Judge: Frank M. Tavelman, Case: 19BBCV00366, Date: 2023-02-10 Tentative Ruling

Case Number: 19BBCV00366    Hearing Date: February 10, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION FOR ATTORNEY’S FEES

MP:     Jan Slort, David Slort, Daniel Slort (Defendants)

*Co-Defendant Jennifer Hines was not party to the motion.

RP:      Steven Myers and Linell Myers (Plaintiffs)

Summary:

The Court previously granted Summary Judgment in favor of Defendants.   Defendants have filed a Motion for Attorneys’ Fees and Costs totaling $140,930.10 pursuant to Civil Code §1717 and Code of Civil Procedure §1032.

Defendants argue that they are entitled to attorney’s fees under the broad terms of the Residential Purchase and Sale Agreement, specifically Clause 22 – the same clause upon which the Plaintiff relied to obtain the original attorney’s fees award.

In July 2001, Defendant Jan Slort purchased real property from Plaintiffs.  On June 8, 2011, Defendant Jan Slort transferred via quit claim deed a 50% interest in the property to Jennifer Hines.  In 2013, Defendant Jan Slort transferred his interest in the property to an irrevocable trust, which was recorded on May 22, 2013.  In 2016, Defendant Jan Slort and David Slort as trustee filed suit in an unrelated case against Plaintiffs based on a failure to disclose unpermitted construction on the real property purchased in 2001.   Defendants subsequently were not victorious in that lawsuit as the statute of limitations had run.  Plaintiff obtained an attorney fees award of $113,590 in or about July 2018.  Plaintiffs filed the current action (19BBCV00366) on April 30 2019, seeking to set-aside the prior property transfer to Jennifer Hines, which occurred approximately four years prior to the attorney fees award in the other matter.

Court’s January 31, 2023 Tentative

In the Court’s January 31^st tentative ruling, the Court, relying on Civil Code §1717(a) and the underlying terms of the original contract determined that attorney’s fees in the amount of $98,347 and costs was justified.  The Court viewed the subsequent unsuccessful lawsuit as a derivative or one-off related lawsuit that involved a contract. Eden Township Healthcare District v. Eden Medical Center (2013) 220 Cal.App.4th 418, 426.

Unlike the prior matter which directly related to the property sold under the Residential Purchase and Sale Agreement, this matter was derivative of that; it was an action to void a transfer of property in an effort to collect the attorney’s fees debt from the prior case.  The ultimate issue is

whether a case that is a “one-off” from the underlying case is an action in contract.  Plaintiff argues that when if the underlying judgment includes an award of attorney’s fees pursuant to a written contract, then attorney fees incurred in enforcing a judgment are included as a collectible cost. (CCP §685.040; CCP §1033.5(a)(10)(A).)

The Court requested supplemental briefing.  Plaintiff and Responding Party filed their supplemental brief on February 8, 2023; Defendant and Moving Party filed their supplemental brief on February 8, 2023 as well.

Extinction by Merger Doctrine

 In Jaffe v. Pacelli the Court of Appeal explains, “[g]enerally, when a judgment is rendered in a case involving a contract that includes an attorney fees and costs provision, the ‘judgment extinguishes all further contractual rights, including the contractual attorney fees clause.’ ” (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 934.) As a consequence, attorneys' fees incurred to enforce such a judgment can only be recovered if there is express statutory authorization, such as is provided by section 685.040. (165 Cal.App.4th at p. 934.) “Pursuant to the current version of the statute, the award of postjudgment attorney fees is not based on the survival of the contract, but is instead based on the award of attorney fees and costs in the trial judgment. [Citation.] This is in accord with the extinction by merger analysis providing that post judgment rights are governed by the rights in the judgment and not by any rights arising from the contract.” (Id. at p. 935,  italics added.)(Cardinale v. Miller (2014) 222 Cal.App.4th 1020, 1026.

In other words, ‘When a party recovers a judgment for breach of contract, entry of the judgment absolves the defendant of any further contractual obligations, and the judgment for damages replaces the defendant's duty to perform the contract. [Citation.] Upon entry of judgment, all further contractual rights are extinguished, and the plaintiff's rights are thereafter governed by the rights on the judgment, not by any rights which might have been held to have arisen from the contract.’” (Globalist Internet Technologies, Inc. v. Reda (2008) 167 Cal.App.4th 1267, 1273–1274; see also Jaffe, supra, 165 Cal.App.4th at p. 934.). This is sometimes known as extinction by merger. ((Guo v. Moorpark Recovery Service, LLC (2021) 60 Cal.App.5th 745, 751)

Under the Extinction by Merger doctrine, once Plaintiff received the judgment on the underlying case, its subsequent enforcement was not based on contract and Civil Code §1717(a).  Plaintiff initially argued that its right for attorney’s fees to enforce the judgment was based on the unilateral provisions of CCP §685.040, but it appeared that it could also be pursuant to Civil Code §1717(a).  The Court was initially under the impression that it was seeking attorney’s fees under alternative provisions, all of which could have provided the aware.   The issue of merger was not argued.

The Court now believes, that although it may be permitted to take a liberal interpretation of what is related to a contract, in this instance that analysis is irrelevant.    The parties’ obligations under the contract ceased after the judgment pursuant to Extinction by Merger.   As such, any mutuality for attorney’s fees does not appear to be authorized by law, and the provisions of CCP §1717 do not appear to be applicable.  Globalist Internet Technologies, Inc., supra 167 Cal.App.4th at 1273–1274).  CCP §685.040 does not appear to be applicable to a judgment debtor.

CONCLUSION

The Court does not have statutory authority to award Defendant’s attorneys fees and costs pursuant to the Extinction by Merger doctrine.  Defendant’s motion for attorney’s fees is denied.

RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants’ motion for attorney’s fees and costs came on regularly for hearing on February 10, 2023  with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE COURT DENIES ATTORNEY’S FEES.

 UNLESS ALL PARTIES WAIVE NOTICE, DEFENSE IS TO GIVE NOTICE.

DATE: February 10, 2023                              

_______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles