foreclosure
For the first time in their reply brief, and in response to what
appellants refer to as a “passing argument” made by respondents in their
brief, appellants assert that “[a]t a minimum, even without considering the
waiver issue, [appellants] were damaged in the amount of [the $1,366.69]
payment [that respondents made to Louise to delay the foreclosure] because
Respondents passed it on to [appellants] as a charge.” Appellants have
forfeited this issue by failing to raise the issue in their opening brief, and by
failing to present reasoned argument supported by citations to the record and
relevant authorities in support of this contention.
Appellate courts generally do not consider arguments raised by
appellants for the first time in a reply brief. (See, e.g., Raceway Ford Cases
(2016) 2 Cal.5th 161, 178; Varjabedian v. City of Madera (1977) 20 Cal.3d
285, 295, fn. 11.) Although the fact that respondents briefly addressed this
issue in their brief mitigates some of the unfairness to the respondent that
can result when an appellant raises an argument for the first time in a reply
brief, we nevertheless conclude that forfeiture of the contention should apply
because of the dearth of reasoned argument on the point offered by
appellants. Appellants devoted only five sentences to this contention in their
reply,18 and they failed to support their contention with relevant legal
authority and reasoned argument, all of which supports a determination that
this contention has been forfeited. (See Tsasu LLC v. U.S. Bank Trust, N.A.
(2021) 62 Cal.App.5th 704, 714 [where party did not raise challenge in
opening brief on appeal and “devoted only one paragraph to it in its reply
brief,” party’s “decision not to present reasoned argument in support of” its
18 One of these five sentences consisted of a single word: “Nonsense.”
26
challenge constituted “a waiver of that challenge”]; see also Cahill v. San
Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 (Cahill) [arguments
not supported by “ ‘ “reasoned argument and citations to authority” ’ ” results
in forfeiture]; In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814,
830 (Marriage of Falcone) [“The absence of cogent legal argument or citation
to authority allows this court to treat the contention as waived”].)
b. For the same reasons appellants cannot demonstrate the
element of causation as a matter of law with respect to their
claim for attorney professional negligence, they cannot
demonstrate causation on their claim for breach of fiduciary
duty based on the same alleged conduct
“The breach of fiduciary duty can be based upon either negligence or
fraud [or another intentional violation of the duty] depending on the
circumstances. [Citations.] It has been referred to as a species of tort
distinct from causes of action for professional negligence [citation] and from
fraud [citation].” (Ash v. North American Title Co. (2014) 223 Cal.App.4th
1258, 1276.) “The elements of a cause of action for breach of fiduciary duty
are the existence of a fiduciary relationship, breach of fiduciary duty, and
damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)
Although respondents contend that appellants’ remaining breach of
fiduciary duty claim is based on negligent conduct rather than intentional
conduct, they acknowledge that the parties disputed this issue at trial. The
standard of causation for a breach of fiduciary duty based on intentional
conduct may be different from the standard applicable where the breach is
based on negligent conduct; at least one court has identified the standard
applicable to an alleged breach of a fiduciary duty based on intentional
conduct as requiring a showing only that the defendant’s conduct was a
“substantial factor” in the harm that is alleged to have resulted from that
27
conduct rather than a “but for” cause as is required for a breach based on
negligent conduct. (Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1095;
see Knutson v. Foster (2018) 25 Cal.App.5th 1075, 1094 (Knutson).) Pursuant
to this standard, “[i]t is plaintiff’s burden to establish ‘ “a reasonable basis for
the conclusion that it was more likely than not that the conduct of the
defendant was a substantial factor in the result.” ’ ” (Stanley, supra,
35 Cal.App.4th at p. 1095.)19 We can assume for purposes of this appeal that
appellants’ claim for breach of fiduciary duty is based on intentional conduct,
because the result is the same, regardless of whether the causation standard
is “substantial factor” causation for intentional conduct or “but for” causation
for negligent conduct. This is because, as we have previously explained, the
stipulation to a 60-year statute of limitation, as well as the waiver of a laches
defense or other so-called “timeliness” defense that appellants have not
identified, did not give Louise any additional rights with respect to moving
forward with the nonjudicial foreclosure on the Sandalwood property. In
view of our conclusions above, the stipulation did not eliminate any available
defenses to the nonjudicial foreclosure that appellants would have had in the
absence of the stipulation. Thus, respondents’ conduct with respect to the
stipulation simply could not have been a “substantial factor” in appellants’
loss of the Sandalwood property to nonjudicial foreclosure.
19 As the Knutson court explained: “The authors of the Restatement
Third of the Law Governing Lawyers recognized that causation for
intentional breach of fiduciary duty might be treated differently from
negligent breach: ‘Under generally applicable fiduciary law, a claim of
intentional breach might render applicable different defenses and causation
and damages rules than would otherwise control.’ [Citation.]” (Knutson,
supra, 25 Cal.App.5th at p. 1094.)
28
c. The grant of nonsuit with respect to the punitive damages
request was proper
In what amounts to essentially a throw-away argument, appellants
suggest that the trial court erred in granting nonsuit with respect to their
request for punitive damages. Appellants contend that “[respondents’]
argument that punitive damages was not supported [does not] have any
merit” because, according to appellants, “[a]n attorney disobeying a direct
instruction from the attorney’s client in knowing disregard of the clients’
rights warrants punitive damages.” However, it has long been understood
that “ ‘[a]ctual damages must be found as a predicate for exemplary
damages’ ”; “punitive damages are never more than an incident to a cause of
action for actual damages, and, when allowed, are allowed only in addition to
recovered actual damages.” (Mother Cobb’s Chicken Turnovers, Inc. v. Fox
(1937) 10 Cal.2d 203, 205–206; 6 Witkin, Summary of Cal. Law (11th ed.
2017) Torts, § 1780 [“it is settled in California that punitive damages cannot
be awarded unless actual damages were suffered, the theory being that they
are in addition to compensatory damages”].) Thus, a punitive damage
request falls when a court grants a nonsuit as to the cause of action
supporting the actual damages that provide the predicate for the punitive
damage request. Because the trial court properly granted nonsuit as to
appellants’ causes of action seeking actual damages, the court also properly
granted nonsuit with respect to appellants’ claim for punitive damages.
d. Appellants have not demonstrated reversible error with
respect to their declaratory relief claim
Appellants assert, without any legal argument, that although “[t]he
nonsuit motion also argued that the declaratory relief claim was derivative
and should be dismissed along with the other claims,” this argument is
29
“meritless” because “[t]he declaratory relief claim sought a declaration that
the Nilsons did not owe White any more money,” and this “claim is not
extinguished even if White was correct that the breach of fiduciary duty claim
could not go to the jury.” This is the extent of appellants’ argument with
respect to their cause of action for declaratory relief and whether the trial
court properly granted nonsuit on that cause of action.
Again, the failure to support a contention with “ ‘ “reasoned argument
and citations to authority” ’ ” results in forfeiture of the contention on appeal.
