McLean v. Rosman CA2/8 ( 2022 )

Filed 10/5/22 McLean v. Rosman CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
ROSS A. McLEAN et al., B308260
Plaintiffs and Appellants,
(Los Angeles County
v. Super. Ct. No. LC104705)
GIDON ROSMAN et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los
Angeles County, Theresa M. Traber, Judge. Affirmed.
Pensanti & Associates and Louisa Pensanti for Plaintiffs
and Appellants.
Keiter Appellate Law, Mitchell Keiter; Pariser & Pariser
and Wayne Pariser for Defendants and Respondents.
_______________________
This is an appeal from a July 23, 2020 attorney fee award
arising from a prior appeal of this matter. The prior appeal was
dismissed because appellants Ross and Louisa McLean (the
McLeans) failed to file a Case Information Statement. We
awarded costs on appeal to respondents Gidon Rosman and Eyal
Kanitz (the Rosmans). After remittitur issued, the trial court
awarded respondents attorney fees pursuant to a provision in a
settlement agreement the McLeans had sought to enforce in the
underlying action against the Rosmans.
In this appeal, the McLeans contend the trial court erred in
awarding attorney fees to the Rosmans based on the agreement,
which the trial court had previously found unenforceable against
the Rosmans. We affirm the July 23, 2020 award.
BACKGROUND
In 1974, the McLeans subdivided their property into four
lots, keeping two of the lots and selling the other two. One lot
was purchased by Donelle-Norell Properties, LLC (Donelle). In
2008, Donelle filed a quiet title and easement action against the
McLeans related to an unpaved roadway which was the only
access to the lots. In January 2010, Donelle and the McLeans
signed a settlement agreement (Agreement) with a provision for
attorney fees.
The attorney fees provision states: “Should any party
institute an action or proceeding to enforce any provision of this
Agreement, or for damages by reason of alleged breach of this
Agreement, the prevailing party shall be entitled to recover all
costs and expenses, including attorneys’ fees, incurred in
connection with such action, including those incurred on appeal
and in enforcing a judgment.”
2
Several years after Donelle and the McLeans signed the
settlement agreement, the Donelle property was bought by the
Rosmans.
In 2016, the McLeans filed a complaint against the
Rosmans, alleging a breach of the 2010 settlement agreement
between the McLeans and Donelle. The Rosmans successfully
obtained summary judgment in that action on the grounds they
were not signatories to the settlement agreement and had no
knowledge of its terms. The McLeans purport to quote from the
trial court’s January 18, 2019 minute order in which the trial
court found the Rosmans “had demonstrated there are no triable
issues of fact to show the formation of a contract” because the
Rosmans were “twice removed” from the predecessor owner that
signed the settlement and that the McLeans had “failed to
comply with Civil Code section 1468 to perfect the lien by
recording [the settlement],” thereby making the settlement void.
Neither the complaint nor this minute order is part of the
appellate record, but the Rosmans do not dispute this description
of the proceedings and the order.
After prevailing on the motion for summary judgment, the
Rosmans moved for an award of attorney fees and costs, relying
on the attorney fees provision of the settlement agreement, Civil
Code section1 1717, and case law, including Hsu v. Abbara (1995)
9 Cal.4th 863. On April 23, 2019, the trial court granted the
motion and awarded fees on those bases.
1 Unspecified statutory references are to the Civil Code.
3
On June 13, 2019, the McLeans filed a notice of appeal
from the order awarding attorney fees.2 This is the prior appeal
referred to above. The appeal was dismissed because the
McLeans failed to file a Case Information Statement. The
McLeans requested and received relief from default, but their
notice of appeal was dismissed again on October 23, 2019, for
again failing to file a Case Information Statement. Remittitur
issued on December 26, 2019.
On January 2, 2020, the Rosmans moved for additional
attorney fees related to the dismissed appeal, on the same bases
as before. On July 23, 2020, the trial court awarded the Rosmans
additional attorney fees. This appeal followed. It involves only
the July 23, 2020 fee award.
DISCUSSION
A. The McLeans Are Not Estopped or Precluded from
Challenging the July 2020 Attorney Fees Award.
The Rosmans contend that the trial court’s prior attorney
fees award for their successful summary judgment motion is final
and estops the McLeans from challenging the trial court’s later
fee award for the McLeans’ unsuccessful appeal of the earlier
award.
