Goldenwest Plaza v. The Frank and Gertrude R. Doyle Foundation CA4/3 ( 2016 )

Filed 8/22/16 Goldenwest Plaza v. The Frank and Gertrude R. Doyle Foundation CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
GOLDENWEST PLAZA, LLC,
Plaintiff, Cross-defendant and G050766
Respondent,
(Super. Ct. No. 30-2013-00638461)
v.
OPINION
THE FRANK M. AND GERTRUDE R.
DOYLE FOUNDATION, INC., et al.,
Defendants, Cross-complainants and
Appellants.
Appeal from an order of the Superior Court of Orange County,
Thierry Patrick Colaw, Judge. Affirmed.
David B. Dimitruk for Defendants, Cross-complainants and Appellants.
Morasse Collins & Clark and Steven R. Morasse for Plaintiff,
Cross-defendant and Respondent.
* * *
INTRODUCTION
Defendant The Frank M. and Gertrude R. Doyle Foundation, Inc.
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(Defendant Foundation), and defendant Goldenwest/Edinger, LP (Defendant G/E),
appeal from an order denying their motion for attorney fees and costs. The motion arose
in a somewhat unusual situation. Plaintiff Goldenwest Plaza, LLC (Plaintiff), brought a
statutory partition action against Defendants, and Defendants cross-complained against
Plaintiff to enjoin any partition by sale and alternatively to seek partition in kind.
Although the litigation settled on the first day of trial, the settlement agreement expressly
reserved the right of any party to seek attorney fees.
Defendants moved to recover attorney fees on two bases: (1) Civil Code
section 1717 (attorney fees incurred in an action on a contract), and (2) Code of Civil
Procedure sections 874.010 and 874.040 (attorney fees incurred in a partition action for
the common benefit). The trial court denied the motion based on a finding that no party
prevailed in the action. We conclude the trial court did not err by denying the motion.
The parties reached a true compromise settlement agreement in which no party achieved
its main litigation objectives, and in the settlement agreement the parties agreed to give
the trial court the right to decide that no party may recover attorney fees. We therefore
affirm.
FACTS AND PROCEDURAL HISTORY
I. Background
The subject of the underlying litigation was a 185,000-square-foot retail
shopping center in Huntington Beach known as Goldenwest Plaza (the Shopping Center).
Plaintiff owned an undivided 7.5 percent ownership interest; Defendant Foundation
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Defendant Foundation and Defendant G/E are together called Defendants.
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owned an undivided 37.5 percent ownership interest; Defendant G/E owned an undivided
30 percent ownership interest; and Busby Family, LLC, owned an undivided 25 percent
ownership interest in the Shopping Center. Plaintiff, Defendant Foundation,
Defendant G/E, and Busby Family, LLC, owned their respective interests in the Shopping
Center as tenants in common.
In preparation for the development of the Shopping Center, a declaration of
covenants, conditions, easements, and restrictions (the Declaration) was recorded in
May 1977. Among the Declaration’s many provisions is the following: “Declarant plans
to develop the Shopping Center as an integrated retail sales area for the mutual benefit of
all real property in the Shopping Center and, for such purposes, does hereby fix and
establish easements, covenants, restrictions, liens and charges (hereinafter collectively
referred to as ‘Restrictions’), upon and subject to which all of said Shopping Center, or
any part thereof, shall be improved, held, leased, sold and/or conveyed.” The Declaration
has a term of 55 years.
Section 10.10 of the Declaration is an attorney fees provision stating: “In
the event that suit is brought for the enforcement of this Declaration or as a result of any
alleged breach thereof, the successful litigant or litigants in such suit . . . shall be entitled
to be paid reasonable attorneys’ fees by the losing litigant or litigants, and any judgment
or decree rendered shall include an award thereof.”
Plaintiff acquired its interest in the Shopping Center in February 2009 for
the sum of $970,000. Youseff Ibrahim, who is Plaintiff’s managing member, managed
the Shopping Center for 17 years starting in 1996. Since that time, there has been
animosity between Ibrahim and F. Patrick Doyle, who is an officer of Defendant
Foundation and an owner of Defendant G/E. Since 2009, Ibrahim and Doyle have
disagreed regularly on prospective tenants, rental terms, contractors, vendors,
remodeling, management, operation, direction, and disposition of the Shopping Center.
