Waterwood Enterprises v. City of Long Beach CA2/1

Filed 4/26/23 Waterwood Enterprises v. City of Long Beach CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
WATERWOOD ENTERPRISES, B316269
LLC,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. NC060787)
v.
CITY OF LONG BEACH,
Defendant and Respondent.
APPEAL from orders of the Superior Court of Los Angeles
County, Mark C. Kim, Judge. Affirmed with instructions.
Stuart Kane, Donald J. Hamman and Eve A. Brackmann
for Plaintiff and Appellant.
Amaro Baldwin, Michael L. Amaro and Sanaz Cherazaie
for Defendant and Respondent.
____________________________
In Hsu v. Abbara (1995) 9 Cal.4th 863 (Hsu), our Supreme
Court held: “[I]n deciding whether there is a ‘party prevailing on
the contract,’ the trial court is to compare the relief awarded on
the contract claim or claims with the parties’ demands on those
same claims and their litigation objectives as disclosed by the
pleadings, trial briefs, opening statements, and similar sources.
The prevailing party determination is to be made only upon final
resolution of the contract claims and only by ‘a comparison of the
extent to which each party ha[s] succeeded and failed to succeed
in its contentions.’ [Citation.]” (Id. at p. 876.)
In the prior appeal involving the same parties—Waterwood
Enterprises LLC (Waterwood) and the City of Long Beach (the
City)—we reversed the trial court’s finding that the City was the
prevailing party. Relying on Hsu, we remanded the case for the
trial court to determine in its discretion whether Waterwood
prevailed on the parties’ contract or whether there was no
prevailing party. (Waterwood Enterprises, LLC v. City of Long
Beach (2020) 58 Cal.App.5th 955 [Waterwood I].) We remanded
the case to the trial court because Waterwood, “the ostensibly
prevailing party receive[d] only a part of the relief sought.’
[Citation.]” (Hsu, supra, 9 Cal.4th at p. 875.)
Upon remand, a judicial officer (Judge Mark Kim) different
from the one who presided over trial (Judge Patrick Madden),
found there was no prevailing party. Waterwood appeals again,
arguing that the trial court (Judge Kim) abused its discretion in
finding no prevailing party. In doing so, Waterwood emphasizes
the evidence most favorable to it and ignores the evidence
supporting the trial court’s decision and thus also ignores our
highly deferential standard of review. We reject Waterwood’s
argument that the trial court (Judge Kim) relied solely on
2
improper criteria, namely the first judicial officer (Judge Patrick
Madden)’s statement of decision, portions of which we rejected in
Waterwood I. Ultimately, Judge Kim agreed with Judge
Madden’s view that Waterwood did not achieve its litigation
objectives as disclosed from the sources approved in Hsu—a
finding consistent with our instructions in Waterwood I.
Because Waterwood was not the prevailing party in the
underlying litigation, it is not entitled to attorney fees incurred
on appeal in pursuing Waterwood I. Fees based on prevailing
party status are awarded to the party prevailing in the entire
lawsuit, not a discrete portion of it. In contrast, the trial court
erred in not entering judgment on Waterwood’s unopposed costs
from Waterwood I, as described in Waterwood’s memorandum of
costs.
The trial court’s orders denying Waterwood attorney fees
incurred in the trial and appellate courts are affirmed. The trial
court is directed to enter judgment on costs in favor of
Waterwood.
BACKGROUND
1. Events preceding trial
In 2005, the City and Waterwood entered into a 10-year
lease. The lease includes an attorney fee provision.
On August 29, 2016, Waterwood filed a complaint alleging
a single cause of action for breach of contract. Waterwood alleged
the City failed to pay for repairs to the roof, rendered the HVAC
(heating, venting, and air conditioning) system inoperable,
damaged the concrete and fence on the property, broke an
electrical conduit, allowed grass to grow, which damaged the
asphalt, and allowed grass to grow in areas containing concrete.
3
Waterwood further alleged that it was damaged “in an amount
according to proof, but which is believed to be in excess of
$150,000.”1 Waterwood additionally sought payment of attorney
fees and costs.
In its answer, the City generally denied the allegations and
asserted 18 affirmative defenses.
The parties’ joint statement of the case recited: “When
Plaintiff [Waterwood] purchased the property from Defendant
[the City] in 2005, Plaintiff leased it back to Defendant under a
written lease that expired in October 2015, after a period of
10 years. [¶] Plaintiff contends that according to the Lease,
Defendant City of Long Beach, had certain obligations to
maintain and repair the property, and when it vacated,
Defendant was required to deliver possession ‘broom clean and in
the same order and condition’ as the property was in at the outset
of the lease, ‘reasonable wear and tear excepted.’ Plaintiff
Waterwood also contends that the City did not properly maintain
and repair the property during the ten-year term of the lease and
return it in the same condition as the property was in at the
outset of the lease, reasonable wear and tear excepted.
