Zock v. Esparza CA4/1 ( 2014 )

Filed 3/13/14 Zock v. Esparza 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
ROBERT NORMAN ZOCK, D062784
Individually and as Trustee, etc.,
Plaintiff and Appellant,
(Super. Ct. No. 37-2011-00090286-
v. CU-OR-CTL)
SCOTT J. ESPARZA et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County, John S.
Meyer, Judge. Reversed in part, affirmed in part, and remanded with directions.
Olsen Law Offices and Christopher Alexander Olsen for Plaintiff and Appellant.
No appearance for the Defendants and Respondents.
Plaintiff and appellant Robert Norman Zock, individually and on behalf of the
R.N. Zock Family Trust, appeals from a judgment awarding Civil Code section 17171
attorney fees to defendants Scott J. Esparza, Scott J. Esparza & Co. Bail Bonds, and
Continental Heritage Insurance Co. on a finding that defendants were the prevailing
parties. Zock contends the trial court abused its discretion in making its prevailing party
determination because he achieved his main litigation objective and recovered the greater
net monetary judgment in the action.
None of the defendants have filed a respondent's brief in this matter. California
Rules of Court, rule 8.200 states: "Each respondent must serve and file a respondent's
brief." (Cal. Rules of Court, rule 8.200(a)(2).) This rule provides that if the respondent
does not timely file a brief, this court "may decide the appeal on the record, the opening
brief and any oral argument by the appellant." (Cal. Rules of Court, rule 8.220(a)(2).)
We elect to do so, and will not treat defendants' failure to file a respondent's brief as a
default or an admission that the trial court erred. (In re Marriage of Riddle (2005) 125
Cal. App. 4th 1075, 1078, fn. 1.) Rather, the better practice is to examine the record on the
basis of Zock's brief and reverse only if prejudicial error is found. (See In re Bryce C.
(1995) 12 Cal. 4th 226, 232-233.) Undertaking that analysis, Zock has shown a
prejudicial abuse of discretion. The judgment to the extent it declares defendants to be
the prevailing parties for purposes of section 1717 attorney fees is without any reasonable
1 All further statutory references are to the Civil Code.
2
basis or supporting evidence. Accordingly, we reverse that part of the judgment and
remand with directions set forth below.
FACTUAL AND PROCEDURAL BACKGROUND
In April 2011, Zock on behalf of himself and the R.N. Zock Family Trust sued
defendants for fraud, breach of contract, breach of the implied covenant of good faith and
fair dealing, wrongful foreclosure, elder abuse, declaratory relief, injunctive relief, and an
accounting. In part, he alleged that after he negotiated to secure a $145,000 bail bond for
his daughter, Danielle Zock, Scott J. Esparza & Co. Bail Bonds, doing business as
ACME Bail Bonds (Acme), demanded a $14,500 renewal fee despite the fact, among
others, that Acme's agents had agreed to waive the fee when the bail bond agreement was
executed. The bail bond agreement executed by Zock provides in part that he would
agree "[t]o pay the Second Party or Surety, in the event that it is necessary for them to
institute suit for a breach of this agreement, a reasonable attorney's fee which shall, in no
event, be less than the sum of twenty-five dollars ($25.00)."
The matter proceeded to a bench trial on all of Zock's causes of action. Zock's
counsel explained at the outset that the primary relief his client sought was a judicial
declaration that he was not bound by the annual renewal fee. His theory was that,
notwithstanding the written bail agreement, defendants had waived their right to recover
that fee. Defendants' position was that they did not waive the fee, and had an enforceable
integrated contract obligating Zock to pay it. During the course of trial, the court
3
confirmed that "the only issue in this case is waiver."2 To that end, Zock testified that
the person with whom he met from Acme, Cathy Kessler, spoke with her manager,
William Burns, who instructed her to tell Zock they would waive the fees to renew the
bond so it would not be a concern for him. Kessler testified she told Zock Acme would
waive the renewal fee. Burns similarly testified he instructed Kessler to do so after she
spoke with Esparza.
