Judge: Michael D. Washington, Case: 37-2019-00043047-CU-OR-NC, Date: 2024-04-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - April 18, 2024

04/19/2024  01:30:00 PM  N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Michael D Washington

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Civil - Unlimited  Other Real Property Motion Hearing (Civil) 37-2019-00043047-CU-OR-NC MARK HENKEL VS BLASI [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 10/17/2023

The Motion for Attorney Fees brought by plaintiffs/cross-defendants Mark and Tiffany Henkel (collectively, the Henkels) is DENIED.

This case began as a simple dispute between neighbors with three causes of action being alleged: trespass, wrongful cutting of timber (Civil Code § 3346(A)), and injunctive relief. While the case has since generated significant additional litigation, including consolidation of a case that involved the homeowners' association in which both properties are located, the final trial was between the neighbor – i.e. the Henkels on the one hand, and defendants/cross-complainants Peter and Tamara Blasi (collectively, the Blasis) on the other. The claims the jury ultimately decided include the following: Henkels' Claims Against the Blasis (1) Trespass to Timber – yes, $500.00 (2) Trespass – no (3) punitive damages – yes, $50,000.00 Blasis' Claims Against the Henkels (1) Nuisance – no (2) Trespass – no (3) Negligence – no (4) punitive damages – no Nevertheless, though this was the ultimate jury verdict, the Court is mindful that other causes of action were asserted and then dismissed over the course of the lawsuit, another party (namely, the homeowners' association and the property management company, which are The Crosby Estate at Rancho Santa Fe Master Association (the HOA) and Keystone Pacific Property Management LLC (Keystone), respectively) was brought into the litigation, and the jury verdict on punitive damages ultimately did not ripen into a judgment due to legal infirmity stemming from a failure to produce hard evidence of the Blasis' net worth.

The Henkels now seek attorney fees on a theory that wrapped-up in this litigation was an ultimate effort to enforce governing documents that govern all properties within the homeowners' association and those governing documents – namely, a 'Custom Lot Declaration' – include an attorney fee clause.

The Court's analysis of the issue actually begins with an assertion made by the Blasis in their opposing brief: 'the Blasis never asserted any breach of contract claim against the Henkels...' A simple look at the Calendar No.: Event ID:  TENTATIVE RULINGS

3094503 CASE NUMBER: CASE TITLE:  MARK HENKEL VS BLASI [IMAGED]  37-2019-00043047-CU-OR-NC jury verdict would bear this assertion out – the Henkels' claims were for torts (trespass, trespass to timber) and so were the Blasis' claims (nuisance, trespass, and negligence). Thus, at first blush, the Blasis appear to have the better argument that, on their face, the claims are not contract-based claims to enforce the governing documents.

The Henkels, however, invoke the reciprocity provisions of Civil Code § 1717 for the proposition that because the Blasis asserted a claim for attorney fees in their cross-complaint against the Henkels, the attorney fee clause that the Blasis were asserting is reciprocally invocable against them now that they have lost the case.

There is something persuasive to this argument. As detailed in the briefing, the Henkels attempted to get clarity on whether the Blasis were claiming that contractual attorney fees applied to their claims, and the Blasis admit that their response to said discovery was to hedge. To use the Blasis' language: 'The Blasis' counsel took a belt-and-suspenders approach by refusing to fully commit to such a conclusion or to entirely foreclose upon the opportunity to rely on the CLD in the future.' (Opposition, p. 4:12-14, citing Decl. of Franza, ¶¶ 4-7 (emphasis in original).) Another way of saying it is that the Blasis equivocated and refused to commit to a position. While the instant case is beyond the discovery stage such that revisiting whether or not such hedging and equivocating was appropriately responsive in discovery, in evaluating the impact of those discovery responses and positions taken on the question that is presented now – which is whether or not the Blasis were claiming attorney fees via their cross-complaint on a theory that their causes of action were brought for the purpose of enforcing the governing documents that contain the attorney fee clause in question – the Court finds that the Blasis did exactly what a litigant does if that litigant wants to, in essence, have it both ways. The Blasis themselves implicitly admit this in their opposition briefing on the present motion: they wanted to be able to seek attorney fees if the governing documents were brought into the argument too much, but they wanted to avoid attorney fees if they could. While presented as straddling the line between whether or not the governing documents were placed front-and-center in the litigation, the Court makes a factual finding that is more simplistic and entirely consistent with what any litigant would want: the Blasis wanted to be able to claim attorney fees if they won, but did not want to be liable for attorney fees if they lost.

