v. Financial Pacific Ins.
Filed 7/13/12 Gold Strike Heights Homeowners v. Financial Pacific Ins. CA3
NOT
TO BE PUBLISHED
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opinion has not been certified for publication or ordered published for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
THIRD APPELLATE
DISTRICT
(Calaveras)
----
GOLD
STRIKE HEIGHTS
HOMEOWNERS ASSOCIATION,
Plaintiff and Appellant,
v.
FINANCIAL PACIFIC INSURANCE
COMPANY et al.,
Defendants and Appellants.
C066240
(Super.
Ct. No. CV34353)
This case arises out of the
development of a new real estate subdivision for which a common area recreation
facility, a clubhouse, was planned. When
the clubhouse was not built, appellant Gold Strike Heights Homeowners Association
(Gold Strike)
title="">[1]
sued the developer, defendant Westwind Development, Inc. (Westwind), and
defendant Financial Pacific Insurance Company (Financial Pacific), the surety
company that issued a bond for the building of the clubhouse. A jury awarded $319,157 to Gold Strike, which
appeared to be based on the construction estimate attached to the bond. However, the trial court granted judgment
notwithstanding the verdict (JNOV) on grounds that Gold Strike failed to
introduce any evidence of what it would actually cost to build the
clubhouse. The trial court also ordered
Gold Strike to pay attorney fees in the reduced amount of $15,000 to Westwind
and $5,000 to Financial Pacific.
Gold Strike appeals, arguing that
the trial court erred by granting defendants’ JNOV motion. Gold Strike contends
of damages for the clubhouse that was not built.
Westwind and Financial Pacific have
filed protective cross-appeals. They
argue that if we reverse the JNOV order, we must remand the case for retrial
because the trial court committed evidentiary errors and advocated on behalf of
Gold Strike when questioning witnesses.
Defendants further argue that the trial court abused its discretion in
awarding them only a fraction of their claimed attorney fees.
We affirm the JNOV order because
Westwind had no obligation to build the clubhouse until it started to build
phase two of the subdivision. Westwind
expressly disclaimed any obligation to build phase two, and indeed phase two
was not built. Because the obligation to
build the clubhouse was not triggered, Financial Pacific did not have to pay on
the surety bond. Our affirmance of the
JNOV order obviates the need to address defendants’ arguments that are
contingent on a reversal of the JNOV order.
Finally, we reverse the order granting attorney fees because the trial
court abused its discretion when it excluded hours expended by defendants’
counsel in pursuing meritorious legal
theories. Accordingly, we affirm the
judgment but reverse the order granting attorney fees.
STANDARD
OF REVIEW
The principles governing review of
a trial court’s granting of a motion for JNOV are well settled. As this court has previously explained, “‘The
trial court’s discretion in granting a motion for [JNOV] is severely
limited.’ [Citation.] ‘“The trial judge’s power to grant a [JNOV]
is identical to his [or her] power to grant a directed verdict
[citations]. The trial judge cannot
reweigh the evidence [citation], or judge the
If the evidence is conflicting or if several reasonable inferences may
be drawn, the motion for [JNOV] should be denied. [Citations.]
‘A motion for [JNOV] of a jury may properly be granted only if it
appears from the evidence, viewed in the light most favorable to the party
securing the verdict, that there is no substantial evidence to support the
verdict. If there is any substantial
evidence, or reasonable inferences to be drawn therefrom, in support of the
verdict, the motion should be denied.’
[Citation.]â€â€™ [Citation.] The trial court cannot consider witness
credibility. [Citation.]†(Hansen
v. Sunnyside Products, Inc. (1997) 55 Cal.App.4th 1497, 1510 (
606.)
FACTUAL
AND PROCEDURAL HISTORY
Based on the applicable standard of
review, we state the facts in the light most favorable to the jury’s
verdict. (Hansen, supra, 55 Cal.App.4th at p. 1510.)
Westwind designed and built the
existing portion of the Gold Strike Heights subdivision project in San Andreas,
California. As stated in the Declaration
of Restrictions (CC&Rs) filed for the project, the subdivision was to be
built in at least two phases. The
CC&Rs for the subdivision were recorded with the Calaveras County
clerk-recorder in March 2002. In pertinent
part, the CC&Rs state: “The first
phase consists of Residential Lots 1 through 42 and 48 to 50 and Common Area
Lot H . . . .†The
CC&Rs also state: “Declarant
[Westwind] reserves the right at its discretion to establish the order of phases,
the number of Common Area Lots or Residential Lots in a phase, the number of
phases, or the building types in a phase.â€
Every prospective buyer of a lot in the subdivision received a copy of
the CC&Rs.
