Filed 7/28/26 Tran v. Tran CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
LOUIS TRAN, H052186
(Santa Clara County
Plaintiff and Respondent, Super. Ct. No. 20CV366973)
v.
LISA TRAN et al.,
Defendants and Appellants.
LOUIS TRAN, H052300
Plaintiff, Cross-defendant, and
Appellant,
v.
LISA TRAN et al.,
Defendants, Cross-
complainants, and
Respondents.
In these appeals, two siblings dispute the proper disposition of a house
they jointly inherited from their father and an award of attorney fees
incurred in litigation over the issue.
After their father’s death, Louis Tran1 and Lisa Tran (then minors)
inherited real property in San Jose (the property) through their mother,
Kathy Tran Phan, their then-guardian. After reaching the age of majority,
Louis and Lisa entered into an agreement that gave Lisa the right to
purchase Louis’s ownership interest in the property. The agreement was
subject to a “time-of-the-essence” clause which required Lisa to pay Louis by
a stated deadline or the agreement would become unenforceable. In the
agreement, Louis waived his right to partition of the property but reserved
his right to pursue a partition action in the event Lisa failed to timely pay.
Lisa did not pay Louis by the deadline.
After Lisa’s failure to timely pay, Louis brought suit against Lisa and
Kathy for quiet title and partition of the property. Lisa and Kathy filed a
cross-complaint seeking partition and asserting claims for, inter alia, breach
of contract and specific performance. The trial court granted summary
judgment in Louis’s favor on both the complaint and cross-complaint. Louis
sought attorney fees under Civil Code section 1717. The trial court denied
Louis’s request under Civil Code section 1717, granted and apportioned
attorney fees incurred for the common benefit under Code of Civil Procedure2
section 874.020, and reduced the fee amount (hereafter, fee order). Louis
timely appealed the fee order.
The trial court also entered an interlocutory judgment under section
872.720, determined the interests of the parties in the property, and ordered
the partition of the property by sale. The court appointed a referee,
1 For clarity, we refer to parties who share a last name by their first
names as they appear in the briefs and record. (See, e.g., In re Marriage of
Leonard (2004) 119 Cal.App.4th 546, 550, fn. 2.)
2 All further unspecified statutory references are to the Code of Civil
Procedure.
2
authorized the referee to sell the property at a private sale in accordance with
sections 873.600 through 873.690, and directed the referee to report on the
sale proceedings to the court.
The referee sought to sell the property to third party buyers. The
referee filed in the trial court an ex parte application for final sale approval
without giving Lisa the full statutory notice period under section 873.720 or
requesting the hearing required by section 873.610. Without conducting a
hearing (and over Lisa’s objection), the court approved the referee’s report
and ordered the sale of the property to the buyers (hereafter, sale order).
Lisa and Kathy timely appealed the sale order.
In his appeal of the fee order, Louis contends that the trial court erred
by denying attorney fees under Civil Code section 1717 and by awarding fees
under a common benefit theory. In her appeal of the sale order, Lisa argues
the court committed structural error by granting the referee’s application
without sufficient notice under section 873.720 and by failing to conduct a
hearing under section 873.610.
For the reasons stated below, with respect to the fee order, we decide
Louis is entitled under Civil Code section 1717 to attorney fees on the third,
fourth, and fifth causes of action in the cross-complaint, and the trial court
erred in awarding fees under the common benefit doctrine. As to the sale
order, we decide the court erred in finding proper notice and in failing to
conduct a hearing on the referee’s application. However, Lisa and Kathy
have failed to meet their burden of demonstrating that these errors
constituted either structural or prejudicial error. We therefore affirm the
sale order, vacate the fee order, and remand for further proceedings.
3
I. FACTS AND PROCEDURAL BACKGROUND3
A. Facts
Louis and Lisa are the children of Kathy and Charles Hoat Tran.
Kathy and Charles were divorced at the time of Charles’s death in 2001.
After Charles’s death, a probate proceeding was opened in Santa Clara
County Superior Court (case No. 1-01-PR-150222). The probate action
resulted in an order in April 2002, which distributed the property to Louis
and Lisa (then minors) through Kathy, their guardian, with Louis and Lisa
each receiving a 50 percent ownership interest.
In December 2019, after Louis and Lisa reached the age of majority,
they and Kathy entered into a real property purchase, settlement, and
release agreement (the agreement).
The agreement set out terms and conditions for Lisa’s purchase of
Louis’s interest in the property and additional transactions related to the
property. Lisa agreed to pay Louis $370,000 (one-half of the agreed upon fair
market value of the property) in consideration for Louis’s assignment,
transfer, and conveyance of his 50 percent interest in the property, minus
certain credits and offsets for rental income, property expenses, and the
reduction of and release from liability for a lien. The agreement summarized
the offsetting transactions, stated that the total amount Lisa was to pay
Louis was $304,725.74, and set forth the terms of escrow.
Among the terms of escrow was a “time-of-the-essence” provision,
which stated: “Time is of the essence for Lisa’s payment to Louis. Timely
3 On our own motion, we ordered case Nos. H052186 and H052300
considered together for purposes of argument and disposition. On our own
motion, in case No. H052186, we take judicial notice of the record in case No.
H052300, and in case No. H052300, we take judicial notice of the record in
case No. H052186. (See Evid. Code, §§ 452, subd. (d), 459, subd. (a).)
4
performance is material to Louis for two reasons. First, Louis is waiving his
right to sell the [] [p]roperty in a partition action where he believes that he
will receive a higher sales price for his interest. Second, Louis believes that
because the economy and real estate market are at risk for a slow down or
recession, he wants to take advantage of a sale by partition before the fair
market value of the [] [p]roperty collapses. Accordingly, if Louis does not
receive payment of $304,725.74 from Lisa by March 9, 2020[,] or if Kathy
does not sign this [a]greement by January 7, 2020, escrow will be
automatically terminated, and this [a]greement will be unenforceable so that
Louis can pursue a partition action.”
The agreement also contained an attorney fees provision, which states:
“If this [a]greement or the transaction contemplated herein gives rise to a
lawsuit or other legal proceeding between the [p]arties, the prevailing party
shall be entitled to recover its reasonable attorneys’ fees and costs (including
expert fees) of litigation in addition to any other judgment of the court.”
Lisa did not pay Louis the amount owed under the agreement by the
March 9, 2020 deadline.4 On March 10, 2020, Lisa’s attorney e-mailed
Louis’s attorney requesting an extension of the deadline for Lisa to purchase
Louis’s ownership interest under the agreement. The following day, Louis’s
attorney replied by e-mail, stating that the agreement automatically
terminated on March 9, 2020, upon Lisa’s failure to close escrow by that date.
