Concerned Citizens of South
Los Angeles v. City of
Angeles
Filed 1/14/13
Concerned Citizens of South Central Los Angeles v. City of Los Angeles CA2/5
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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
CONCERNED
CITIZENS OF SOUTH CENTRAL LOS ANGELES,
Plaintiff and Respondent,
v.
CITY OF LOS ANGELES,
Defendant and Respondent.
B240301
(Los Angeles County
Super. Ct. No.
BC389760)
APPEAL
from an order of the Superior Court of
County, Coleman Swart and John L. Segal, Judges. Affirmed.
Klapach
& Klapach, P.C. and Joseph S. Klapach for Plaintiff and Respondent.
Carmen
A. Trutanich, City Attorney and Brian I. Cheng, Deputy City Attorney for
Defendant and Respondent.
I. INTRODUCTION
Plaintiff, Concerned Citizens of
South Central Los Angeles, and defendant, City of Los Angeles, appeal
from a January
30, 2012 judgment. The judgment at issue was entered after we
reversed a judgment in a prior appeal. (
19, 2011, B222424) [nonpub. opn.].) Plaintiff argues: the trial court erroneously awarded a
declaratory rather than a money judgment; it should have been granted leave to
amend the declaratory relief complaint to add a contract breach claim; and it
was entitled to pre-and post-judgment interest.
On cross-appeal, defendant challenges the award of attorney fees to
plaintiff. Defendant argues plaintiff is
judicially estopped from recovering attorney fees. We reject all of these contentions and affirm
the January
30, 2012 judgment.
II. BACKGROUND
A. Agreement
On November 20, 2001, the parties entered into a contract entitled, “Agreement Number
102346 of City Contracts Between the City of Los Angeles and Concerned Citizens
of South Central Los Angeles Relating to the Antes Columbus Football Club Youth
Center Acquisition.†Defendant agreed to
provide $2.4 million in community development block grant funds to be secured
by a promissory note and a trust deed.
Plaintiff agreed to use the funds to acquire “an abandoned, three acre
industrial site†in Los Angeles. Plaintiff was to transform
it into “a youth recreation facility†for the benefit of “very low and low
income†persons. Section 203 of the
agreement provides: “Concerned Citizens
of South Central Los Angeles will transform an abandoned, three acre industrial
site in Los Angeles into a youth recreation facility that will include a 31,000 square
feet community center and a 75,000 square feet state of the art soccer
field. The Antes Columbus Football Club
Youth Center will serve 750 youths monthly and will house a pre-school daycare
facility, literacy and skills training programs, weight and aquatic training
equipment, a multi-media computer center, a fully digital audio/video
production studio, conference and classroom space, and a commercially equipped
kitchen. The site will include a 28,000
square foot park, a 75,000 square foot state of the art soccer field and a 226
space parking structure.†Section 103 of
the agreement provides, “The term of this Agreement shall commence on upon
execution of this agreement and end January 31, 2002, and provided that said
term is subject to the provision of the general terms and conditions as
detailed in §601 through §743 of this Agreement.â€
Section 203H of the
agreement allows plaintiff to repay the promissory note as follows: “Two Million Four Hundred Thousand Dollars
($2,400,000) shall be repaid with services. . . . The
services shall be amortized at the rate of $40,000 per year for a total of
Sixty (60) years. Said amortization
shall commence when the Contractor obtains a Certificate of Occupancy or Notice
of Completion and begins utilizing the additional space to fulfill its service
obligations as identified in this Agreement.
[¶] The Contractor may, at its
option, purchase the City’s interest at anytime, for an amount equal to the
current value as determined in the preceding paragraph. [¶]
When the Contractor has fully complied with all aspects of this
Agreement and the Promissory Note, the City’s interest shall be zero and the
City shall reconvey the aforesaid Deed of Trust or reassign the aforesaid
Conditional Consent to Assignment of Lessee’s Interest in Lease to the
Contractor.â€
In
addition, section 609 of the agreement contains a reversion of assets
provision: “[Plaintiff] shall, within 45
days of the expiration of this Agreement, transfer to the City Treasury any,
and all, grant funds on hand at the time of expiration and any, and all,
accounts receivable attributable to the use of grant funds provided under this
Agreement.†Because the purchase price
of the property was $2.1 million, plaintiff returned $300,000 in community
development block grant funds to defendant pursuant to section 609A of the
agreement. In addition, section 609B
provides: “Any real property under the
Contractor’s control that was acquired or improved in whole or in part with
grant funds provided under this Agreement in excess of $25,000 shall either be: [¶]
1. Used to meet one of the
national objectives set forth in 24 CFR 570.208 until five (5) years after the
expiration of this Agreement, or such longer period of time as determined
appropriate by the City; or [¶] 2. Disposed of in a manner which results in the
City being reimbursed in the amount of the current fair market value of the
property less any portion thereof attributable to expenditures of non-grant
funds for acquisition of, or improvement to, the property. Such reimbursement is not required after the
period of time specified in accordance with 1) above.â€
B. Promissory Note
On November 29, 2001, plaintiff signed a promissory note secured by a trust deed in
favor of defendant. The promissory note
states in part: “In consideration for
the $2,400,000, the BORROWER shall utilize the Antes Columbus Footbal[l] Club Youth Center . . . for
the purpose of providing youth recreation services. The services and reports to be provided by
the BORROWER are detailed in Section 203 of Agreement No. 102346 between
the LENDER and the BORROWER. . . . [¶]
The BORROWER shall secure the promissory note of $2,400,000 in favor of
the LENDER. If the BORROWER fails to
comply with the conditions covered herein the Note shall be in default and the
LENDER has the right to accelerate the loan.