(See., e.g., Cahill, supra, 194 Cal.App.4th at p. 956; Marriage of Falcone,
supra, 164 Cal.App.4th at p. 830.) Appellants have failed to support their
contention regarding the court’s grant of nonsuit with respect to the
declaratory relief claim with any argument, let alone reasoned argument.
Further, the record makes clear that appellants could not demonstrate that
the trial court prejudicially erred in granting nonsuit as to their declaratory
relief claim. Although we agree with appellants that their declaratory relief
claim is not derivative of either the attorney malpractice claim or the breach
of fiduciary duty claim, appellants had a full and fair opportunity to try all of
the issues raised in their declaratory relief cause of action; respondents’
entire cross-complaint concerned respondents’ contention that appellants
were liable for additional monies due to respondents, which is the same issue
that appellants raise in their declaratory relief claim.20 Appellants’ raised a
20 In their declaratory relief claim, appellants asserted that there existed
“an actual controversy between Plaintiffs and Defendants as to whether
Plaintiffs owe significant sums to Defendants for legal services rendered.”
Appellants further asserted that “[d]ue to Defendants’ ethical violations,
overbilling, unnecessary billing, and other misconduct, as well as principles
of accord and satisfaction, novation, and other doctrines of contract and
equity, Plaintiffs should not be liable to Defendants for any additional
monies.” Appellants sought a declaration that they owed no more money to
30
variety of defenses to respondents’ claims in their answer to the cross-
complaint, including defenses related to matters referenced in appellants’
declaratory relief claim—including respondents’ alleged breaches of ethical
obligations, attorney negligence, unclean hands, waiver, breach of contract,
accord and satisfaction, novation, and lack of or failure of consideration.
Most important, the parties actually litigated all of the issues raised in
appellants’ declaratory relief cause of action—i.e., whether respondents’
conduct and/or alleged misconduct prevented respondents from obtaining any
further monies from appellants, whether respondents’ billings were
unnecessary or unreasonable, and whether contractual principles otherwise
rendered appellants not liable for further attorney fees and costs associated
with respondents’ representation of appellants in the underlying family
dispute litigation. It is therefore clear that appellants were not prejudiced by
the court’s grant of nonsuit with respect to their declaratory relief cause of
action.
B. Appellants have demonstrated no basis for reversing the jury’s verdict in
favor of respondents on respondents’ cross-complaint for unpaid attorney
fees
Appellants do not directly attack the validity of the jury’s verdict in
favor of respondents on respondents’ contractual claim for unpaid attorney
fees, but instead challenge two aspects of the trial court’s pretrial rulings.
First, appellants contend that the trial court erred in not permitting them to
call their attorney, whom they hired to represent them after the attorney-
client relationship with respondents terminated, to testify as to “the
reasonableness and necessity of White’s claimed fees.” The trial court
respondents. Although all three claims may have relied to some extent on
the same evidence, this cause of action is distinct from appellants’ causes of
action for attorney malpractice and breach of fiduciary duty.
31
excluded such testimony on the ground that appellants had not included a
declaration as to the content of their attorney’s proffered testimony, which is
required with respect to retained experts.
Second, appellants contend that the trial court erred in ruling that
evidence of the existence of an alleged oral modification of the written legal
services agreement between the parties constituted inadmissible parol
evidence. They further contend that the trial court’s misunderstanding of the
nature of the evidence as parol evidence led the court to engage in
instructional error by declining to instruct the jury with CACI No. 313,
regarding subsequent modification of a written agreement, as requested by
appellants.
1. The trial court did not abuse its discretion in not permitting
appellants to call their subsequently-retained attorney to testify
regarding the reasonableness of the fees claimed by respondents
Appellants contend that the trial court prejudicially erred in granting
respondents’ motion in limine No. 1, which had the effect of precluding
appellants’ second attorney in the underlying family dispute matter, Hovore,
from providing nonpercipient expert witness testimony. The trial court’s
ruling was based on the fact that appellants had not provided respondents
with a declaration as to the content of Hovore’s proposed testimony, as is
required by statute with respect to retained-expert testimony. The trial court
stated, “Well, the tentative is to grant this motion. There hasn’t been a
designation that he’ll be providing us with testimony. There has been no
declaration outlining what the proposed expert testimony would be. [¶] Now,
to the extent that he’s allowed to testify as a percipient witness attorney
remains to be seen. I haven’t heard his testimony. I don’t know what the
questions and answers are going to be. But at this point, on the various
32
issues that are addressed in this case, I’m not inclined to allow him to testify
as an expert. He can certainly testify as to what he did as an attorney.”
At trial, while Hovore was testifying on direct examination, counsel for
respondents objected to some of Hovore’s statements regarding things that
Hovore believed White had not done, but should have, during his
representation of appellants in the underlying proceeding, as violating the
trial court’s in limine ruling regarding expert testimony. The attorneys and
the court discussed the matter of the limitation on Hovore’s testimony further
and the court repeatedly reaffirmed its earlier tentative ruling that Hovore
would not be permitted to testify as a legal expert with respect to issues
surrounding the standard of care and/or the value or reasonableness of
respondents’ services and fees. At one point, the court explained, “One of the
problems is if Mr. Hovore was a plumber, this was a plumber business, he
can testify as to what he’s done. As a professional licensed lawyer, it’s hard
for him, on this subject, from what I’ve heard, to give any testimony without
giving an expert opinion. That’s the problem which leads us back to [where
we are]. He probably should have been, at some point, designated as an
expert.”
After further discussion, the trial court again indicated its concern
about the testimony that appellants’ counsel wanted to elicit from Hovore
and the likelihood that counsel would veer into expert opinion territory.
When appellants’ counsel asked, “Are we allowed to present facts that show
why the fee claim is problematic? Are we allowed to meet the facts at all?”
the court responded, “How do you do that without discussing and rendering
expert opinions? I don’t know how any expert does that. In a personal injury
case you can’t have a physician go on the stand and, without appropriate
designation of expertise, testify how another physician’s fees are
33
unreasonable and unnecessary. There’s just no way around it. That’s why
we have evidentiary laws that apply to it. He can testify as to his diagnosis,
as to his prognosis, as to his course of treatment, but that’s the problem we’re
having with this witness’s testimony.”
After further argument, the trial court ultimately stated, “So here’s
what I’m going to do. I’m going to allow Mr. Hovore’s testimony to continue,
the risk being that if none of his testimony is relevant or has any bearing on
this case and the objections continue to come in and they continue to be
sustained, then there’s the risk that his testimony is stricken -- so as long as
you’re aware of that -- at the conclusion of it. I don’t know if that will happen
or not, but I just want to make sure you’re aware of that so you can
appropriately weigh that, because right now I’m not seeing the relevancy of
his testimony based on what I’ve heard. And I want to bring the jury in, I’ll
allow him to continue, and we’ll see where it goes.”
Hovore continued to testify as to his percipient observations regarding
his work as appellants’ attorney in the underlying matter. His testimony
comprised approximately 61 pages of transcript.
