Opinion
D072176/72759
05-22-2018
DEBORAH BOYD-NALIBOFF, as Executor, etc., Plaintiff and Appellant, v. PPDW, LLC et al., Defendants and Respondents.
Janis Law Group, Dean T. Janis; Niddrie Adams Fuller, and Victoria E. Fuller for Plaintiff and Appellant. Gregory S. Markow and Jamie Altman Buggy for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00014209-CU-BC-CTL) APPEALS from judgment and postjudgment order of the Superior Court of San Diego County, Katherine A. Bacal, Judge. Reversed. Janis Law Group, Dean T. Janis; Niddrie Adams Fuller, and Victoria E. Fuller for Plaintiff and Appellant. Gregory S. Markow and Jamie Altman Buggy for Defendants and Respondents.
The trial court granted a defense summary judgment in this action filed by plaintiff and appellant Jack Naliboff, on breach of contract and related theories. (Code Civ. Proc., § 437c.) In 2006, plaintiff (now represented by his widow and executor Deborah Boyd-Naliboff; together Plaintiff), entered into a written advisory services agreement (ASA) with an entity owning a shopping center, Poway Plaza, LLC (Plaza), for Plaintiff to recover a percentage share of its profits in return for his managerial efforts. Plaza was a California limited liability corporation (LLC) owned by commercial real estate investors affiliated with defendants and respondents Jorge A. Lutteroth (Jorge) and a Nevada company, Luja, LLC (Luja). In 2014, Plaza became the predecessor of defendant and respondent PPDW, LLC, a Delaware company (PPDW; sometimes referred to together with Jorge and Luja as Defendants), when the owners of Plaza decided to refinance Plaza's debt. In doing so, Defendants created an "Agreement and Plan of Merger" (the Plan of Merger), effective in December 2014, to merge Plaza into PPDW. (Corp. Code, § 17710.01 et seq. [merger and conversion of LLCs]; Del. Code Ann., tit. 6, Commerce and Trade, LLC Act, § 18-209 [merger and consolidation of LLCs].)
All further statutory references are to this code unless noted.
Plaintiff brought this action for breach of contract and the implied covenant against PPDW, after Defendants notified him that the merger indicated that the 2006 ASA had become inoperative under its own termination clause, ending any right to compensation for him. The ASA specified Plaza's "complete liquidation" as a terminating event. As against Luja and Jorge, Plaintiff sought damages for conspiracy to interfere and interference with existing contractual relations.
Defendants then brought a summary judgment motion, contending a "complete liquidation" of Plaza had occurred due to the chosen structure of their refinancing deal, rendering the ASA ineffective under applicable Delaware and/or California law, thus entitling them to judgment as a matter of law on all claims. (Del. Code Ann., tit. 6, § 18-209 [merger and consolidation], subd. (g) [membership of an LLC may make an agreement on whether a merger results in dissolution of one of the companies]; id. at § 18-801 [requirements for dissolution and winding up].)
Further, Defendants argued that even if extrinsic evidence were admitted and considered in interpreting the ASA, they were entitled to summary judgment, for lack of triable material issues of fact. In rendering its ruling, the trial court discussed the extrinsic evidence supplied by both parties, and determined that the motion should be granted on all the contract and tort theories. It subsequently made an award of attorney fees and costs to Defendants as prevailing parties, under a fees clause in the ASA. (Civ. Code, § 1717.)
On appeal, Plaintiff contends that summary judgment was erroneously granted, whether extrinsic evidence was considered or not when interpreting the ASA termination clause. Plaintiff argues that if a plain meaning of the contractual term "complete liquidation" is used, the merger of Plaza into PPDW did not qualify as a trigger for termination. Alternatively, the extrinsic evidence that was available showed that the PPDW merger did not fall within the ASA parties' intents, in specifying when the ASA would be terminated. Rather, Plaintiff contends that no complete liquidation occurred and Plaza's existing liability under the ASA was transferred to its successor, PPDW, under the same applicable Delaware and/or California law cited by Defendants. Triable issues of material fact arguably remain for resolution on the case against PPDW for breach of contract, breach of the duty of good faith and fair dealing and declaratory relief. Likewise, Plaintiff contends that the related claim against Jorge and Luja for their intentional interference with the ASA contractual relationship cannot be resolved at this time.
In the consolidated appeal of a postjudgment order awarding attorney fees and costs to Defendants, Plaintiff seeks to overturn it on the basis that any reversal of the summary judgment serves to undermine that order.
Interpretation of a written instrument is solely a judicial function "when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence, or a determination was made based on incompetent evidence." (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 (City of Hope); Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866.) Absent a conflict in the evidence, contract interpretation is a matter of law. (City of Hope, supra, at p. 395.) If, however, there is a conflict in the extrinsic evidence, the factual conflict is to be resolved by the jury. (Ibid. ["when, as here, ascertaining the intent of the parties at the time the contract was executed depends on the credibility of extrinsic evidence, that credibility determination and the interpretation of the contract are questions of fact that may properly be resolved by the jury"]; Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 291.)
Application of the statutory law as presented to us, on merger, dissolution and survival of liabilities, is inconclusive to resolve all the contract liability issues, for purposes of illuminating the "complete liquidation" term. (§ 17707.01 [events causing "dissolution and winding up" of LLC, including a member vote]; see Del. Code Ann., tit. 6, § 18-801 [dissolution].) Under section 17710.16, subdivision (a), when a merger of LLCs occurs under California law, "the separate existence of the disappearing limited liability companies . . . ceases and the surviving limited liability company . . . shall succeed, without other transfer, act or deed, to all the rights and property, whether real, personal, or mixed, of each of the disappearing limited liability companies . . . , and shall be subject to all the debts and liabilities of each in the same manner as if the surviving limited liability company . . . had itself incurred them." (Italics added.) Although Defendants claim that under Delaware Code Annotated, title 6, section 18-209, subdivision (g), they could reach an internal agreement about whether Plaza's merger into PPDW would result in dissolution of Plaza as a nonsurviving company, such that Plaza's liabilities were extinguished and did not remain attributable to PPDW, we disagree that the record currently establishes, as a matter of law, that they could unilaterally terminate the ASA by placing similar "complete liquidation" language in their merger agreement.