The final recorded subdivision map
shows that the clubhouse was planned for lot 43, which is not listed by the
CC&Rs among the lots to be developed during the first phase. The clubhouse was anticipated to consist of
an 1,800-square-foot structure that contained unspecified “[e]quipment.†However, no architectural plans for the
clubhouse were ever drawn up by Westwind.
Even so, Westwind wished to refer to the clubhouse in selling lots in
the Gold Strike Heights subdivision.
Before Westwind was allowed to
mention the clubhouse in marketing phase one of the subdivision, the Department
of Real Estate (Department) required the developer to secure a surety bond for
the clubhouse. Chris Neri, an assistant
commissioner with the Subdivision Section at the Department, testified:
“Q.
[T]he bond that [sic] says
phase one –- do you have an explanation as to why it may say phase one?
“A.
Because the developer represented to the [D]epartment that they wanted
to advertise the rec facility.
“Q.
So the bond is stated to be for phase one to advertise. Correct?
“A.
Yes.â€
In February 2002, Westwind secured
from Financial Pacific a surety bond that was entitled “Bond (
§ 11018.5(a)(2)(A)[
Business and Professions Code to assure lien-free completion of the
improvements described in Principal’s ‘Planned Construction Statement’, a copy
of which is attached hereto and incorporated herein by reference, for the
subdivision development known as Gold Strike Heights Unit 1 (Phase 1) situated
in the County of Calaveras, State of California.†The bond was made “in the penal sum of Three
Hundred Nineteen Thousand Six Hundred Forty Seven Dollars ($319,647.00)
. . . .†Attached to the
bond was a “Planned Construction Statement†that indicated common area developments
consisting of landscaping, “Asphalt & Concrete,†and a “Recreation Area
with Equipment.†The recreation area
with equipment referred to a clubhouse, and was listed as having a cost
estimate of $200,000 with an anticipated completion date of May 2002. The planned construction statement does not
mention the phase in which a clubhouse was to be constructed other than to give
an estimated completion date of May 2002.
After the bond was issued, the
Department prepared a public report regarding the Gold Strike Heights
subdivision to be given to prospective buyers of lots within the new
development. The public report required
each prospective buyer to sign a receipt that he/she had received and read the
report before agreeing to purchase any lot within Gold Strike Heights. The public report for the subdivision also
required that a copy of the CC&Rs be provided to each prospective buyer
prior to the close of escrow.
With regard to the description of
the subdivision, the public report stated:
“LOCATION AND SIZE: This subdivision is located in Calaveras
County at 699 Gold Strike Road and approximately 11 miles from Angels Camp,
California. [¶] This is
the first phase of a two phase project which consists of approximately 13.1
acres divided into 45 lots, in addition to the common area which consists of
open space, with natural grasses, streets, drives, and street lighting. [¶] Additional common
amenities and/or facilities consisting of landscaping, streets and recreation
area with equipment will be constructed in the second phase. [¶] Gold Strike Heights, if
developed as proposed, will consist of two phases containing 88 lots. There is no assurance that the total
project will be completed as proposed.â€
(Italics added.)
The Department did not receive an
application to develop phase two of the subdivision, and the clubhouse was not
built.
Clubhouse
In May 2008, Gold Strike claimed
that Calaveras County was liable for building the clubhouse. In a letter to Gold Strike denying that
Calaveras County had any liability for construction of the clubhouse, county
counsel stated:
“As for the clubhouse, conditions
of approval required the developer to apply for a P[lanned] [Unit]
D[evelopment] permit for the clubhouse.
The Planning Commission approved a P[lanned] [Unit] D[evelopment] permit
for the clubhouse in 2006. Nothing in
the conditions of approval for Unit 1[
name="_ftnref3" title="">[3]] required the clubhouse to
be built prior to the recordation of the final map for Unit 1. In recognition of the concern expressed by
the Unit 1 owners about the ability of the developer to construct the
clubhouse, the Planning Commission conditioned recordation of the final map of
Unit 2 on completion of the clubhouse.
Therefore, no parcels in Unit 2 can be legally created until the
clubhouse is complete. No one from the
subdivision or [Gold Strike] appealed the decision of the Planning Commission
on Unit 2 to the Board of Supervisors.