The Rosmans use the terms “estoppel” and “preclusion,”
and cite at least two cases which use the phrase “res judicata.”
(E.g., Samara v. Matar (2018) 5 Cal.5th 322, In re Marriage of
Spector (2018) 24 Cal.App.5th 201, 208 (Spector).) These terms
have different meanings, although they are often used
2 On our own motion, we take judicial notice of our records in
the prior appeal, case No. B298461.
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interchangeably. Regardless, both res judicata (claim preclusion)
and collateral estoppel (issue preclusion) traditionally apply to
second or successive actions between the same parties or parties
in privity with them. (Border Business Park, Inc. v. City of San
Diego (2006) 142 Cal.App.4th 1538, 1563 [claim preclusion
“ ‘ “ ‘operates as a bar to the maintenance of a second suit’ ” ’ ”
while issue preclusion “ ‘ “ ‘precludes a party to an action from
relitigating in a second proceeding matters litigated and
determined in a prior proceeding.’ ” ’ ”]; see also People v.
Barragan (2004) 32 Cal.4th 236, 253.) Because these doctrines
are not typically applied in the same proceeding, we do not apply
them here.3
B. The Trial Court Did Not Err in Awarding Attorney Fees to
the Rosmans.
The McLeans contend the trial court erred in relying on the
settlement agreement to award the Rosmans attorney fees on
appeal. The McLeans contend the Rosmans were not parties to
the Agreement or beneficiaries of it, did not participate in the
negotiation of the Agreement, and were found by the trial court
not to be bound by the Agreement. More specifically, the
McLeans contend the trial court erred in relying on a single
decision, Hsu v. Abbara, supra, 9 Cal.4th 863 (Hsu). They claim
3 Spector, cited by Rosman, might be understood to be
referring to preclusion within a case, but Spector involves a very
particular type of order in marital dissolution proceedings,
specifically a temporary spousal support order, and there are
statutory restrictions in the Family Code on the modification of
such an order which are not a consideration in other cases. We
note that such orders can be modified, just not with retroactive
effect. (Spector, supra, 24 Cal.App.5th at p. 208.)
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Hsu is factually inapplicable to this case because the prevailing
party in Hsu, although not a signatory, had helped negotiate the
contract at issue. Here the Rosmans were completely uninvolved
in crafting the settlement agreement at issue. We do not think
this fact is relevant.
Hsu is the long-standing law in California and is in no way
controversial. Although it is a single case, it is a decision of the
California Supreme Court case, and the trial court and this court
are bound by it. (Auto Equity Sales, Inc. v. Superior (1962)
57 Cal.2d 450, 455.) As the Supreme Court explained in Hsu: “It
is now settled that a party is entitled to attorney fees under
section 1717 ‘even when the party prevails on grounds the
contract is inapplicable, invalid, unenforceable or nonexistent, if
the other party would have been entitled to attorney’s fees had it
prevailed.’ [Citations.]” (Hsu, supra, 9 Cal.4th at p. 870.) There
is no requirement in Hsu that the prevailing party have been
involved in negotiating the contract at issue. Rather, the party is
entitled to attorney fees because, as the Supreme Court
explained, “[t]his rule serves to effectuate the purpose underlying
section 1717. As this court has explained, ‘[s]ection 1717 was
enacted to establish mutuality of remedy where [a] contractual
provision makes recovery of attorney’s fees available for only one
party [citations], and to prevent oppressive use of one-sided
attorney’s fees provisions. [Citation.]’ [Citations.] The statute
would fall short of this goal of full mutuality of remedy if its
benefits were denied to parties who defeat contract claims by
proving that they were not parties to the alleged contract or that
it was never formed.” (Hsu, at p. 870.)
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In a further attempt to show error, the McLeans rely on
cases which involve parties who claimed to be third party
beneficiaries. (Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937,
943–944 (Murphy); Sessions Payroll Management, Inc. v. Noble
Construction Co. (2000) 84 Cal.App.4th 671, 674 (Sessions); Super
7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 546–547
(Super 7).) This reliance is misplaced.
A third party beneficiary may enforce a contract expressly
made for its benefit. Its right to performance is based on the
contracting parties’ intent to benefit it. (Murphy, supra,
17 Cal.3d at pp. 943–944.) Based on the limited record before us,
the McLeans did not sue the Rosmans as third party beneficiaries
of the agreement, they sued the Rosmans on the theory that
although the Rosmans were not signatories they were as bound
by the contract as if they were signatories. Similarly, the
Rosmans did not seek attorney fees as third party beneficiaries
(unlike the parties in Super 7 and Sessions, who did seek
attorney fees on such a basis).