We review a trial court’s ruling on the admissibility of expert testimony
for an abuse of discretion. (Mateel Environmental Justice Foundation v.
Edmund A. Gray Co. (2003) 115 Cal.App.4th 8, 25.) A trial court’s discretion
to make evidentiary rulings “is abused only when in its exercise, the trial
court ‘exceeds the bounds of reason, all of the circumstances before it being
considered.’ [Citation.] . . . A trial court will abuse its discretion by action
that is arbitrary or ‘ “that transgresses the confines of the applicable
principles of law.” ’ [Citations.]” ((Shaw v. County of Santa Cruz (2008)
170 Cal.App.4th 229, 281.)
34
California law distinguishes between retained experts and nonretained
or “independent” experts. Code of Civil Procedure section 2034.210,
subdivision (a), applies to both types of experts, and provides that “[a]ny
party may demand a mutual and simultaneous exchange by all parties of a
list containing the name and address of any natural person, including one
who is a party, whose oral or deposition testimony in the form of an expert
opinion any party expects to offer in evidence at the trial.”
Code of Civil Procedure section 2034.210, subdivision (b), applies to
retained experts, and provides that if an expert designated under
subdivision (a) “is a party or an employee of a party, or has been retained by
a party for the purpose of forming and expressing an opinion in anticipation
of the litigation or in preparation for the trial of the action, the designation of
the witness shall include or be accompanied by an expert witness declaration
under Section 2034.260.” (Italics added.) The expert witness declaration
under Code of Civil Procedure section 2034.260, subdivision (c), must be
signed by the attorney for the party designating the expert, if the party is
represented by an attorney, and must contain the following: “(1) A brief
narrative statement of the qualifications of each expert. [¶] (2) A brief
narrative statement of the general substance of the testimony that the expert
is expected to give. [¶] (3) A representation that the expert has agreed to
testify at the trial. [¶] (4) A representation that the expert will be sufficiently
familiar with the pending action to submit to a meaningful oral deposition
concerning the specific testimony, including any opinion and its basis, that
the expert is expected to give at trial. [¶] (5) A statement of the expert’s
hourly and daily fee for providing deposition testimony and for consulting
with the retaining attorney.”
35
Nonretained, independent experts must be listed on the expert
designation, but nothing more than the expert’s name and address is
required. (Code Civ. Proc., §§ 2034.210, subd. (a), 2034.260, subd. (b)(1); see
Schreiber v. Estate of Kiser (1999) 22 Cal.4th 31, 35 (Schreiber).)
Code of Civil Procedure section 2034.300 provides in relevant part that
“on objection of any party who has made a complete and timely compliance
with Section 2034.260, the trial court shall exclude from evidence the expert
opinion of any witness that is offered by any party who has unreasonably
failed to . . . [¶] (b) Submit an expert witness declaration.”
Appellants contend that “the law in California has long been that a
percipient witness may offer professional opinions which the witness is
qualified to offer without complying with the requirements of section
2034.260, subdivision (c),” and that “ ‘[f]or such a witness, no expert witness
declaration is required, and he may testify as to any opinions formed on the
basis of facts independently acquired and informed by his training, skill, and
experience.’ (Schreiber v. Estate of Kiser (1999) 22 Cal.4th 31, 39.)” They
contend that Hovore was designated as a nonretained expert witness in this
case, and that, as such, Hovore should have been permitted to testify not only
as to “the state of the file that he received,” but also to “the value of the
services that had been performed by White prior to Hovore’s retention.”21
According to appellants, they were not required to submit a declaration
regarding Hovore’s opinion about the value of the services that White &
Amundson had provided because he was, effectively, similar to a treating
physician who may provide not only percipient witness testimony, but may
21 Appellants appear to be challenging as prejudicial error only the trial
court’s exclusion of Hovore’s opinions regarding the reasonableness and
necessity of respondents’ billings, and not the exclusion of his opinions
regarding the standard of care with respect to professional negligence.
36
also provide “ ‘opinions formed on the basis of facts independently acquired
and informed by his training, skill, and experience.’ ” According to
appellants, Hovore “has all the expertise required to form opinions, and his
involvement with the Underlying Matter was more than adequate to provide
a basis for his opinions.”
Appellants rely on Schreiber, supra, 22 Cal.4th at p. 39 to argue that
because Hovore could have testified as to “any opinions formed on the basis of
facts independently acquired and informed by his training, skill, and
experience,” he should have been permitted to provide his opinion as to the
reasonableness of respondents’ fees. Schreiber is instructive. The question
before the Schreiber court was “whether a treating physician becomes a
‘retained’ expert within the meaning of [the predecessor provision to Code of
Civil Procedure section 2034, subdivision (b)], requiring the submission of an
expert witness declaration, whenever the physician gives opinion testimony.”
(Id. at p. 34.) As the court explained, a treating physician generally does not
fall into one of the categories of expert witnesses to which the declaration
requirement applies—“i.e., those who are parties, employees of parties, or are
‘retained by a party for the purpose of forming and expressing an opinion in
anticipation of the litigation or in preparation for the trial . . . .’ [Citations.]”
(Id. at pp. 34–35.)
In reaching the conclusion that a treating physician may provide
opinion testimony as part of his or her percipient witness testimony, the
Supreme Court identified the distinguishing feature that sets a treating
physician apart from a typical retained expert: “A treating physician is a
percipient expert, but that does not mean that his testimony is limited only to
personal observations. Rather, like any other expert, he may provide both
fact and opinion testimony. As the legislative history clarifies, what
37
distinguishes the treating physician from a retained expert is not the content
of the testimony, but the context in which he became familiar with the
plaintiff’s injuries that were ultimately the subject of litigation, and which
form the factual basis for the medical opinion. . . . A treating physician is not
consulted for litigation purposes, but rather learns of the plaintiff’s injuries
and medical history because of the underlying physician-patient relationship.”
(Schreiber, supra, 22 Cal.4th at p. 35, italics added.) The context in which
the testifying expert witness came to know the facts underlying his or her
opinion is, in fact, the main distinction between a nonretained expert and a
retained expert.
The Schreiber court repeatedly highlighted the fact that the source of
the information forming the factual basis of a treating physician’s opinions is
relevant to the question whether a treating physician may provide opinion
testimony without being considered to be a “retained” expert. (See Schreiber,
supra, 22 Cal.4th at pp. 38 [“[B]ecause [treating physicians] acquire the
information that forms the factual basis for their opinions independently of
the litigation, they are subject to no special discovery restrictions” (italics
added)], 39 [“[T]o the extent a physician acquires personal knowledge of the
relevant facts independently of the litigation,” there is no need for an expert
witness declaration and that physician “may testify as to any opinions formed
on the basis of facts independently acquired and informed by his training,
skill, and experience” (italics added)].) It is thus clear that for purposes of
determining whether a designated expert witness is to be considered to be a
“retained” expert, thus requiring a declaration, a trial court must consider
whether that witness acquired the facts necessary to the expert’s opinion
independent of the litigation at issue.