Accordingly, Plaintiff alleges that the City breached the lease
terms, and seeks damages for the repairs and replacement
necessary to return the property to the same condition as it was
in at the outset of the lease, reasonable wear and tear excepted.”
The joint statement also stated: “The City contends that it
performed all of the repairs and maintenance required under the
lease, and any repairs or maintenance that were not so completed
1 In its government claim filed with the City, Waterwood
asserted its damages were $137,950.56.
4
were the result of reasonable wear and tear over the 10 year
lease term. Defendant denies that it breached the lease terms.”
2. Jury trial
Judge Patrick Madden presided over a 10-day trial. Our
record of the trial proceedings is limited. For example, we do not
have transcripts from the jury trial that led to our first opinion.
As explained in our Discussion, we reject the City’s efforts now to
augment the record with transcripts the trial court did not have
in determining, on remand, that there was no prevailing party.
The parties appear to agree that at trial, Waterwood’s
expert indicated the City owed Waterwood $224,000 in damages.
Citing that expert’s estimate summary reflected on a chart
attached to the expert’s deposition, the City points out
Waterwood’s expert claimed the City owed Waterwood $224,150
consisting of work on the masonry structure, roof, heating,
venting, and air conditioning, electrical issues, paving, concrete,
fences, gates, and walls. The chart does not further describe the
repairs Waterwood claimed were the City’s responsibility. In
addition to the costs for these items, Waterwood’s expert also
opined that the City was responsible for contractor’s overhead,
contractor’s profit, insurance, a bond, a “contingency on
construction costs,” construction management, architect design,
engineering design, testing inspection and permit fees.
(Capitalization omitted.) Citing the same estimate summary
chart, Waterwood acknowledges that its “expert claimed at trial
to [sic] hard costs of $170,000, and with soft costs and
contingency, to be $224,000.” (Italics added.)
The jury found in Waterwood’s favor and awarded $45,050
in damages. In a special verdict, the jury answered the following
question affirmatively: “Did Defendant, City of Long Beach,
5
breach the written lease contract?” The jury concluded the
breach was a substantial factor in causing Waterwood’s damages.
The special verdict did not address the City’s affirmative
defenses.
3. The trial court awards costs to Waterwood and
attorney fees to the City
After trial, both parties filed motions for attorney fees
based on the attorney fee provision in the lease. The trial court
(Judge Madden) evaluated the parties’ settlement offers to assess
which party achieved its litigation objectives. The trial court
described the contested items at trial as follows: “The significant
contested items were plaintiff’s contention that: (a) defendant
was required to remove and replace an entire roof on one of the
buildings; (b) defendant was required to replace two air
conditioners; and (c) defendant was required to tear up and
replace all of the existing asphalt parking lot on the property and
nearby concrete pads. As to these items, it was defendant’s
argument that the roof did not require replacement, because any
deterioration was due to reasonable wear and tear. As to the two
air conditioners, defendant argued that neither air conditioner
required replacement. As to the condition of the asphalt,
defendant admitted that plaintiff was entitled to recover some of
its claimed damages to repair the asphalt, because some of the
asphalt had deteriorated based on use that was beyond any
reasonable wear and tear; however, defendant contended the City
was not liable for the replacement cost of the entire parking lot or
the concrete pads.”
The trial court stated, “[E]xamining the parties’ position
during the trial, the City clearly succeeded on its claims and
Waterwood did not. . . . Simply stated, the jury’s verdict was very
6
good news to the City and terrible new[s] for Waterwood. Based
on the litigation objectives of the parties, defendant is clearly the
prevailing party.” Pursuant to Civil Code section 1717 (section
1717), the court awarded the City attorney fees in the amount
$172,375. With respect to costs, the court found Waterwood was
the prevailing party and ordered the City to pay Waterwood’s
costs in the amount of $19,905.04.
The amended judgment provided: “Waterwood Enterprises
LLC shall recover from Defendant, The City of Long Beach,
interest on the damages of $45,050 at the rate of 10% per
annum.” The court added $1,987.06 in interest.
“The City of Long Beach shall pay to plaintiff Waterwood
Enterprises LLC on all the above amounts the rate of 10% per
annum from and after the date of the verdict until orders are
entered on all post-trial motions, including motions for attorneys’
fees and to tax costs, if any, and 7% per annum thereafter until
the Judgment is paid in full.”
