Hernandez v. Villasenor
Filed 2/5/07 Hernandez v. Villasenor CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CLAUDIA HERNANDEZ, Plaintiff and Respondent, v. MARISOL VILLASENOR, Defendant and Appellant. | D047800 (Super. Ct. No. GIS16289) |
APPEAL from a judgment and an order of the Superior Court of San Diego County, William S. Cannon, Judge. Affirmed and remanded for determination of attorney fees on appeal.
Defendant Marisol Villasenor appeals the judgment confirming an arbitration award in favor of plaintiff Claudia Hernandez and an order granting her attorney fees as the prevailing party under Civil Code section 1717. Villasenor contends the court erred by denying her petition to vacate the arbitration award on the grounds it exceeds the arbitrator's powers and was obtained by fraud, and the attorney fees award lacks evidentiary support. We affirm the judgment and the order and remand the matter to the trial court for its determination of the amount of Hernandez's attorney fees on appeal.
FACTUAL AND PROCEDURAL BACKGROUND
In February 2004, Hernandez sued Villasenor for specific performance of a California Residential Purchase Agreement (Purchase Agreement) entered into the previous December under which she agreed to sell her Chula Vista, California home to Hernandez. The Purchase Agreement contained a binding arbitration clause that required the arbitrator to " render an award in accordance with substantive California law." It also contained a clause allowing the prevailing party in any action on it to reasonable attorney fees.
The parties stipulated to arbitration before Herbert B. Hoffman, a retired superior court judge, and he held a one-day arbitration in February 2005. His decision states that escrow on the sale was to close approximately February 19, 2004, Hernandez deposited $8,000 into escrow, and on February 2, Villasenor unilaterally canceled the agreement for personal reasons. Further, in March 2004, Hernandez purchased another home and withdrew her claim for specific performance and sought monetary damages.
Judge Hoffman found Villasenor breached the Purchase Agreement. He rejected Hernandez's claim for $115,000, the alleged difference between the sale price and the home's value on the date of breach. He awarded her $8,000 for her deposit, as there was no evidence the escrow company returned it to her, or that it would have done so absent her consent to cancel escrow, which would have precluded her from suing for specific performance.
Villasenor argued Hernandez was not ready, willing and able to purchase the home because she could not remove sale contingencies, such as obtaining financing. Judge Hoffman found Villasenor's supporting evidence unpersuasive as she did not invoke the Purchase Agreement's right to cancel by sending Hernandez a notice to perform.
Judge Hoffman also found Hernandez was the prevailing party entitled to reasonable attorney fees. Hernandez sought $40,830.50 in fees, but Judge Hoffman reduced them to $12,000 and also awarded her $1,822 in other costs. He rejected Villasenor's argument fees were improper because Hernandez did not recover more than Villasenor's offer to compromise under Code of Civil Procedure[1] section 998.
Hernandez petitioned the superior court to confirm the arbitration award. Villasenor opposed the petition and petitioned the court to vacate the award. She argued Judge Hoffman exceeded his authority because he did not render a decision in accordance with California law, and because the sales contract violated the statute of frauds and was invalid since Hernandez's signatures on three counteroffers were forged. Villasenor also argued Hernandez procured the award by fraud since she made material false statements on her loan application, and had she been honest, she could not have obtained financing for the purchase.
The court denied Villasenor's petition. It granted Hernandez's petition and confirmed the arbitration award. Hernandez then moved for attorney fees incurred in the superior court proceedings, and the court awarded her $8,342. Judgment was entered on October 25, 2005.
DISCUSSION[2]
I
Scope of Judicial Review
" California has a well-established policy favoring arbitration as a speedy and inexpensive means of settling disputes. . . . [¶] To support this policy and encourage parties to settle their disputes through arbitration, it is essential that arbitration judgments be both binding and final." (A.M. Classic Construction, Inc. v. Tri-Build Development Co. (1999) 70 Cal.App.4th 1470, 1474-1475.)
As this court has explained, " [t]o ensure that an arbitrator's decision is, indeed, the end of a dispute, arbitration judgments are subject to extremely narrow judicial review. [Citation.] The scope of this judicial review was comprehensively treated by our Supreme Court in Moncharsch [v. Heily & Blase (1992) 3 Cal.4th 1]. In that case the court reviewed the history of arbitration in California, from the earliest days of statehood to the present, and concluded the exclusive grounds for vacating an arbitration award are the . . . statutory grounds found in . . . section 1286.2. [Citation.] Unless one of the enumerated grounds exists, a court may not vacate an award even if it contains a legal or factual error on its face which results in substantial injustice." (Marsch v. Williams (1994) 23 Cal.App.4th 238, 243-244, fns. omitted.)
