Aquino v. Klein CA2/3 ( 2021 )

Filed 4/8/21 Aquino v. Klein CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
LEILA AQUINO, B301186
Cross-complainant and (Los Angeles County
Appellant, Super. Ct. Nos. BC584799,
BC615815)
v.
HARRY KLEIN, as Trustee,
etc.,
Cross-defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Affirmed.
Law Office of Nick A. Alden and Nick A. Alden for Cross-
complainant and Appellant.
Law Offices of Timothy L. McCandless and Timothy L.
McCandless for Cross-defendant and Respondent.
____________________
This case arose after friends, who went into business
together, became romantically involved and then had a falling
out. Leila Aquino and her company, Synergy Financials &
Management Services, Inc. (together Aquino) obtained a jury
trial judgment in her favor. Having won the war, Aquino seeks to
refight earlier battles by challenging several intermediate orders
on appeal. She also contests the amended judgment awarding
her attorney fees. We affirm three of the challenged orders and
conclude that we may not review the merits of a fourth.
BACKGROUND
Two decades ago, Thomas J. Shayman hired Aquino to
provide financial advice, accounting, bookkeeping, and litigation
support for his businesses. Shayman is the lifetime beneficiary of
the Thomas J. Shayman Generation Skipping Exemption Trust
(the trust), an irrevocable trust. Harry Klein is the successor
trustee. Shayman and Aquino’s personal and professional
relationship began falling apart in 2013. Aquino’s two-decades’
professional relationship with Klein was a casualty of the
breakup. The parties attempted to resolve their financial
entanglements and litigation ensued. Having ultimately
recovered less at trial than she wanted, Aquino has turned her
sights on Klein in this appeal. Shayman is not a party to the
appeal.
This litigation began with the complaint filed against
Aquino by Burbank Management Group, Inc., doing business as
Canyon Grille at Debell (BMG), a company owned by the trust.
Aquino cross-complained against Shayman, Klein as trustee of
the trust, and BMG. Of the complaint’s five causes of action, the
only one at issue on appeal was alleged against all three cross-
defendants, and sought damages for breach of an agreement to
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give Aquino 50 percent of BMG’s stock in payment for her
professional services, and failure to repay her for loans she made
to the trust on behalf of BMG.
Klein, as trustee of the trust,1 filed a complaint against
Aquino (case No. BC615815) that was consolidated with this
action. The operative version alleged that Klein executed a note
in favor of Aquino secured by a mortgage on the trust’s real
property in reliance on Aquino’s allegedly false representation
that she would provide support for the amount of the debt.
After a five-day trial, the trial court granted Aquino’s
motion for directed verdict on all of Klein’s complaint, and so she
prevailed on that complaint.
The trial court granted Klein’s motion for directed verdict
as to all causes of action alleged against him in Aquino’s cross-
complaint, except the fifth for fraud. The jury returned a special
verdict on that cause of action finding in Aquino’s favor, but
awarded her no damages against Klein.
Aquino prevailed against Shayman and obtained an award
of $422,669.93 plus costs on her various claims against him.
Aquino timely appealed from the judgment.
She then moved for in attorney fees for prevailing on
Klein’s complaint. The trial court awarded her half of her
request and amended the judgment to reflect that amount. We
allowed Aquino to file a supplemental brief addressing the fee
award.
Additional relevant facts will be provided below.
1 Hereinafter, we shall refer to Klein in his capacity as
trustee as Klein, unless a distinction is necessary.
3
DISCUSSION
I. No error in granting Klein relief from default
A. Facts
Aquino obtained Klein’s default for failure to answer her
cross-complaint. Klein moved to set aside the default under Code
of Civil Procedure2 section 473, subdivision (b), and attached the
declaration of defense attorney Arthur Hodge. Hodge declared
that the entry of Klein’s default “was the result of [his] mistake,
inadvertence, surprise, or neglect, as described in section 473[,
subd.] (b)” as it was “solely the result of failures on [his] own part
to take action in response to” service of Aquino’s cross-complaint
on Klein. Aquino’s opposition pointed to the unreasonableness of
Hodge’s actions. The trial court granted the motion.3
B. Review and merits
Appealability is a jurisdictional prerequisite that we must
raise on our own initiative whenever a doubt exists about
whether an order or judgment falls within section 904.1.