38
At trial, appellants made no proffer that Hovore’s opinions as to the
reasonableness of respondents’ fees and billings that appellants sought to
elicit would be based solely on his knowledge of the case based on his
representation of plaintiffs in the underlying family dispute.22 Indeed, there
is nothing in the record that suggested to the trial court that Hovore would
have possessed or reviewed White & Amundson’s billings as part of his
representation of appellants in the underlying matter, or that he was privy to
White & Amundson’s internal billing decisions, or the amount of time that
White & Amundson attorneys and staff spent on various matters. Thus,
there was nothing to indicate that Hovore could have offered any informed
opinion based solely on “facts independently acquired” through his
representation of appellants in the underlying case about the reasonableness
of the fees billed by respondents or the necessity of the services rendered for
which fees were billed. The testimony that appellants suggest they should
have been permitted to elicit from Hovore regarding the reasonableness of
respondents’ billings is similar to a portion of a treating physician’s testimony
that the court in Dozier v. Shapiro (2011) 199 Cal.App.4th 1509, 1518
(Dozier) concluded constituted “retained” expert testimony, despite the fact
that the testimony was elicited from a treating physician. Specifically, the
Dozier court concluded that the plaintiff in that case had not “substantially
compl[ied] with the code requirements for expert witness designation”
because the plaintiff had failed to disclose the substance of a treating doctor’s
22 In their reply, plaintiffs appear to suggest that respondents bore some
burden to provide evidence that Hovore “did review such outside documents
or assisted [plaintiffs’]” “preparation for trial in this legal malpractice action.”
However, when the admissibility of proffered evidence is dependent upon the
existence of some preliminary fact, it is the proponent of that proffered
evidence who has the burden of producing evidence of the preliminary fact.
(Evid. Code, § 403.)
39
anticipated opinion testimony that was formed based on “information
received after [the treating physician’s] deposition and not wholly from his
status as [the plaintiff’s] treating physician.” (Id. at p. 1518, bolding and
some capitalization omitted.) As the Dozier court explained, “The issue here
is not whether an expert witness declaration is necessarily required when a
treating physician testifies as an expert; it is not. [Citation.]” (Id. at
p. 1520.) This is because “[a] treating physician is not consulted for litigation
purposes, but rather is qualified to testify about the plaintiff’s injuries and
medical history because of his or her underlying expertise as a physician and
his or her physician-patient relationship with the plaintiff. A retained
expert, on the other hand, is engaged for the purpose of forming and
expressing an opinion in anticipation of the litigation based at least in part on
information obtained outside the physician-patient relationship, for the
purpose of the litigation rather than the patient’s treatment. [Citation.]”
(Ibid., italics added.)
The Dozier court concluded that the plaintiff was entitled to present the
treating physician’s testimony “as an expert on the basis of the facts he had
learned and opinions he had formulated in connection with his physician-
patient relationship and treatment of [the plaintiff].” (Dozier, supra,
199 Cal.App.4th at p. 1520.) However, the plaintiff’s counsel in Dozier sought
to elicit opinion testimony from the treating physician based on additional
materials, including records that the treating physician had not examined
during the course of his treatment of the plaintiff. (Id. at p. 1521.) The
Dozier court concluded that, at the point where the treating physician’s
opinion was no longer based solely on what he had learned during the
physician-patient relationship, the treating physician was “transformed . . .
into a retained expert.” (Ibid.) As the Dozier court explained, “[W]hen
40
Dr. Zeegen received additional materials . . . to enable him to testify to
opinions about [the defendant’s] adherence to the standard of care—a subject
on which he had [stated during his deposition that he had] formed no
opinions in connection with his physician-patient relationship with
Mr. Dozier [and required additional records in order to be able to do so]—his
role was not that of a treating physician, but became that of a retained
expert. And as Dr. Zeegan was a retained expert, Dozier was required to
disclose the information called for in [Code of Civil Procedure] section
2034.210, subdivision (b), including a summary of the substance of Dr.
Zeegan’s anticipated testimony. ([Code Civ. Proc.,] § 2034.210, subd. (b).)”
(Dozier, supra, at p. 1521.) The Dozier court concluded that the trial court
had “correctly determined that Dr. Zeegan’s trial testimony on the subject of
the standard of care would be that of a retained expert rather than merely a
treating physician,” and that the court “was justified in precluding him from
testifying to opinions he had formed for the litigation, including his opinions
on the subject of [the defendant’s] compliance with the standard of care.”
(Ibid.)
Similarly, in this instance, the trial court correctly understood that, to
the extent Hovore’s opinions about the value of respondents’ services and the
reasonableness of their billings were not formed in the course of his
representation of appellants in the underlying litigation23 but instead would
have required that he obtain additional information—i.e., information other
than what he would glean solely through his representation of appellants—
such opinions would veer into “retained” expert territory for which a
23 Appellants have offered nothing to suggest that an attorney taking over
the representation of a client in a dispute would have any need to consider
the reasonableness or necessity of prior counsel’s billings of that client in the
matter as part of his or her representation of the client.
41
declaration is required under Code of Civil Procedure section 2034.210,
subdivision (b). In the absence of the requisite declaration, respondents were
not provided fair notice of appellants’ intention to elicit from Hovore his
opinions about matters beyond those based solely on his representation of the
clients in the underlying matter. This lack of fair notice undermines the
purpose of the expert witness disclosure requirements, and provided good
cause for the trial court to exclude Hovore’s opinions as to the reasonableness
of respondents’ billings. (See Easterby v. Clark (2009) 171 Cal.App.4th 772,
780 [“ ‘[T]he very purpose of the expert witness discovery statute is to give
fair notice of what an expert will say at trial. . . .’ ” “ ‘[W]hen an expert is
permitted to testify at trial on a wholly undisclosed subject area, opposing
parties . . . lack a fair opportunity to prepare for cross-examination or
rebuttal’ ”].)
Appellants do not challenge the trial court’s implicit finding that their
failure to comply with the code by providing a declaration outlining the
general substance of the testimony that Hovore was expected to provide was
unreasonable. (See Code of Civ. Proc., § 2034.300 [trial court “shall exclude
from evidence the expert opinion of any witness that is offered by any party
who has unreasonably failed to” provide the required expert witness
declaration (italics added)].) Appellants have thus forfeited any challenge to
the trial court’s ruling on this basis. (See, e.g., Nelson v. Avondale
Homeowners Assn. (2009) 172 Cal.App.4th 857, 862 [“Appellate briefs must
provide argument and legal authority for the positions taken. ‘When an
appellant fails to raise a point, or asserts it but fails to support it with
reasoned argument and citations to authority, we treat the point as
waived’ ”].)
42
We therefore conclude that appellants have not demonstrated that the
trial court abused its discretion in determining that, because appellants did
not submit the required declaration, Hovore’s testimony regarding the
reasonableness and necessity of respondents’ billings in the underlying
matter would be excluded.
