Karton v. Musick, Peeler, Garrett LLP ( 2022 )

Filed 10/3/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
DAVID S. KARTON, B305837
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC206243)
v.
MUSICK, PEELER, GARRETT
LLP,
Defendant and Respondent.
APPEAL from orders of the Superior Court of Los Angeles
County, Edward B. Moreton, Jr., Judge. Affirmed.
Benedon & Serlin, Gerald M. Serlin and Melinda
W. Ebelhar for Plaintiff and Appellant David S. Karton, A Law
Corporation.
Musick Peeler & Garrett, Cheryl A. Orr; Joshua
P. Friedman and Associates, and Joshua P. Friedman for
Defendant and Respondent Musick, Peeler & Garrett LLP.
___________________________
In 2015 and 2017, William Russell Dougherty obtained
judgments against David S. Karton, A Law Corporation (the
Law Corporation). In July 2019, Dougherty assigned the
judgments to Musick Peeler & Garrett LLC (Musick Peeler).
In October 2019, the Law Corporation filed a motion (the
setoff motion) in the superior court to set off against its judgment
debt to Musick Peeler a debt that Dougherty allegedly owes to
the Law Corporation. Dougherty’s purported debt is the sum
of attorney fees the Law Corporation incurred as a result of
Dougherty’s alleged tortious actions to hinder, delay, or defraud
the Law Corporation in its efforts to collect on a 1999 default
judgment prior to our opinion vacating that judgment and
declaring it void in 2009. (See David S. Karton, A Law Corp. v.
Dougherty (2009) 171 Cal.App.4th 133, 152 (Karton I).) The court
denied the motion, and the Law Corporation appealed.1 For the
reasons given below, we affirm the order.
FACTUAL SUMMARY AND PROCEDURAL HISTORY
A. The Law Corporation’s 1999 Default Judgment
and Enforcement Efforts2
In 1996, Dougherty retained the Law Corporation to
represent him in a marital dissolution action. The retainer
1 In response to the appeal, Musick Peeler filed a motion
for sanctions against the Law Corporation, David S. Karton, and
the law firm representing them on appeal. We shall address the
sanctions motion in a separate order.
2 Our summary of the facts is based in part on evidence the
Law Corporation offered in support of its setoff motion. Although
the trial court sustained Musick Peeler’s objections to such
2
agreement provides that the “prevailing party” shall be entitled
to recover “legal fees for services” incurred in connection with the
enforcement of the agreement and the collection of fees and costs.
In 1999, the Law Corporation sued Dougherty, seeking
to recover $65,246.63 in unpaid fees and costs, plus interest.
In August 1999, the trial court entered a default judgment
against Dougherty for a total of $86,676.88, including accrued
prejudgment interest, attorney fees, and costs.
By October 4, 1999, the Law Corporation had collected,
by levy upon Dougherty’s bank accounts, approximately $56,000
in partial satisfaction of the default judgment. On that date,
Dougherty filed a voluntary petition for relief under chapter 13
of the Bankruptcy Code.
The Law Corporation commenced an adversary action
against Dougherty in the bankruptcy proceeding that resulted in
an order denying Dougherty a discharge under the Bankruptcy
Code. The Law Corporation thereafter filed actions in
Pennsylvania, Tennessee, and Arkansas against Dougherty
to enforce and collect the judgment in those states. As a result of
these efforts, the Law Corporation garnished Dougherty’s wages
in Tennessee and Arkansas. In addition, the Law Corporation
filed a second action in Tennessee, which the parties refer to as
the Tennessee fraudulent transfer action. In that action, the Law
Corporation alleged that Dougherty, with the intent to hinder,
delay, and defraud the Law Corporation: purchased property in
Nevada; “[d]iverted sale proceeds” from the sale of a Tennessee
residence, transferred funds into a “bank account that was
evidence, we will assume for purposes of our summary that the
evidence is admissible.
3
hidden from the Law Corporation”; transferred title of a
Pennsylvania residence to himself and his then-wife Kimberly
Moseley; failed to disclose rent Dougherty received from property
in Pennsylvania; transferred funds into Moseley’s account;
and transferred funds into a bank account located outside of
Tennessee.
In 2004 and 2005, Dougherty commenced what the parties
refer to as the “collateral attack” actions in California seeking
to set aside the 1999 default judgment. Dougherty dismissed
the 2004 collateral attack action before the Law Corporation
filed a responsive pleading. The superior court sustained the
Law Corporation’s demurrer to the 2005 collateral attack action
without leave to amend on the ground that the action was
barred by the doctrine of collateral estoppel as a result of the
1999 default judgment. Dougherty’s appeal from the ensuing
judgment was dismissed for failure to post an appeal bond. The
superior court subsequently awarded the Law Corporation more
than $115,000 in attorney fees it incurred in response to the
collateral attack actions.
In 2006, a Pennsylvania court ordered Dougherty to pay
to David S. Karton (the Individual) and the Individual’s counsel
$30,000 as contempt sanctions for discovery violations.3
3 In prior appeals between the Law Corporation and
Dougherty, we used the single word, Karton, to refer to the
Law Corporation. (See Karton I, supra, 171 Cal.App.4th at
p. 135; David S. Karton, A Law Corp. v. Dougherty (2014) 231
Cal.App.4th 600, 603 (Karton II). In this case, we use the phrase,
“the Law Corporation,” to avoid confusing it with the Individual,
with whom it shares the Karton name.
4
On December 31, 2007, a Tennessee Chancery Court
denied the Law Corporation’s motion for summary judgment
in the Tennessee fraudulent transfer action. The court, however,
made a finding that Dougherty’s transfer of title to certain
property in Pennsylvania from himself to both him and Moseley
“was a fraudulent transfer” and ordered the transfer set aside.
B. The 1999 Default Judgment is Vacated
in Karton I
In 2003 and 2007, the Law Corporation, without notice
to Dougherty, requested the superior court award it additional
attorney fees and costs based on its enforcement and collection
efforts, including fees incurred in connection with Dougherty’s
bankruptcy proceeding, the Pennsylvania and Tennessee
collection actions, the Tennessee fraudulent transfer action, and
the California collateral attack actions. The court granted the
requests in their entirety. The second such award, entered in
February 2007, increased the principal amount of the judgment
to more than $1.3 million.
In 2007, Dougherty filed a motion to vacate the default
judgment and the 2003 and 2007 fee awards, which the trial
court denied. Dougherty appealed.
