Valentine v. Matthews

Valentine v. Matthews

Filed 2/11/10 Valentine v. Matthews CA2/3


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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.





Plaintiffs and Respondents,



Defendants and Appellants.


(Los Angeles County

Super. Ct. No. BC214701)

APPEAL from a judgment of the Superior Court of Los Angeles County, Richard L. Fruin, Jr., Judge. Affirmed.

Cohon & Pollak, Jeffrey M. Cohon and Kristina S. Keller for Defendants and Appellants.

Martin E. Jacobs, Inc. and Martin E. Jacobs and Eugene R. Salmonsen for Plaintiffs and Respondents.



This is the second time we have addressed this dispute. In this appeal, attorney Leodis C. Matthews and his firm Matthews & Partners (collectively Matthews) appeal from a judgment entered after the trial court denied a motion to vacate a judgment pursuant to Code of Civil Procedure section 663 (Section 663). We affirm.



A. The underlying facts and the first appeal (case No. B178848).[1]

Through a bankruptcy proceeding, Westland Architecture & Development Corporation (Westland) obtained an option to buy a commercial building from Interlink Development. Matthews represented Westland and its president, Youless Jimmy Valentine (Valentine), in the bankruptcy case and thereafter. Eventually, Matthewss solely owned corporation Retra, LLC, bought the building by purchasing the option from Westland. In 1999, Retra paid approximately $2.9 million to exercise the option and buy the property. At the time, the property was appraised for at least $7.1 million. Matthews, as the sole owner of Retra, received a real estate brokerage commission of more than $85,000 when the option was exercised and the property was sold to Retra. Additionally, Matthews received $100,000 which was an asset of Interlink. In March 2004, Retra sold the property to a third party for the fair market value of $6.7 million.

Valentine and Westland filed a lis pendens and sued Matthews and Retra. Retra cross-complained for slander of title. A jury trial on the complaint was conducted in 2004. The trial court denied Matthewss motion for directed verdict. On May 21, 2004, the jury rendered a special verdict in favor of Westland and against Matthews. The jury found that Matthews had represented Westland from January 25, 1999 to May 15, 1999, and that Matthewss breaches of fiduciary duty and legal malpractice proximately caused damages to Westland in the amount of $2,016,709. On August 10, 2004, the trial court rendered a statement of decision on the cross-complaint for slander of title finding for Retra. The trial court found that the wrongful filing of the lis pendens had caused Retra to incur $61,084.75 in attorney fees. The trial court awarded Retra $61,084.75 in compensatory damages and $20,000 in punitive damages against Valentine and Westland, jointly and severally.

Thereafter, the trial court granted Matthewss motion for judgment notwithstanding the verdict (jnov) and motion for a new trial. Valentine and Westland appealed.

In an opinion filed on October 11, 2007 in case No. B178848, we reversed the trial courts order granting jnov and a new trial. We held that the trial courts ruling was untimely and it had no jurisdiction to rule on the motions. We directed the trial court to reinstate the jury verdict on the complaint against Matthews in favor of Westland. On the cross-complaint for slander of title, we affirmed the judgment in favor of Retra insofar as it awarded compensatory damages against Westland and Valentine, however, we directed the trial court to strike the punitive damages.

We then turned to Matthewss protective cross-appeal in which he argued that the trial court had erred in denying his directed verdict motion. In his cross-appeal, Matthews contended he was not liable. He argued he had been free to pursue the option on behalf of Retra because Westland decided to sell the option while it was represented by independent counsel attorney Lorraine Loder. Matthews also contended there had been no evidence that Westland financially could have exercised the option and thus, Westland had not proven causation and damages. We found unpersuasive all of these contentions. In doing so, we detailed the numerous ways in which Matthews had violated his professional and fiduciary responsibilities. We summarized the situation as one in which [d]uring the course of [Matthewss] agency with Westland, Matthews set up a scenario where his corporation was able to buy Westlands sole valuable asset, the option. We also held that the punitive damage award on the cross-complaint should be stricken. We directed the trial court on remand to consider whether the judgment on the complaint and cross-complaint entitled Westland and Retra to interest thereon.

