MB Urban Properties v. Lankford & Assocs. CA4/1 ( 2013 )

Filed 12/16/13 MB Urban Properties v. Lankford & Assocs. 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
MB URBAN PROPERTIES, LLC, et al., D061297
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2010-00090082-
CU-CTL)
LANKFORD & ASSOCIATES, INC., et al.,
Defendants and Respondents.
APPEALS from a judgment and an order of the Superior Court of San Diego
County, Judith F. Hayes, Judge. Affirmed.
Aguirre, Morris & Severson, Michael J. Aguirre, Christopher S. Morris and Maria
C. Severson for Plaintiffs and Appellants.
Higgs, Fletcher & Mack, John Morris, Victoria E. Fuller and Thomas W. Ferrell
for Defendants and Respondents.
This appeal is brought by Michael Blumenthal; Tamer Salameh; MB Urban
Properties, LLC; and IB4B, Inc. (collectively Plaintiffs) after a verdict against them in
their lawsuit alleging fraud and breach of contract against Lankford & Associates, Inc.;
Robert V. Lankford (hereinafter, "Mr. Lankford"); Lankford Marketplace, LLC
(hereinafter "Marketplace LLC"); Lankford Investments, LLC; and CJUF II Lankford
Market LLC (hereinafter "CJUF II")1 arising out of Plaintiffs' investment in a real estate
development venture.
Plaintiffs contend that (1) the trial court should have granted their motion for a
new trial based on an allegedly prejudicial comment made by opposing counsel during
closing argument; and (2) the trial court erred in awarding attorney fees.
Defendants have filed a motion to dismiss the appeal from the judgment as
untimely, which we consider below.
We conclude (1) that the motion to dismiss the appeal is without merit and (2) that
Plaintiffs have set forth no meritorious basis for reversal. Accordingly, we affirm the
judgment.
I
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs and Defendants were involved in a venture to develop a parcel of real
estate in downtown San Diego into a mixed-use high-rise building containing
condominiums, retail space and parking (the Project). Plaintiffs obtained an interest in
1 When referring collectively to defendants Lankford & Associates, Inc.; Robert V.
Lankford; Marketplace, LLC; Lankford Investments, LLC; and CJUF II, we will refer to
them as "Defendants."
2
the Project in 2006 when MB Urban Properties, LLC and IB4B, Inc.2 contributed the lot
on which the Project was to be built (the Real Property) in exchange for a payment of
$16.5 million and a credit of $5.5 million in the form of a capital contribution to
Marketplace LLC, in which they became members. Lankford & Associates, Inc. — the
other member of Marketplace LLC — made a $1 million capital contribution and acted as
its managing member.3
In turn, Marketplace LLC became a member of CJUF II Lankford Market LLC
(hereinafter, "CJUF II"), along with another entity, Canyon Johnson Urban Fund II, L.P.,
which was to make a $30.4 million capital contribution. The stated purpose of CJUF II in
its operating agreement was to develop the Project. Marketplace LLC was identified in
the operating agreement as the "operator" of CJUF II, responsible for the day-to-day
activities of the company.
Plaintiffs became dissatisfied with Defendants because the Project was ultimately
never developed and Plaintiffs obtained no financial gain from their investment.
Plaintiffs filed suit against Defendants, alleging (1) securities fraud (Corp. Code,
§§ 25401, 25501, 25504); (2) fraud and deceit; (3) breach of contract; (4) breach of the
covenant of good faith and fair dealing; (5) breach of contract (rescission); (6) breach of
fiduciary duty; and (7) declaratory relief. The declaratory relief cause of action sought a
2 The operative complaint alleged that Salameh owned IB4B, Inc., and Blumenthal
owns MB Urban Properties, LLC.
3 According to the operative complaint, Robert Lankford is the president and sole
owner of Lankford & Associates, Inc.
3
declaration regarding the parties' rights and duties under a provision in the CJUF II
operating agreement concerning Marketplace LLC's right, in certain circumstances, to
repurchase the Real Property.
The case proceeded to a jury trial on all of the causes of action except declaratory
relief, and the jury returned a verdict against Plaintiffs on each of cause of action
presented to it.
Defendants submitted a proposed judgment to the trial court, reciting the jury's
verdict and dismissing the declaratory relief cause of action on the ground that
"[p]laintiffs presented no evidence during the trial of this matter pertaining to the
declaratory relief sought in the Seventh Cause of Action[,]" and "made no argument to
the Court addressing that cause of action."