(Jennings v. Marralle (1994) 8 Cal.4th 121, 126–127.) An order
granting a motion to set aside a default before a judgment has
been entered is not appealable. (Davis v. Taliaferro (1963) 218
2All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
3 The minute order cited by Aquino did not grant the
motion. Klein quotes from an order purportedly dated July 28,
2016, but did not augment the appellate record to include it. We
obtained a copy of the July 29, 2016 order setting aside Klein’s
default from the superior court and, on our own motion, take
judicial notice of it.
4
Cal.App.2d 120, 122.) However, intermediate rulings are
generally reviewable on an appeal from the final judgment by the
party adversely affected by them. (§ 906; Johnson v. Alameda
County Medical Center (2012) 205 Cal.App.4th 521, 531.) Aquino
was adversely affected by the order setting aside Klein’s default.
It resulted in a final outcome in Klein’s favor as he prevailed at
trial on Aquino’s cross-complaint. Hence, we may reach the
merits of Aquino’s appellate challenge to the set-aside order.
Aquino contends that Klein’s motion to set aside the default
was untimely filed one day more than six months after entry of
the default. (Gov. Code, § 6803.) However, the six-month period
in which to file a motion under section 473, subdivision (b)
commences at different times depending on whether the motion
seeks discretionary or mandatory relief. (Weil & Brown, Cal.
Practice Guide: Civil Procedure Before Trial (The Rutter Group
2020) ¶¶ 5:366 to 5:368.) Aquino’s appellate contentions assume
that Klein moved for discretionary relief. But, although Klein’s
motion did not specify the provision, attorney Hodge attached his
declaration falling on his sword and declaring that the default
was caused by his neglect, not excusable neglect. Therefore, the
motion was premised on the mandatory provision of section 473,
subdivision (b). (Cf. SJP Limited Partnership v. City of Los
Angeles (2006) 136 Cal.App.4th 511, 517 [mandatory relief
available when neglect is inexcusable]; compare Comunidad en
Accion v. Los Angeles City Council (2013) 219 Cal.App.4th 1116,
1132 [test for discretionary relief requires showing of excusable
error].)
The time limit for mandatory relief, which is based on an
attorney affidavit of fault, “does not begin to run until ‘entry of
judgment.’ ” (Weil & Brown, Cal. Practice Guide: Civil Procedure
5
Before Trial, supra, ¶¶ 5:305.1 & 5:368.1; see Sugasawara v.
Newland (1994) 27 Cal.App.4th 294, 297.) The appellate record
does not show that a default judgment was entered against Klein,
and his motion stated that judgment had not yet been entered.
The motion for relief from default was timely. (Weil & Brown,
Cal. Practice Guide: Civil Procedure Before Trial, supra,
¶ 5:305.2 [no deadline if no judgment entered].)
As section 473, subdivision (b) “does not require explication
of reasons as a prerequisite to mandatory relief” (Martin Potts &
Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 438),
we reject Aquino’s next contention that attorney Hodge’s conduct
was not reasonable. The “purpose of the mandatory relief
provision under section 473, subdivision (b) is achieved by
focusing on who is to blame, not why.” (Id. at p. 439.) Klein’s
motion to set aside his default was timely and accompanied by
Hodge’s sworn declaration of his fault under the mandatory
provision, with the result that the trial court had no discretion to
refuse relief. (Carmel, Ltd. v. Tavoussi (2009) 175 Cal.App.4th
393, 399.)4
4 Aquino also argues that Klein did not include the
requisite proposed answer with his motion to set aside the
default, a precondition for obtaining relief. (§ 473, subd. (b).).
This requirement is not jurisdictional (Weil & Brown, Cal.
Practice Guide: Civil Procedure Before Trial, supra, ¶ 5:305.10),
and the record does not indicate that Aquino raised the pleading’s
absence in the trial court.
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II. No error in denying Aquino’s summary adjudication motion
A. Facts
Aquino moved for summary adjudication of the first cause
of action in her cross-complaint seeking damages for breach of
agreement to give her BMG stock and for repayment of loans she
made to the trust for BMG. Her motion valued her share of the
stock at $645,498 based on an expert’s appraisal and asked for
$57,352 for the loans.
