Filed 8/30/18 Cusack v. Togneri CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION ONE

GREGORY CUSACK,

Plaintiff and Appellant,

v.

ROSALINA TOGNERI,

Defendant and Respondent.

A152844

(Sonoma County

Super. Ct. No. SCV 258868)

Appellant Gregory Cusack appeals from a judgment awarding respondent Rosalina Togneri contractual attorney fees under Civil Code section 1717 (hereinafter section 1717). Cusack argues the trial court erred in finding Togneri to be the prevailing party because the litigation was resolved by settlement and thus, there cannot be a prevailing party pursuant to section 1717, subdivision (b)(2); the contract at issue did not expressly give Togneri the right to obtain attorney fees; and Cusack, not Togneri, was the prevailing party because he forced Togneri to provide proof of her claims, which she wrongfully refused to provide prior to the litigation. Cusack further argues that equity should preclude the award of attorney fees to Togneri because it was her wrongful conduct that led to this unnecessary litigation. We reject these arguments and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This litigation arose from a seller-financed sale of a house located at 98 Barham Avenue, Santa Rosa (the Property) in 1996. Cusack’s aunt, Caroline Snelson, was the seller, and Togneri and her husband, John, were the buyers. Snelson financed $47,000 of the purchase price, secured by a deed of trust against the Property (the 1996 deed of trust). The Togneris signed a “Note Secured by Deed of Trust” (the 1996 note), which required them to make payments of $583 on the first of every month and a balloon payment of the remaining balance after four years, on October l, 2000. Cusack had no ownership interest in the Property but was named as a co-beneficiary on the 1996 note and deed of trust.

In or about 2000, Snelson told the Togneris that she preferred to continue receiving monthly payments rather than the scheduled balloon payment. Thus, Togneri continued sending monthly checks of $583 to Snelson until the loan was fully paid off in 2006. However, no reconveyance of the 1996 deed of trust was ever recorded.

Both Snelson and John Togneri passed away before the litigation commenced.

In 2014, Togneri obtained a secured loan on the Property. Because the 1996 deed of trust had not been reconveyed, a “lost deed of trust bond” was secured from RLI Insurance Company.

In May 2016, Cusack filed a verified complaint against Togneri and others seeking judicial foreclosure on the Property, damages for the missing balloon payment plus interest in the sum of $117,000, and costs of suit, including attorney fees. In April 2017, Togneri filed a cross-complaint against Cusack alleging the 1996 note had been fully repaid under the terms orally agreed upon by Snelson and the Togneris. Togneri sought a judicial declaration that the 1996 note had been fully repaid and that Cusack had no right to receive further payments under the note or to exercise any right to foreclose under the 1996 deed of trust.

During the litigation, Redwood Credit Union was able to recover many of the Togneris’ checking account statements from the 2000 to 2006 period. These checking account statements confirmed Togneri’s contention that she mailed a $583 check to Snelson at the beginning of every month until October 2006.

On May 9, 2017, Cusack and the Togneris executed a “Settlement Agreement and Mutual General Release” (the settlement agreement) acknowledging the 1996 note had been completely repaid. Under the settlement agreement, Cusack agreed to execute and deliver a full reconveyance of the 1996 note and deed of trust. It was further agreed that the parties’ counsel would execute a request for dismissal of the entire action with prejudice, but the executed document would be “held in trust by counsel for Togneri and filed with the Court promptly following determination by the Court of any motions to tax costs or for attorney’s fees as provided in paragraph 2.4.” Paragraph 2.4 stated, in pertinent part: “Within 15 days of the execution of this Settlement Agreement and Mutual General Release, any party who feels they are entitled to do so may file . . . a motion for attorney’s fees.”

Togneri and Cusack each filed motions for attorney fees. In August 2017, the court issued an order granting Togneri’s motion and denying Cusack’s. The trial court found that the 1996 note contained an attorney fee provision, that the actions were instituted on the note, and that Togneri was the prevailing party because “[s]he obtained an agreement to dismiss this action with prejudice and execution of a full reconveyance of the note, which was her main litigation objective. Therefore, Togneri is the party who recovered greater relief in this action under Civil Code section 1717(b)(1).” The trial court further concluded that Togneri’s request for $16,390.91 in fees was reasonable. In denying Cusack’s motion, the trial court found that he was not the prevailing party, and that he failed to submit any evidentiary support for his motion.

Judgment was entered on September 5, 2017, awarding Togneri costs in the amount of $3,507.50 and attorney fees in the amount of $16,390.91. On November 1, 2017, Cusack filed a timely notice of appeal from the September 5, 2017 judgment.

