Opinion
D069616
04-20-2017
KAVEH S. FARHOOMAND, Plaintiff and Respondent, v. JANET JUSTIN CAINE, Defendant and Appellant.
Fransen and Molinaro, Paul J. Molinaro and Nathan W. Fransen for Defendant and Appellant. Law Offices of Linda J. Alexander, Linda J. Alexander and Paul Grinvalsky; Lotz, Doggett & Rawers and Jeffrey S. Doggett, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 37-2011-00050839-CU-BC-NC) APPEAL from a postjudgment order of the Superior Court of San Diego County, Earl H. Maas III, Judge. Affirmed. Fransen and Molinaro, Paul J. Molinaro and Nathan W. Fransen for Defendant and Appellant. Law Offices of Linda J. Alexander, Linda J. Alexander and Paul Grinvalsky; Lotz, Doggett & Rawers and Jeffrey S. Doggett, for Plaintiff and Respondent.
After disputes arose between defendant and appellant Janet Justin Caine and plaintiff and respondent Kaveh S. Farhoomand concerning a residential real estate transaction, Farhoomand obtained a judgment in part granting specific performance of a contract for transfer of the residence from Caine to Farhoomand and awarding Farhoomand attorney fees and costs as sanctions. Pending the first appeal in this case (Farhoomand v. Caine (Jun. 25, 2015, D064302) [nonpub. opn.]), the trial court ordered the promissory note on the property posted as an undertaking to stay enforcement of the judgment and set up a blocked account into which Farhoomand transferred funds received from the property's refinance. Following resolution of the appeal, the court granted Farhoomand's request to distribute proceeds from the home's sale from the account. In doing so, it determined the payoff amount of a loan Caine had given to Farhoomand, subtracted the attorney fees and costs sanctions awarded to Farhoomand, and ordered the remainder of the funds distributed to Caine's attorney and placed in an attorney trust account.
We granted Farhoomand's December 28, 2016 request for judicial notice of this court's prior nonpublished appellate opinion, attached as exhibit 1 to his request for judicial notice, as well as the portions of the reporter's transcript from the prior appeal. (Evid. Code, §§ 452, subd. (d)(1) [judicial notice may be taken of court records], 459; Cal. Rules of Court, rule 8.1115(b)(1); Fink v. Shemtov (2010) 180 Cal.App.4th 1160, 1171-1173.) On our own motion, we take judicial notice of the remainder of the record in the prior appeal. We summarize some of the factual background from that record and our prior opinion.
Caine appeals from that postjudgment order, contending the judgment terminated the trial court's jurisdiction, removing its authority to determine the parties' rights as to the underlying debt, which assertedly was not part of the final judgment and as a consequence, the court's determination of the loan's payoff amount is void. We reject the contentions and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Proceedings Through the First Appeal
In or about 2009, Caine purchased a house (the property) and signed a grant deed conveying it to Farhoomand. Farhoomand signed a note secured by a deed of trust indicating that Caine gave Farhoomand a 30-year loan of $605,000 at a 5.5 percent interest rate. The total loan amount was calculated by adding the $525,000 purchase price to Farhoomand's existing debts to Caine, and included money Caine spent to purchase furniture for Farhoomand.
Farhoomand made mortgage payments and paid utilities, property taxes, home warranty and homeowner's insurance on the property, but after he and Caine's relationship deteriorated, Farhoomand obtained a court order permitting him to make payments into an interest-bearing account. He filed suit against Caine and eventually asserted claims for breach of contract, breach of fiduciary duty, fraud, and declaratory relief. In particular, Farhoomand sought a judicial declaration of his and Caine's rights, duties and obligations under their agreement as well as their interest in the property, and for enforcement of the agreement. In part, he prayed for specific enforcement of the agreement including the fulfilment of the property's transfer to him in accordance with its terms. Caine filed a cross-complaint alleging financial elder abuse, intentional infliction of emotional distress and conversion.