It was premature for the trial court to interpret the termination clause of the ASA, because a complete understanding of its language is not possible without evaluating the credibility of extrinsic evidence. Particularly in this context of the parties' use of a unique term of art, within the context of sophisticated and specialized business dealings, expert evidence will be relevant to assist the finder of fact in interpreting the ASA terminology. (Evid. Code, § 801, subd. (a); Wolf v. Superior Court (2004) 114 Cal.App.4th 1143, 1355-1357 (Wolf) [conflicting extrinsic evidence on trade custom and usage is admissible to expose an ambiguity in an industry term found in contract].)
This is not a case in which the trial court could properly determine the plain meaning of the ASA contract term "complete liquidation" as a matter of law, within the entire factual context presented to it. (City of Hope, supra, 43 Cal.4th at p. 395.) The record discloses that extrinsic and conflicting evidence exists and will be relevant to determining factual issues concerning the parties' intent in identifying the "complete liquidation" of Plaza that would operate to terminate obligations under the ASA. The trial court incorrectly overlooked remaining triable issues of fact raised by conflicts in the extrinsic evidence about the negotiation of the ASA and the later communications between the parties giving rise to the dispute, at the time of the refinancing. We reverse the summary judgment for appropriate further proceedings. The postjudgment order for attorney fees and costs is likewise reversed, for lack of a prevailing party at this time. (Civ. Code, § 1717.)
I
BACKGROUND
A. Terms of ASA; Plan of Merger and Creation of PPDW
Plaintiff was an experienced property and asset manager. In 2002 or 2003, the Lutteroth family, the owners of defendants Luja and PPDW, acting through Jorge and Luis Lutteroth, used Plaintiff's assistance to acquire the Plaza shopping center property. In 2006, Plaza and Plaintiff entered into the ASA for compensation of asset management work in the form of a services fee, in light of their ongoing relationship which included work he had already performed. It included a paragraph stating the ASA would be binding on the parties' successors for continued services, as well as an integration clause. Plaza designed the ASA to provide Plaintiff with 20 percent of Plaza's operating cash flow, after payment of certain expenses. As relevant here, the ASA states in paragraph 2 that it became effective when Plaintiff started performing services, and it will end on a termination date, "which shall occur immediately upon the complete liquidation of Poway Plaza." Under the ASA, Plaintiff received almost $300,000 over about eight years, from 2006 to 2014. Plaza's property value increased by millions of dollars over that time period.
In 2014, Plaza decided to refinance its debt with a new lender, Goldman Sachs (the lender). The lender provided a term sheet to Plaza, requiring that as the borrower, it must qualify as a newly formed or "recycled" Delaware entity, subject to industry rating criteria. Plaza prepared a draft Plan of Merger with defendant PPDW, a Delaware LLC the Lutteroth family had just formed. The Plan of Merger states that Luja is the only member of both Plaza and PPDW, and Plaza desired to merge with and into PPDW, such that PPDW would be the surviving entity. When Plaintiff received this draft Plan of Merger, he objected that the ASA terms would be affected, and he requested an ASA amendment to protect him from "getting lost in the merger which I know is clearly not anyone's intention." His concerns were not addressed, so he sent a follow-up e-mail about his request to Jorge, stating the ASA "dies when you dissolve [Plaza] which is this Wednesday."
In the summary judgment ruling, the trial court granted Plaintiff's request to take judicial notice of a document entitled "Appendix XIV U.S. Legal Criteria for 'Recycled Special-Purpose Entities.' " (Evid. Code, § 452, subd. (h).) Its "Editor's note" explains the article was originally published on September 19, 2002 and is available on Ratings Direct, Standard & Poor's web-based credit analysis system. The legal criteria for allowing a "recycled" entity to incur debt are that it must meet the same creditworthiness standards as a new entity, such as when "the relevant liabilities have been mitigated by acceptable credit enhancement."
Pursuant to section 17707.01, subdivision (b), a majority of the members of an LLC can vote to dissolve it and wind up its activities. Dissolution and winding up of LLCs is provided for in Delaware Code Annotated, title 6, section 18-801.
The final Plan of Merger was dated December 9, 2014 and provided at its section 1.1 that as the "Surviving Company," PPDW would succeed to all of Plaza's assets and liabilities. In its section 2.4, the Plan of Merger cites to Delaware Code Annotated, title 6, section 18-209, subdivision (g), as providing that "the Merger shall constitute a dissolution and complete liquidation" of Plaza. Also, the Plan of Merger in its section 2.4 states that "Notwithstanding section 1.1 above, PPDW shall only expressly assume any liability . . . approved by its Manager," designated as Jorge. (Italics added.) Jorge had become dissatisfied with Plaintiff's services and thought he was overreaching for payment, and accordingly rejected his request to amend or to continue the ASA after the merger.
B. Complaint and Summary Judgment Proceedings
A few months after the Plan of Merger went into effect, Plaintiff filed his complaint, alleging against PPDW causes of action for breach of contract and breach of the duty of good faith and fair dealing. Declaratory relief was sought, as well as damages for Jorge's and Luja's alleged intentional interference with the ASA contractual relationship. After Mr. Naliboff passed away, his executor was appointed for purposes of continuing the action.
Defendants' motion for summary judgment or adjudication soon followed, contending it could be decided as a matter of law that there had been a "complete liquidation" of Plaza at the time of the Plan of Merger, within the meaning of the ASA. They argued there was no evidence that Plaza and Plaintiff, when negotiating the ASA, had discussed or intended to use any technical definition of the term "liquidated," as opposed to its ordinary meaning. They relied on definitions found in online sources, as follows: "[T]he term 'liquidation' as applied to a company, means the process by which the existence of the company is brought to an end. See e.g., 'Liquidation,' Wikipedia.com, Dec. 2, 2016 (https://en.wikipedia.org/wiki/Liquidation); 'Liquidation'; Investopedia.com, Dec. 2, 2016 (http://www.investopedia.com/terms/l/liquidation.asp) ('Liquidation is the process of bringing a business to an end and distributing its assets to claimants.')."
