Petrolink, Inc. v. Lantel Enterprises ( 2022 )

Filed 7/14/22
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PETROLINK, INC., D079305
Plaintiff and Appellant,
v. (Super. Ct. No. CIVVS1200383)
LANTEL ENTERPRISES,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Bernardino
County, John M. Pacheco, Judge. Affirmed.
Bleau Fox, Martin R. Fox, Megan A. Childress and Elizabeth M. Martin
for Plaintiff and Appellant.
Fullerton, Lemann, Schaefer & Dominick, Wilfrid C. Lemann and
David P. Colella for Defendant and Respondent.
I.
INTRODUCTION
Plaintiff and appellant Petrolink, Inc. (Petrolink) returns to this court
after two previous appeals, one from an original judgment, as discussed in
Petrolink, Inc. v. Lantel Enterprises (2018) 21 Cal.App.5th 375 (Petrolink I),
and the second from an amended judgment entered after remand in
Petrolink I, as discussed and affirmed in Petrolink, Inc. v. Lantel Enterprises
(Mar. 18, 2021, D076583) [nonpub. opn.] (Petrolink II).
Petrolink filed an action against defendant Lantel Enterprises (Lantel),
seeking specific performance of a lease agreement that gave Petrolink the
option to purchase a commercial property owned by Lantel at fair market
value; Lantel cross-complained against Petrolink, contending that Petrolink
was refusing to purchase the property for its fair market value. The parties
disagreed as to the valuation of the property and were effectively seeking a
judicial determination as to the fair market value of the property so that they
could complete the transaction. After years of litigation in the trial court, an
appeal, a partial reversal of the judgment, remand, and further litigation, the
trial court ultimately concluded that the fair market value of the property
was $889,854. The court then calculated a net purchase price of $948,404 by
subtracting from the fair market value a credit to Petrolink for the rents that
it had paid from the date the purchase should have been completed, and
adding a credit to Lantel for the loss of use of the sale proceeds. In its
amended judgment, the court ordered the parties to complete the transaction;
Petrolink was to deposit $948,404 in escrow and Lantel was to deliver title to
the property “by grant deed free and clear of all encumbrances.”
Petrolink filed an appeal from the amended judgment, arguing that it
was entitled to certain additional financial reductions and offsets to the
purchase price. We rejected Petrolink’s contentions and affirmed the
amended judgment in Petrolink II.
Eleven days after this court issued our opinion in Petrolink II and four
days after Petrolink deposited the purchase funds in escrow, the State of
California Department of Transportation (Caltrans) filed an eminent domain
2
action pertaining to the property at issue in this litigation. The filing of the
Caltrans action prevented Lantel from being able to convey unencumbered
title, as required by the amended judgment.
After Caltrans filed the eminent domain action, Petrolink refused to
close escrow on the property, stating that it would do so only if Lantel
deposited unencumbered title to the property in escrow.
Lantel filed a motion titled, “Notice of Motion and Motion for Order
Compelling Performance Under Amended Judgment; Request for Sanctions”
(some capitalization omitted). After a hearing, the trial court granted the
motion, stating that it would “enforce the amended judgment.” The court’s
order compels Petrolink to complete the purchase transaction by taking title
to the property despite the encumbrance on title resulting from the Caltrans
eminent domain action, thus effectively excusing Lantel from its obligation
under the amended judgment to deliver title “free and clear of all
encumbrances.”
Petrolink appeals from the trial court’s order enforcing the amended
judgment, arguing that the Caltrans action encumbers title to the property as
a matter of law, and that the court’s order requiring Petrolink to complete the
purchase of the property is erroneous because, in requiring the sale to be
completed despite the encumbered title, the court improperly modified the
judgment in a manner that materially alters the substantial rights of the
parties.
We conclude that the trial court did not abuse its discretion in ordering
Petrolink to accept title encumbered by the Caltrans eminent domain action.
