Opinion
G055425
10-30-2018
ABDOLHAMID RISDANA et al., Plaintiffs and Appellants, v. GAIL MARIE DUNCAN et al., Defendants and Respondents.
Hammett & Galan and Erik J. Hammett for Plaintiffs and Appellants. Robert L. Conn for Defendant and Respondent Gail Duncan. Aleshire & Wynder, Anthony R. Taylor and Mily C. Huntley for Defendant and Respondent The Emerald Bay Inn.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2013-00646667) OPINION Appeal from a judgment of the Superior Court of Orange County, Hugh Michael Brenner, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Reversed and remanded. Hammett & Galan and Erik J. Hammett for Plaintiffs and Appellants. Robert L. Conn for Defendant and Respondent Gail Duncan. Aleshire & Wynder, Anthony R. Taylor and Mily C. Huntley for Defendant and Respondent The Emerald Bay Inn.
Abdolhamid Risdana and Henny Risdana sued Gail Duncan as an individual and trustee of the Gail Duncan Trust dated September 27, 1990, The Emerald Bay Inn, LLC (Emerald Bay), and other defendants for breach of contract, financial elder abuse, and back wages, among other claims. A jury found in favor of Duncan and Emerald Bay on all claims. The trial court, after entering judgment, awarded attorney fees to Duncan and Emerald Bay on all causes of action. The Risdanas contend the court erred because all of the causes of action overlapped with the claims for financial elder abuse and back wages, which were based on statutes allowing attorney fees only to a prevailing plaintiff. Given the complete overlap in claims, the Risdanas argue Duncan and Emerald Bay cannot recover any attorney fees. Alternatively, the Risdanas claim the court should have apportioned the attorney fees. We agree the court should have apportioned the fees and remand for the court to determine the proper apportionment.
I.
FACTS
In April 2013, the Risdanas filed the underlying complaint. In August 2015, the Risdanas filed a third amended complaint (TAC) against Duncan and her husband, Shashi Tejpaul, and their companies, including Emerald Bay, Picayo, LLC, and In Vogue, LLC. The Risdanas alleged they formed a business relationship with Tejpaul, loaned money to him, and performed services for him based on his representations and inducements. In addition to finding and managing investment properties in Orange County for Tejpaul, Abdolhamid Risdana allegedly loaned over $2 million dollars to Tejpaul. The loans were secured by promissory notes and a deed of trust. According to the Risdanas, Tejpaul promised to repay the various loans and to compensate Abdolhamid Risdana for his services, but failed to do so. Based on these allegations, the Risdanas asserted claims for: (1) breach of contract based on promissory notes; (2) breach of contract based on a deed of trust; (3) foreclosure of deed of trust; (4) back wages pursuant to California Labor Code § 1194 et seq.; (5) financial elder abuse pursuant to California Welfare & Institutions Code § 15610.30 et seq.; (6) conversion; (7) promise made without intent to perform; and (8) declaratory relief.
On the court's own motion, we augment the record to include the TAC filed in the Orange County Superior Court, Case No. 30-2013-00646667.
In October 2016, the jury found in favor of Duncan and Emerald Bay on all claims. The court entered judgment on June 5, 2017, and Duncan served notice of entry of judgment on June 16, 2017. The judgment provided that Duncan and Emerald Bay were "entitled to recover legally allowable costs from [the Risdanas] in an amount as subsequently entered or ordered by the Court." The judgment also provided: "The issue of prevailing party attorney's fees shall be determined by noticed motion with the exception of statutory provisions or as provided by Code."
Duncan and Emerald Bay then filed motions for attorney fees, which the Risdanas opposed. Duncan and Emerald Bay generally argued they were entitled to attorney fees for defending against all of the causes of action because the claims were "'inextricably intertwined.'" Duncan explained: "All of [the Risdana's] causes of action are 'interrelated' and 'inextricably intertwined', because they all related to [the Risdana's] allegations of damages of more than $2M which were allegedly secured by the Deed of Trust that provides for the award of attorney's fees herein." Emerald Bay similarly argued: "[D]efense of the breach of contract claim cannot be isolated from defending the other causes of action."
The Risdanas request we take judicial notice of the parties' briefing on the motions for attorney fees. We construe the request as a motion to augment the record and grant the motion.