In the alternative, Defendants argued the record showed that Plaza's principals did not recognize that the creation of PPDW would have any special, terminating effect upon the ASA, until Plaintiff complained to them about it. Defendants provided a copy of the term sheet from the lender in the refinancing, which required that the borrower (called the Sponsor, the Lutteroth family) should be a "special-purpose, bankruptcy-remote entity majority owned and controlled, directly or indirectly, by Sponsor. At Sponsor's election, such entity may be a newly formed Delaware entity or a Delaware entity 'recycled' in accordance with rating agency criteria." Defendants contended that when the Plan of Merger was being formed, they had not focused on the issues about its legal effect as terminating the ASA. Once they understood that effect, they were satisfied with that arrangement because they did not believe Plaintiff had been adequately performing his asset management services. They argued that PPDW had been created only to satisfy the request of the lender.
Defendants provided a declaration from their former attorney, Philip Jelsma, who was retained by Plaza and PPDW to facilitate their merger. He understood that the lender required the borrower entity to be a new Delaware entity, which was a common practice for sophisticated lenders. Lenders want such new Delaware entities "to (a) remove and eliminate liabilities from the old entity; (b) take advantage of lender-favorable Delaware corporate law; and (c) take advantage of certain provisions of Delaware law that assist in bankruptcy situations. This ensures that the most amount of cash from the underlying real estate asset is available to service the debt to the lender." (Italics added.)
In further support, Defendants lodged e-mails from that time period, to interpret Plaintiff's objections to the wording of the Plan of Merger as admissions that their interpretation of it was correct. Defendants filed declarations from Jorge and another family member, Luis Lutteroth, as well as their transactional attorneys. Jorge's declaration explained:
"Beginning in about 2013, I and the other members of [Plaza] had grown unhappy with [Plaintiff's] work as a property manager and an asset manager for the Poway Plaza property. We believed he was in the process of retiring from business and was no longer paying attention to the property or performing either property management or asset management with the skill and care he formerly displayed. When I combined that unhappiness with his performance with what I believed to be his over-reaching in seeking payments in perpetuity for no services rendered, we believed that the termination of the [ASA] pursuant to the merger would be appropriate and we did not have any interest in 'saving' the [ASA] from termination due to the
effect of the merger. [¶] Therefore, when [he] admitted to me that the [ASA] would terminate with the merger, I felt that termination was in the best interest of the property and its owner. I therefore did not agree to continue the [ASA] after the merger and did not sign his proposed amendment to the [ASA]."
In opposition to summary judgment, Plaintiff contended that the Plan of Merger could not amount to a "complete liquidation" that would qualify as terminating the ASA. Plaintiff argued that as a matter of law, "liquidation" and "dissolution" are different terms with different meanings, and no extrinsic evidence should be admitted to alter or add to the terms of the ASA. As a matter of California and Delaware statutory law, all of the Plaza liabilities had been transferred to PPDW. Alternatively, if parol evidence could properly be admitted, it would only support a conclusion that the Plan of Merger was ineffective to terminate the ASA, based on the ASA parties' evident contractual intentions. Plaintiff next contended that Jorge and Luja had intentionally and wrongfully acted to deprive him of the continuing benefits of the ASA.
Section 17710.01 of California LLC law provides relevant definitions. Under its subdivision (h), " 'Disappearing limited liability company' means a constituent limited liability company . . . that is not the surviving limited liability company." Under its subdivision (l), " 'Surviving limited liability company' means a limited liability company or foreign limited liability company into which one or more other limited liability companies, foreign limited liability companies, other business entities, or foreign business entities are merged."
Plaintiff provided a declaration from Attorney Robert Caplan, giving his expert opinions on real estate investment matters, including the proper specialized definitions used in the industry of the terms merger, liquidation, and dissolution. Caplan stated he had reviewed the e-mails among the parties and a draft version of the ASA, as well as Plaza's corporate filings and the grant deed in which it conveyed to PPDW the shopping center real property. This grant deed imposed no documentary transfer tax because it only confirmed a change of name and that the grantor and grantee were the same party. Caplan therefore concluded that if Plaza had actually been liquidated, Plaza would have had to pay the required documentary transfer tax. He did not believe that the merger had any impact on the economic future of the shopping center or the ability of the investors to participate in its cash flow and valuation after the time of the Plan of Merger.
The summary judgment ruling granted Plaintiff's request for judicial notice of lodged dictionary definitions of these terms, as follows:
"Legal Definition of Liquidate: '(1) to determine by agreement or litigation the precise amount of; also to settle (a debt) by payment or other adjustment (2a) to determine the liabilities and apportion the assets of especially in bankruptcy or dissolution; (2b) to convert (as assets) into cash; to liquidate something (as a corporation).' " (https://www.merriamwebster.com/dictionary/liquidation.)
"Legal Definition of Merger: e.g., 'the absorption of a lesser estate or interest into a greater one held by the same person.' " (https://www.merriamwebster.com/dictionary/merger.)
"Legal Definition of Dissolution: 'the act or process of ending: as (a) the termination of an organized body (as a court); (b) the ending of a partnership relationship caused by the withdrawal of one of the partners from the relationship; (c) the termination of a corporation[, etc.].' " (https://www.merriamwebster.com/dictionary/dissolution.)
Plaintiff lodged various exhibits about the dealings between the parties and deposition excerpts from Plaintiff and David Boatwright, the attorney who worked for Plaza in 2006 and supervised the writing of the ASA. The exhibits included a 2005 report from a certified public accountant (CPA) acting on behalf of Plaza's parent corporation (Southwest Properties Ltd.), showing the effect of a hypothetical liquidation that would include the sale of its assets, such as Plaza. Plaintiff also lodged a copy of an earlier draft of the ASA, in which certain terminology relating to terminating events, e.g., upon a sale of assets, etc., was stricken so that only "complete liquidation" remained. Plaintiff requested and obtained judicial notice of "Appendix XIV U.S. Legal Criteria for 'Recycled' Special-Purpose Entities," regarding credit rating standards. (See fn. 2, ante.)
In reply, Defendants filed evidentiary objections to Caplan's declaration, on the grounds that it was inappropriate for him to provide expert opinion testimony on questions of law or the applicability of law to facts, such as in the interpretation of contracts. (Summers v. A.A. Gilbert Co. (1999) 69 Cal.App.4th 1155, 1179.) Defendants also objected that Caplan did not have personal knowledge about the parties' intent in drafting the documents he obtained and examined, such as the grant deed imposing no documentary transfer tax.