The trial court entered the proposed judgment, as submitted, on June 24, 2011.
The judgment indicated that the amount of costs and attorney fees to be awarded to
Defendants was still to be determined. Defendants served notice of entry of judgment on
Plaintiffs on June 28, 2011.
Even though the declaratory relief cause of action was dismissed in the June 24,
2011 judgment, Plaintiffs filed an ex parte application to obtain a briefing schedule and
set a hearing date to resolve the declaratory relief cause of action. At the June 28, 2011
ex parte hearing, counsel for Plaintiffs explained that although he was "concerned" that
the judgment had already been entered against Plaintiffs on the declaratory relief cause of
action, he was nevertheless seeking a statement of decision in Plaintiffs' favor on the
declaratory relief cause of action and would like the court to set a briefing schedule in
4
connection with that issue.4 Plaintiffs' counsel also made clear that he would be filing a
motion for a new trial and a judgment notwithstanding the verdict (JNOV) on other
grounds. The trial court stated at the ex parte hearing, "Sounds like the best we're going
to be able to do here today is to set this for the time of post-trial motions so it can be fully
briefed and decided when I have enough time to do that and give you a full hearing on it."
On July 11, 2011, Plaintiffs filed three motions: (1) a motion for JNOV; (2) a
motion for a new trial; and (3) "Plaintiffs' Motion for Findings of Fact and Conclusions
of Law re Declaratory Relief Pursuant to [Code of Civil Procedure sections] 1060 and
632" (the posttrial declaratory relief motion).
The posttrial declaratory relief motion sought a declaration from the trial court
that, pursuant to a contractual repurchase provision between the parties, the proceeds
from a pending sale of the Real Property should be apportioned in a specific manner.
Plaintiffs stated, "In order to accomplish this end, the existing judgment should be
amended pursuant to [Code of Civil Procedure section 473, subdivision (d)] which allows
the Court to amend any judgment to conform to proof. In particular, that section of the
4 Prior to the start of the jury trial, the parties discussed with the trial court the
procedure for resolution of the declaratory relief cause of action. Plaintiffs' counsel
suggested that "at the end of the case . . . the parties provide Your Honor with a proposed
statement of decision . . . and you can have the benefit of doing that at the end of the
case." Counsel for Defendants agreed to that approach. The agreed-upon procedure was
not followed prior to the trial court's entry of judgment on June 24, 2011, which
dismissed the declaratory relief cause of action for lack of evidence and argument from
Plaintiffs at trial.
5
judgment stating that no evidence concerning the Declaratory Relief Cause of Action was
presented at trial. This is simply not true."
Neither the motion for new trial nor the motion for JNOV sought relief regarding
the declaratory relief cause of action. As relevant here, the sole ground for the new trial
motion was counsel for Defendants' purported prejudicial statement during closing
argument that Mr. Lankford was " 'being sued to take his house away.' "
On August 19, 2011, the trial court issued a minute order ruling on the three
posttrial motions. The trial court denied the motion for JNOV and the motion for a new
trial.
In explaining its reasons for denying the motion for a new trial, the trial court
stated that (1) Plaintiffs' counsel did not object to the allegedly prejudicial statement
made by Defendants' counsel during oral argument and did not ask for a curative
instruction, and thus waived the right to assert the issue as grounds for a new trial; and
(2) the comment was factually accurate, was a single brief statement that was not part of
a pattern of offensive conduct, and did not appeal to the sympathy of the jury, so that it
was not prejudicial per se.
With respect to the posttrial declaratory relief motion, the trial court directed "both
parties to submit proposed statements of decision within 30 days of the court's ruling
herein."
Plaintiffs and Defendants submitted their proposed statements of decision on the
declaratory relief cause of action within the 30-day time frame. Defendants responded to
Plaintiffs' proposed statement of decision by filing an objection, which stated, among
6
other things, that "[g]ranting [P]laintiffs' request would require the Court to vacate that
portion of the June 24, 2011 judgment" that dismissed the declaratory relief cause of
action.