[¶] The Promissory Note shall be
amortized at the rate of Forty Thousand Dollars ($40,000.00) per year for Sixty
(60) years, while the BORROWER operates the project in compliance with the
Agreement. Following the execution of
Agreement No. 102346, the service payback period shall begin when the BORROWER
notifies the LENDER that it has fulfilled the requirements of Section 203 of
City Agreement No. 102346. [¶]
The BORROWER may, at its option, purchase the LENDER’S interest at any
time for an amount equal to the current value as determined by the preceding
paragraph. Any amount owed under the
Note may be prepaid, in whole or in part, without premium or penalty. [¶]
When the BORROWER has fully complied with all aspects of Agreement No.
102346, the LENDER’S interest shall be zero and LENDER shall execute and
reconvey the Deed of Trust on the real
property . . . . [¶]
If action is instituted on this Note upon default by BORROWER, the
BORROWER promises to pay reasonable attorney’s fees and other related costs as
the court may see fit.â€
C. Plaintiff’s Complaint
On March 5, 2008, plaintiff sued defendant for declaratory relief. Plaintiff sought “a judicial determination of
its rights and duties per the Agreement, and a declaration†as to what should
be the purchase price for its interest in the property. Plaintiff requested: “1. A
declaration that the Agreement allows the Plaintiff to acquire the City’s
interest in the real property mentioned therein for $2,100,000.00 and that the
City must immediately release all lien[s] on the Property upon receipt of such
funds; 2. Costs, including but not
limited to attorney’s fees; and 3. Any
and all other relief to which Plaintiff may be justly entitled.†Plaintiff never amended its complaint prior
to the first appeal.
D. Defendant’s Cross-Complaint
On
April 8, 2008, defendant filed a cross-complaint against plaintiff for: rescission; contract breach; promissory note
breach; accounting; and declaratory relief.
Defendant alleged plaintiff breached the agreement and the promissory
note by failing to build and operate the community center as required by the
parties’ agreement. In addition,
defendant sought rescission based on plaintiff’s failure to build the community
center and provide services as required by section 203 of the agreement. Defendant also sought judicial determination
of its rights and duties under the November 20, 2001 contract and November 29, 2001 note. In addition, defendant sought the following
declaration, “[T]he current fair market value of the Property as determined by
the amount of compensation to be paid by the [Los Angeles Unified School
District] for the property in the Related Action.â€
E. Eminent Domain Action
On
March 10, 2008, the Los Angeles Unified School District filed an eminent domain action against plaintiff, defendant and the
Los Angeles County Tax Collector to acquire the property. On April 7, 2009,
the trial court entered an interlocutory judgment in the eminent domain action
fixing the condemnation award at $5,587,500 pursuant to the parties’
stipulation. Of that amount, $154,177.46
was paid to the county tax collector for unpaid taxes and penalties. The remaining $5,433,322.54 remained on
deposit with the trial court pending further orders.
F. Statement of Decision and Judgment
On November 12, 2009, after a bench trial, the statement of decision was issued. The trial court found plaintiff received a
$2.1 million community development block grant funded by the United States
Department of Housing and Urban Development.