In the ruling, the trial court sustained Defendants' evidentiary objections to Caplan's declaration, without detailed explanation. On the merits, the court's ruling first determined that the validity of Plaintiff's contract claim turned upon whether there was a "complete liquidation" of Plaza within the meaning of the ASA. The court stated that it was required to determine whether the parties had given any special or technical meaning to the contract terms. (Civ. Code, § 1644.) The court concluded that Plaintiff presented no evidence that the parties used the term "complete liquidation" in a technical sense or that the parties ascribed any special meaning to the phrase, so that standardized legal and dictionary definitions supported the conclusion that Plaza was "liquidated" under the ordinary sense of the word. The court found that as a result of the Plan of Merger, Plaza no longer existed or retained any assets, Plaintiff had admitted that its liabilities transferred to PPDW as a matter of law, and thus "liquidation" must have occurred.
After this plain meaning interpretation, the court continued the analysis, determining there were additional reasons to find no triable issues of fact remained about whether there was a "complete liquidation" of Plaza, within the meaning of the ASA. The court found Plaintiff was not justified in relying on the 2005 CPA report about a hypothetical liquidation of Plaza's parent corporation, for the purpose of showing that a liquidation means the sale of all assets, payment of all liabilities, and distribution of the net cash to the shareholders.
Next, the court considered the circumstances surrounding the making of the ASA, specifically, the draft ASA that Plaintiff submitted, showing that the ASA originally contained a termination clause specifying that its obligations would terminate "upon the 'dissolution, termination, liquidation, or sale of all or substantially all of the assets of Poway Plaza.' " The court concluded that "the fact that the parties deleted the language regarding a sale of assets supports the interpretation that a liquidation not involving a sale of assets would terminate the ASA. [¶] As a result, PPDW cannot be liable for breach of the ASA." For this reason, the court granted summary adjudication regarding all of the breach of contract theories, including breach of the implied covenant of good faith and fair dealing and declaratory relief.
On the related cause of action seeking recovery for intentional interference with contractual relations, the court concluded that Plaintiff was unable to show an existing underlying and binding contractual relationship. The court rejected, as follows, Plaintiff's theories on remaining questions of fact about whether Jorge and Luja "intended to deprive plaintiff of the benefits under the ASA by creating a new entity to accomplish the refinancing. Plaintiff argues Defendants could have used a 'recycled' Delaware entity instead of creating a new one. It is unclear what difference that would have made in light of plaintiff's contention that [Plaza's] liabilities transferred to the surviving entity by operation of law. In any event, it is undisputed that [the lender] required defendants to use a Delaware corporation to refinance [Plaza's] debt obligations. [Citation.] According to [Jorge] Lutteroth, at that time he did not consider the effect this would have on the ASA. [Citation.] Plaintiff presents no evidence that defendants created a new company with the intent of depriving him of the benefits of the ASA. Accordingly, defendants are entitled to summary adjudication of [that] cause of action."
Although the respondent's brief contends that the finalized minute order seems to contain clerical errors in allocating its analysis between the different causes of action, the ruling is consistent and intelligible and is readily susceptible of the required de novo review.
The motion for summary judgment was granted and Plaintiff appeals.
II
REVIEW OF SUMMARY JUDGMENT
To obtain summary judgment, a moving defendant must show that the plaintiff's cause of action has no merit, e.g., that the plaintiff cannot establish one or more of the elements of his or her cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) The burden then shifts to the plaintiff to show that there is an existing triable issue of material fact as to the cause of action or a defense. (Ibid.)
"On appeal after a motion for summary judgment has been granted, we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) The evidence is viewed in the light most favorable to the opposing party, by resolving any evidentiary doubts or ambiguities in its favor. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; see Aguilar, supra, 25 Cal.4th 826, 856 [opposing plaintiff's evidence construed for what it could show or imply to reasonable trier of fact].)
Summary judgment is proper if no triable issue of fact is shown by all the papers submitted, such that the moving party is entitled to judgment as a matter of law. (Orrick Herrington & Sutcliffe v. Superior Court (2003) 107 Cal.App.4th 1052, 1056-1057; Aguilar, supra, 25 Cal.4th 826, 850.) A triable issue of fact exists if, "and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Ibid.)
III
NO "PLAIN MEANING" READING APPROPRIATE;
ADMISSIBILITY OF PAROL EVIDENCE
A de novo standard of review applies to our threshold determination of the ambiguity of the ASA termination provision. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165-1166 (Winet).) On appeal, both parties have initially argued that the trial court should have rendered a plain meaning contract interpretation, in their favor, because the ASA's term "complete liquidation" has a definite meaning as a matter of law. They each cite to the terms of Delaware corporate law and to California LLC law, containing analogous terms such as dissolution and merger.
Although the trial court's ruling began by stating that standardized legal and dictionary definitions supported the conclusion that Plaza was "liquidated" under the ordinary sense of the word, its reasoning did not stop there. Instead, the court continued the analysis, outlining and evaluating the conflicting evidence presented, and then reaching its conclusions that there were no triable issues of fact remaining on whether, within the meaning of the ASA, there was a "complete liquidation" of Plaza. As we will show, the trial court's approach was only partially correct.
The trial court appropriately "provisionally receive[d]" the extrinsic evidence, as relevant to show whether the ASA's termination clause was reasonably susceptible of the particular meanings ascribed to it by the parties. (Wolf, supra, 114 Cal.App.4th 1343, 1350; Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 39-40 (Pacific Gas & E. Co.).) In its ruling, the court evaluated the extrinsic evidence provided, and evidently decided the language was "reasonably susceptible" to the interpretations being urged by the parties, thereby admitting that extrinsic evidence for purposes of interpreting the contract. (Winet, supra, 4 Cal.App.4th 1159, 1165.) "Even if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible." (Wolf, supra, at p. 1351; Pacific Gas & E. Co., supra, at p. 40 & fn. 8.)