The only facts in dispute were the value of the stock,
Aquino’s contention that Klein and Shayman were equitably
estopped to deny her valuation for failure to produce financial
documents during discovery, and whether the trust and
Shayman, rather than BMG, possessed the financial documents.
The trial court denied Aquino’s motion finding a triable issue of
material fact. Aquino asks us to reverse that order and to
remand the case for further proceedings.
B. Review and merits
An order denying summary adjudication is normally
reviewable by writ petition and Aquino did not seek a writ. (See
generally § 437c, subd. (m)(1).) However, a writ petition is not
the exclusive method of obtaining appellate review. (Weil &
Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra,
¶ 15:96.2.) The order denying a motion for summary adjudication
is reviewable under certain circumstances on appeal from a final
judgment entered after a trial (§ 906; Federal Deposit Ins. Corp.
v. Dintino (2008) 167 Cal.App.4th 333, 343), but the appellant
risks being unable to demonstrate prejudicial error when the
same issue was decided adversely to the appellant both on denial
of the motion and after trial on the merits (Federal Deposit Ins.
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Corp., at p. 343). The reason is that a decision based on less
evidence—presented on summary judgment—should not prevail
over a decision based on more evidence—presented at trial, and
where witnesses were cross examined, seen, and appraised.
(Gackstetter v. Frawley (2006) 135 Cal.App.4th 1257, 1269.)
Aquino lost her motion for summary adjudication of the first
cause of action in her cross-complaint. She prevailed at trial on
the merits of that same cause of action, although the jury
awarded her less than the amount she had asked for in the
earlier motion: $50,000 for the stock and $21,000 for the loans.
Thus, she is technically aggrieved, and we may review the order.
(§ 906.)
Our de novo review (Edward Fineman Co. v. Superior
Court (1998) 66 Cal.App.4th 1110, 1116), applying the same steps
as the trial court does in evaluating a summary adjudication
motion (Orrick Herrington & Sutcliffe v. Superior Court (2003)
107 Cal.App.4th 1052, 1056–1057), reveals that Aquino did not
carry her burden as moving party to prove each element of her
breach of contract cause of action and so the burden never shifted
to cross-defendants to show a triable issue of material fact (see
generally § 473c, subd. (p)(1)).
The pleadings frame the issues to be considered on a
motion for summary adjudication. (Wattenbarger v. Cincinnati
Reds, Inc. (1994) 28 Cal.App.4th 746, 750.) Aquino’s cross-
complaint sought $30,352 for the loans she made on BMG’s
behalf, but her motion sought $57,352. As for the value of the
stocks, Aquino relied on her expert’s appraisal submitted with
her motion. The appraisal valued the stock as of June 2014, and
the report included the caveat that it was “based on limited
documents, including interim financial statements for a short
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period.” (Italics omitted.) Aquino’s summary adjudication
motion argued that cross-defendants were equitably estopped to
deny that valuation for failure to produce financial documents
during discovery. Yet, the trial court had denied her motion to
compel, and Aquino has not demonstrated on appeal that the
denial was an abuse of discretion. (People ex rel. Harris v. Sarpas
(2014) 225 Cal.App.4th 1539, 1552.) Even had the trial court
exercised its discretion (City of Hollister v. Monterey Ins. Co.
(2008) 165 Cal.App.4th 455, 483) and estopped cross-defendants
from challenging her appraisal, summary adjudication was
properly denied as the appraisal report stated it did not rely on
generally accepted accounting principles, with the result it did
not establish Aquino’s damages.
III. We may not review the trial court’s order denying Aquino’s
motion for sanctions.
Aquino filed a motion to strike Klein’s operative complaint
“pursuant to . . . sections 128.5 and 128.7,” and requested $16,060
in sanctions on the grounds that the complaint contained false
allegations, was legally and factually meritless, and was filed for
the improper purpose of harassing her. The trial court denied the
motion to strike and request for sanctions. On appeal, Aquino
contends that the order was legally erroneous.
We may not review the order. “ ‘The clear import of
[section 906] is to allow an appellate court to review rulings,
orders, or other decisions that led up to, or directly related to, the
judgment or order being appealed to the extent they substantially
affected the rights of one of the parties to the appeal.’ ” (Lopez v.
Brown (2013) 217 Cal.App.4th 1114, 1135, italics added.)