4. Prior appeal
Waterwood appealed, challenging the award of attorney
fees to the City. We concluded the trial court erred in awarding
the City attorney fees. (Waterwood I, supra, 58 Cal.App.5th at
p. 958.) We explained that under section 1717, upon remand, the
trial court had discretion to find no prevailing party or to find
that Waterwood was the prevailing party. (Waterwood I, at
p. 959.) We held the trial court erred inter alia in evaluating
relative settlement offers in finding the City was the prevailing
party. We directed the trial court, on remand, to “compare the
relief awarded on the contract claim or claims with the parties’
demands on those same claims and their litigation objectives as
disclosed by the pleadings, trial briefs, opening statements, and
7
similar sources.’ [Citation.]” (Id. at p. 965.) We further
explained Waterwood did not achieve a “ ‘ “simple unqualified
win” ’ ” because it “did not recover all its damages on its contract
claim against the City . . . .” (Ibid.) We concluded the trial court
(Judge Madden) abused its discretion in awarding attorney fees
to the City because it relied on unsupported facts and improper
legal criteria, and failed to consider the controlling legal
standard. (Id. at pp. 966–970.) We also acknowledged, “[T]here
was only one contract claim, and Waterwood was the only party
that obtained relief,” as well as the fact that the jury “rejected all
its [the City’s] affirmative defenses.” (Id. at p. 971.) Accordingly,
the City could not be the prevailing party, but on remand, the
trial court would have discretion to find either that Waterwood
was the prevailing party or there was none. (Id. at p. 972.) We
reversed the judgment only insofar as it required Waterwood to
pay the City’s attorney fees. (Ibid.) Finally, we directed that
Waterwood was entitled to its costs on appeal. (Ibid.)
5. Pursuant to Waterwood’s Code of Civil Procedure
section 170.6 challenge to Judge Madden, the case
was reassigned
Upon remand, Waterwood exercised a peremptory
challenge against Judge Madden and the case was reassigned to
Judge Kim. Waterwood then filed two separate motions, one of
which requested attorney fees and costs for Waterwood I, and the
other requested attorney fees and costs for the litigation in the
trial court.
8
6. Waterwood’s motion for attorney fees and costs on
appeal
In its motion requesting attorney fees and costs incurred in
Waterwood I, Waterwood argued, “Plaintiff is entitled to recover
all of its reasonable attorneys’ fees and costs incurred on appeal,
and the only significant issues to be decided on this motion are
the amount of the award.” Waterwood contended because in
Waterwood I, this court awarded it costs, the trial court must
“affirm that Plaintiff was the prevailing party on the appeal and
determine the amount of fees and costs to award.”
Waterwood sought attorney fees and costs totaling $71,461
plus an additional $10,000 in estimated fees for the cost of
litigating the fee motion. According to Waterwood, “The rates
charged and hours spent were reasonable as demonstrated by the
evidence before the Court, including bills and descriptions of the
work performed every day.” Waterwood also attached to its
motion a memorandum of costs on appeal indicating that the
costs totaled $6,102.52.
7. Waterwood’s motion for attorney fees based on
litigation in the trial court
In its motion requesting attorney fees and costs incurred in
the trial court, Waterwood requested $347,719.50 in fees and
$4,246.33 in costs not previously considered. Waterwood argued
it was the prevailing party reasoning that the complaint alleged a
single cause of action for breach of lease, which caused damages
in an amount according to proof, but believed to be in excess of
$150,000. The answer alleged 18 affirmative defenses, all of
which the jury rejected.
9
Waterwood represented that it asked the jury for $235,000
“to cover past and future repairs,” and that the City asserted
nothing was due. Waterwood cited only its attorney’s declaration
in support of this contention. Waterwood’s counsel averred, “At
opening statement, although I do not have a transcript, my notes
reflect that I planned to say that Waterwood had spent $13,568
repairing the roof, $26,788 repairing the HVAC system, $4,000 on
the collapsed wall, $10,063 for the skylight, $70,055 on the
asphalt, and $6,584 on the concrete, and with remaining repairs
the eventual total repair cost would be $235,000.” (Italics added.)
In the same declaration, Waterwood’s counsel stated,
“Defendant denied breaching the lease, denied any obligation to
do more repair or maintenance than it did, and denied causing
damages or that Plaintiff suffered damages by any breach.”
According to counsel, “In opening statement, according to my
notes and my recollection, Defendant denied any liability
whatsoever [and] suggested that it was entitled to a defense
verdict. I do not have a transcript of opening statement or
closing arguments.”
Waterwood’s counsel described the 10-day trial as follows:
“[W]e appeared for trial on April 23 and 24 for pretrial matters,
conducted jury selection and opening statements on April 25, and
presented the testimony of our client’s principal, Jerry Nininger,
on April 26th. On April 27, we completed the testimony of
Mr. Nininger, and the Court received testimony from
Mr. Prudencio Rivera (the current tenant), and Sgt. Daniel
Barkwill of the Long Beach Police Department (who was taken
out of order pursuant to stipulation). On April 30 we completed
the testimony of Mr. Rivera and received the testimony of Elena
Barnett (a City employee who worked at the Property) and Steve
10
Abraham (Waterwood’s realtor). Trial on May 1 was devoted to
the expert testimony of Plaintiff’s industry expert John Gebhardt,
and the City’s engineering expert Mark Reiser (taken out of turn
to accommodate his schedule). We attended trial on May 2 when
Plaintiff’s construction and cost expert Pete Fowler testified, and
on May 3 when the City called City Engineer Sean Crumbly, Tom
Wilkinson, Matthew Brookes, and Kurt Schilling. The parties
gave their closing arguments on May 7.”