Where the parol evidence is in conflict, the trial court's resolution of that conflict is a question of fact and must be upheld if supported by substantial evidence. (Winet, supra, 4 Cal.App.4th at p. 1166.) " 'Furthermore, "[w]hen two equally plausible interpretations of the language of a contract may be made . . . parol evidence is admissible to aid in interpreting the agreement, thereby presenting a question of fact which precludes summary judgment if the evidence is contradictory." ' " (Wolf, supra, 114 Cal.App.4th at p. 1351, quoting Walter E. Heller Western, Inc. v. Tecrim Corp. (1987) 196 Cal.App.3d 149, 158.) From 2006 to 2014, the parties abided by the ASA terms. Such evidence about the parties' predispute, postcontracting conduct is admissible to demonstrate an ambiguity in their contractual language. (City of Hope, supra, 43 Cal.4th at p. 393 ["A party's conduct occurring between execution of the contract and a dispute about the meaning of the contract's terms may reveal what the parties understood and intended those terms to mean. For this reason, evidence of such conduct . . . is admissible to resolve ambiguities in the contract's language."].)
Because this record contains identifiable conflicting extrinsic evidence, and since the trial court appropriately provisionally admitted and considered it, we decline to accept the parties' invitation to resolve this appeal by conducting a plain language interpretation of the ASA's termination clause. On de novo review, we find ambiguity in the subject contract language. This dispute arose in the specialized real estate context of asset management, in which terminology is defined not only by statute but also by the sophisticated parties' course of dealing and usage of trade. (See Winet, supra, 4 Cal.App.4th 1159, 1165-1166; Code Civ. Proc., § 1856, subd. (c) [apparently finalized contract terms "may be explained or supplemented by course of dealing or usage of trade or by course of performance"].)
We accordingly turn to the parties' backup arguments, that assuming the court correctly took into account their extrinsic evidence, all of it naturally supports only their own legal and factual interpretation of the circumstances giving rise to the ASA and the Plan of Merger.
IV
BREACH OF CONTRACT/IMPLIED COVENANT ANALYSIS;
DECLARATORY RELIEF (PPDW)
A. Applicable Statutes
Civil Code section 1644 dictates, "The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." In this factual context, the technical and material term in the ASA termination clause, "complete liquidation," was ambiguous as used by the parties, and consideration of the extrinsic evidence was allowed to determine their respective intents. (Code Civ. Proc., § 1856, subd. (g); Pacific Gas & E. Co., supra, 69 Cal.2d at p. 37; Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1125 [if extrinsic evidence reveals that apparently clear language in the contract is, in fact, "susceptible to more than one reasonable interpretation," then extrinsic evidence may be used to determine the contracting parties' objective intent].)
To begin the process, both Defendants and Plaintiff continue to rely on standardized or dictionary definitions of the term "liquidate." Plaintiff also sought and obtained judicial notice of dictionary definitions of "merger" and "dissolution." In their appellate brief, Defendants contend that whether the ordinary meaning of the word "liquidation" is considered, or its technical, legal meaning, the same conclusion follows: that Plaza has been completely liquidated. In support, Defendants cite to Manson v. Shepherd (2010) 188 Cal.App.4th 1244 (Manson), a case arising from a trustee's petition for settlement of a trust accounting and report and associated attorney fees under Probate Code section 17200, etc. (Manson, supra, at p. 1249, fn. 4.) In the course of its substantial evidence analysis of factual findings by the trial court, the appellate court in Manson was required to pass upon "the usual and ordinary meanings of" words that included "liquidation," in the context of construing a statutory term found in Probate Code section 16350, "partial liquidation." In doing so, the opinion noted that courts may "appropriately refer to the dictionary definition to determine the ordinary meaning of a word in a statute." (Manson, supra, at p. 1262; Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1121-1122.)
In the Probate Code procedural context of Manson, the court explained, "The word 'liquidation' is defined as '[t]he process of selling assets, such as inventories or securities, in order to achieve a better cash position. The term also refers to the termination of a business by converting its assets to cash, paying its liabilities, and distributing the residue among the partners or stockholders.' [Citation.] Additionally, the California Supreme Court has stated, ' " 'Liquidation of a corporation is defined as "the operation of winding up its affairs by realizing its assets, paying its debts and appropriating the amount of profit or loss.' " ' " (Manson, supra, 188 Cal.App.4th 1244, 1262-1263, fn. omitted, quoting Estate of Traung (1947) 30 Cal.2d 811, 814.)
Section 172, part of the Corporation Code's general provisions and definitions chapter, likewise shows the parties to a contract could interpret the liquidation concept differently in different transactions: " 'Liquidation price' or 'liquidation preference' means amounts payable on shares of any class upon voluntary or involuntary dissolution, winding up or distribution of the entire assets of the corporation, including any cumulative dividends accrued and unpaid, in priority to shares of another class or classes."
In their respondent's brief, Defendant cited to a tax case, Pridemark, Inc. v. C.I.R. (4th Cir. 1965) 345 F.2d 35 (Pridemark). In Pridemark, the federal court was interpreting federal tax law and regulations in the context of a corporation that liquidated its business, which business was not promptly resumed by a successor or new corporation as a continuation of a going concern. In that context, the court found that a "complete liquidation" had occurred of the first corporation, when the shareholders receive distributions, even though the Internal Revenue Code "provides no definition of 'complete liquidation.' " (Pridemark, supra, at p. 41.)
Defendants also cite to another tax case, Estate of Lammerts v. Commissioner of Internal Revenue (1970) 54 T.C. 420, 437-438 (Estate of Lammerts). That case distinguished between situations in which only a purported corporate reorganization takes place, in which there is a complete identity of shareholder interest among the transferor and transferee corporations. In other cases, where the shareholders of the new corporation are not the same as the shareholders in the old, reorganized corporation, there may not be any such abuse of the tax laws. (Ibid.; see 26 U.S.C. § 368 ["Definitions relating to corporate reorganizations," including 26 U.S.C. § 368, subd. (a)(2)(G)(i) for determinations of when distribution to the creditors of an acquired corporation, in connection with such liquidation, can be treated as pursuant to the plan of reorganization].) At the trial court level, Defendants' moving papers did not discuss such federal case law. Plaintiff objects that they have forfeited appellate arguments on that point.