As relevant here, the grounds enumerated in section 1286.2 include: " (1) The award was procured by corruption, fraud or other undue means. . . . [¶] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted." " The powers of arbitrators derive from, and are limited by, the agreement to arbitrate." (Jordan v. California Dept. of Motor Vehicles (2002) 100 Cal.App.4th 431, 444.) An arbitrator may exceed his or her powers by, for instance, acting without subject matter jurisdiction or deciding an issue not submitted to arbitration. (Id. at p. 443.)
We independently review the question of whether there is a statutory ground for vacation of an arbitration award. (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 945.) However, " '[w]e must accept the trial court's resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence.' [Citation.] This standard comports with the policies behind arbitration and the legislative mandate that hearings on petitions to confirm awards should be 'heard in a summary way.' " (Trabuco Highlands Community Ass'n. v. Head (2002) 96 Cal.App.4th 1183, 1189-1190 (Trabuco).)
II
Arbitrator's Powers
A
Validity of Purchase Agreement
Villasenor contends Judge Hoffman exceeded his powers by awarding Hernandez anything because the Purchase Agreement was an invalid contract.[3] The " power of the arbitrator to determine the rights of the parties is dependent upon the existence of a valid contract under which [the litigated] rights may arise. [Citations.] In the absence of a valid contract no such rights can arise and no power can be conferred upon the arbitrator to determine such nonexistent rights." (Loving & Evans v. Blick (1949) 33 Cal.2d 603, 609-610.)
Villasenor asserts the Purchase Agreement is void under Civil Code section 1624, subdivision (a)(3), a provision of the statute of frauds, which provides: " (a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent: [¶] . . . [¶] (3) An agreement . . . for the sale of real property . . . ; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged." (Italics added.)
Villasenor claims she learned after the arbitration that Hernandez's signatures on three counteroffers made during negotiations were forged. In support of her motion to vacate the arbitration award, she submitted a declaration by Daniel Vom Hof, which stated, " I have been qualified as an expert in several fields, including handwriting analysis, in both federal and state courts for over thirty years." It also stated that in his opinion signatures represented to be Hernandez's on numerous documents pertaining to the real estate transaction were made by the same person, but those on counteroffer numbers one through three were made by another person.
Hernandez, however, objected to Vom Hof's declaration on the ground, among others, that it provided no facts to establish he had the special knowledge, experience, training or education required to qualify as an expert as required by Evidence Code section 720, subdivision (a). The court sustained the objection and Villasenor assigns no error to that ruling. Accordingly, the statute of frauds issue lacks any evidentiary support.
Although the court's evidentiary ruling is dispositive, we also note the statute of frauds did not automatically render the Purchase Agreement illegal or void even had someone other than Hernandez signed counteroffer numbers one through three on her behalf. " The statute of frauds, set forth in Civil Code section 1624, has not been interpreted as making such [oral real estate] agreements null and void. It is the general rule that a contract falling within the operation of the statute, but made in contravention thereof, is not invalid in the sense that it is void. It is merely voidable. The statute is said to relate to the remedy only and not to affect the validity of the oral contract." (Masin v. Drain (1984) 150 Cal.App.3d 714, 717; Peyton v. Cly (1960) 184 Cal.App.2d 193, 196.)
Any failure of Hernandez to sign counteroffers did not affect her remedy against Villasenor as the vendor of real property. Under Civil Code section 1624, the phrase " party to be charged" means " the party to be charged in court with the performance of the obligation, i.g., the defendant in the action brought to enforce the contract." (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 359, p. 406; Harper v. Goldschmidt (1909) 156 Cal. 245, 246.) Indeed, to prosecute such an action the buyer need not have signed the contract at all. (Steel v. Duntley (1931) 115 Cal.App. 451, 452.) Villasenor was the " party to be charged," and she does not dispute that she signed the Purchase Agreement.
Substantive California Law
Further, Villasenor contends Judge Hoffman exceeded his powers by not rendering " an award in accordance with substantive California law," as that phrase is used in the arbitration clause of the Purchase Agreement. Villasenor asserts the award violates California law for two reasons: Judge Hoffman lacked authority to render an award based on a contract Hernandez did not sign, " which was void at its inception," and an award of attorney fees for the arbitration proceedings was improper because Hernandez did not recover more than Villasenor's offer to compromise under section 998.