Waterwood requested that the “Court [Judge Kim] award
Plaintiff all of its attorney fees and costs through trial, in the
amount of $347,719.50 plus additional costs from the trial that
have not previously been considered and ruled upon in the sum of
$4,246.33 through February 2019, [and] attorney’s fees and costs
incurred to bring and argue this motion, and interest on all of the
foregoing.”
In its motion, Waterwood argued it was the prevailing
party because, “even where . . . Plaintiff requested more than it
recovered, . . . that can be only a small part of the analysis, and
cannot overcome the fact that the City wrongly denied any
liability.” Waterwood also argued that its attorney fees were
reasonable.
Waterwood subsequently amended its motion to request
$361,573.50 in attorney fees, $4,246.33 in costs incurred prior to
Waterwood I, and an additional $3,512 to file its reply and argue
the fee motion.
8. The City’s opposition
The City argued that Waterwood was not the prevailing
party and that Waterwood’s fees were unreasonable. According
to the City, the trial court had already concluded that Waterwood
did not obtain the greater relief at trial. The City argued that
11
Waterwood “fallaciously impl[ies] that the Court of Appeal found
it to be the prevailing party.” The City also contended it
“achieved its main pre-litigation and litigation objective: to pay
Plaintiff for some, but not all, of the claimed repairs.” It asserted
the “wisdom of the trial judge, who presided over the 10-day trial
and heard all of the parties’ evidence and argument is presumed
to be correct.” The City added, “Plaintiff’s attorney’s fees
request—which is nearly 10 times the amount of the jury
award—is not only unreasonable, it is unconscionable.” (Boldface
omitted.)
9. The new trial court held a hearing
At a hearing on Waterwood’s motions before Judge Kim,
Waterwood argued, “[T]here is now no question that [the City]
did breach the lease. And, yet, the City at all times took the
position that it did not breach the lease. It said it was not liable
for any damages whatsoever, and the only way . . . the plaintiff in
this case could recover anything close to what it was entitled to
was to go to trial.” Counsel further contended Waterwood was
not “disqualif[ied]” from being the prevailing party because it
recovered less than the amount requested and Waterwood had
recovered a net monetary relief. Waterwood’s counsel also
counseled that the trial court could not adopt Judge Madden’s
statement of decision because this court had reversed Judge
Madden’s finding that the City was the prevailing party and the
resulting incorrect award of attorney fees to the City in
Waterwood I.
In response to the latter argument, the trial court stated,
“[T]he court will not consider factors that Judge Madden
consider[ed] which the Court of Appeal held to be [an] abuse of
power. Namely, the court will not consider [evidence] relating to
12
the City making a [$]40,000 998 offer. The court will not consider
that the City had admitted that it needed to make certain repairs
and that the jury by circumstantial evidence accepted that.
Third, that the court [Judge Madden] found the ultimate recovery
was so shy of the amount requested at trial as to be a win. The
court [Judge Kim] will not consider that in determining whether
or not plaintiff was the prevailing party. [¶] However, the court
will consider other evidence and other findings made by Judge
Madden to decide whether or not, one, if there is a prevailing
party or if there is no prevail[ing] party . . . .”
10. Judge Kim denies both motions for attorney fees
In an order denying Waterwood’s motion for attorney fees,
the trial court stated, “Plaintiff, in its complaint, sought to
recover damages in the amount of $150,000. [Citation.] While
the exact mechanism is not clear, it appears all parties agree
Plaintiff ultimately sought damages in the amount of $235,000 at
trial.” On appeal, the appellate court did not find Waterwood
was the prevailing party but instead “indicated the trial court has
the discretion, on remand, to determine EITHER (a) Plaintiff is
the prevailing party, OR (b) there is NO prevailing party. The
Court of Appeal[ ] articulated the standard to be applied in
making this determination.”
The court cited with deference Judge Madden’s finding that
the City “ ‘clearly succeeded on its claims at trial, while
Waterwood did not . . . .’ ” “This Court [Judge Kim] agrees that,
under the circumstances, Plaintiff did not achieve its main
litigation objective, and should not be declared the prevailing
party. As expressly permitted by the Court of Appeal[ ], this
Court finds there is no prevailing party in connection with the
primary litigation.”
13
Relying on Wood v. Santa Monica Escrow Co. (2009)
176 Cal.App.4th 802, 807–808, the trial court also found
Waterwood was not entitled to attorney fees incurred in pursuing
Waterwood I because Waterwood did not prevail overall even
though Waterwood was successful in reversing an award of fees
to the City. The court entered a separate order denying
Waterwood’s attorney fees on appeal. The court did not grant or
deny Waterwood’s request for costs from Waterwood I.