We decline to consider Defendant's newly raised arguments that we should apply the step transaction doctrine from taxation law in this peculiar context, or label this a "liquidation - reincorporation" transaction sufficient for federal tax law and LLC purposes. (Commissioner v. Clark (1989) 489 U.S. 726, 738.)
According to Defendants' reply papers, Plaintiff also cited the trial court to numerous sources that seemed to support an ordinary meaning of "liquidation." Plaintiff's opposition papers included a definition offered in Internal Revenue Manual section 4.11.7.4: "[T]he status of liquidation exists when a company ceases to be a going concern and its activities are merely for the purpose of winding up its affairs . . . ." Plaintiff also relied on Black's online law dictionary definition of liquidation: " '[A]s applied to a company, . . . liquidation is used in a broad sense as equivalent to "winding up." ' "
Regardless, it is beyond the scope of the briefing and the issues presented to us to consider federal applications of the liquidation concept, such as in federal tax cases (e.g., Pridemark, supra, 345 F.2d 35, 41) and bankruptcy law (11 U.S.C. § 701 et seq. [Chap. 7 liquidation]; 11 U.S.C. § 726 [final distribution of property]). Defendants' reliance on Manson, supra, 188 Cal.App.4th 1244 is instructive mainly to point out that the term "liquidation" can have different meanings in different procedural and statutory contexts. The statutory term found in Probate Code section 16350, "partial liquidation," is to be contrasted to the term used here, "complete liquidation."
For our current purposes, the federal law citations Defendants offer are most helpful in a footnote by the dissenting justice in Estate of Lammerts, supra, 54 T.C. 420, 447, footnote 1, as follows: "The liquidation-reincorporation area is a prickly thicket through which the courts, the respondent, and even the Congress, have traveled only with considerable difficulty." ([dis. opn. in part, Tannenwald, J.].) He also pointed out that tax analysis traditionally uses "form versus substance" criteria, as opposed to "the tyranny of labels." (Id. at p. 420.) This reference in the dissent in Estate of Lammerts to "form versus substance" invoked Bazley v. C.I.R. (1947) 331 U.S. 737. Bazley indicates that when the tax courts evaluate a corporation's distributions, in whatever form utilized, they will look to whether the circumstance "represents merely a new form of the previous participation in an enterprise, involving no change of substance in the rights and relations of the interested parties one to another or to the corporate assets. As to these, Congress has said that they are not to be deemed significant occasions for determining taxable gain." (Id. at p. 740.) Although we do not have a tax case before us, we too should look to the substance of the transactions, not their forms. (Civ. Code, § 3528 ["The law respects form less than substance."].)
Because PPDW was a Delaware LLC, Defendants relied heavily on Delaware Code Annotated, title 6, section 18-209, subdivision (g), as providing standards for merger or consolidation of LLCs and for agreements to be made about allocation of resources and liabilities to the surviving or resulting company, with or without dissolution and winding up processes. They argued the statute allowed them to make such an agreement and not to wind up Plaza's business, when "liquidating" it. However, the record does not contain substantial evidence that Defendants could unilaterally decide that as a result of the Plan of Merger, none of the entire set of assets or liabilities of Plaza can still exist. There may be circumstances in which statutory law permits survival of its liabilities pursuant to the Plan of Merger, such that Plaza was not "completely liquidated" under the ordinary sense of the words used in the ASA.
We accordingly should properly focus upon the manner in which the parties used the contracting language at the time the ASA was drafted and before disputes arose. (City of Hope, supra, 43 Cal.4th at p. 393 ["A party's conduct occurring between execution of the contract and a dispute about the meaning of the contract's terms may reveal what the parties understood and intended those terms to mean. For this reason, evidence of such conduct . . . is admissible to resolve ambiguities in the contract's language."].)
B. Premerger/Postmerger Conduct; Objective Standard
Evidence about the parties' predispute, postcontracting conduct is admissible to demonstrate an ambiguity in their contractual language, but "only to prove a meaning to which the language is 'reasonably susceptible' [citation], not to flatly contradict the express terms of the agreement." (Winet, supra, 4 Cal.App.4th 1159, 1167; Pacific Gas & E. Co., supra, 69 Cal.2d 33, 38.) In this light, we caution that evidence regarding a party's subjective understanding of the term is irrelevant, absent evidence the understanding was mutual at the time of drafting. (Winet, at p. 1166, fn. 3 ["evidence of the undisclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language"]; Wolf, supra, 114 Cal.App.4th at pp. 1355-1357.) For this reason, Plaintiff cannot properly rely on his personal belief that potentially severe tax consequences would ultimately prevent Defendants from ever liquidating Plaza, so the ASA must have been drafted accordingly.
Instead, we should look to objective manifestations of the parties' conduct in arriving at and in carrying out the ASA. Defendants' arguments are premised on assumptions that Plaintiff's ASA rights were expressly terminated upon a "complete liquidation" and as a matter of law, the Plan of Merger accomplished that. They then attempt to turn the question into whether the "merger and disappearance" of Plaza qualified as that "liquidation" referenced in the ASA. Defendants' points and authorities admitted to the trial court that under section 17707.07 (permitting actions against dissolved LLCs), if there has been no discharge in bankruptcy, then "all obligations survive liquidations, dissolutions and mergers. That is, a liquidation, dissolution, or merger of a limited liability company is the ending of a corporate existence, but those to whom the liquidating company owes something continue to have claims against the company and can enforce its obligations." They nevertheless argue that the manner in which the ASA was written triggered its own end, when it used the "complete liquidation" term, and when Defendants inserted the same "complete liquidation" term into the Plan of Merger.
We find several flaws with Defendants' approach. First, the term "complete liquidation" as used in the ASA is not necessarily identical to Defendants' unilateral reiteration of it in their Plan of Merger. The term "liquidation" can be used in different senses in different contexts, as discussed above. Once the modifier "complete" was attached to the liquidation term, a more specialized reading became necessary, in the particular procedural and factual context in which the word was used in the document.