The filing of the eminent domain action rendered it impossible for Lantel to
convey unencumbered title as contemplated by the terms of the amended
judgment, through no fault of either party. Faced with this scenario, the trial
3
court weighed the equities and concluded that it would be more equitable for
Petrolink to bear any burden of the encumbrance created by the filing of the
Caltrans action. We therefore affirm the trial court’s postjudgment order
compelling Petrolink to complete the purchase transaction.
II.
FACTUAL AND PROCEDURAL BACKGROUND1
The dispute between Petrolink and Lantel, which has been pending in
the courts since 2012, arose from a lease agreement pursuant to which
Petrolink leased a commercial property owned by Lantel. Petrolink was in
possession of the property prior to this dispute and has been in possession of
the property throughout the pendency of the litigation.
In addition to providing the terms by which the property would be
leased, the lease agreement included a provision that gave Petrolink the
option to purchase the property at fair market value. Pursuant to the terms
of that provision, in 2011 Petrolink notified Lantel of its desire to exercise the
purchase option. However, the parties could not reach agreement as to the
fair market value of the property.
Petrolink sued Lantel and Lantel cross-complained. Each party
claimed that the other had refused to complete the sale and purchase
transaction and sought to compel the other to perform under the contract.
The primary issue in dispute at the trial was the fair market value of the
property at the time Petrolink exercised its purchase option. The trial court
ultimately determined that the fair market value of the property as of August
1 The factual and procedural background that we provide in this section
is taken from our prior opinions in Petrolink I, supra, 21 Cal.App.5th 375 and
Petrolink II, supra, D076583, with the exception of our recitation of the
proceedings that occurred subsequent to our issuance of the opinion in
Petrolink II.
4
25, 2011—the date of Petrolink’s letter notifying Lantel of its desire to
exercise the purchase option in the lease agreement—was $889,854.
Petrolink had requested that the trial court grant Petrolink an offset
against the $889,854 purchase price for the amount of rents that it had
continued to pay to Lantel after it exercised the purchase option and during
the pendency of the litigation. The trial court denied Petrolink’s request for
an offset and ordered Lantel to sell the property to Petrolink for $889,854.
Petrolink appealed from the judgment.
In our opinion in Petrolink I, supra, 21 Cal.App.5th at page 379, we
concluded that Petrolink was entitled to an offset against the purchase price
for the rents that it had paid throughout the pendency of the litigation. We
determined that, to the extent the trial court had denied Petrolink an offset
for these rents, the court had “failed to account for the delayed performance
of the contract for purchase and sale” by “fail[ing] to place the parties in the
positions in which they would have been at the time the sale and purchase
contract should have been performed.” (Ibid.) We therefore directed the trial
court “to determine the reasonable date on which the contract for purchase
and sale should have been performed, and . . . to consider what financial
adjustments must be made in order to relate the parties’ performance back to
the date that the contract should have been performed.” (Id. at p. 389.)
On remand from Petrolink I, the trial court determined that the date on
which the contract should have been performed was December 26, 2011. The
trial court granted Petrolink an offset for rents that it had paid after that
date, and awarded Lantel compensation for its loss of use of the proceeds of
the sale. The court thereafter entered an amended judgment on September
5, 2019, which ordered that “[u]pon receipt of $948,404 from Petrolink, Lantel
shall convey the Property to Petrolink by grant deed and free and clear of all
5
encumbrances.” The amended judgment also specified that Petrolink was to
pay Lantel the purchase amount “within 45 days of the date of service of this
Judgment on the parties.”2
Petrolink appealed from the amended judgment, arguing that the trial
court erred in failing to perform certain additional financial adjustments for
which Petrolink had advocated.3 In Petrolink II, supra, D076583, filed on
March 18, 2021, we rejected Petrolink’s arguments regarding additional
financial adjustments and affirmed the trial court’s amended judgment.
One week later, on March 25, 2021, Petrolink deposited in escrow the
additional funds required of it, in compliance with the terms of the amended
judgment.