DISCUSSION
A. The Record on Appeal is Limited and We Deny the
City’s Request to Augment the Record to Consider
Documents Not Before the Trial Court When it Made
its Prevailing Party Determination
To recap, in Waterwood, we directed the trial court to
evaluate whether Waterwood prevailed on the contract by
comparing “ ‘the relief awarded on the contract claim or claims
with the parties’ demands on those same claims and their
litigation objectives as disclosed by the pleadings, trial briefs,
opening statements, and similar sources.’ [Citations.]”
(Waterwood I, supra, 58 Cal.App.5th at p. 972.) Waterwood
provided the trial court with the pleadings. According to
Waterwood, no trial briefs were filed. Waterwood did not provide
a transcript of the trial. Waterwood objected to the City’s proffer
of the transcript of opening and closing statements on the basis
that the transcript was uncertified and incomplete. There is no
indication that the trial court relied on transcript excerpts
attached to the City’s opposition.
On appeal, Waterwood states it is incorporating by
reference the record in Waterwood I (see Cal. Rules of Court,
14
rule 8.124). Waterwood, however, did not provide that record to
the trial court on remand. Waterwood makes no legal argument
supporting the proposition that this court should evaluate the
trial court’s order based on evidence not provided to the trial
court.2 With the exception of Judge Madden’s statement of
decision,3 we do not consider the record on appeal from
Waterwood I. Instead, we rely exclusively on the documents
Waterwood provided to the trial court. (See fn. 2, ante.)
For the same reasons, we deny the City’s motion to
augment the record to include the reporter’s transcript from trial.
The trial court did not have the trial transcript in making its
prevailing party finding, and the City makes no showing and
offers no legal support for the proposition that this court may
consider such new evidence on appeal. Because we deny the
City’s motion to augment the record to include the reporter’s
2 The following were the exhibits in support of
Waterwood’s motion for attorneys’ fees and costs on appeal: the
decision in Waterwood I, the complaint, the judgment, the
amended judgment, attorney invoices and bills, a chart of fees
and costs incurred, an expense report, and a memorandum of
costs on appeal. Waterwood attached the following exhibits in
support of its motion for attorney fees: the opinion in
Waterwood I, the complaint, the judgment, the amended
judgment, invoices an bills, a chart of fees and costs, an expense
report, the government claim for damages against the City of
Long Beach, a public records request form, the joint statement of
the case, and the answer to the complaint filed by the City.
3 We have reviewed Judge Madden’s statement of decision
because Judge Kim’s order makes clear that he considered it.
Waterwood also relies on that statement of decision, and we could
not evaluate Waterwood’s claims of error without reviewing it.
15
transcript, we need not address Waterwood’s objections to the
transcript itself.
B. Waterwood Demonstrates No Abuse of Discretion In
The Trial Court’s Conclusion That There Was No
Prevailing Party in the Trial Court Litigation
1. The trial court acted within its discretion in finding
no prevailing party
We concluded in Waterwood I that the City could not be the
prevailing party and remanded the matter to the trial court to
determine in its discretion whether Waterwood prevailed or no
one did. (Waterwood I, supra, 58 Cal.App.5th at p. 972.) The
trial court then exercised its discretion and found no party
prevailed. We review that determination for abuse of discretion.
(Burkhalter Kessler Clement & George LLP v. Hamilton (2018)
19 Cal.App.5th 38, 43.) “ ‘ “The discretion of a trial judge is not a
whimsical, uncontrolled power, but a legal discretion, which is
subject to the limitations of legal principles governing the subject
of its action, and to reversal on appeal where no reasonable basis
for the action is shown. [Citation.]” ’ [Citation.] The scope of
discretion always resides in the particular law being applied, i.e.,
in the ‘legal principles governing the subject of [the] action . . . .’
Action that transgresses the confines of the applicable principles
of law is outside the scope of discretion and we call such action an
‘abuse’ of discretion.” (City of Sacramento v. Drew (1989)
207 Cal.App.3d 1287, 1297.)
Waterwood once again argues it “clearly prevailed at trial”
because it received a $45,050 award on a single cause of action
for breach of contract and defeated all of the City’s affirmative
16
defenses.4 This argument is inconsistent with Waterwood I, in
which we acknowledged these facts but also that the trial court
would have had the option of finding no prevailing party.
(Waterwood I, supra, 58 Cal.App.5th at p. 972.) The question
before us is whether the trial court abused that discretion.
The record supports the trial court’s exercise of its
discretion to conclude that no party prevailed. In his declaration,
Waterwood’s counsel averred he “planned” to tell the jury that
Waterwood spent $13,568 repairing the roof, $26,788 repairing
the HVAC system, and $70,055 repairing the asphalt and that
“remaining repairs might increase the total repair cost to
$235,000.” Additionally, Waterwood’s expert claimed that the
City owed Waterwood $224,000 for repairs of various items
including the masonry structure, roof, HVAC, electrical issues,
paving, concrete, and undescribed fences, gates, and walls. In
addition to the cost of repair for these items, Waterwood’s expert
opined the City was responsible for contractor’s overhead,
contractor’s profit, insurance, a bond, a “contingency on
4 Waterwood notes that it also received costs of almost
$20,000 and assumes that the costs should be added to the jury
award when assessing whether Waterwood achieved its litigation
objective for purposes of determining the prevailing party.