As discussed, the Purchase Agreement was not void and Villasenor's breach of it was actionable. Moreover, it is settled that " [e]ven where application of a particular law or body of law is required by the parties' arbitration agreement, an arbitrator's failure to apply such a law is not in excess of an arbitrator's powers within the meaning of section 1286.2, subdivision (d) [now subdivision (4)]." (Marsch v. Williams, supra, 23 Cal.App.4th 238, 242, italics added, citing Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 588-589, abrogated on other grounds by Advanced Micro Devices, Inc. v. Interl Corp. (1994) 9 Cal.4th 362, 376-377 [" The fact that the parties restrict the arbitrator to a decision of the issues in the manner of a court of law does not mean that they expect that the decision is reviewable. The mode of decision and its reviewability are separate questions." ].)
As for the section 998 issue, it appears Villasenor may not have submitted her offer to compromise to the trial court. Even if she had, however, she cites no authority suggesting an arbitrator's factual determination of whether the plaintiff's recovery exceeded an offer to compromise is subject to judicial review.[4] In another context in Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782 (Moore), the Supreme Court held that when the recovery or nonrecovery of attorney fees is one of the contested issues of law and fact submitted to the arbitrator for decision, the arbitrator has the power to decide the entire matter and his or her decision is final and not subject to judicial review for error. (Id. at pp. 786-787.) The court explained that " [h]aving submitted the fees issue to arbitration, plaintiffs cannot maintain the arbitrators exceeded their powers. . . by deciding it, even if they decided it incorrectly." (Id. at p. 787.)
The Purchase Agreement required binding arbitration of any dispute arising from the agreement. It also contained an attorney fees clause and both parties alleged entitlement to fees. Additionally, section 998 expressly applies to arbitration proceedings and authorizes the arbitrator to determine whether the prevailing party obtained a more favorable judgment than the opposing party's offer to compromise. (§ 998, subds. (b), (c)(1) & (2)(A).) Accordingly, we conclude Judge Hoffman was empowered to address the section 998 issue, and the award of fees is not subject to judicial review under the guise it exceeded the arbitrator's powers or otherwise fails to comport with California law. " The arbitrator's resolution of these issues is what the parties bargained for in the arbitration agreement." (Moore, supra, 22 Cal.4th at p. 787.)
III
Fraud
A
Hernandez's Ability to Perform
Additionally, Villasenor contends the court erred by denying her motion to vacate the arbitration award on the ground of fraud. A three-part test is commonly used to determine whether an arbitration award should be vacated for fraud. " 'First, the movant must establish the fraud by clear and convincing evidence. [Citations.] Second, the fraud must not have been discoverable upon the exercise of due diligence prior to or during the arbitration. [Citation.] Third, the person seeking to vacate the award must demonstrate that the fraud materially related to an issue in the arbitration. [Citations.]' " (Pour Le Bebe, Inc. v. Guess? Inc. (2003) 112 Cal.App.4th 810, 830, citing Bonar v. Dean Witter Reynolds, Inc. (11th Cir. 1988) 835 F.2d 1378, 1383.)
Villasenor asserts Hernandez's fraudulent conduct wrongfully allowed her to show at arbitration that she was in a position to consummate the Purchase Agreement absent Villasenor's breach. " Although it is true that an anticipatory breach or repudiation of a contract by one party permits the other party to sue for damages without performing or offering to perform its own obligations [citation], this does not mean damages can be recovered without evidence that, but for the defendant's breach, the plaintiff would have had the ability to perform." (Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 625.)
Judge Hoffman found Hernandez would have been able to obtain financing to purchase Villasenor's property based on her ability to obtain financing to purchase a substitute property within a short time of the breach of contract. At the trial court, Villasenor argued she recently discovered Hernandez falsified a loan application to Mylor Financial Group (Mylor) for the purchase of Villasenor's property. Specifically, Hernandez assertedly failed to disclose she had filed for bankruptcy under an alias with a different social security number and had not satisfied previous financial obligations.
Villasenor submitted the declaration of Jacqueline McAdams, which stated she was a manager with Mylor and Hernandez submitted an application for a mortgage that Mylor conditionally approved. It also stated: " It has come to my attention that . . . Hernandez allegedly applied for a loan with Mylor wherein she used a different social security number than that previously used by her under an alias, Claudia Amador, and that as Claudia Amador, . . . Hernandez had filed for bankruptcy protection and defaulted on a number of financial obligations. If these allegations are true and if such allegations had been disclosed to Mylor prior to final loan approval and funding, a loan may not have been made to . . . Hernandez by Mylor."
Hernandez objected to McAdams's declaration on the grounds, among others, that it contained inadmissible hearsay and was speculative. The court sustained the objection, noting the declaration " does not unequivocally state Mylor [credit] would have . . . denied, and it is speculative to make such a conclusion." Further, the declaration does not suggest McAdams had personal knowledge of events. Villasenor does challenge the court's exclusion of the evidence.