At the hearing on the motions, the Risdanas' attorney argued the trial court should apportion the attorney fees, claiming Duncan and Emerald Bay could not recover their fees on all of the causes of action because "[t]his is not just one common cause of action or set of facts that affected all eight causes." Instead, he explained: "[T]here were eight causes of action; they were not common. There is no common denominator other than the parties." He also explained, "This is not one simple cause of action about one piece of property. This is . . . eight, causes of action that range from financial elder abuse, which by statute is unilateral, and he's not entitled to any attorney fees for that, to these deeds of trust
Counsel for Duncan and Emerald Bay again argued apportionment was unnecessary because all of the causes of action were intertwined. Duncan's counsel claimed: "The $2 million question . . . [was] used . . . as [the Risdana's] umbrella to encompass everything . . . . [The Risdanas] mentioned it in their elder abuse, they mentioned it in the fraud; they mentioned it as the wages . . . . So I mean, that $2 million was their umbrella for the entire case."
After hearing the parties' arguments, the trial court issued a minute order on June 30, 2017, awarding the full amount of attorney fees requested: $346,680 to Duncan and $359,394.50 to Emerald Bay. The court did not apportion the fees or address whether the causes of action were intertwined. Instead, the court only stated: "I'm aware of, from trying the case for a month . . . I have a pretty good idea of how heavily litigated this was."
On July 14, 2017, the trial court entered an amended judgment, including the attorney fees awarded to Duncan and Emerald Bay. Duncan served notice of entry of the amended judgment on July 21, 2017. On September 8, 2017, the Risdanas filed a notice of appeal from the amended judgment. In October 2017, the Risdanas filed a designation of record indicating the "[j]udgment or order appealed from" was entered on June 30, 2017.
II.
DISCUSSION
A. The Risdanas' Appeal Is Timely
Duncan and Emerald Bay argue we should dismiss the appeal because the Risdanas did not timely appeal from the June 30, 2017 minute order. The Risdanas contend they timely appealed from the July 14, 2017 amended judgment, arguing they could not have appealed from the June 30, 2017 minute order because it was an interlocutory order. Although we reject the Risdanas' claim the minute order was appealable, we nevertheless conclude the appeal is timely and deny the request to dismiss the appeal, which is consistent with our order denying Duncan's prior motion to dismiss.
We deny the Risdanas request that we strike Duncan's brief because she filed her brief a day late. Duncan timely filed her original brief on March 13, 2018, within the 15-day grace period allowed under California Rules of Court, rule 8.220. On March 14, 2018, we rejected Duncan's original brief for certain nonconformities, and Duncan refiled a corrected brief on the same day.
"An order awarding attorneys' fees, if made after judgment, is separately appealable. [Citations.] '[W]here several judgments and/or orders occurring close in time are separately appealable (e.g ., judgment and order awarding attorney fees), each appealable judgment and order must be expressly specified - in either a single notice of appeal or multiple notices of appeal - in order to be reviewable on appeal.' [Citation.]" (DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43.)
Here, the June 30, 2017 minute order was appealable. While the Risdanas argue the minute order was interlocutory, the order followed the original judgment and did not order preparation of a formal signed order or amended judgment (although one was signed later). The amended judgment also did not alter the attorney fee awards reflected in the minute order. (Erickson v. R.E.M. Concepts, Inc. (2005) 126 Cal.App.4th 1073, 1079-1080 [either the minute order or amended judgment can be the first appealable order or judgment awarding attorney fees depending on the circumstances].) Thus, we conclude the minute order awarding attorney fees was separately appealable.
The September 8, 2017 notice of appeal was timely for both the June 30, 2017 minute order and the July 14, 2017 amended judgment. Pursuant to California Rules of Court, rule 8.104(a)(1), the Risdanas had to file a notice of appeal "on or before the earliest of": (1) 60 days after the clerk or a party serves notice of entry of the appealed judgment or order, or (2) 180 days after entry of the judgment or order if no notice was provided. The June 30, 2017 minute order indicated the parties "waive[d] notice" at the hearing, and nothing in the record suggests the minute order or notice of entry of the minute order was ever served. Thus, the notice of appeal was timely filed within 180 days of both the minute order and the amended judgment.