2. Appellants have not demonstrated reversible error with respect to
the trial court’s exclusion of evidence of a purported oral
modification of the written Legal Services Retainer Agreement
or the court’s failure to instruct the jury with CACI No. 313
Appellants contend that the trial court abused its discretion in
excluding evidence of a purported oral agreement modifying the terms of the
parties’ Legal Services Retainer Agreement (Retainer Agreement). They
further contend that this erroneous evidentiary ruling led the court to
commit instructional error by failing to instruct the jury with CACI No. 313,
as requested by appellants.24
24 CACI No. 313 provides:
“[Name of party claiming modification] claims that the
original contract was modified or changed. [Name of party
claiming modification] must prove that the parties agreed
to the modification. [Name of other party] denies that the
contract was modified.
“The parties to a contract may agree to modify its terms.
You must decide whether a reasonable person would
conclude from the words and conduct of the parties that
they agreed to modify the contract. You cannot consider
the parties’ hidden intentions.
“[A contract in writing may be modified by a contract in
writing.]
“[A contract in writing may be modified by an oral
agreement to the extent the oral agreement is carried out
by the parties.]
43
A trial court’s ruling on an in limine motion is generally reviewed for
an abuse of discretion. However, review is de novo when the issue is one of
law. (Condon–Johnson & Associates, Inc. v. Sacramento Municipal Utility
Dist. (2007) 149 Cal.App.4th 1384, 1392.)
Respondents moved to exclude evidence of any purported oral
agreement between the parties on the ground that such evidence would
constitute inadmissible parol evidence. Appellants argued that the parties
entered into an oral agreement once appellants’ $25,000 fee deposit for the
litigation in the family dispute was depleted, thereby modifying the Retainer
Agreement. According to appellants, the parties orally agreed that
respondents would continue to work on the case, and that appellants would
not be required to pay respondents’ bills until the resolution of the underlying
matter. The trial court agreed with respondents that evidence of a purported
oral agreement constituted parol evidence, and excluded any evidence of the
purported oral agreement on this ground. Given this ruling, the court denied
appellants’ request to instruct the jury with CACI No. 313.
The plaintiffs were seeking to admit evidence of a subsequent oral
modification, not evidence of a prior or contemporaneous oral agreement.
Thus, the evidence of a purported oral modification of the Retainer
Agreement was not parol evidence. (See Riverisland Cold Storage, Inc. v.
Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1174; see
also Marani v. Jackson (1986) 183 Cal.App.3d 695, 699, fn. 2 [parol evidence
“[A contract in writing may be modified by an oral
agreement if the parties agree to give each other something
of value.]
“[An oral contract may be modified by consent of the
parties, in writing, without an agreement to give each other
something of value.]”
44
rule excludes only extrinsic evidence of prior or contemporaneous oral
agreements, not evidence of subsequent oral agreements].) This is not the
end of the analysis, however.
“If evidence is excluded on an improper objection but the evidence
excluded is subject to objection on a different ground, it does not matter that
the reason advanced by counsel or relied upon by the court was wrong.
[Citations.] If the exclusion is proper upon any theory of law applicable to the
instant case, the exclusion must be sustained regardless of the particular
considerations which may have motivated the trial court to its decision.”
(Philip Chang & Sons Associates v. La Casa Novato (1986) 177 Cal.App.3d
159, 173, italics added; Children’s Hospital Central California v. Blue Cross
of California (2014) 226 Cal.App.4th 1260, 1278 [“although the trial court
excluded evidence of Hospital’s service specific costs for the wrong reason, the
result was correct”]; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 347,
pp. 398–399.) We conclude that the exclusion of the evidence in question was
proper, albeit on grounds different from those that the trial court relied on.
As a result, we further conclude that the court did not err in declining to
instruct the jury with CACI No. 313.
As both parties note, Civil Code section 1698 governs the manner by
which a written agreement may be modified. In addition to noting that a
written agreement may be modified by a separate written agreement (Civ.
Code, § 1698, subd. (a)), the statute provides that a written contract may be
modified by an oral agreement (1) to the extent that the oral agreement is
“executed by the parties” (Civ. Code, § 1698, subd. (b)), or (2) where the
written contract does not indicate that it cannot be modified by an oral
agreement, to the extent that the oral agreement is supported by
consideration and the statute of frauds is satisfied where applicable (Civ.
45
Code, § 1698, subd. (c)).25 The Law Revision Commission comment to Civil
Code section 1698 observes: “The rules provided by subdivisions (b) and (c)
merely describe cases where proof of an oral modification is permitted; these
rules do not, however, affect in any way the burden of the party claiming that
there was an oral modification to produce sufficient evidence to persuade the
trier of fact that the parties actually did make an oral modification of the
contract.” (Italics added.)
In response to respondents’ contention that the purported oral
agreement to modify the written Retainer Agreement was not “executed” for
purposes of Civil Code section 1698, subdivision (b), appellants argue in their
reply briefing that the oral agreement was in fact “executed by the parties”
and that subdivision (b) of the provision therefore applies to render the
evidence in question admissible. We disagree with appellants on this point.
25 Civil Code section 1698 provides in full as follows:
“(a) A contract in writing may be modified by a contract in
writing.
“(b) A contract in writing may be modified by an oral
agreement to the extent that the oral agreement is
executed by the parties.
“(c) Unless the contract otherwise expressly provides, a
contract in writing may be modified by an oral agreement
supported by new consideration. The statute of frauds
(Section 1624) is required to be satisfied if the contract as
modified is within its provisions.
“(d) Nothing in this section precludes in an appropriate
case the application of rules of law concerning estoppel, oral
novation and substitution of a new agreement, rescission of
a written contract by an oral agreement, waiver of a
provision of a written contract, or oral independent
collateral contracts.”
46
Generally, the term “executed” means that an agreement “must be fully
performed on both sides.” (Lockheed Missiles & Space Co. v. Gilmore
Industries, Inc. (1982) 135 Cal.App.3d 556, 559, italics added; see Civ. Code,
§ 1661 [“An executed contract is one, the object of which is fully performed”].)
Appellants argue that the evidence demonstrates that the parties “conducted
themselves in comportment with the oral modification” over a period of
approximately 15-months, and that this demonstrates that the purported
modification was “executed.” However, according the appellants, the
performance required of them pursuant to the purported oral modification
was their payment of respondents’ bills upon resolution of the underlying
matter. It is undisputed that appellants have not performed their obligation
under the terms of the purported oral modification. As a result, the oral
modification cannot be said to have been fully performed, and therefore
cannot be considered to have been “executed by the parties” (Civ. Code,
§ 1698, subd. (b)). We therefore conclude that the evidence was not
admissible as evidence of an oral agreement to modify a written contract
pursuant to Civil Code section 1698, subdivision (b).
The parties also dispute whether the evidence at issue could have been
admissible pursuant to Civil Code section 1698, subdivision (c).
