Filed 1/8/20 J Sylvester Construction, Inc. v. Standeford 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

J SYLVESTER CONSTRUCTION, INC.,

Plaintiff and Appellant,

v.

RICHARD R. STANDEFORD,

Defendant and Respondent.

G057337

(Super. Ct. No. 30-2016-00861932)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Ronald L. Bauer, Judge. Affirmed.

Theodora Oringher, Andrew G. Prout and Jessica H. Diotalevi for Plaintiff and Appellant.

Berger Harrison and Benjamin Berger for Defendant and Respondent.

* * *

Plaintiff J Sylvester Construction, Inc. (Sylvester) brought a lawsuit against RRS Plumbing, Inc. (RRS) for performing unlicensed plumbing work under a subcontract that contained a prevailing party attorney fees provision. Subsequently, Sylvester and RRS entered into a settlement agreement that was silent as to an allocation of attorney fees and costs. However, Sylvester also continued to prosecute its lawsuit against individual defendant Richard R. Standeford, based upon a theory of alter ego liability. After a bench trial, the trial court found in favor of Standeford and awarded him attorney fees pursuant to the subcontract provision and Civil Code section 1717.

On appeal, Sylvester contends the award of attorney fees should be reversed because Standeford has not demonstrated he would have been liable for fees if Sylvester had prevailed instead. Based upon Sylvester’s failure to carry its burden to demonstrate reversible error, we affirm the judgment.

I

FACTS AND PROCEDURAL HISTORY

A. Lawsuit and Settlement with RRS

In 2014, Sylvester entered into a subcontracting agreement with RRS to perform work at a residence in Newport Coast for approximately $93,000. The subcontract contained an attorney fees provision that entitled a prevailing party in a legal dispute “to recover reasonable attorney’s fees” from an opposing party.

In 2016, Sylvester sued RRS for performing work under the subcontract without a proper contractor’s license. The complaint alleged four causes of action: 1) breach of contract, 2) violation of Business & Professions Code section 7026 et seq., 3) negligence, and 4) declaratory relief. Sylvester sought $83,610 in damages as well as attorney fees and costs. In October 2017, 15 months after filing its lawsuit, Sylvester filed a single-page form to replace the name of defendant “Doe 1” with Standeford, who at all relevant times had been the dominant shareholder of RRS.

In December 2017, Sylvester and RRS signed a settlement agreement entitled “Stipulation for Entry of Judgment” (the stipulation). The stipulation stated: “This stipulation settles only the claims currently being alleged against the current Defendant in the above-entitled case. [¶] . . . This stipulation does not settle claims being alleged against defendant(s) that have been served with process but who have not yet appeared in the above-entitled case.” The stipulation stated that a judgment in the amount of $200,000 would be entered against RRS. The stipulation also stated: “[Sylvester’s] damages are currently approximately $226,000 and are expected to increase in due [sic] to additional attorneys’ fees and costs that will be incurred if the matter proceeds to trial.” The stipulation explicitly stated RRS’s acknowledgement that Sylvester was entitled to recover attorney fees and costs pursuant to both the subcontract and a statute authorizing a court discretion to award attorney fees to a prevailing plaintiff against a defendant who had provided unlicensed goods or services (Code Civ. Proc., § 1029.8). The stipulation also stated that “[u]pon entry of this judgment, the balance of $200,000.00, plus interest and costs of suit, owing to Plaintiff by Defendants shall become immediately due and payable.”

In January 2018, four days after being signed, Sylvester and RRS appeared in the trial court for the first scheduled date of trial and reported the stipulation. Standeford was present in court on behalf of RRS and confirmed he had signed the stipulation in that capacity. The trial court held discussions with counsel for both Sylvester and RSS as well as Standeford. The court inquired about the possibility of an additional claim for attorney fees and counsel for Sylvester responded it was his belief that fees and costs were being resolved by the agreed upon judgment amount of $200,000. The court confirmed Sylvester’s understandings that the judgment against RRS agreed to in the stipulation would “not lie against Mr. Standeford personally” and that Sylvester’s intention was to pursue Standeford as an individual defendant despite its settlement with RRS. The court did not enter judgment and set a case management conference to be held 90 days later, in March 2018.

B. Alter Ego Theory Against Standeford

In March 2018, a few weeks before the case management conference, Sylvester filed a first amended complaint. It maintained the same four causes of action as its original complaint, but also alleged Standeford was the alter ego of RRS. In its prayer for relief, Sylvester maintained its original complaint requests “[f]or an award of reasonable attorneys’ fees and costs incurred herein” against “all Defendants.”