However, that strategic motive, in and of itself, is not improper and does not resolve the question being presented to this Court. The Blasis cite the case of Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295 for the proposition that the mere assertion of a claim of attorney fees does not automatically trigger an award of reciprocal attorney fees under Civil Code § 1717.

Finally, Jones and Manier contain broad language to the effect that attorney's fees should be granted when it would be inequitable to deny them. [Citations.] These cases base their analysis of mutuality of remedy on an equitable estoppel argument: if one merely alleges a right to recover attorney's fees, one is estopped from contending that he or she could not recover them if the other party prevails and claims attorney's fees. The Prescotts urge use to adopt this view. This equitable estoppel theory was first announced in Pas v. Hill (1978) 87 Cal.App.3d 521..., a case that was criticized by legal writers and later overruled by the Pas court itself in Saucedo v. Mercury Sav. Loan Assn.... As such, Jones and Manier are not well-founded. The California Supreme Court has determined that one may only recover attorney's fees pursuant to section 1717 if one 'would have been liable' for such fees had the opposing party prevailed. [Citation.] Judging by this language, Reynolds and section 1717 require that the party claiming a right to receive fees establish that the opposing party actually would have been entitled to receive them if he or she had been the prevailing party...

Leach's bare allegation that she is entitled to receive attorney's fees would not have been sufficient to prove her case; she must also have established that the attorney's fees clauses in the promissory note and the deed of trust actually entitled her to recover fees. The note and deed of trust were executed by Bell, not Leach. As a plaintiff who was not a signatory to these contracts, Leach would have no independent right to recover fees under the attorney's fees clauses contained in them. Under the mutuality of remedy theory of section 1717, the Prescotts may not recover fees from Leach. [Citation.] Calendar No.: Event ID:  TENTATIVE RULINGS

3094503 CASE NUMBER: CASE TITLE:  MARK HENKEL VS BLASI [IMAGED]  37-2019-00043047-CU-OR-NC Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1306-1307. Under the Leach analysis, this Court is left in the unenviable position of examining the question of whether the Blasis claims, if the Blasis had prevailed, would have entitled them to recover fees from the Henkels. The Court must make this analysis without the benefit of a full trial on the question. To make that analysis, the Court turns to the critical language of the attorney fee clause in the governing documents at issue: Should any Owner institute any action or proceeding against any other Owner, (a) to enforce or interpret th[e] Custom Lot Declaration, (b) for damages by reason of any alleged breach of th[e] Custom Lot Declaration or of any provision thereof, or (c) for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be entitled to receive from the other Owner all attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding. (ROA 653, Ex. B, ¶ 4.16.) It might be possible to conclude that tort claims – meaning strictly just the tort claims – brought by the Blasis were not 'to enforce or interpret th[e] Custom Lot Declaration' and were not 'for damages by reason of an alleged breach of th[e] Custom Lot Declaration or of any provision thereof...' However, it appears that the Blasis were seeking a 'declaration of rights' under the Custom Lot Declaration via this lawsuit. The Sixth Cause of Action for Injunctive Relief listed in the Blasi's initial Cross-Complaint expressly states: 97. Cross-Complainants are informed and believe, and on that basis allege, that unless Cross-Defendants are restrained and enjoined by order of this Court, Cross-Defendants will continue to harass Cross-Complainant, fail to maintain their bushes/trees, improperly monitor Cross-Complainants via motion detector surveillance cameras, and continue to improperly and unsafely plant bushes and trees without the property safety sign-offs as required per The Crosby. (ROA 11, ¶ 97 (bold added).) Additional language was added when the Blasis filed their First Amended Cross Complaint about 14 months later: 142. Cross-Complainants are informed and believe, and on that basis allege, that unless Cross-Defendants are restrained and enjoined by order of this Court, Cross-Defendants will continue to harass Cross-Complainant, fail to maintain their bushes/trees, improperly monitor Cross-Complainants via motion detector surveillance cameras, to improperly and unsafely plant bushes and trees without the property safety sign-offs as required per The Crosby, to maintain plants in violation of Zoning Ordinances, and to utilized recycled water. (ROA 50, ¶ 142.) The 'safety sign-offs' as required by per the HOA do not appear to be what was ultimately brought up at the trial. Moreover, even if they were, there is a missing link when it comes to connecting the bolded language above to an award of attorney fees: to be awardable, the Henkels cannot invoke just any generic requirements of the HOA, they have to invoke requirements of the HOA that are specifically created by the Custom Lot Declaration. It is not clear that 'property safety sign-offs' that were being referenced in the Blasis' cross-complaints fall into such a category, as the HOA may have had many safety requirements, some of which may not have had anything to do with the obligations set forth in the Custom Lot Declaration.