In closing arguments, Zock's counsel argued that the "very narrow issue in this
case is whether or not the parties agreed to [an] annual renewal fee." He pointed out that
every person present during the bond's negotiation agreed that the fee had been waived.
Counsel reiterated that "primarily the remedy that plaintiffs are looking for [is] that the
annual renewal fee not be enforced, that the plaintiffs be allowed to pay off the other
amounts that are costs that were associated . . . ."3
Thereafter, the court entered a judgment (1) that Zock take nothing on his
complaint against defendants; (2) awarding Acme $4,6604 against Zock on behalf of
2 "The Court: So the only issue in this case is waiver. [¶] [Zock's counsel]:
Exactly that's exactly right. [¶] The Court: Right? [Zock's counsel]: Yes."
3 Zock's counsel argued the case was "not about going after Mr. Esparza [and] not
going after [Acme]. . . . What's in dispute is the annual renewal fee. . . . So to that
extent plaintiffs simply request that the court order that the annual renewal fee not be
enforced, and that we just move on with everything else from there."
4 This award appears to be based on a $337.50 premium tax that Acme owed to the
State; $1,500 owed by Acme to the surety; a $1,381 balance on the initial premium owed
by Zock; and $1,450 for one month of prorated premium. Danielle Zock testified she
was willing to pay the balance owed to Acme on the initial premium, but not another
premium.
4
himself and the R.N. Zock Family Trust; (3) declaring defendants to be the prevailing
parties; and (4) ordering that Acme not take action to enforce its rights under the
contracts with Zock, including the deed of trust, until 90 days from the court's entry of
judgment. Zock appeals from the judgment.
DISCUSSION
I. Standard of Review
"The trial court exercises wide discretion in determining who, if anyone, is the
prevailing party for purposes of attorney fees." (Cussler v. Crusader Entertainment, LLC
(2012) 212 Cal. App. 4th 356, 366; see Hsu v. Abbara (1995) 9 Cal. 4th 863, 871.) Thus,
we review the trial court's ruling for a manifest abuse of discretion, which occurs when
the trial court acts in an " ' " ' "arbitrary, capricious or patently absurd manner that
resulted in a manifest miscarriage of justice," ' " ' " (Cussler, at p. 366) commits a
prejudicial error of law, or makes necessary findings not supported by substantial
evidence. (Silver Creek, LLC v. Blackrock Realty Advisors, Inc. (2009) 173 Cal. App. 4th
1533, 1539.)
II. Prevailing Party Determination for Recovery of Section 1717 Attorney Fees
Section 1717 provides in part: "In any action on a contract, where the contract
specifically provides that attorney's fees and costs, which are incurred to enforce that
contract, shall be awarded either to one of the parties or to the prevailing party, then the
party who is determined to be the party prevailing on the contract, whether he or she is
the party specified in the contract or not, shall be entitled to reasonable attorney's fees in
addition to other costs. [¶] . . . [¶] . . . The court, upon notice and motion by a party,
5
shall determine who is the party prevailing on the contract for purposes of this section,
whether or not the suit proceeds to final judgment. Except as provided in paragraph (2)
[relating to dismissal of action], the party prevailing on the contract shall be the party
who recovered a greater relief in the action on the contract. The court may also
determine that there is no party prevailing on the contract for purposes of this section."
(§ 1717, subds. (a) & (b)(1).)
"The phrase 'greater relief . . . on the contract' does not necessarily mean greater
monetary relief. [Citation.] Under . . . section 1717, the trial court has discretion to
determine who, if anyone, is the party prevailing on the contract. [Citation.]