Doyle and his sister, Molly Glen, accused Ibrahim of dishonesty, mismanagement, and
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incompetence. In this litigation, Defendants accused Ibrahim of being a sexual predator
and an embezzler.
II. The Litigation
In March 2013, Plaintiff filed a complaint for partition under Code of Civil
Procedure section 872.020 et seq. The operative pleading was a first amended complaint
(the Partition Complaint) which asserted causes of action for partition by sale and
declaratory relief. The Partition Complaint alleged: “The tenant in common relationship
between [Plaintiff], on the one hand, and [Defendant] Foundation and [Defendant] G/E,
on the other, has been irreparably damaged due to disputes, personal grudges and other
issues between them concerning the direction, operation, management and ultimate
disposition of the [Shopping Center]. It is in the best interest of the tenants in common
and the [Shopping Center] to permanently end the tenant in common relationship and
permanently end current and future disputes between the parties by a sale of the
[Shopping Center].”
As relief, the Partition Complaint sought “an order and judgment that the
[Shopping Center] be sold and that from the proceeds of the sale any encumbrance be
paid, together with the costs and expenses of this action and the sale, and the net proceeds
then be divided between [Plaintiff], [Defendant] Foundation, [Defendant] G/E and Busby
in accordance with their respective interests.”
Defendants answered the Partition Complaint and filed a cross-complaint
against Plaintiff (the Cross-complaint). The Cross-complaint asserted causes of action
for injunctive relief and partition in kind. As part of the injunctive relief cause of action,
the Cross-complaint alleged the Declaration barred Plaintiff’s partition cause of action.
Section 1.1 of the Declaration stated: “In the event that more than one person or entity
owns fee title to any Parcel, whether by way of undivided interest or in severalty, the
person and/or entity holding all of the fee interest in and to any Parcel shall, for the
purposes of this Declaration, be jointly considered a single Owner.” The
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Cross-complaint alleged that passage from the Declaration meant: “[I]n order to cause
the entire fee estate of the [Shopping Center] to be sold and transferred, the consent of all
co-tenants is required before a sale may be effected. The cross-complainants have not
consented and do not consent to a transfer of the fee estate to all seven parcels to be sold
or transferred to another.” The Cross-complaint sought an injunction “to enforce the
Declaration” and “to also preserve and protect the rights and benefits to which the
cross-complainants are entitled to enjoy under the provisions of the Declaration.”
In the partition in kind cause of action, the Cross-complaint alleged that
partition of the Shopping Center by forced sale would be unfair to the cotenants and was
barred by doctrines of implied waiver and estoppel. In the alternative, the
Cross-complaint alleged the Shopping Center could and should be “divided in kind”
among the cotenants rather than be the subject of a forced sale.
III. The Settlement Agreement
All parties reached a settlement in March 2014. A written settlement
agreement (the Settlement Agreement) was prepared and signed by all parties. Among
the recitals in the Settlement Agreement are the following:
“D. In the original and first amended complaint, [Plaintiff] requested that
the Court require the entire Shopping Center to be ordered to be sold pursuant to its claim
that the entire shopping center be sold. [Plaintiff] contended from the commencement of
the Lawsuit to the day of the trial of the Lawsuit was to commence that the entire
Shopping Center should be sold. [D]efendants contested [P]laintiff’s request to force a
sale of the entire Shopping Center.
“E. In its cross-complaint, [Defendant] Foundation and [Defendant G/E]
requested that the Shopping Center be partitioned in kind in some manner instead of
selling the Shopping Center. From the time they filed their cross-complaint to the day the
trial of the Lawsuit was to commence, [Defendant] Foundation and [Defendant G/E]
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contended that the Court should effect a partition in kind. [Plaintiff] contested . . . any
partition in kind.”
