Kirtland & Packard v. Iron Mountain

Filed 3/12/08 Kirtland & Packard v. Iron Mountain CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from an order of the Superior Court of Los Angeles County. Malcolm Mackey, Judge. Affirmed.

Nossaman, Guthner, Knox & Elliott, Brendan F. Macaulay and Deborah E. Beck for Defendant and Appellant.

Kirtland & Packard and Robert K. Friedl for Plaintiff and Respondent.

____________________

Appellant Iron Mountain, Inc. (Iron Mountain) appeals from a trial court order denying its request for attorney fees. We conclude that the trial court did not err in finding that Iron Mountain is not entitled to attorney fees. It was not a party to the written contract that contains an attorney fee provision. Moreover, the trial court did not abuse its discretion in refusing to apply the doctrine of judicial admission against respondent Kirtland & Packard (K&P).

Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This appeal arises out of a former business relationship between Iron Mountain and K&P. Iron Mountain provides business records and information management services. K&P is a law firm.

On or about June 14, 1962, K&P entered into a written agreement with Bekins Business Records Center for business records storage, handling, and service (the Bekins contract). .At some time in 1988, in lieu of Bekins, Iron Mountain began to provide business records storage, handling and other records management services to K&P.

During the course of their business relationship, Iron Mountain sent K&P at least one Renewal Schedule A that set forth fees different than those included in the Bekins contract.

Eventually, according to Iron Mountain, K&P became delinquent on its account. Alternatively, K&P claimed that it did not owe any monies to Iron Mountain under Renewal Schedule A.

The Pleadings: K&Ps Complaint and IronMountains Cross-Complaint

On August 10, 2005, K&P filed an unverified complaint against Iron Mountain, alleging breach of contract.[1] According to the complaint, K&P entered into the Bekins contract. At some time thereafter, Iron Mountain purchased or otherwise acquired Bekins, or otherwise acquired the business. [K&P] never negotiated or executed a contract directly with Iron Mountain. K&P claimed that Iron Mountain then sought to make a series of unilateral changes to the written agreement between K&P and Bekins by repeatedly sending K&P Renewal Schedule A. Specifically, pursuant to Renewal Schedule A, Iron Mountain sought to implement a storage fee for cubic feet of material, instead of boxes, a retrieval fee for stored material, and a fee for the permanent withdrawal of materials.

Copies of the Bekins contract and Renewal Schedule A are attached to K&Ps complaint.

Although the Bekins contract contains a provision for attorney fees,[2]K&P did not request attorney fees in its complaint.

In response, Iron Mountain filed a verified cross-complaint against K&P, alleging breach of contract, promissory estoppel, quasi-contract, and unjust enrichment. According to the cross-complaint, K&P breached the Bekins contract, which Iron Mountain acquired, by failing to pay records storage and maintenance fees. Iron Mountain also requested attorney fees as provided for in the Bekins contract.

After receiving Iron Mountains cross-complaint, K&Ps counsel contacted Iron Mountains counsel, advising him that K&P wanted to amend its complaint to add a request for attorney fees under the contract, as Iron Mountain had done. Iron Mountains counsel agreed to allow K&P to amend its complaint. Despite this agreement, K&P never amended its pleading to add a request for attorney fees.

Shortly thereafter, K&P answered the cross-complaint. Significantly, K&P alleged that it lacked sufficient information to determine whether Iron Mountain actually acquired the Bekins contract, or not, and thus denied that allegation.

Iron Mountains Application for Writ of Attachment

On January 10, 2006, Iron Mountain filed an application for a writ of attachment. K&P opposed the application. (In its opposition, K&P asserted that it and Iron Mountain were parties to the Bekins contract.

It is unclear from the appellate record whether Iron Mountains application was granted or denied.

Discovery

The parties then engaged in pretrial discovery. In particular, K&P sought to obtain evidence that Iron Mountain was the assignee of the Bekins contract. Thus, it propounded a document request, asking that Iron Mountain produce all documents that refer, relate, constitute or evidence Iron Mountains contention that it is the assignee of the Bekins Contract. Iron Mountain objected to the document request, prompting K&P to pursue a motion to compel. Ultimately, Iron Mountain failed to produce any documents evidencing an assignment of the Bekins contract to it. Instead, it admitted that it could not locate an assignment of the contract.