2 The text of the decree portion of the amended judgment reads:
“Judgment is granted for Petrolink on the cause of action
for specific performance only. Upon receipt of $948,404
from Petrolink, Lantel shall convey the Property to
Petrolink by grant deed and free and clear of all
encumbrances. Pending receipt of $948,404 from Petrolink,
which is to occur within 45 days of the date of service of
this Judgment on the parties, Lantel is enjoined from
conveying or encumbering the Property.”
3 In its appeal from the amended judgment, Petrolink contended that the
trial court erred in determining the value of the property on remand from the
first appeal by: (1) applying the future income stream to the fair market
value price of the subject property, (2) not awarding Petrolink interest on the
portion of monies it had deposited in escrow on February 8, 2016, (3) finding
that Petrolink was not entitled to interest on the rent money that it had paid
Lantel, and (4) denying Petrolink the value of loss of the use of the funds that
it had been required to post as a bond between November 28, 2016 to October
22, 2018.
6
On March 29, 2021, Caltrans filed an eminent domain action that
would, if successful, condemn some or all of the property at issue in this case.
The Caltrans action named both Lantel and Petrolink as defendants.
After the filing of the Caltrans action, Petrolink refused to accept
delivery of title to the property from Lantel, thereby preventing escrow from
closing. Petrolink contended that the Caltrans action encumbered the title to
the property, rendering Lantel unable to perform pursuant to the terms of
the amended judgment and excusing Petrolink from any obligation to close
escrow.
After it became clear that Petrolink would not accept title and permit
escrow to close, Lantel filed a motion in the trial court titled, “Notice of
Motion and Motion for Order Compelling Performance Under Amended
Judgment; Request for Sanctions” (some capitalization omitted). In its
opposition to Lantel’s motion, Petrolink argued that it should not be required
to complete the transaction because title to the property was “encumbered
and bad as a matter of law.” (Underscoring and capitalization omitted.)
Petrolink did not offer any suggestion as to how it believed the judgment
could be effectuated and escrow closed; Petrolink contended only that it did
not have to accept title as encumbered by the Caltrans action.
Lantel argued in reply that it had not had possession of the property
throughout the proceedings and had not received any money from Petrolink
during the pendency of the proceedings, despite the fact that Petrolink has
been in possession of, and had use of, the property. Lantel also contended
that it had no real substantive ownership interest in the property that should
cause it to remain a party in the Caltrans action, because, according to
Lantel, Petrolink is the “prima facie owner of the Property” under the
amended judgment.
7
After conducting a hearing on the matter, the trial court concluded that
it would “grant the motion and proceed to enforce the amended judgment,”
despite the fact that both parties conceded that it was impossible for Lantel
to deliver unencumbered title to the property. While noting elsewhere in its
order that “[t]his is an unusual procedural situation and Petrolink correctly
observed Lantel is unable to provide clear and unencumbered title,” the trial
court determined that “[i]t is . . . legally proper and equitable that Petrolink
bear the burden of the Caltrans Action.” In reaching this conclusion, the
court relied in part on the fact that, if the parties had been able to agree on a
purchase price and had completed the sale at the time Petrolink exercised its
purchase option in 2011, as contemplated in the lease agreement, Petrolink
not only would have been in possession of the property at the time the
Caltrans action was filed, but would also have been the owner of the
property.4 After concluding that there was no legal impediment to imposing
on Petrolink the burden of the encumbrance on the title to the property, and
further concluding that, in weighing the equities, it would be more equitable
to place the burden of the encumbrance on Petrolink, the court ordered
Petrolink to complete the purchase transaction. The court’s order thus had
the effect of implicitly modifying the amended judgment to excuse Lantel
from having to convey to Petrolink unencumbered title.