The funds were administered by defendant to acquire a three-acre parcel
under the agreement. The trial court
found: “After the property was cleared,
it was partially used by the North Central American Youth Soccer League by
about 1,800 children per year. Games
were played on Saturday and there was some practice during the week. The property was also used as a used car
lot. The property was leased to carnival
operators about 15 times. Each carnival
lasted one to two weeks. The property
was used for a circus 5 times. The
plaintiff[] collected $5,000 per week for these uses. Plaintiff[] testified the money was used to
pay taxes and for maintenance of the property.â€
The trial court described
plaintiff’s efforts to buy out defendant’s interest in 2006: “In March 2006, [plaintiff] sent an email to
the City seeking ‘to “buy out†the City’s interest for “fair market value,â€â€™
which email was further confirmed by Mark Williams’ testimony. [Exhibit 110]. The City responded stating that a property
appraisal was needed to determine ‘fair market value.’ [Exhibit 110]. In August 2006, [plaintiff] sought to
purchase the City’s interest for $2.1 million, to which the City responded that
under the terms of the Contract and [Department of Housing and Urban Development]
regulations, the City’s interest is measured by the fair market value of the
Property. [Exhibits 111-117].â€
The trial court found
plaintiff never completed the project outlined in section 203 of the
agreement. Plaintiff built an earthen
clay soccer field that was used for youth soccer but the construction did not
comply with section 203. The trial court
also found: “No further construction was
accomplished as plaintiff had insufficient funds to complete the project as
required by Para. 203. The property sat
barren for 7 years until [Los Angeles Unified School District] took the
property by eminent domain for the fair market value of $5,433,322.54. [Los Angeles Unified School District]
deposited that amount with the court pending the court outcome of this
case.â€
The statement of decision
summarized the parties’ contentions at trial:
“Plaintiff seeks declaratory relief that plaintiff is entitled to a
determination that plaintiff may exercise an option to purchase the defendant
City’s interest for a price of $2.1 million.
(The amount of the grant used to purchase the property.) [¶]
The city contends that the city is entitled to the full market value of
the property in accordance with 24 CFR 570, 503(7) ii. [¶]
Plaintiff’s position is that plaintiff has a right pursuant to Para.
203H1 (2nd paragraph) and the promissory note to ‘purchase the city’s interest
at anytime for an amount equal to the current value as determined in the
preceding paragraph’; claiming this 2nd paragraph is a stand alone option. The city claims the 2nd paragraph of 203H1 is
inextricably connected to the preceding 1st paragraph and only applies when
service payback under the contract begins.
Plaintiff further contends that under Para. 609 of the agreement (which
paraphrases 24 CFR 570.503(7)[)] that plaintiff complied with #1 under that
section as the property was used to meet one of the national objectives set
forth in 24 CFR 503(7) for over 5 years.
The objective being the ‘elimination or reduction of blight.’â€
The trial court rejected
plaintiff’s argument that it complied with section 609B1 of the agreement by
reducing blight. The trial court
reasoned: “Paragraph 203A2 of the
agreement gives the national objective for the agreement in Para. 203A3a2 as
being an activity benefitting very low and low income youth. The objective re: blight (203A2b) is not
checked in the agreement. The court
finds that the national objective of this agreement was to benefit low or very
low income youth. Plaintiff’s argument
under Para. 609B1 fails re: blight.
Further, the court finds that the activities on the property do not meet
the compliance standard required under Para. 609B1 or 24 CFR 570.503(7)i as set
forth in Para. 203L of the agreement.â€
The trial court also
ruled: “The court finds that the second
paragraph of Section 203H1 is ambiguous and confusing and can understand how
plaintiff could interpret the paragraph as it has. However, looking at the agreement as [a]
whole and further finding that plaintiff has breached the agreement by not
performing as promised under paragraph 203 of [the] agreement and also finding
that 24 CFR 570.503(7)ii is applicable to this case, the court rules that
plaintiffs do not have the right to the proceeds of the sale of the property
other than the right to be reimbursed under 24 CFR 570.503(7)ii.†As for the promissory claim, the trial court
ruled: “Plaintiff’s claim on the
promissory note is derivative of the substantially identical terms at paragraph
203H1 of the agreement. The note does
not stand alone. The note is merely
reflective of the right of the city to recover the property from plaintiff upon
default or breach of the agreement. The
plaintiff[] did breach the agreement as indicated above.â€
On December 22, 2009,
judgment was entered in defendant’s favor on its claims for breach of the
contract and promissory note in the amount of $4,684,843.22. Plaintiff received $406,237.03 in
reimbursement for site improvement expenditures. In addition, the trial court awarded
defendant $4,492.29 in costs and $127,600 in attorney fees. Plaintiff appealed the judgment on February
18, 2010.
G. Prior Opinion
On May 19, 2011, we
reversed the December 22, 2009 judgment.
(Concerned Citizens of South Central
Los Angeles v. City of Los Angeles, supra, B222424.) We found substantial evidence supported the
trial court’s finding that plaintiff did not comply with paragraph 609B(1) and
24 Code of Federal Regulations part 507.503(b)(7)(i). We explained:
“It is undisputed that Concerned Citizens never built the youth
recreation facility. The clay soccer
field that was built on the property was not the soccer field contemplated by
the parties under section 203 of the agreement.