On November 9, 2011, the trial court issued a statement of decision on the
declaratory relief cause of action. The trial court explained that in connection with the
posttrial declaratory relief motion, "defendants' counsel resubmitted evidence previously
provided to the court in connection with a pretrial motion to void a lis pendens" and
"after having once again reviewed the evidence," the court "reaffirms its prior findings
that plaintiffs have not presented evidence that they exercised their right to repurchase the
property and have failed to prove entitlement to the relief sought in the seventh
[declaratory relief] cause of action." The court stated that it "hereby reaffirms its
dismissal of the seventh cause of action in its June 24, 2011 Judgment for the reasons
stated herein," and "as a separate and alternative basis for the court's decision . . . , the
court finds the totality of the evidence, much of which is uncontroverted, fails to prove by
a preponderance of the evidence their entitlement to the relief sought."
Plaintiffs filed an ex parte application for entry of an amended judgment, which
the court entertained at a December 7, 2011 hearing. Although counsel for Defendants
objected to the entry of an amended order on the grounds that it would be the same as the
June 24, 2011 judgment and the time to appeal from that judgment had already expired,
the trial court explained that it would enter an amended judgment because counsel "didn't
have the benefit of the court's reasoning" on the declaratory relief cause of action at the
time of the June 24, 2011 judgment, and "[i]n not having the benefit of the court's
7
reasoning, having made a timely request for a statement of decision, they . . . couldn't
frame their appeal. That's not fair." The trial court explained, "The idea isn't to cut off
anybody's rights. It's to preserve everybody's rights to have a full and fair hearing on the
merits and to have a full and fair hearing on the appeal." According to the trial court,
"[t]here was nothing about the way in which the decision was rendered that should act to
eliminate the plaintiffs' right to appeal. That's just not going to happen."
On January 5, 2012, the trial court entered a "Final Amended Judgment After Jury
Verdict." The amended judgment recited the jury verdict and contained the following
resolution of the declaratory relief cause of action:
"Following the trial, the parties briefed and argued Plaintiffs' Seventh
Cause of Action for Declaratory Relief. Following argument by counsel,
the Court requested that each party submit a proposed statement of
decision. After consideration of the evidence presented, the briefing of the
parties, the arguments of counsel and the proposed statements of decision
of each party, the Court entered its Statement of Decision Regarding
Plaintiffs' Seventh Cause of Action For Declaratory Relief on November 9,
2011. The Court found that Plaintiffs had failed to prove the entitlement to
the relief sought in the Seventh Cause of Action and declined to give the
interpretation of the contract urged by Plaintiffs. The Court therefore
denied the relief sought by plaintiffs in their seventh cause of action."
Plaintiffs filed a notice of appeal from the amended judgment on January 24, 2012.
On April 26, 2012, the trial court granted Lankford & Associates, Inc.'s motion for
attorney fees, awarding it $466,440.32. On May 14, 2012, Plaintiffs filed an appeal from
the order awarding attorney fees to Defendants.
8
II
DISCUSSION
A. The Motion to Dismiss the Appeal
We first address Defendants' motion to dismiss the appeal.
Defendants argue that the appeal from the judgment must be dismissed as
untimely.5 According to Defendants, the time to appeal started running from the entry of
the June 24, 2011 judgment rather than from the entry of the January 5, 2012 amended
judgment. As the time to file an appeal from the June 24, 2011 judgment expired 30 days
from the trial court's August 22, 2011 service of its ruling denying the motion for new
trial and motion for JNOV, i.e., on September 21, 2011, Defendants contend that
Plaintiffs' January 24, 2012 notice of appeal was untimely.
As an initial matter, we agree with Defendants that if Plaintiffs were required to
appeal from the June 24, 2011 judgment, the deadline for filing that appeal would be
September 21, 2011. Specifically, California Rule of Court,6 rule 8.108 (b)(1) provides:
"If any party serves and files a valid notice of intention to move for a new trial, the
following extensions of time apply: [¶] (1) If the motion for a new trial is denied, the
5 As we understand Defendants' motion to dismiss the appeal, it pertains only to the
notice of appeal from the amended judgment, not from the notice of appeal of the
posttrial order awarding attorney fees. The appeal from the attorney fee order was timely
filed on May 14, 2012, within 60 days of the April 26, 2012 service of the order. (See
Code Civ. Proc., § 904.1, subd. (a)(2) [a postjudgment order awarding attorney fees is
separately appealable]; Cal. Rules of Court, rule 8.104 (a), (e) [60-day deadline from date
of service to appeal from an appealable postjudgment order].)