4 The court explained that if the transaction had been completed as
contemplated and not delayed as a result of this protracted litigation,
Petrolink “would have already taken title long before the Caltrans Action was
filed.” The court relied on this as a factor weighing in favor of concluding
that it would not be unfair to place the burden of the Caltrans action on
Petrolink, rather than on Lantel.
8
Petrolink filed a timely notice of appeal from the trial court’s
postjudgment order compelling it to complete the purchase transaction and
close escrow as required by the amended judgment.
III.
DISCUSSION
Petrolink’s argument on appeal is, essentially, the following: (1) the
amended judgment required Lantel to convey unencumbered title; (2) the
filing of the Caltrans action encumbers title to the property, as a matter of
law, such that Lantel is unable convey unencumbered title to the property
while the Caltrans action is pending (and potentially after it is concluded if
the result of that action is the taking of some portion or all of the property);
(3) in ordering Petrolink to complete the purchase transaction and take
encumbered title, the trial court improperly modified the amended judgment
in a way that affects the parties’ substantial rights; and (4) the court was
without authority to modify the amended judgment in this manner.
In response, Lantel agrees that the Caltrans action “constitutes an
encumbrance on the Property.” However, Lantel contends that the amended
judgment’s reference to Lantel’s obligation to convey the property by grant
deed “free and clear of all encumbrances” can be reasonably understood to
refer only to encumbrances “caused by Lantel.” According to Lantel, “[a]ny
other interpretation of the Amended Judgment is illogical and contrary to
law,” because, Lantel asserts, “Lantel cannot be held accountable for liens it
does not control, much less liens created in the years of delay caused by
Petrolink’s unwillingness to close escrow.” Lantel further contends that
“[t]he time ‘fixed for performance’ [of the transaction] expired before the
Caltrans Action was initiated.” (Boldface, underscoring, and italics omitted.)
In support of this contention, Lantel quotes Petrolink’s opening brief, in
9
which Petrolink asserts that “ ‘[i]t is the condition of title at the time fixed for
performance which determines the rights of the parties to the agreement to
sell,’ ” (boldface, underscoring, and italics omitted) and suggests that the time
“fixed for performance” was, at the latest, October 20, 2019, which was 45
days after service of the amended judgment was effected.
Lantel also argues that the trial court had the authority to “give effect
to the Amended Judgment,” and further contends that the court’s order “did
not ‘materially alter the substantial rights of the parties.’ ” Lantel’s
suggestion that the parties’ substantial rights were not altered is based in
part on its contention that the amended judgment required only that Lantel
not encumber the property through its own conduct, and not that it provide
title clear of encumbrances over which it had no control.
We conclude that neither party’s analysis is entirely correct and that
the path to resolution of this appeal lies somewhere between the parties’
respective positions. As we explain, we ultimately conclude that the
appropriate disposition is to affirm the trial court’s order compelling
Petrolink to accept title in its present condition and allow escrow to close.
We begin our analysis with the fundamental principle that a trial
court’s order “is presumed to be correct, and all intendments and
presumptions are indulged to support it on matters as to which the record is
silent. [Citation.] It is the appellant’s burden to affirmatively demonstrate
error. [Citations.]” (In re Marriage of Gray (2002) 103 Cal.App.4th 974, 977–
978.)
The next step in our analysis of Petrolink’s appeal is to determine the
applicable standard of review. The order from which Petrolink has appealed
is an order compelling specific performance of a judgment, which is, itself, a
judgment decreeing the specific performance of a property sale transaction.
10
The trial court styled its order as an order “[g]rant[ing] Lantel’s motion for
order compelling performance under amended judgment.” Although there is
no rule that provides a general standard of review for every iteration of an
order addressing a “motion to compel,” an order compelling a party to
perform an affirmative act is inherently an order for specific performance.
(See, e.g., Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790,
1795 [a petition to compel arbitration pursuant to Code of Civil Procedure
section 1281.2 “is in essence a suit in equity to compel specific performance of
the arbitration agreement”].) Judgments and orders granting or denying
specific performance (including the amended judgment for specific
performance in this case) are reviewed under an abuse of discretion standard.