Moreover, Concerned Citizens leased the property to vendors for
carnivals, used car sales and circuses, activities which did not benefit low or
very low income residents.†(
Angeles v. City of Los Angeles, supra, B222424, at p. 13.) But we concluded the reversion of assets
provision under section 609B(2) did not require plaintiff to reimburse
defendant for the fair market value of the property. We explained the reversion of assets
provision by its own term specified no reimbursement was required five years
after the expiration of the agreement. (
2002, under section 103, plaintiff was not required to reimburse defendant for
the fair market value of the property since it was disposed of after January
31, 2007. Plaintiff disposed of the
property on March 10, 2008, when the Los Angeles Unified School District
condemned the parcel. (
We ruled plaintiff was entitled to exercise its option to purchase
defendant’s interest under the service payback provision in section 203H of the
agreement. (Id. at p. 15.) As for the
attorney fees award, we held defendant was not entitled to recover attorney
fees because there was no default on the promissory note. We found there was no default on the
promissory note because plaintiff chose to exercise its option to purchase the
city’s interest. (Id. at pp. 15-16.)
H. Proceedings After Remand
After the remittitur
issued, plaintiff filed a proposed judgment.
Plaintiff sought: a monetary
judgment of $4,816,935.51; “ownership of the interest attributable to
$5,223,172.54 of the funds previously held on deposit in the related eminent
domain action . . . between the date of the deposit of such
funds and the date that such funds were disbursedâ€; “prejudgment interest at
the rate of 7% per annum against the City for the amount of the judgment from
the date that the funds previously held on deposit in the related eminent
domain action . . . were disbursed to the City until
September 8, 2011â€; and $224,446 in attorney fees.
Defendant objected to the
proposed judgment, arguing plaintiff did not seek a monetary judgment. In addition, defendant contended we did not
find plaintiff was entitled to a money judgment. Defendant argued if our opinion was read to
allow plaintiff a money judgment, it must be reduced by $2.1 million to reflect
the option price. Defendant also
objected to any interest award.
On December 14, 2011, a
hearing was held on the proposed judgment and plaintiff’s motions for attorney
fees and pre- and post-judgment interest.
On December 22, 2011, plaintiff filed a motion requesting entry of a
money judgment, or in the alternative, an ex-parte application for leave to
amend the complaint to conform to proof.
In the alternative, plaintiff sought to shorten the time on its motion
for leave to amend its declaratory complaint.
On January 5, 2012, the
trial court ruled on the proposed judgment issue and plaintiff’s various
motions. Concerning the proposed
judgment, the trial court ruled: “The
Court of Appeal reversed the December 22, 2009 judgment in this action. The Court of Appeal held that the trial court
erred by ruling that plaintiff could not exercise its option to purchase the
property, and that ‘plaintiffs do not have the right to the proceeds of the
property other than the right to be reimbursed’ for improvements, taxes and
insurance costs. 2011 WL 188918, at 5,
8. The Court of Appeal held that
plaintiff ‘is entitled to exercise its option to purchase the city’s interest
for $2.1 million.’ Id. at 9. The Court of Appeal stated that plaintiff
exercised this $2.1 million option to purchase on August 1, 2006. Id. at 4.
Therefore, under the Court of Appeal’s ruling, plaintiff was entitled on
August 1, 2006 to purchase defendant’s interest in the property for $2.1
million. [¶] On April 7, 2008, defendant’s interest in the
property became defendant’s interest in $5,433,322.54, the net amount of the
interlocutory judgment in the eminent domain action that [Los Angeles Unified
School District] filed to acquire the property.
Therefore, plaintiff has a right to purchase, for $2,100,000 the
$5,433,322.65 that represents defendant’s interest in the property. [¶]
For these reasons, plaintiff is entitled to a declaratory judgment that
it has the right to pay defendant $2,100,000 in exchange for defendant paying
plaintiff $5,433,322.65, less the $406,237.03 plaintiff already received from
the funds deposited with the court.
(Plaintiff concedes that this $406,237.03 should be credit against the
amount of any money plaintiff receives in this case. . . .) Therefore, the court will enter a declaratory
judgment declaring that plaintiff has the right to pay defendant $2,100,000 in
exchange for defendant paying plaintiff $5,027,085.62.â€
Plaintiff’s motion for
pre- and post-judgment interest was denied.
The trial court explained:
“Section 3287(a) does not apply
because . . . plaintiff is not entitled to damages in a sum
certain or capable of being made certain by calculation. Plaintiff is entitled to a declaration that
upon paying a certain amount of money ($2,100,000), plaintiff is entitled to
receive a certain amount of money ($5,027,085.62). The declaratory judgment plaintiff is
entitled to recover is similar to a judgment for damages, but it is not a
judgment for damages. If plaintiff does
not pay the $2,1000,000, plaintiff does not get any money. That is not a money judgment. [Civil Code] [s]ection 3287(b) does not apply
because . . . plaintiff is not entitled to a judgment to
receive damages based on a cause of action in contract. [¶] To
the extent plaintiff is seeking post-judgment interest between the original
judgment on December 22, 2009 and the soon-to-be-entered judgment after remand,
such interest is also not recoverable.
