Case Number: BC589523 Hearing Date: March 16, 2018 Dept: 47

Cacique, Inc. v. Proctor Industrial Investors, LLC

MOTION FOR AN ORDER AWARDING ACCRUED AND PRE-JUDGMENT INTEREST AND ATTORNEYS’ FEES

MOVING PARTY: Defendant/Cross-Complainant Proctor Industrial Investors, LLC

RESPONDING PARTY(S): Plaintiff/Cross-Defendant Cacique, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff buyer alleges that Defendant seller has breached an agreement for sale of real property by refusing to complete improvements prior to the close of escrow.

Defendant filed a cross-complaint alleging that Plaintiff did not deposit an additional $1,500,000 into escrow as required by the terms of the Agreement once the Contingency Date had passed.

On December 27, 2017, judgment was entered in favor of Defendant/Cross-Complainant. Defendant/Cross-Complainant Proctor Industrial Investors, LLC moves for an order awarding accrued and pre-judgment interest and attorneys’ fees.

TENTATIVE RULING:

Defendant/Cross-Complainant Proctor Industrial Investors, LLC’s motion for accrued and pre-judgment interest in the sum of $104,936.82 is GRANTED. Proctor’s motion for attorney’s fees is GRANTED in the amount of $249,062.50, which the Court finds to be the amount of reasonable attorney’s fees incurred in this action by Proctor.

DISCUSSION:

Motion For Order Awarding Accrued and Pre-Judgment Interest and Attorneys’ Fees

Accrued and Prejudgment Interest

Assuming that prejudgment interest was requested in the operative complaint, case law indicates that the circumstances under which a request for prejudgment interest may timely be made are as follows: (1) Prior to the entry of judgment, but no later than the time limits for a motion for new trial pursuant to CCP § 659(a)(2)[1], which is within 15 days of the date the clerk mails notice of entry of judgment or service by any party of written notice of entry of judgment, or within 180 days after entry of judgment, whichever is earliest; such a motion would be in the nature of a motion for new trial on the ground of inadequate damages (CCP § 657(5)) (Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279, 297-98; North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828-83); or (2) If the parties stipulate prior to the entry of judgment that a request for prejudgment interest would be adjudicated in a postjudgment hearing (Steiny & Co. v. Cal. Elec. Supply Co. (2000) 79 Cal.App.4th 285, 294.

Here, the Court expressly noted on the judgment at the time of its entry that Proctor may seek an award of pre-judgment interest which may be allowed by law. This is tantamount to a stipulation by the parties that a post-judgment motion for entry of prejudgment interest may be brought.

Accordingly, Proctor’s request for pre-judgment interest is timely.

Civil Code § 3287(a) provides in pertinent part:

(a) A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, . . .

There is no question that the sum of $500,000.00 which was awarded to Proctor was an amount of damages which was “certain” for purposes of Civil Code § 3287, because it was specifically provided for in the sum of all amounts deposited by buyer into escrow, and all accrued interest thereon, as liquidated damages the contract. Section 14.3, Page 25 of Purchase and Sale Agreement; Motion, Exh. 1. Although Proctor sought to recover an additional $1,500,000, the minimum $500,000 liquidated damages amount was payable regardless of whether the additional $1,500,000 was payable (for a total of $2 million). Thus, Proctor is entitled to recover prejudgment interest on the sum of $500,000.

3. The Certainty Requirement

From a plaintiff’s perspective, prejudgment interest compensates for the loss of the use of the money during the period between the assertion of the claim and the rendition of judgment. (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906 [197 Cal. Rptr. 348] (Chesapeake).) Obviously, the plaintiff loses the use of the money whether or not the amount owed is certain and, consequently, compensation was not the Legislature’s sole consideration when it adopted Civil Code section 3287.

From the defendant’s perspective, the certainty requirement promotes equity because liability for prejudgment interest occurs only when the defendant knows or can calculate the amount owed and does not pay. (Chesapeake, supra, 149 Cal.App.3d at p. 906.) In Chesapeake, the court acknowledged the tension between compensating the plaintiff’s loss and fairness to the defendant, stating: “These competing policy considerations have led the courts to focus on the defendant’s knowledge about the amount of the plaintiff’s claim. The fact the plaintiff or some omniscient third party knew or could calculate the amount is not sufficient. The test we glean from prior decisions is: did the defendant actually know the amount owed or from reasonably available information could the defendant have computed that amount. Only if one of those two conditions is met should the court award prejudgment interest.” (Id. at p. 907, italics omitted.)

Under this test for certainty as to amount, a dispute or denial of liability does not make the amount of damages uncertain. (Wisper Corp. v. California Commercial Bank (1996) 49 Cal.App.4th 948, 958 [57 Cal. Rptr. 2d 141].) As stated by our Supreme Court: “Generally, the certainty required of Civil Code section 3287, subdivision (a), is absent when the amounts due turn on disputed facts, but not when the dispute is confined to the rules governing liability.” (Olson v. Cory (1983) 35 Cal.3d 390, 402 [197 Cal. Rptr. 843, 673 P.2d 720], italics added (Olson).) In that case, the court determined the salary and pension benefits owed to the members of the plaintiff class were readily calculable amounts for purposes of awarding prejudgment interest. (Ibid.)