(See Petersen v. Hartell (1985) 40 Cal.3d 102, 110 [the remedy of specific
performance is a discretionary, equitable remedy, and reviewing courts apply
the abuse of discretion standard of review to the granting or denial of specific
performance].) Thus, in compelling Petrolink to complete its performance
under the amended judgment, the trial court was exercising its discretionary
authority.
Further the language of the trial court’s order clearly indicates that the
order constitutes an exercise of the court’s equitable powers; the trial court
recognized that it had to weigh equities and decide on which party the
burden of the new encumbrance on title to the property should fall, given that
this encumbrance was the result of the action of a third party and was not
within the control of either party. The court noted that the motion “raises the
question of which party should bear the burden of the cloud on title caused by
the Caltrans Action,” and ultimately determined that it is more “equitable
that Petrolink bear the burden of the Caltrans Action.”
11
We therefore conclude that the abuse of discretion standard of review
applies to the trial court’s ultimate determination that compelling Petrolink’s
performance under the amended judgment, while excusing Lantel from its
obligation under that judgment to deliver unencumbered title, is an equitable
result.5 “When a trial court makes a ruling based on equitable
considerations, the abuse of discretion standard applies on review of that
ruling.” (Lin v. Jeng (2012) 203 Cal.App.4th 1008, 1025.) “Under [the abuse
of discretion] standard, ‘[t]he trial court’s “application of the law to the facts
is reversible only if arbitrary and capricious.” [Citation.]’ ” (Cummings v.
Dessel (2017) 13 Cal.App.5th 589, 597.)6
With these appellate principles in mind, we turn to the parties’
contentions. Lantel acknowledges that the Caltrans action constitutes an
encumbrance on title, but suggests that the trial court’s ruling may be
affirmed because, in requiring Lantel to provide title free and clear of all
encumbrances, the amended judgment can be reasonably understood to refer
5 We therefore disagree with Petrolink’s contention that the only
standard of review applicable in this appeal is the de novo standard of
review.
6 A court has broad discretion in exercising its equitable powers. (See,
e.g., Abers v. Rohrs (2013) 217 Cal.App.4th 1199, 1208 [“The trial court’s
discretion to grant or deny equitable relief is broad, and we must indulge all
inferences in favor of its decision”]; Estates of Collins & Flowers (2012)
205 Cal.App.4th 1238, 1246 [“A trial court sitting in equity has broad
discretion to fashion relief”]; Richmond v. Dofflemyer (1980) 105 Cal.App.3d
745, 766 [court proceeding in equity “has broad powers and comparatively
unlimited discretion to do equity”]; Bechtel v. Wier (1907) 152 Cal. 443, 446
[“From the very nature of equity, a wide play is left to the conscience of the
chancellor in formulating his decrees, that justice may be effectually carried
out. It is of the very essence of equity that its powers should be so broad as to
be capable of dealing with novel conditions”].)
12
only to encumbrances “caused by Lantel,” or for which Lantel is to blame. We
disagree with this interpretation of the amended judgment.7 The amended
judgment imposed on Lantel an obligation to convey title to the property that
was clear of “all” encumbrances, without regard to how the encumbrance
arose or whether it was the result of Lantel’s own action or inaction or
instead, the action of a third party.
We also disagree with Lantel’s contention that “[t]he time ‘fixed for
performance’ [of the sale transaction] expired before the Caltrans Action was
initiated.”8 (Boldface, underscoring, and italics omitted.) Lantel argues that
“performance [of the agreement to sell] was fixed for October 20, 2019.”
(Underscoring and boldface omitted.) The October 20, 2019 date, Lantel
contends, is the date by which Petrolink was to deposit the $948,404
purchase funds and Lantel was to convey title to the property—i.e., the final
date that would meet the amended judgment’s requirement that the purchase
7 The trial court also appears to have implicitly rejected this
interpretation of the amended judgment. If the court had agreed with
Lantel’s interpretation, it would not have had to weigh the equities of the
situation to reach its result; instead, the court could have simply concluded
that the Caltrans action did not constitute the type of encumbrance
prohibited by the amended judgment.
