Filed 1/19/18 Clark v. Delay CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA



HAL SCOTT CLARK,

Plaintiff and Appellant,

v.

CAROL DELAY,

Defendant and Respondent.
D072856



(Super. Ct. No. CIVDS 1408065)


APPEAL from a judgment of the Superior Court of San Bernardino County, Wilfred J. Schneider, Jr., Judge. Judgment affirmed as modified.

Jerome R. Moe for Plaintiff and Appellant.
Rhona S. Kauffman for Defendant and Respondent.
Plaintiff Hal Scott Clark (Plaintiff) appeals following a court trial that resulted in a judgment in favor of defendant Carol Delay (Defendant) that included an award of attorney fees to Defendant under Civil Code section 1717. On appeal, Plaintiff raises no issues or arguments with regard to the trial. However, we agree with Plaintiff that the court erred in granting Defendant's posttrial motion for attorney fees. As we explain, the scope of the contractual attorney fees provision at issue does not include the breach of contract claim that Plaintiff filed and on which the court entered judgment in Defendant's favor. Accordingly, we will strike the award of attorney fees in the judgment and affirm the judgment as modified.
I.
FACTUAL AND PROCEDURAL BACKGROUND
In or around October 1994, Plaintiff, Defendant, and their spouses formed "Clark Construction Company, a grading contractor, a limited partnership" (Partnership). Plaintiff was the general partner, and Defendant and the two spouses were the limited partners. A written agreement of the same date indicates that Plaintiff purchased a $140,000 policy on the life of Defendant's husband—with Plaintiff as the beneficiary.
A little over a year later, by written agreement, Plaintiff, Defendant, and their spouses agreed in writing to dissolve the Partnership effective December 23, 1995 (Dissolution Agreement). In part, Plaintiff agreed to purchase the limited partnership interests of Defendant and her husband for $60,000 through two $12,500 payments by specified dates and immediate delivery of a $35,000 promissory note. The Dissolution Agreement provided that the note "shall be for five years charging ten percent interest fully amortized with quarterly payments in the amount of [blank]" and "shall have no prepayment penalty and be non assignable and non assumable."
By a written promissory note of the same date as the Dissolution Agreement, Plaintiff agreed to pay Defendant and/or her husband $35,000 with 10 percent annual interest, payable $2,230.95 quarterly, beginning on the date of the Note and continuing until December 23, 2001, at which time all unpaid principal was due and payable (Note). As singularly relevant to this appeal—indeed, outcome determinative—the Note contains the following attorney fee provision: "Should suit be commenced or an attorney employed to enforce the payment of this note, I agree to pay such additional sum as the court may adjudge reasonable as attorney's fees in said suit."
Approximately one month later, in early 1996, Plaintiff (as owner of the Insurance Policy that we identified at fn. 3, ante) requested that the insurance company change the "First Beneficiary" of the Insurance Policy to Plaintiff and Defendant as "co beneficiaries." The company effected the change in mid-1996.
Defendant's husband died more than 16 years later, in June 2012. At that time, the benefit under the Insurance Policy was $50,000. Within a few months, the insurance company paid both cobeneficiaries—a little more than $25,000 to Plaintiff and $25,000 to Defendant.
Plaintiff's receipt of the check from the insurance company in an amount less than the full $50,000 benefit was his first knowledge that Defendant was still a beneficiary of the Insurance Policy. Although Plaintiff had done nothing to change the cobeneficiaries designated in 1996, he had "assum[ed]" that Defendant had been "removed from the [Insurance P]olicy" "after the [N]ote was paid." When Plaintiff contacted Defendant to request that she pay him the $25,000 in insurance proceeds, she declined.
Plaintiff sued Defendant. In the operative first amended complaint (Complaint), Plaintiff sought damages of at least $25,000 and a declaration that he was entitled to the proceeds of the Insurance Policy that Defendant had received. More specifically, Plaintiff alleged that he had requested the insurance company to change the beneficiary of the Insurance Policy to Plaintiff and Defendant as cobeneficiaries in 1996 based on an oral agreement to amend the Dissolution Agreement. According to the Complaint, the terms of the oral amendment (Oral Amendment) included: (1) Defendant would be added as a cobeneficiary (with Plaintiff) to the Insurance Policy; (2) Defendant would be added as a cobeneficiary "solely to ensure that, if [Defendant's husband] died prior to full repayment of the Note, and if [Plaintiff] then refused to pay any such balance due . . . , then [Defendant] would have some protection up to any unpaid amount of the Note"; and (3) once Plaintiff paid the Note, "any right of [Defendant] to the proceeds of the [I]nsurance [P]olicy would terminate and [Defendant and her husband] would immediately take any and all appropriate action to remove [Defendant's] name as a co-beneficiary from the subject policy." Plaintiff alleged that, even though the Oral Amendment was between him and Defendant's husband, Defendant was "a party" to the amendment and "agreed to abide by [it]."
