First AFG Financial Corp. v. Security
Union Title Ins. Co.

















Filed 1/28/13 First AFG Financial Corp. v. Security Union
Title Ins. Co. CA4/3





















NOT TO BE
PUBLISHED IN OFFICIAL REPORTS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 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opinion has not been certified for publication or ordered published for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




>

FIRST AFG FINANCIAL CORPORATION, Plaintiff and Respondent, v. SECURITY UNION TITLE INSURANCE COMPANY, Defendant and Appellant.

G046179 (Super. Ct. No. 07CC05856) O P I N I O N

Appeal from an order of the Superior Court of Orange County, Sheila Fell, Judge. Reversed with directions.

Rutan & Tucker, Milford W. Dahl, Jr., and
Gerard M. Mooney, Jr., for Defendant and Appellant.

O’Neil & Matusek and Henry John Matusek
II for Plaintiff and Respondent.

In a nonpublished opinion, >First AFG Financial Corporation v. Security
Union Title Insurance Company (Dec. 8, 2010, G042855) (First AFG I), we reversed the trial court’s entry of judgment in
favor of First AFG Financial Corporation (First AFG), arising out of First
AFG’s breach of contract and negligence causes of action against Security Union
Title Insurance Company (Security Union), in a dispute over the recording of
documents. We concluded insufficient
evidence supported the trial court’s finding (1) there was a contract between
First AFG and Security Union, and (2) Security Union owed a duty of care to
First AFG.

On remand, the trial court set a trial date
but then entered a revised judgment in favor of Security Union. The trial court later granted First AFG’s
motion to vacate the revised judgment.
The court then granted First AFG’s ex parte application to file a first
amended complaint. Security Union appeals
from the trial court’s order granting First AFG’s motion to vacate the revised
judgment.

In its opening brief, Security Union argues
the trial court erred in granting the motion to vacate the revised judgment
because: (1) the court had the authority
to enter the revised judgment; (2) retrial after an appellate court reversal
based on insufficient evidence is prohibited; and (3) First AFG’s two new
causes of action are barred by the “law of the case” doctrine.

In its respondent’s brief, First AFG
contends: (1) the November 2011 order
Security Union appeals from is a nonappealable order; (2) any appeal from the

June 2011 order is untimely;
(3) the June 2011 judgment is null and void because it violated First AFG’s due
process rights; and (4) the court’s June 2011 order setting a new trial was
proper.

In its reply brief, Security Union
asserts: (1) the November 2011 order was
an appealable order; (2) First AFG’s due process rights were not violated by
entry of the revised judgment; and (3) the court’s granting of First AFG’s
motion to vacate was erroneous.

We conclude First AFG’s due process rights
were violated when the trial court entered the revised judgment but First AFG
was not prejudiced. As we also explain
below, we agree with Security Union that the trial court erred in granting
First AFG’s motion to vacate the revised judgment. We reverse the order and remand the matter to
the trial court and direct the trial court to enter judgment in favor of
Security Union.

FACTS

>Underlying Factual Dispute

> The underlying facts are
fully set forth in our prior nonpublished opinion First AFG I, supra, G042855.
We need not repeat them here.

>Our First Opinion

In December 2010, we filed our opinion
reversing the trial court’s judgment in favor of First AFG. As to First AFG’s breach of contract cause of
action, we stated: “Here, the parties to
the escrow were the borrower, [Lorece] Wright, and the lender, Long Beach
Mortgage, and the escrow holder was Priority Escrow. First AFG makes much of the fact it hired
Security Union, but Security Union was not a party to the escrow—it provided
sub-escrow and title services. The
evidence at trial established sub-escrow services included making payoffs and
recording the documents. Additionally,
there was testimony there was no written contract between the escrow company,
Priority Escrow, and the title company, Security Union. [¶]
There was testimony from [Jeff] Allen, the

Security Union title officer
responsible for the refinance, that Security Union’s file included both the
October 23, 2003, and November 14, 2003, ‘Payoff Demand’ letters. But these demand letters were addressed to
Priority Escrow, the escrow holder, and agent to the escrow parties, Wright and
Long Beach Mortgage. First AFG’s ‘Payoff
Demand’ letters instructed Priority Escrow how to prepare the
reconveyances. The ‘Payoff Demand’
letters that were from First AFG and addressed to Priority Escrow did not
establish a contract between First AFG and Security Union. Additionally, they did not

constitute escrow
instructions to Security Union. Although
there was evidence Allen should have caught the discrepancies, Allen testified
he performed the closing services based upon the reconveyances that were submitted
to him, and not the ‘Payoff Demand’ letters.
[¶] . . . [¶] The present
situation is similar because Security Union was not a party to the escrow, and
there was evidence Security Union was responsible for recording the documents
Priority Escrow submitted to Security Union to perform its sub-escrow
function. Security Union carried out its
sub-escrow duties in accordance with the reconveyance documents provided to it
by the escrow company, Priority Escrow. Therefore,
we conclude the trial court erroneously concluded Security Union breached a
written agreement with First AFG.” (>First AFG I, supra, G042855, at slip
opinion pp. 10-12.)