In April 2013, Farhoomand obtained unanimous special jury verdicts in his favor on his breach of contract, concealment/breach of fiduciary duty, false promise, negligent misrepresentation and intentional misrepresentation causes of action. Thereafter, Farhoomand moved for specific performance of the sales contract, asking the court to order Caine to immediately turn over the original grant deed she had executed for recording, which would permit him to refinance the property. He also asked the court to determine how much money was due Caine from the interest-bearing account, with a proper allocation of monies between principal and interest.
The parties did not submit the issue of economic damages to the jury, agreeing to have the court decide that issue; and the jury awarded Farhoomand zero noneconomic damages.
In May 2013, the court held a hearing on the matter, including on the issue of specific performance. In part, the court and parties discussed how the court would reach an equitable resolution of the matter so as to enforce the parties' agreement, get Caine the money held in trust by the court, and eliminate the relationship between Caine and Farhoomand. The parties also discussed the fact that the jury had not determined the property's purchase price, resulting in possible adverse tax consequences to Caine and other difficulties with the disposition of trust proceeds and calculation of mortgage payments and interest. The parties agreed during the hearing, however, that the purchase price of the property was $525,000.
The next month, the court entered judgment for Farhoomand on his complaint and Caine's cross-complaint, granting specific performance of the contract for transfer of the property from Caine to Farhoomand. The judgment required turnover of the grant deed to the court, release of the funds held in trust to Caine, and monthly payments of $3,150 by Farhoomand to Caine until the promissory note was paid in full.
Caine appealed from the judgment in July 2013.
The next month, Farhoomand's counsel, noting Farhoomand's continued payments on the note, asked the court to clarify the judgment as to the loan balance and what would constitute payment in full. Caine's counsel objected that such a clarification was an improper request to amend the judgment, which the court was without power to do pending appeal. The court discussed its thinking as to how the parties would eventually resolve the matter taking into consideration its judgment, Farhoomand's payments on the note to Caine's counsel, and the upcoming requests for attorney fees and costs; it stated it had the power to decide the interest rate on the note and what was owed on it, then offset any attorney fees and costs award against the total amount owed.
In October 2013, the court amended the judgment to award Farhoomand $20,080.55 in costs. The amended judgment also included cost of proof sanctions consisting of $287,040 in attorney fees and $7,448.05 in expert fees and costs. The court added a line finding the property's purchase price to be $525,000.
Several months later, in connection with proceedings in which Farhoomand sought to compel Caine to appear for a judgment debtor exam, the court ordered the parties' promissory note posted as an undertaking for the $294,488.05 in attorney fees and costs pending resolution of the issues on appeal. The order provided that the court "will evaluate the remaining security and appropriate offsets at the time of remittitur, if any" and it expressly retained jurisdiction over the order and its enforcement.
In April 2015, Farhoomand applied for an order to set up a blocked account to transfer funds obtained through the refinancing of the property to cover costs and fees awarded to him pending resolution of the appeal, and distribution of the remaining funds to Caine. He argued based on the property's purchase price, his payments and interest, he owed Caine $493,183.91 on the original loan as of June 1, 2015, and asked that the undertaking of $441,732.07 (one and a half times the court's fees and costs award to him) be held in the account, with the remainder released to Caine. The court ordered the account opened in May 2015.
On Caine's first appeal (Farhoomand v. Caine, supra, D064302), this court held Caine's July 2013 notice of appeal had divested the court of jurisdiction to amend the judgment in October 2013 to state the property's purchase price. We directed the court on remand to modify the amended judgment by removing its declaration regarding that matter, but otherwise affirmed.
Proceedings Following the First Appellate Decision
In September 2015, the property was sold and the proceeds placed in the blocked account. In October 2015, anticipating the pending remittitur from this court, Farhoomand moved for an order permitting distribution of funds from the account, as well as for imposition of sanctions on Caine under Code of Civil Procedure section 128.5. He pointed out that his total award of attorney fees and costs was $314,568.55 and interest from September 6, 2013, to the present increased the total award to $383,428.93. He argued Caine was to receive the mortgage balance as of the date of sale less the total award due him, and the payoff amount of the loan was $491,041.67, so that from the account Caine was entitled to $107,612.74 ($491,041.67 minus $383,428.93) minus any further sanctions or costs ordered by the court. Farhoomand submitted declarations from his counsel attaching, among other things, letters between counsel regarding payoff calculations supported by exhibits as well as a judgment interest calculator.