8 In making this assertion, Lantel is referring to Petrolink’s argument in
its opening brief that title to property is encumbered and “bad as a matter of
law” (boldface and capitalization omitted) when a condemnation action is
filed before the time set for performance of a contract to sell land. Petrolink
asserts in its opening brief that the “trial court correctly found that the filing
of the Caltrans Action encumbered the Property,” and quotes Lansburgh v.
Market Street Railway Co. (1950) 98 Cal.App.2d 426, 430 (Lansburgh) for the
proposition that “[i]t is the condition of the title at the time fixed for
performance which determines the rights of the parties to the agreement to
sell.”
13
funds be delivered “within 45 days of the date of service of [the amended
judgment].”
In making this argument, Lantel fails to acknowledge that Petrolink’s
appeal and its posting of an undertaking, as required by the trial court,
served to stay the amended judgment and render that judgment
unenforceable until it became final. (See Code of Civ. Proc., § 917.4.)
Because a judgment is subject to possible modification or reversal through
appellate review, that judgment becomes final only after the appellate
process has been completed or the time to seek review has elapsed. (See
Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 303–304 [although
there can be other meanings of the phrase “ ‘final judgment’ ” depending on
“ ‘the purpose for which and the standpoint from which it is being
considered,’ ” typically “a judgment is not ‘final’ as long as it remains subject
to direct attack by appeal, by motion for a new trial, or motion to vacate the
judgment”].) For example, if this court had agreed with any of Petrolink’s
arguments in Petrolink II, the amended judgment could have been reversed
or modified and returned to the trial court. Under such circumstances, the
trial court could not have given effect to the amended judgment as originally
contemplated. Because a trial court cannot enforce a judgment for specific
performance that has been stayed pending appeal, that judgment cannot be
considered to have fixed a date for performance until the stay has been
lifted—i.e., once the judgment is final in that there is no possibility it will be
altered on appeal. Therefore, the time “fixed for performance” (Lansburgh,
supra, 98 Cal.App.2d at p. 430) of this transaction was no more than 45 days
after the date of service of an amended judgment that was final.9 For this
9 Even if the trial court intended for the parties to perform pursuant to
the amended judgment within 45 days of service of that judgment, as a
14
reason, we reject Lantel’s contention that the time “fixed for performance” of
the transaction at issue in this case was a date prior to 45 days after the
amended judgment in this case became final.10 It is apparent that under this
calculation of the relevant time periods, the Caltrans action was initiated
prior to the date fixed for performance of the terms of the amended judgment.
However, this does not end our inquiry into the propriety of the trial
court’s order. Although we agree with Petrolink that the filing of the
Caltrans action operated to encumber title to the property, and that, in turn,
the encumbrance resulting from the filing of the Caltrans action resulted in
Lantel being unable to fully perform pursuant to the terms of the amended
judgment, we disagree with Petrolink’s contention that the trial court was
powerless to do anything to bring this matter to a final resolution.
Petrolink argues that the trial court did not have the authority to order
Petrolink to perform its obligations under the amended judgment because
requiring Petrolink to accept encumbered title effectively modified the
amended judgment. In support of this argument, Petrolink cites to
authorities that state the general rule that a trial court may not modify a
judgment that it has issued in such a way as to alter the substantial rights of
matter of law, the taking of the appeal and the stay preventing enforcement
of the judgment meant that the court could not require that the parties
perform their obligations under the amended judgment by that date.