Meanwhile, Iron Mountain was propounding its own discovery requests. On April 14, 2006, it served a request for admissions upon K&P, asking K&P, inter alia, to admit that Iron Mountain was an assignee of the Bekins contract. K&P denied Iron Mountains request for admission.

In response to Iron Mountains interrogatories, K&P made various assertions regarding the parties obligations under the Bekins contract and averred that Iron Mountain breached the Bekins contract.

IronMountains Motion for Summary Judgment

In February 2006, Iron Mountain moved for summary judgment or, in the alternative, summary adjudication. Although unclear from the appellate record, it appears that Iron Mountain sought summary adjudication of K&Ps third cause of action for breach of written contract and summary adjudication of Iron Mountains first cause of action for breach of written contract.[3]

K&P opposed Iron Mountains motion.

Meanwhile, prior to the hearing on Iron Mountains motion, on June 22, 2006, K&P dismissed its breach of contract cause of action.

Following oral argument, the trial court granted Iron Mountains motion for summary adjudication of the first cause of action for breach of contract, as alleged in Iron Mountains cross-complaint, on an implied indemnity theory. In other words, the trial court did not determine whether Iron Mountain was a party to the Bekins contract; it only decided that K&P and Iron Mountain were parties to an implied contract. It expressly left open the question of whether Iron Mountain was entitled to recover attorney fees. The remaining issues are attorneys fees and amount of damages under the implied contract.

IronMountains Motion for Attorney Fees

On August 7, 2006, Iron Mountain moved for attorney fees. It argued that it was the prevailing party and that, pursuant to the broad attorney fees provision set forth in the Bekins contract, it was entitled to recoup nearly $225,000 in attorney fees. Anticipating K&Ps theory that it was not a party to the Bekins contract, Iron Mountain asserted that the doctrine of judicial admission controlled, and that based upon K&Ps judicial admissions, both it and Iron Mountain were parties to the Bekins contract. In support of its motion, Iron Mountain relied upon (1) K&Ps allegation in its complaint that it and Iron Mountain were parties to the Bekins contract, (2) K&Ps attachment of the Bekins contract to the complaint, (3) K&Ps representations in briefs that Iron Mountain and K&P were parties to the Bekins contract, and (4) K&Ps discovery responses that confirmed that Iron Mountain was a party to the Bekins contract. Alternatively, even if K&P had not admitted that Iron Mountain was a party to the Bekins contract, Iron Mountain presented evidence, namely a declaration from Iron Mountains senior vice-president and general counsel, Garry B. Watzke (Watzke), that it was the successor to Bekins.

K&P opposed Iron Mountains motion. It argued that Iron Mountain was not entitled to attorney fees based upon the Bekins contract because judgment only was entered on Iron Mountains breach of implied contract cause of action. In fact, Iron Mountain could not prevail on an express contract claim because it failed to prove an assignment of the Bekins contract to Iron Mountain. Finally, citing Civil Code section 1717, subdivision (b)(2), K&P asserted that Iron Mountain was not entitled to contractual attorney fees based upon K&Ps voluntary dismissal of the complaint as there was no prevailing party.

In addition, K&P objected to Watzkes declaration on the grounds that it (1) was insufficient to authenticate certain documents, (2) constituted inadmissible hearsay, and (3) lacked foundation.

After entertaining oral argument, the trial court denied Iron Mountains motion for attorney fees.[4] In so ruling, the trial court reiterated its finding that only an implied contract existed between K&P and Iron Mountain, not an express written contract. Iron Mountain did not prevail under an express contract and failed to prove an assignment of the Bekins contract. As for K&Ps alleged judicial admission that an express written agreement existed between these parties, the trial court found that K&P back peddled and backed away from it, ultimately withdrawing it. Finally, the trial court noted that Iron Mountains request for almost $300,000 in attorney fees was unbelievable and mind boggling, given that Iron Mountain only sought approximately $60,000 in damages.

The trial court sustained K&Ps objections to Watzkes declaration.

Judgment and Appeal

On August 25, 2006, judgment was entered in favor of Iron Mountain. The judgment reflects the trial courts order granting summary adjudication in favor of Iron Mountain on its claim for breach of implied contract. Iron Mountain was awarded damages in the amount of $63,314.42, plus attorney fees and costs in the amount of $33,718.

Iron Mountains timely appeal from the trial courts order denying its motion for attorney fees followed.