Under the terms of the Settlement Agreement, Plaintiff sold its 7.5 percent
cotenancy interest in the Shopping Center to Defendants for $2,017,500. The parties
mutually agreed to a “Release of Claims,” which included mutual releases and Civil Code
section 1542 waivers.
Under the terms of the Settlement Agreement, the parties reserved the right
to seek attorney fees. Section 2.3 of the Settlement Agreement states, in relevant part:
“2.3 As a material condition to the formation of this Agreement, each party
to this Agreement reserves the right to file a motion for the recovery of attorneys’ fees
and costs incurred in the Lawsuit pursuant to Code of Civil Procedure sections 874.010,
874.020, 874.030, 874.040 and 874.050 and such other grounds as may entitle any party
to claim a right to attorney fees and costs. The parties agree that the Court shall have the
jurisdiction to award such attorney fees and costs and that the Court may take this
Agreement into account in making a decision as to whether any party is entitled to an
award of attorney fees and costs, if any, even though no judgment has been entered;
provided, however, that (1) nothing herein is intended to nor shall it constitute or be
deemed to create an attorneys’ fees provision; (2) [Plaintiff] disputes that there is any
basis under California law for an award of attorneys’ fees and/or costs in this settled case
and, even if there is (which [Plaintiff] disputes), the Court only has jurisdiction to award
attorneys’ fees and costs to the extent allowable under applicable California law, if any;
and (3) the Court has the right to decide that no party is entitled to an award of
attorneys’ fees and/or costs.” (Italics added.)
IV. Motions for Attorney Fees
All parties filed motions to recover attorney fees. Relevant here is the
motion filed by Defendants, which sought attorney fees based on two grounds:
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(1) section 10.10 of the Declaration and Civil Code section 1717 (attorney fees incurred
in an action on a contract), and (2) Code of Civil Procedure sections 874.010 and 874.040
(attorney fees incurred in a partition action for the common benefit). Defendants
requested an award of about $203,000 in attorney fees and about $118,000 in costs and
expenses.
The trial court denied all motions for attorney fees. In a minute order
denying the motion of Defendants, the court explained:
“The court in its discretion finds there is no prevailing party in this action.
The parties reached a mutual, global settlement on the first day of trial on their own
accord. No rulings were made by the court and no preliminary issues were decided.
“In reviewing the terms of the settlement, each party realized some of their
litigation objectives as well as forfeiting some of their litigation objectives. Plaintiff did
not obtain any partition of the property, but it did recover the current value of its interest
in the property. Defendants did not obtain a defense verdict against plaintiff or a
dismissal of all of the claims against them. They bought their peace of mind by paying
plaintiff an amount equal to the current value of the 7.5% interest of property owned by
plaintiff to reclaim all of the parcels of land in order to keep their Net Income Plan intact.
“Whether defendants’ motives and actions were for the common benefit of
the co-tenants or primarily for their own benefit with potential reciprocal benefits to the
co-tenants need not be decided because in balancing the principal litigation objectives
achieved by all parties on both sides, this is a case where the court finds the parties’
realization of their litigation objectives is split down the middle. Black’s Law Dictionary
defines settlement as: ‘The act by which parties who have been dealing together arrange
their accounts and strike a balance.’
“Based on the practical impact of the settlement on all parties, the litigation
objectives achieved by each party and balancing those objectives against the forfeiture of
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any rights by each party, fairness dictates a finding that there is no prevailing party in this
lawsuit.”
Defendants filed a request for a statement of decision. No statement of
decision was issued. Defendants timely appealed from the minute order denying their
motion for attorney fees and costs.
DISCUSSION
I. Contractual Attorney Fees Under
Civil Code Section 1717
Defendants argue the trial court erred by finding that no party prevailed and
denying their request for contract-based attorney fees. We conclude otherwise.
Attorney fees, when authorized by contract, are allowable as costs. (Code
Civ. Proc., § 1033.5, subd. (a)(10).) Code of Civil Procedure section 1021 leaves the
“measure and mode of compensation” for attorney fees to the agreement of the parties.