Your allegations about staff representations to the Board of Supervisors
are false as the approval of Unit 2 never went to the Board of
Supervisors.â€
County counsel’s letter
concluded: “We understand your
frustration with the developer in not carrying out developer promises, but most
of those promises were not promises imposed by the County as part of the
approval of the project. The County is
committed to getting the clubhouse built and will not allow the developer, or
any subsequent developer, to create any more parcels until the clubhouse is
constructed.â€
Gold Strike subsequently sued
Westwind and Financial Pacific for breach of contract and for enforcement of
liability on the surety bond. A jury
trial culminated in a verdict that awarded Gold Strike a total of $319,157 in
damages. The components of the damages
specified by the jury exactly matched the planned construction statement
attached to the surety bond. The trial
court entered judgment on the verdict, and Westwind and Financial Pacific moved
for JNOV. The court granted the motion
for JNOV on grounds that Gold Strike “presented no evidence of costs, oral or
written, to complete the community clubhouse apart from the amount of the bond,
arguing that the amount of the completion bond itself constituted proof of
damages.†The court then entered a judgment
in favor of Westwind and Financial Pacific.
In September 2010, Gold Strike
timely filed a notice of appeal. In
October 2010, Westwind and Financial Pacific filed protective
cross-appeals.
Westwind and Financial Pacific
moved for attorney fees. Westwind
claimed fees in the amount of $151,061.50 and Financial Pacific claimed fees in
the amount of $82,350. In March 2011,
the trial court awarded $15,000 in attorney fees to Westwind and $5,000 to
Financial Pacific. Each of the parties
has filed a separate notice of appeal from the order awarding attorney fees to
Westwind and Financial Pacific.
DISCUSSION
APPEAL
BY GOLD STRIKE
Clubhouse was Triggered
Gold Strike contends the trial
court’s granting of JNOV was in error because the jury properly found that
Westwind breached its obligation to build the clubhouse during phase one of the
development, causing the homeowners’ association to incur $319,647 in damages.
no obligation to build the clubhouse during phase one.
An action for breach of contract
accrues only if there is “an unjustified failure to perform a material
contractual obligation when performance is due.†(Central
Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501, 514
fn. 3.) The corollary is that if no
performance is due, there can be no liability for breach of an obligation. (See ibid.) Because damages are limited to those flowing
from the breach of contract, a lack of breach precludes any liability. (Amelco
Electric v. City of Thousand Oaks (2002) 27 Cal.4th 228, 243.)
In this case, no competent evidence
established that Westwind’s obligation to construct the clubhouse was
triggered. In the absence of Westwind’s
duty to build the clubhouse, Financial Pacific had no corresponding obligation
to pay out the penal sum under the surety bond.
Consequently, the trial court reached the correct result in granting the
JNOV motion after the jury awarded damages to Gold Strike for the failure to
build or fund the development’s clubhouse.
We must affirm the granting of a motion for JNOV that reaches the
correct result, even if the trial court’s reasoning erred. (Stillwell
v. The Salvation Army (2008) 167 Cal.App.4th 360, 377; In re Marriage of Burgess (1996) 13 Cal.4th 25, 32.)
As Gold Strike points out, the
surety bond does mention phase one of the development. As relevant, the bond states that it “is
given pursuant to § 11018.5(a)(2)(A) . . . to assure lien-free
completion of the improvements described in Principal’s ‘Planned Construction
Statement’, . . . for the subdivision development known as Gold
Strike Heights Unit 1 (Phase 1) . . . .†The surety bond was required “[b]ecause the developer
represented to the department that they wanted to advertise the rec facilityâ€
development. No evidence was adduced
that any of the Gold Strike residents ever saw or heard of the bond before they
purchased a lot. More importantly, the
public report given to the prospective buyers of the lots stated that the
clubhouse was to be built during the second phase of development. The CC&Rs, also provided to prospective
buyers, indicated that the subdivision was going to be built in phases and did
not include the clubhouse lot in the list of lots to be developed in the first
phase.
Gold Strike also relies on the
“Common Area Completion Security Agreement and Instructions to Escrow
Depository -- § 11018.5(a)(2)†to argue that the clubhouse was to be built
as part of phase one. However, as Gold
Strike notes, this document was not admitted into evidence. Instead, the document was attached as an
exhibit to Gold Strike’s motion for attorney fees.
An exhibit not admitted into
evidence cannot support Gold Strike’s sufficiency of the evidence
argument. “It is axiomatic that in
reviewing the liability aspect of a judgment based on a jury verdict, we may
not review exhibits identified, but not admitted at trial.†(Frank
v. County of Los Angeles (2007) 149 Cal.App.4th 805, 815.) In a footnote, Gold Strike asserts that the
document “was not admitted into evidence by the Court below in error.†However, Gold Strike fails to develop any
argument on this point. Consequently,
the assertion of error is forfeited. (
793.)