In October 2018, Sylvester proceeded to a court trial with Standeford. According to Sylvester’s briefing, 10 days before trial commenced, Sylvester’s counsel sent Standeford’s counsel an e-mail with a document titled “Plaintiff J Sylvester Construction, Inc.’s List of Controverted Issues,” that identified one issue for trial: “Whether [RRS] is an alter ego of [Standeford] subjecting Standeford to personal liability for the stipulated judgment.” On the day of trial, the court asked Sylvester’s counsel: “We’ve got a first amended complaint with four causes of action. [¶] Are they all being tried or not?” Sylvester’s counsel responded: “Yes, they are, your honor.” The trial court then inquired about Sylvester’s trial witness list, to which counsel replied the list was “probably going to be pared down significantly based on the fact that there [was] already a stipulated judgment that has not been entered yet against [RRS].” Later, the trial court asked: “And so this trial is limited to claims against [Standeford]?” Sylvester’s counsel replied: “Establishing the alter ego liability of [Standeford] for the judgment against – or for the stipulated judgment against the corporation, your honor.”

Standeford prevailed at trial through a motion for judgment. (Code Civ. Proc., § 631.8.) After judgment was entered two months later, Standeford moved for attorney fees pursuant to the subcontract provision. In its opposition, Sylvester did not challenge the amount awarded but argued that no attorney fees were authorized because “Sylvester extinguished its right to pursue attorney’s fees by settling with RRS per a stipulated judgment.” The trial court granted Standeford’s motion for the entire amount of attorney fees sought: $15,806.50.

On appeal, Sylvester states that “the sole issue on appeal [is] whether the lower court erred in extending Civil Code section 1717 to award attorney’s fees against [Sylvester].”

II

DISCUSSION

A. Standard of Review and Relevant Law

“‘“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.”’” (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751.) Sylvester incorrectly contends that Standeford has the burden of proof on appeal. Sylvester, as the appellant, has the burden of proving the trial court’s determination amounted to reversible error. (Morgan v. Imperial Irrigation Dist. (2014) 223 Cal.App.4th 892, 912-913.)

“Under Code of Civil Procedure section 1033.5, subdivision (a)(10), the costs allowable under Code of Civil Procedure section 1032 include attorney fees ‘only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees.’” (Mitchell Land & Improvement Co. v. Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 484.) Section 1717 provides, among other things, that a contract provision authorizing an award of attorney fees to “one of the parties” is equally available to “the party who is determined to be the party prevailing on the contract.” Under section 1717, “a prevailing party is entitled to attorney fees only if it can prove it would have been liable for attorney fees had the opponent prevailed.” (M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One (2003) 111 Cal.App.4th 456, 467.)

“When parties settle a case, they are free to allocate costs in any manner they see fit, although they must do so in language specifically addressing such allocation.” (DeSaulles v. Community Hospital of Monterey Peninsula (2016) 62 Cal.4th 1140, 1147-1148; see Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261, 263-264 [“a party who accepts a section 998 offer may recover attorney fees under section 1717, as an item of costs after judgment, where the compromise agreement is silent on costs and fees”]; see also Lanyi v. Goldblum (1986) 177 Cal.App.3d 181, 192-193, fn. omitted [“Applying contract principles, the parties’ failure to ‘expressly or by necessary implication’ exclude statutory fees, as an incident to the cause, means that the fees were not contemplated in settlement and therefore may be awarded”].) Settlement agreements are “‘governed by the legal principles applicable to contracts generally.’” (Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677.) “A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (§ 1636.) “Where contract language is clear and explicit and does not lead to absurd results, we ascertain intent from the written terms and go no further.” (Ticor Title Ins. Co. v. Employers Ins. of Wausau (1995) 40 Cal.App.4th 1699, 1707-1708.)

Based upon the above, it is Sylvester’s burden on appeal to demonstrate it would not have been entitled to fees had it prevailed against Standeford at trial. (Morgan v. Imperial Irrigation Dist., supra, 223 Cal.App.4th at pp. 912-913.)