In cases where the original judgment is reversed on appeal and a new
judgment is entered after remand, interest runs only from the date of the new
judgment. [Citations.] The appeal in this case was a complete
reversal, not a modification.â€
The trial court granted
plaintiff’s attorney fees motion. The
trial court ruled: “Defendant sued
plaintiff for breach of the promissory note.
See Cross-complaint, ¶¶ 22-26.
The Court of Appeal held that plaintiff ‘did not default on the
promissory note’ and that ‘there was no default on the promissory note.’ 2011 WL 1889418, at 9. Because plaintiff did not breach the
promissory note, plaintiff prevailed on defendant’s third cause of action for
breach of the promissory note. Plaintiff
is the prevailing party. [¶] Defendant does not challenge the
reasonableness of any of plaintiff’s claimed fees, nor raise any issue of
allocation. Therefore the court will
award plaintiff its reasonable attorneys’ fees as requested in the amount of
$220,096, plus an additional $8,040 incurred since plaintiff filed their motion
(which the court finds is reasonable), for a total award of $228,136.†Finally, the trial court denied plaintiff’s
ex parte application to amend the complaint, or in the alternative, an order
shortening time on its motion for leave to amend.
On
January 30, 2012, judgment was entered on plaintiff’s complaint for declaratory
relief. The judgment states, “[Plaintiff
is awarded judgment on its Complaint for declaratory relief in its favor and
against [defendant] as follows:
[plaintiff] has the right to pay [defendant] $2,100,000 in exchange for
[defendant] paying [plaintiff] $4,816,935.51.â€
Plaintiff was awarded it costs of appeal in the amount of $3,552.89 and
its attorney fees in the amount of $228,136.
Notice of entry of judgment was served on February 1, 2012. Plaintiff filed its notice of appeal on April
2, 2012. Defendant filed its
cross-appeal on April 18, 2012.
III. DISCUSSION
A. Plaintiff’s Appeal
1. Declaratory Relief Judgment
Plaintiff argues the
trial court erred in entering a declaratory rather than a money judgment. The January 30, 2012 judgment states,
“[Plaintiff] has the right to pay [defendant] $2,100,000 in exchange for
[defendant] paying [plaintiff] $4,816,935.51.â€
This is precisely the judgment plaintiff sought in its complaint. It is this judgment we ruled plaintiff was
entitled to under the agreement.
Plaintiff’s declaratory relief complaint seeks, “A declaration that the
Agreement allows the Plaintiff to acquire [defendant’s] interest in the real
property mentioned therein for $2,100,000.00 and that [defendant] must
immediately release all [liens] on the Property upon receipt of such
funds.†In addition, plaintiff requested
“[a]ny and all other relief†to which it was entitled. Prior to the first appeal, plaintiff never
amended its declaratory relief complaint.
In our May 19, 2011 decision, we concluded plaintiff was entitled to
exercise its option to purchase defendant’s interest under the service payback
provision in section 203H of the agreement.
We reversed the December 22, 2009 judgment because we ruled the trial
court erred in not allowing plaintiff the right to exercise its option under
the parties’ agreement. The January 30,
2012 judgment provides plaintiff the relief sought in the declaratory relief
complaint and on its first appeal. On
both occasions, plaintiff sought the right to exercise its option to purchase
defendant’s interest for $2.1 million; the amount owed on the promissory
note.
Plaintiff contends the trial court must return it to
as near as possible the position it occupied prior to the December 22, 2009
judgment. Plaintiff argues this court
should exercise its power under Code of Civil Procedure section 908 to order
defendant to pay the condemnation proceeds plus interest. Code of Civil Procedure section 908
provides: “When
the judgment or order is reversed or modified, the reviewing court may direct
that the parties be returned so far as possible to the positions they occupied
before the enforcement of or execution on the judgment or order. In doing so, the reviewing court may order
restitution on reasonable terms and conditions of all property and rights lost
by the erroneous judgment or order . . . and may direct the
entry of a money judgment sufficient to compensate for property or rights not
restored. The reviewing court may take
evidence and make findings concerning such matters or may, by order, refer such
matters to the trial court for determination.†Our reversal of the December 22, 2009
judgment was based on our interpretation of the agreement. The agreement permitted plaintiff to exercise
the option to purchase defendant’s interest at any time. The posture that plaintiff occupied before the
December 22, 2009 judgment is its current position -- it has a right to
exercise its option.
Plaintiff also asserts
the declaratory relief complaint was
not limited to a declaration of rights but included a request for “any and all
other relief†to which it may be justly entitled. Plaintiff reasons once the trial court
released the money to defendant, plaintiff was “justly entitled†to a judgment
compelling defendant to repay the money received in error. But what plaintiff was “justly entitled†to
under the agreement is the right to exercise its option. This is a right enforced by the January 30,
2012 judgment.