Further, Super 7 and Sessions both recognize the rule
summarized in Hsu. (Sessions, supra, 84 Cal.App.4th at p. 678
[“[S]ection 1717 makes an otherwise unilateral right reciprocal
when a defendant sued on a contract with a provision awarding
attorney fees to the prevailing party defends by successfully
arguing the inapplicability, invalidity, unenforceability, or
nonexistence of that contract. . . . ‘To ensure mutuality of remedy
in this situation, it has been consistently held that when a party
litigant prevails in an action on a contract by establishing that
the contract is invalid, inapplicable, unenforceable, or
nonexistent, section 1717 permits that party’s recovery of
attorney fees whenever the opposing parties would have been
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entitled to attorney fees under the contract had they prevailed.’ ”]
Super 7, supra, 16 Cal.App.4th at p. 548 [“Several cases hold that
a plaintiff, having sued a nonsignatory on the contract as if the
nonsignatory were a contracting party, becomes liable for fees
when the nonsignatory prevails. . . . Those cases involved
lawsuits in which the plaintiff’s claim, if successful, would have
established the defendant was in fact liable on the contract even
though the defendant was nominally a nonsignatory.”].)
The McLeans also rely on Canal-Randolph Anaheim, Inc. v.
Wilkoski (1978) 78 Cal.App.3d 477 (Canal-Randolph) for the
proposition that section 1717 is not intended to make parties
with no role in the formation of a contract beneficiaries of its
attorney fees provision. We do not see any reference to a “role in
contract formation” in Canal-Randolph. The opinion holds that
section 1717 is only intended “to make unilateral attorney fee
provision in a contract reciprocal, not to extend the benefit of a
contractual provision for the recovery of attorney fees to a person
not a party to the contract.” (Canal-Randolph, at p. 486.) Canal-
Randolph is an opinion by the Fourth District Court of Appeal
and it expressly disagrees with Babcock v. Omansky (1973)
31 Cal.App.3d 625, an opinion on the same issue out of the
Second District. Canal-Randolph was not controlling law when it
was written, and because it predates and is inconsistent with
Hsu, we view it as having been impliedly overruled.
C. The Rosmans Are Not Estopped from Pursuing Attorney
Fees by Their Success in Obtaining Summary Judgment.
The McLeans contend the doctrine of judicial estoppel bars
a party from taking inconsistent positions in the same or
separate proceedings and so the Rosmans, having obtained
summary judgment on the ground they were not parties to the
8
contract, cannot take a contradictory position and claim they are
parties to obtain attorney fees.
The Rosmans never claimed to be a party to the settlement
agreement. We understand the Rosmans are relying on section
1717 for attorney fees. As the California Supreme Court has
explained: “The second situation in which section 1717 makes an
otherwise unilateral right reciprocal, thereby ensuring mutuality
of remedy, is when a person sued on a contract containing a
provision for attorney fees to the prevailing party defends the
litigation ‘by successfully arguing the inapplicability, invalidity,
unenforceability, or nonexistence of the same contract.’
[Citation.] Because these arguments are inconsistent with a
contractual claim for attorney fees under the same agreement, a
party prevailing on any of these bases usually cannot claim
attorney fees as a contractual right. If section 1717 did not apply
in this situation, the right to attorney fees would be effectively
unilateral—regardless of the reciprocal wording of the attorney fee
provision allowing attorney fees to the prevailing attorney—
because only the party seeking to affirm and enforce the agreement
could invoke its attorney fee provision. To ensure mutuality of
remedy in this situation, it has been consistently held that when
a party litigant prevails in an action on a contract by establishing
that the contract is invalid, inapplicable, unenforceable, or
nonexistent, section 1717 permits that party’s recovery of
attorney fees whenever the opposing parties would have been
entitled to attorney fees under the contract had they prevailed.”
(Santisas v. Goodin (1998) 17 Cal.4th 599, 611, italics added.)
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DISPOSITION
The July 23, 2020 order awarding attorney fees to
respondents is affirmed. Respondents to recover costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, P. J.
We concur:
GRIMES, J.
WILEY, J.
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