With
regard to First AFG’s negligence cause
of action, we relied on Summit Financial
Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705,
707-709. We stated: “The facts here are similar to >Summit as Security Union was not a party
to the escrow. Therefore, Security Union
did not owe a duty of care to First AFG, and Security Union is not liable to
First AFG under a negligence theory.” (>First AFG I, supra, G042855, at slip
opinion p. 14.)

On December 30, 2010, we denied First AFG’s
petition for rehearing. The California
Supreme Court denied First AFG’s petition for review on March 16, 2011.

>PostAppeal Proceedings

In April 2011, the trial court set a
postappeal status conference for May 4, 2011.
At the May 4, 2011, status conference, Security Union indicated it would
submit a new judgment for the trial court’s review and signature. Counsel for First AFG was not present. The court continued the status conference.

In preparation for the status conference,
Security Union filed a status conference report. The report was supported by multiple
exhibits, including a revised

judgment. Security Union acknowledged the general rule
retrial is appropriate after a reversal without directions but argued we
expressed our contrary intent when we held there was no contract between First
AFG and Security Union, and Security Union did not owe a duty of care to First
AFG.

First AFG filed an “Objectio[n] to Proposed Judgment
and Status Conference Report.” First AFG
contended the general rule of retrial upon reversal without directions is
appropriate. First AFG contended the
“‘law of the case’” doctrine is limited to our holding no contract existed
between First AFG and Security Union, and Security Union did not owe a duty of
care to First AFG. First AFG contended
it would produce “new evidence,” and “new law,” at retrial establishing it was
a third party beneficiary of the contract between Wright, Long Beach Mortgage,
and Security Union. The new evidence
First AFG cited to was trial exhibit No. 1, and Allen’s testimony. First AFG also contended “[t]he undisputed facts
are” Security Union breached its fiduciary duty to First AFG.

Security Union filed a reply, arguing First AFG
misstated the evidence, and the undisputed evidence contradicted First AFG’s
new legal theories.

Two days later, on June 9, 2011, the trial
court conducted a status conference. At
the conference, First AFG indicated this court reversed the judgment “without
instructions . . . so the rule should be retrial.” Security Union’s cocounsel argued retrial was
inappropriate in this case because the court should apply an exception to the
general rule allowing retrial. First AFG
agreed with the trial court that it should set a trial date. Security Union argued a retrial was not
necessary but stated “we could go ahead and set a trial date . . . .” Security Union inquired what was the best
method “to go about deciding that before we go ahead.” The court replied it could set a trial date
and Security Union could file a motion on this issue. When Security Union mused what type of motion
it would bring, the trial court stated, “You know what? You file it and I’ll read

it.” The court set a trial date for October 11,
2011. The trial court issued a minute
order reflecting the trial date of October 11, 2011, that First AFG waived jury
trial, and trial was estimated to be two days.

Two weeks later, on June 23, 2011, the trial
court entered a “Revised Judgment After Appeal.” The court ruled: “1. .
. . First AFG, . . . has [j]udgment against defaulted . . . Priority Escrow, .
. . in the sum of $1,030, 000.00 plus interest at the lawful rate of 10
[percent] per annum from November 1, 2005.
[¶] 2. . . . First AFG, . . .
takes nothing on its Complaint from . . . Security Union . . . . [¶] 3. [First AFG] is the prevailing party as to . .
. Priority Escrow . . . . [¶] 4. . . . Security Union . . . is the prevailing
party as to . . . First AFG.” Security
Union gave “Notice of Entry of Judgment” almost three months later, on
September 15, 2011.

On October 18, 2011, pursuant to Code of
Civil Procedure section 473, subdivision (b), First AFG filed a motion to
vacate the June 23, 2011, judgment based on surprise, and requested permission
to file an amended complaint alleging two new causes of action: breach of fiduciary duty and breach of
contract as a third party beneficiary.
First AFG argued the revised judgment was void ab initio because the trial court entered it without notice or an
opportunity to be heard. First AFG also
argued the general rule is that retrial is appropriate where the appellate
court reverses without directions.
Referencing the attached first amended complaint, First AFG asserted two
new causes of action: (1) breach of
fiduciary duty; and (2) breach of contract for the benefit of a third party
beneficiary. First AFG asserted the
undisputed facts were Security Union “was the escrow” and breached its escrow
duties. First AFG also asserted trial
exhibit No. 1 and Allen’s testimony established First AFG was a third party
beneficiary of the written escrow instruction from Long Beach Mortgage to
Security Union.