Plaintiff
also argues the trial court erred by failing to recognize it had the power to
enter a money judgment in a declaratory judgment action. Plaintiff argues the circumstances compel the
award of money judgment in its declaratory judgment action, relying on: County
of San Diego v. State of California (2008) 164 Cal.App.4th 580, 608;
Cal.App.2d 387, 390; and Tolle v. Struve (1932)
124 Cal.App. 263, 268. Plaintiff’s
reliance is misplaced. To begin with,
there is no evidence the trial court misunderstood its powers. It is presumed the trial court was aware of
its powers. (Evid. Code § 664,
41 Cal.4th 704, 718.)
In County of San Diego, the Court of Appeal recognized monetary relief
may be appropriate in a declaratory action where the parties dispute the
validity of a contract. (
supra, 164 Cal.App.4th at p. 608.)
In that situation, the trial court can declare the contract valid and
award damages for the breach of the agreement to dispose of the entire
controversy between the parties. (
Here, the declaratory relief the complaint sought is not a declaration
as to the validity of the agreement.
Rather, plaintiff sought a declaration as to its right to exercise its
option for $2.1 million.
Likewise,
present case. In Tolle v. Struve, supra,
124 Cal.App.at pages 265-266, judgment was entered for past due rents in a
declaratory relief action concerning the validity of the lease and
sublease. The Court of Appeal rejected
defendant’s argument that her breach of the leases barred an award of
declaratory relief. (
relief it sought in its complaint--the right to exercise its option.
Finally, the
circumstances in California Bank v.
Diamond, supra, 144 Cal.App.2d at pages 389-390 differ from this case. In
declaration determining the parties’ rights and duties arising from a
stop-payment of a check that the plaintiff subsequently paid. (Ibid.) The Court of Appeal concluded the complaint
stated a declaratory relief claim and affirmed the award of the full amount
plaintiff sought in its complaint for declaratory and other relief. (Id.
at p. 390.) Here, the right that
plaintiff had under the agreement is the right to exercise its option to
purchase defendant’s interest for $2.1 million.
2. Leave to Amend
The trial court denied
plaintiff’s post-remittitur ex parte
application for leave to amend. In
addition, plaintiff sought an order shortening time on its motion for leave to
amend. Plaintiff argues the trial court
erred in refusing to grant it leave to amend its complaint according to proof
by adding a contract breach claim. A
trial court may allow a pleading to be amended at any time up to and including
trial. (Code Civ. Proc. §§ 473, subd.
(a) (1), 576.) The Court of Appeal has
held, “The basic rule applicable to amendments to conform to proof is that the
amended pleading must be based upon the same general set of facts as those upon
which the cause of action or defense as originally pleaded was grounded.†(Union
Bank v. Wendland (1976) 54 Cal.App.3d 393, 400-401; accord,
to amend the complaint. (
39 Cal.4th 235, 242; Singh v. Southland
Stone, U.S.A. Inc. (2010) 186 Cal.App.4th 338, 355; Garcia v. Roberts, supra, 173 Cal.App.4th at p. 909.) Leave to amend according to proof is properly
denied where the proposed amendment raises new issues that opposing party has
had no opportunity to defend. (
17, 31; Singh v. Southland Stone, U.S.A.
Inc., supra, 186 Cal.App.4th at p. 355; Garcia
v. Roberts, supra, 173 Cal.App.4th at p. 912 [“[I]f a proposed amendment
during trial is prejudicial to the opposing party, it is reversible error to
grant leave to amend to conform to proofâ€].)
No abuse of discretion occurred.
Plaintiff presented no evidence of any breach of the agreement by
defendant. Also, the facts alleged in
plaintiff’s complaint do not state a contract breach claim. And the remittitur had issued after the first
appeal. There was no showing of
diligence. Thus, the trial court could
properly deny plaintiff’s request to amend the
3. Pre-Judgment Interest
Civil Code section 3287 subdivision (a) provides: “Every person who is entitled to recover
damages certain, or capable of being made certain by calculation, and the right
to recover which is vested in him upon a particular day, is entitled also to
recover interest thereon from that day, except during such time as the debtor
is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of
damages and interest from any such debtor, including the state or any county,
city, city and county, municipal corporation, public district, public agency,
or any political subdivision of the state.â€
Our Supreme Court has stated:
“[O]ne purpose of section 3278, and of prejudgment interest in general,
is to provide just compensation to the injured party for loss of use of the
award during the prejudgment period – in other words, to make the plaintiff
whole as of the date of the injury.†(
6 Cal.4th 644, 663; see Howard v.
American Nat. Fire Ins. Co. (2010) 187 Cal.App.4th 498, 535.)
