Opinion
G044304
06-28-2012
CASTLETON REAL ESTATE & DEVELOPMENT, INC., Plaintiff, Cross-defendant and Appellant, v. TAI-FU CALIFORNIA PARTNERSHIP et al., Defendants, Cross-complainants and Respondents; JUSTIN HUANG et al., Cross-defendants and Appellants.
Manning & Kass, Ellrod, Ramirez, and Trester, Fredric W. Trester, Christopher A. Kanjo and Ronald J. Selgrath for Plaintiff, Cross-defendant and Appellant and Cross-defendants and Appellants. Castro & Associates, Joel B. Castro, Toneata Martocchio; Law Office of Morton Minikes and Morton Minikes for Defendants, Cross-complainants 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 07CC00624)
OPINION
Appeal from a postjudgment order of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed in part and reversed and remanded in part.
Manning & Kass, Ellrod, Ramirez, and Trester, Fredric W. Trester, Christopher A. Kanjo and Ronald J. Selgrath for Plaintiff, Cross-defendant and Appellant and Cross-defendants and Appellants.
Castro & Associates, Joel B. Castro, Toneata Martocchio; Law Office of Morton Minikes and Morton Minikes for Defendants, Cross-complainants and Respondents.
* * *
After plaintiff Castleton Real Estate & Development, Inc. (Castleton) sued defendants Tai-Fu California Partnership and Hsiuh Chin Lin (collectively Tai-Fu) to recover a real estate broker's commission under an exclusive listing agreement for the sale of certain real property, Tai-Fu cross-complained against, inter alia, Castleton and two of its employees, cross-defendants Justin Huang and Howard Ting, seeking rescission and making other contractual claims. Tai-Fu later amended its cross-complaint to allege various torts, including negligent misrepresentation, constructive fraud, and elder abuse. The jury found in favor of Castleton and its employees on the complaint and cross-complaint. In a related case (G043720 [consol. w/ G043760 & G043787]), Tai-Fu appeals the judgment, and Castleton and another cross-defendant sued by Tai-Fu, YK America Group, Inc., cross-appeal from the order denying their motions for prejudgment interest.
This appeal involves the denial of Castleton, Huang, and Ting's motion for attorney fees based on a provision in the listing agreement. The court found Castleton's failure to request mediation before filing its complaint as required by the fee provision barred recovery of fees for both prosecution of its complaint and defending against the cross-complaint. It further determined Huang and Ting were not entitled to fees because they were not parties to the listing agreement, although it agreed at the motion hearing if Castleton had been entitled to fees on the cross-complaint it would include those incurred to defend all three cross-defendants against the contractually-based claims in the cross- complaint. Because Huang and Ting do not challenge the court's ruling they could not individually recover fees, only Castleton's entitlement is at issue on appeal.
Castleton concedes it may not recover fees for the prosecution of its complaint because it failed to seek mediation prior to filing it. (Lange v. Schilling (2008) 163 Cal.App.4th 1412, 1414.) But it contends it was entitled to fees for its defense against the cross-complaint, as that initiated a separate action. We agree and remand the matter to the trial court to determine the appropriate amount of fees to award Castleton. In all other respects, the order is affirmed.
DISCUSSION
We review de novo the legal basis for the court's denial of attorney fees. (Snyder v. Marcus & Millichap (1996) 46 Cal.App.4th 1099, 1102.)
The listing agreement between Castleton and Tai-Fu allows for the recovery of attorney fees to the prevailing party "[i]n any action" between them regarding Tai-Fu's obligation to pay a commission. The parties agreed "to mediate any dispute or claim arising between them out of this [l]isting [a]greement . . . before resorting to arbitration or court action . . . . If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action."
Castleton did not request mediation before filing its complaint, but Tai-Fu demanded it a month after it was sued. Although Castleton thereafter made efforts to mediate the matter, Tai-Fu refused to proceed and filed its cross-complaint. In doing so Tai-Fu "commence[d] an action" without first attempting to resolve the matter through mediation, having "refuse[d] to mediate" after requesting it.