DISCUSSION

I. Standard of review

The parties dispute the appropriate standard of review. According to Iron Mountain, we must review the trial courts order de novo. K&P, on the other hand, contends that (1) we must determine whether the trial court abused its discretion in finding that the doctrine of judicial admission does not apply, and (2) we review the effect of Civil Code section 1717 de novo.

On appeal this court reviews a determination of the legal basis for an award of attorney fees de novo as a question of law. (Dell Merk, Inc. v. Franzia (2005) 132 Cal.App.4th 443, 450.) We review the trial courts finding that the doctrine of judicial admission does not apply for abuse of discretion. (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 871.)

II. The trial court properly denied IronMountains request for attorney fees

It is undisputed that the trial court granted summary judgment to Iron Mountain on an implied contract theory only. The trial court found no express written contract between the parties. Iron Mountain did not, and does not, challenge that finding.

Civil Code section 1717, subdivision (a), provides, in relevant part: In any action on a contract, where the contract specifically provides that attorneys 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 . . . shall be entitled to reasonable attorneys fees. (Civ. Code, 1717, subd. (a), italics added.)

Here, the trial court did not determine that Iron Mountain prevailed on the Bekins contract. In fact, it expressly found otherwise; it found that Iron Mountain only was the prevailing party on an implied contract. Because Iron Mountain did not prevail on its express written contract claim, it is not entitled to attorney fees as a matter of law.

In its opening brief, Iron Mountain ignores the plain statutory language of Civil Code section 1717, subdivision (a), and argues that it is entitled to attorney fees because it prevailed in this action. However, Civil Code section 1717 does not entitle a prevailing party in an action to recover attorney fees; rather, in order to recoup contractual attorney fees, a party must prevail on the contract. Iron Mountain did not do so here.

The fact that Iron Mountain prevailed on an implied contract theory does not aid its cause on appeal. By virtue of the trial courts order on Iron Mountains motion for summary judgment, there is no binding written agreement between the parties; there is only an implied contract. Thus, Iron Mountain cannot avail itself of terms in the Bekins contract.

In urging us to reverse the trial courts order, Iron Mountain argues that K&P judicially admitted that the Bekins contract controlled their business relationship.

A judicial admission . . . is a conclusive concession of the truth of the matter admitted. (Prilliman v. United Air Lines, Inc. (1997) 53 Cal.App.4th 935, 961.) It is a waiver of proof of a fact by conceding its truth, and it has the effect of removing the matter from the issues. (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1271 (Valerio).) As explained by Witkin, a judicial admission is not treated procedurally as evidence; the [particular pleading or allegation is not formally offered in evidence but may nevertheless be relied upon and treated in argument] as part of the case. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, 413, pp. 510-511.)

In order for the doctrine of judicial admission to apply and preclude a party from offering contradictory evidence on the issue allegedly judicially admitted, the pleading or discovery response purportedly constituting a judicial admission must be unambiguous and unequivocal, not a tacit admission or a fragmentary and equivocal concession. (See, e.g., Valerio, supra, 103 Cal.App.4th at p. 1271; Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 15221523; Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 48; St. Paul Mercury Ins. Co. v. Frontier Pacific Ins. Co. (2003) 111 Cal.App.4th 1234, 1248; Uhrich v. State Farm Fire & Casualty Co. (2003) 109 Cal.App.4th 598, 611613.)

In this case, K&P did not make any unequivocal or unambiguous concession that it and Iron Mountain were parties to the Bekins contract. Admittedly, K&P brought this action against Iron Mountain for breach of contract and attached the Bekins contract to its complaint. However, in its verified response to Iron Mountains cross-complaint, K&P expressly denied that Iron Mountain had acquired the Bekins contract. In fact, K&P explained in its answer to the cross-complaint that it was relying upon Iron Mountains assertion that the Bekins contract applied when it filed the instant lawsuit against Iron Mountain.[5]

During the pretrial discovery process, K&P attempted to obtain documentary evidence from Iron Mountain regarding Iron Mountains status as a purported assignee of the Bekins contract. Instead of producing any responsive documents, Iron Mountain simply objected. K&P was forced to bring a motion to compel, and, when Iron Mountain was finally forced to respond, it failed to produce any evidence of an assignment. Rather, it admitted that it could not locate an assignment of the Bekins contract to it.