Waterwood offers no authority supporting the proposition that
the costs awarded to the party with the net monetary recovery
(Civ. Code, § 1032) are relevant in assessing whether a party
achieved its objective in the litigation for purposes of Civil Code
section 1717. Issues that are not raised or supported by
argument and citation to legal authority are forfeited. (Okorie v.
Los Angeles Unified School Dist. (2017) 14 Cal.App.5th 574, 600,
disapproved on another ground in Bonni v. St. Joseph Health
System (2021) 11 Cal.5th 995, 1011.)
17
construction costs,” construction management, architectural
design, engineering design, testing and inspection and permits
and fees. (Capitalization omitted.) This evidence confirms that
not only did Waterwood obtain a jury verdict far shy of its repair
costs request, but also that its requested damages were for
multiple items as to its singleton breach of contract claim.
Although the jury’s verdict does not reveal the components of its
$45,050 award, the mere amount of that award indicates the
jury rejected many of Waterwood’s requested damages.
Also, in seeming disregard for our holding in Waterwood I,5
Waterwood states that the City “litigated in full force,
stonewalled early settlement efforts, and drove Waterwood to
incur significant attorney’s fees before making a settlement offer
of any substance. [Citation.] Finally, on September 12, 2017,
less than five weeks before the trial date . . . , the City served a
statutory offer to compromise . . . . ” “At that point, with more
than $32,000 in fees and $1,500 in costs invested by Waterwood
over more than 12 months since the case was filed [citation], the
offer was not acceptable.” Waterwood also describes at length its
demands to the City beginning in 2016. Further, Waterwood’s
5 In Waterwood I, we explained: “In determining the
prevailing party under section 1717, a trial court may not
consider the parties’ settlement communications. ‘Settlement
communications are not sources “similar” to “pleadings, trial
briefs, [and] opening statements.” [Citation.] They were not
presented at trial, and we decline to allow their use to establish
that defendant’s “litigation objectives” were in fact different from
the “demands” it made on those claims throughout the litigation.’
[Citation.]” (Waterwood I, supra, 58 Cal.App.5th at pp. 967–968,
quoting Marina Pacifica Homeowners Assn. v. Southern
California Financial Corp. (2018) 20 Cal.App.5th 191, 204.)
18
briefing has an entire section entitled “Waterwood Beats the
City’s 998 offer.” (Boldface & some capitalization omitted.) As
we held in Waterwood I, supra, 58 Cal.App.5th at pp. 967–968,
and Judge Kim recognized at the hearing on Waterwood’s
motions, settlement demands are irrelevant in assessing the
prevailing party for purposes of section 1717.
Waterwood is correct insofar as it argues the fact the jury
did not award all its requested damages does not preclude a
contractual fee award as the prevailing party. (See, e.g., Scott
Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109.) As we wrote in
Waterwood I, “ ‘Most of the time, attorneys have an incentive to
assert the maximal claims possible on behalf of their clients. . . .
But if anything less than complete victory means that a client
loses what would otherwise have been “prevailing party” status
under section 1717, the attorney is crunched into a dilemma.
Risk a malpractice suit by not asserting maximal claims, or risk a
malpractice suit by forfeiting “prevailing party” status under
section 1717 by asserting maximal claims.’ [Citation.]”
(Waterwood I, supra, 58 Cal.App.5th at pp. 971–972, fn. 5,
quoting de la Cuesta v. Benham (2011) 193 Cal.App.4th 1287,
p. 1296, fn. 5.) Waterwood’s argument, however, ignores our
standard of review. The fact that a trial court may order a fee
award under similar circumstances does not demonstrate that
another court abuses its discretion in finding no prevailing party.
“That another court might reasonably have reached a different
result . . . does not demonstrate an abuse of discretion.”
(O’Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 269.)
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2. Waterwood does not demonstrate Judge Kim relied on
improper criteria in finding no prevailing party
Waterwood argues Judge Kim abused his discretion in
relying on Judge Madden’s statement of decision, which indicated
that the City “ ‘clearly succeeded on its claims at trial, while
Waterwood did not. . . .’ ” In fact, it argues Judge Kim found
there was no prevailing party solely by deferring to Judge
Madden’s prior statement of decision, which decision we
ultimately reversed.
The record does not support Waterwood’s contention that
Judge Kim based his decision “solely on deference to the prior
statement of decision.” (Boldface & capitalization omitted.) To
the contrary, Judge Kim’s order indicates that Judge Kim agreed
with Judge Madden. Specifically, Judge Kim stated, “This Court
agrees that, under the circumstances, Plaintiff did not achieve its
main litigation objective, and should not be declared the
prevailing party.”
