Howard, Strickroth & Parker v. BalboaBay Club
Filed 8/29/08 Howard, Strickroth & Parker v. Balboa Bay Club CA4/3
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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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
FOURTH APPELLATE DISTRICT
DIVISION THREE
HOWARD, STRICKROTH & PARKER, Plaintiff and Appellant, v. BALBOA BAY CLUB, INC., Defendant and Respondent. | G038124 (Super. Ct. No. 05CC11389) O P I N I O N |
Appeal from a judgment of the Superior Court of Orange County, Joseph E. Di Loreto, Judge. (Judge of the L.A. Super. Ct. assigned by the Chief Justice pursuant to art. VI, 6 of the Cal. Const.) Affirmed.
Howard, Strickroth & Parker, Theodore R. Howard and Shannon C. Lamb for Plaintiff and Appellant.
Law Offices of Edwin Paul, Edwin Paul and Margie L. Jesswein for Defendant and Respondent.
* * *
Plaintiff and appellant Howard, Strickroth & Parker (the Howard Firm) appeals from a judgment of dismissal after the trial court sustained, without leave to amend, the demurrer of the Balboa Bay Club, Inc., (the Club) to the Howard Firms conversion and constructive trust causes of action, and granted judgment on the pleadings against its declaratory relief claim.
The Club had obtained a judgment in a prior action against John Howard, Trustee of the James Trust (the James Trust) for unpaid rent and recovered $73,854.03 by levying on a James Trust bank account. We reversed the judgment in that case on appeal and ordered a limited retrial. After the trial court denied the James Trusts motion for restitution of the levied funds, the James Trust purported to grant the Howard Firm a lien on the funds held by the Club. The Howard Firm filed the present action seeking to enforce its lien.
We conclude the trial court in the present case did not err. The James Trust was at best a contingent beneficiary of the levied funds held by the Club at the time the James Trust created the Howard Firms lien. Accordingly, the Howard Firm could obtain no greater interest in the funds than that held by the James Trust. Because the James Trusts unqualified right to the levied funds never materialized, the lien never attached to those funds. We therefore affirm.
I
Factual and Procedural Background
In a previous action, The Balboa Bay Club, Inc. v. John Howard, Trustee of the James Trust (Super. Ct. Orange County, No. 02CC13818) (Balboa Bay), the Club sought from the James Trust, a trust the decedent established before her death, 18 months of unpaid rent on a five-year lease following the tenants death. In the first phase of trial, the trial court held the lease survived the tenants death and therefore the James Trust was bound by the leases provisions. In the second phase, the jury found the Club failed to mitigate its damages because it did not make reasonable efforts to relet the apartment. The trial court, however, granted the Clubs motion for judgment notwithstanding the verdict (JNOV), ruling the trust failed to establish the amount of unpaid rent the lessor could have recouped had reasonable efforts been taken to relet the apartment. The trial court entered judgment in the Clubs favor, awarding $63,154.26 in lost rent damages and attorney fees of $69,117.18, plus costs, for a total award of $135,123.88.
The James Trust appealed the judgment without posting a bond, and we denied the trusts petition for writ of supersedeas. In March 2004, while the appeal was pending, the Club executed on the judgment and secured $73,854.03 from a levy on a James Trust bank account. In April, 2005, we reversed the judgment, determining an error in the special verdict form prevented the jury from calculating the amount of rent the Club could have obtained had it made reasonable efforts to relet the apartment. We remanded for retrial limited to the mitigation issue.
On remand, the James Trust filed a motion for restitution seeking to recover the $73,854.03 the Club obtained when it executed on the judgment. On August 22, 2005, the trial court exercised its discretion and denied the motion.
Eight days later, on August 30, 2005, the James Trust granted the Howard Firm a lien on the executed funds in the Clubs possession as security for past and future attorney fees incurred on the James Trusts behalf. The following day, the James Trust filed a motion for reconsideration of the trial courts denial of its restitution motion, arguing the newly-created attorney lien justified return of the funds. On October 7, the trial court denied the reconsideration motion, ruling that the motion is based on alleged facts which were orchestrated by [the James Trust] and its counsel . . . . The court concluded that [t]he validity and effect, if any, of this alleged lien can be determined in an appropriate proceeding . . . . Following a jury trial in the Balboa Bay action on the mitigation of damages issue, the trial court entered judgment for the Club in the total amount of $296,637.91.