4 Although Lisa and Kathy disputed this fact in their response to
Louis’s separate statement of undisputed material facts, the trial court found
in its order granting summary judgment that Lisa and Kathy “openly
admit[ted] they did not obtain a loan until ‘May 2020, approximately 78 days
after they were required to pay’ ” Louis.
5
B. Procedural Background
1. Complaint, Cross-complaint, and Motions for Summary
Judgment
In May 2020, Louis filed a complaint for quiet title and partition for
sale of the property. The complaint named Lisa and Kathy as defendants. In
paragraph Nos. 10 and 11 of his factual allegations, Louis asserted that he
and Lisa had entered into the agreement, quoted the time-of-the-essence
clause, and alleged that, because Lisa failed to pay Louis the purchase price
by the deadline, the agreement became unenforceable. Louis further
asserted that he was “[a]ccordingly, . . . exercising his right to petition by
filing this action.” Louis incorporated his factual allegations by reference in
each of the causes of action in the complaint.
Louis alleged two causes of action, quiet title (§ 760.020) and partition
by sale (§ 872.210 et seq.). In the first cause of action for quiet title, Louis
alleged that Kathy claimed some adverse right, title, estate, lien, or interest
in the property by virtue of her status as administrator of Charles’s estate
and guardian of Louis’s and Lisa’s estates as well as in her capacity as an
individual because “it appear[ed] that Kathy may be in open and actual
possession of the property for the past one year.” Louis sought quiet title to
the property “in favor of Louis and Lisa as tenants in common in fee with
equal interests.”
In the second cause of action for partition by sale, Louis similarly
alleged that he and Lisa “are equal fee-simple owners” of the property, and
Kathy held adverse right, title, estate, lien, or interest in the property. Louis
sought partition of the property “for the common benefit of Lisa and himself”
on the grounds that the property could not “be physically divided without
materially impairing its value or the value of a co-owner’s interest” and was
6
not “divisible under the applicable zoning regulations.” Louis sought credit
for reasonable attorney fees expended “for the common benefit” in connection
with the partition. In his prayer for relief for the second cause of action,
Louis sought the costs of partition, including “[r]easonable attorney’s fees
incurred by Louis for the common benefit of the parties.” In his prayer for
relief “on all causes of action,” Louis sought “costs of suit.” (Boldface &
capitalization omitted.)
On July 28, 2020, Lisa and Kathy answered the complaint, asserting
various affirmative defenses, including that Louis had acted in bad faith and
prevented them from complying with the agreement.
Lisa and Kathy also filed a cross-complaint against Louis for partition
by Kathy (first cause of action), partition by Lisa (second cause of action),
breach of contract (third cause of action), breach of implied covenant of good
faith and fair dealing (fourth cause of action), and specific performance (fifth
cause of action). Lisa and Kathy included factual allegations regarding Lisa’s
efforts to obtain a mortgage loan to satisfy her financial obligations to Louis
under the agreement, and Louis’s refusal to sign relevant documents and his
demand for additional payments. Lisa and Kathy incorporated by reference
the factual allegations in each cause of action.
In the first and second causes of action for partition, Lisa and Kathy
requested that “[p]artition . . . be effectuated by permitting [Lisa and Kathy]
to purchase” Louis’s ownership interest in the property or, in the alternative,
permitting Louis to purchase Lisa’s ownership interest in the property. Lisa
and Kathy alleged as the basis for their partition claims that “[d]isputes
ha[d] arisen between them, which render the continued joint ownership of the
[] [p]roperty both unpleasant and impracticable.”
7
In the third and fourth causes of action, Lisa and Kathy claimed Louis
breached the terms of the agreement and the implied covenant of good faith
and fair dealing by failing to perform his obligations under the agreement
and doing so in bad faith. In the fifth cause of action, they asked the trial
court to order Louis to specifically perform the agreement by selling the
property to them. In their prayer for relief, Lisa and Kathy sought, inter alia,
a partition order, an order authorizing them to purchase Louis’s interest in
the property, and “[a]ll costs, including attorney’s fees, associated with this
lawsuit.” Louis answered Lisa’s and Kathy’s cross-complaint and asserted
various affirmative defenses.
Louis moved for summary judgment on his complaint. He also moved
for summary judgment against Lisa’s and Kathy’s cross-complaint. Lisa and
Kathy opposed Louis’s motions for summary judgment and responded to
Louis’s separate statement of undisputed material facts.
After a hearing on the motions for summary judgment, the trial court
issued an order granting Louis’s motions for summary judgment on both the
complaint and the cross-complaint.
The trial court granted summary judgment on Louis’s complaint after
finding that Lisa’s and Kathy’s opposition did “not raise any substantive
argument against the two claims for quiet title and partition.” The court
granted summary adjudication on the first, second, and fifth causes of action
(partition and specific performance) in the cross-complaint on similar
grounds. The court granted summary adjudication on the cross-complaint’s
third cause of action (breach of contract) because Lisa and Kathy admitted
they did not obtain a loan to purchase the property until after the
agreement’s deadline and thus failed to demonstrate the existence of a triable
8
issue of material fact regarding their nonperformance.5 The court granted
summary adjudication on the cross-complaint’s fourth cause of action (breach
of implied covenant of good faith and fair dealing) because Lisa and Kathy
failed to present any admissible evidence in support of their claim.
2. Interlocutory Judgment of Partition
Louis filed an ex parte application for submission of interlocutory
judgment of partition. On November 7, 2023, the trial court entered its
interlocutory judgment under section 872.720, subdivision (a), determining
the interests of the parties in the property and ordering the partition of the
property by sale. The court appointed a referee with the authority to sell the
property at a private sale. The court ordered the referee to give notice of sale
“to the persons specified under section 873.640” “as required under section
873.640 et. seq.” The order stated that, “[i]n all other respects notice of and
procedure for sale shall be as provided in sections 873.600 through 873.690.”
The interlocutory order directed the referee, after selling the property,
to provide a report to the trial court on the sale proceedings and, once the
court confirmed the sale and the buyer paid the purchase price, authorized
and directed the referee to execute and deliver the property deed to the
buyer. The court retained its jurisdiction for the purposes of reviewing the
referee’s report and ordering any equitable adjustments the court deemed
“just and appropriate.”
3. Attorney Fees
Following the grant of judgment in his favor, Louis filed a motion for
attorney fees and supporting documents, including his attorneys’ declarations
5 The trial court’s order granting the motion for summary judgment
recounted Lisa’s unsuccessful efforts over a three-month period to obtain the
necessary financing and her approval for a loan approximately two months
after the deadline set out in the agreement had passed.
9
setting forth their hourly rates and experience and attaching their bills.