On November 20, 2017, Togneri filed a “Motion re Undertaking to stay enforcement on appeal.” A hearing on the motion was held on January 10, 2018. According to the parties’ briefs, the trial court granted the motion and imposed an undertaking in the sum of $19,898.41.

DISCUSSION

I. The Court Has No Jurisdiction to Review the Undertaking Ruling
II.
Cusack purports to appeal from not only the September 5, 2017 judgment, but from the postjudgment order requiring Cusack to post an undertaking. However, this ruling came down more than two months after Cusack filed his November 1, 2017 notice of appeal. Cusack did not file a separate notice of appeal of the order requiring an undertaking, which was separately appealable as an order made after an appealable judgment. (Code Civ. Proc., § 904.1, subd. (a)(2).)

Although notices of appeal must be liberally construed (Cal. Rules of Court, rule 8.100(a)(2)), a notice of appeal that clearly designates the judgment appealed from but fails to mention a postjudgment order cannot be liberally construed as an appeal from the postjudgment order. (See Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46–47.) This was not a situation in which the notice of appeal “subsumed” the subsequent order, since the September 5, 2017 judgment did not contemplate a future determination regarding an undertaking. (See Grant v. List & Lathrop (1992) 2 Cal.App.4th 993, 995 [notice of appeal from judgment awarding attorney fees but leaving amounts for later determination subsumed later order fixing amount of fees].)

Because Cusack did not file a separate notice of appeal from the postjudgment order on Togneri’s motion for an undertaking, we lack jurisdiction to review that order.

III. Standard of Review
IV.
“On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law. [Citations.] [¶] Stated another way, to determine whether an award of attorney fees is warranted under a contractual attorney fees provision, the reviewing court will examine the applicable statutes and provisions of the contract. Where extrinsic evidence has not been offered to interpret the [contract], and the facts are not in dispute, such review is conducted de novo. [Citation.] Thus, it is a discretionary trial court decision on the propriety or amount of statutory attorney fees to be awarded, but a determination of the legal basis for an attorney fee award is a question of law to be reviewed de novo.” (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.)

V. Mutuality of Remedy Under Section 1717
VI.
“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.” (§ 1717, subd. (a).)

The 1996 note contained an attorney fee provision stating, “If action be instituted on the note, I promise to pay such sum as the Court may fix as attorney fees.” There was no dispute that this litigation involved an “action on a contract” within the meaning of section 1717. (See Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 245 [action is on contract if it arose out of contract and contract is central to dispute].)

Cusack argues the 1996 note only allowed the beneficiaries to the deed of trust to obtain attorney fees and costs, and thus, Togneri had no express contractual right to attorney fees. Even so, section 1717 “was enacted to transform a unilateral contract right to attorney’s fees into a reciprocal provision. As a statutory modification of unilateral attorneys’ fees provisions, section 1717 was designed to accomplish mutuality of remedy.” (Smith v. Krueger (1983) 150 Cal.App.3d 752, 756.) Thus, by law, Togneri had a reciprocal right to contractual attorney fees under the 1996 note.

Cusack further argues that he is not liable for attorney fees because he was not a signatory to the original agreement between Snelson and the Togneris. Togneri argues that under Manier v. Anaheim Business Center Co. (1984) 161 Cal.App.3d 503 (Manier), when a nonsignatory relies on a contractual attorney fee provision to seek attorney fees, the prevailing defendant may be awarded fees under the same provision. Cusack responds by pointing out that Manier has been criticized by other courts, including another division of this court in Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295 (Leach). That criticism, however, was based on Manier’s theory of equitable estoppel against nonsignatories who have claimed attorney fees but would not have been entitled to them had they prevailed. (Leach, at pp. 1305–1307; see Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 897–901.) Here, there is no need to rely on a theory of equitable estoppel because Cusack, as Snelson’s heir and co beneficiary of the note, would have been entitled to attorney fees under the note had he prevailed against Togneri. (See Exarhos v. Exarhos (2008) 159 Cal.App.4th 898, 905–907 [nonsignatory plaintiff who was successor-in-interest of deceased’s savings account liable for attorney fees under bank deposit agreement].) Accordingly, Cusack was liable for attorney fees under the 1996 note.