Aquino was not substantially affected by the order denying
her motion to strike because as she acknowledges, she prevailed
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at trial on Klein’s operative complaint by obtaining a directed
verdict against him. Nor was Aquino adversely affected by the
trial court’s denial of her request for sanctions. Section 128.7
gives the trial court discretion to impose sanctions. (Kojababian
v. Genuine Home Loans, Inc. (2009) 174 Cal.App.4th 408, 422.)
Section “128.7 sanctions should be ‘made with restraint’ [citation]
and are not mandatory even if a claim is frivolous.” (Peake v.
Underwood (2014) 227 Cal.App.4th 428, 448.) Aquino was never
guaranteed to be awarded sanctions even had the court found her
motion to strike had merit.5
IV. No abuse of discretion shown in the award of attorney fees
Aquino appeals from the amended judgment awarding her
$192,000.50 in attorney fees as the prevailing party on Klein’s
complaint on the note and trust deed. She initially sought
$458,007.63, based on 866.22 hours at an hourly rate of $500.
The trial court asked for further justification for the attorney
fees. Aquino’s supplemental brief reduced her request to
$386,355.02, based on 776.1 hours worked, which she argued
reflected the difficult nature of the case and the parties’
“aggressive litigation” style.
5 Aquino states that should she prevail on appeal, and to
avoid further appeals, she would like this court to determine that
Klein, individually, was the real plaintiff as the alter ego of the
trust and should be held personally liable for filing a frivolous
complaint. However, after entry of judgment in this case, the
trial court denied Aquino’s motion to add Klein individually as a
judgment debtor. We denied her permission to brief the trial
court’s postjudgment order because that order was separately
appealable, and she did not appeal it. (See generally § 904.1,
subd. (a)(2).)
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We review the trial court’s ruling on the propriety of an
attorney fees award for abuse of discretion. (Carpenter v. Jack in
the Box Corp. (2007) 151 Cal.App.4th 454, 460.) The
“ ‘ “ ‘experienced trial judge is the best judge of the value of
professional services rendered in his court, and while his
judgment is of course subject to review, it will not be disturbed
unless the appellate court is convinced that it is clearly
wrong[’]—meaning that it abused its discretion. [Citations.]” ’
[Citations.] Accordingly, there is no question our review must be
highly deferential to the views of the trial court.” (Nichols v. City
of Taft (2007) 155 Cal.App.4th 1233, 1239.) “An abuse of
discretion is shown when the award shocks the conscience or is
not supported by the evidence.” (Jones v. Union Bank of
California (2005) 127 Cal.App.4th 542, 549–550.)
Aquino contends that the award of half of the amount she
ultimately requested was an abuse of discretion. However, the
judge who awarded the fees here was the same judge who
presided over the pretrial activity. He was well aware of the
complexity of the issues, the meritorious nature of the motions,
and is familiar with the time involved in motion and trial
practice. The judge clearly scrutinized the request, as he asked
for further justification. We cannot say that the attorney fees
award shocks the conscience.
Aquino next argues that the trial court denied her due
process by failing to give reasons for its ruling because it
prevented her from demonstrating error on appeal. But none of
the applicable court rules and statutes requires the court to state
its reasons for ruling on an attorney fees motion. (See §§ 1032,
1033.5; Civ. Code, § 1717; Cal. Rules of Court, rule 3.1702.) Had
she desired an explanation, Aquino should have asked the court
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for one. She cites Herrington v. County of Sonoma (9th Cir. 1989)
883 F.2d 739 and Moreno v. City of Sacramento (9th Cir. 2008)
534 F.3d 1106, which are inapt. We are not bound by decisions of
the federal courts of appeal (People v. Williams (2013) 56 Cal.4th
630, 668) and those cases concern the right to fees in federal civil
rights litigation, not under state law in a suit between private
parties.6
DISPOSITION
The judgment is affirmed. Each party to bear its own costs
on appeal.
NOT TO BE PUBLISHED.
SALTER, J.*
We concur:
EDMON, P. J. EGERTON, J.
6 Finally, Aquino argues that the court erred in failing to
enhance her attorney fee award to compensate for the fact that
she retained her attorney on a contingency fee basis. Her brief
merely reasserts the request for an enhancement she made in the
trial court. The request was apparently denied, and she does not
show how that denial was an abuse of discretion.
* Judge of the Orange County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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