Villasenor also submitted copies of what she described as " Selected [d]ocuments executed by . . . Hernandez, including vesting choices for purchases of real property, loan applications." They include a Uniform Residential Loan Application for the purchase of Villasenor's home, a document entitled " KHMI Pre-Application," a loan application for the substitute property Hernandez purchased after Villasenor reneged on the Purchase Agreement, and a document entitled " VESTING WORKSHEET," apparently also for the substitute property. The Uniform Residential Loan Application states Hernandez had not been declared bankrupt within the previous seven years. Hernandez also submitted copies of documents from a 1993 bankruptcy court proceeding for Claudia Amador.
The court sustained Hernandez's objection to all of these documents, and Villasenor does not challenge the rulings. As the trial court noted, there was no competent evidence Hernandez submitted falsified loan applications to either Mylor or the lender on the substitute property, as the " loan applications and the bankruptcy petition submitted by [Villasenor] were not authenticated."
Further, Villasenor submitted a second declaration of Vom Hof, which stated he believed the signatures purported to be Hernandez's on the Purchase Agreement and on bankruptcy documents were made by the same person. Again, however, Hernandez objected to the declaration on the ground, among others, that it did not provide any factual foundation to establish Vom Hof is a handwriting expert. Further, his opinion relied on documents that were not authenticated. The court sustained the objection and Villasenor does not challenge the ruling.
Villasenor also relied on Hernandez's deposition testimony that she never filed a bankruptcy proceeding. Without authentication of the bankruptcy documents Villasenor submitted, however, there is no proof Hernandez's testimony was false. Given the complete failure of Villasenor's evidence, which she ignores, the court correctly determined Villasenor did not show fraud.
Additional Evidentiary Hearing
Alternatively, Villasenor claims the trial court erred by denying her motion to vacate the arbitration award without permitting a second evidentiary hearing. Villasenor's reliance on Trabuco, supra, 96 Cal.App.4th 1183, however, is misplaced.
In Trabuco, the issue before the trial court was whether the parties had agreed to binding arbitration. In answering the question affirmatively, the court relied solely on a letter by the arbitrator that said the arbitration was binding. The appellate court held that by doing so, " the trial court abdicated its function to determine whether the arbitrator exceeded his powers in a most fundamental way: by issuing a binding award after the parties agreed only to nonbinding arbitration." (Trabuco, supra, 96 Cal.App.4th at p. 1190.) The evidence showed the parties entered into an express agreement, through two letters, that the arbitration would not be binding, and the question was whether the parties changed their positions at the arbitration hearing. One party presented a declaration that denied ever agreeing to binding arbitration. Because the court ignored the parties' evidence, and the arbitrator's letter was hearsay, the court reversed and remanded " the case for a proper consideration of whether the parties agreed to binding arbitration." (Id. at p. 1191.) The court also noted that had " the trial court . . . simply decided whether the arbitration was binding based on the declarations of the parties concerning what was said at the arbitration hearing, we might simply affirm the ruling by concluding it was a matter of credibility of the trial court to decide." (Id. at p. 1190.)
Here, there is no dispute that the parties agreed to binding arbitration. Further, Trabuco does not stand for the proposition that when a party presents incompetent evidence in support of a petition to vacate an arbitration award, as here, he or she is entitled to another bite at the apple in a second evidentiary hearing. When Villasenor argued for an additional hearing she offered no reason for, for instance, not having documents authenticated or presenting evidence of Vom Hof's credentials. Under Trabuco, the court was required to review the evidence presented, and it did so.
III
Attorney Fees for Trial Court Proceedings
Villasenor also contends the court erred by awarding Hernandez attorney fees " based on the type of billing invoices submitted and statement of services performed." (Capitalization omitted.)
The trial court's determination of the legal basis for an award of attorney fees is subject to de novo review. (Sessions Payroll Management, Inc. v. Noble Const. Co., Inc. (2000) 84 Cal.App.4th 671, 677.) Here, however, there is no dispute as to the basis for a fee award. " 'The matter of reasonableness of attorney's fees is within the sound discretion of the trial judge. [Citations.] . . .' 'In determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider the " nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, [and] the success of the attorney's efforts." ' " (Stokus v. Marsh (1990) 217 Cal.App.3d 647, 656-657.)
In support of her motion, Hernandez submitted the declarations of four attorneys. The declaration of Steve Haskins, of Haskins & Associates, stated the regular hourly billing rates for attorney Pitchkolan were $195, and for attorneys Cyrus Seradj and Craig Sanders they were $185, and Haskins believed those rates were below the market rate for similar work by San Diego attorneys.