6 All further rule references are to the California Rules of Court.
9
time to appeal from the judgment is extended for all parties until the earliest of: [¶]
(A) 30 days after the superior court clerk, or a party serves an order denying the motion
or a notice of entry of that order; [¶] (B) 30 days after denial of the motion by operation
of law; or [¶] (C) 180 days after entry of judgment." Rule 8.108 (d)(1) provides for the
same deadlines after a denial of a JNOV motion, i.e., the earliest of 30 days after service
of the order denying the motion, 30 days after denial of the motion by operation of law,
or 180 days after entry of judgment. Here, the superior court clerk served the order
denying the motion for a new trial and motion for JNOV on August 22, 2011. Thus, the
earliest of the three deadlines set forth in rule 8.108 (b)(1) and (d)(1) was September 21,
2012, which was 30 days from the date the clerk served the order.
The dispositive question, however, is whether Plaintiffs were required to appeal
from the June 24, 2011 judgment, or if — instead — a new appeal period began upon
entry of the amended judgment. The general rule is that if an amendment to a judgment
makes a substantive change, the right to appeal restarts from the entry of the amended
judgment. If the amendment amounts " 'to a substantial modification of the
judgment . . . , the amended judgment supersedes the original and becomes the appealable
judgment' " and " 'a new appeal period starts to run from notice of entry or entry of the
amended judgment.' " (Torres v. City of San Diego (2007) 154 Cal.App.4th 214, 222.)
A " 'substantial modification' . . . mean[s] 'one materially affecting the rights of the
parties.' " (Sanchez v. Strickland (2011) 200 Cal.App.4th 758, 765 (Sanchez).) The focus
is on "whether there is a substantial change in the rights of the parties such that allowing
an amendment nunc pro tunc (relating back to the original judgment) would unfairly
10
deprive them of the right to contest the issue on appeal or otherwise." (Dakota
Payphone, LLC v. Alcaraz (2011) 192 Cal.App.4th 493, 506-507 (Dakota Payphone).)7
"[I]t is ultimately the parties' ability to challenge the ruling that is key . . ." in determining
whether there has been a substantial modification to the judgment, as it has "generally
been held unfair to the parties to allow the trial court to make a change that they cannot,
thereafter, challenge." (Dakota Payphone, at pp. 507, 508.) Thus, for example, when an
amendment to a judgment reflected "a new legal ground" for the decision, it was a
substantial modification, because the party would not have been able to frame an appeal
from that ruling if it had appealed from the original judgment. (Sanchez, at p. 767.)
In this case, although the amended judgment reached the same result on the
declaratory relief cause of action as the original judgment in that both of them resolved
7 Although some of the case law approaches the issue of whether an amendment
was substantial by examining whether the amendment was merely to correct a clerical
error, we agree with the recent case law rejecting that approach as overly simplistic. As
the court stated in Sanchez, supra, 200 Cal.App.4th 758, agreeing with the analysis in
Dakota Payphone, supra, 192 Cal.App.4th at page 506, "[t]he question of clerical error
versus judicial error does not resolve the issue whether a substantial modification
occurred. [Citation.] Furthermore, we reject the proposition that all changes correcting
clerical errors in judgments are insubstantial or immaterial. [¶] . . . [¶] . . . Also, all
insubstantial changes to judgments do not necessarily involve the correction of clerical
errors." (Sanchez, at pp. 765-766.) As an apt example, Sanchez posed a hypothetical in
which the names of a liable defendant and not-liable defendant were transposed in the
judgment due to a clerical mistake, with the error corrected in an amended judgment. (Id.
at p. 766.) As Dakota Payphone clarifies, "[T]he question whether a trial court has the
ability to amend and under what circumstances it may amend a judgment is a different
question than what effect any such modification might have on the time in which to
appeal from the judgment. Thus, the question of 'clerical error' versus 'judicial error'
does not resolve the issue" of the time to appeal from the judgment. (Dakota Payphone,
at p. 506.)
11
that cause of action against Plaintiffs, different legal grounds were set forth in the two
judgments. The original judgment simply based its dismissal of the declaratory relief
cause of action on the purported failure of Plaintiffs to present evidence or argument
pertaining to that cause of action. However the amended judgment set forth a resolution
on the merits, referring to the trial court's consideration of the evidence and arguments of
counsel, as reflected in the statement of decision. The amended judgment stated that
"Plaintiffs had failed to prove the entitlement to the relief sought in the Seventh Cause of
Action" and explained that the court had "declined to give the interpretation of the
contract urged by Plaintiffs." Because the amended judgment contained a completely
different legal basis for resolving the declaratory relief cause of action against Plaintiffs,
it contained a substantial modification from the original judgment, and it accordingly
reset the time to appeal from the judgment.