Respondents argue that there was no consideration for a purported
modification of the Retainer Agreement because “[a] promise to do something
one is already bound to do cannot constitute consideration needed for a
binding contract.” Appellants dispute respondents’ contention that any
purported oral modification was not supported by consideration and was
therefore not admissible under Civil Code section 1698, subdivision (c).
Appellants have the better position in this respect. The purported oral
agreement was not simply an agreement to allow appellants to delay
47
payment for work that respondents had already completed. Rather, the
agreement, according to appellants, was that respondents would continue to
represent appellants and to bill additional hours for work on the underlying
case in exchange for appellants’ agreement to pay for that work upon the
resolution of the underlying case. Under this theory, respondents obtained
something of value in exchange for their agreement to a delay in payment,
i.e., the opportunity to incur more billable hours, for which they would be
entitled to additional payment, beyond what was already due at the time of
the purported modification.
However, as respondents note, under subdivision (c) of Civil Code
section 1698, “a written contract can be modified by oral agreement only if
supported by new consideration, ‘[u]nless the contract otherwise expressly
provides.’ ” Respondents identify language in the Retainer Agreement that
prohibits modification of the written agreement by anything other than
another written and signed agreement. Specifically, the Retainer Agreement
includes an integration provision that requires that any modification be in
writing and signed by the party against whom enforcement of the purported
modification is sought: “This Retainer Agreement contains the entire
agreement between Clients and Law Firm relating to representation of
Clients in Clients’ case, and all prior work, contemporaneous agreements,
understandings, representations, and statements, whether oral or written,
and whether by a party or such parties’ legal representative, are merged
herein. No modification, waiver, amendment, discharge, or change of this
Retainer Agreement will be valid unless the same is in writing and signed by
the party against which the enforcement of such modification, waiver,
amendment, or discharge is or may be sought.” (Italics added.)
48
The introductory language of Civil Code section 1698, subdivision (c)—
i.e., “[u]nless the contract otherwise expressly provides”—imposes a
significant limitation on the circumstances under which a nonexecuted oral
modification to a written agreement may be given effect. A party may not
rely on an alleged oral modification of a written agreement, even if the
alleged oral modification is supported by consideration, where the written
agreement provides that its terms may be modified only in writing. (See
Conley v. Matthes (1997) 56 Cal.App.4th 1453, 1465.)26 Because the Retainer
Agreement required that any modification of its terms be in writing,
appellants were not entitled to put forth evidence of an alleged oral
modification of the written agreement that had not been fully executed by the
parties.
The fact that the trial court properly declined to allow appellants to
present evidence of a purported oral agreement modifying the terms of the
Retainer Agreement means that the trial court also did not err in declining to
instruct the jury with CACI No. 313, as requested by appellants, regarding
how and when a written agreement may be modified by an oral agreement. A
party is entitled to an instruction on a theory of the case only where that
theory is supported by the pleadings and substantial evidence. (Soule v.
General Motors Corp. (1994) 8 Cal.4th 548, 572.) Because the trial court
properly excluded evidence of the purported oral agreement, appellants were
not entitled to an instruction regarding oral modifications of written
agreements.
26 This clearly is in contrast to a situation in which the evidence
demonstrates that the terms of the oral agreement have been fully executed,
as provided for in subdivision (b) of Civil Code section 1698, which does not
include the “[u]nless the contract otherwise expressly provides” language that
appears in subdivision (c).
49
C. There is no basis for reversing the trial court’s cost-of-proof order
In their final challenge to the trial court’s judgment, appellants assert
that the court erred in a number of ways with respect to its order granting
respondents cost-of-proof sanctions in the amount of $211,032.50. We
address each argument, in turn.
1. Legal standards
Under Code of Civil Procedure section 2033.420, “[i]f a party fails to
admit the genuineness of any document or the truth of any matter when
requested to do so . . . , and if the party requesting that admission thereafter
proves the genuineness of that document or the truth of that matter, the
party requesting the admission may move the court for an order requiring the
party to whom the request was directed to pay the reasonable expenses
incurred in making that proof, including reasonable attorney’s fees.” (Id.,
subd. (a).) A trial court “shall make this order” unless it finds any of the
following: “(1) An objection to the request was sustained or a response to it
was waived . . . . [¶] (2) The admission sought was of no substantial
importance. [¶] (3) The party failing to make the admission had reasonable
ground to believe that that party would prevail on the matter. [¶] (4) There
was other good reason for the failure to admit.” (Id., subd. (b).)
“Requests for admissions differ fundamentally from other forms of
discovery. Rather than seeking to uncover information, they seek to
eliminate the need for proof.” (Stull v. Sparrow (2001) 92 Cal.App.4th 860,
864 (Stull).) “ ‘The primary purpose of requests for admissions is to set at
rest triable issues so that they will not have to be tried; they are aimed at
expediting trial. [Citation.] The basis for imposing sanctions [under section
2033.420] is directly related to that purpose. Unlike other discovery
sanctions, an award of expenses . . . is not a penalty. Instead, it is designed
50
to reimburse reasonable expenses incurred by a party in proving the truth of
a requested admission . . . [citations] such that trial would have been
expedited or shortened if the request had been admitted.’ ” (Id. at p. 865,
quoting Brooks v. American Broadcasting Co. (1986) 179 Cal.App.3d 500, 509
(Brooks).)
The party seeking to benefit from the exceptions listed in subdivision
(b) of Code of Civil Procedure section 2033.420 “ ‘bears the burden to
establish the exception.’ ” (Samsky v. State Farm Mutual Automobile Ins. Co.
(2019) 37 Cal.App.5th 517, 523.) Because appellants were seeking the benefit
of one or more of the exceptions in subdivision (b), they bore the burden to
establish that those exceptions applied.
The determination as to whether a party is entitled to expenses under
section 2033.420 is within the sound discretion of the trial court. “More
specifically, ‘section 2033[.420] clearly vests in the trial judge the authority to
determine whether the party propounding the admission thereafter proved
the truth of the matter which was denied.’ ” (Stull, supra, 92 Cal.App.4th at
p. 864.) We review the trial court’s determination for an abuse of discretion.
(Brooks, supra, 179 Cal.App.3d at p. 508.)
2. Additional background
Respondents sought cost-of-proof sanctions for the expenses that they
incurred as a result of having to prove requests for admission Nos. 16, 17, 20,
21, 22, 34 and 35.27 Request for admission No. 16 asked appellants to
“[a]dmit the final maturity date for performance of the obligation imposed by
the note between Charles and Louise Nilson Family Trust and Dan A. Nilson
27 The trial court did not grant cost-of-proof sanctions with respect to
request for admission No. 34, but did grant them with respect to the other
requests for admission. We separately discuss requests for admission Nos. 34
and 35 in part III.C.5, post.
51
secured by a May 3, 1994 recorded deed of trust on the home located at . . .
Sandalwood Drive in El Centro, California is not ascertainable from the
recorded deed of trust.”