Security Union opposed First AFG’s motion to
vacate the judgment. Security Union
contended the “‘law of the case’ doctrine” barred First AFG’s new causes

of action because it
presented no new or different facts.
Security Union noted no new evidence accompanied First AFG’s first
amended complaint. Security Union also
asserted First AFG had sufficient notice and an opportunity to be heard. It cited to First AFG’s status conference
brief and the June 9 status conference where First AFG argued retrial was the
general rule. First AFG replied.

The hearing on First AFG’s motion to vacate
the judgment was held in November 2011.
The trial court heard counsels’ arguments and took the matter under
submission. Security Union’s cocounsel
argued the tentative opinion did not address any of the exceptions to the
general rule that retrial is appropriate after a reversal without
directions. Security Union argued the
“‘law of the case’” doctrine barred retrial.
First AFG responded: “[T]he law
of the case applies to the facts, it doesn’t apply to the legal theories. We are dealing with different legal theories
here. [¶] And also law of the case only applies to the
facts if the facts are the same, but if you’ve got new theories, the new facts
and any new additional facts cause a reweighing of all of the old facts in the
new trial.” The trial court took the
matter under submission.

On November 16, 2011, the trial court issued
a minute order granting

First AFG’s motion. The court stated: “The [c]ourt having reviewed the pleadings
filed in this matter, having heard oral argument, having reviewed applicable
law, and having taken [First AFG’s] Motion to Set Aside/Vacate the Judgment
under submission on November 9, 2011, now rules as follows: The [c]ourt finds no reason to change its
tentative ruling. The reversal without
direction vacates the appealed [j]udgment or [o]rder. This includes the right to amend the
pleadings to raise new issues. The
proposed new causes of action . . . are sufficiently different from the
original theories to allow the new [c]omplaint to go forward on the new
theories. [First AFG’s] motion is
granted.”





First AFG filed an ex parte application to
file a first amended complaint. On
December 5, 2011, the trial court granted First AFG’s ex parte request and
deemed the first amended complaint filed that date. First AFG’s first amended complaint alleged
the following two causes of action against Priority Escrow and Security Union:

(1) breach of fiduciary duty
by escrow holder; and (2) breach of contract [third party beneficiary].

On December 7, 2011, Security Union filed a
notice of appeal.

Security Union “hereby
appeals from the final order (the ‘Order’) entered on

November 16, 2011[,] setting
aside/vacating the judgment (the ‘Judgment’) of the [c]ourt entered on June 23,
2011, and any orders made appealable thereby.”

DISCUSSION

>I. Statement of Appealability

> First AFG argues Security
Union appeals from a nonappealable order, the trial court’s November 16, 2011,
minute order granting its motion to vacate the revised judgment. We disagree.

> “It is well established that
a direct appeal may be taken from an order granting a statutory motion to set
aside a . . . judgment [citation] so long as the underlying judgment sought to
be vacated is an appealable final judgment [citation] and is not conditioned on
a second order unconditionally vacating the judgment. [Citation.]”
(Elsea v. Saberi (1992) 4
Cal.App.4th 625, 628-629; Garcia v.
Hejmadi (1997)

58 Cal.App.4th 674, 680; >County of Ventura v. Tillet (1982) 133
Cal.App.3d 105,

110-111, disapproved on
another ground in County of Los Angeles
v. Soto (1984)

35 Cal.3d 483, 492, fn. 4;> 9 Witkin, Cal. Procedure (5th ed.
2008) Appeal, § 194,

pp. 271-272.)>

The order vacating the revised judgment as to
First AFG satisfies the requisite criteria.
Clearly, the reason First AFG sought to vacate the revised judgment

was to prevent enforcement
of the judgment against it. At that
point in the proceeding, there was nothing left to be decided. The revised judgment was an appealable final judgment,
and thus, the order vacating the judgment is appealable.

First AFG relies on Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 652 (>Lakin), and Carr v. Kamins (2007) 151 Cal.App.4th 929, 933 (>Carr), to argue the revised judgment was
void ab initio and Security Union
could not appeal from a void judgment. >Lakin, supra, 6 Cal.4th at page 652 is
inapposite as it involved a postjudgment motion for attorney fees and not a
motion to vacate a judgment. First AFG’s
reliance on the below italicized language from Carr does not help it either.