Louis requested fees under Civil Code section 1717 on the grounds that, to
prevail on his motions for summary judgment on both the complaint and
cross-complaint, Louis had to demonstrate that the agreement was
unenforceable due to Lisa’s failure to timely perform her obligations
thereunder and that Louis did not interfere with Lisa’s ability to perform
such obligations. Louis argued that Civil Code section 1717 should also apply
to the noncontract claims in the complaint and cross-complaint because
Louis’s right to partition was conditioned upon the terms of the agreement,
the agreement allowed recovery if the agreement or the transaction it
contemplates gave rise to a lawsuit, and Louis’s defeat of the contractual
claims in the cross-complaint was “essential to” his success on the
noncontract claims in his complaint. Louis sought $217,140 in attorney fees
under Civil Code section 1717.
Lisa and Kathy opposed Louis’s motion on the grounds that his
complaint contained only statutory (noncontractual) claims, did not seek
recovery of attorney fees on the agreement, and Louis’s requested attorney
fees were excessive and thus unreasonable given the “basic” nature of the
action. They also asserted that only one-half of the claims in the cross-
complaint were based on contract and the cross-complaint did not seek
contractual remedies. Lisa and Kathy further argued that Louis had not
sought and was not entitled to attorney fees under a common benefit theory.
In his reply, in addition to reiterating his earlier arguments, Louis
agreed with Lisa and Kathy that he had made no request for attorney fees
incurred for the common benefit. Louis reserved his statutory right to seek
such fees in the future, and disputed Lisa and Kathy’s contention that he was
not entitled to such fees. Louis’s attorney explained that the number of hours
10
spent drafting the complaint was due in part to anticipating “the potential
threat of [Lisa and Kathy] filing a cross-complaint.” As part of Louis’s
strategy, his counsel included the factual allegations regarding the time-of-
the-essence clause in the agreement, the agreement’s unenforceability, and
Louis’s right to seek partition of the property.
On April 23, 2024, a different bench officer than the one that had
adjudicated the summary judgment motions conducted a hearing on Louis’s
motion for attorney fees. During the hearing, Louis challenged the trial
court’s tentative ruling denying attorney fees under Civil Code section 1717
and awarding attorney fees under the common benefit theory. Louis objected
to the award on the basis that he had not sought attorney fees incurred for
the common benefit, stating that he did not have “the opportunity to provide
reasonable legal authority and analysis” to support such a request because
his motion was “solely focused” on attorney fees under Civil Code section
1717. Although Lisa and Kathy asked the court to reject Louis’s arguments,
they acknowledged that “the statutory procedure[] for asking for fees . . . is by
motion.” The court orally adopted its earlier tentative ruling and asked
Lisa’s and Kathy’s attorney to prepare the order.
On May 6, 2024, the bench officer that had adjudicated the summary
judgment motion signed the written order for Louis’s motion for attorney
fees, adopting the tentative ruling in full and denying Louis’s request for
attorney fees under Civil Code section 1717. The trial court decided that the
causes of action in the complaint sought statutory, rather than contractual,
remedies. The court found the cross-complaint contained neither an
allegation referencing the attorney fee provision in the agreement nor a
request for attorney fees under the agreement.
11
The trial court awarded Louis $44,000 in attorney fees under sections
874.010 and 874.040 for the common benefit of the parties to the partition
action. The court apportioned the fees based on its evaluation of which fees
were incurred in connection with the causes of action for partition. The court
reduced the requested fees after finding that, although Louis’s counsel
charged reasonable hourly rates, given the “relatively straightforward and
not complex” facts and causes of action in the case, the number of hours
incurred by Louis’s counsel was “excessive, duplicative, or redundant in many
instances.”
4. Confirmation of Sale
On April 30, 2024, the referee filed in the trial court an ex parte
application for final sale approval and further instructions, together with
supporting papers. The referee reported that he had retained a realtor who
listed the property for sale on March 12, 2024, he had received “numerous
offers” for the property (including one from Lisa), the property was in escrow
for $1.05 million, and the buyers had submitted an offer with no
contingencies, meaning escrow would be “ready to close” as soon as the court
approved the sale.
The referee stated Lisa had made three different offers for the property.
Lisa’s first offer was for $970,000 (with a credit of $270,000 based on her
ownership interest in the property). After the referee consulted with the
property’s listing agent, he “countered only the highest offer” based on the
listing agent’s “opinion that the offer was extremely strong given the
condition of the [p]roperty and multiple counteroffers could push the [b]uyer
away.” The buyer accepted the referee’s counteroffer to purchase the
property for $1.05 million with no contingencies. After the buyer accepted
the counteroffer and escrow opened, Lisa submitted a second offer, this time
12
for $1.056 million (with a credit of “ ‘$100,000+’ ”). After the referee gave
Lisa notice of his ex parte application, Lisa submitted a third offer to
purchase the property, this time for $1.08 million (with a credit of
“ ‘$100,000+’ ”). The referee asserted that, because he was “under contract,”
he was unable to act on Lisa’s offer “without breaching the agreement with
the [b]uyer.” The referee also stated that he had “concerns regarding credit
bids.”
The referee asserted that he had given proper notice of the ex parte
application by sending an e-mail on April 26, 2024 (a Friday), to Lisa’s
attorneys notifying them that he would be filing the application on April 30,
2024 (a Tuesday). He asked whether Lisa intended to oppose the application
or would like to request a hearing. The referee thought a hearing “could be
beneficial.” Nevertheless, the referee maintained that he thought it
“appropriate to proceed on an ex parte basis because waiting for a hearing on
a noticed motion could result in the buyer canceling the purchase contract,”
and, if the trial court wanted the referee to consider Lisa’s offer, “then it
[wa]s best to do so as soon as possible.” The referee sought the court’s
instructions on how to proceed.
On May 1, 2024, Lisa filed an opposition to the referee’s ex parte
application, together with supporting papers. In support of her opposition,
Lisa provided letters written by family members and neighbors expressing
their hope that the property stay “in the family.” Lisa also submitted the
declaration of her real estate agent, Larry Giang. Giang asserted that the
property’s listing agent “stressed to [him] that an offer package must be
complete, including a signed Agent Visual Inspection Disclosure (‘AVID’)
form, and submitted by the offer deadline to be considered.” Nonetheless, the
buyers had failed to complete an AVID form by the offer deadline. Giang
13
further asserted that the listing agent lacked the experience intimated by the
referee’s ex parte application, and Lisa’s third offer was $30,000 more than
the highest offer on the property, included “a cash downpayment,” and was
“not subject to contingencies because she ha[d] already secured funding
approval.”