The Henkels' argument to connect these dots includes the following: Both parties marked the Custom Lot Declaration as trial exhibits without objection in the Joint Trial Readiness Conference Report. {Evidentiary citation.} In response to Motions in Limine, the Blasis argued the importance of the Custom Lot Declaration as it applied to the HOA's position allegedly 'imposing a six-foot height restriction on the honeysuckle wall' {evidentiary citation}, and cited in support a February 13, 2019 letter from the HOA asserting that the Custom Lot Declaration 'Section 2.5.1 expressly permits the [HOA Design Review Committee] to place height restrictions on [the Henkels'] Lot 316.' [Evidentiary citation.] Indeed, at trial, the Blasis introduced this letter and argued the propriety of imposing a height restriction of the honeysuckle that they alleged was afforded by the Custom Lot Declaration, among Calendar No.: Event ID:  TENTATIVE RULINGS

3094503 CASE NUMBER: CASE TITLE:  MARK HENKEL VS BLASI [IMAGED]  37-2019-00043047-CU-OR-NC other things. [Evidentiary citation.] (Motion, p. 7:5-15 (emphasis added).) It thus appears that the Custom Lot Declaration was involved in the instant case in some capacity, but the critical question for purposes of the instant Motion for Attorney Fees is whether that capacity fits within any of the enumerated items spelled-out in the attorney fee clause at issue which, again, states as follows: Should any Owner institute any action or proceeding against any other Owner, (a) to enforce or interpret th[e] Custom Lot Declaration, (b) for damages by reason of any alleged breach of th[e] Custom Lot Declaration or of any provision thereof, or (c) for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be entitled to receive from the other Owner all attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding. (ROA 653, Ex. B, ¶ 4.16.) When connecting the face of the pleadings to the evidence and arguments that were actually made at trial, it appears that the Blasis were, in fact, attempting to enforce at least a portion of the Custom Lot Declaration. It also appears that the overall amount of the involvement of the Custom Lot Declaration may have been relatively minimal in scope. Indeed, even as presently argued by the Henkels, 'the Blasis introduced this letter and argued the propriety of imposing a height restriction of the honeysuckle that they alleged was afforded by the Custom Lot Declaration, among other things.' (Motion, p. 7:5-15 (emphasis added).) It is these 'other things' that diminish the overall focus on the Custom Lot Declaration. It is nonetheless true, however, that in the mere act of raising the Custom Lot Declaration as one among several grounds that purportedly supported their position, the Blasis sought 'a declaration of rights hereunder...' meaning under the terms of the Custom Lot Declaration.

The language of the attorney fee clause is quite broad in that, if an 'Owner' institutes any action or proceeding against any other 'Owner' he or she 'shall be entitled to receive from the other Owner all attorneys' and other fees incurred... in connection with such action or proceeding' if he or she turns out to be the prevailing party. In this case, the Henkels are the prevailing party on a trespass to timber claim involving $500 worth of damages to their honeysuckle – they did not necessarily 'prevail' on any claims for injunctive relief. In fact, therein lies much of the crux of this entire motion: neither party seems to have pursued their claims for injunctive relief to completion. The Blasis voluntarily dismissed their Tenth Cause of Action for Injunctive Relief on February 22, 2023. (ROA 416.) The Judgment in this case expressly states that: 'The Henkels also brought a cause of action for injunctive relief. They are no longer pursuing this cause of action and request the Court dismiss it with prejudice.' (ROA 603.) As such, though both parties appear to have asserted causes of action involving injunctive relief, neither appears to have followed such claims through to completion. At face value, the fact that the Blasis asserted a cause of action for injunctive relief that involved 'a declaration of rights hereunder' (meaning under the Custom Lot Declaration, at least in part) and then dismissed it, would seem to demonstrate that the Henkels are the 'prevailing party' on that particular cause of action. Indeed, in other areas of law (namely, the costs statute) there are statutory definitions that define a 'prevailing party' as 'a defendant in whose favor a dismissal is entered...' (Code of Civil Procedure § 1032(1)(4).) However, under the statute that authorizes contractual attorney fees, Civil Code § 1717(b)(2), it is expressly stated that: 'Where 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.' (See also Mitchell Land & Improvement Co. v. Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 485-486.) The Mitchell Land court made the point that: 'Section 1717, subdivision (b)(2), overrides or nullifies conflicting contractual provisions, such as provisions expressly allowing recovery of attorney fees in the event of voluntary dismissal or defining prevailing party as including parties in whose favor a dismissal has been entered.' Mitchell Land, supra, 158 Cal.App.4th at 485-486, quoting Santisas v. Goodin (1998) 17 Cal.4th 599, 614, 617 (cleaned up).