In the disposition, we stated: We reverse the order of the trial court granting judgment notwithstanding the verdict and new trial and direct the trial court to reinstate the verdict in favor of Westland against Matthews and Matthews & Partners on the complaint. We affirm the judgment on the cross-complaint in favor of Retra insofar as it awards compensatory damages against Westland and Valentine. We reverse the judgment on the cross‑complaint insofar as it awarded punitive damages to Retra. On remand the trial court is directed to strike the award of punitive damages on the cross-complaint. On remand the trial court shall consider whether the judgments on the complaint and cross-complaint entitle Westland and Retra to interest thereon. Costs on appeal are awarded to Westland and Valentine.

B. Further proceedings and this appeal.

The matter returned to the trial court. Before the trial court entered a modified judgment according to our directive, Matthews filed a motion to vacate the judgment pursuant to Section 663 on the grounds that there was an incorrect and erroneous legal basis for the decision, not consistent with or supported by the facts.

On March 5, 2008, the trial court denied Mathewss Section 663 motion and entered a judgment in favor of Westland in the sum of $2,016,709 with interest thereon at the rate of 10 percent per annum from May 21, 2004, and for costs of suit. On the cross-complaint, judgment was entered in favor of Retra against Westland and Valentine, jointly and severally, in the sum of $61,085.75, plus interest at the rate of 10 percent from August 26, 2004, and costs of suit.

Matthews appealed from the judgment. We affirm. We conclude that Matthewss argument that the trial court should have granted his Section 663 motion is unpersuasive.



A. The trial court had no jurisdiction to rule on Matthewss Section 663 motion and properly entered judgment according to our directive.

Westland and Valentine persuasively assert that when we reversed the judgment in case No. B178848, the trial court had no jurisdiction to rule on Matthewss subsequently filed Section 663 motion. Rather, as the court concluded, it only had the jurisdiction to follow the directives in the disposition of our prior opinion.

When an appellate courts reversal is accompanied by directions requiring specific proceedings on remand, those directions are binding on the trial court and must be followed. Any material variance from the directions is unauthorized and void. [Citations.] When, for example, a cause is remanded with directions to enter a particular judgment, it is the duty of the trial court to enter judgment in conformity with the order of the appellate court, and that order is decisive of the character of the judgment to which the appellant is entitled. The lower court cannot reopen the case on the facts, allow the filing of amended or supplemental pleadings, nor retry the case, and if it should do so, the judgment rendered thereon would be void. [Citation.] (Butler v. Superior Court (2002) 104 Cal.App.4th 979, 982; accord, Karlsen v. Superior Court (2006) 139 Cal.App.4th 1526, 1530.)

In case No. B178848, we reversed the trial court with specific directions. The effect of our disposition limited the actions of the trial court upon remand. The trial court only had jurisdiction to: (1) reinstate the verdict in favor of Westland against Matthews and Matthews & Partners on the complaint; (2) strike the award of punitive damages on the cross-complaint and enter a judgment on the cross-complaint in favor of Retra insofar as it awarded compensatory damages against Westland and Valentine; and (3) consider whether the judgments on the complaint and cross-complaint entitled Westland and Retra to interest thereon. The trial court had no authority to conduct or consider Matthewss Section 663 motion. Had it done so, the ruling by the trial court would have been void.

Thus, as the trial court impliedly held when it denied Matthewss Section 663 motion and signed the modified judgment, it had no jurisdiction to consider Matthewss Section 663 motion. As we demonstrate below, however, had the trial court had the jurisdiction to address Matthewss Section 663 motion, the court was correct in denying it.

B. Section 663 does not apply and the doctrine of the law of the case precludes Matthews from re-arguing issues we previously decided.

1. Section 663.

Section 663 reads: A judgment or decree, when based upon a decision by the court, or the special verdict of a jury, may, upon motion of the party aggrieved, be set aside and vacated by the same court, and another and different judgment entered, for either of the following causes, materially affecting the substantial rights of the party and entitling the party to a different judgment: [] 1. Incorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts; and in such case when the judgment is set aside, the statement of decision shall be amended and corrected. []  2.  A judgment or decree not consistent with or not supported by the special verdict.