In her opposition, Lisa requested the trial court deny the referee’s ex
parte application because, as she contended, the referee’s application
“circumvent[ed]” the requirements under sections 873.720, subdivision (b),
and 873.610, subdivision (b), by failing to give her at least 10 days’ notice by
noticed motion. She also asserted that the statute required the court to
conduct a hearing to examine the referee’s report and the court could not
approve the report “absent a noticed motion.”
Lisa argued that, should the trial court nonetheless consider the
application, the court should direct the referee to accept Lisa’s offer because
it was “complete, complied with all requirements, ha[d] no contingencies,
and, most importantly, is $30,000 more than the current offer.” In
comparison, Lisa asserted that the buyers’ offer was incomplete, lower, and
contingent upon court approval. Further, she maintained that the referee
and the listing agent provided “preferential treatment” to the buyers by
giving them, and not Lisa, the opportunity to respond to a counteroffer. Lisa
also asked the court to consider the “numerous letters of support” from her
family and neighbors.
On May 24, 2024, a different bench officer than the one who had
adjudicated the motions for summary judgment and issued the interlocutory
judgment of partition, issued an order on the referee’s application.6 The trial
6 Although the trial court stated that it had considered the referee’s ex
parte application “and any opposition papers and oral argument of the
14
court ordered the sale of the property to the buyers for $1.05 million,
authorized the referee to execute and deliver a quitclaim or grant deed
conveying to the buyers title to the property, and ordered Kathy’s lien
(recorded on May 6, 2002, No. 2002-16250576) be deemed extinguished and
removed from title such that it would not transfer with the property. The
court directed the referee to use the net sales proceeds to pay any
outstanding referee fees and costs, and hold the balance in a trust account
until the court issued an order on the final distribution of funds. The court
found that the referee had provided proper notice of the application.
That same day, Lisa and Kathy appealed the sale order.
II. DISCUSSION
A. Louis’s Appeal of the Attorney Fee Order from the Judgment
Louis contends the trial court erred by denying his request for attorney
fees under Civil Code section 1717. Louis asserts that the complaint alleged
the “key terms” of the agreement and enforced his right to partition under
those terms. Louis also argues that, because he had to overcome Lisa’s and
Kathy’s contract-based affirmative defenses and Lisa and Kathy would have
been entitled to attorney fees under the agreement had they prevailed on
those defenses, he is entitled to attorney fees under Civil Code section 1717’s
principle of reciprocity.
As to the cross-complaint, Louis argues that, because Lisa and Kathy
alleged contract claims, sought contractual relief, and requested contractual
attorney fees in their cross-complaint, the claims in the cross-complaint are
parties,” the register of actions does not include any entry for a hearing on
the referee’s application, and it is undisputed that the court did not conduct
such a hearing.
15
on a contract and he is entitled to attorney fees under Civil Code section
1717.
Lisa and Kathy dispute Louis’s contentions of error.
1. Civil Code section 1717
a. Legal Principles
Under the “American rule,” each party to a lawsuit ordinarily pays its
own attorney fees. (Mountain Air Enterprises, LLC v. Sundowner Towers,
LLC (2017) 3 Cal.5th 744, 751 (Mountain Air).) However, section 1021
“permits parties to ‘ “contract out” of the American rule’ by executing an
agreement that allocates attorney fees. [Citations.] Thus, ‘ “[p]arties may
validly agree that the prevailing party will be awarded attorney fees incurred
in any litigation between themselves, whether such litigation sounds in tort
or in contract.” ’ ” (Mountain Air, at p. 751.)
“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.” (Civ. Code,
§ 1717, subd. (a); see also Santisas v. Goodin (1998) 17 Cal.4th 599, 614
(Santisas).) “Reasonable attorney’s fees shall be fixed by the court, and shall
be an element of the costs of suit.” (Civ. Code, § 1717, subd. (a); Chen v.
Valstock Ventures, LLC (2022) 81 Cal.App.5th 957, 970 (Chen).)
Parties to a contract may agree that the prevailing party may recover
attorney fees for both contract claims and noncontract claims. (Santisas,
supra, 17 Cal.4th at p. 608.) However, Civil Code section 1717 is limited to
attorney fees on a contract claim. (Exxess Electronixx v. Heger Realty Corp.
16
(1998) 64 Cal.App.4th 698, 708; Orozco v. WPV San Jose, LLC (2019) 36
Cal.App.5th 375, 408 (Orozco).) Thus, even “[i]f an action asserts both
contract and tort or other noncontract claims, [Civil Code] section 1717
applies only to attorney fees incurred to litigate the contract claims.”
(Santisas, at p. 615.)
Although “[t]he requirement under Civil Code section 1717 that the
action be ‘on a contract’ has been liberally construed” (Orozco, supra, 36
Cal.App.5th at p. 407), “[i]n determining whether an action is ‘on the
contract’ under [Civil Code] section 1717, the proper focus is not on the
nature of the remedy, but on the basis of the cause of action.” (Kachlon v.
Markowitz (2008) 168 Cal.App.4th 316, 347 (Kachlon).) Our courts have
distilled “the following principle: An action (or cause of action) is ‘on a
contract’ for purposes of [Civil Code] section 1717 if (1) the action (or cause of
action) ‘involves’ an agreement, in the sense that the action (or cause of
action) arises out of, is based upon, or relates to an agreement by seeking to
define or interpret its terms or to determine or enforce a party’s rights or
duties under the agreement; and (2) the agreement contains an attorney fees
clause.” (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211
Cal.App.4th 230, 242 (Douglas); Orozco, at p. 408.)
Moreover, it is well settled that a party is entitled to attorney fees
under Civil Code section 1717 “ ‘when the party prevails on grounds the
contract is inapplicable, invalid, unenforceable or nonexistent, if the other
party would have been entitled to attorney’s fees had it prevailed.’ ” (Hsu v.
Abbara (1995) 9 Cal.4th 863, 870 (Hsu); Santisas, supra, 17 Cal.4th at
p. 611.)
“Although normally we review attorney fee awards for abuse of
discretion, where, as here, the appeal presents a legal question of whether
17
the criteria for an attorney fee award have been satisfied, our review is de
novo.” (American Building Innovation LP v. Balfour Beatty Construction,
LLC (2024) 104 Cal.App.5th 954, 966, citing Mountain Air, supra, 3 Cal.5th
at p. 751.)
b. Analysis
“ ‘Before [Civil Code] section 1717 comes into play, it is necessary to
determine whether the parties entered an agreement for the payment of
attorney fees, and if so, the scope of the attorney fee agreement.’ [Citation.]
This determination requires us to apply traditional rules of contract
interpretation.” (Mountain Air, supra, 3 Cal.5th at p. 752.)