While K&P may have asserted early in the litigation that the Bekins contract controlled the parties relationship, such as in its opposition to Iron Mountains demurrer to K&Ps complaint, in correspondence between counsel, and in papers associated with K&Ps opposition to Iron Mountains application for an attachment order, it also refused to admit in its discovery responses that Iron Mountain was an assignee or a party to the Bekins contract. Furthermore, it never amended its complaint to add a request for attorney fees. And, K&P opposed Iron Mountains motion for summary judgment on the grounds that Iron Mountain could not produce any admissible evidence that it was a party to the Bekins contract.

Taken together, the foregoing establishes that K&P did anything but unequivocally admit that the Bekins contract controlled the parties relationship and governed this dispute. Accordingly, the trial court did not abuse its discretion in declining to apply the doctrine of judicial admission against K&P.

In urging us to reverse, Iron Mountain relies heavily upon K&Ps interrogatory responses in support of its argument that the trial court abused its discretion in failing to apply the doctrine of judicial admissions against K&P. We are not convinced. Interrogatory responses do not constitute judicial admissions; they are only evidentiary admissions. (See, e.g., Weiss v. Baba (1963) 218 Cal.App.2d 45, 50.) Regardless, even if they were construed as some sort of admission, that admission conflicts with K&Ps other discovery responses, as set forth above.

In addition to the foregoing, we note that the cases upon which Iron Mountain relies are readily distinguishable. For example, in Valerio, the plaintiff admitted the existence of a written contract in his answer to the cross-complaint and in his responses to the defendants requests for admission. (Valerio, supra, 103 Cal.App.4th at pp. 1271, 1273.) Also, while the plaintiff indicated in a trial management conference statement that there was no contract between the parties, he never dismissed his breach of contract claim. (Id. at p. 1268.) And, when the defendant represented in his trial management conference statement and in his trial brief that the existence of a written contract was not disputed and that the plaintiff could not argue that there was no written contract between the parties, the plaintiff did not amend his pleading or discovery responses. (Id. at p. 1269.)

In contrast, as set forth above, K&P never unequivocally admitted that the Bekins contract controlled the parties relationship. And, when it became apparent that Iron Mountain could not offer conclusive evidence that it was a true assignee of the Bekins contract, unlike the plaintiff in Valerio, K&P dismissed its breach of contract complaint.

Similarly, Castillo v. Barrera (2007) 146 Cal.App.4th 1317 does not aid Iron Mountain. In that case, the plaintiff alleged in his complaint an oral agreement to manage a defendants boxing career. (Id. at p. 1326.) The plaintiff sought to circumvent those allegations in a declaration in response to the defendants motion for summary judgment. (Id. at p. 1324.) The trial court granted the defendants motion for summary judgment, finding that the plaintiff was bound by the admission in his complaint. (Id. at p. 1322.) The Court of Appeal agreed and affirmed the judgment. (Id. at pp. 1326, 1328.)

In contrast, in the instant case, we are not confronted with allegations in a complaint weighed against a competing declaration. Far more exists, including K&Ps discovery requests, its refusal to admit Iron Mountains requests for admission, its opposition to Iron Mountains motion for summary judgment, and its ultimate dismissal of its complaint for breach of contract.

Under these circumstances, the trial court properly exercised its discretion in disregarding any purported judicial admission.

DISPOSITION

The order of the trial court is affirmed. K&P is entitled to costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

_____________________, J.

ASHMANN-GERST

We concur:

_____________________, Acting P. J.

DOI TODD

_____________________, J.

CHAVEZ

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[1] Although other causes of action were alleged, Iron Mountains demurrer to those claims was sustained without leave to amend. As is relevant to the issues raised in this appeal, K&P opposed Iron Mountains demurrer, reiterating its allegations of the complaint that Iron Mountain and K&P were parties to the Bekins contract.

[2] The provision provides: [K&P] shall be liable for costs of suit and attorney fees in the event of any suit or adverse claims by or against [Bekins] involving title or possession of [K&Ps] records, or charges for services rendered.

[3] Notably, in the appellants appendix, Iron Mountain did not provide us with any of the papers related to its motion for summary judgment. And, K&P only gave us certain pages of Iron Mountains motion, memorandum of points and authorities, and separate statement.

[4] The trial court did award attorney fees in the amount of $29,800 to Iron Mountain because [it had] to prove stuff that should have been admitted.

[5] During oral argument, Iron Mountain asserted that K&P admitted in its verified answer to the cross-complaint that the Bekins contract controlled. As explained above, this is not so. K&P did anything but unequivocally admit that it and Iron Mountain were parties to the Bekins contract.