In performing de novo review of the summary judgment ruling, "we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his] evidentiary submission while strictly scrutinizing defendants' own showing, and resolving any evidentiary doubts or ambiguities in plaintiff's favor." (Saelzler v. Advanced Group 400, supra, 25 Cal.4th 763, 768.) Utilizing the extrinsic evidence to assist in defining the contractual term "complete liquidation," this record suggests that triable material issues of fact about the original intent of the ASA parties remain. Where there is no evidence of objective manifestations of the parties' intent, and where a contractual term is undefined in the parties' contract, "the only way to construe the meaning of the term . . . is to consider the nature of the contract and the circumstances under which the parties negotiated." (Wolf, supra, 114 Cal.App.4th at p. 1357.) Where the contract and the circumstances involve industry custom and usage, extrinsic evidence may expose a latent ambiguity in the contract language regarding the industry's customary usage of the term. (Ibid.)
Going in chronological order, events in 2005, 2006 and 2014 may have bearing on the ASA parties' respective intent. In 2005, when Defendants considered liquidating Plaza's parent corporation (Southwest Properties Ltd.), they obtained a CPA's report on the effects of such a hypothetical liquidation upon Plaza. The CPA and Attorney Boatwright, who assisted later in drafting the ASA, displayed a certain understanding about how a "typical liquidation" would take place, such as selling the assets, paying all liabilities, and distributing the net cash to shareholders. We do not now resolve the binding effect of such an understanding, but observe that since the proposal was prepared for the same people that own the current Defendants, it may shed light on their understanding of the term "liquidation" in later arriving at the ASA.
Defendants argued that their Attorney Boatwright's deposition testimony about the 2006 time frame, when the parties drafted the ASA, confirmed that he did not remember discussing the term "liquidation" with them. During the drafting process, comparable terms were deleted from the draft ASA provision that governed termination events (i.e., "dissolution," "termination," and "sale of all or substantially all" of Plaza's assets). Different inferences can be drawn on whether the parties intended to narrow or broaden the termination clause, with respect to any future merger that Defendants might cause. The ASA itself recited at its outset that before 2005, Plaintiff had already performed asset management and advisory services for Plaza, which led to the drafting of the ASA to establish his legal entitlement to a services fee. It included a paragraph stating the ASA would be binding on the parties' successors, such that continued services were evidently contemplated.
During 2014, while Defendants were preparing for the merger, Plaintiff was still working for them and was sent a copy of the draft Plan of Merger. Plaintiff's lodged exhibits include an e-mail from one of the transactional counsel involved in 2014, questioning whether the draft Plan of Merger "purports to give PPDW the right to cherry pick which liabilities, contracts, agreements, leases, obligations, debts or other arrangements that it would like to take on, and to leave the rest (e.g., what if PPDW elected not to assume the Management Agreement or Participation Agreement?). We note that this is not in accordance with applicable Delaware and California law, which provides that the surviving entity assumes all rights and liabilities of the disappearing entity." Plaintiff wrote Defendants, "As written, my agreement [i.e., the ASA] dies when you dissolve Poway Plaza, LLC which is this Wednesday." He offered them an amendment to the ASA "that protects me from getting lost in the merger which I know is clearly not anyone's intention." Defendants retained the questioned language in the Plan of Merger, however.
We disagree with Defendants that those written statements by Plaintiff in November and December 2014, during the negotiations leading to the Plan of Merger, amount to outright evidentiary admissions against interest that Plaintiff had interpreted the ASA phrase, "complete liquidation," as clearly extinguishing his rights as a result of the contemplated merger. Instead, his objections in this respect appear to qualify as conflicting evidence which exposes an ambiguity in the ASA term's meaning and its binding effect upon future transactions. (Wolf, supra, 114 Cal.App.4th at p. 1355.) Both parties were experienced real estate professionals who were still working together and were not yet in litigation, and they presumably were using terminology according to industry norms. The ASA terms were reasonably susceptible to the meanings urged. (City of Hope, supra, 43 Cal.4th at p. 393.) As such, the competing definitions of complete liquidation, and about the ASA's usage of that term as having an effect upon a proposed merger, are equally plausible and subject to further inquiry. (Id. at p. 1355.)
Under section 17710.16, subdivision (b), after a merger, a creditor's rights against each of the constituent limited liability companies "shall be preserved unimpaired and may be enforced against the surviving limited liability company . . . to the same extent as if the debt, liability, or duty . . . had been incurred or contracted by the surviving limited liability company . . . ." Here, Plaza and PPDW own the same shopping center property, it was used as collateral for the refinancing, an ongoing business continued, and the record does not now establish as a matter of law that all of Plaza's affairs were wound up to eliminate all existing Plaza liabilities.
Section 1.1 of the Plan of Merger generally provided for PPDW to succeed to Plaza's liabilities and debts, but its section 2.4 specified that "Notwithstanding Section 1.1 above, PPDW shall only expressly assume any liability . . . approved by its Manager," designated as Jorge. That unilateral declaration by Defendants that they could select which of their liabilities should continue to exist, as they claim, does not completely answer the question of whether Plaza was legally dissolved or "completely" liquidated. (Del. Code Ann., tit. 6, § 18-209, subd. (g) [membership of an LLC may make an agreement on whether a merger results in dissolution of one of the companies]; id. at § 18-801 [requirements for dissolution and winding up]; Corp. Code, § 17710.16, subds. (a) [upon merger of LLCs, surviving LLC succeeds to rights of disappearing LLC and is subject to its liabilities, as if the surviving LLC had itself incurred them] and (b) [rights of creditors of constituent or disappearing LLC shall be preserved as against surviving LLC].)
Plaintiff supported his claim that Plaza was not completely liquidated, by having his expert Caplan attach to his declaration a recorded copy of the Plaza-PPDW deed of transfer, giving the legal description of the property and stating that no tax was due. Defendants filed evidentiary objections to Caplan's declaration, on the grounds that it was inappropriate for him to provide expert opinion testimony on questions of law or the applicability of law to facts, such as in the interpretation of contracts. (Summers v. A.A. Gilbert Co., supra, 69 Cal.App.4th 1155, 1179.) Defendants objected that Caplan did not have personal knowledge about the parties' intent in drafting the documents he examined, such as the deed. The trial court sustained the evidentiary objections without further explanation.