10 This court’s opinion affirming the amended judgment became final 30
days after the opinion in Petrolink II was issued (see Cal. Rules of Court, rule
8.264(b)(1)); Petrolink then had an additional 10 days during which it could
have sought Supreme Court review of the matter (Cal. Rules of Court, rule
8.500(e)(1)). If a party does not seek review from the Supreme Court within
this time frame, then the judgment becomes final. In this case, because
Petrolink did not seek review in the Supreme Court, the date on which the
amended judgment became final was 40 days after this court issued its
opinion in Petrolink II.
15
the parties under the original judgment. (See LaMar v. Superior Court
(1948) 87 Cal.App.2d 126, 129 (LaMar) [stating that a “court has inherent
power to correct a judgment so as to make it actually express the decision
declared by the court and such power may be exercised after appeal and
affirmance of the judgment as well as before an appeal has been finally
determined, provided that the amendment does not affect the substantial
rights of the parties”].) Petrolink also cites to authorities for the proposition
that a court may not use its “ ‘ “authority to correct clerical error” ’ ” to
“substantially modif[y] the original judgment or materially alter[ ] the rights
of the parties.” (See People v. Davidson (2008) 159 Cal.App.4th 205(Davidson); In re Candelario (1970) 3 Cal.3d 702; Leftridge v. City of
Sacramento (1941) 48 Cal.App.2d 589 (Leftridge).) We do not disagree with
these general propositions; it is usually true that a court may not revisit a
judgment that has already been issued in order to alter it in some
substantive way. However, this general rule gives way to a more specialized
rule in situations in which the judgment governs future events, such as a
judgment ordering nuisance abatement or other injunctive relief, including
orders requiring specific performance, and a change in circumstances renders
modification of the judgment necessary or appropriate.11 Specifically, in a
circumstance in which a trial court issues a judgment governing future
actions and there exists the possibility of an unforeseen change in
circumstances over which the judgment has no control, the court retains the
inherent authority to modify that judgment when such changes in
circumstances render modification necessary or appropriate. (See Rest.2d
Judgments, § 73, com. b.) Section 73 of the Restatement Second of
11 An award of specific performance is, essentially, an affirmative
injunction. (See Miller & Starr, 12 Cal. Real Est. (4th ed.) § 40:23.)
16
Judgments explains that there may be circumstances under which
modification of a judgment is appropriate even where no express reservation
of the right to modify is included in the judgment:
“Judgments governing future events. Judgments that
govern continuing or recurring courses of conduct may be
subject to modification even though the power of doing so is
not expressly provided. . . . Whether a judgment whose
modification was not expressly anticipated ought to be open
to modification depends on the nature of the controversy
resolved by the judgment and the remedy awarded. . . .
“[T]he principal factor in whether a judgment is subject to
modification is whether it contemplates an interaction
between the activity of the judgment obligor and some other
conditions over which the judgment does not exercise
control. When an unforeseen or uncontrollable interaction
occurs between the judgment obligor and the surrounding
circumstances, the balance between burden and benefit can
be disturbed. If the disturbance assumes substantial
proportion, redress by modification may be appropriate.”
(Italics altered.)