Nonetheless, . . . section 1717 also contemplates that a party prevailing on a contract will
'receive attorney fees as a matter of right . . . whenever the statutory conditions have been
satisfied.' [Citations.] [¶] Accordingly, when the decision on a litigated contract claim
'is purely good news for one party and bad news for the other—the Courts of Appeal
have recognized that a trial court has no discretion to deny attorney fees to the successful
litigant. Thus, when a defendant defeats recovery by the plaintiff on the only contract
claim in the action, the defendant is the party prevailing on the contract under . . . section
1717 as a matter of law. [Citations.]' [Citation.] It is only when the results of the
litigation are 'mixed' that the statute 'reserve[s][to] the trial court a measure of discretion
to find no prevailing party[.]' [Citation.] Upon final resolution of the contract claims, the
trial court determines whether there is a prevailing party on the contract by comparing the
relief awarded on the contract claim with the parties' demands and their litigation
objectives." (Otay River Constructors v. San Diego Expressway (2008) 158 Cal. App. 4th
6
796, 806, italics omitted; see Hsu v. Abbara, supra, 9 Cal.4th at p. 876; see also Silver
Creek, LLC v. Blackrock Realty Advisors, Inc., supra, 173 Cal.App.4th at pp. 1538-
1539.)
"The prevailing party determination is to be made only upon final resolution of the
contract claims and only by 'a comparison of the extent to which each party ha[s]
succeeded and failed to succeed in its contentions." (Hsu v. Abbara, supra, 9 Cal.4th at
p. 876; see De La Cuesta v. Benham (2011) 193 Cal. App. 4th 1287, 1294.) "If neither
party achieves a complete victory on all the contract claims, it is within the discretion of
the trial court 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, italics added.) "[I]n determining litigation
success, courts should respect substance rather than form, and to this extent should be
guided by 'equitable considerations.' For example, a party who is denied direct relief on a
claim may nonetheless be found to be a prevailing party if it is clear that the party has
otherwise achieved its main litigation objective." (Hsu, at p. 877, italics omitted; Silver
Creek, LLC v. Blackrock Realty Advisors, Inc., supra, 173 Cal.App.4th at p. 1539.)
III. Analysis
Zock contends the trial court abused its discretion by determining defendants to be
the prevailing party without considering which party achieved its litigation objectives or
the greater net monetary benefit through the litigation. He maintains that by achieving
his objective of defeating defendants' claim to their $14,500 renewal fee, he both met his
litigation objective and achieved the greater monetary net benefit.
7
The contention has merit. Though defendants sought to enforce the bond
agreement and recover the $14,500 annual renewal fee (in addition to the unpaid balance
and prorated amount of the bond plus interest), it did not prevail on that part of its claim.
Thus, this case is plainly not one where defendants achieved a " 'simple, unqualified
win' " (Hsu v. Abbara, supra, 9 Cal.4th at pp. 876-877) on the contract, entitling
defendants to prevailing party fees with no discretion vested in the trial court to rule
otherwise. (Ibid.; see Scott Co. v. Blount, Inc., supra, 20 Cal.4th at p. 1109 [trial court
exercises discretion where neither party achieves a complete victory on all the contract
claims]; De La Cuesta v. Benham, supra, 193 Cal.App.4th at p. 1293 [simple, unqualified
win on the contract takes a case out of the discretion clause of section 1717 and puts it
into the entitlement clause].) Because defendants' result fell short of a complete victory,
the trial court could not reasonably find defendants to be the prevailing party without
exercising any discretion as to the parties' relative success or failure.
As to the court's discretion on that point, while it is broad, it is not unlimited.
(Silver Creek, LLC v. BlackRock Realty Advisors, Inc., supra, 173 Cal.App.4th at p.
1541; De La Cuesta v. Benham, supra, 193 Cal.App.4th at p. 1295.) "If the results in a
case are lopsided in terms of one party obtaining 'greater relief' than the other in
comparative terms, it may be an abuse of discretion for the trial court not to recognize
that the party obtaining the 'greater' relief was indeed the prevailing party." (De La
Cuesta, at p. 1295.)
This was the case in Silver Creek LLC v. BlackRock Realty Advisors, Inc., supra,
173 Cal. App. 4th 1533, in which the parties entered into agreements to purchase
8
commercial properties, but the plaintiff, Silver Creek, notified defendant it was
terminating the agreements after a dispute arose regarding their terms. (Id. at p. 1536.)
