Guo v. Moorpark Recovery Service, LLC

Filed 2/8/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
CHUNLEI LEILA GUO,
Plaintiff and Respondent,
A159195
v.
MOORPARK RECOVERY (Alameda County
SERVICE, LLC, Super. Ct. No.
VG07304640)
Defendant and Appellant.
Appellant Moorpark Recovery Service, LLC (Moorpark) was
denied attorney fees under Code of Civil Procedure section
685.040, which authorizes the recovery of attorney fees incurred
for enforcement of a judgment when the underlying judgment
includes an award of attorney fees pursuant to a contract. 1 The
question is what the statute means by an “award” of fees. The
judgment at issue awarded reasonable attorney fees to
Moorpark’s predecessors-in-interest as prevailing parties, but it
did not set a particular amount of fees to be recovered and no
costs bill including such fees was ever filed. We conclude that
because the underlying judgment awarded reasonable attorney
fees, the court’s failure to include a specific amount of fees in the
Statutory references are to the Code of Civil Procedure
1
unless otherwise indicated.
1
judgment does not defeat section 685.040. We reverse and
remand the case for a new hearing on postjudgment attorney
fees.
I. BACKGROUND
Respondent Chunlei Leila Guo (Guo) was the sole
shareholder of Tri-Valley Golden Care, Inc. (TVGC), which
operated a day spa in Pleasanton. TVGC entered into a written
agreement to sell the spa business and its assets to Svetlana
Mazurova and her husband, who formed the corporation
Luminary Spa, Inc. (LSI). The sale was financed in part through
a promissory note in favor of Guo. Both the sales agreement and
promissory note contained provisions allowing a party prevailing
in a legal action to recover attorney fees.
After the sale of the spa business, a dispute arose between
the parties regarding, among other things, Guo’s alleged
nondisclosure of outstanding coupons issued for free spa services
and Mazurova’s alleged failure to make payments under the
promissory note. Guo and TVGC filed a civil action for breach of
contract and related claims against Mazurova and LSI, who
responded by filing a cross-complaint against Guo and TVGC.
A default was taken against TVGC on the cross-complaint
and a “JUDGMENT BY DEFAULT AGAINST CROSS-
DEFENDANT TRI-VALLEY GOLDEN CARE, INC.” was entered
for $161,085.58. 2 On November 18, 2008, the trial court denied a
Guo was initially represented by counsel but fired her
2
attorney and began representing herself in pro per to save
money. As a non-lawyer, she could not represent TVGC and a
default was taken.
2
request for attorney fees by Mazurova and LSI because Guo had
been granted leave to file an amended complaint and there was
not yet any prevailing party on the contract, as the contractual
claims were still pending. On April 10, 2009, the court filed an
“AMENDED JUDGMENT BY DEFAULT AGAINST CROSS-
DEFENDANT TRI-VALLEY GOLDEN CARE, INC. AND ALTER
EGO JUDGMENT DEBTOR CHUNLEI LEILA GUO, JOINTLY
AND SEVERALLY[.]” The order designating Guo an alter ego
was affirmed on appeal. (Guo v. Luminary Spa, Inc. (Jan. 27,
2010, A125428) [nonpub. opn.].) 3
On September 17, 2010, the court entered a “JUDGMENT
ON THE FIRST AND SECOND CAUSES OF ACTION OF
PLAINTIFF CHUNLEI GUO’S FIRST AMENDED
COMPLAINT[,]” providing that Guo would take nothing by way
of her claims. That judgment specifically stated, “Defendants
Luminary Spa, Inc. and Svetlana Mazurova are hereby deemed
the prevailing parties under Code of Civil Procedure Section 1032
and shall be entitled to recover their costs of suit and reasonable
attorney fees in this action as permitted by law.”
Mazurova and LSI assigned the judgment to Moorpark for
collection. 4 Moorpark engaged in collection efforts and brought a
3 We take judicial notice of our prior opinion in this matter,
(Chunlei Guo v. Luminary Spa (Jan. 27, 2010, A125428) [nonpub.
opn.].) (Evid. Code, §§ 452, subd. (d), 459, subd. (a).)
4An assignee of the judgment may seek attorney fees for
enforcement of the judgment under section 685.040 if the original
judgment creditor would be entitled to recovery under that
statute. (Miller v. Givens (1994) 30 Cal.App.4th 18, 22.)