We start by considering the parties’ intention at the time they signed
the agreement (Civ. Code, § 1636) by reviewing the plain language of the
agreement (id., § 1639). “ ‘ “The ‘clear and explicit’ meaning of these
provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by
the parties in a technical sense or a special meaning is given to them by
usage’ [citation], controls judicial interpretation.” ’ ” (Mountain Air, supra, 3
Cal.5th at p. 752.)
Although “attorney fee provisions, if drafted broadly, can encompass
noncontractual claims” (Orien v. Lutz (2017) 16 Cal.App.5th 957, 964
(Orien)), such as “when they apply to actions ‘arising out of’ or ‘ “relating to” ’
a contract or its subject matter, or to ‘ “any dispute under” ’ an agreement”
(id. at pp. 964–965), a broad attorney fee provision that encompasses tort or
other noncontract claims does not extend the application of Civil Code section
1717 to cover noncontract claims. (Orozco, supra, 36 Cal.App.5th at p. 408.)
The agreement at issue here contained the following attorney fee
provision: “If this [a]greement or the transaction contemplated herein gives
rise to a lawsuit or other legal proceeding between the [p]arties, the
18
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
costs (including expert fees) of litigation in addition to any other judgment of
the court.”
As drafted, the attorney fee clause awards attorney fees to the
prevailing party. Since Louis was the prevailing party on both the complaint
and the cross-complaint, we must determine whether and to what extent
Louis is entitled to attorney fees according to the language of the fee clause.
The provision states that the prevailing party is entitled to attorney
fees arising from a lawsuit or other legal proceeding arising from the
agreement or “the transaction contemplated” therein. By its terms, the
agreement’s purpose was to both allow the parties to account for and resolve
their financial obligations with respect to the property and allow Lisa to
purchase Louis’s ownership interest in the property. It outlined a series of
transactions related to that purpose, specifically, Lisa’s purchase of Louis’s
ownership interest in the property, Lisa’s payment of rental income and
shared property expenses, the reduction of Kathy’s lien on the property, and
a credit in exchange for a release from liability for the lien and reduced lien.
None of these transactions gave rise to either the partition or the quiet title
action. We conclude the agreement’s attorney fee clause by its terms does not
extend to Louis’s partition and quiet title claims. (Orien, supra, 16
Cal.App.5th at p. 965.)
Nevertheless, Louis argues that his partition cause of action is on a
contract because the agreement “restored” his right to partition. We are not
persuaded. Although a co-owner may waive by contract their right to
partition (LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493), the
absolute right to partition itself is a statutory, not a contractual, construct.
(§ 872.210 et seq.; Orien, supra, 16 Cal.App.5th at p. 964 [holding the right to
19
partition arises “under the law”]; American Medical International, Inc. v.
Feller (1976) 59 Cal.App.3d 1008, 1013 [“The right of a co[-]owner to seek
partition is governed by statute.”].) A cause of action for quiet title is also a
statutory action. (§ 760.020; Robin v. Crowell (2020) 55 Cal.App.5th 727,
740.) Louis brought his quiet title and partition actions pursuant to the
applicable statutes—not the agreement.
Louis alleged in his first cause of action that he sought to quiet title to
the property in his and Lisa’s favor in light of Kathy’s alleged adverse claims
to the property based on Kathy’s role as administrator of Charles’s estate,
guardian for Louis and Lisa, and in her individual capacity as occupant of the
property. Louis alleged in his second cause of action that he sought to
partition the property for his and Lisa’s “common benefit” in light of Kathy’s
alleged adverse claims to the property and because the property was neither
physically divisible nor divisible under applicable zoning regulations.
Although, according to Louis’s counsel, Louis anticipated that Lisa and
Kathy would file a cross-complaint and therefore included in the complaint’s
factual allegations the agreement’s time-of-the-essence clause, neither cause
of action references the agreement as a potential adverse claim on the
property or as a basis for the action. (See Mountain Air, supra, 3 Cal.5th at
pp. 760–761; Kachlon, supra, 168 Cal.App.4th at p. 347.) Louis did not
suggest in his complaint that there was any dispute regarding his right to
seek partition or nor did he seek a declaration of his right. (See § 1060;
Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 898.)
Louis contends that, by incorporating by reference the factual
allegations regarding the existence and unenforceability of the agreement,
his claims are necessarily on a contract. We disagree. Although Louis’s
claims incorporate by reference his factual allegations about the agreement,
20
the agreement functions only as the backdrop of the case, and Louis’s causes
of action did not seek to interpret or enforce any provision in the agreement.
(See Santisas, supra, 17 Cal.4th at p. 615 [Civil Code “section 1717 applies
only to actions that contain at least one contract claim.”].) Thus, despite
Louis’s reference to the agreement in his complaint, he “did not and could not
rely on that agreement to establish [his] right to partition under these
circumstances—[his] right instead arose under the law, and the agreement
was irrelevant to [his] claim.” (Orien, supra, 16 Cal.App.5th at p. 964.)
We are similarly unpersuaded by Louis’s argument that Lisa’s and
Kathy’s affirmative defenses transform the claims in his complaint into
actions on a contract.
Lisa and Kathy asserted their ninth and 10th affirmative defenses in
response to Louis’s actions for quiet title and partition. Our Supreme Court
has stated that “the assertion of an affirmative defense is not contemplated
as an ‘action’ or a ‘proceeding.’ ” (Mountain Air, supra, 3 Cal.5th at p. 756;
see also id. at p. 753, citing § 22 [“[A]n ‘action’ is synonymous with a
lawsuit.”]; Gil v. Mansano (2004) 121 Cal.App.4th 739, 744, fn. omitted
[“[T]he assertion of a defense does not constitute the bringing of an action . . ..
[Citations.] Raising a defense may not be equated with bringing an action.”].)
Therefore, these affirmative defenses do not make Louis’s partition and quiet
title claims actions on a contract.
We decide Louis is not entitled to attorney fees under either the
attorney fee clause in the agreement or Civil Code section 1717 for the claims
in his complaint.
21
With respect to the cross-complaint, the third (breach of contract),
fourth (breach of implied covenant of good faith and fair dealing),7 and fifth
(specific performance) causes of action in the cross-complaint sought to
enforce the terms of the agreement. In each of these three causes of action,
Lisa and Kathy alleged that Louis breached the agreement by actions that
delayed or stymied their performance under the agreement. As discussed
ante, the agreement contains an attorney fee provision. We decide the third,
fourth, and fifth causes of action in the cross-complaint satisfy the test for an
action on a contract. (Douglas, supra, 211 Cal.App.4th at p. 242; Orozco,
supra, 36 Cal.App.5th at p. 408.) Because Louis prevailed on these causes of
action on summary judgment by demonstrating the agreement was
unenforceable, he is entitled to attorney fees on those claims under the terms
of the agreement and Civil Code section 1717.8 (Santisas, supra, 17 Cal.4th
at p. 611; Hsu, supra, 9 Cal.4th at p. 870.)