However, the Mitchell Land court adds some complexity to this analysis by indicating that while the dismissal of a claim that would otherwise trigger reciprocity under Civil Code § 1717 renders there no 'prevailing party' – the subdivision providing that there is no 'prevailing party' in such circumstances Calendar No.: Event ID:  TENTATIVE RULINGS

3094503 CASE NUMBER: CASE TITLE:  MARK HENKEL VS BLASI [IMAGED]  37-2019-00043047-CU-OR-NC only works against contract-based claims. In other words, where a contract provision provides for attorney fees and is 'broadly worded' in a way that encompasses tort claims as well, the dismissal of the contract claim only renders there no 'prevailing party' on the contract claim and does not otherwise invalidate application of the attorney fee clause to tort claims that are still maintained. Mitchell Land, supra, 158 Cal.App.4th at 456, citing Santisas v. Goodin (1998) 17 Cal.4th 599, 614-622, also citing California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598, 605.

This standard is almost unworkable as applied to the instant case.

Indeed, the Mitchell Land court itself did not ultimately make this distinction, as its conclusion was that: We conclude the reasoning of [cases], concerning identification of the nature of an unlawful detainer action, is sound. Because this unlawful detainer action was premised upon Ferrantelli's alleged breach of covenants of its lease, the action is one 'on a contract' and section 1717, subdivision (b)(2), precludes an award of attorney fees to Ferrantelli. Mitchell Land, supra, 158 Cal.App.4th at 490.

In other words, though the Mitchell Land court made the analytical distinction between contract-based claims and tort-based claims for purposes of applying Civil Code § 1717(b)(2), it ultimately held that the claims at issue were contract-based – rendering it dicta on the issue of whether one who is not a prevailing party on a dismissed contract claim can still be liable under an attorney fees clause for torts that were covered by the broadly-worded attorney fee clause.

Were it the end of it that the Blasis dismissed their claim for injunctive relief, the analysis here might have its endpoint. But, the procedural history of this case indicate that the Blasis brought up the Custom Lot Declaration at trial – i.e. even after they had dismissed their claim for injunctive relief. This factual detail renders the analysis of the issue very fine indeed, as it hangs on a determination of whether the mere raising of the Custom Lot Declaration at trial in a somewhat evidentiary manner (as opposed to being a legal basis for a cause of action) is sufficient to trigger application of the attorney fee clause to those claims.

The problem with doing so is that the attorney fee clause in question is somewhat at odds with the statutory principles and legal authorities. The attorney fee clause is worded to focus on when a party 'initiates' any action or proceeding – not whether it 'maintains' such legal claim through trial. As such, focusing on what was argued and maintained at trial is somewhat discordant with the agreed-up contractual term. On the other hand, the law regarding reciprocal attorney fees expressly indicates that there is no 'prevailing party' when the contract-based claims are dismissed prior to trial. Perhaps the overarching point to be made here is that, since the Blasis brought up the Custom Lot Declaration at trial, it can be extrapolated that the tort-based claims they asserted in their initial and operative cross-complaints involved the Custom Lot Declaration. While this is a step toward determining that such tort claims fall within the purview of the attorney fee clause, it bears repeating, for a third time, that the attorney fee clause specifically enumerated three categories of legal proceedings that would trigger its application: '(1) to enforce or interpret this Custom Lot Declaration, (b) for damages by reason of any alleged breach of this Custom Lot Declaration or any provision thereof, or (c) for a declaration of rights hereunder...' The Blasis tort-based claims included nuisance, trespass, and negligence, and the Blasis lost on all three.

Juxtaposing the principles above, the very thing that appears at first to save the Henkels' attorney fee theory from being undone by the subdivision that provides that there is no 'prevailing party' for purposes of the reciprocity statute when contract claims are dismissed is the thing that dooms the Henkels' attorney fee theory from being able to fall within the attorney fee clause at issue. Said another way, to get out from the dead-end that is the attempt to obtain attorney fees under the dismissed cause of action for injunctive relief, the Henkels must look to other causes of action that proceeded to trial. However, to look to those other causes of action is to abandon the cause of action that most clearly requests a 'declaration of rights' under the Custom Lot Declaration. Ultimately, the minor mentions of the Custom Lot Declaration at trial were not enough, on their own, to trigger application of the attorney fee statute, and the claim for injunctive relief having been dismissed makes it a legal nonstarter under Civil Code § Calendar No.: Event ID:  TENTATIVE RULINGS

3094503 CASE NUMBER: CASE TITLE:  MARK HENKEL VS BLASI [IMAGED]  37-2019-00043047-CU-OR-NC 1717(b)(2).

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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