VII. Prevailing Party
VIII.
Cusack argues the trial court erred in finding that Togneri was the prevailing party. First, Cusack contends that under section 1717, subdivision (b)(2), there was no prevailing party since the case was resolved by settlement and voluntary dismissal. Second, Cusack argues that he, not Togneri, was the prevailing party because he successfully forced Togneri to submit proof of payments that she refused to provide prior to the litigation. We find both arguments to be without merit.

a. Section 1717, subdivision (b)(2)
b.
Section 1717, subdivision (b)(2), provides that “[w]here an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.” (§ 1717, subd. (b)(2).) However, “ ‘where there is no dismissal, a settling party may move for contractually based attorney fees under section 1717 unless the right to them was expressly or impliedly waived in the settlement agreement.’ ” (Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 784–785 (Jackson).) A trial court is not bound by section 1717, subdivision (b)(2), before a voluntary dismissal has been entered. (Jackson, at p. 786, fn. 9.) Thus, settling parties may agree that before voluntary dismissal, the court will determine the question of attorney fees. (Id. at pp. 785–786.)

Cusack argues that Jackson does not apply because the settlement agreement at issue did not expressly waive section 1717, subdivision (b)(2) or state that the trial court would determine the prevailing party. Jackson did not require such an express waiver. The settlement agreement that the Jackson court found sufficient to avoid the application of section 1717, subdivision (b)(2), provided: “ ‘The Parties have agreed to reserve the issue of any award of costs and attorneys fees to Plaintiffs, as requested by Plaintiffs in their respective Complaints, for consideration by this Court upon Plaintiffs filing the necessary Motion and/or Memorandum of Costs with the Court.’ ” (Jackson, supra, 93 Cal.App.4th at p. 778.) “[T]he parties also agreed on the record that the action would not be dismissed until the trial court had resolved the attorney fee issue.” (Ibid.)

Similarly, in the case at bar, the settlement agreement provided that the parties had 15 days from execution to file any motion for attorney fees, and that the request for dismissal would not be filed until after “determination by the Court of any motions . . . for attorney’s fees . . . .” By expressly deferring dismissal of the case until after the motions were decided, the settlement agreement avoided the effect of section 1717, subdivision (b)(2), and reserved for the trial court the determination of which party was entitled to attorney fees under the law.

c. Togneri was the prevailing party.
d.
Cusack alternatively argues that he, rather than Togneri, was the prevailing party because he successfully forced Togneri to submit proof of payments that she refused to provide prior to the litigation.

“[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (§ 1717, subd. (b)(1).) “[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’ ” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 (Hsu).)

There is no question that Togneri recovered the greater relief here. Cusack, in his complaint, sought judicial foreclosure of the Property and damages of $117,000 for the allegedly unpaid balloon payment plus interest. In her cross-complaint, Togneri sought a declaration that Cusack had no right to receive further payments under the 1996 note or to exercise any right to foreclose under the 1996 deed of trust. In the end, Cusack recovered nothing, his claims were dismissed with prejudice, and he executed a full reconveyance of the 1996 note and deed of trust, giving Togneri clear title to the property. Simply put, Cusack achieved none of his litigation objectives and Togneri achieved all of hers. We reject Cusack’s post hoc attempt on appeal to reframe his litigation objective as simply seeking proof of payments from Togneri.

Cusack argues that equity precluded an award of attorney fees to Togneri because she wrongfully refused to respond to requests from Cusack’s counsel for proof of payment, leading to this unnecessary litigation. However, Cusack’s claims of Togneri’s wrongful conduct are completely unsupported by any citation to evidence in the record. (See Cal. Rules of Court, rule 8.204(a)(1)(C) [briefs must cite supporting record by volume and page number].) Indeed, as the trial court noted, “Cusack . . . failed to submit any evidentiary support for his motion.” Furthermore, Togneri submitted evidence that she told Cusack’s counsel about the checking account statements from Redwood Credit Union and sent copies of these statements on three separate occasions to Cusack’s counsel at the address on his letterhead. Additionally, Togneri’s counsel e-mailed the checking account statements to Cusack’s attorneys in December 2016, but the litigation continued for another six months. On this record, the trial court did not abuse its discretion in rejecting Cusack’s equity argument.

Finally, Cusack argues that even if Togneri was the prevailing party based upon her request for relief in the cross-complaint, she was only entitled to the attorney fees she incurred from the filing date of her cross-complaint (April 10, 2017) to the date of the settlement agreement (May 8, 2017). This argument is meritless. Togneri was the prevailing party in defense of Cusack’s contract action, as he obtained none of his litigation objectives in filing suit against her. (Hsu, supra, 9 Cal.4th at p. 876.) There was no reason to limit Togneri’s award to the fees incurred in prosecuting her cross action.

DISPOSITION

The judgment is affirmed. Togneri shall recover her costs on appeal.

_________________________

Dondero, J.

We concur:

_________________________

Margulies, Acting P. J.

_________________________

Banke, J.

A152844 Cusack v. Togneri