Silver Creek then filed an action for a declaration that its termination was valid, and it
was entitled to retain the defendant's deposit. (Ibid.) The defendant cross-complained,
alleging Silver Creek had breached certain obligations that rendered the purported
termination invalid. (Ibid.) The trial court granted Silver Creek its requested declaratory
relief and denied the defendant's cross-claims, but returned the defendant its deposit. (Id.
at p. 1538.) The trial court denied Silver Creek's ensuing request for section 1717
attorney fees, reasoning that Silver Creek "did not 'win an unqualified victory' " because
defendant obtained some relief, and it "could not 'determine . . . that one party has
obtained greater relief than the other.' " (Ibid.)
This court reversed on grounds the court's finding was not supported by the
evidence. (Silver Creek LLC v. BlackRock Realty Advisors, Inc., supra, 173 Cal.App.4th.
at p. 1540.) Specifically, this court held that Silver Creek's issue was "most important to
the parties and 'greater' in terms of monetary value—about $29.75 million at issue for the
properties versus about $1.13 million at issue for the deposit." (Ibid.) Thus, Silver Creek
had achieved its main litigation objective, while the defendant failed to accomplish its
desired goal even though it obtained the return of its deposit. (Ibid.) The record
"indisputably" showed Silver Creek had obtained the greater relief on the contract, and
the trial court abused its discretion by finding neither party achieved greater relief and
denying it attorney fees under section 1717. (Id. at p. 1541.)
9
The court in De La Cuesta v. Benham, supra, 193 Cal. App. 4th 1287 found a
similar abuse of discretion. There, a landlord sued a tenant for unpaid rent of a
commercial property, and requested $103,000 in damages. (Id. at p. 1291.) The tenant
asserted she owed nothing in back rent, characterized by the Court of Appeal as an
"extreme position . . . ." (Id. at p. 1296.) The landlord was awarded $69,500 in damages.
(Id. at p. 1291.) Observing the landlord's win was not "unqualified," the appellate court
pointed out he nevertheless got nearly 70 percent of what he sought whereas the tenant
got zero percent. (Id. at pp. 1296, 1299.) Because the landlord obtained the greater part
of his two litigation objectives: repossession and compensation for the tenant's
occupation, the appellate court held the trial court abused its discretion in ruling there
was no prevailing party. (Id. at p. 1299.)
Here, the trial court provided no explanation or reasoning for its conclusion, and
we find no reasonable basis to support it. The record reveals Zock had conceded liability
for the amounts ultimately recovered by defendants, but was given his "primar[y] . . .
remedy" sought, namely, a determination that defendants had waived, and Zock was not
responsible for paying, the $14,500 renewal fee provided for in the contract. Even
though Zock did not obtain a monetary recovery on the contract, equitable considerations
dictate a conclusion that he in fact achieved the entirety of his main litigation objective to
avoid paying the fee, which was a substantially higher sum than the amount of
defendants' award. Such " ' "equitable considerations must prevail over both the
bargaining power of the parties and the technical rules of contractual construction." ' "
(Sears v. Baccaglio (1998) 60 Cal. App. 4th 1136, 1151.) Under these circumstances,
10
Zock has shown the trial court abused its discretion in determining defendants to be the
prevailing party under section 1717.
"Statutory authorization for the recovery of attorney fees incurred at trial
necessarily includes attorney fees incurred on appeal unless the statute specifically
provides otherwise." (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal. App. 4th 1127,
1134; Evans v. Unkow (1995) 38 Cal. App. 4th 1490, 1499-1500.) Because section 1717
does not provide otherwise, Zock is entitled to his attorney fees and costs incurred on
appeal.
11
DISPOSITION
The judgment to the extent it determines defendants to be the prevailing party is
reversed. The matter is remanded with directions that the trial court declare Robert
Norman Zock on behalf of himself and the R.N. Zock Family Trust to be the prevailing
party, and for further proceedings to determine reasonable attorney fees pursuant to Civil
Code section 1717 and on appeal. The judgment is otherwise affirmed. Zock shall
recover his costs on appeal.
O'ROURKE, J.
WE CONCUR:
HUFFMAN, Acting P. J.
AARON, J.
12