The first and second causes of action seek partition “by permitting [Lisa
and Kathy] to purchase [] Louis’[s] interest” in the property, or, in the
alternative, by permitting Louis to purchase Lisa’s and Kathy’s interest in
the property. The claims request that, “[i]f neither party is able to purchase
7 “It is well established a breach of the implied covenant of good faith is
a breach of the contract.” (Carson v. Mercury Ins. Co. (2012) 210 Cal.App.4th
409, 429; Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218
Cal.App.4th 1230, 1244.)
8 Although the trial court stated that the cross-complaint only sought
common benefit attorney fees, entitlement to attorney fees under Civil Code
section 1717 depends not on the relief sought, but on the basis for the claim.
(Kachlon, supra, 168 Cal.App.4th at p. 347.) Moreover, the prayer for relief
in the cross-complaint was not limited to common benefit attorney fees, but
requested “[a]ll costs, including attorney’s fees, associated with this lawsuit.”
(See Civ. Code, § 1717, subd. (a) [“Reasonable attorney’s fees . . . [are] an
element of the costs of suit.”]; Chen, supra, 81 Cal.App.5th at p. 970.)
22
the other’s interest,” then the trial court should order a partition by sale.
Although Lisa and Kathy do not cite in their cross-complaint the statutory
bases for their partition claims, as discussed ante, the right to seek partition
arises by operation of the partition statute. Therefore, these causes of action
do not fall under Civil Code section 1717 or the attorney fee clause of the
agreement.
Consequently, we reverse the trial court’s denial of attorney fees under
Civil Code section 1717 with respect to Louis’s attorney fees for the third,
fourth, and fifth causes of action in the cross-complaint. Louis is not entitled
to attorney fees under Civil Code section 1717 for the claims in his complaint
or the first and second causes of action in the cross-complaint.
2. Common Benefit
Louis asserts that the trial court erred by awarding attorney fees under
a common benefit theory where Louis did not request such fees and
“affirmatively disclaimed” them. Louis also contends that attorney fees
incurred for the common benefit may only be awarded after a final judgment,
and the interlocutory judgment is not a final judgment.
In the alternative, Louis argues that the trial court erred calculating
the attorney fees awarded because the court assessed the reasonableness of
the requested fees under the “incorrect” standard—a common benefit theory
rather than Civil Code section 1717—and improperly apportioned fees
despite the contractual and noncontractual claims being “inextricably
intertwined.” In addition, Louis contends that Lisa and Kathy failed to meet
their burden of objecting with sufficient detail to the reasonableness of the
requested attorney fees.
“A basic tenet of motion practice is that the notice of motion must state
the grounds for the order being sought ([] § 1010; Cal. Rules of Court, rule
23
3.1110(a)), and courts generally may consider only the grounds stated in the
notice of motion.” (Kinda v. Carpenter (2016) 247 Cal.App.4th 1268, 1277;
Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1125 (Luri); Castagnoli v.
Castagnoli (1954) 124 Cal.App.2d 39, 41.)
Louis’s motion9 for attorney fees sought fees only under Civil Code
section 1717. Nevertheless, in its fee order, the trial court awarded Louis
attorney fees incurred for the common benefit under sections 874.010 and
874.040. The court therefore considered a ground not stated in Louis’s
motion.
A ground absent from a notice of motion “may be overlooked if the
supporting papers make clear the grounds for the relief sought” (Luri, supra,
107 Cal.App.4th at p. 1125) or “if the omitted issue, or ground for relief, was
raised without objection before the trial court” (Golf & Tennis Pro Shop, Inc.
v. Superior Court (2022) 84 Cal.App.5th 127, 138).
Although Louis sought attorney fees incurred for the common benefit in
his complaint, the papers Louis filed in support of his motion for attorney fees
following entry of judgment do not suggest that his motion sought attorney
fees under a common benefit theory. His motion and supporting papers
discuss only his request for attorney fees under Civil Code section 1717.
At the hearing on the motion for attorney fees in April 2024, Louis
objected to the trial court’s tentative ruling awarding attorney fees incurred
for the common benefit on the ground that he did not make such a request in
his motion for attorney fees. At the hearing, Louis affirmatively stated that
9 The record does not include a notice of motion for attorney fees, only a
memorandum of points and authorities in support of a motion for attorney
fees. The parties do not challenge on appeal the absence of a notice of
motion.
24
he did not want the court to award fees on that basis at that juncture, but he
planned to seek fees under the common benefit theory “during the post-sale
accounting phase” of the action. In addition, in their opposition, Lisa and
Kathy objected to the award of attorney fees to Louis under the common
benefit theory because, inter alia, “common benefit fees have not been
requested” in the motion.10
Given that neither exception to the principle requiring courts to rule
only on a ground sought in a noticed motion applies here, the trial court erred
in so doing. We therefore reverse the fee order with respect to the attorney
fees incurred for the common benefit without prejudice to Louis’s right to
seek attorney fees under a common benefit theory at a later date in the
underlying action. Because we reverse the fee order on this basis, we do not
reach Louis’s other contentions on appeal with respect to the common benefit
fees.
Louis has also requested attorney fees for this appeal. “ ‘Although this
court has the power to fix attorney fees on appeal, the better practice is to
have the trial court determine such fees.’ ” (Huntingdon Life Sciences, Inc. v.
Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228,
1267.) Thus, upon an appropriate motion, the trial court is to consider
10 At the hearing, Lisa and Kathy challenged on the grounds of fairness
and judicial efficiency Louis’s right to have “a second bite at the apple” by
seeking fees under a common benefit theory later in the proceedings, but they
did not assert that Louis sought such fees in his motion. They asserted only
that the complaint and cross-complaint, and a letter from Louis’s counsel,
sought attorney fees under the partition statute.
On appeal, Lisa and Kathy merely contend that, because Louis sought
in his complaint attorney fees incurred for the common benefit, the trial
court’s award of such fees was “legally justified and factually supported.”
They do not argue that Louis sought in his noticed motion attorney fees
incurred for the common benefit.
25
whether attorney fees incurred on appeal should be awarded and, if so, in
what amount. (See ibid.; In re Marriage of Cheriton (2001) 92 Cal.App.4th
269, 320.)
B. Lisa and Kathy’s Appeal of the Order Confirming the Sale of the
Property
Lisa and Kathy contend that the trial court erred by granting the
referee’s ex parte application despite the referee’s failure to provide 10 days’
notice as required under section 873.720, subdivision (b)(2), and without
conducting a hearing as required under section 873.610, subdivision (b). Lisa
and Kathy assert that, because the court’s errors denied them due process
and were “structural error[s],” such errors are presumptively prejudicial and
reversible per se. In the alternative, they maintain that they were prejudiced
by having a shortened period to respond to the referee’s application and by
not having the opportunity at a confirmation hearing to “more fully oppose”
the application and “submit an overbid.”