As the statutory language [in Section 663] indicates, a motion to vacate lies only where a different judgment is compelled by the facts found. ( 663.) A motion to vacate under section 663 may only be brought when the trial judge draws an incorrect legal conclusion or renders an erroneous judgment upon the facts found by it to exist. [Citation.]  A motion to vacate under [Code of Civil Procedure] section 663 is a remedy to be used when a trial court draws incorrect conclusions of law or renders an erroneous judgment on the basis of uncontroverted evidence.  [Citations.] (Payne v. Rader (2008) 167 Cal.App.4th 1569, 1574.)[2]

In Matthewss Section 663 motion, he argued the following: the jurys determination was erroneous as a matter of law because Westland hired independent counsel, Lorraine Loder, to advise it with respect to the Option . . . . Since the purpose of Rule of Professional Conduct 3-300 is to encourage a client to hire independent counsel when its original lawyer perceives a conflict, this purpose was achieved. Moreover, Westland consented to the sale of the Option to Matthewss company, Retra, when, during a meeting with Loder (with Matthews not present), its board adopted a resolution authorizing the sale. [] Westlands evidence did not establish that Matthews breached any fiduciary duties owed to Westland, nor that Matthews was in any way professionally negligent, nor that he failed to comply with Rule 3-300. Moreover, even if Matthews did not comply with Rule 3-300, Westland did not and cannot show injury or damages as a result.

By these arguments, however, Matthews was not asking the court to consider uncontroverted evidence. Rather, he was asking the trial court to re-weigh the evidence. A Section 663 motion was inappropriate. It could not be used in lieu of a new trial motion. (Code Civ. Proc., 657.)

Additionally, by these arguments, Matthews ignores the doctrine of the law of the case.

2. The law of the case precludes Matthewss arguments.

We decided the dispositive issues, including those articulated by Matthews in his Section 663 motion, when we resolved the prior appeal.

In case No. B178848, we held that the trial court did not err in denying Matthewss directed verdict motion. We concluded Matthews had breached numerous fiduciary and professional duties. We stated in part: There are numerous instances where Matthews breached his fiduciary obligations and did not abide by his ethical responsibilities. Matthews advised Valentine to dismiss the bankruptcy proceedings without explaining what might occur if Matthewss other clients (the investors) claimed they owned the option. Matthews never explained the potential conflicts that could arise because Matthews had obligations to the investors as well as to Westland. Matthews argued directly against Westlands interests when he threatened litigation against Westland and asserted that the investors owned the option. Matthews never obtained a written fee agreement that complied with the Rules of Professional Conduct. Matthews backdated a fee agreement to make it appear as if he had complied with his ethical responsibilities. Matthews accepted a percentage ownership in Westland without providing proper admonitions or explanation as to the affect of that arrangement, including inherent conflicts. When Matthews learned that Westland was willing to sell the option to Valentine, Matthews misled Westlands board into believing Matthews and Valentine would be partners in the new venture. Upon the sale of the property to Retra, Matthews obtained a commission of more than $85,000 and an additional $100,000, without disclosing these facts to Westland, thereby obtaining a secret profit from the transaction. Matthews failed to provide Westland with proper disclosures or warnings. Matthews never explained the conflicts of interests involved because he sought for his own company Westlands sole asset. [] Matthews learned of a business opportunity through his confidential relationship with Westland and maneuvered the situation so that his solely owned entity, Retra, acquired that opportunity. Retra paid Westland about $400,000 for the rights to the option, $200,000 for the option, and approximately $2.9 million for a building appraised at more than $7 million. [Citation.] As such, the transaction showed overreaching by Matthews and a transaction that was not fair or reasonable to Matthewss client, Westland. [] Matthews breached his duty of loyalty, violated numerous Rules of Professional Conduct, and [violated] his obligations under the Probate Code.

We also rejected Matthewss argument that he could not be held responsible because as of March 23, 1999, Westland was represented by independent counsel, Loder. We first noted that Matthews testified that he represented Westland until May 15, 1999. We then stated that [e]ven if a client obtains the advice of independent counsel, an attorney who enters into a business transaction with a client can be held liable for breaches of the attorneys ethical obligation. (BGJ [Associates v. Wilson(2003)] 113 Cal.App.4th [1217,] 1226-1227.) This is particularly true when as occurred here, the attorney committed numerous acts that violated the duties owed to his client, these acts were inextricably intertwined with the sale of the clients sole asset to the attorney, the transaction was unfair and unreasonable to the client, and all of the terms of the transaction were not disclosed to the client. [] During the course of his agency with Westland, Matthews set up a scenario where his corporation was able to buy Westlands sole valuable asset, the option. It is these facts that distinguish this case from those cited by Matthews. . . . Thus, even if Loder was the sole attorney representing Westland, before or after, May 15, 1999, her independent representation of Matthews did not rebut the presumption of undue influence. [Citation.]