Defendants contend that the trial court was without authority to enter the amended
judgment. According to Defendants, we should therefore declare the amended judgment
to be void and give no effect to it when calculating the timeliness of the appeal. We
disagree for two reasons.
First, the authority that Plaintiffs cited to the trial court for amending the judgment
was Code of Civil Procedure 473, subdivision (d), which states that "[t]he court may,
upon motion of the injured party, or its own motion, correct clerical mistakes in its
judgment or orders as entered, so as to conform to the judgment or order directed, and
may, on motion of either party after notice to the other party, set aside any void judgment
or order." There is no deadline for an amendment of a judgment under this provision. "A
12
court of general jurisdiction has power after judgment, pending an appeal and even after
affirmance of the judgment on appeal, and regardless of lapse of time, to correct clerical
errors whether made by the court, clerk or counsel so that its records will conform to and
speak the truth." (Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 506 (Hennefer).)
Here, the trial court's amendment to the judgment constituted the correction of a
clerical error under Code of Civil Procedure section 473, subdivision (d). " ' "The term
'clerical error' covers all errors, mistakes, or omissions which are not the result of the
exercise of the judicial function. If an error, mistake, or omission is the result of
inadvertence, but for which a different judgment would have been rendered, the error is
clerical and the judgment may be corrected to correspond with what it would have been
but for the inadvertence." ' " (Aspen Internat. Capital Corp. v. Marsch (1991) 235
Cal.App.3d 1199, 1204, italics added.) "The difference between judicial and clerical
error rests . . . upon . . . whether 'it was the deliberate result of judicial reasoning and
determination.' " (Ibid.)
A clerical error may include a provision in a judgment that was drafted by counsel
and inadvertently approved by the trial court when it endorsed the proposed judgment.
For example, in Bowden v. Green (1982) 128 Cal.App.3d 65 (Bowden), the trial court
made a clerical error subject to correction under Code of Civil Procedure section 473,
subdivision (d), when it signed a proposed judgment drafted by counsel providing that the
defendants take nothing by way of their cross-complaint. (Id. at pp. 69, 74.) "If a trial
judge through inadvertence or mistake signs an order different from that which he
intended because of the error of an attorney draftsman, it may readily be corrected.
13
[Citation.] 'In these times busy judges must of necessity rely heavily upon the attorneys
to prepare orders and judgments accurately so that they express that which was done at
the trial and that which the judge had called for.' " (Hennefer, supra, 182 Cal.App.3d at
p. 507.)
The record establishes that the trial court inadvertently entered judgment on the
declaratory relief cause of action before issuing a statement of decision. We reach this
conclusion based on: (1) the reporter's transcript of the pretrial proceedings, which
shows that the parties clearly agreed that the trial court would resolve the declaratory
relief cause of action after reviewing the parties' proposed statements of decision; (2) the
fact that the proposed judgment the trial court signed was prepared and submitted by
Defendants' counsel without an indication from the trial court that it had considered and
ruled on the declaratory relief cause of action; and (3) the trial court's explanation, on the
record, that it was entering an amended judgment because it did not intend to issue a final
judgment on the declaratory relief cause of action without first making a ruling and
giving the parties a statement of decision explaining its decision.8 Because the trial court
8 In explaining why it was entering an amended judgment, the trial court stated,
"You'll recall during the trial, [Plaintiffs' counsel] requested a ruling and a statement of
decision. Now he has one. Now he gets a judgment. Now you go off for appeal." As
the court explained, it did not intend to enter a final judgment including the declaratory
relief cause of action prior to issuing a statement of decision, as "[c]ounsel didn't have the
benefit of the court's reasoning. In not having the benefit of the court's reasoning, having
made a timely request for a statement of decision, they couldn't . . . frame their appeal.
That's not fair."
The trial court's explanation of its intention in entering an amended judgment is
important to our analysis of whether the amendment was to correct an inadvertent clerical
error. "It is . . . settled that '[in] determining whether an error is clerical or judicial, great
14
inadvertently included the dismissal of the declaratory relief cause of action in the
original judgment, that mistake constitutes a clerical error subject to correction under
Code of Civil Procedure section 473, subdivision (d).