In Karton I, supra, 171 Cal.App.4th 133, we held that the
1999 default judgment was void on its face because the judgment
exceeded the amount the Law Corporation had sought in its
complaint. (Id. at pp. 149−151.) We directed the trial court to
enter an order vacating and setting aside that judgment and the
2007 fee award. (Id. at pp. 151−152.) We also noted that our
opinion “nullif[ied]” the 2003 fee award. (Id. at p. 151, fn. 18.)
The trial court thereafter set aside the entry of Dougherty’s
default, as well as the default judgment.
5
Our holding in Karton I had consequences for the Law
Corporation’s actions in Tennessee and California. In April 2009,
a Tennessee Court of Appeal held that, as a result of Karton I,
“there no longer exist[s] any California judgments . . . for the
Tennessee courts to enforce.” (David S. Karton v. Dougherty
(Tenn.Ct.App. Apr. 29, 2009, No. M2008-01478-COA-R3-CV)
2009 Tenn.App. LEXIS 158 at p. *6.) In August 2010, Dougherty
filed in the Tennessee collection action a motion/petition for
writ of restitution in the Tennessee Chancery Court and a motion
to vacate all judgments. The court granted the motion/petition
for writ of restitution, directing the Law Corporation to pay
Dougherty $151,137.86 as restitution for the Law Corporation’s
garnishment of Dougherty’s wages. The Tennessee court also
granted Dougherty’s motion to vacate all judgments because,
in part, “the original 1999 California judgment is void and
all subsequent California judgments are vacated.” The court
explained that “none of the judgments that have been enrolled
by [the Law Corporation] in Tennessee are enforceable.”4
In December 2010, the Los Angeles County Superior Court
granted Dougherty’s motion to vacate the judgment in the 2005
collateral attack action and the related attorney fee awards.
The court explained that the judgment in the collateral attack
action and the related fee awards are void because they were
4 In a 2019 proceeding concerning the 2006 Pennsylvania
sanctions order, the Court of Common Pleas of Lehigh County,
Pennsylvania, noted the Tennessee court’s finding that, as a
result of Karton I, “there was no longer a judgment to enforce
in Tennessee,” and stated that if the Law Corporation sought
“to enforce the underlying judgment in Pennsylvania, the same
would be true in Pennsylvania.”
6
“based on a ‘void’ judgment.” Division Eight of this court
affirmed that ruling in 2012. (Dougherty v. David S. Karton,
A Law Corporation (Oct. 11, 2012, B230074) [nonpub. opn.].)
In February 2011, a Tennessee Chancery Court issued
an order that “revised” its December 31, 2007 summary judgment
order in the Tennessee fraudulent transfer action. In particular,
the court “deleted” its finding in the prior order, that Dougherty’s
transfer of title to property in Pennsylvania “was a fraudulent
transfer.”
C. The Law Corporation’s Action to Recover Its
Costs and Fees After Karton I
After the trial court vacated Dougherty’s default pursuant
to Karton I, the fee dispute between the Law Corporation
and Dougherty was arbitrated by a panel of the Los Angeles
Bar Association pursuant to Business and Professions Code
section 6201. The arbitrators found in favor of Dougherty and
determined that he had previously paid the Law Corporation
“ ‘an amount far in excess of the amounts owed for legal services
plus interest on the amounts billed.’ ” (Karton II, supra, 231
Cal.App.4th at p. 605.)
After the arbitration ruling, the Law Corporation filed
a request for trial de novo in the superior court. In addition to
alleging a cause of action against Dougherty for breach of the
retainer agreement and common counts, the Law Corporation
included a sixth cause of action seeking to recover damages from
7
Dougherty under the tort of another doctrine and a seventh
cause of action for declaratory relief.5
Under the tort of another cause of action, the Law
Corporation alleged that Dougherty had “been engaged in a
pattern of fraud and fraudulent transfers, which has required
[the Law Corporation] to pursue claims against other people and
certain assets.” Dougherty’s allegedly wrongful conduct included:
the filing of a “fraudulent [b]ankruptcy” proceeding in 1999,
making fraudulent transfers to his accountant, transferring his
property in Pennsylvania to Moseley with the “intent to hinder,
delay, or defraud [the Law Corporation],” and transferring his
and Moseley’s property in Tennessee and Arkansas to Moseley
only, with the “intent to hinder, delay, or defraud [the Law
Corporation].” As a result of such conduct, the Law Corporation
allegedly incurred expenses responding to these wrongful acts.
In its declaratory relief cause of action, the Law
Corporation sought a declaration that, among other things, the
Law Corporation “is entitled to be reimbursed for the attorneys’
fees that it incurred in the various lawsuits between [the Law
Corporation] and Dougherty, the [Tennessee] Fraudulent
Transfer Action, and [Dougherty’s] Bankruptcy [proceeding].”
In a trial brief to the court, the Law Corporation explained
that its “pursuit of a ‘tort of anther’ claim was appropriate to
5 In another cause of action for “Indebtedness Assumpsit,”
the Law Corporation alleged that Dougherty had agreed in
October 2006 to pay $30,000 in connection with the Law
Corporation’s Pennsylvania collection action. The trial court
granted Dougherty’s motion to strike this allegation, noting
that the Law Corporation must proceed to enforce the $30,000
Pennsylvania judgment or order in a separate proceeding.
8
recover the moneys that [the Law Corporation] incurred due
to [Dougherty’s] fraudulent transfers.” The Law Corporation
further argued that the court could decide the tort of another
cause of action without having “to decide whether [Dougherty]
committed a tort, that is, whether he made fraudulent transfers.”
In February 2012, the superior court held a bench trial.
In August 2012, the court issued a statement of decision setting
forth its finding that by March 10, 2008, the Law Corporation
“had collected funds sufficient to cover all principal and interest
payments due on [the Law Corporation’s] invoices under the
[retainer agreement],” and by July 3, 2008, the Law Corporation
“had collected $14,383.30 in excess of the amounts owed by
[Dougherty] under that agreement.” Therefore, the court
concluded, “Dougherty’s debt to [the Law Corporation] for the
fees billed under the [retainer agreement] and interest on
overdue amounts has been extinguished.” Because Dougherty
had not filed a cross-complaint, the court stated further, he was
not entitled to a money judgment for the overpayment, but “is
entitled to a credit insofar as the amount of excess funds collected
by [the Law Corporation], without interest, which he may apply
to any other obligation he owes to plaintiff.”