Plaintiff argues it is entitled to recover prejudgment interest
under section 3287, subdivision (a).
Plaintiff asserts its “right to recover†damages from defendant vested
in August 2006 when defendant refused to recognize plaintiff’s option. Plaintiff reasons the damages became “certain
or capable of being made certain by calculation†when the trial court entered a
judgment in the condemnation action.
According to plaintiff, the judgment fixed the property’s fair market
value.
Plaintiff’s argument is premised on the mistaken assumption that
we found defendant breached the agreement by refusing to honor plaintiff’s
right to exercise its buy-out option. We
made no finding as to any contract breach by defendant in our May 19, 2011
decision. Rather, we ruled plaintiff was
entitled to purchase defendant’s interest in the property for $2.1
million. This gave plaintiff the
declaratory relief it sought in its complaint and at trial. As the trial court explained: “If plaintiff does not pay the $2,100,000,
plaintiff does not get any money. That is not a money judgment.†We conclude prejudgment interest under Civil
Code section 3287 subdivision (a) was
properly denied because plaintiff is not entitled to recover damages against
defendant.
Plaintiff also asserts the trial court erred in refusing to award
prejudgment interest under Civil Code section 3287, subdivision (b). Civil Code section 3287, subdivision (b)
provides,
person who is entitled under any judgment to receive damages based upon a cause
of action in contract where the claim was unliquidated, may also recover
interest thereon from a date prior to the entry of judgment as the court may,
in its discretion, fix, but in no event earlier than the date the action was
filed.†Civil Code section 3287 subdivision
(b) creates a limited exception to the general rule disallowing prejudgment
interest on unliquidated obligations. (
Unified School Dist. (2001) 90 Cal.App.4th 64, 69.) The trial court has discretion to determine whether
prejudgment interest should be awarded on an unliquidated contractual
claim. (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824,
829; Lewis C. Nelson & Sons, Inc. v.
Clovis Unified School Dist., supra, 90 Cal.App.4th at p. 69.) We review this contention for an abuse of
discretion. (See Gebert v. Yank (1985) 172 Cal.App.3d 544,
555-556; Moreno v. Jessup Buena Vista
Dairy (1975) 50 Cal.App.3d 438, 448.)
No abuse of discretion occurred.
Under Civil Code section 3287, subdivision (b), a party may recover
prejudgment interest on damages awarded on an unliquidated contractual
claim. Here Civil Code section 3287,
subdivision (b) is inapplicable because plaintiff did not receive damages based
on an unliquidated contractual claim.
Plaintiff asserted a declaratory relief claim. Plaintiff received the declaration of rights
it sought in its complaint.
Plaintiff also argues it is entitled to recover all interest that
accrued on the condemnation proceeds that continue to be held on deposit with
the trial court. Plaintiff asserts our
May 19, 2011 decision held defendant breached the agreement in August
2006. We found plaintiff tried to
exercise its option in August 2006. But
we did not rule defendant breached the agreement by refusing to recognize
plaintiff’s right to exercise its option.
The evidence showed defendant recognized plaintiff’s right to exercise
its option but believed the price was the current market value of the property. Should plaintiff chose to exercise its option
and buy out the city’s interest for $2.1 million, plaintiff hypothetically may
then be entitled to a pro rata portion of the accrued interest on the
condemnation award. We do not reach the
merits of this issue. But plaintiff is
not entitled to recover any interest on that portion of the condemnation award
that represents the $2.1 million principal amount even if the option is
exercised. Here, the trial court did not
err when it refused to release any accrued interest arising from the
condemnation proceeds. Plaintiff has not
yet purchased defendant’s interest.
4. Post-Judgment Interest
Plaintiff argues the
trial court erred in concluding it was not entitled to post-judgment interest
prior to the date of entry of the January 30, 2012 judgment. This contention has no merit. Our prior appellate ruling and remittitur
ordered the trial court to enter a declaratory judgment in plaintiff’s
favor. The question of when interest
begins to run does not depend on “mere formalism†but on the substance of our
order. (Snapp v. State Farm Fire & Cas. Co. (1964) 60 Cal.2d 816,
821-822; Munoz v. City of Union City
(2009) 173 Cal.App.4th 199, 203-204.)
Plaintiff is not entitled to any post-judgment interest. The judgment that it received is a
declaratory, not a money judgment.
Plaintiff has the right to exercise its option to buy-out defendant’s
interest pursuant to the agreement but it does not have to do so.