Gold Strike urges us to “[k]eep in
mind that the marketing map used to sell homes in Phase 1 indicated that the
clubhouse was to be built in Phase 1 on Lot 43.†The marketing map does show where the
clubhouse was to be located in relation to the other lots. However, that same map also included lots 44
through 47, which were also excluded from phase one development. Nothing on the marketing map indicates when,
or in which phase, any of the
lots were to be developed. Instead, the
map includes the clubhouse because of its geographic location among the lots to
be developed and sold as part of phase one.
The Department’s public report
expressly informed prospective buyers that the clubhouse was to be built as
part of phase two, and that phase two might never be built. Similarly, the CC&Rs, also provided to
prospective buyers, stated that the subdivision was going to be built in at
least two phases, and listed the lots to be developed during the first phase. The map shown to buyers indicated the
clubhouse stood on a lot that the CC&Rs did not slate for development
during the first phase. As did the
public report, the CC&Rs cautioned that subsequent phases might never be
built.
Finally, Gold Strike relies on the
testimony of Brenda Bayers, a sales agent for the Gold Strike development. Gold Strike asserts that she “testified that
there was a promise by [defendant] Westwind of a clubhouse to be built on lot
43 in Phase I before December 2006.†An
examination of Bayers’s testimony does not establish that there was ever a
part of phase one. To the contrary,
Bayers testified that she would not have made any oral representations that
conflicted with the Department’s public report that was made available to
prospective buyers.
To the extent that Bayers testified
there were oral representations about when the clubhouse would be built, such
oral representations are not recognized in the sale of real property. An oral promise to build real estate fails to
satisfy the statute of frauds. “The
statute of frauds requires contracts and options for the sale of real property
to be in writing. (Civ. Code,
§ 1624.)†(Alameda Belt Line v. City of Alameda (2003) 113 Cal.App.4th 15,
20.) Thus, a promise to build real
property must satisfy the statute of frauds.
(Ellis v. Klaff (1950) 96
Cal.App.2d 471, 478, disapproved on other grounds in Sterling v. Taylor (2007) 40 Cal.4th 757, 769.)
No competent evidence established
that Westwind’s obligation to build the clubhouse for the Gold Strike Heights
subdivision was triggered. Consequently,
no damages could be awarded for failure to build or fund the clubhouse. The trial court thus reached the correct
result in granting the motion for JNOV.
PACIFIC
After Gold Strike filed its appeal
to challenge the granting of the JNOV motion, both Westwind and Financial
Pacific filed protective cross-appeals.
(See Mason v. Lake Dolores Group (2004)
117 Cal.App.4th 822, 831 [failure to file protective cross-appeal after appeal
from order granting JNOV requires automatic affirmance of judgment entered on
jury’s verdict].) Given the possibility
of reversal of the order granting JNOV, Westwind and Financial Pacific advance
arguments to challenge the jury’s verdict.
Our affirmance of the order granting JNOV obviates the need to address
the arguments made by Westwind and Financial Pacific in their protective
cross-appeals.
Though we affirm the order granting
JNOV, we must nonetheless address the arguments by Westwind and Financial
Pacific in which they challenge the trial court’s award of attorney fees to
them. Both Westwind and Financial
Pacific argue that the trial court abused its discretion when awarding them
$15,000 and $5,000, respectively, in attorney fees. Both contend they should have received
substantially more of their fees in this litigation. We conclude that the trial court abused its
discretion when it excluded hours expended pursuing meritorious legal theories
and reverse the attorney fees order.
A.
Awarding Attorney Fees
Gold Strike’s operative complaint
was filed against Westwind and Financial Pacific “to collect on the bond issued
for the ‘Clubhouse’ promised to be built by [Westwind].†The surety bond was required under the
completion security agreement that has a fee-shifting clause. To this end, Gold Strike’s complaint sought
“attorneys fees [incurred] in enforcing the liability on this surety bond
. . . .â€
As we noted above, the completion
security agreement was not introduced into evidence during trial. (See part I, ante.) Nonetheless, this
action was clearly one to enforce the bond that was secured pursuant to the
completion security agreement. The jury
found that Westwind and Financial Pacific entered into an agreement requiring
the issuance of a bond for which Gold Strike was the intended beneficiary and
which guaranteed performance of a promise to build a common area
clubhouse. Although later reversed by
the court’s grant of JNOV, the jury awarded “damages [accrued] at the time of
the breach of [Westwind]’s obligations under
the bond . . . .â€
(Italics added.)