Civil Code section 1717 governs attorney fee awards for enforcing contracts that include
fee-shifting clauses. Section 1717, subdivision (a) awards attorney fees to the “party
prevailing on the contract, whether he or she is the party specified in the contract or not.”
Section 1717, subdivision (b)(1) defines prevailing party as “the party who recovered
greater relief in the action on the contract.”
To recover attorney fees based on contract, a party must (1) prevail (2) in
an action (3) on a contract (4) with an attorney fees provision. (Hyduke’s Valley Motors
v. Lobel Financial Corp. (2010) 189 Cal. App. 4th 430, 435-436.) In determining whether
an action is on a contract, the court considers the pleaded theories of recovery, the
theories asserted and the evidence produced at trial, if any, and any additional evidence
submitted on the motion. (Id. at p. 435.)
Section 10.10 of the Declaration permits recovery of attorney fees in an
action “brought for the enforcement of this Declaration or as a result of any alleged
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breach thereof.” Plaintiff contends the underlying litigation was not an action on a
contract or for the enforcement of the Declaration, but a statutory partition action.
Defendants respond that they asserted section 1.1 of the Declaration as a defense to the
partition action and as a basis for their injunctive relief cause of action in the
Cross-complaint. We do not decide whether the litigation was bought to enforce the
Declaration or resulted from its breach because, we conclude, the trial court did not err by
finding that no party prevailed.
A party obtaining a “simple, unqualified victory by defeating the only
contract claim in the action” (Hsu v. Abbara (1995) 9 Cal. 4th 863, 877) is entitled to
recover attorney fees under Civil Code section 1717 as a matter of right, and the trial
court has no discretion to deny that party attorney fees (Hsu v. Abbara, supra, at
pp. 876-877). If neither party achieves such a complete victory, the trial court has
discretion to determine which party prevailed on the contract or whether, on balance,
neither party prevailed sufficiently to justify an award of attorney fees. (Scott Co. v.
Blount, Inc. (1999) 20 Cal. 4th 1103, 1109.)
When determining the prevailing party under Civil Code section 1717, the
trial court “is to compare the relief awarded on the contract claim or claims with the
parties’ demands on those same claims and their litigation objectives as disclosed by the
pleadings, trial briefs, opening statements, and similar sources.” (Hsu v. Abbara, supra, 9
Cal.4th at p. 876.) In determining litigation success, courts should respect substance
rather than form, and may be guided by equitable considerations connected to litigation
success. (Id. at p. 877.) A party who is denied direct relief on a claim may nonetheless
be found to be a prevailing party if it is clear the party has otherwise achieved its main
litigation objective. (Ibid.)
“The trial court exercises wide discretion in determining who, if anyone, is
the prevailing party for purposes of attorney fees. [Citation.] We thus review the trial
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court’s ruling that there was no prevailing party for an abuse of discretion.” (Cussler v.
Crusader Entertainment, LLC (2012) 212 Cal. App. 4th 356, 366.)
Defendants did not obtain a “simple, unqualified victory.” (Hsu v. Abbara,
supra, 9 Cal.4th at p. 877.) They opposed the Partition Complaint, and, in the
Cross-complaint, sought partition in kind as an alternative. Defendants ended up paying
Plaintiff over $2 million to buy its interest in the Shopping Center. Thus, the trial court
enjoyed “wide discretion” (Cussler v. Crusader Entertainment, LLC, supra, 212
Cal.App.4th at p. 366) in determining which, if any, party prevailed.
Defendants’ main litigation objective was to prevent partition by sale of the
Shopping Center altogether. This objective was revealed in Defendants’ answer, which
raised affirmative defenses to the Partition Complaint, and in the Cross-complaint, which
included a cause of action to enjoin partition by sale. In other words, Defendants’ main
litigation objective was to keep the Shopping Center and the cotenancy arrangement
intact. Plaintiff’s main litigation objective was the opposite: the Partition Complaint
sought to sell the Shopping Center outright and divide the proceeds among the cotenants
based on their respective ownership. The litigation goal of Defendants and the litigation
goal of Plaintiff were inconsistent and contested. The recitals to the Settlement
Agreement state that Defendants “contested [P]laintiff’s request to force a sale of the
entire Shopping Center” and “[Plaintiff] contested . . . any partition in kind.”