B. Defendant’s Cross-Appeal
1. Attorney Fees
In its
cross-complaint, defendant alleged plaintiff breached the promissory note by
failing to provide services through the operation of the community center. Defendant sought the full amount of the note
and reasonable attorney fees. The
promissory note states in part, “If action is
instituted on this Note upon default by [plaintiff], the [plaintiff] promises
to pay reasonable attorney’s fees and other related costs as the court may see
fit.†In our May 19, 2011
decision, we reversed the award of attorney fees to defendant. We explained there was no default of the
note. The promissory note, as previously noted, states in part: “[Plaintiff] may, at its option, purchase
[plaintiff’s] interest at any time for an amount equal to the current value as
determined by the preceding paragraph.
Any amount owed under the Note may be prepaid, in whole or in part,
without premium or penalty.†We concluded
plaintiff did not default on the promissory note because it tried to exercise
its option to purchase defendant’s interest.
After the remittitur issued,
plaintiff moved for attorney fees, which were granted by the trial court. The trial court found plaintiff prevailed on
defendant’s claim for promissory note breach.
The trial court reasoned we ruled plaintiff did not default on the
promissory note. No doubt, only
plaintiff agreed to pay reasonable attorney fees under the expositions of the
promissory note. But, Civil Code section
1717
subdivision (a) grants a reciprocal right to attorney fees when a contract
provides the right to one party but not the other. (Santisas
v. Goodin (1998) 17 Cal.4th 599, 610-611; Hsu v. Abbara (1995) 9 Cal.4th 863, 870.) Here,
the attorney fees provision in the promissory note is subject to the reciprocal
contractual attorney fees statute in Civil Code section 1717, subdivision (a).
Defendant does not dispute the amount of attorney fees
awarded to plaintiff. Rather, defendant
challenges plaintiff’s entitlement to attorney fees. Defendant argues plaintiff is judicially
estopped from recovering attorney fees under the promissory note. In Aguilar
v. Lerner (2004) 32 Cal.4th 974, 986-987, our Supreme Court summarized the
judicial estoppel doctrine: “‘“Judicial
estoppel precludes a party from gaining an advantage by taking one position,
and then seeking a second advantage by taking an incompatible position. [Citations.] . . .â€â€™ [Citation.]
The doctrine applies when: ‘(1) the same party has taken two positions;
(2) the positions were taken in judicial or quasi-judicial administrative
proceedings; (3) the party was successful in asserting the first position (i.e.
the tribunal adopted the position or accepted it as true); (4) the two
positions are totally inconsistent; and (5) the first position was not taken as
a result of ignorance, fraud or mistake.’â€
(Accord, MW Erectors, Inc. v.
Niederhauser Ornamental and Metal Works Co., Inc. (2005) 36 Cal.4th 412,
422.) Judicial estoppel is an equitable
doctrine that is applied to maintain the integrity of the judicial system and
protect parties from opponents’ unfair strategies. (MW
Erectors, Inc. v. Niederhauser Ornamental and Metal Works Co., Inc., supra,
36 Cal.4th at p. 422; Aguilar v. Lerner,
supra, 32 Cal.4th at p. 986.)
Here, defendant did not argue
plaintiff’s attorney fees motion in the trial court. Thus, defendant has forfeited this argument
by failing to raise it in the trial court below. (Kern
County Department of Child Support Services v. Camacho (2012) 209
Cal.App.4th 1028, 1038;
and Rural Environment v. County of Placer (2006) 144 Cal.App.4th 890, 904;
90 Cal.App.4th 297, 313.)
IV. DISPOSITION
The judgment is affirmed. The parties are to bear their own appeal
costs.
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER,
P. J.
I concur:
ARMSTRONG,
J.
>
MOSK, J., Concurring
Concerned
Citizens has repeatedly declared it has exercised the option, and, because the
City is holding on to the condemnation proceeds, Concerned Citizens has the
wherewithal to tender the option amount.
There is no apparent justification to require Concerned Citizens to
obtain the $2.1 million option amount, to exchange it for the over $5 million
eminent domain amount the City has. I
believe a judgment in Concerned Citizens’ favor for the difference would be
appropriate. A court can award monetary
relief in a declaratory relief in the appropriate circumstances, including “in
the interest of disposing of the entire controversy between the parties and
granting complete relief.†(See
164 Cal.App.4th 580, 608.) In effect,
the money is on deposit with the City and thus can be the basis of a monetary
judgment in a declaratory relief action.
(Cf. Enterprise Development Corp.
v. Terry (1953) 117 Cal.App.2d 389.)
But
the trial court has the power to require that Concerned Citizens fully exercise
the option by paying the $2.1 million to the City. I concur in the judgment.
MOSK,
J.
Code section 1717, subdivision (a) provides in part: “In any action on
a contract, where the contract specifically provides that attorney’s fees and
costs, which are incurred to enforce that contract, shall be awarded either to
one of the parties or to the prevailing party, then the party who is determined
to be the party prevailing on the contract, whether he or she is the party
specified in the contract or not, shall be entitled to reasonable attorney’s
fees in addition to other costs.â€