Applying the rule described in the Restatement Second of Judgments to
the factual scenario presented in this case, it is undisputed that the filing of
the Caltrans action is a condition over which the judgment exercised no
control. Specifically, the judgment contemplates an interaction between
Lantel’s obligation to deliver unencumbered title and potential circumstances
that the judgment was without any ability to control, such as a third party
encumbering the property through an eminent domain action. Further, the
balance between the burden and the benefit of the judgment was disturbed—
the filing of the Caltrans action rendered it impossible for Lantel to fulfill its
obligation under the terms of the amended judgment to deliver
unencumbered title. Thus, if the court had not modified the judgment in the
way that it did, it would have had to modify it in some other way. It was
17
simply not possible to continue to require both parties to perform as ordered
in the amended judgment.12
None of the authorities on which Petrolink relies involves a judgment
that governed future events where modification was necessary because a
change of circumstances had rendered full compliance with the judgment
impossible. (See LaMar, supra, 87 Cal.App.2d at pp. 130–131 [addressing
power of trial court to make “corrections in the judgment necessary to carry it
into effect” where court had failed to include the “language usual in a money
judgment” and this failure prevented the petitioner from being able to obtain
a writ of execution for enforcing the money judgment]; Davidson, supra,
159 Cal.App.4th at pp. 209–211 [affirming criminal judgment after a
conviction for attempted murder was reinstated after the defendant’s
conviction for murdering the same victim was reversed on appeal and the
People indicated that they were unable to proceed with a retrial]; In re
Candelario, supra, 3 Cal.3d at pp. 704–705 [concluding that trial court’s act
in amending a criminal judgment to include a prior conviction that neither
the court’s minutes nor abstract of judgment showed was found true did not
constitute a “clerical error” but was instead judicial error and not
correctable]; Leftridge, supra, 48 Cal.App.2d at pp. 591–595 [after trial court
issued preemptory writ of mandate directing Civil Service Board to
investigate and determine prevailing wage scale for work performed by
12 Even delaying performance of the judgment by either party until
resolution of the Caltrans action could have resulted in a de facto
modification of the judgment because it is not clear that Caltrans would not
take the entire property, or if it did not, what would remain of the property at
the conclusion of the Caltrans action. In addition, by the time the Caltrans
action is resolved, which will be potentially years from now, the purchase
price in the judgment would likely not be close to the value of the property at
the time the transaction could finally take place.
18
plaintiffs and the obligation was satisfied, the trial court later attempted to
modify, nunc pro tunc, the prior preemptory writ to include ruling that the
plaintiffs were owed no money, even though that issue had not been
determined in the writ proceeding].) These cases are therefore
distinguishable and do not convince us that the rule expressed in the
Restatement Second of Judgments regarding the court’s authority to modify a
judgment governing future events when those events are affected by
circumstances outside the control of the judgment should not apply in this
case. We therefore reject Petrolink’s contention that the trial court did not
have the authority to modify the amended judgment in a manner that it
deemed equitable in order to bring the matter to a close, given that changed
circumstances made it impossible for one of the parties to perform according
to the terms of the amended judgment as originally contemplated.
We next consider whether the trial court’s weighing of the equities, and
specifically, its modification of the judgment in a manner that it deemed to be
the most equitable under the circumstances, was arbitrary or capricious. We
conclude that the court’s resolution of the matter was not arbitrary or
capricious. The burden of the Caltrans eminent domain action had to fall
somewhere, and the equities did not clearly favor one party over the other.
Petrolink had been in possession of the property during the entire time that
this case was being litigated—a fact of which the trial court was well aware.
It was reasonable for the court to have considered this fact, together with the
fact that, if the parties had not been litigating this case for approximately a
decade, Petrolink would not only have been in possession of the property, but
would also have been the owner of record of the property at the time the
19
Caltrans action was filed.13 Faced with less than ideal options, the trial
court’s determination that, under these circumstances, it would be fairer to
require Petrolink to complete the transaction and take title to the property
despite it being encumbered by the Caltrans action than it would be to modify
the amended judgment in some other way, was reasonable. We therefore
affirm the court’s postjudgment order.
IV.
DISPOSITION
The order of the trial court is affirmed. The parties shall bear their
own costs on appeal.
AARON, J.
WE CONCUR:
HUFFMAN, Acting P. J.
DO, J.
13 To the extent that Lantel contends that Petrolink was required to take
encumbered title, as a matter of law, because the transaction should have
taken place as of December 26, 2011, and that as a result, that date was the
time fixed for performance of the contract, such analysis would be erroneous,
and the trial court does not appear to have employed this analysis. Instead,
the court appears to have relied on the fact that, as a matter of equity, it was
relevant to consider that Petrolink wanted to take title to the property prior
to December 26, 2011, and that if the parties had been able to agree on a
purchase price at the time Petrolink exercised its purchase option, Petrolink
would have been in possession of the property and would also have held title.
20