The court rejected the Law Corporation’s tort of another
cause of action. Under the tort of another theory, the court
stated, a “ ‘person who through the tort of another has been
required to act in the protection of his interests by bringing or
defending an action against a third person is entitled to recover
compensation for the reasonably necessary loss of time, attorney’s
fees and other expenditures thereby suffered or incurred.’ ”
(Quoting Prentice v. North Amer. Title Guar. Corp. (1963) 59
Cal.2d 618, 620 (Prentice).) The court explained that the right to
9
recover attorney fees under this theory is an exception to the
general rule, codified in section 1021,6 that attorney fees are
recoverable only as provided by statute or contract. (See Prentice,
supra, 59 Cal.2d at pp. 620−621.)7
Although the court recognized that the Law Corporation
had paid attorney fees to prosecute the Tennessee fraudulent
transfer action, the Law Corporation had “not shown that
any portion of the fees paid by it to prosecute the Tennessee
fraudulent transfer action against . . . Moseley produced
any benefit to [the Law Corporation] of the kind recognized
in Prentice, supra, [59 Cal.2d 618,] or that such fees were
reasonably necessary, because of . . . Dougherty’s wrongdoing,
to protect [the Law Corporation’s] interest.”8 Lastly, the court
determined that the Law Corporation’s request for a judicial
declaration that it was entitled to recover its attorney fees
incurred in the various lawsuits between the Law Corporation
and Dougherty, the Tennessee fraudulent transfer action, and
Dougherty’s bankruptcy proceeding was rendered moot by its
ruling on the other causes of action.
6Subsequent unspecified statutory references are to the
Code of Civil Procedure.
7 Section 1021 provides in relevant part: “Except as
attorney's fees are specifically provided for by statute, the
measure and mode of compensation of attorneys and counselors
at law is left to the agreement, express or implied, of the parties.”
8 Later in its statement of decision, the court reiterated
its conclusion, stating that the Law Corporation had “obtained
no relief ” in the Tennessee fraudulent transfer action and had
“not shown in this case entitlement to any amount of attorney
fees incurred in Tennessee as damages for a fraudulent transfer.”
10
In August 2012, the court entered a judgment stating
that the Law Corporation had collected $14,383.30 in excess
of the amount Dougherty owed under the retainer agreement.
Although the Law Corporation could not recover damages on
any of its causes of action, the court ruled that it “may seek by
way of post-trial motion to have such fees, as the court may find
to have been reasonably and necessarily incurred by it, included
in [the] judgment.”
Dougherty and the Law Corporation each filed motions
to be determined the prevailing party and for awards of attorney
fees. Dougherty sought $543,128.50 in fees; the Law Corporation
sought $1,661,565. The Law Corporation included in its claim
the attorney fees it incurred in connection with Dougherty’s
bankruptcy proceeding, fees incurred in its collection efforts in
California, Pennsylvania, Tennessee, and Arkansas, and fees
incurred in connection with the Tennessee fraudulent transfer
action.
In June 2013, the court denied Dougherty’s motion and
granted the Law Corporation’s motion (the June 2013 order).
The court found that the Law Corporation is “the prevailing party
under . . . section 1032 and Civil Code section 1717,” and the
fees the Law Corporation sought in Dougherty’s bankruptcy
proceeding, the Pennsylvania collection action and the Arkansas
collection action are “reasonable.” The court awarded the Law
Corporation $1,161,565 in attorney fees. The court declined to
award the Law Corporation $500,000 in fees it allegedly incurred
in the “Tennessee actions,” which, the court noted, “have not
concluded.” The denial was “without prejudice” to the Law
Corporation’s right to apply for such fees “in Tennessee.”
11
D. Karton II: Dougherty Is The Prevailing Party
Dougherty appealed from the August 2012 judgment and
the June 2013 order awarding attorney fees and costs to the Law
Corporation. Although the Law Corporation filed a cross-appeal
from the judgment, it did not challenge the court’s ruling on its
merits or, more particularly, the court’s rejection of its tort of
another or declaratory relief causes of action. (Karton II, supra,
231 Cal.App.4th at p. 614, fn. 6.)
In Karton II, supra, 231 Cal.App.4th 600, we reversed the
judgment “insofar as it awards costs to [the Law Corporation],
and the orders of June 25, 2013, awarding attorney fees to [the
Law Corporation].” (Id. at p. 614.) We held that Dougherty
was the prevailing party within the meaning of section 1032
and Civil Code section 1717. (Id. at pp. 610, 612.) We directed
the trial court “to enter a new and different order granting
Dougherty’s motion to be determined the prevailing party . . .
and for an award of costs and attorney fees, in an amount to be
determined on remand.” (Id. at p. 614.) We otherwise affirmed
the judgment.
Dougherty thereafter filed a motion in the superior court
for an award of attorney fees against the Law Corporation.9 The
trial court granted Dougherty’s motion and, on September 25,
9 While the court’s decision on Dougherty’s fee motion was
pending, the Law Corporation filed a motion in the trial court for
an order setting aside our opinion in Karton I and all subsequent
orders, rulings, and proceedings. The court denied that motion
and we affirmed in an unpublished opinion. (David S. Karton,
A Law Corporation v. Dougherty (Jan. 10, 2019, B268342)
[nonpub. opn.].)
12
2015, entered judgment in his favor in the amount of
$655,258.80.10
On July 18, 2017, the trial court entered a second judgment
in favor of Dougherty and against the Law Corporation in the
amount of $33,257.20 for fees and costs awarded in Karton II.
The sum of the principal amounts of the September 25, 2015
judgment and the July 18, 2017 judgment is $688,538.10.
On July 10, 2019, Dougherty assigned the two judgments
to Musick Peeler. We refer to the two judgments at times as the
Musick Peeler judgments.
E. The Law Corporation’s Setoff Motion
In October 2019, the Law Corporation filed the setoff
motion, seeking an order “authorizing ‘[s]etoffs [a]gainst’ ” the
Musick Peeler judgments and “an order to bifurcate the issue of
punitive damages.” The notice of motion states that it “is brought
on the grounds that the Law Corporation has cross-demands that
substantially exceed the amounts of the judgments against it now
held by Musick Peeler.” In its supporting memorandum of points
10 The September 25, 2015 judgment initially and
erroneously named David S. Karton—i.e., the Individual—
as the judgment debtor. The trial court subsequently granted
Dougherty’s application to correct the judgment nunc pro tunc
to name the Law Corporation as the judgment debtor. The Law
Corporation appealed that ruling and we affirmed. (David S.