Request for admission No. 17 asked appellants to “[a]dmit the last fixed
payment date for [the] note between Charles and Louise Nilson Family Trust
and Dan A. Nilson secured by a May 3,1994 recorded deed of trust on the
home located at . . . Sandalwood Drive in El Centro, California is not
ascertainable from the recorded deed of trust.”
Request for admission No. 20 asked appellants to “[a]dmit you had
thirty days after June 13,2016 to dispute the validity of the Notice of Default
and Election to Sell Under Deed of Trust relating to the note between
Charles and Louise Nilson Family Trust and Dan A. Nilson secured by a May
3,1994 recorded deed of trust on the home located at . . . Sandalwood Drive in
El Centro.”
Request for admission No. 21 asked appellants to “[a]dmit White &
Amundson told you on June 13, 2016 that it would take no action with
respect to the Notice of Default and Election to Sell Under Deed of Trust
relating to the note between Charles and Louise Nilson Family Trust and
Dan A. Nilson secured by a May 3,1994 recorded deed of trust on the home
located at . . . Sandalwood Drive in El Centro, California.”
Request for admission No. 22 asked appellants to “[a]dmit White &
Amundson told you on June 13, 2016 that it would not represent you with
respect to the Notice of Default and Election to Sell Under Deed of Trust
relating to the note between Charles and Louise Nilson Family Trust and
Dan A. Nilson secured by a May 3,1994 recorded deed of trust on the home
located at . . . Sandalwood Drive in El Centro, California.”
52
Request for admission No. 35 asked appellants to “[a]dmit [that] before
May 4, 2016, no actual conflict of interest exi[s]ted relating to White &
Amundson, APC’s legal representation of Dan and Donna Nilson.”
Appellants denied all of these requests for admission.
3. The trial court did not err in granting cost-of-proof sanctions with
respect to requests for admission Nos. 16, 17, 20, 21, and 22
Appellants should have admitted requests for admission Nos. 16 and
17, given the existence of documents supporting the assertions of fact at issue
in those requests for admission. Rather than concede these points, which
went to the question whether the final maturity date for the obligation
secured by the deed of trust was apparent from recorded documents, and
thus, to the question of the timeliness requirements for a nonjudicial
foreclosure on the Sandalwood property, appellants disputed them and in
doing so, caused respondents to have to prove those matters. The trial
regarding the foreclosure of the Sandalwood property focused on whether
respondents’ agreement to the stipulation in the underlying dispute to waive
certain timeliness defenses was a proximate cause of appellants’ loss of the
property to the nonjudicial foreclosure. The question whether the maturity
date was ascertainable from the record went to a central issue in the
litigation of appellants’ claims against respondents because if there is no
maturity date or final fixed payment date on the recorded deed of trust—the
only recorded document—then the 60-year statute of limitations applies. In
turn, if the 60-year statute of limitation applies, respondents could not have
caused appellants any harm by stipulating to a 60-year statute of limitations.
Although appellants contend that their failure to admit to facts that
would have demonstrated the applicability of the 60-year statute of
limitations had minimal impact because the real focus of the dispute was
53
respondents’ waiver of a laches defense, in order to prevail, respondents were
required to disprove all of the allegations set out by appellants, including the
claim that respondents improperly agreed to a 60-year statute of limitations.
The trial court reasonably concluded that appellants should have admitted
these facts and that an admission of these facts would have expedited the
trial.
Requests for admission Nos. 21 and 22 sought admissions that
respondents informed appellants that respondents would take no action and
would not represent appellants with respect to the Notice of Default and
Election to Sell Under Deed of Trust. According to appellants, they
reasonably denied these requests for admission because respondents had, in
fact, taken some action on appellants’ behalf by accepting notice of the letter,
thereby contradicting the terms of the letter. As the trial court stated, and
we agree, this is an unreasonable position. Respondents’ receipt and
acceptance of the Notice of Default and Election to Sell Under Deed of Trust,
and their subsequent efforts to inform appellants of the Notice of Default
could not be understood to reasonably indicate that respondents were
continuing to represent appellants, given the express statements in the June
13, 2016 letter from respondents to appellants stating the opposite. It was
clear that the receipt of the Notice of Default and Election to Sell Under Deed
of Trust and the forwarding of this document to appellants was the final act
that respondents were going to take on behalf of appellants. To the extent
that appellants contend that requests for admission Nos. 21 and 22 were not
important to a central issue at trial, again, appellants had the burden at trial
to demonstrate that respondents’ alleged malpractice caused harm to
appellants; this required a showing that appellants would have obtained a
more favorable outcome if not for respondents’ actions. Although appellants
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suggested that the foreclosure occurred “because White left,” which in turn
caused the “mediation and the settlement talks that had been ongoing” to
“stop[ ] for a while, and in that interim, the house was foreclosed on,” in point
of fact, respondents expressly informed appellants that they would not be
representing appellants, and indicated to appellants that their new counsel
should take immediate action to address the impending foreclosure.28
Further, although appellants still contend that “any such challenge [to the
validity of the debt] would have been futile because White had already
waived the grounds for a challenge,” it is clear that the waiver was only as to
timeliness defenses, and not to any other defenses that appellants may have
had.29 Again, all of these facts went to the central issue of whether
respondents’ acts or omissions caused appellants’ harm.
Similarly, appellants had no reasonable basis for denying that they
“had thirty days after June 13, 2016 to dispute the validity of the Notice of
Default and Election to Sell Under Deed of Trust relating to the note between
Charles and Louise Nilson Family Trust and Dan A. Nilson secured by a
28 As previously noted, respondents told appellants, “[O]ur withdrawal
means that settlement negotiations will be suspended. . . . Your new lawyer
should immediately address this with [Louise’s attorney] to determine if
Louise will continue to defer the foreclosure. If [Louise’s attorney] refuses to
further defer foreclosure, your new counsel may wish to consider an
application for injunctive relief.”
29 For example, as respondents point out in briefing, appellants had not
waived a right to contest the foreclosure on the ground that the underlying
debt had been satisfied. Appellants suggested that Dan had paid off the loan
through deductions from his salary. As respondents note, evidence that Dan
had paid off the loan through such deductions could have supported a
wrongful foreclosure action against Charles’s estate. However, appellants did
not take any action to contest the nonjudicial foreclosure after respondents
were no longer representing them.
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May 3,1994 recorded deed of trust” on the Sandalwood property, as requested
in request for admission No. 20. This request for admission was based on the
law regarding nonjudicial foreclosure, as well as a letter that appellants
received from the debt collector dated June 13, 2016, which informed them of
this fact. Appellants contend that they were reasonable in disputing this
request for admission because they had “90 days to challenge, not 30 days.”
However, this request asked them to admit that they had 30 days to
challenge the validity of the debt about which the Notice of Default was being
sent. The Notice of Default indicated that appellants had 30 days to dispute
the validity of the debt, as provided by federal law under the Fair Debt
Collection Practice Act. The Notice of Default also separately notified
appellants that no sale date would be set until 90 days from the date of
recording of the Notice of Default. In this request, respondents were asking
appellants to admit that they had been provided 30 days to dispute the
validity of the debt and default under the note pursuant to the Notice of
Default.