Second, even were we to decide that Code of Civil Procedure section 473,
subdivision (d) is not applicable and that the trial court therefore acted outside of its
authority in issuing the amended judgment, Plaintiffs' appeal would still be timely. As a
leading treatise explains, under the applicable case law "[i]f an amended judgment is
subsequently determined to be void . . . , the original judgment is reinstated[,]" and "the
amended (though void) judgment is deemed to have suspended the time to appeal the
original judgment; a new appeal period thus runs from the date the original judgment was
reinstated (the date the amended judgment was declared void). In effect the reinstated
judgment is treated as a new judgment for appeal purposes." (Eisenberg et al., Civil
Appeals and Writs (The Rutter Group 2012) ¶ 3:57, p. 3-31, citing In re Marriage of
Micalizio (1988) 199 Cal.App.3d 662, 671-672.) Thus, even if the amended judgment
were declared void, Plaintiffs would still be deemed to have a timely appeal from the
original judgment.
weight should be placed on the declaration of the judge as to his intention in signing the
[judgment].' [Citation.] The rationale for that rule was succinctly stated by Witkin:
'Where the error is made by the judge it is seldom clear from the record or other extrinsic
evidence whether the error is judicial or clerical; i.e., whether (a) he knowingly rendered
a judgment without realizing that it was bad in law (judicial error), or (b) inadvertently or
by mistake signed findings or a judgment or order which he did not intend to constitute
his decision. The issue is one of the judge's intent, and the best evidence is the judge's
own statement, either express or implied from the order of correction.' " (Bowden, supra,
128 Cal.App.3d at p. 71.)
15
In sum, we conclude that Plaintiffs' appeal from the January 5, 2012 judgment was
timely, and Defendants' motion to dismiss is therefore without merit.
B. The Trial Court Did Not Err in Denying the Motion for a New Trial
We now turn to Plaintiffs' contention that the trial court erred in denying its
motion for a new trial.
As we have explained, the sole basis for Plaintiffs' motion for a new trial was a
statement made by counsel for Defendants during closing argument, which Plaintiffs
contend unfairly prejudiced them. Specifically, in the course of explaining to the jury the
difference between the five defendants — one of which was an individual and four of
which were business entities — counsel for Defendants made the following comment:
"Mr. Lankford has been sued as an individual, as a person. He's being sued
to take his house away, to take his personal assets away. A business
dispute made personal. Suing him personally for his own money in his
pocket. I won't argue the evidence again about fraud, nondisclosure, breach
of contract, who has control. But if you find Mr. Lankford liable
individually, that's his money. That's his assets.
"The next defendant is the company that he owns and runs, Lankford &
Associates . . . . That's his company. If you find that entity liable for fraud
or that entity liable for breach of contract, again that's Mr. Lankford."
Counsel for Defendants then proceeded to discuss the role played by the remaining
three defendants, as business entities, in the transactions giving rise to the lawsuit.
Although Plaintiffs did not object to these comments during closing argument, did
not ask the trial court to admonish the jury, and did not seek a mistrial, Plaintiffs argued
for the first time in their motion for a new trial that that they were unfairly prejudiced by
counsel's comments, requiring a retrial. According to Plaintiffs, counsel for Defendants
16
committed misconduct in referring to Mr. Lankford's house being taken away, and "[t]his
improper and prejudicial argument played to the sympathies of the jury, and prevented
[Plaintiffs] from having a fair trial."
The trial court denied the motion for new trial on two main grounds: (1) Plaintiffs
had not raised the objection during closing argument when it could have been corrected
by an admonition to the jury; and (2) the comment was not unfairly prejudicial.
The authority for a new trial based on misconduct by opposing counsel during
closing argument is "[s]ection 657, subdivision (1), of the Code of Civil
Procedure[, which] provides that a new trial may be granted for an '[(i)rregularity] in the
proceedings of the court, jury or adverse party . . . by which either party was prevented
from having a fair trial.' It is well settled that misconduct of counsel is such an
irregularity and a ground for new trial. [Citations.] It is also well settled that misconduct
has often taken the form of improper argument to the jury . . . ." (City of Los Angeles v.
Decker (1977) 18 Cal.3d 860, 870 (Decker).)