Although Louis concedes that the trial court erred by failing to conduct
a hearing on the referee’s application, he contends that the error was not
structural and was harmless. He asserts that Lisa and Kathy failed to
articulate what additional evidence they could have proffered at a hearing
and what additional bid terms they could have presented to convince the
court to accept their bid over that of the buyers, and that the evidence they
submitted in their opposition was deficient. Furthermore, Louis maintains
that (1) given the court found in granting Louis’s summary judgment motions
that Lisa “had materially defaulted” on the agreement to purchase Louis’s
ownership interest in the property, “[i]t was within the [] court’s discretion to
view [Lisa] as unreliable”; and (2) “the summary judgment ruling was
incorporated into the [] court’s understanding of the parties.”
26
1. Legal Principles
Section 873.610, subdivision (b) provides that, in an action for partition
by sale, the trial court “may refer the manner, terms, and conditions of sale to
the referee for recommendation but shall not approve the referee’s report
except following a hearing upon noticed motion.” Once the referee has
concluded a sale, section 873.720, subdivision (a) provides that “the
referee . . . may move the court to confirm or set aside the sale.” As the
moving party, the referee “shall give not less than 10 days’ notice of motion
to” (id., subd. (b)) “[a]ll other parties who have appeared in the action.” (Id.,
subd. (b)(2).)
At the confirmation hearing, the trial court must “examine the
[referee’s] report and witnesses in relation to the report” (§ 873.730, subd. (a))
and may, at its discretion, confirm or vacate the sale (id., subds. (b), (c)). If,
at the hearing, “a responsible bidder” makes “a written increased offer that
exceeds the sale price by at least 10 percent on the first ten thousand dollars
($10,000) and 5 percent on the amount in excess thereof,” the court has the
discretion to vacate the sale and either direct a new sale be made or direct
acceptance of the increased offer. (§ 873.740, subd. (a); see also § 873.730,
subd. (c)(3).)
We review de novo as a question of statutory interpretation whether
the trial court’s sale order complied with the statute. (Severson & Werson,
P.C. v. Sepehry-Fard (2019) 37 Cal.App.5th 938, 944 (Severson).) We likewise
review Lisa’s and Kathy’s procedural due process claim de novo “ ‘because
“the ultimate determination of procedural fairness amounts to a question of
law.” ’ ” (Ibid.)
When construing a statutory provision, we first examine the language
of the statute, construing it in the context of “ ‘ “ ‘ “the entire scheme of law of
27
which it is part so that the whole may be harmonized and retain
effectiveness.” ’ ” ’ ” (Severson, supra, 37 Cal.App.5th at p. 946; Hassell v.
Bird (2018) 5 Cal.5th 522, 540; Even Zohar Construction & Remodeling, Inc.
v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 837–838.)
2. Analysis
The partition statute requires that the trial court conduct a hearing on
a referee’s report before confirming the sale of the subject property. Section
873.610, subdivision (b) states that the court “shall not approve the referee’s
report except following a hearing upon noticed motion.” “ ‘[T]he word “shall”
in a statute is ordinarily deemed mandatory, and “may” permissive’ ” (Kurz v.
Syrus Systems, LLC (2013) 221 Cal.App.4th 748, 762), “ ‘particularly when
. . . the Legislature has used both the terms “shall” and “may” in the same
statute’ ” (Severson, supra, 37 Cal.App.5th at p. 946), as the Legislature has
done in the partition statute. Moreover, section 873.720, subdivision (b)
requires the referee to seek confirmation of the sale by noticed motion. “The
Legislature’s ‘use of the term “motion” (rather than “ex parte application”)[11]
[has been interpreted to impose] the notice and hearing requirements
generally applicable to motions.’ ” (Titmas v. Superior Court (2001) 87
Cal.App.4th 738, 743.)
Section 873.720, subdivision (b) requires the moving party to “give not
less than 10 days’ notice” to the buyer(s) and “[a]ll other parties who have
appeared in the action.” The referee gave Lisa only four days’ notice of his
11 The partition statute does not use the term “ex parte application.”
(See generally § 872.010 et seq.; see also St. Paul Fire & Marine Ins. Co. v.
Superior Court (1984) 156 Cal.App.3d 82, 85 [“Although certain orders may
be obtained through ex parte application, a statute silent on the question
should not be interpreted as authorizing an ex parte application for an
order.”].)
28
intention to file the ex parte application. Nonetheless, the trial court found
the referee had given her “proper” notice of the ex parte application.
Based on the statutory text, we conclude the trial court violated section
873.610, subdivision (b) in failing to conduct a hearing on the referee’s
application before confirming the sale of the property to the buyers.12 We
further conclude the court erred under section 873.720, subdivision (b) in
finding the referee had given proper notice. We next consider whether these
errors constituted prejudicial error.
“[A]n error is reversible per se when it constitutes “a ‘ “structural
[defect] in the . . . trial mechanism” ’ that defies evaluation for
harmlessness.” ’ [Citation.] A structural defect or error is one that affects
‘the framework within which the trial proceeds, rather than simply an error
in the trial process itself.’ [Citation.] ‘A structural error requires per se
reversal because it cannot be fairly determined how a trial would have been
resolved if the grave error had not occurred.’ ” (TriCoast Builders, Inc. v.
Fonnegra (2024) 15 Cal.5th 766, 786–787 (TriCoast); F.P. v. Monier (2017) 3
Cal.5th 1099, 1108 (F.P.); Severson, supra, 37 Cal.App.5th at p. 951 [“The
effects of [a structural] error are ‘ “ ‘unmeasurable’ ” and “ ‘def[y] analysis by
“harmless-error” standards.’ ” ’ ”].) Nevertheless, “ ‘[c]ategorization of an
error as structural represents “the exception and not the rule” ’ ” (F.P., at
p. 1108) and “ ‘[a] strong presumption’ exists against finding that an error
falls within the structural category.” (Ibid.)
“ ‘ “In the civil context, structural error typically occurs when the trial
court violates a party’s right to due process by denying the party a fair
12 Although the trial court stated in the sale order that it had
considered “oral argument of the parties,”CT 851) it is undisputed that the
court did not conduct such a hearing.
29
hearing.” ’ ” (Severson, supra, 37 Cal.App.5th at p. 951; TriCoast, supra, 15
Cal.5th at p. 787.)