Plaintiff next alleged that, after he had paid what he owed on the Note, he "assumed" that Defendant and her husband "had taken the requisite action of removing" Defendant as a cobeneficiary of the Insurance Policy. Plaintiff concluded by alleging that he first learned that Defendant and her husband had "violated the terms of the Oral Amendment" when Defendant's husband died and Plaintiff received only half of the Insurance Policy's benefits.
The Complaint contained seven causes of action against Defendant: breach of contract (i.e., the Dissolution Agreement, including the Oral Amendment); rescission of the Oral Amendment and restitution (of Defendant's wrongful receipt of $25,000 in insurance benefits); fraud and negligent misrepresentation (in inducing Plaintiff to enter into the Oral Amendment); conversion (of the $25,000 in insurance benefits that Defendant received as cobeneficiary); money had and received (i.e., the $25,000 in insurance benefits that belonged to Plaintiff); and declaratory relief (that Plaintiff is entitled to "reimbursement of the funds taken by Defendant" from the proceeds of the Insurance Policy). In the prayer, Plaintiff sought $25,000 in damages plus prejudgment interest; restitution in the amount of $25,000; punitive damages; a declaration of the parties' rights and obligations; costs; and additional relief as the court deems appropriate.
The case was tried by the court without a jury. Plaintiff's trial brief and Plaintiff's written closing argument were consistent with the allegations and the requested relief in Plaintiff's Complaint described above.
The trial court filed a proposed statement of decision, which, after receiving no objections, became the final statement of decision. The court ruled that "Plaintiff failed to prove any claims against the Defendant," expressly finding "that there was insufficient evidence presented to support the existence of any oral agreements between the parties or any modifications of the Dissolution Agreement." The court directed that judgment be entered in favor of Defendant, explaining that "without an oral contract having been established, Plaintiff has failed to establish viable claims against the Defendant for breach of contract, rescission and restitution, conversion, fraud or negligent misrepresentation."
Prior to entry of judgment, Defendant filed a motion for attorney fees. Defendant brought her motion pursuant to section 1717 and the attorney fee provision in the Note on the following basis: Plaintiff and Defendant were parties to both the Dissolution Agreement and the Note; by its reference in the Dissolution Agreement, the Note was incorporated into the Dissolution Agreement; the Note contained an attorney fees provision; under section 1717, the attorney fee provision applied to the entire contract (i.e., the Dissolution Agreement); and Defendant prevailed in Plaintiff's cause of action for breach of the Dissolution Agreement. Emphasizing that she had defended the cause of action for breach of the Dissolution Agreement by "alleging that the Note was not satisfied," Defendant argued that she prevailed on that claim because Plaintiff could not establish that the Note had been fully satisfied.
In his opposition, among other arguments, Plaintiff pointed out that the trial court had made no ruling as to whether the Note had been satisfied. Rather, according to Plaintiff, the court ruled only that, because Plaintiff did not establish the existence of the Oral Amendment, Plaintiff did not establish a breach of the Dissolution Agreement.
Following oral argument, the trial court granted Defendant's motion and awarded Defendant $53,637 in attorney fees. The court later entered judgment in favor of Defendant and against Plaintiff and directed that Plaintiff pay Defendant $53,637 in attorney fees and $3,446.45 in costs.
Plaintiff timely appealed from the judgment. Plaintiff also appealed from the posttrial (prejudgment) order granting Defendant's motion for attorney fees and from an unidentified postjudgment order.
II.
DISCUSSION
A. Only the Award of Attorney Fees is Properly Before Us in this Appeal
Each point raised on appeal must be supported in a brief "by argument and, if possible, by citation of authority" and by "reference to a matter in the record by a citation to the volume and page number of the record where the matter appears." (Cal. Rules of Court, rule 8.204(a)(1)(B) & (C).) If not—i.e., if a brief raises a point but fails to support it " ' "with reasoned argument and citations to authority" ' "—then appellate review of the point is forfeited. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) Here, Plaintiff's briefs contain lengthy passages indicating Plaintiff's displeasure with the results of the trial, but Plaintiff presents no argument or authorities in support of prejudicial error associated with any of the rulings in the statement of decision. Similarly, although Plaintiff appealed from a postjudgment order, in his briefing he does not identify, let alone suggest prejudicial error associated with, any postjudgment order. Thus, Plaintiff has forfeited (and, therefore, we do not consider) any potential error during the trial or in postjudgment proceedings. (Cahill, at p. 956.)