The Howard Firm filed the present action, seeking to enforce its attorney fee lien against the Club. The operative first amended complaint alleged causes of action for declaratory relief, conversion, and constructive trust. The trial court sustained the Clubs demurrer to the conversion and constructive trust claims without leave to amend, and granted judgment on the pleadings on the declaratory relief cause of action. The Howard Firm now appeals.
II
Discussion
It is settled law that restitution after reversal is not governed exclusively by statute [citation], and that the trial court has inherent power to afford such relief, which normally is the right of the party who secured the reversal. [Citation.] Indeed, it is said that the respondent who collected upon the judgment immediately becomes a trustee for his opponent with respect thereto. [Citations.] From this it follows that the motion is addressed to the sound legal discretion of the court [citation], which may, in an exceptional case, deny the motion. The ruling will not be disturbed on appeal in the absence of a showing of manifest abuse of that discretion. (Rogers v. Bill & Vinces, Inc. (1963) 219 Cal.App.2d 322, 324-325.)
The trial court in the Balboa Bay action exercised its discretion to deny the James Trusts restitution motion, reasoning: [T]he Court is persuaded that the more equitable and appropriate course of action, even though the prior judgment was partially reversed, is to leave the funds in the hands of [the Club]. This decision is based on the facts that [the James Trusts] liability for breach of the lease has been determined, it appears that [the Club] will be entitled to at least some recovery, [the Club] will presumably be entitled to recover its attorneys fees which already approximate the amount it is holding, [the James Trust] is apparent[y] without substantial assets, and [the Club], if required, appears able to repay the collected funds. The James Trust did not challenge this ruling, and we therefore presume it was correct.
As the James Trust notes, our reversal of the first judgment in the Balboa Bay Club action placed the Club in a position of trustee over the levied funds for the James Trust. By denying the restitution motion, however, the court determined the James Trust did not hold an absolute right to a return of the funds. Any return of the funds was contingent upon the James Trusts success on retrial of its mitigation of damages defense. The position of the James Trust at that time is best described as a contingent beneficiary of the levied funds.
It is axiomatic that one cannot transfer an interest in property greater than he or she possesses. (Qualls v. Lake Berryessa Enterprises, Inc. (1999) 76 Cal.App.4th 1277, 1284.) Because the James Trusts right to the levied funds was contingent on its ultimate success in the litigation, any assignment of its rights was necessarily subject to the same limitation.
This point is embodied Civil Code section 2883, subdivision (a), which allows the creation of a lien agreement concerning property the grantor does not yet possess. This section provides: An agreement may be made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence. In that case the lien agreed for attaches from the time when the party agreeing to give it acquires an interest in the thing, to the extent of such interest. (Italics added.) Accordingly, the lien the James Trust created did not attach to the trust res, i.e., the levied funds in the Clubs possession, but attached only to the James Trusts contingent interest in the res. Had the James Trust prevailed on its mitigation of damages defense at the retrial in the Balboa Bay case and obtained a final judgment in its favor, the Howard Firms lien would have attached to the levied funds. Because the final judgment the Club obtained exceeded the amount of the levied funds, however, the James Trusts contingent interest in the funds evaporated, along with the Howard Firms lien.
The James Trust contends the Clubs lien on the levied funds ended upon our reversal of the first judgment in the Balboa Bay action. But the Howard Firm loses not because its lien on the funds came second in time, but because its lien never attached to the funds at all. We therefore do not address the parties arguments regarding lien priority.
Our conclusion here is supported not only by the law, but by logic and equity. If we accepted the James Trusts position, a party whose restitution motion fails could circumvent the courts ruling by issuing liens against the money held by its opponent in a manner similar to writing checks against a bank account. One may not avoid an adverse ruling by assigning his or her rights to third parties in the hope they may get a more favorable ruling in another case.
We conclude the trial court did not err in sustaining the Clubs demurrer to the James Trusts constructive trust and conversion claims without leave to amend. In light of the trial courts rulings on the demurrers, a further judicial declaration of the parties respective rights was unnecessary. (Code Civ. Proc., 1061.)[1] Accordingly, we also conclude the trial court did not err in dismissing the James Trusts declaratory relief claim in response to the Clubs motion for judgment on the pleadings.
III
Disposition
The judgment is affirmed. The Club is entitled to its costs on appeal.
ARONSON, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
IKOLA, J.
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[1] Code of Civil Procedure section 1061 provides: The court may refuse to exercise the power granted by this chapter [declaratory relief] in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.