"[W]e review an order denying a new trial motion under the abuse of discretion
standard." (Santillan v. Roman Catholic Bishop of Fresno (2012) 202 Cal.App.4th 708,
733.) "[A] trial judge is accorded a wide discretion in ruling on a motion for new trial
and . . . the exercise of this discretion is given great deference on appeal." (Decker,
supra, 18 Cal.3d at pp. 871-872.)
As we will explain, because Plaintiffs did not raise an objection at trial or ask for a
curative instruction, they did not preserve their argument that Defendants' counsel
committed misconduct during closing argument.
17
"Generally a claim of misconduct is entitled to no consideration on appeal unless
the record shows a timely and proper objection and a request that the jury be admonished.
The purpose of the rule requiring the making of timely objections is remedial in nature,
and seeks to give the court the opportunity to admonish the jury, instruct counsel and
forestall the accumulation of prejudice by repeated improprieties, thus avoiding the
necessity of a retrial. . . . In the absence of a timely objection the offended party is
deemed to have waived the claim of error through his participation in the atmosphere
which produced the claim of prejudice." (Horn v. Atchison, T. & S.F. Ry. Co. (1964) 61
Cal.2d 602, 610, citations omitted.) Asserting misconduct for the first time in the context
of a new trial motion does not preserve the issue for appeal; the objection and the request
for a curative instruction must be made during trial. (People v. Williams (1997) 16
Cal.4th 153, 254-255.) Here, Plaintiffs did not object to counsel's comments during trial
and did not request that the jury be admonished. Therefore, they may not assert
misconduct by counsel during closing argument as a basis for reversal of the judgment.
Although acknowledging that they failed to object to counsel's allegedly
prejudicial statement during trial, Plaintiffs contend that if misconduct by opposing
counsel is sufficiently egregious, a party may be excused from the requirement to object
during trial. In support of this argument, Plaintiffs cite Hoffman v. Brandt (1966) 65
Cal.2d 549. The citation does not support Plaintiffs' argument. In Hoffman the appellant
did object at trial, but failed to request an admonition. Hoffman merely illustrates the
well-established rule that in exceptional cases, where an admonition will not cure the
misconduct, a failure to request an admonition does not serve as a waiver of a party's
18
appellate rights. (See Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 794-795 ["In
addition to objecting, a litigant faced with opposing counsel's misconduct must also
'move for a mistrial or seek a curative admonition' . . . unless the misconduct is so
persistent that an admonition would be inadequate to cure the resulting prejudice."
(Italics added.)].) Here, Plaintiffs' fundamental problem is that they failed to object at all,
and thus regardless of whether an admonition would have been effective, they have
waived their right to assert misconduct as a basis for reversal of the judgment.
Further, we do not agree with Plaintiffs that this is a case in which an admonition
would have been futile and could not have cured any prejudice from counsel's statement.
The comment about Mr. Lankford possibly losing his house if he was found liable was an
isolated comment that could have been addressed by the trial court in a simple
admonition. If the trial court decided that the comment was unfairly prejudicial because
it was not supported by the evidence or improperly played on the jury's sympathy, the
trial court could have instructed the jury to disregard the statement as unsupported by the
evidence at trial and not pertinent to the legal issues presented. "Except perhaps in cases
of highly emotional or inflammatory language or reference to extremely prejudicial
circumstances not in evidence, a jury must be deemed capable, if so instructed, of
ignoring references to a litigant's personal or corporate virtues and confining itself to the
merits of the case." (Sabella v. Southern Pac. Co. (1969) 70 Cal.2d 311, 320.) Here, the
comment about Mr. Lankford's house being in jeopardy was not highly emotional or
inflammatory, and we must therefore presume that the jury would have been able to
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follow an instruction to disregard counsel's comments and focus on the evidence and
legal issues presented.
In sum, we conclude that because Plaintiffs failed to object and request a curative
admonition, they may not pursue appellate relief based on opposing counsel's purportedly
prejudicial comments during closing argument.
C. The Challenge to the Attorney Fee Award Lacks Merit
We next consider Plaintiffs' challenge to the award of attorney fees. Specifically,
Plaintiffs contend that "[t]he trial court committed error when it awarded $466,440.32 in
attorneys' fees and costs to Mr. Lankford." Plaintiffs contend that Mr. Lankford should
not have been awarded attorney fees because, due to an indemnification agreement with a
third party, he did not actually pay those fees himself. As we will explain, there are
multiple flaws in Plaintiffs' argument.