Based on the parties' briefing, what is at issue is the posttrial prejudgment order granting Defendant's motion for attorney fees. Because the order was filed prior to the judgment, it did not finally determine the rights of the parties or terminate the litigation between them; thus, it is not an appealable order. (Olson v. Cory (1983) 35 Cal.3d 390, 399; see Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 304.) Nonetheless, Plaintiff's timely appeal from the judgment properly places before us all nonappealable orders that preceded the judgment and that "involve[] the merits or necessarily affect[] the judgment . . . or which substantially affect[] the rights of a party." (Code Civ. Proc., § 906; see Bakewell v. Bakewell (1942) 21 Cal.2d 224, 227 ["On appeal from the final judgment the rulings and decision of the court on all the issues are reviewable."].)
Accordingly, we proceed to the parties' arguments as to the propriety of the prejudgment order granting Defendant's motion for attorney fees.
B. The Trial Court Erred in Awarding Attorney Fees
Plaintiff raises only one issue on appeal: Did the trial court err in awarding Defendant attorney fees on this record? As we explain, the answer is "yes."
"Under the American rule, each party to a lawsuit ordinarily pays its own attorney fees." (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751 (Mountain Air).) Although Code of Civil Procedure section 1021 codifies this general rule, parties to a contract may agree otherwise, such that in the event of litigation the prevailing party will be awarded attorney fees. (Mountain Air, at p. 751, citing Santisas v. Goodin (1998) 17 Cal.4th 599, 608 (Santisas); see generally R.W.L. Enterprises v. Oldcastle, Inc. (2017) 17 Cal.App.5th 1019, 1025 (R.W.L. Enterprises).) However, based on the actual language of the attorney fee provision in the Note, there was no agreement to pay the prevailing party's attorney fees in the breach of contract claim that Plaintiff alleged here.
1. Standard of Review
Plaintiff does not challenge the amount of the fees awarded, but only Defendant's entitlement to fees. Thus, we independently review the trial court's ruling. (Mountain Air, supra, 3 Cal.5th at p. 751; R.W.L. Enterprises, supra, 17 Cal.App.5th at p. 1025.) "We apply traditional rules of contract interpretation to 'give effect to the mutual intention of the parties as it existed at the time of contracting[.]' . . . If possible, we ascertain such intent 'from the writing alone.' . . . 'The words of a contract are to be understood in their ordinary and popular sense . . . unless used by the parties in a technical sense, or unless a special meaning is given to them by usage[.]' . . . ' " 'Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning.' " ' " (R.W.L. Enterprises, at p. 1026, quoting Mountain Air, at p. 752, and §§ 1636, 1639, 1644, respectively.)]
Because the trial court's order granting Defendant's motion is presumed correct, Plaintiff (as the appellant) has the burden of establishing reversible error. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140 [attorney fee appeal].)
2. Analysis
The Dissolution Agreement does not contain an attorney fee provision. Rather, Defendant based her motion on the facts that the Note contains an attorney fee provision, and the Dissolution Agreement incorporated the Note by referencing it at paragraph 2.B. of the agreement.
On appeal, Plaintiff contends that, given the language of the Dissolution Agreement and the Note, the dictionary definition of " 'incorporation by reference' " compels the conclusion that the Dissolution Agreement did not incorporate the Note by reference. In response, Defendant relies on three California cases to support her position. (See Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 54; Williams Const. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454; Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1331.) Although neither party cited, let alone discussed, California's statutory standard for determining whether separate contracts are to be read together as one (see § 1642 ), Defendant appears to have the better position. Nevertheless, we do not have to decide the issue because, as we explain, the attorney fee provision does not apply to Plaintiff's specific claim for breach of the Dissolution Agreement in any event. Thus, we will assume, without deciding, that the Dissolution Agreement sufficiently incorporates the Note such that the attorney fee provision in the Note applies to the Dissolution Agreement.
Where, as here, a litigation claim sounds in contract, an agreement that allocates attorney fees may be with the scope of section 1717. (Mountain Air, supra, 3 Cal.5th at p. 752.) "The primary purpose of section 1717 is to ensure mutuality of remedy for attorney fee claims under contractual attorney fee provisions." (Santisas, supra, 17 Cal.4th at p. 610.) This mutuality potentially arises in two situations, both of which are arguably present here: (1) where the language in the agreement limits the obligation to only one party; and (2) where the prevailing party establishes that the contract with the attorney fee provision is unenforceable. (Santisas, at p. 611. ) In this latter situation, which we discuss in greater detail post, the test is whether Plaintiff would have been entitled to attorney fees from Defendant (even though she was not a signatory to the Note), if he had prevailed on his claim for breach of the Dissolution Agreement. (Santisas, at p. 611, citing Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128-129; Brown Bark III, L.P. (2013) 219 Cal.App.4th 809, 819 ["section 1717 allows a party who defeats a contract claim by showing the contract did not apply or was unenforceable to nonetheless recover attorney fees under that contract if the opposing party would have been entitled to attorney fees had it prevailed"].)