Waterwood, moreover, failed to provide Judge Kim with a
transcript of the trial proceedings or other means to assess
Waterwood’s objectives at trial. Waterwood’s summary of trial
revealed only the name of the witnesses and the dates they
testified, which would not assist the trial court in assessing
whether Waterwood achieved its litigation objectives. In his
declaration, Waterwood’s attorney described what he “planned to
say” to the jury during opening and described his “notes and [his]
recollection” of defendant’s opening statement, but the trial court
was not required to credit that declaration.
Waterwood itself relies on Judge Madden’s statement of
decision to describe the evidence at trial. Specifically, referencing
Judge Madden’s statement of decision, Waterwood asserts that
20
the parties contested the following items: (1) whether the City
was required to remove and replace an entire roof, (2) whether
the City was required to replace two air conditioners, and
(3) whether the City was required to tear up and replace all of the
existing asphalt parking lot on the property and nearby concrete
pads. This evidence confirms that Waterwood requested several
items of damage, and the jury rejected a good deal of them,
although the jury’s verdict did not specify which items it rejected.
This evidence also supports Judge Kim’s finding that Waterwood
did not achieve its litigation objectives and thus no one prevailed
where we have previously held that the City could not be the
prevailing party. In sum, Waterwood has not shown that the
trial court (Judge Kim) acted outside the confines of the
applicable principles of law in relying in part on Judge Madden’s
statement of decision. (City of Sacramento v. Drew, supra,
207 Cal.App.3d at p. 1297.)
Finally, Waterwood argues that it “should be awarded not
only its prevailing party attorney fees in the underlying action,
but also interest on those fees.” Because we conclude the trial
court did not err in finding Waterwood was not the prevailing
party, we need not consider this argument. Waterwood also
seeks $4,246.33 in costs in addition to the $19,905.04 awarded in
the amended judgment prior to Waterwood I. In Waterwood I,
which is now final, we affirmed the judgment insofar as it
awarded $19,905.04 in costs to Waterwood. Waterwood also
does not show that its request for additional costs is cognizable in
this appeal.
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C. Waterwood Is Not Entitled to Attorney Fees for
Waterwood I
Waterwood argues the trial court erred in denying it
appellate fees incurred in Waterwood I because it was the
prevailing party on that appeal. We agree that Waterwood
successfully reversed a $230,000 contractual fee award in favor of
the City. Relying on Wood v. Santa Monica Escrow Co. (2009)
176 Cal.App.4th 802, 807–808 (Wood), the trial court (Judge Kim)
concluded Waterwood was not entitled to fees incurred in
Waterwood I. We review de novo the trial court’s determination
that as a matter of law, Waterwood was not entitled to fees for
Waterwood I. (Mountain Air Enterprises, LLC v. Sundowner
Towers, LLC (2017) 3 Cal.5th 744, 751.)
Our district has issued two opinions on point. In Wood,
Division Six held, “A party who prevails on appeal is not
necessarily the prevailing party in an action.” (Supra,
176 Cal.App.4th at p. 804.) Wood involved a plaintiff who
voluntarily dismissed the complaint against the defendant with
prejudice. (Id. at p. 802.) The trial court denied the defendant’s
motion for contractual attorney fees, and the appellate court
affirmed that denial. (Id. at pp. 804–805.) The plaintiff then
sought attorney fees, purportedly as the prevailing party, because
it had won the appeal. (Id. at p. 805.) The appellate court
rejected plaintiff’s request and stated, “[T]he trial and appeal are
treated as parts of a single proceeding” and the defendant was
the prevailing party “in the lawsuit considered as a whole.” (Id.
at pp. 804, 806.) In the words of our colleagues, “[S]ection 1717
does not support an award to the prevailing party on appeal, but
only to the prevailing party in the lawsuit.” (Wood, at p. 808.)
22
In de la Carriere v. Greene (2019) 39 Cal.App.5th 270(Greene), decided by Division Eight, respondent de la Carriere
filed a complaint seeking to void a note and deed of trust; Greene
filed a cross-complaint for breach of the note. After a bench trial,
the trial court found respondent’s claims meritless and awarded
monetary relief in Greene’s favor after subtracting usurious
interest payments. The trial court then awarded Greene
contractual attorney fees as the prevailing party. Greene,
however, appealed the trial court’s damages calculation. After
Division Eight questioned whether Greene could do so after
executing an acknowledgement of satisfaction of judgment,
Greene dismissed the appeal.