Tai-Fu contends the cross-complaint was part of a single action initiated by Castleton because the proceedings were not severed. But the Supreme Court has held the filing of a cross-complaint "institute[s] a ' . . . separate, simultaneous action'" distinct from the initial complaint and makes the cross-defendant a defendant. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 51.) The result is "'two simultaneous actions pending between the same parties wherein each is at the same time both a plaintiff and a defendant.' [Citations.]" (Id. at pp. 51-52.) The fact the Legislature changed the definition of a complaint to mean either a complaint or cross-complaint "reinforces [the] 'treatment of all cross-actions as independent suits." (Id. at p. 52, fn. 2.) As a "defendant" in a cross-complaint filed after Tai-Fu refused to mediate, Castleton was entitled to recover fees incurred for its defense. (See Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1101 [affirming fee award to the defendant under mediation clause similar to this case where the plaintiff filed complaint without first seeking to mediate].)
Tai-Fu argues otherwise, quoting Johnson v. Siegel, supra, 84 Cal.App.4th at page 1101 (italics omitted), for the proposition "[s]eeking mediation is a condition precedent to the recovery of attorney fees by the party who initiates the action." According to Tai-Fu, that means only Castleton, as the party who initiated the lawsuit, must request mediation. We are not persuaded.
In Johnson, the defendant did not file a cross-complaint, but merely answered, and thus had not "commenced an action." (Johnson v. Siegel, supra, 84 Cal.App.4th at pp. 1091, 1100.) Because Tai-Fu filed a cross-complaint and thus "commenced an action," Johnson undermines rather than supports Tai-Fu's position.
Nor does Frei v. Davey (2004) 124 Cal.App.4th 1506 assist Tai-Fu. Frei involved an attorney fees request by the defendant sellers of a house who filed a cross-complaint against the buyer and the real estate broker. The agreement contained an essentially identical mediation condition to the one in this case. The court reversed an order awarding fees to defendants upon determining they had refused the plaintiff buyer's request to mediate without a legally valid reason. (Id. at pp. 1513-1514.) The case did not involve a request for fees by a plaintiff sued on a cross-complaint by the defendant. "[I]t is axiomatic that cases are not authority for propositions not considered. [Citations.]" (People v. Alvarez (2002) 27 Cal.4th 1161, 1176.)
Tai-Fu maintains the cross-complaint's gravamen and tenor was defensive in nature to Castleton's complaint and "many" of its causes of action tracked its affirmative defenses. Bertero rejected a similar contention the defendants' cross-complaint "did not initiate a judicial proceeding" because it was "in effect only an affirmative defense which they were obligated to assert under penalty of waiver" and "that it did not interject any theories or burdens not raised by the answer to the complaint." (Bertero v. National General Corp., supra, 13 Cal.3d at p. 50.) According to the court, "[f]or our purposes no sound reason appears for treating a cause of action initiated by a cross-pleading as only an integral part of that cause initiated by the complaint." (Id. at p. 51.) Moreover, "by seeking affirmative relief," defendants did "more than attempt to repel [the plaintiff's] attack; they took the offense in attempting to prosecute a cause of action of their own." (Id. at p. 53.) Although Bertero involved an action for malicious prosecution based on "affirmative relief asserted in a cross-pleading" (id. at p. 53), its analysis pertains to this case.
By stating "many" of its claims followed its affirmative defenses, Tai-Fu acknowledges not all of them did. To the contrary, Tai-Fu's second amended complaint goes on the offense by asserting causes of action for breach of fiduciary duty and elder abuse against Castleton, Huang, and Ting, and fraud against Huang. It was thus a separate action from the initial complaint. (Bertero v. National General Corp., supra, 13 Cal.3d at p. 53.)
The final issue raised on appeal is whether the fee provision of the listing agreement covers both the contract and tort claims asserted by Tai-Fu. It does. A provision such as the one in this case allowing for the recovery of fees arising out of the agreement is broad enough to support an award for the defense of both contract and tort claims. (Johnson v. Siegel, supra, 84 Cal.App.4th at pp. 1101-1102.)
DISPOSITION
The order denying an award of attorney fees to Castleton Real Estate & Development, Inc. is reversed and the matter is remanded to the trial court to determine the appropriate amount to which it is entitled consistent with the views expressed in this opinion. In all other respects, the order is affirmed. Castleton Real Estate & Development, Inc. shall recover its costs on appeal.
RYLAARSDAM, J. WE CONCUR: O'LEARY, P. J. BEDSWORTH, J.