In applying section 1717, we must first determine "the scope of the attorney fee agreement," because "any inquiry begins with the language of the attorney fees provision itself." (Mountain Air, at pp. 752, 760; see R.W.L. Enterprises, supra, 17 Cal.App.5th at pp. 1025, 1029.) Here, the attorney fee provision provides in full:
"Should suit be commenced or an attorney employed to enforce the payment of this note, I agree to pay such additional sum as the court may adjudge reasonable as attorney's fees in said suit."
Therefore, if the attorney fee provision applies, then it applies both to Plaintiff and Defendant and to the entire Dissolution Agreement. (§ 1717, subd. (a); Santisas, supra, 17 Cal.4th at pp. 610-611.)
However, we are persuaded by Plaintiff's argument that, even if he had prevailed, he would not have been entitled to attorney fees.
In the first cause of action of the Complaint, Plaintiff alleged that Defendant breached the Dissolution Agreement, which included the Oral Amendment, by (1) not complying with the Dissolution Agreement's requirement that " 'all partners agree to sign all forms needed in regard to the buy/sell insurance policies in order to show [Plaintiff] owner of all policies' "; and (2) not complying with the Oral Amendment's requirement "to remove the name of [Defendant] as a co-beneficiary under the [Insurance P]olicy." These allegations do not involve, in the language of the Note, "enforce[ment of] the payment of th[e N]ote." Nor do they, under the standard set forth in Mountain Air, supra, 5 Cal.5th at page 758, "necessarily implicate[]" the triggering language of the Note. Consistently, in both his trial brief and written closing argument, Plaintiff's position was that, because he had paid the Note, Defendant was not entitled to the $25,000 in benefits that she received under the Insurance Policy.
Thus, in order to prevail on his contract claim (for breach of the Dissolution Agreement), even though Plaintiff was required to prove that he had paid the Note, the contract claim itself was not "to enforce payment of th[e N]ote"—as required by the limiting language of the attorney fee provision.
The trial court's statement of decision also provides guidance. The court did not once mention the Note, instead ruling in relevant part: "The court finds that there was insufficient evidence presented to support the existence of any oral agreements between the parties or any modifications of the Dissolution Agreement. [¶] . . . [¶] Therefore, without an oral contract having been established, Plaintiff has failed to establish viable claims against the Defendant for breach of contract . . . ." Whether Plaintiff satisfied the Note is irrelevant to the issues the court tried and determined—namely, whether the parties agreed to the Oral Amendment and, if so, whether Defendant breached the Dissolution Agreement. Even if Plaintiff had prevailed and established the terms of the Oral Amendment as alleged, and even if Plaintiff had proved that he was entitled to $25,000 as a result of Defendant's breach of the Dissolution Agreement, Plaintiff would not have been entitled to a section 1717 award of attorney fees, because the breach of the contract would not have involved a claim "to enforce payment of the[e N]ote"—as expressly required by the language of the attorney fee provision.
Consistent with her position in the trial court, on appeal Defendant argues that the attorney fee provision applies, because she defended the allegations in the Complaint by asserting that Plaintiff failed to comply with the Dissolution Agreement and Note by failing to make all payments required by under the Note. However, Defendant has not provided us with copies of her answer (and affirmative defenses), her trial brief, her written closing argument, or citations to the reporter's transcript where she presented her position to the trial court; thus, we do not know the bases on which she defended Plaintiff's claim for breach of the Dissolution Agreement. Indeed, the trial court's statement of decision does not mention such a defense, and the court's substantive ruling is not based on such a defense.
3. Conclusion
We have assumed (without deciding) that the parties entered into an agreement for the payment of attorney fees and concluded, nonetheless, that the scope of the attorney fee agreement does not include Plaintiff's claim for breach of the Dissolution Agreement. In doing so, we have followed our Supreme Court's directive that, before section 1717 can " 'come[] into play, it is necessary to determine whether the parties entered an agreement for the payment of attorney fees, and if so, the scope of the attorney fee agreement.' " (Mountain Air, supra, 3 Cal.5th at p. 752.)
On this record, therefore, the trial court erred in granting Defendant's motion for attorney fees.
DISPOSITION
The judgment is modified by striking the award of $53,637 in attorney fees and, as modified, is affirmed. Plaintiff is entitled to his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)


IRION, J.

WE CONCUR:




HUFFMAN, Acting P. J.




DATO, J.