The attorney fees and costs award plus interest identified by Farhoomand actually totals $382,654.93, a difference of $774. Neither party raised the mathematical error below nor do they on appeal, so we leave in place the trial court's order based on Farhoomand's calculations.
According to Farhoomand, this payoff amount was based on Caine's calculations in a handwritten ledger she kept showing a loan balance of $546,038.96 after December 1, 2010; the loan terms of a 5 percent interest rate with $3,150 in monthly payments made by Farhoomand from January 1, 2011, to September 1, 2015; an amortization schedule showing the balance of the loan after September 1, 2015, was $489,855; and daily interest from September 1, 2015, to September 17, 2105, amounting to $1,156.67. Caine had testified at trial that she had adjusted the loan amount and terms in July 2010, adding $20,000 to the principal balance to make it $586,780.94, and reducing the interest rate to 5 percent. As stated, the trial court adopted Farhoomand's calculations, and Caine does not challenge them in her appeal.
In opposition, Caine argued that Farhoomand's request sought "new rulings" as to the operative terms of the loan and additions and subtractions from the loan balance, which she asserted were beyond the court's jurisdiction and irrelevant to the judgment's enforcement.
She also argued that the amount owed by Farhoomand remained in dispute as to the interest rate, a purported tax credit, and her entitlement to attorney fees and costs. Caine does not repeat these arguments on appeal.
Ruling that Caine's objections and request for attorney fees had been resolved by posttrial motions, the court in November 2015 granted Farhoomand's request for an order allowing distribution of the funds from escrow. It adopted Farhoomand's calculations on the payoff amount of the loan and ordered $383,428.93 deducted and paid to Farhoomand's counsel with the remaining $107,612.74 distributed to Caine's attorney and placed in a segregated blocked attorney trust account until further court order. It denied Farhoomand's request for sanctions.
Caine appeals from the postjudgment order.
DISCUSSION
I. Appellate Principles and Standard of Review
Preliminarily, we note the established appellate principle that " '[a] judgment or order of the lower court is presumed correct.' " (Denham v. Superior Court (1970) 2 Cal.3d 557, 564, italics omitted; see Estate of Bonzi (2013) 216 Cal.App.4th 1085, 1101.) Thus, Caine must affirmatively demonstrate error occurred and, when the appellate record is silent on a matter, we must indulge all intendments and presumptions that support the order or judgment. (Ibid.) Applying this settled standard, we do not reach the correctness of the trial court's factual findings left unchallenged by Caine. The sole question before us is whether following entry of the final judgment, appeal, and remand, the trial court had power to make its order.
On this issue, our review is settled: whether the court possessed jurisdiction is a pure question of law, subject to our independent review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799; Shisler v. Sanfer Sports Cars, Inc. (2008) 167 Cal.App.4th 1, 6.)
II. Contentions
Caine contends the October 2013 amended judgment in this case terminated the trial court's jurisdiction, and at that point "there was nothing further for the trial court to determine . . . ." She acknowledges authority setting out an exception to that rule permitting a court to resolve questions of enforcement or compliance (citing APRI Ins. Co. v. Superior Court (1999) 76 Cal.App.4th 176, 181), but maintains its postjudgment order was not for that purpose. According to Caine, the court instead resolved a dispute between Farhoomand and Caine—the payoff amount of the loan—that had not been decided in the underlying case or encompassed within the judgment, and "was not necessary for the enforcement of the judgment" and should have been the subject of a new action. Caine characterizes the court's determination of the loan balance as an amendment or correction of the jury's verdict that it did not have power to make after its final judgment was entered, or a new claim independent of or unrelated to the disputes resolved by the judgment. She argues the trial court after a remittitur is only vested with jurisdiction to carry out the judgment as ordered by the appellate court, and that under the circumstances the court's postjudgment order determining the payoff amount of the loan is legally void.