Appellants also argue that this request was irrelevant to their claims
because “[t]he issue pertaining to the Sandalwood House is not what
happened on June 13, 2016 or thereafter,” but rather, “what White did six
months earlier on January 19, 2016, when [respondents] waived Dan Nilson’s
rights.” This is incorrect. In order to establish that the loss of the
Sandalwood property was attributable to respondents’ conduct, appellants
had to demonstrate that appellants lost the Sandalwood property in the
nonjudicial foreclosure as a result of respondents’ acts or omissions. A
demonstration that appellants had 30 days after receipt of this letter to
challenge the debt, and that they took no action during that time to attempt
to prevent the foreclosure by challenging the validity of the debt, was
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relevant to demonstrating that it was not respondents’ conduct that caused
appellants’ loss of the Sandalwood property to nonjudicial foreclosure.
We see no abuse of the trial court’s discretion in its determination that
respondents were entitled to be reimbursed for costs for having to prove all of
the facts that went to the question whether appellants could demonstrate
that appellants’ loss of the Sandalwood property was the result of
respondents’ conduct.
4. The trial court did not err in determining the amount of the
sanctions award
Appellants contend that the trial court erred in “determining the
amount of sanctions” (boldface and some capitalization omitted). According
to appellants, “[e]vidence of costs incurred for proving each denied request
must be segregated into separate amounts for each request,”
We conclude that the record supports the trial court’s decision to award
the amounts that respondents requested. The rule is that a party cannot
recover cost-of-proof sanctions for issues that are outside the scope of the
requests. (See Assoc. for Los Angeles Deputy Sheriffs v. Macias (2021)
63 Cal.App.5th 1007; see also Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724,
736–737 [party cannot recover cost-of-proof sanctions for issues that are
“completely outside the scope of the request for admissions”].) In Garcia, for
example, the court noted that the amount requested as cost-of-proof sanctions
for the failure to admit a number of requests for admission may have
included some expenses for resources that had been devoted to issues wholly
separate and distinct from the issue of employer negligence that was at the
heart of the requests for admission at issue in that case. (Garcia, supra,
28 Cal.App.4th at pp. 736–737.) Because the Garcia court was already going
to reverse on the ground that the cost-of-proof award covered a time period
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before costs would have been permitted under the statute, the court also
directed the trial court to consider whether some of the costs that had been
requested were incurred in proving separate issues at trial. (Ibid.)
In this case, however, the main issue at trial with respect to appellants’
claims against respondents was whether respondents were liable for damages
to appellants arising from the loss of the Sandalwood property. Requests for
admission Nos. 16, 17, 20, 21, and 22 all sought admissions of predicate facts
intended to demonstrate that respondents’ conduct was not the cause of
appellants’ loss of the Sandalwood property to the nonjudicial foreclosure.
The trial court therefore reasonably concluded that all of these requests for
admission were central to the single issue litigated at trial and that
respondents were therefore entitled to reimbursement of the costs that they
incurred for having to prove the facts at issue in the requests for admission.
Contrary to appellants’ contention, because all of the requests for admission
went to the single issue of whether respondents could be held liable for
appellants’ loss of the Sandalwood property, there was no need to segregate
the costs with respect to each of the individual requests. We see no abuse of
discretion in the court’s determination of the amount of the cost-of-proof
sanctions.
5. The trial court erred in awarding cost-of-proof sanctions for
request for admission No. 35; however appellants were not
prejudiced by this error
Request for admission No. 35 asked appellants to “[a]dmit [that] before
May 4,2016, no actual conflict of interest exi[s]ted . . . relating to White &
Amundson, APC’s legal representation of Dan and Donna Nilson.”
Appellants denied the factual basis of this request for admission. The trial
court included request for admission No. 35 as a basis for the total cost-of-
proof sanction award in its order.
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The trial court concluded that appellants should have admitted request
for admission No. 35 because, even though appellants had “stipulated to
withdrawal of all claims and defenses related to conflicts of interest prior to
trial,” they had “not address[ed] the issue as an affirmative defense to the
Cross-Complaint.”30 However, as appellants note, there is no affirmative
defense in the answer to the cross-complaint that specifically relies on an
assertion of the existence of a conflict of interest. The trial court was
therefore incorrect in suggesting that appellants’ failure to admit the lack of
a conflict of interest, as requested in request for admission No. 35, was
ultimately of any importance at trial. As a result, appellants’ failure to admit
request for admission No. 35 could not form the basis for a cost-of-proof
sanction award.
However, the record demonstrates that the trial court has already
reduced respondents’ cost-of-proof sanction award by the amount that
respondents claimed was required to prove requests for admission Nos. 34
and 35. Respondents requested costs of proof related to requests for
admission Nos. 34 and 35 jointly, arguing that the cost of proving both of
those predicate facts went to the need to overcome appellants’ “legal
malpractice affirmative defense” to the fee agreement claim asserted by
respondents. Because the fee agreement issue raised by respondents’ cross-
complaint was litigated before the jury after the nonsuit was granted as to
appellants’ complaint, the attorney declaration filed by respondents’ counsel
in support of the cost-of-proof motion stated that the fees incurred by
30 The court’s order is inconsistent in that the court appears to
acknowledge that appellants stipulated to withdraw “all claims and defenses
related to conflicts of interest,” but goes on to state that appellants did not
“address the issue as an affirmative defense to the Cross-Complaint.”
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respondents in connection with litigating “these affirmative defenses after
the non-suit was granted” totaled only $6,067.
In considering respondents’ cost-of-proof sanctions motion, the trial
court denied any cost-of-proof sanctions for having to prove the factual matter
at issue in request for admission No. 34 after concluding that appellants had
a good faith basis not to admit that request for admission. The court noted
that respondents had not specified how many hours had been spent on
“Request[ ] for Admission number[ ] 34,” and, as a result, the court reduced
the overall amount requested by the full $6,067—i.e., the total amount
requested by respondents with respect to both request for admission No. 34
and request for admission No. 35. Because the court reduced the award by
the aggregate amount requested by respondents for the expenses that they
incurred in proving both requests for admission Nos. 34 and 35, there is no
additional amount that the trial court could deduct from its sanctions award
to account for its error with respect to request for admission No. 35.31 There
is therefore no basis for reversing or modifying the court’s cost-of-proof
sanctions order.
31 Appellants have suggested that the trial court’s decision to reduce “the
claimed fees” was problematic because the court did so “by an arbitrary
amount.” This is not so. The court declined to award respondents $6,067 of
the expenses they claimed were spent proving the truth of the matters
appellants denied in requests for admission Nos. 34 and 35. This was the
precise amount that respondents’ attorney’s declaration specifically attested
was spent litigating the truth of the matters at issue in those requests for
admission.
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IV.
DISPOSITION
The judgment is affirmed. Respondents are entitled to their costs on
appeal.
AARON, J.
WE CONCUR:
MCCONNELL, P. J.
DATO, J.
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