3
motion for attorney fees under section 685.040. On October 23,
2018, the court entered an order denying the motion without
prejudice to Moorpark submitting further evidence of the
reasonableness and necessity of such fees. The order stated,
“Moorpark has adequately shown that the Court has the
authority to make an award of reasonable attorney’s fees
incurred in the enforcement of the Amended Judgment entered
by the court on April 10, 2009.” It granted Moorpark leave to file
a second motion for fees.
Moorpark filed a renewed motion to obtain fees under
section 685.040. The court denied the motion. Its written order
issued October 16, 2019 states, “Although the Judgment provides
that the assignors were the prevailing parties and entitled to
recover their reasonable attorney’s fees, they never filed a Motion
for Attorney’s Fees and no fees were awarded. [¶] [T]he Court
concludes that it cannot award any attorney’s fees or paralegal
fees to Moorpark because the underlying judgment did not
include an award of attorney’s fees. [Citation.] Finally, the fact
that Judge True indicated in the September 17, 2010 judgment
that Luminary Spa, Inc. and Mazurova were prevailing parties
entitled to file a motion for attorney’s fees does not change the
result in this case. In Imperial Bank v. Pim Electric, Inc. (1995)
33 Cal.App.4th 540, 558, the court held that the judgment
creditor[s’] entitlement to an award of postjudgment attorney’s
fees based on the underlying promissory note and personal
guarantees was not sufficient to support an award of fees under
Section 685.040 because no attorney’s fee award was ever made.”
4
Moorpark filed a motion to vacate this order under Code of
Civil Procedure section 663, which was denied. Moorpark timely
appealed from the October 16, 2019 order denying fees.
II. DISCUSSION
Moorpark argues the trial court erred in ruling that it was
not “awarded” fees in the underlying judgment and therefore
cannot recover fees to enforce that judgment under section
685.040. We agree.
“The usual standard of review for an award of attorney fees
is abuse of discretion. [Citations.] Here, however, the issue is
whether the trial court had the authority pursuant to section
685.040 to issue such an award . . . . This is a legal issue, which
we review de novo.” (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927,
934 (Jaffe).)
Section 685.040 provides, “The judgment creditor is entitled
to the reasonable and necessary costs of enforcing a judgment.
Attorney’s fees incurred in enforcing a judgment are not included
in costs collectible under this title unless otherwise provided by
law. Attorney’s fees incurred in enforcing a judgment are
included as costs collectible under this title if the underlying
judgment includes an award of attorney’s fees to the judgment
creditor pursuant to subparagraph (A) of paragraph (10) of
subdivision (a) of Section 1033.5.” (Italics added.) “Review of
section 1033.5, subdivision (a)(10)(A), shows that attorneys’ fees
may be recovered as costs when authorized by contract.”
(Cardinale v. Miller (2014) 222 Cal.App.4th 1020, 1025.)
5
Pursuant to section 685.040, “there are two requirements
before a motion for an award of postjudgment attorney fees may
be awarded as costs: (1) the fees must have been incurred to
‘enforce’ a judgment; and (2) the underlying judgment had to
include an award for attorney fees pursuant to Code of Civil
Procedure section 1033.5, subdivision (a)(10)(A), which provides
that attorney fees may be awarded when authorized by contract.”
(Jaffe, supra, 165 Cal.App.4th at p. 935.) If there was an “award”
of attorney fees under the contract and promissory note in this
case, section 685.040 authorized an award of attorney fees
incurred to enforce the judgment.
Although attorney fees were not awarded on the cross-
complaint in the “judgment” entered on November 18, 2008 and
amended on April 10, 2009, the “judgment” entered on September
17, 2010 on the complaint itself stated that Mazurova and LSI
were prevailing parties entitled to attorney fees. Under the “one
final judgment” rule there is generally only a single judgment
rendered on a complaint and cross-action involving the same
parties and subject matter. (American Nat. Bank v. Stanfill
(1988) 205 Cal.App.3d 1089, 1095; Lemaire v. All City Employees
Assn. (1973) 35 Cal.App.3d 106, 110.) We construe the two
“judgments” on the main action and cross-complaint as a single
judgment that included a determination that Moorpark’s
predecessors-in-interest were prevailing parties under the
contract.
Was this sufficient to trigger section 685.040 when no costs
bill was filed, and the court never ordered that a particular dollar
6
amount be paid? We conclude it was. The judgment provided:
“Defendants Luminary Spa, Inc. and Svetlana Mazurova are
hereby deemed the prevailing parties under Code of Civil
Procedure Section 1032 and shall be entitled to recover their
costs of suit and reasonable attorney’s fees in this action as
permitted by law.” Although it did not state a dollar amount, this
language was unambiguous that Moorpark’s predecessors-in-
interest were entitled to attorney fees. They were thereby
“awarded” such fees under section 685.040.