III. The Trial Court's Order of Distribution Accomplished Enforcement of the Judgment
There is no dispute that postjudgment, the trial court here was dealing with Farhoomand's requests for a judicial declaration and specific performance, both forms of equitable relief. (Steiner v. Thexton (2010) 48 Cal.4th 411, 425, fn. 14; City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 480-481; Dawson v. East Side Union High School Dist. (1994) 28 Cal.App.4th 998, 1044.) As Caine acknowledges, trial courts retain jurisdiction to oversee and enforce the execution of a judgment, giving them authority to fashion orders to enforce compliance. (Code Civ. Proc., § 128, subd. (a)(4) [court retains jurisdiction to "compel obedience to its judgments, orders, and process . . . ."]; Ironridge Global IV, Ltc. v. ScripsAmerica, Inc. (2015) 238 Cal.App.4th 259, 267; Rivero v. Lake County Board of Supervisors (2014) 232 Cal.App.4th 1187, 1195, fn. 3, citing Estate of Bonzi, supra, 216 Cal.App.4th at p. 1103.)
Where, as here, a case involves equitable claims and relief, such postjudgment jurisdiction has been expressed in broad terms: " 'The jurisdiction of a court of equity to enforce its decrees is coextensive with its jurisdiction to determine the rights of the parties, and it has power to enforce its decrees as a necessary incident to its jurisdiction. Except where the decree is self-executing, jurisdiction of the cause continues for this purpose, or leave may be expressly reserved to reinstate the cause for the purpose of enforcing the decree, or to make such further orders as may be necessary. [Citations.] A court of equity can mold its decrees to suit the exigencies of the case. [Citation.] Where equity has acquired jurisdiction for one purpose, it will retain that jurisdiction to the final adjustment of all differences between the parties arising from the causes of action alleged. [Citations.] Where a court has taken jurisdiction of a suit in equity it may determine all legal as well as equitable issues in order to completely dispose of the matters in controversy.' " (Day v. Sharp (1975) 50 Cal.App.3d 904, 912-913 [court had jurisdiction twelve years after the judgment to reduce equitable constructive trust decree to a specific monetary sum]; accord, Balboa Island Village Inn, Inc. v. Lemen (2007) 40 Cal.4th 1141, 1161; see Stump's Market, Inc. v. Plaza de Santa Fe Limited, LLC (2013) 212 Cal.App.4th 882, 890 [" ' "The jurisdiction of a court of equity to enforce its decrees is coextensive with its jurisdiction to determine the rights of the parties, and it has power to enforce its decrees as a necessary incident to its jurisdiction" ' "].) This is so even in the absence of an express reservation of jurisdiction: "An equity court has inherent power to make its decree effective by additional orders affecting the details of performance, irrespective of reservation of power in the decree." (Barnes v. Chamberlain (1983) 147 Cal.App.3d 762, 767; accord, Palmco Corp. v. Superior Court (1993) 16 Cal.App.4th 221, 225.) This includes "broad powers to fashion 'new remedies to deal with novel factual situations.' " (Dawson v. East Side Union High School Dist., supra, 28 Cal.App.4th at p. 1045.) In Vallelunga v Gomes (1951) 102 Cal.App.2d 374, 380, 382, the court applied the rule that a court of equity has "inherent power to supervise the execution of its orders, even after they have become final" and noted authority holding that a "court of equity has the duty of administering funds held in the custody of the law, distributing them to such of the parties as, after due hearing, show themselves entitled thereto, a duty which continues even after dismissal of the action in which the court gained custody."
In his operative complaint, Farhoomand sought declaratory relief and quiet title, specific performance of his and Caine's agreement, and an accounting. The judgment in his favor addressed his and Caine's rights to the property, requiring specific performance of their contract for its transfer and ordering the turnover of the grant deed as well as monthly payments by Farhoomand on their promissory note. The judgment also awarded Farhoomand sanctions that the court elected to offset from the balance owed by Farhoomand to Caine on the note, which was tendered in lieu of a bond as security to stay the judgment's enforcement. As Farhoomand points out, the court contemplated it would eventually calculate offsets against the note for the money Farhoomand owed to Caine, and distribute the blocked account funds so as to globally effect both the performance of the parties' agreement and the monetary portion of the judgment on the promissory note. Resolution of the matter inherently entailed a calculation of the loan payoff amount to Caine less the attorney fees and costs owed to Farhoomand, basically a determination of what monies under the note were in excess of the monies owed to Farhoomand to be returned to Caine.