After securing judgment in its
favor on the jury verdict, Gold Strike moved for attorney fees in the amount of
$50,910.50. In support of the motion,
Gold Strike attached the completion security agreement, which was authenticated
by a declaration noting that the parties had stipulated to its admissibility. In pertinent part, the completion security
agreement states that “[t]o secure the timely completion of the Improvements
free of all liens and claims, the Subdivider has procured the issuance of
the: [¶] surety bond in the sum of Three Hundred Nineteen
Thousand Six Hundred Forty Seven Dollars . . . .†The completion security agreement further
provides: “In any action or proceeding
arising out of this Agreement, the prevailing party or parties shall be
entitled to reasonable attorney’s fees.â€
In the event of Westwind’s failure to construct the clubhouse,
enforcement of the surety bond is one of the actions specifically mentioned in
the completion security agreement. Both
the planned construction estimate for the clubhouse and the bond itself were
attached to Gold Strike’s motion.
In support of attorney fees before
the trial court, Gold Strike argued:
“Importantly, the contract allowing for attorney’s fees can be read
broadly to include claims outside of the contract but
peripherally related to the contract. (
Cal.4th 599, 608.) When the dispute
between the parties concerns several contracts and only one of those contains a
fee-shifting clause, the documents are generally construed as one contract for
the purposes of awarding fees. (
Cal.App.3d 308, 325; Niederer v. Ferreira (1987) 189 Cal.App.3d 1485,
1505 (guarantor liable for attorney’s fees due to provision in separate
contract for award of fees.) [¶]
In our case, the Completion Agreement, to which [Gold Strike] and Westwind are
parties, contains an attorney’s fees provision and specifically references and
incorporates the bond. [Citation.] But for Westwind’s failure to perform as
required under the Completion Agreement, no action would have been brought on
the Bond which specifically secured performance under the Completion
Agreement.†Gold Strike also argued that
Financial Pacific was liable for attorney fees because the surety’s liability
was commensurate with that of Westwind.
When the trial court granted the
JNOV motion and issued an amended judgment in favor of defendants, Westwind and
Financial Pacific brought their own motions for attorney fees. Westwind sought $151,061.50 in attorney fees,
and Financial Pacific requested $82,350.
The trial court granted attorney
fees to Westwind and Financial Pacific, but in a fraction of the amounts
claimed. In an order explaining its
award, the trial court states:
“[H]ow much are defendants entitled
to as reasonable attorney fees?
“To answer this question, the court
first determines the ‘lodestar’ figure for each defendant’s attorney fees. That requires the court to determine the
reasonable hours expended by each attorney and multiply those hours times the
reasonable hourly rate for each attorney.
What is reasonable in the court’s opinion is not necessarily equal to
what each counsel claims.
“In the court’s opinion, the
defendants expended more hours than reasonably necessary. The court does not doubt the hours listed,
just the reasonableness of all those hours.
As to reasonable hourly rates for the work performed, the court finds,
in civil trial in Calaveras County, where this trial was held, an hourly fee of
$200 is an appropriate and reasonable hourly rate.
“Once the court has determined the
‘loadstar’ figures, it may then increase or reduce the loadstar figures so the
amounts are reasonable under the circumstances of this case.
“The court follows the guidance of PLCM
Group, Inc. v. Drexler (2000) 22 Cal.4[t]h 1084, and EnPalm, LCC
cases cited in these decisions. As
stated, ‘The factors to be considered include the nature and difficulty of the
litigation, the amount of money involved, the skill required and employed to
handle the case, the attention given, the success or failure, and other
circumstances in the case and . . . the necessity for and nature of
the litigation.’ (PLCM, supra [sic]
at p. 1095.)
“Although there have been
voluminous filings in this case and reams of paper used, including filing three
demurrers, and filing eleven court files, in the court’s opinion this was not a
difficult case. Plaintiff proceeded pro
per during most of the pleading stages (almost two years) by way of an assignment
to Don Lee, a non-lawyer.
“In the court’s opinion, the issues
in this case did not require exceptional skills by defendants’ attorneys. And as to success, the plaintiff initially
won; the jury awarded the plaintiff the full amount it sought. Defendants prevailed only when the court
granted a JNOV for plaintiff’s failure to prove its damages. Thus, the JNOV win by defendants was not
because of exceptional skill or attention devoted to the legal issues, but by
plaintiff’s failure to call a single expert witness to tell the jury what the
costs would be to construct the clubhouse.