We also rejected Matthewss further contention that his actions did not cause harm to Westland because the facts did not show that Westland would have been able to exercise the option. We stated, Valentine had secured a commitment from Oakwood Financial Group to issue a $3.5 to $4 million equity loan. Given the amount of equity in the property that was valued at more than $7 million, it was likely that this lender, or another, would have issued a loan because there was a large market for such loans.

Matthews points to footnote 13 in case No. B178848 to assert that the only issue we addressed in that opinion was causation. This assertion ignores the numerous holdings in case No. B178848, many of which have been quoted above. This assertion also relies on a misreading of footnote 13 as it ignores the last sentence in the footnote. We stated in footnote 13: The directed verdict motion was based upon causation. To the extent Matthews argues he owed no duties to Westland or Valentine, the argument is waived. And, as shown above, this argument is belied by the facts. (Italics added.)

In Matthewss Section 663 motion, and on appeal, Matthews raises virtually the identical contentions that we rejected in our prior opinion based on the identical facts.[3] Thus, the law of the case would have precluded the trial court, and precludes us on appeal, from reaching contrary legal results. (Cf. Curran v. Mount Diablo Council of the Boy Scouts (1998) 17 Cal.4th 670, 685 [law of the case does not apply to sufficiency of the evidence ruling if different evidence is presented on retrial]; People v. Barragan (2004) 32 Cal.4th 236, 246 [doctrine applies to finding of evidences legal sufficiency]; Pellett v. Sonotone Corp. (1945) 26 Cal.2d 705, 708 [law of the case applied to decision on sufficiency of the evidence where facts at both trials was the same]; People v. Cooper (2007) 149 Cal.App.4th 500, 524 [law of the case requires same conclusion where matter retried on same evidence].)

Thus, we affirm the judgment.[4]



We affirm the judgment. Costs on appeal are awarded to Valentine and Westland.



We concur:



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[1] Many of the facts have been taken from our prior opinion in case No. B178848.

[2] Code of Civil Procedure section 663a establishes the time frame for making a Section 663 motion. Section 663a reads: The party intending to make the motion mentioned in the last section must file with the clerk and serve upon the adverse party a notice of his intention, designating the grounds upon which the motion will be made, and specifying the particulars in which the legal basis for the decision is not consistent with or supported by the facts, or in which the judgment or decree is not consistent with the special verdict, either [] 1.  Before the entry of judgment; or [] 2.  Within 15 days of the date of mailing of notice of entry of judgment by the clerk of the court pursuant to Section 664.5, or service upon him by any party of written notice of entry of judgment, or within 180 days after the entry of judgment, whichever is earliest. [] The provisions of Section 1013 of this code extending the time for exercising a right or doing an act where service is by mail shall not apply to extend the time above specified. [] An order of the court granting such motion may be reviewed on appeal in the same manner as a special order made after final judgment.

[3] Matthews does raise one issue on appeal that we did not specifically address in the prior appeal. He argues that the value of the option was far less than the amount of the $2,015,709 jury verdict. However, this is a factual argument that should have been raised in a motion for new trial, not in a Section 663 motion. (Code Civ. Proc., 657, part 5 [motion for new trial may be brought if damages are excessive].) Further, Matthews is hard pressed to argue that the facts relevant to the amount of damages were uncontroverted and thus, could be addressed by a court upon a Section 663 motion. Rather, this valuation argument is a substantial evidence attack on the jury verdict and is not one that can be raised in a Section 663 motion. (Acosta v. Los Angeles Unified School Dist. (1995) 31 Cal.App.4th 471, 479-480, fn. 7; cf. Westervelt v. McCullough (1924) 68 Cal.App. 198, 210.)

[4] We deny the motion for sanctions filed by Valentine and Westland. While we hold that the issues raised by Matthews have no merit, we cannot conclude they are frivolous or taken solely for delay. (Code Civ. Proc.,  907; Cal. Rules of Court, rule 8.276; In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650; Pierotti v. Torian (2000) 81 Cal.App.4th 17, 31.)

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