B. No Allocation of Attorney Fees

Even assuming for the sake of argument that the stipulation limited Sylvester’s right to recourse against Standeford, the stipulation did not specifically address an allocation of attorney fees. Instead, as mentioned above, its last paragraph simply read that “[u]pon entry of this judgment, the balance of $200,000.00, plus interest and costs of suit, owing to [Sylvester] by Defendants shall become immediately due and payable.” Since the stipulation did not specifically address an award of attorney fees, it did not preclude Sylvester from seeking postsettlement fees from Standeford. (DeSaulles v. Community Hospital of Monterey Peninsula, supra, 62 Cal.4th at pp. 1147-1148; see Wong v. Thrifty Corp., supra, 97 Cal.App.4th at pp. 263-264; see also Lanyi v. Goldblum, supra, 177 Cal.App.3d at pp. 192-193.)

We reject Sylvester’s attempt to augment the written terms of the stipulation by relying upon statements its counsel made to the trial court in January 2018, when the stipulation was reported to the court. Specifically, in its appellate briefing, Sylvester cites to a portion of a reporter’s transcript that contains its counsel’s following statements to the court, as mentioned above:

“The Court: All right. And you mentioned there is a possibility of an additional amount for fees. What is your plan there?

“Mr. Dove: At this point, your honor, I think that the stipulated judgment in the amount of $200,000 is going to satisfy the claim for attorneys’ fees.

“The Court: All inclusive?

“Mr. Dove: Yes, your honor.

“The Court: And costs?

“Mr. Dove: Yes, your honor.”

Counsel’s statements do not alter the disposition of this appeal because the stipulation was “clear and explicit and [did] not lead to absurd results,” so “we ascertain intent from the written terms [of the stipulation] and go no further.” (Ticor Title Ins. Co. v. Employers Ins. of Wausau, supra, 40 Cal.App.4th at pp. 1707-1708.) Even if we considered counsel’s statements to the court, we note they were qualified by the phrases “[a]t this point” and “I think.” We do not find the statements would have clearly precluded an award of additional attorney fees as to Standeford—particularly given that additional fees would likely have been awardable pursuant to Code of Civil Procedure section 685.040, as Standeford contends in his respondent’s brief. (See York v. Strong (2015) 234 Cal.App.4th 1471 [a judgment creditor can be awarded additional attorney fees based upon contract or other “law,” such as statutory authorization].) The ambiguity of counsel’s statements is exacerbated by the fact that two months after they were made, Sylvester filed an amended complaint against Standeford, explicitly continuing to seek an award of attorney fees and costs, as mentioned above.

Similarly, we reject Sylvester’s attempt to rely upon its document titled “Plaintiff J Sylvester Construction, Inc.’s List of Controverted Issues,” also mentioned above. Like the stipulation, the document is silent as to the specific issue of attorney fees. Accordingly, even if we were to look beyond the “clear and explicit” terms of the stipulation (Ticor Title Ins. Co. v. Employers Ins. of Wausau, supra, 40 Cal.App.4th at pp. 1707-1708), Sylvester’s “List” would not demonstrate that Sylvester would have been precluded from seeking attorney fees from Standeford had it prevailed at trial.

In sum, Sylvester has not demonstrated that an award of attorney fees in its favor was precluded when it prosecuted its first amended complaint against Standeford on a theory of alter ego liability. Neither Sylvester’s stipulation with RRS, nor any of its citations to the record or legal authorities proves its contention that because “[Sylvester] could not have recovered attorney’s fees for the alter ego trial [against Standeford], . . . under the reciprocal rule of Civil Code section 1717, neither should [Standeford] recover his fees . . . .” Accordingly, Sylvester has not demonstrated any error in the court’s determination that attorney fees were awardable to Standeford.

Additionally, through the parties’ briefing and oral arguments, we infer that the $200,000 in “damages” agreed to in Sylvester and RRS’s stipulation included Sylvester’s attorney fees and costs to that point in the litigation. Accordingly, given 1717’s “design[] to assure fairness between the parties” (See M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One, supra, 111 Cal.App.4th at p. 469), we note the result proposed by Sylvester would be unfair. That is, Sylvester asserts that Standeford should be denied a right to claim his attorney fees based upon the same stipulation Sylvester relied on to, in effect, pursue its own fees against Standeford. Under the circumstances discussed above, Sylvester’s proposed result would amount to an end-run around section 1717’s purpose of reciprocity.

Finally, given our holding above, Sylvester’s claim for an award of attorney fees in its favor is moot.

III

DISPOSITION

The judgment is affirmed. Standeford is entitled to his costs on appeal, and may file a motion for attorney fees on appeal in the trial court.

MOORE, J.

WE CONCUR:

O’LEARY, P. J.

IKOLA, J.