A clubhouse the jury found was promised by Westwind and secured by
[Financial Pacific]’s performance bond.
The court finds much of defendants’ trial efforts were spent trying to
obfuscate the promise to construct or pay up to the amount of its surety bond
on the clubhouse. [¶] . . . [¶]
“THEREFORE, IT IS ORDERED THAT
“1.
Defendant [Westwind] shall recover its attorney’s fees from Plaintiff
[Gold Strike] in the amount of $15,000.
“2.
Defendant [Financial Pacific] shall recover its attorneys’ fee[s] from
Plaintiff [Gold Strike] in the amount of $5,000.â€
B.
to Determine Reasonable Attorney Fees
On the issue of contractual
attorney fees, the California Supreme Court has explained, “Civil Code section
1717 provides that ‘[r]easonable attorney’s fees shall be fixed by the
court.’ As discussed, this requirement
reflects the legislative purpose ‘to establish uniform treatment of fee
recoveries in actions on contracts containing attorney fee provisions.’ (Santisas
v. Goodin, supra, 17 Cal.4th at p. 616.) Consistent with that purpose, the trial court
has broad authority to determine the amount of a reasonable fee. (
[(1978)] 21 Cal.3d [218,] 224 [‘[E]quitable considerations [under Civil Code
section 1717] must prevail over . . . the technical rules of
contractual construction’]; Beverly Hills
Properties v. Marcolino (1990) 221 Cal.App.3d Supp. 7, 12 [‘the award of
attorney fees under section 1717, as its purposes indicate, is governed by
equitable principles’]; Montgomery v.
Bio–Med Specialties, Inc. (1986) 183 Cal.App.3d 1292, 1297 [trial court has
‘wide latitude in determining the amount of an award of attorney’s fees’ under
Civil Code section 1717]; Vella v.
Hudgins (1984) 151 Cal.App.3d 515, 522 [‘The amount to be awarded in
attorney’s fees is left to the sound discretion of the trial court’].) As we have explained: ‘The “experienced trial judge is the best
judge of the value of professional services rendered in his [or her] court, and
while his [or her] judgment is of course subject to review, it will not be
disturbed unless the appellate court is convinced that it is clearly wrong’ -—
meaning that it abused its discretion. (
49; Fed–Mart Corp. v. Pell Enterprises,
Inc. (1980) 111 Cal.App.3d 215, 228 [an appellate court will interfere with
a determination of reasonable attorney fees ‘only where there has been a
manifest abuse of discretion’].)†(
Cal.4th 1084, 1094-1095 (PLCM Group).)
The specific methodology for
determining the proper award of attorney fees “begins with the ‘lodestar,’
i.e., the number of hours reasonably expended multiplied by the reasonable
hourly rate. ‘California courts have
consistently held that a computation of time spent on a case and the reasonable
value of that time is fundamental to a determination of an appropriate
attorneys’ fee award.’ (
(1982) 134 Cal.App.3d 999, 1004–1005.) The
reasonable hourly rate is that prevailing in the community for similar
work. (Id. at p. 1004; Shaffer
v. Superior Court (1995) 33 Cal.App.4th 993, 1002.) The lodestar figure may then be adjusted,
based on consideration of factors specific to the case, in order to fix the fee
at the fair market value for the legal services provided. (Serrano
v. Priest, supra, 20 Cal.3d at
p. 49.) Such an approach anchors
the trial court’s analysis to an objective determination of the value of the
attorney’s services, ensuring that the amount awarded is not arbitrary. (Id.
at p. 48, fn. 23.)†(
p. 1095.)
Ultimately, the lodestar method
must yield an equitable result. For this
reason, “‘the determination of what constitutes reasonable attorney fees is
committed to the discretion of the trial court. . . . [Citations.]
The value of legal services performed in a case is a matter in which the
trial court has its own expertise.
[Citation.] The trial court makes
its determination after consideration of a number of factors, including the
nature of the litigation, its difficulty, the amount involved, the skill
required in its handling, the skill employed, the attention given, the success
or failure, and other circumstances in the case.’ (Melnyk
v. Robledo (1976) 64 Cal.App.3d 618, 623–624.)†(PLCM
Group, supra, 22 Cal.4th at p. 1096.)