Lisa and Kathy contend they were denied due process by the trial
court’s failure to conduct a hearing on the referee’s untimely noticed ex parte
application prior to confirming the sale of the property and that such defects
were structural. However, they cite no authority for the proposition that
failure to either timely notice a motion to confirm a sale under section
873.720, subdivision (b) or hold a hearing under section 873.610, subdivision
(b) is structural error.13 (See F.P., supra, 3 Cal.5th at p. 1108.)
Nor do Lisa and Kathy engage in any cogent argument as to how the
sale order deprived them of their property rights without due process when
(1) the trial court considered Lisa’s written objections to the sale and
(2) under the court’s order Lisa will be financially compensated for her
ownership interest in the property through the partition sale. We decide Lisa
and Kathy have not met their burden of demonstrating that the trial court’s
failure to conduct a hearing constituted structural error.
Alternatively, Lisa and Kathy request this court reverse the sale order
because the trial court’s error was prejudicial. The general rule “ ‘ “prohibits
a reviewing court from setting aside a judgment due to trial court error
unless it finds the error prejudicial,” ’ ” or, in other words, that it resulted in a
miscarriage of justice. (TriCoast, supra, 15 Cal.5th at p. 786, quoting F.P.,
supra, 3 Cal.5th at p. 1108.) A reviewing court decides error is prejudicial
only if “it is reasonably probable that a result more favorable to the appealing
13 One of the cases Lisa and Kathy cite, Farmers & Merchants Nat.
Bank of Los Angeles County v. Superior Court (1944) 148 P.2d 445, was
vacated and is therefore not binding. The other, Judith P. v. Superior Court
(2002) 102 Cal.App.4th 535, considers protections in dependency proceedings.
30
party would have been reached in the absence of the error.” (People v.
Watson (1956) 46 Cal.2d 818, 836.)
Lisa and Kathy contend that, had the referee provided timely notice as
required by section 873.720, subdivision (b) and had the trial court conducted
a hearing as required by section 873.610, subdivision (b), they would have
been able to provide a more complete opposition to the referee’s ex parte
application and “submit an overbid” in accordance with sections 873.730 and
873.740. They assert that, because the referee was “ ‘not able to act upon
[Lisa’s] offer without breaching the agreement with the [b]uyer,’ ” the hearing
was the only opportunity for the trial court and the referee to consider an
overbid offer.
At oral argument, Lisa and Kathy asserted that at the hearing they
could have called witnesses who could testify about Lisa’s ability to pay for
the property and compare her offer with that of the buyers. They further
asserted that the court at the hearing would have been required to accept
Lisa’s “statutory overbid.”
Louis contends that Lisa’s opposition had already “[f]ully [p]resented”
(boldface omitted) her points challenging the referee’s application and “a
complete offer” for the property. (Italics omitted.) He asserts that she fails to
meet her burden on appeal because, until oral argument, she did not state
that additional witnesses, appraisals, documents, or financial confirmations
would be introduced at a live hearing, did not request the right to cross-
examine the referee, submit evidence rebutting his statements, or claim bias
or misconduct.
In addition, Louis asserts that the trial court had already found Lisa
unreliable as a buyer in its order granting summary judgment. He contends
that, under the doctrine of implied findings, deficiencies in Lisa’s loan
31
preapproval letter and the court’s alleged finding of Lisa’s unreliability
during the summary judgment phase of the proceedings provide substantial
evidence to support the court’s issuance of the sale order.
We disagree. The trial court made no express or implied finding in its
order granting summary judgment that Lisa was unreliable as a buyer. The
court recounted only Lisa’s efforts at obtaining a loan over the course of a
five-month period, which included obtaining approval for a loan at the end of
that period, albeit after the deadline in the agreement had passed. Even if
we could infer that the court made such an implied finding in its sale order,
the doctrine of implied findings is not applicable here. (See McMillin
Companies, LLC v. American Safety Indemnity Co. (2015) 233 Cal.App.4th
518, 532, fn. 21.)
Nevertheless, we decide Lisa and Kathy have failed to meet their
burden of demonstrating prejudicial error. They did not identify in their
appellate briefing any specific information or witness testimony that they
could have presented at the hearing that Lisa had not already conveyed to
the court in her opposition to the ex parte application. At oral argument,
Lisa and Kathy alluded only generally to being able to offer testimony that
Lisa would have been financially able to purchase the property, and an
expert that would discuss the respective offers. Lisa and Kathy failed to
identify what her “statutory overbid” would have contained that the offer she
submitted to the referee did not. With respect to the lost opportunity to
present a “statutory overbid,” Lisa and Kathy stated only that the two types
of offers are distinguishable and that the trial court would have been
required to accept Lisa’s statutory overbid.
Lisa’s and Kathy’s assertions of prejudice are conclusory. They present
no specifics about the content of the evidence they were precluded from
32
presenting due to the trial court’s failure to conduct a hearing on the referee’s
report that would have rendered it reasonably probable that the trial court
would have issued an order more favorable to them. Instead, they rely on
and reiterate bare recitations of their contentions that Lisa could have “more
fully oppose[d]” the ex parte application, submitted an overbid, and proffered
unspecified witness testimony. Such unsupported contentions are
insufficient. (See In re S.C. (2006) 138 Cal.App.4th 396, 408; Nelson v.
Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862.)
Furthermore, Lisa and Kathy misconstrue the statutory language,
which grants the trial court discretionary authority over whether to confirm
or vacate the sale recommended by the referee if “a responsible bidder makes
a written increased offer” during the hearing. (§ 873.740, subd. (a) [stating
that “the court in its discretion may” vacate the sale and either direct that a
new sale be made or accept and confirm the increased offer]; see also
§ 873.730, subd. (c) [“The court may vacate the sale and direct that a new sale
be made if it determines” that a new sale would yield a higher amount.].)
While we are sympathetic to Lisa’s desire to retain the family home, and
agree that the trial court erred in finding proper notice of the ex parte
application and in failing to conduct the required hearing, we decide Lisa and
Kathy have not met their burden of demonstrating that these errors were
prejudicial. We affirm the court’s order confirming the referee’s ex parte
application for final sale approval.
III. DISPOSITION
The May 6, 2024 attorney fee order is reversed. On remand, the trial
court is directed to vacate its award of attorney fees incurred for the common
benefit and, upon further consideration on remand, determine the amount of
33
attorney fees to be awarded to Louis Tran under Civil Code section 1717 on
the third, fourth, and fifth causes of action of the cross-complaint.
The May 24, 2024 order confirming the referee’s ex parte application
for final sale approval is affirmed.
In the interests of justice, the parties shall bear their own costs in these
appeals. (Cal. Rules of Court, rule 8.278(a)(3).)
34
______________________________________
Danner, J.
WE CONCUR:
____________________________________
Greenwood, P. J.
____________________________________
Lie, J.
H052186, H052300
Tran v. Tran et al.