Karton, A Law Corporation v. Musick, Peeler & Garrett LLP
(Mar. 4, 2020, B289113 [nonpub. opn.].) We also determined that
the appeal was frivolous and granted a motion by Dougherty
for monetary sanctions against the Law Corporation in the
amount of $89,224.38. (David S. Karton, A Law Corporation v.
Musick, Peeler & Garrett LLP, order imposing sanctions filed
May 7, 2020, B289113.)
13
and authorities, the Law Corporation relied on section 431.70
as “[a]uthority for the Law Corporation’s request for a setoff[ ],”
and the “application of the equitable principle of off-set.” The
Law Corporation argued that, when its “cross-demands” are
setoff against the Musick Peeler judgments, Musick Peeler “will
be required to file full satisfactions as to each judgment,” citing
section 724.010.
The Law Corporation’s cross-demands consist of claims
that the Law Corporation suffered “damages” as a “result of
fraudulent transfers by Dougherty, while conspiring primarily
with [Moseley] . . . to defraud the Law Corporation.” (Italics
omitted.) The Law Corporation calculated its $1,154,119.02
setoff claim by adding the amount of its legal fees and costs
incurred since August 1999 (1) “preventing Dougherty from
obtaining a discharge” in bankruptcy proceedings, (2) enforcing
the 1999 judgment against Dougherty in Pennsylvania,
Tennessee, and Arkansas, (3) pursuing the Tennessee fraudulent
transfer action, and (4) responding to the 2004 and 2005
collateral attack actions. It also includes the amount of the
$30,000 award to the Individual by a Pennsylvania court in 2006
against Dougherty as a discovery sanction.
The Law Corporation acknowledged that the setoff amount
is substantially identical to the attorney fees and costs the trial
court had awarded in June 2013, which we reversed in Karton II.
The Law Corporation argued, however, “that it may use the
same fees to support its claim for fees as damages as were used
to support its claim for fees based on a prevailing party theory
inasmuch as the two theories . . . are distinct and each is based
on a ‘separate primary right.’ ”
14
The Law Corporation supported the motion with the
Individual’s declaration and documents related to the underlying
proceedings in this case, Dougherty’s bankruptcy case, the
Pennsylvania collections action, and the Tennessee fraudulent
transfer action. The Law Corporation did not, however, submit
evidence of the attorney fees it had allegedly incurred as damages
other than references to the statement in the trial court’s June
2013 order that the fees the Law Corporation sought in its action
on the contract “are reasonable.” The Law Corporation further
stated that it “can support with documentary evidence” various
transactions Dougherty made “to avoid using funds to satisfy the
debt.”
Music Peeler filed an opposition to the motion, supported
with declarations by Dougherty and Dougherty’s counsel. Musick
Peeler argued, among other arguments, that the claims asserted
by the Law Corporation are barred by principles of res judicata
and collateral estoppel based on the trial court’s 2012 ruling
adjudicating the Law Corporation’s tort of another cause of
action. Regarding the Law Corporation’s claim based on the
Pennsylvania sanctions order, Musick Peeler pointed out that
the Pennsylvania order had not been reduced to judgment in
Pennsylvania and, if the Law Corporation obtains such a
judgment, its remedy is to file a sister-state enforcement action
in California. Musick Peeler further asserted that the Law
Corporation’s reliance on equitable principles is misplaced
because equity in this case “militate[s] against application of any
offset,” that section 431.70 does not apply because that statute
applies only to affirmative defenses asserted in an answer to
a complaint, and that the Law Corporation failed to provide
15
competent evidence to support its claims. Musick Peeler also
filed objections to the Individual’s declaration.
During a hearing held on January 6, 2020, the court
sustained all of Musick Peeler’s objections other than an objection
to the Individual’s oath, and denied the setoff motion. The court
explained that, “aside from the evidentiary problems,” the motion
“does not set forth any authority that would provide a basis for
relief.” The court stated that section 724.010, which the Law
Corporation had cited in its motion, “does not support the
proposition that a judgment debtor is entitled to setoffs for the
various and sundry claims and potential claims that it describes.”
Counsel for the Law Corporation argued that the motion is based
on section 431.70, and that “we stated a claim for setoff” under
that statute. The court rejected the argument, and further
stated that, “regardless of one’s view of the law, there simply
isn’t sufficient admissible evidence to support the argument.”
On January 27, 2020, the Law Corporation filed a motion
for new trial and/or to set aside and vacate the order denying
the setoff motion (the new trial motion). The Law Corporation
argued that the court’s order was based on “errors of law, fact
and procedure” and that the court’s evidentiary rulings are
erroneous. It did not rely on any new or different facts.11 Musick
Peeler opposed the motion. On March 16, 2020, the court denied
the motion.
11 In its reply to Musick Peeler’s opposition to the motion
for new trial, the Law Corporation stated that it had recently
obtained a judgment in Pennsylvania on its 2006 sanctions
award, that the judgment was corrected to identify the Law
Corporation as the judgment creditor, and that the Law
Corporation had domesticated the judgment in California.
16
The Law Corporation timely appealed from the January 6,
2020 order.
DISCUSSION
A. Standards of Review
The party “seeking an offset against a money judgment
has the burden of proving the offset.” (Conrad v. Ball Corp.
(1994) 24 Cal.App.4th 439, 444 (Conrad).) We review the court’s
ruling denying a setoff under the abuse of discretion standard.
(Fassberg Construction Co. v. Housing Authority of City of
Los Angeles (2007) 152 Cal.App.4th 720, 762–763 (Fassberg).)
We will not find an abuse of such discretion in the absence of
a showing that the ruling “resulted in a manifest miscarriage
of justice.” (Wm. R. Clarke Corp. v. Safeco Ins. Co. of America
(2000) 78 Cal.App.4th 355, 359 (Wm. R. Clarke).)
We consider issues of law, including the interpretation
of statutes, de novo. (Even Zohar Construction & Remodeling,
Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 837;
Bruns v. E-Commerce Exchange, Inc. (2011) 51 Cal.4th 717, 724.)
B. The Setoff Motion is Procedurally Groundless
The setoff motion does not clearly state a procedural
ground for the motion. The notice of motion states that it is
“brought on the grounds that the Law Corporation has cross-
demands that substantially exceed the amounts of [the Musick
Peeler] judgments.” It further states that it is based on the
supporting memorandum of points and authorities, which
includes citations to sections 431.70 and 724.010, discussed
below. When the trial court raised the issue during the hearing,
the Law Corporation’s counsel asserted that the motion is
authorized by section 431.70. It reasserts the point on appeal.