Duncan and Emerald Bay claim the notice of appeal only lists the amended judgment. While this technically is true, it appears the Risdanas mislabeled the notice of appeal by failing to mention the June 30, 2017 minute order. This assumption is supported by the Risdana's designation of record filed in October 2017 before the 180 days had expired. The designation of record shows the "[j]udgment or order appealed from" was entered on June 30, 2017, which is the date of the minute order. Because Duncan and Emerald Bay were on notice that the Risdanas were appealing the attorney fee awards based on their designation of record, they could not have been misled about the scope of the appeal. Based on the foregoing, together with the general rule that notices of appeal "must be liberally construed," we conclude the notice of appeal was sufficient to challenge the award of attorney fees. (Cal. Rules of Court, rule 8.100(a)(2).) B. The Trial Court Erred in Failing to Apportion the Attorney Fees
1. Standard of Review
"On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law." (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.) In other words, "it is a discretionary trial court decision on the propriety or amount of statutory attorney fees to be awarded, but a determination of the legal basis for an attorney fee award is a question of law to be reviewed de novo." (Ibid.) Here, the Risdanas challenge the legal basis for the trial court's attorney fee award: whether the court should have awarded fees at all, and, if so, whether the court should have applied apportionment principles. Accordingly, this appeal presents a question of law subject to de novo review.
2. Statutory Framework
"'Whether a party to litigation is entitled to recover costs is governed by Code of Civil Procedure section 1032, which provides, in subdivision (b), that "[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding." [Section] 1032 defines "prevailing party" to include "a defendant in whose favor a dismissal is entered." (Code Civ. Proc., § 1032, subd. (a)(4).)' Also, a defendant against whom the plaintiff does not recover any relief is a prevailing defendant. [Citation.] [¶] Under Code of Civil Procedure section 1033.5, subdivision (a)(10), attorney fees are allowable as costs under Code of Civil Procedure section 1032, 'when authorized by any of the following: [¶] (A) Contract. [¶] (B) Statute. [¶] (C) Law.'" (Carver v. Chevron U.S.A., Inc., supra, 97 Cal.App.4th at p. 143.)
Here, there is no dispute Duncan and Emerald Bay are prevailing parties because they received favorable defense verdicts. There also is no dispute the relevant contracts authorized an award of attorney fees. The only issue is whether Duncan and Emerald Bay are precluded from recovering all or part of their attorney fees because the claims for financial elder abuse and back wages are based on statutes with unilateral fee-shifting provisions. Those statutes contain nonreciprocal attorney fee provisions awarding attorney fees only to a prevailing plaintiff. (See Welf. & Inst. Code, § 15657.5, subd. (a) ["Where it is proven by a preponderance of the evidence that a defendant is liable for financial abuse, . . . the court shall award to the plaintiff reasonable attorney fees and costs."]; Lab. Code, § 1194, subd. (a) ["[A]ny employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover . . . reasonable attorney's fees, and costs of suit"].) As we explain, Duncan and Emerald Bay are precluded from recovering attorney fees exclusive to, or overlapping with, the claims for financial elder abuse and back wages.
3. Apportionment
As a general rule, "[a]ttorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed." (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d. 124, 129-130.) Courts have found exceptions to this rule, however, where a compensable claim overlaps with a claim based on a statute with a unilateral fee-shifting provision. In these circumstances, courts either deny all of the attorney fees where the claims completely overlap or apportion the attorney fees to remove the portion related "exclusively or by 'inextricable overlap' to" the claims involving a unilateral fee-shifting provision. (Carver v. Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 498, 504 (Carver) [defendant could invoke a contract's attorney fee provision only for work allocable to non-Cartwright Act claims because claims under the Cartwright Act included a unilateral fee provision]; see also Wood v. Santa Monica Escrow Co. (2007) 151 Cal.App.4th 1186, 1190-1191 [defendant could not recover attorney fees where contract claims overlapped with claims under elder abuse statute with unilateral fee-shifting provision].)
The Risdanas argue Duncan and Emerald Bay are entitled to no attorney fees because all of the causes of action were inextricably related to the financial elder abuse and the back wages claim, which only allow unilateral fee awards to a prevailing plaintiff. This directly contradicts the Risdanas' argument in the trial court proceedings where they argued the causes of action "were not common" and did not share a "common denominator other than the parties." In fact, the Risdanas previously only argued the attorney fees should be apportioned and did not suggest the unilateral fee-shifting provisions precluded recovery of all attorney fees. Because an appellant generally is required to preserve issues for appeal, the Risdanas forfeited the right to appeal this issue by failing to raise it in the trial court. (Hepner v. Franchise Tax Bd. (1997) 52 Cal.App.4th 1475, 1486.)