Defendants contend their main litigation objective was to achieve a
partition in kind of the Shopping Center and the trial court abused its discretion by not
making such a finding. A fair reading of the trial court’s statement of reasons is that the
court at most found partition in kind to be a secondary objective. The court found that
“Plaintiff did not obtain any partition of the property, but it did recover the current value
of its interest in the property” and that “Defendants did not obtain a defense verdict
against plaintiff or a dismissal of all of the claims against them.” The Cross-complaint
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sought to stop the partition action altogether and as an alternative, i.e., a secondary goal,
sought a partition in kind.
The Settlement Agreement was the perfect compromise between the two
conflicting objectives. Plaintiff got bought out and received cash for its cotenancy
interest; Defendants had to pay over $2 million but maintained the integrity of the
Shopping Center. No party achieved its main litigation objective. The trial court did not
abuse its discretion by finding that no party prevailed for purposes of awarding attorney
fees.
II. Attorney Fees for Partition Under Code of Civil
Procedure Section 874.010
Defendants also sought attorney fees as costs of partition under Code of
Civil Procedure sections 874.010 and 874.040. Under section 874.010, “[t]he costs of
partition include: [¶] (a) Reasonable attorney’s fees incurred or paid by a party for the
common benefit.” (Code Civ. Proc, § 874.010, subd. (a).) Under section 874.040, “the
court shall apportion the costs of partition among the parties in proportion to their
interests or make such other apportionment as may be equitable.”
In the minute order denying Defendants’ motion for attorney fees, the trial
court stated, “[w]hether defendants’ motives and actions were for the common benefit of
the co-tenants or primarily for their own benefit with potential reciprocal benefits to the
co-tenants need not be decided because in balancing the principal litigation objectives
achieved by all parties on both sides, this is a case where the court finds the parties’
realization of their litigation objectives is split down the middle.” Defendants argue the
trial court erred by not making a finding whether attorney fees were incurred for the
common benefit. They argue the issue, relevant under Civil Code section 1717, of
whether the parties achieved their respective litigation objectives is not the same as the
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issue, relevant under Code of Civil Procedure section 874.010, of whether attorney fees
were incurred or paid by a party for the common benefit.
The final phrase of section 2.3 of the Settlement Agreement states: “[T]he
Court has the right to decide that no party is entitled to an award of attorneys’ fees and/or
costs.” The meaning of a written contract is to be determined, if possible, from the
writing alone, and the words of the contract are to be understood “‘in their ordinary and
popular sense.’” (Founding Members of the Newport Beach Country Club v. Newport
Beach Country Club, Inc. (2003) 109 Cal. App. 4th 944, 955.)
Section 2.3 of the Settlement Agreement plainly states the parties agree to
give the trial court “the right to decide that no party is entitled to an award of attorneys’
fees.” Without the final phrase of section 2.3, the trial court already had the ability under
Civil Code section 1717 to find that no party prevailed and the ability under Code of
Civil Procedure section 874.010 to find that attorney fees were not incurred for the
common benefit of the cotenants. The parties did not intend any part of section 2.3 to be
superfluous. (Brandwein v. Butler (2013) 218 Cal. App. 4th 1485, 1507 [“when
interpreting a contract, we strive to interpret the parties’ agreement to give effect to all of
a contract’s terms, and to avoid interpretations that render any portion superfluous, void
or inexplicable”].) Thus, we interpret section 2.3 of the Settlement Agreement to give the
trial court the right, notwithstanding Civil Code section 1717 and Code of Civil
section 874.010, to decide that no party could recover attorney fees. The trial court did
not abuse its discretion in exercising its right granted under section 2.3 because, as we
have explained, the parties reached a true compromise settlement agreement and no party
achieved its main litigation objective.
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DISPOSITION
The order denying Defendants’ motion for attorney fees is affirmed.
Respondent shall recover costs on appeal.
FYBEL, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
ARONSON, J.
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