On remand, the trial court awarded respondent attorney
fees she incurred on the appeal. The issue before our colleagues
was whether the trial court erred in finding her the prevailing
party. Relying on Woods, Division Eight held, “The trial court
determined that Greene was the prevailing party in the lawsuit
after finding he defeated Carriere’s claims and obtained
affirmative relief on the cross-complaint. Carriere’s subsequent
success on appeal and her postjudgment motion did not affect
that determination. Indeed, both before and after appeal, Greene
received a net judgment of $150,329.21. Consequently, he
recovered the ‘greater amount on the action on the contract’ and
remains the prevailing party for purposes of Civil Code
section 1717. As such, he is the only party entitled to attorney
fees under the Note. The trial court erred in finding otherwise.”
(Greene, supra, 39 Cal.App.5th at pp. 276–277.) Division Eight
also rejected respondent’s argument that the award of costs on
appeal established “conclusively” that respondent was the
prevailing party. (Id. at p. 277.)
23
Here, as in Wood and Greene, Waterwood I did not decide
who prevailed in the lawsuit. Instead, we remanded the case to
the trial court to make that determination. The trial court
concluded no party prevailed, and did not abuse its discretion in
doing so.
D. Costs for Waterwood I
In Waterwood I, we concluded Waterwood was entitled to
its costs on appeal. After remittitur issued, Waterwood filed a
memorandum of costs on appeal requesting $6,102.52 in costs.
The City did not oppose that request. Under the applicable
California Rules of Court, the clerk of the court should have
entered a judgment on the costs in the amount of $6,102.52.6
(See Cal. Rules of Court, rule 8.278 [describing the procedure for
claiming costs ordered by the appellate court and referencing rule
3.1700]; Cal. Rules of Court, rule 3.1700(b)(4) [“After the time has
passed for a motion to strike or tax costs or for determination of
that motion, the clerk must immediately enter the costs on the
judgment.”].) Waterwood is entitled to costs of $6,102.52.
Waterwood also argues it is entitled to interest from the
date of remittitur on the costs this court awarded in Waterwood I.
We do not agree. Waterwood is not entitled to interest from the
date of the remittitur. Waterwood relies in part on Lucky United
Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125,
138. Lucky concerned attorney fees incurred in preparing an
6 The City does not dispute that it owes Waterwood costs
incurred in Waterwood I. The City argues Waterwood was
required to send the clerk a proposed judgment. The authority
cited by the City—California Rules of Court, rule 3.1700(b)(4)—
does not contain any such requirement.
24
abstract of judgment and judgment liens and costs after
judgment. (Id. at p. 136.) Those issues are not relevant here.
But, Lucky also considered the appellate court’s order of costs on
appeal: “If an appeal is taken from the judgment, the party
prevailing in the Court of Appeal is usually entitled to costs on
appeal. [Citation.] The award of costs is included in the
remittitur, although the amount of the award is determined in
the trial court. [Citation.] These costs, however, are not added to
the trial court judgment, but constitute a separate judgment.
[Citations.] Interest thereon begins to run from the date of the
entry of the trial court’s award.”7 (Lucky, at p. 138.) We also
reject Waterwood’s argument that it is entitled to $7,983.41 in
7 We rely on Lucky only insofar as it discusses the costs on
appeal awarded by an appellate court. Felczer v. Apple Inc.
(2021) 63 Cal.App.5th 406, limited Lucky on an issue irrelevant
to the current appeal. Felczer explained that Lucky involved an
assessment of the date of the judgment “in a context where the
prevailing plaintiff’s entitlement to attorney’s fees” for filing an
anti-SLAPP motion “was clear.” (Felczer, at p. 414.) In Felczer,
in contrast, it was unclear at the time of judgment whether the
prevailing party would recover any fees. (Ibid.) Felczer held “in a
civil case where the prevailing party is entitled to recover certain
litigation expenses and attorney’s fees from the losing party” the
postjudgment interest begins to accrue “on the date of the
judgment or order that establishes the right of a party to recover
a particular cost item, even if the dollar amount has yet to be
ascertained.” (Id. at pp. 409–410.)
Felczer did not involve an appellate court’s award of costs
incurred on appeal. Felczer does not support Waterwood’s
contention that it is entitled to interest on costs on appeal from
the date of the remittitur.
25
costs because that amount exceeds Waterwood’s requested costs
in its memorandum of costs.
Finally, there is a period of time between the date the trial
court should have entered judgment on costs and the date the
trial court will enter judgment on costs. It was Waterwood’s
responsibility as the party entitled to costs on appeal to alert the
trial court of the need to enter judgment. (Cal. Rules of Court,
rule 3.1700(b)(4).) The City is not liable for interest on the
judgment until after the judgment is entered.
DISPOSITION
The order denying Waterwood attorney fees for the trial
court litigation is affirmed. The order denying Waterwood
attorney fees for Waterwood I is affirmed. The trial court is
directed to enter a judgment in the amount of $6,102.52 in favor
of Waterwood. Each party shall bear its own costs in this appeal.
NOT FOR PUBLICATION.
BENDIX, J.
We concur:
ROTHSCHILD, P. J.
WEINGART, J.
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