The Carr
court explained: “If a judgment is void,
an order giving effect to the void judgment is subject to appeal even if the
underlying judgment was also appealable.
(County of Ventura v. Tillett,
supra, 133 Cal.App.3d 105, 110 . . . .)
‘A judgment is void on its face if the court which rendered the judgment
lacked personal or subject matter jurisdiction or exceeded its jurisdiction in
granting relief which the court had no power to grant. [Citations.]’
[Citation.] An order after judgment that gives effect to a judgment that is void on
its face is itself void and subject to appeal even if the judgment itself
is not appealed. [Citations.] The order denying appellant’s motion to
vacate the judgment is therefore appealable.”
(Carr, supra, 151 Cal.App.4th
at

pp. 933-934, italics
added.) Carr is inapposite as the trial court granted First AFG’s motion to
vacate the revised judgment and there is no order giving effect to a void
judgment. Therefore, Security Union
properly appealed from the trial court’s order granting First AFG’s motion to
vacate the revised judgment.

>II. Entry of the Revised
Judgment

> First AFG contends the
revised judgment was void because the trial court entered the revised judgment
without notice and an opportunity to be heard.
We agree the court should have given First AFG an opportunity to be
heard before it reversed itself, but we discern First AFG was not prejudiced by
this error.

“Unless the requirements of [Code of Civil
Procedure] section 437c, subdivision (f)(2), or 1008 are satisfied, any action
to reconsider a prior interim order must formally begin with the court >on its own motion. To be fair to the parties, if the court is
seriously concerned that one of its prior interim rulings might have been
erroneous, and thus that it might want to reconsider that ruling on its own
motion—something we think will happen rather rarely—it should inform the
parties of this concern, solicit briefing, and hold a hearing. [Citations.]
Then, and only then, would a party be expected to respond to another
party’s suggestion that the court should reconsider a previous ruling. This procedure provides a reasonable balance
between the conflicting goals of limiting repetitive litigation and permitting
a court to correct its own erroneous interim orders.” (Le
Francois v. Goel (2005) 35 Cal.4th 1094, 1108-1109.)

“It is a fundamental principle of appellate
review that we presume that a judgment or order is correct. [Citation.]
Moreover, it is the appellant’s burden of providing a record that
establishes error, and where the record is silent, we must indulge all
intendments and presumptions to support the challenged ruling. [Citations.]
From these principles, courts have developed the doctrine of implied
findings by which the appellate court is required to infer that the trial court
made all factual findings necessary to support the order or judgment. [Citations.]”
(Laabs v. City of Victorville
(2008)

163 Cal.App.4th 1242,
1271-1272.) The doctrine of implied
findings applies to minute orders. (>Ibid.)
We review the trial court’s ruling de novo. (Cruz
v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 496.)

Here, the trial court issued a minute order
on June 9, 2009, after the status conference.
The minute order set a trial date of October 11, 2011, and stated First
AFG waived jury trial and trial was estimated to be two days. Although the trial court did not expressly
discuss the general rule favoring retrial after reversal without directions in
its

minute order, the court’s
ruling conformed to the general rule, and we imply from the

minute order the court
concluded the general rule applied and not the exceptions we discuss
below. At the status conference, the
court informed Security Union’s cocounsel that it would entertain any motion
asserting retrial was inappropriate and the court should enter judgment in
Security Union’s favor.

About two weeks later, however, without any
notice to the parties or further written submission from the parties, the trial
court entered a revised judgment in favor of Security Union. The court’s entry of judgment conflicts with
its prior interim order that retrial was appropriate, and it was incumbent upon
Security Union to demonstrate one of the exceptions to the general rule
favoring retrial was applicable. But
Security Union did not file a subsequent motion. We can only assume the trial court
subsequently reviewed the status conference reports and concluded retrial was
unnecessary.