When much of the trial is found to
be unnecessary, a trial court has discretion to reduce the lodestar figure to a
reasonable amount. (EnPalm, LCC v. Teitler (2008) 162 Cal.App.4th 770, 774-775.) However, a trial court abuses its discretion
when it makes a determination based on legal error. (Bell
v. Bayerische Motoren Werke Aktiengesellschaft (2010) 181 Cal.App.4th 1108,
1122 (Bell).)
C.
Fees Awarded to Westwind and Financial Pacific
Pretrial
Westwood and Financial Pacific
argue that the trial court failed to properly account for the extensive
pretrial costs. Specifically, Westwind
and Financial Pacific emphasize their extensive pretrial work, which included
the filing of three demurrers. We
conclude that Westwind and Financial Pacific’s challenges to the trial court’s
reduction of attorney fees for pretrial litigation are forfeited.
Westwind and Financial Pacific have
not provided an adequate record of pretrial
litigation. “It is the burden of the
party challenging the fee award on appeal to provide an adequate record to
assess error.†(Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.) The record does not include the demurrers or
any of the other pretrial motions –- other than some of the in limine motions
filed on the eve of trial. Westwind and
Financial Pacific designated only the inclusion of post-judgment motions and documents in their
attorney fees. Thus, we do not have a
record on which to assess defendants’ contentions regarding the necessity of
their apparently extensive pretrial motions.
Westwind and Financial Pacific
could have designated the necessary documents for inclusion in the clerk’s
transcript. (Cal. Rules of Court, rule
8.122(a)(2).) Alternately, they could
have had the original superior court file transmitted to this court for
review. (Cal. Rules of Court, rule
8.128(a); Ct. App., Third Dist., Local Rules of Ct., rule 2 [Stipulation
for use of original superior court file].)
For lack of an adequate record, their contentions regarding pretrial
litigation not being properly accounted for by the trial court are forfeited.
Trial
The trial court awarded
substantially less in attorney fees than claimed by Westwind and Financial
Pacific. In doing so, the court reduced
the hourly rate of compensation and the number of hours expended during
trial.
Westwind and Financial Pacific’s
counsel both claimed an hourly rate of $250 for trial. However, the trial court found that $200 per
hour constituted a reasonable rate of compensation for civil litigation in
Calaveras County. Neither Westwind nor
Financial Pacific challenges that hourly rate as unreasonable. Instead, Westwind and Financial Pacific
challenge the trial court’s reduction in claimed fees, which substantially
reduced the number of hours compensated to 75 hours for Westwind and 25 for
Financial Pacific.
While a trial court has discretion
to reduce the lodestar figure to a reasonable amount, a trial court abuses its
discretion when it makes a determination based on legal error. (Bell,
supra, 181 Cal.App.4th at p. 1122.)
Among the reasons given by the
trial court in reducing the number of hours to which Westwind and Financial
Pacific were entitled to fees was the following: “The court finds much of defendants’ trial
efforts were spent on trying to obfuscate the promise to construct or pay up to
the amount of its surety bond on the clubhouse.†The court also found that Westwind and
Financial Pacific initially lost because the jury awarded Gold Strike the full
measure of claimed damages. In the
court’s view, Westwind and Financial Pacific did not so much win at trial as
Gold Strike lost by failing to prove damages.
Based on our examination of the
record, the trial court’s comments about defendants’ efforts to “obfuscate†two
issues at trial could only have referred to their repeated arguments that
(1) the obligation to build the clubhouse was not triggered during
construction of phase one of the Gold Strike Heights subdivision, and
(2) Gold Strike failed to adduce any evidence of the actual cost necessary
to build the clubhouse. The trial court
erred in excluding hours spent by counsel for Westwind and Financial Pacific in
arguing and presenting evidence on these two points.
As we explained in part I, ante,
the contention that the duty to build the clubhouse was not triggered has merit. And, although we do not reach the issue of
whether the evidence of the cost to build the clubhouse was sufficient, the
trial court found the contention to be meritorious because it granted the JNOV
motion on this ground. Rather than
obfuscate the issues of whether the duty to build had been triggered and
whether any evidence proved the cost to construct the clubhouse, we conclude
that Westwind and Financial Pacific presented meritorious motions on these two
points at least three times:
(1) before trial via in limine motions; (2) during trial by
motions for directed verdict; and (3) after trial by motion for JNOV. The trial court failed to rule on dispositive
motions.
With regard to the in limine
motions, the trial court noted that some of the in limine motions were
dispositive. For example, one motion
argued that Gold Strike was unable to prove that a duty to build the clubhouse
had been triggered. Another motion
granted by the trial court resulted in the exclusion of any evidence of the
cost to build the clubhouse.
name="_ftnref5" title="">[5] Instead of ruling on the dispositive in
limine motions, the trial court directed counsel to proceed with presenting
evidence to the jury.