Disputes about the amount owed do not automatically create uncertainty. The Supreme Court has “held that even a dispute as to the amount of alleged damages (from an earthquake) did not prevent those damages from ‘being made certain by calculation’ within the meaning of [Civil Code] section 3287 where the amount of recovery closely approximated plaintiff’s claims.” (Leff v. Gunter (1983) 33 Cal.3d 508, 520 [189 Cal. Rptr. 377, 658 P.2d 740] (Leff).) In that case, a readily ascertainable value of the plaintiff’s share of a development project was established by (1) the difference between (a) an uncontested appraisal of the completed building and (b) the amount of the mortgage against the property (2) divided by the plaintiff’s conceded one-sixth share in the original venture. (Id. at p. 519.) The court noted, “Defendants offered no evidence to contradict [the] valuations” of the three components used to calculate damages. (Id. at p. 520.) Consequently, the court reversed the trial court’s denial of prejudgment interest and remanded the case for the calculation and award of such interest. (Id. at pp. 520–521.)

A general principle of practical import, not expressly adopted by our Supreme Court but easily inferred from its discussions of certainty, is that the manner in which a case is litigated can affect the ultimate resolution of the certainty question. (See Olson, supra, 35 Cal.3d at p. 402 [“amounts due turn on disputed facts”]; Leff, supra, 33 Cal.3d at p. 520 [no evidence contradicted components used in plaintiff’s calculations; recovery closely approximated plaintiff’s claims].)

Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279, 293-94 (bold emphasis and underlining added).

Cacique’s argument that Proctor waived the right to required prejudgment interest by virtue of Section 14.3 of the Purchase and Sale Agreement which provided that Proctor could only recover the amounts deposited into escrow, interest accrued on those amounts, and attorney’s fees and costs is not persuasive.

The liquidated damages set forth in Section 14.3 was intended by the parties to compensate the seller for damages suffered by virtue of the buyer’s breach of the contract. On the other hand, prejudgment interest pursuant to Civil Code § 3287 compensates for the failure to pay the amount if liquidated damages until the rendition of judgment:

From a plaintiff’s perspective, prejudgment interest compensates for the loss of the use of the money during the period between the assertion of the claim and the rendition of judgment. (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 906 [197 Cal. Rptr. 348] (Chesapeake).) Obviously, the plaintiff loses the use of the money whether or not the amount owed is certain and, consequently, compensation was not the Legislature’s sole consideration when it adopted Civil Code section 3287.

Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279, 29 (bold emphasis and underlining added).

There is no indication that the parties agreed in the Purchase and Sale Agreement that, if the buyer breached the agreement and failed to pay the amount of liquidated damages, the seller waived any claim for damages (i.e., loss of use of that money/prejudgment interest) if the buyer withheld payment of liquidated damages for years.

Here, Proctor calculates the amount of accrued and pre-judgment interest on the sum of $500,025.34[2] to be awarded from August 13, 2015 (the date Proctor terminated the agreement as a result of Cacique’s breach), until entry of judgment on December 27, 2017 at 10% per annum[3], is the sum of $104,936.82. See Motion at Page 4:16-21 and footnote 2. Cacique does not demonstrate that this mathematical calculation is wrong.

Accordingly, Proctor’s request for accrued and pre-judgment interest in the sum of $104,936.82 is GRANTED.

Attorney’s Fees

The judgment signed by the Court expressly provides that “Proctor is the prevailing party in this action, and that, as the prevailing party in the action, Proctor shall be entitled to recover attorneys’ fees and costs” in a sum to be determined. There is no basis for the Court to change this finding.

In the opposition, Cacique seeks a reduction in the amount of attorney’s fees requested in the following amounts: (1) $29,305.00 in connection with the motion to expunge lis pendens, as to which Proctor was only awarded $6,560, which Cacique paid, but Proctor claims was not paid); (2) $12,201.50 for a discovery motion that Proctor lost; (3) $6,355.00 for work incurred in a different action, BC669533. Cacique requests that the attorney’s fees award be reduced by the forgoing amounts in the sum of $54,421.50 ($29,305.00 + $6,560.00 + $12,201.50 + $6,355.00).

Although Proctor in its Reply disputes that a reduction in the amount of $54,421.50 is warranted, the Court agrees with Cacique that a $54,421.50 reduction is proper. First, the Court already determined that the amount of attorney’s fees to be awarded was $6,650, and Proctor is seeking this $6,650 as part of the instant fee motion. Thus, there is no basis for Proctor to recovery any attorney fees related to the motion to expunge, as Proctor has already been awarded those fees in connection with the motion to expunge. Second, Proctor was denied attorney’s fees in connection with the discovery motion, and to award attorney’s fees incurred for that motion would be to circumvent the Court’s prior order denying such fees. Third, Proctor does not contest the reduction for work performed in connection with a different case, BC699533.

As such, the $303,484 sought by Proctor is reduced by $54,421.50, as requested by Cacique. Accordingly, the motion for attorney’s fees is GRANTED in the amount of $249,062.50, which the Court finds to be the amount of reasonable attorney’s fees incurred in this action by Proctor.

Defendant/Cross-Complainant Proctor Industrial Investors to give notice, unless waived.

IT IS SO ORDERED.

Dated: March 16, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court