Case law interpreting section 685.040 recognizes that we
look to the judgment rather than the contract itself when
determining a party’s entitlement to fees. (Jaffe, supra, 165
Cal.App.4th at p. 935) “An award of such postjudgment attorney
fees under section 685.040 is not . . . based on the contract. As
explained in Tomaselli v. Transamerica Ins. Co. (1994) 25
Cal.App.4th 1766, 1770[], ‘When a party recovers a judgment for
breach of contract, entry of the judgment absolves the defendant
of any further contractual obligations, and the judgment for
damages replaces the defendant’s duty to perform the contract.
[Citation.] Upon entry of judgment, all further contractual rights
are extinguished, and the plaintiff’s rights are thereafter
governed by the rights on the judgment, not by any rights which
might have been held to have arisen from the contract.’ ”
(Globalist Internet Technologies, Inc. v. Reda (2008) 167
Cal.App.4th 1267, 1273–1274; see also Jaffe, supra, 165
7
Cal.App.4th at p. 934.) 5 This is sometimes known as extinction
by merger. (Jaffe, supra, 165 Cal.App.4th at p. 935.)
The judgment in this case provided for an award of fees; it
just did not specify an amount. Guo has not pointed to any policy
reason for denying fees under these circumstances. We agree
with Moorpark that it should not be penalized for the failure of
its predecessors-in-interest to file a cost bill when they did secure
a judgment that identified them as prevailing parties entitled to
reasonable attorney fees. Looking to the judgment rather than
the contract, as the merger doctrine requires us to do, the parties’
rights and obligations include an obligation by Guo to pay
reasonable attorney fees to Mazurova and LSI. No more is
required for section 685.040 to apply.
In reaching a contrary conclusion, the trial court relied on
Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540,
557 (Imperial). There, the court of appeal affirmed an order
denying attorney fees on appeal under section 685.040 where the
trial court judgment included an award of reasonable attorney
fees, but the judgment creditor had not recovered any fees via a
costs bill. (Id., pp. 544, 557–558.) Although the appellate court
concluded “the judgment itself does not award attorney fees and
5 Section 685.040 originally precluded postjudgment
attorney fees that were based on a fee provision in a contract.
(Chinese Yellow Pages Co. v. Chinese Overseas Marketing Service
Corp. (2008) 170 Cal.App.4th 868, 880–881.) The statute was
amended in 1992 to provide for postjudgment attorney fees
incurred in enforcing the judgment when the judgment itself
included an award of contractually based fees, thus abrogating
case law holding to the contrary. (Ibid.)
8
there is nothing in the record to indicate that the trial court
awarded attorney fees pursuant to Civil Code section 1717 or any
other statute” (id. at p. 558), it did not squarely address the issue
presented in this case—whether a judgment that includes an
award of “reasonable attorney fees” but not an award of a
specified amount is an “award” of fees under section 685.040.
“ ‘Cases are not authority for propositions not considered.’ ”
(Emeryville Redevelopment Agency v. Harcros Pigments, Inc.
(2002) 101 Cal.App.4th 1083, 1102.) To the extent the opinion in
Imperial is inconsistent with our decision today, we respectfully
disagree with its implicit conclusion that a judgment awarding
reasonable attorney fees is not an award of attorney fees for
purposes of section 685.040.
We take no position on whether the fees claimed by
Moorpark to enforce the judgment were necessary or reasonable
or whether the request for various fees met the criteria of section
685.070, which places various restrictions on a motion for
postjudgment fees. We hold only that it should not have been
denied fees for enforcement of the judgment based solely on the
determination that no fees were awarded in the underlying
judgment.
II. DISPOSITION
The October 16, 2019 order denying postjudgment attorney
fees is reversed. The matter is remanded for further proceedings
consistent with this opinion. Appellant Moorpark is awarded its
costs on appeal.
9
NEEDHAM, J.
We concur.
SIMONS, Acting P.J.
SELIGMAN, J. *
Guo v. Moorpark Recovery Service / A159195
* Judge of the Superior Court of Alameda County, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
10
A159195 / Guo v. Moorpark Recovery Service
Trial Court: Superior Court of Alameda County
Trial Judge: Honorable Stephen M. Pulido
Counsel: Law Offices of James Studer; James T. Studer and
David R. LeRoy for Defendant and Appellant.
Chunlei Leila Guo, in pro. per., for Plaintiff and
Respondent.
11