Pitchkolan submitted a declaration that stated she had practiced since 1988 primarily in civil litigation and corporate law; she kept detailed time records that showed she spent 37.8 hours on behalf of Hernandez, including 31 hours on papers regarding confirmation of the arbitration award and 6.8 hours on the motion for attorney fees. Pitchkolan's declaration also stated: " Most of the time spent . . . has been due to the actions of [Villasenor] in attempting to defeat the judgment. Initially, we filed a petition to confirm the arbitration. There after [sic] the defendant filed a motion to vacate the award. [Villasenor] did not have grounds for vacating the award but still chose to file it. The motion to vacate was not timely filed. When that fact was made clear to [Villasenor], she filed a motion to allow her to file the motion to vacate late. As a result [Hernandez] was forced to file two motions oppositions on top of her petition to confirm the award."
The declarations of Seradj and Sanders stated they kept detailed time records and spent, respectively, 4.7 hours on the preparation of the petition to confirm the arbitration award, and 6.2 hours on the preparation of the opposition to Villasenor's motion to allow the late filing of her motion to vacate.
Additionally, Hernandez submitted an exhibit of the hours spent by each attorney per month between June and September 2005. Instead of listing tasks per minute or hour, as detailed time records may, the exhibit listed the types of work performed each month, for instance, " Telephone conferences with client," " Inter-office conferences," " Prepare Petition to Confirm Arbitration Award," " Review correspondence from Judge Hoffman," and so on.
Villasenor complains that Hernandez " provided a summary of work performed" and " has failed to demonstrate how specific tasks required a specific amount of time and that the amount of time expended on those tasks was reasonably necessary for the results she achieved." As the court noted, however, in California " an attorney need not submit contemporaneous time records in order to recover attorney fees. . . . [Citation.] Testimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records." (Martino v. Denevi (1986) 182 Cal.App.3d 553, 559.)
The court explained it found the attorneys' declarations sufficient to support an award, and, with minor deductions, the time spent was reasonable. The trial court has particular expertise in these matters, and we will not second guess it. We find no abuse of discretion.
Villasenor submits the court should have drastically reduced the attorney fees because Hernandez achieved only limited success in arbitration, the return of her $8,000 escrow deposit. The fees the trial court awarded, however, were incurred in conjunction with Hernandez's petition to confirm the arbitration award and in opposing Villasenor's meritless petition to vacate the award. Further, Villasenor claims the court unreasonably awarded $40,000 in fees when the award was actually $8,342.[5]
IV
Attorney Fees on Appeal
Hernandez seeks attorney fees on appeal. " '[I]t is established that fees, if recoverable at all -- pursuant to either statute or [the] parties' agreement -- are available for services at trial and on appeal.' " (Marcos v. Board of Retirement (1990) 51 Cal.3d 924, 927; Serrano v. Unruh (1982) 32 Cal.3d 621, 637.) Hernandez is the prevailing party on appeal, and thus she is entitled to fees under Civil Code section 1717. " Although this court has the power to fix attorney fees on appeal, the better practice is to have the trial court determine such fees." (Security Pacific National Bank v. Adamo (1983) 142 Cal.App.3d 492, 498.)
DISPOSITION
The judgment and order are affirmed. The matter is remanded to the trial court for
its determination of an award to Hernandez for attorney fees on appeal. Hernandez is also entitled to costs on appeal.
McCONNELL, P. J.
WE CONCUR:
BENKE, J.
McINTYRE, J.
Publication Courtesy of San Diego County Legal Resource Directory.
Analysis and review provided by El Cajon Property line attorney.
[1] Statutory references are to the Code of Civil Procedure unless otherwise specified.
[2] On August 3, 2006, Villasenor moved to augment the appellate record with various documents. We deny the motion as it pertains to pages 1 through 154, and grant it as it pertains to pages 155 through 264.
[3] Villasenor cites sections 1281 and 1281.2, subdivision (b) for the proposition " there is no authority to arbitrate a dispute which arises out of an invalid contract." Those statutes, however, are inapplicable because they concern the validity of contractual arbitration clauses, an issue not in dispute here.
[4] Section 998 provides: " If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer." (§ 998, subd. (c)(1).) Section 998 is intended to encourage settlement through financial disincentive. (Bank of San Pedro v. Superior Court (1992) 3 Cal.4th 797, 804.)
[5] In her reply brief, Villasenor contends the arbitration award violates the Federal Arbitration Act. She waived the issue by not raising it in her opening brief. (California Recreation Industries v. Kierstead (1988) 199 Cal.App.3d 203, 205, fn. 1.)