The first problem with Plaintiffs' argument is that the attorney fee order is in favor
of Lankford & Associates, Inc., not Mr. Lankford as an individual, and thus Plaintiffs'
challenge to an award in favor of Mr. Lankford lacks any basis in the procedural history
of this case. For several reasons, the record leaves no doubt that the attorney fee award
was solely in favor of Lankford & Associates, Inc. First, the motion for attorney fees was
brought solely by Lankford & Associates, Inc. Second, the trial court's original and
amended judgment both identified Lankford & Associates, Inc., but not the other
Defendants, as being entitled to "statutory prevailing party fees" in an amount to be
determined. Finally, the two contracts containing the attorney fee provisions forming the
basis for attorney fee motions under Civil Code section 1717 were entered into by
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Lankford & Associates, Inc., not the other Defendants. As Lankford & Associates, Inc.
was the only party that recovered $466,440.32 in attorney fees from Defendants,
Plaintiffs' challenge to the award of attorney fees in favor of Mr. Lankford as an
individual is without merit.
The only way to make sense of Plaintiffs' argument is to assume that they intend to
challenge the award in favor of Lankford & Associates, Inc. but have mistakenly referred
to "Mr. Lankford." However, even if we construe the argument to apply to Lankford &
Associates, Inc., it still lacks merit.
The basis for Plaintiffs' challenge to the attorney fee award is that another party
apparently indemnified Mr. Lankford or Lankford & Associates, Inc. for their attorney
fees. However, Plaintiffs have waived this argument because they have failed to support
it with adequate citations to the appellate record. (City of Lincoln v. Barringer (2002)
102 Cal.App.4th 1211, 1239 [arguments not supported by adequate citations to record
need not be considered on appeal].) Plaintiffs' opening brief provides no record citations
to establish that Mr. Lankford or Lankford & Associates, Inc. was indemnified. In
Plaintiffs' reply brief, they state that "[Mr.] Lankford was arguably fully indemnified
pursuant to his agreement with his financial partner." However, the citation provided is
to the entire first volume of the Appellant's Appendix, which contains 291 pages and
numerous documents, many of which plainly have nothing to do with indemnification. It
is not our role to conduct an independent, unassisted search of the record for evidence to
support Plaintiffs' argument. (Air Couriers Internat. v. Employment Development Dept.
(2007) 150 Cal.App.4th 923, 928 ["party on appeal has the duty to support the arguments
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in the briefs by appropriate reference to the record, which includes providing exact page
citations," and we "have no duty to search the record for evidence and may disregard any
factual contention not supported by proper citations to the record"].)
Although Plaintiffs provide no factual detail or citation to documents in the record
to support their argument, they assert in a conclusory manner that "[i]t is not disputed that
Mr. Lankford was indemnified for his attorneys' fees under the operations agreement by a
party who was not a party to the Contribution or Purchase agreements. . . . Therefore, he
is seeking to recover fees he did not pay."9 This argument lacks legal merit because,
under Civil Code section 1717, the relevant inquiry is whether attorney fees have been
incurred, not whether the party is personally responsible for paying them. Thus, work
performed by in-house counsel and paid for by the party's employer supports an award of
attorney fees (PLCM Group v. Drexler (2000) 22 Cal.4th 1084; International Billing
Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175), as does incurring attorney fees that
will be indemnified by an insurance carrier (Staples v. Hoefke (1987) 189 Cal.App.3d
1397, 1410). As has been observed in the context of insurance coverage, plaintiffs are
"not entitled to avoid their contractual obligation to pay reasonable attorney fees based on
the fortuitous circumstance that they sued a defendant who obtained insurance coverage
providing a defense." (Staples, at p. 1410.) The same policy applies here, where the
9 Although it is not clear from Plaintiffs' discussion, and Plaintiffs fail to provide
any citations to the appellate record on the issue, it appears based on their position in the
trial court that they believe Mr. Lankford's or Lankford and Associates, Inc.'s attorney
fees were paid by CJUF II pursuant to an indemnification agreement in the CJUF II
operating agreement.
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indemnification was by a third party pursuant to a contractual agreement. Accordingly,
the trial court did not err in awarding attorney fees even if those fees were ultimately
indemnified by a third party.
DISPOSITION
The judgment and the postjudgment order awarding attorney fees are affirmed.
IRION, J.
WE CONCUR:
NARES, Acting P. J.
HALLER, J.
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