17
We agree with Musick Peeler that section 431.70 does not
authorize the setoff motion.
Section 431.70 provides in relevant part: “Where cross-
demands for money have existed between persons at any point
in time when neither demand was barred by the statute of
limitations, and an action is thereafter commenced by one such
person, the other person may assert in the answer the defense
of payment in that the two demands are compensated so far as
they equal each other, notwithstanding that an independent
action asserting the person’s claim would at the time of filing
the answer be barred by the statute of limitations. If the cross-
demand would otherwise be barred by the statute of limitations,
the relief accorded under this section shall not exceed the value
of the relief granted to the other party. . . . For the purposes of
this section, a money judgment is a ‘demand for money.’ ”
As its plain language indicates, section 431.70 authorizes
a party who has been sued and has a “cross-demand[ ] for
money” against the plaintiff to “assert in the answer the defense
of payment.” (§ 431.70.) Thus, “a setoff claim [made under
section 431.70] may only be used defensively, being in nature
a defensive pleading asserting that the claim constituted prior
payment for the amount sought in the plaintiff ’s complaint.”
(Construction Protective Services, Inc. v. TIG Specialty Ins.
Co. (2002) 29 Cal.4th 189, 197–198; see Morris Cerullo World
Evangelism v. Newport Harbor Offices & Marina, LLC (2021) 67
Cal.App.5th 1149, 1159 [section 431.70 codifies the “affirmative
defense of setoff ”]; Wm. R. Clarke, supra, 78 Cal.App.4th at
pp. 360−361, fn. 6 [section 431.70 “applies . . . only when the right
to a setoff is raised as a defense”]; see, e.g., Fassberg, supra, 152
Cal.App.4th at pp. 731−732, 763−764 [defendant who asserted
18
setoff as affirmative defense and established the validity and
amount of claim at trial entitled to setoff].)
Here, the Law Corporation asserted its right to setoff in a
postjudgment motion, not as an affirmative defense in an answer
to a complaint. Therefore, section 431.70 does not provide a basis
for the Law Corporation’s motion.
The Law Corporation also cited section 724.010 in its
motion and relied on that statute in its motion for new trial.
Section 724.010 is within division 5, chapter 1 of the Enforcement
of Judgments law, which governs the manner of acknowledging
satisfaction of a judgment and a procedure for compelling a
judgment creditor to file an acknowledgement of satisfaction
of judgment. (§§ 724.010−724.100.) Subdivision (a)
of section 724.010 provides that “[a] money judgment may be
satisfied by payment of the full amount required to satisfy the
judgment or by acceptance by the judgment creditor of a lesser
sum in full satisfaction of the judgment.” Subdivision (b) governs
satisfaction of a money judgment by levy. Subdivision (c), which
the Law Corporation emphasized in its motion for new trial,
provides that a money judgment may be “satisfied by payment
to the judgment creditor by check or other form of noncash
payment,” and that “the judgment creditor” is obligated “to give
or file an acknowledgment of satisfaction of judgment . . . when
the check or other form of noncash payment has actually been
honored upon presentation for payment.”
The Law Corporation argued below that the assertion of
its setoff claims is a valid method of making a “noncash payment”
within the meaning of section 724.010, subdivision (c), and,
on appeal, compares the setoff motion to a motion to compel
acknowledgment of satisfaction of judgment, which “is an entirely
19
acceptable procedure for seeking an offset against a judgment.”
(Jhaveri v. Teitelbaum (2009) 176 Cal.App.4th 740, 753 (Jhaveri);
see also Coonan v. Loewenthal (1905) 147 Cal. 218, 221.)
Even if we assume that a disputed claim can constitute
a “noncash payment” for purposes of section 724.010—a
proposition for which the Law Corporation offers no authority—
a motion to compel acknowledgement of satisfaction of judgment
requires compliance with the requirements set forth in
section 724.050. (See Horath v. Hess (2014) 225 Cal.App.4th
456, 466 [“section 724.050 provides the sole statutory procedure
to require a judgment creditor to file an acknowledgment of
satisfaction of judgment or, if he or she refuses, to obtain a
satisfaction of judgment entered by the court clerk]; Quintana v.
Gibson (2003) 113 Cal.App.4th 89, 91 [section 724.050 provides
“the exclusive method for obtaining an order for entry of
satisfaction of judgment”].) These requirements include serving
the judgment creditor with a written demand to either file an
acknowledgment of satisfaction of judgment with the court or
deliver an executed acknowledgment to the judgment debtor.
(§ 724.050, subd. (a); Gray1 CPB, LLC v. SCC Acquisitions, Inc.
(2015) 233 Cal.App.4th 882, 898.)12 The Law Corporation does
12 The written “demand shall include the following
statement: ‘Important warning. If this judgment has been
satisfied, the law requires that you comply with this demand not
later than 15 days after you receive it. If a court proceeding is
necessary to compel you to comply with this demand, you will be
required to pay my reasonable attorney’s fees in the proceeding
if the court determines that the judgment has been satisfied and
that you failed to comply with the demand. In addition, if the
court determines that you failed without just cause to comply
20
not assert that it complied with these prefiling requirements,
and nothing in our record indicates that it did so. Therefore,
to the extent the Law Corporation relies on the procedure for
compelling an acknowledgment of satisfaction of judgment, it is
not entitled to relief on that basis.13
In addition to relying on sections 431.70 and 724.010,
the Law Corporation cites to cases where courts considered
equitable setoff principles in various factual and procedural
settings. (See, e.g., Erlich v. Superior Court (1965) 63 Cal.2d
551, 555−556; Jones v. Mortimer (1946) 28 Cal.2d 627, 632−634;
Harrison v. Adams (1942) 20 Cal.2d 646, 648−649 (Harrison);
Machado v. Borges (1915) 170 Cal. 501, 502−503; Jhaveri,
supra, 176 Cal.App.4th at pp. 753−754; Keith G. v. Suzanne H.
(1998) 62 Cal.App.4th 853, 859−861; Brienza v. Tepper (1995)
35 Cal.App.4th 1839, 1847−1849; Salaman v. Bolt (1977) 74
Cal.App.3d 907, 918−920; Margott v. Gem Properties, Inc. (1973)
34 Cal.App.3d 849, 853−857; Sunrise Produce Co. v. Malovich
(1950) 101 Cal.App.2d 520, 522−525.) None of these authorities,
however, holds that a judgment debtor may use a nonstatutory
with this demand within the 15 days allowed, you will be liable
for all damages I sustain by reason of such failure and will also
forfeit one hundred dollars to me.’ ” (§ 724.050, subd. (b).)