First AFG’s contention the trial court
entered the revised judgment without notice or further opportunity to be heard
is well taken. But we are not sure what
was left to be said on the issue. The
general rule is that “[t]he effect of an unqualified reversal (‘the judgment is
reversed’) is to vacate the judgment, and to leave the case ‘at large’ for
further proceedings as if it had never been tried, and as if no judgment had
ever been rendered. [Citations.]” (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal,
§ 869, p. 928.) “An unqualified reversal
ordinarily has the effect of remanding the cause for a new trial on all of the
issues presented by the pleadings. It is
unnecessary to add specific directions for this purpose in the judgment [on
appeal].” (9 Witkin, >supra, § 870, p. 929; >McCoy v. Hearst Corp. (1991) 227
Cal.App.3d 1657, 1662; Bank of America v.
Superior Court (1990) 220 Cal.App.3d 613, 620-621; Stromer v. Browning (1968)

268 Cal.App.2d 513,
518-519.)

However, “‘When the plaintiff has had full
and fair opportunity to present the case, and the evidence is insufficient as a
matter of law to support plaintiff’s cause of





action, a judgment for
defendant is required and no new trial is ordinarily allowed, save

for newly discovered evidence.
. . . Certainly, where the plaintiff’s evidence is insufficient as a matter of
law to support a judgment for plaintiff, a reversal with directions to enter
judgment for the defendant is proper. . . .
[¶] . . . [A] reversal of a judgment for the plaintiff based on
insufficiency of the evidence should place the parties, at most, in the
position they were in after all the evidence was in and both sides had
rested.’ [Citations.] In another context, our Supreme Court
explained in Silberg v. Anderson
(1990) 50 Cal.3d 205, 214, that ‘[f]or our justice system to function, it is
necessary that litigants assume responsibility for the complete litigation of
their cause during the proceedings.’” (>Kelly v. Haag (2006) 145 Cal.App.4th
910, 919 (Kelly); >Frank v. County of Los Angeles (2007)
149 Cal.App.4th 805, 833-834.)

Here, First AFG had a full and fair
opportunity to present its case in the first trial. As we explain below more fully, First AFG
offers no newly discovered evidence supporting a new trial either below or on
appeal. To the extent First AFG claims
that had the trial court given the parties notice it intended to enter the
revised judgment First AFG could have submitted new evidence, that claim is
belied by the record. As we discuss
anon, First AFG provided no new
evidence. Although we agree the trial
court should have given First AFG notice of its intent to change its ruling,
the record does not indicate First AFG could have met its burden to demonstrate
a new trial was justified.

>III. Motion to Vacate

> Security Union argues the
trial court abused its discretion in granting

First AFG’s motion to vacate
the revised judgment. We agree.

In our prior opinion we concluded
insufficient evidence supported the trial court’s finding (1) there was a contract
between First AFG and Security Union, and

(2) Security Union owed a
duty of care to First AFG. In its first
amended complaint,



First AFG alleges two “new”
causes of action, breach of fiduciary duty and breach of

contract as a third party
beneficiary. But First AFG offers no
newly discovered evidence to support these causes of action. Indeed, First AFG recognizes this fact
throughout its respondent’s brief. First
AFG states the following: “These facts
and theories though presented in the underlying trial and argued in the
subsequent appeal[]” were neither decided by the trial court in the underlying
litigation of the first appeal nor decided by this court in >First AFG I, supra, G042855; “[First
AFG] seek[s] remedies based upon different legal theories supported by the same
facts[]”; and First AFG claims its new legal theories and factual allegations
“have evidentiary support already appearing in the record.” We review an order granting a motion to
vacate a judgment for an abuse of discretion.
(Rappleyea v. Campbell (1994)
8 Cal.4th 975, 981.)

In its status conference report, motion to
vacate, and respondent’s brief, First AFG cites to evidence that was admitted
at the first trial. First AFG cites to
the “undisputed” facts, Woodbury’s testimony, Allen’s testimony, and trial
exhibit No. 1. The trial court heard
Woodbury’s and Allen’s testimony in the first trial. (First
AFG I, supra, G042855, at Slip Opinion pp. 5-6.) And trial exhibit No. 1 was admitted into
evidence.href="#_ftn1" name="_ftnref1"
title="">[1]

First AFG cites to one new piece of evidence—First
AFG was the loan broker and was paid more than $10,000 out of escrow. But First AFG certainly knew this and knew of
its role when it litigated the first case.
This is not new evidence, but instead, evidence known to First AFG that
it should have offered at the first trial.
(Kelly, supra, 145 Cal.App.4th
at p. 919 [parties must “‘assume responsibility for the complete litigation of
their cause during the proceedings’”].)




> We recognize there is legal
authority for the proposition a party may amend its pleadings on retrial, but
the party seeking retrial must present newly discovered evidence supporting the
new causes of action. (>Kelly, supra, 145 Cal.App.4th at p.
919.) Here, First AFG has not done
that.

DISPOSITION

The order is reversed with directions to
enter judgment in favor of Security Union.
Appellant shall recover its costs on appeal.





O’LEARY,
P. J.



WE CONCUR:







ARONSON, J.







IKOLA, J.