Alternatively, the Risdanas contend the trial court should have apportioned the attorney fees. We agree the court erred in failing to apportion the fees. Although the court did not explain why it was proper to award all of the requested fees rather than apportion them, the court appears to have relied on the general principle that attorney fees need not be apportioned when incurred for representation on an issue common to a compensable claim and one in which they are not allowed. Relying on Reynolds and similar case law, Duncan and Emerald Bay raised this argument in the trial court proceedings. However, Reynolds is distinguishable because it did not "address a situation where, as here, an award of fees for all hours spent on the compensable claim would conflict with a statutory unilateral fee-shifting provision." (Turner v. Association of American Medical Colleges (2011) 193 Cal.App.4th 1047, 1072; see also Carver, supra, 119 Cal.App.4th at p. 505 ["Reynolds is distinguishable because it did not involve a conflict between a contractual right to attorney fees and a statutory prohibition against awarding such fees."].) "When [a] defendant prevails in a suit containing causes of action for both breach of contract and violation of . . . a statute [allowing attorney fees only to a prevailing plaintiff], the contractual attorney fees clause . . . cannot be used to award defendant its fees attributable to the statutory action . . . because doing so would effectively allow the contract to override the statute." (Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2017) ¶ 17:164.11a, pp. 17-188 to 17-189.)
Carver is on point. The defendant there prevailed on contract claims and claims under the Cartwright Act, which included a nonreciprocal attorney fee provision. (Carver, supra, 119 Cal.App.4th at p. 501.) The appellate court held the defendant could invoke the contract's attorney fee provision only for work solely allocable to the non-Cartwright Act claims. The court reasoned the Cartwright Act's nonreciprocal attorney fee provision "prohibits an award of attorney fees for successfully defending Cartwright Act and non-Cartwright Act claims that overlap. To allow [the defendant] to recover fees for work on Cartwright Act issues simply because the statutory claims have some arguable benefit to other aspects of the case would superimpose a judicially declared principle of reciprocity on the statute's fee provision, a result unintended by the Legislature, and would thereby frustrate the legislative intent to 'encourage improved enforcement of public policy.'" (Id. at p. 504.)
The same logic applies to the Risdanas' statutory claims for financial elder abuse and back wages. At a minimum, the attorney fees incurred to defend against the claims for financial elder abuse and back wages must be excluded because those claims involved unilateral fee-shifting provisions. (See Welf. & Inst. Code, § 15657.5, subd. (a); Lab. Code, § 1194, subd. (a).) In the trial court proceedings, Duncan and Emerald Bay also admitted there was some overlap among the claims. To the extent there are fees "related . . . by 'inextricable overlap' to" the financial elder abuse or back wages claims, those fees also must be excluded. (Carver, supra, 119 Cal.App.4th at p. 506.) We therefore remand the matter for the trial court to apportion the attorney fees. (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1297-1298 [reversing trial court's attorney fees award for failing to properly apportion fees and remanding for the trial court to make a proper apportionment].) "'The "experienced trial judge is the best judge of the value of professional services rendered in his court"'" (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095) and should make the apportionment in the first instance. Having reached this disposition, we express no opinion on the amount of attorney fees the court should award on remand and note Duncan and Emerald Bay may recover an amount similar to the prior award depending on the court's apportionment.
Duncan and Emerald Bay generally argue the trial court had discretion to apportion the attorney fees. While this is true, we find the court erred in misapplying the requisite legal standard required to make an apportionment in the first place. Finally, we reject Duncan's vague suggestion that the back wages claim is irrelevant because "this cause of action never made it to the jury." In the trial court proceedings, Duncan argued she was entitled to attorney fees on all claims, including the back wages claim. Because the trial court awarded all of the requested attorney fees, the back wages claim is relevant, and Duncan and Emerald Bay are not entitled to any fees related to or overlapping with that claim.
Emerald Bay also contends "trial courts are not required to explain the rationale for an attorneys' fee award" "[a]bsent a request for a statement of decision." At oral argument, Emerald Bay's counsel further suggested the Risdanas forfeited any argument as to whether or not the trial court considered apportionment because they did not request a statement of decision. We disagree because courts are not required to issue a statement of decision regarding fee awards. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140.) "When the record is unclear whether the trial court's award of attorney fees is consistent with the applicable legal principles, we may reverse the award and remand the case to the trial court for further consideration and amplification of its reasoning." (In re Vitamin Cases (2003) 110 Cal.App.4th 1041, 1052.) --------
III.
DISPOSITION
The order is reversed and remanded to the trial court for further proceedings. On remand, the court is directed to apportion the attorney fees and exclude fees incurred in defense of the claims for financial elder abuse and back wages. The Risdanas shall recover their costs incurred on appeal.
ARONSON, J. WE CONCUR: O'LEARY, ACTING P. J. THOMPSON, J.