13 To the extent the Law Corporation sought to set off the
$30,000 Pennsylvania discovery sanctions order, the appropriate
procedure, as the court informed the Law Corporation in 2012,
is to file an application for judgment on a sister state judgment
pursuant to the Sister State Money Judgments Act (§ 1710.10
et seq.). We note that, after the court denied the setoff motion,
the Law Corporation did so, as discussed in a recent unpublished
opinion from this court. (David S. Karton, A Law Corporation v.
Dougherty (Sept. 1, 2022, B310431) [nonpub. opn.].)
21
postjudgment motion to obtain an offset against its judgment
debt based on disputed claims. Indeed, our Supreme Court has
stated that, in the absence of a stipulation, when, as here, the
disputed claims are for “attorney fees under the ‘tort of another’
doctrine,” the claims “may not be asserted by post-trial motion
but rather must be pleaded and proved to the trier of fact.”
(Hsu v. Abbara (1995) 9 Cal.4th 863, 869, fn. 4; see Vacco
Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 56; see
generally 1 Pearl, Cal. Attorney Fee Awards (Cont.Ed.Bar 3d ed.
2022), §§ 7.3, 7.34 (1 Pearl); 2 Pearl, Cal. Attorney Fee Awards
(Cont.Ed.Bar 3d ed. 2022) §§ 11.32, 11.42.)
In the absence of a valid procedural ground for the motion,
the court did not abuse its discretion in denying the motion.
C. The Claims Asserted in the Setoff Motion Are
Without Merit
In addition to denying the setoff motion on procedural
grounds, the court stated that “there simply isn’t sufficient
admissible evidence to support the argument.” We agree.
The Law Corporation seeks to set off against the Musick
Peeler judgments its fees and costs incurred in connection with:
(1) Dougherty’s bankruptcy proceedings, (2) enforcement actions
in Tennessee, Pennsylvania, and Arkansas, (3) the Tennessee
fraudulent transfer action, (4) the Pennsylvania sanctions award,
(5) the California collateral attack actions, and (6) the $30,000
Pennsylvania judgment. With the exception of the Pennsylvania
judgment, the setoff claims are based on the tort of another
doctrine. Under that doctrine, a “person who through the tort of
another has been required to act in the protection of his interests
by bringing or defending an action against a third person is
entitled to recover compensation for the reasonably necessary
22
loss of time, attorney’s fees, and other expenditures thereby
suffered or incurred.” (Prentice, supra, 59 Cal.2d at p. 620, italics
added; see Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1310 (Sooy)
[the “theory of recovery is that the attorney fees are recoverable
as damages resulting from a tort in the same way that medical
fees would be part of the damages in a personal injury action”];
UMET Trust v. Santa Monica Medical Investment Co. (1983)
140 Cal.App.3d 864, 871 [party seeking fees under tort of another
doctrine must prove that it was “compelled or required to bring
or defend an action against the third person”].)
Here, the Law Corporation offered no evidence in support
of its setoff motion that it brought or defended an action against
a third person related to the bankruptcy proceedings as a result
of any tort Dougherty committed against the Law Corporation.
Rather, it appears from our record that the Law Corporation
commenced an adversary action against Dougherty alone with
the effect of preventing Dougherty from obtaining a discharge.
The tort of another doctrine does not apply to these facts.
In support of its motion, the Law Corporation argued
that the decision in Berger v. Varum (2019) 35 Cal.App.5th 1013authorizes the recovery of “legal fees” as damages “as a result
of conduct intended to hinder, delay and/or defraud the creditor.”
In Berger, the plaintiff, Berger, sued his judgment debtors for
fraudulent conveyance based on allegations that the defendants
took “actions to intentionally ‘hinder, delay or defraud’ Berger
from collecting payment on the judgment.” (Id. at p. 1017.) The
court held that Berger had stated a “common law” fraudulent
transfer cause of action, which permits the recovery of damages
under applicable tort principles. (Id. at pp. 1020−1022.) In
particular, the court held that “the damages alleged by Berger
23
fall within the scope of recoverable tort damages and satisfy the
damage element for a fraudulent transfer claim for purposes of
demurrer.” (Id. at p. 1021.) Berger’s alleged damages included
“increased financing fees” and “foreclosure fees” (id. at p. 1020)—
which the Law Corporation appears to have misleadingly
described in the setoff motion as “legal fees.” The description
of Berger’s alleged damages, however, does not include attorney
fees, and nothing in Berger suggests that the court was extending
the tort of another doctrine, departing from the general rule
limiting the recovery of attorney fees to those authorized by
statute or agreement (§ 1021), or otherwise holding that a
plaintiff can recover attorney fees incurred litigating against
a defendant tortfeasor in a fraudulent transfer action. Berger,
therefore, does not help the Law Corporation.
Moreover, the only evidence the Law Corporation offered
of the fees it incurred in connection with the bankruptcy
proceedings is a statement by the California trial court in its
June 2013 ruling that such fees were “reasonable” for purposes
of awarding the Law Corporation its fees as the prevailing
party on its contract cause of action. In Karton II, however, we
reversed that ruling without qualification (Karton II, supra, 231
Cal.App.4th at p. 614), and, therefore, the court’s ruling retained
no further “vitality or force.” (Hampton v. Superior Court (1952)
38 Cal.2d 652, 655; see Odlum v. Duffy (1950) 35 Cal.2d 562,
564 [“the reversal of a judgment or order ordinarily leaves the
proceeding in the same situation in which it stood before the
judgment or order was made”].)
Even if the trial court’s finding of reasonableness survived
our disposition in Karton II, that finding has no relevance on the
question whether the fees are recoverable as tort damages under
24
the tort of another doctrine. The court’s June 2013 finding was
made with respect to the Law Corporation’s postjudgment motion
for attorney fees as costs pursuant to Civil Code section 1717
and section 1032. Such fees may be awarded by the court to a
prevailing party in an “action on a contract” for fees “incurred
to enforce that contract.” (Civ. Code, § 1717, subd. (a).) When
a party is entitled to fees as costs on that basis, the court, in
determining the reasonableness of such fees, may “ ‘take all of
the circumstances [of the case] into account.’ ” (Hadley v. Krepel
(1985) 167 Cal.App.3d 677, 683.)