Under the authorities cited above, we agree the trial court possessed equitable jurisdiction to order the distribution of funds from the blocked account respectively to Farhoomand and Caine so as to effectuate the specific performance and money aspects of the judgment. The court had continuing jurisdiction to make the " 'final adjustment of all differences between the parties' " and " 'determine all legal as well as equitable issues in order to completely dispose of the matters in controversy.' " (Day v. Sharp, supra, 50 Cal.App.3d at pp. 912-913.) "It is the policy of equity that it once having acquired jurisdiction it will settle all the controversies between the parties that it can reasonably do, so as to avoid unnecessary litigation. . . . ' "[W]here equity has acquired jurisdiction for one purpose it will retain that jurisdiction to the final adjustment of all differences between the parties arising from the cause of action presented. It is, indeed, the duty of a court of equity, when all parties to the controversy are before it, to adjust the rights of all and leave nothing open for further litigation." ' " (Iverson v. Goodbub (1933) 128 Cal.App. 538, 540.)
Caine's argument that Farhoomand should have filed a new action to resolve disputes over the payoff amount is without citation to authority. And we reject her suggestion that the court's determination amounted to an improper amendment of the judgment to add damages or other substantive provisions. (Compare Clark Equipment Co. v. Mastelotto, Inc. (1978) 87 Cal.App.3d 88, 99 [trial court has no authority to correct a jury verdict by adding to it an amount for damages proved and omitted from the verdict] & Stump's Market, Inc. v. Plaza De Santa Fe Limited, LLC, supra, 212 Cal.App.4th at p. 892-893 [court had no jurisdiction to declare the parties' rights and responsibilities as to future hypothetical issues between them].) Here, the figures on which Farhoomand relied to calculate the loan payoff were either stipulated by the parties or testified to by Caine during trial, and Caine does not challenge them in any way. The note's terms were established at trial and the ultimate order based on a computation made by the trial judge who presided over the matter, heard the trial testimony and considered the evidence. Where a court possesses equitable jurisdiction to make a postjudgment order, the question of whether the court appropriately exercised it is subject to review for abuse of discretion. (See Branscomb v. JPMorgan Chase Bank, N.A. (2014) 223 Cal.App.4th 801, 806; Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 770-771 [" 'From the very nature of equity, a wide play is left to the conscience of the [judge] in formulating his decrees' "]; Lortz v. Connell (1969) 273 Cal.App.2d 286, 300 ["The trial court has discretion as to the extent of the relief to be afforded in a proceeding for declaratory relief"].) Under this standard, reversal is required only where the court's ruling exceeds the bounds of reason, all of the circumstances before it being considered. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 987; Walker v. Superior Court (1991) 53 Cal.3d 257, 272.) We perceive no such abuse of discretion.
We note that this court in Stump's Market recognized the traditional rule that a court acting in equity may retain jurisdiction to enforce its judgment, although doing so was not appropriate under the unusual circumstances of that case. (Stump's Market Inc. v. Plaza De Santa Fe Limited, LLC, supra, 212 Cal.App.4th at pp. 890-892.) There, the lower court retained jurisdiction over parties to a lease potentially spanning an additional 17 years; the court also retained jurisdiction to determine the parties' future rights and responsibilities. (Id. at pp. 892-893.) Here, the trial court's jurisdiction was limited to fully and finally settling a judgment for specific performance of a property transfer agreement and for sanctions; it did not exercise jurisdiction to resolve any disputes occurring beyond the agreement or future hypothetical matters. This court's concern in Stump's Market that jurisdiction was retained over an impermissibly lengthy period of time and extended to different disputes is not a factor in this case. The trial court here retained jurisdiction in accordance with the general rule in equitable actions, and did so in a manner well within its discretion. Caine does not cite to or rely upon Stump's Market in any event.
DISPOSITION
The judgment is affirmed.
O'ROURKE, J. WE CONCUR: McCONNELL, P. J. HUFFMAN, J.