After Gold Strike rested its case,
defendants moved for a directed verdict on two grounds: (1) the obligation to build the
clubhouse was not triggered; and (2) the lack of proof of any
damages. Even though the trial court
found it “troublesome†that the duty to build was not part of phase one and
there was no evidence of the cost to build the clubhouse, the trial court
denied defendants’ motions for a directed verdict.
Not until after a jury trial did
the trial court finally rule in defendants’ favor based on the lack of any
evidence of damages. This was one of the
issues that defendants had raised repeatedly before and during trial. At the end of its ruling, the trial court
admitted that it should have granted defendants’ motions for a directed
verdict. Specifically, the trial court
stated that “[a]fter weighing all the evidence, the court is convinced from the
entire record, including reasonable inferences therefrom, that the Court should
have granted Defendants’ motion for a Directed Verdict when Plaintiff
rested.â€
Without citing any authority, Gold
Strike asserts that the award of attorney fees to Financial Pacific violated
“the general rule that a surety cannot recover attorneys’ fees as a prevailing
party†on an agreement to which the surety was not a party. For lack of legal authority or any developed
argument in support of the asserted “rule,†Gold Strike’s contention is
forfeited. (In re S.C. (2006) 138 Cal.App.4th 396, 408; Atchley v. City of Fresno (1984) 151 Cal.App.3d 635, 647.)
Moreover, Gold Strike’s contention
has no merit. Civil Code section 1717
makes reciprocal any provision awarding attorney fees. (Real Property Services Corp. v. City of
Pasadena (1994) 25 Cal.App.4th 375, 379.)
“Under some circumstances, . . . the reciprocity principles of
Civil Code section 1717 will be applied in actions involving signatory
at p. 380, italics added.) The
purposes of Civil Code section 1717 require it to “be interpreted to further
provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as
if he were a party to it, when a plaintiff would clearly be entitled to
attorney’s fees should he prevail in enforcing the contractual obligation
against the defendant.†(
p. 380.) In T&R Painting Constr. v. St. Paul
Fire & Marine Ins. Co. (1994) 23 Cal.App.4th 738, a surety on a
construction bond was required to pay attorney fees to a beneficiary of the
bond who was not a signatory to the bond.
In T&R Painting, the Court
of Appeal held that the nonsignatory beneficiary of a bond became entitled to
attorney fees after successfully proving the principal’s liability –- a
liability covered by the bond. (
trial court, it would have been entitled to attorney fees against Financial
Pacific if it had prevailed in enforcing the bond. Based on the reciprocity provision of Civil
Code section 1717, Financial Pacific is entitled to recover attorney fees for
its successful defense of the same action on the bond.
Both Westwind and Financial Pacific
were entitled to attorney fees after they prevailed against Gold Strike’s
action on a bond that was subject to a fee-shifting provision. On this record, the trial court was clearly
wrong and abused its discretion in excluding hours spent by Westwind’s and
Financial Pacific’s counsel in pursuing meritorious arguments that the duty to
build the clubhouse was not triggered and that Gold Strike failed to adduce any
evidence of damages.
DISPOSITION
The judgment is
affirmed and the order granting attorney fees to Westwind Development, Inc.,
and Financial Pacific Insurance Company is reversed. Westwind Development, Inc., and Financial
Pacific Insurance Company are entitled to their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) &
(5).)
HOCH ,
J.
We concur:
HULL , Acting P. J.
MAURO , J.
name="_ftn1" title="">[1] According to the record, Gold Strike assigned
at least part of its claim to Don H. Lee.
As an assignee of the claim, Lee then prosecuted the action.
name="_ftn2" title="">[2] Undesignated section references are to the
Business and Professions Code.
Section
11018.5 provides: “With respect to
. . . subdivisions . . . , the commissioner shall issue a
public report if the commissioner finds the following with respect to any such subdivision
or interest: [¶] (a)(1) Reasonable arrangements have been made to
assure completion of the subdivision and all offsite improvements included in
the offering. [¶]
(2) If the condominium or community apartment project, stock cooperative
or planned development, or premises or facilities within the common area are
not completed prior to the issuance of a final subdivision public report on the
project, the subdivider shall specify a reasonable date for completion and
shall comply with one of the following conditions: (A) Arranges for lien and completion
bond or bonds in an amount and subject to such terms, conditions and coverage
as the commissioner may approve to assure completion of the improvements lien
free.â€