The recovery of attorney fees as damages under the tort
of another doctrine, by contrast, is limited to the “necessary
attorney fees incurred in third party litigation which is
proximately and foreseeably caused” by the defendant’s tortious
conduct. (Sooy, supra, 220 Cal.App.3d at p. 1312; see Brandt v.
Superior Court (1985) 37 Cal.3d 813, 818−820.) Thus, even if
the court’s June 2013 finding of reasonableness as to the fees
the Law Corporation incurred to enforce its retainer agreement
with Dougherty was not nullified in Karton II, the finding has
no bearing on the issue of the Law Corporation’s alleged attorney
fees as damages under the tort of another doctrine.
With respect to fees and costs incurred in Pennsylvania,
the Law Corporation offered evidence that it pursued
enforcement of the 1999 default judgment in that state, but does
not offer any evidence that it brought or defended any action
against a third person in Pennsylvania. The Law Corporation
points to the Tennessee Chancery Court’s finding in 2007 that
Dougherty’s quitclaim of certain property in Pennsylvania to
Moseley “was a fraudulent transfer” and ordered that it be “set
aside.” The Law Corporation omits to mention, however, that
25
the same Tennessee court subsequently “deleted” this finding,
effectively negating any possible claim for tort of another
attorney fees related to the alleged fraudulent transfer.
Also, the only evidence of the amount of fees incurred in the
Pennsylvania action is the court’s June 2013 statement that
such fees were reasonable for purposes of awarding fees to the
Law Corporation as the prevailing party on the contract cause of
action. As with the same statement regarding the fees incurred
in the bankruptcy proceedings, even if that statement survived
our decision in Karton II, it has no relevance in determining
the existence or amount of attorney fees recoverable as damages
under the tort of another doctrine.
The Law Corporation filed two actions in Tennessee: an
action to domesticate and enforce the 1999 California default
judgment in Tennessee, and the Tennessee fraudulent transfer
action. The Law Corporation offered no evidence that the
Tennessee enforcement action was brought against a third
person. Therefore, any fees or costs incurred in connection with
that action are not recoverable as damages under the tort of
another doctrine. (See Prentice, supra, 59 Cal.2d at p. 620.)
In the Tennessee fraudulent transfer action, the Law
Corporation filed the action against both Dougherty and
Moseley.14 That action is apparently still pending in Tennessee,
and the only documents before the superior court at the hearing
on the setoff motion that evidence the Tennessee court’s findings
in that case are: (1) an order denying the Law Corporation’s
14 Musick Peeler does not argue that the voiding of the
1999 judgment in Karton I in 2009 necessarily precludes the
Law Corporation from pursuing the Tennessee fraudulent
transfer action.
26
motion for summary judgment, which stated that Dougherty’s
transfer of certain property in Pennsylvania was a fraudulent
transfer, and (2) a subsequent order revising the earlier order
to delete the finding of a fraudulent transfer. Such evidence is
insufficient to establish a claim for fraudulent transfer, let alone
a claim for the recovery of attorney fees incurred in that action
based on the tort of another doctrine.
Even if the Law Corporation had stated a valid and
subsisting claim based on fraudulent transfers in Tennessee,
it offered no evidence of the amount of fees and costs incurred as
a result of having to pursue a third person in that action. (See
Conrad, supra, 24 Cal.App.4th at p. 445 [failure to distinguish
between amount that could be used as an offset from amount that
could not “precludes any offset, for want of supporting facts”].)
Indeed, as the Law Corporation conceded to the trial court in
its 2012 trial brief, it needed to establish the amount of fees it
incurred “pursuing . . . Moseley (which are recoverable under the
‘tort of another’ theory) and the fees spent pursuing [Dougherty]
(which are not).” (See 1 Pearl, supra, §§ 7.4, 7.13 [attorney fees
recoverable under tort of another doctrine are those incurred
litigating against the third party, not those incurred litigating
against the tortfeasor].) Instead, the Individual states only
a single sum purportedly incurred in connection with both the
Tennessee enforcement action and the Tennessee fraudulent
transfer action.
The Law Corporation further asserts that it incurred fees
in connection with enforcement efforts in Arkansas, but does not
offer any evidence that it brought or defended any action against
a third person in Arkansas. And the only evidence of the amount
of its attorney fees is the irrelevant reference to the court’s 2013
27
finding that the fees incurred in the Arkansas collection efforts
were reasonable for purposes of determining an award of fees
as the prevailing party on the contract. Our analysis of the Law
Corporation’s claims for fees in the bankruptcy proceeding and
the Pennsylvania and Tennessee actions applies equally to the
claim for fees incurred in the Arkansas action.
To the extent the Law Corporation incurred any fees or
costs in connection with its defense against the collateral attack
actions in California, they were incurred in defending actions by
Dougherty, not a third person. These actions, therefore, do not
support a setoff claim based on the tort of another doctrine. (See
Prentice, supra, 59 Cal.2d at p. 620.)
In support of the Law Corporation’s claim that a
Pennsylvania court’s $30,000 sanction order against Dougherty
should be set off against the Law Corporation’s judgment debt
to Musick Peeler, the Law Corporation submitted an October 4,
2006 order by the Pennsylvania Court of Common Pleas of
Lehigh County awarding the Individual and his counsel $30,000
as a contempt sanction against Dougherty. Because the order,
so far as the evidence before the trial court showed, was not
in favor of the Law Corporation, it could not be set off against
the Law Corporation’s judgment debt to Dougherty. (See
Harrison, supra, 20 Cal.2d at pp. 649–650 [in allowing setoff
of one judgment against another, “mutuality is essential”;
“the judgments must be between the same parties in the same
right”]; In re Zeth S. (2003) 31 Cal.4th 396, 405 [reviewing court
“ ‘reviews the correctness of a judgment as of the time of its
28
rendition, upon a record of matters which were before the trial
court for its consideration’ ”].)15
Lastly, the Individual’s declaration in support of the
setoff motion states that the Law Corporation “can support
with documentary evidence” that Dougherty made certain
fund transfers “to avoid using funds to satisfy the [1999 default
judgment] debt.” No such evidence, however, was included with
the motion or otherwise offered at the hearing on the motion.
(See Weil & Brown, Cal. Practice Guide: Civil Procedure Before
Trial (The Rutter Group 2022) ¶ 9:44 [“The original or copies
of all evidence that will be presented to the court at the motion
hearing must be served along with the notice of motion and
points and authorities”].) Assertions that evidence exists that
could be produced in the future have no evidentiary weight.