The court was justified in sustaining objections to Caplan's legal interpretation of the transaction, based on his years of experience as an attorney, that a "complete liquidation" would require an event, such as a sale of the asset, so that the owners would realize its net value and would then have no further interest in it. He stated, "A merger of one entity into another is not such an event (by that I mean the merger is not a complete liquidation), since the merger has no impact on the economic future of the shopping center or the ability of the members of the Lutteroth family to participate in the cash flow and increase in value of the shopping center after [its effective date]." --------
However, those defense objections did not directly attack the evidence provided about the recorded grant deed transfer, which showed on its face that no documentary transfer tax was imposed. Different inferences can be drawn from that evidence about the effect of the transfer of the asset, whether it occurred during a corporate reorganization or liquidation. Possibly, a finder of fact would be assisted by expert interpretation of the terminology used during such a transaction. (Evid. Code, § 801, subd. (a).) Caplan's declaration stated, " 'There is no Documentary Transfer Tax as this conveyance confirms a change of the name and the Grantor and Grantee are the same party [citing Rev. & Tax. Code, § 11911].). If there was a liquidation of [Plaza] (and certainly if there was a complete liquidation of it), [Plaza] would have had to pay the required Documentary Transfer Tax. [Plaza] made it clear that that was not what was intended or happening - the conveyance was only a change of name (to get title into the then recently formed PPDW, LLC so that the lender [] which was closing a secured real property loan (and recording a deed of trust encumbering [Plaza] concurrently with the recordation of the Grant Deed) would have as the borrower an entity that satisfied its requirements. There was another way to satisfy the lender's requirements that did not require the formation of a new Delaware limited liability company, but defendants selected forming PPDW, LLC.' "
At the summary judgment stage, Caplan's declaration was not properly considered on contract interpretation issues, but similar material might qualify as extrinsic evidence to assist in interpreting any indications about the intent of Defendants in executing the ASA and its effects on any Plan of Merger. If it can be proved that contractual liabilities existing under the ASA could survive this type of merger, other elements of Plaintiff's breach of contract claim may still require findings of fact. Jorge wrote in his declaration that he had become dissatisfied with Plaintiff's performance of his ASA duties, suggesting Defendants might have a contract defense regarding Plaintiff's potential breaches of the ASA.
Where contractual language is reasonably susceptible to the meaning given it by one party but not the other, the court must decide the ultimate construction to be placed on the ambiguous language. (Wolf, supra, 114 Cal.App.4th at pp. 1351, 1355.) " 'Where, however, a conflict in the evidence exists, it must be resolved in the trial court, as with any question of fact, before the court can declare the meaning of the contract as a matter of law.' " (Id. at p. 1359.) The reasonableness of the competing interpretations must be tested. The parties' objectively reasonable expectations regarding the scope of the term when they agreed to the contract also amount to triable issues of material fact. (Id. at pp. 1359-1360.) On this record, it is not possible to resolve all the contract issues as matters of law. Summary judgment should not have been granted on contract, or on the related causes of action for breach of the implied covenant of good faith and fair dealing and declaratory relief.
V
TORT ANALYSIS (LUJA AND JORGE); ORDER FOR FEES AND COSTS
To challenge the ruling that no triable issues of fact existed on the claim for conspiracy to interfere with existing contractual relations, Plaintiff argues that the ASA contractual relationship and obligations survived the Plan of Merger. He contends there is a question of fact as to whether Jorge and Luja intended to deprive him of the benefits under the ASA, when choosing to create a new entity to accomplish the refinancing. (Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1603 [elements include intentional acts toward inducing breach or disruption of contract].)
Where a plaintiff alleges an unlawful conspiracy, he may "rely on inference rather than evidence," but must rely only on inferences that imply an unlawful conspiracy was more likely than not to have occurred, together with other inferences or evidence. (Aguilar, supra, 25 Cal.4th 826, 857.) Here, the lender's term sheet permitted Defendants to choose between using a "recycled" Delaware entity or a new one. In the judicially noticeable materials supplied about the criteria for creating a recycled entity, the authors note that a borrower can make certain concessions to increase the creditworthiness of a recycled entity. (See fn. 2, ante.) Defendants did not choose to do so, instead contending that none of Plaza's liabilities remained in existence after the Plan of Merger.
The Plan of Merger states that Luja is the only member of both Plaza and PPDW, and Plaza desired to merge with and into PPDW, such that PPDW would be the surviving entity. Section 17710.16, subdivision (d), specifies, "Nothing in [article 10] is intended to affect the liability a member of a disappearing limited liability company may have in connection with the debts and liabilities of the disappearing limited liability company existing prior to the time the merger is effective." This statutory language indicates that Luja, as a member of both the disappearing and the surviving LLCs, might remain exposed to any liability of Plaza that existed before the effective date of the Plan of Merger.
Together with the declaration from Jorge, stating that before the Plan of Merger was completed, he had already become dissatisfied with Plaintiff's services and was therefore satisfied with terminating Plaza's obligations toward Plaintiff, the term sheet evidence may raise inferences that Jorge and Luja had the intent of using the Plan of Merger for that purpose. Triable issues of fact may remain on whether their dissatisfaction was justified, regarding the performance element of the underlying breach of contract cause of action.
Although Jorge declares that in 2014, he did not consider the effect this Plan of Merger would have on the ASA, that raises credibility issues. Jorge's admission he was dissatisfied with Plaintiff may raise inferences about a less than innocent purpose for choosing a structure for the Plan of Merger that removed the Plaza name and possibly its liabilities from responsibility for the underlying asset. The Plan of Merger borrowed the "complete liquidation" term from the ASA, and inferences may be drawn that this was a purposeful method of repudiating the ASA. The court erred in granting summary judgment on this claim.
Further, when "summary judgment is reversed on appeal, there is no prevailing party and thus no basis for an award of fees." (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1056; see also Roberts v. Packard, Packard & Johnson (2013) 217 Cal.App.4th 822, 831 [prevailing party determination under Civil Code section 1717 cannot be made until all causes of action have been finally resolved].) The order awarding fees and costs must be reversed in light of our decision reversing summary judgment.
DISPOSITION
Summary judgment and the postjudgment order awarding fees and costs are reversed. Costs on appeal to Appellant.
HUFFMAN, J. WE CONCUR: McCONNELL, P. J. O'ROURKE, J.