Moreover, it does not appear that these various alleged transfers,
even if they occurred and were wrongful, resulted in the Law
Corporation bringing any action against a third person.
For all the foregoing reasons, even if the Law Corporation’s
motion was procedurally proper, the Law Corporation failed to
support its setoff claims with relevant evidence and, therefore,
15 We note that, in an earlier stage of this litigation, the
Law Corporation asserted that Dougherty could not enforce the
judgment against the Law Corporation because the judgment
initially, and erroneously, identified the Individual as the
judgment debtor. (David S. Karton, A Law Corporation v.
Musick, Peeler & Garrett LLP (Mar. 4, 2020, B289113) [nonpub.
opn.].) Dougherty was required to correct the judgment to
name the Law Corporation as the judgment debtor. The Law
Corporation was thus acutely aware of the legal significance of
the identification of the parties affected by the court’s orders and
judgments.
29
the court did not abuse its discretion in denying the motion.16
For the same reason, any error in the court’s evidentiary rulings
is harmless.
D. The Court Did Not Err in Denying the
New Trial Motion
The Law Corporation contends that the court erred in
denying its new trial motion. We disagree.
Initially, we agree with Musick Peeler that the Law
Corporation’s motion is a motion for reconsideration under
section 1008. Under that statute, a party affected by a court’s
order may apply to the court “to reconsider the matter and
modify, amend, or revoke the prior order” “based upon new
or different facts, circumstances, or law.” (§ 1008, subd. (a).)
The statute “specifies the court’s jurisdiction with regard to
applications for reconsideration of its orders and renewals of
16 Musick Peeler argued below that the Law Corporation’s
setoff claims are barred by the doctrines of res judicata and
collateral estoppel because they seek to relitigate claims that
were raised in the operative complaint and adjudicated against
the Law Corporation in 2012. Musick Peeler reasserts the
argument on appeal. With the exception of the claim based
on the $30,000 Pennsylvania sanctions award, which was not
litigated in the underlying action, the argument appears to have
merit. In its tort of another cause of action, the Law Corporation
sought to recover as tort damages the attorney fees it incurred
in Dougherty’s bankruptcy proceeding, its actions against
Dougherty in Pennsylvania, Tennessee, and Arkansas, and the
collateral attack actions. That cause of action was litigated and
decided against the Law Corporation in 2012. Nevertheless, in
light of our conclusions as to the motion’s procedural defects and
absence of substantive merit, we need not decide these issues.
30
previous motions, and applies to all applications to reconsider
any order of a judge or court, or for the renewal of a previous
motion, whether the order deciding the previous matter or motion
is interim or final.” (§ 1008, subd. (e).) The statute is “exclusive
and jurisdictional” and applies “to interim and final orders alike.”
(In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 1313.)
According to the Law Corporation, its motion was a “vehicle
to seek re-examination of the trial court’s legal conclusions on
the [setoff] motion.” We perceive no difference between a “re-
examination” of the court’s ruling and the “reconsider[ation of]
the matter” contemplated under section 1008. The motion thus
fits squarely within the language of section 1008.
A motion for reconsideration must be “based upon new
or different facts, circumstances, or law.” (§ 1008, subd. (a).)
Here, the Law Corporation concedes that it presented no new
or different facts in its motion. Although the Law Corporation
asserts the court made an “error of law” in denying the motion
for setoff, it did not refer the court to any new or different law to
support its motion. The court, therefore, did not err in denying
the motion.
Even if the motion is treated as a motion for new trial,
the court did not err in denying the motion. Generally, trial
courts have “wide discretion in ruling on a motion for new trial
and that the exercise of this discretion is given great deference
on appeal.” (City of Los Angeles v. Decker (1977) 18 Cal.3d
860, 871–872; accord, Moreno v. Bassi (2021) 65 Cal.App.5th
244, 263.) Any determination underlying its ruling, however,
“is scrutinized under the test appropriate to such determination.”
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 859;
31
accord, Guzman v. NBA Automotive, Inc. (2021) 68 Cal.App.5th
1109, 1115−1116.)
Here, the Law Corporation, in its motion, reiterated
its arguments regarding its purported “right to a setoff” and
asserts that, “despite detailed legal authority supporting the
Law Corporation’s motion,” the court made an “error of law” in
denying the motion. The denial of the motion implies the court’s
determination that the Law Corporation was not entitled to a
setoff. As set forth above, that determination is also reviewed for
abuse of discretion. (Fassberg, supra, 152 Cal.App.4th at p. 762;
Wm. R. Clarke, supra, 78 Cal.App.4th at p. 359.) For the reasons
given above, the court did not abuse its discretion in denying the
setoff motion and our own examination of the record compels that
result as a matter of law. Therefore, the court did not abuse its
discretion in denying the new trial motion.
In the new trial motion, the Law Corporation also
challenged the court’s evidentiary rulings, which are reviewed
for abuse of discretion. (Dart Industries, Inc. v. Commercial
Union Ins. Co. (2002) 28 Cal.4th 1059, 1078.) As explained
above, in light of the lack of a valid procedural basis for the
motion and the absence of substantial evidence—admissible
or inadmissible—to support the motion, any error in the court’s
evidentiary rulings is harmless. Nothing in the new trial motion
alters that conclusion.
The Law Corporation argues that the court treated the
new trial motion as a motion for reconsideration and, thus,
never exercised the discretion that a new trial motion requires.
Although the court indicated at the hearing on the motion that it
agreed with Musick Peeler that the motion should be deemed a
motion for reconsideration, the court also agreed to give further
32
consideration to authority raised by the Law Corporation at
the hearing and take the matter under submission. The court
thereafter issued a minute order stating that the “motion for new
trial . . . is denied.” (Capitalization omitted.) The court did not
indicate in its order that it was treating the motion as a motion
for reconsideration. We construe the order according to its terms
as an order denying the new trial motion as such, and infer that
the court exercised the discretion it had. In any event, in light of
the complete lack of merit to the setoff motion and the new trial
motion, any discretion in this instance could only be rationally
exercised in one way: to deny the new trial motion.
33
DISPOSITION
The January 6, 2020 order denying the motion for setoff
is affirmed.
Respondent is awarded its costs on appeal.
ROTHSCHILD, P. J.
We concur.
CHANEY, J.
KELLEY, J.*
*Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
34