Allred v. Kennerley

Filed 3/12/07 Allred v. Kennerley 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

This appeal is from a judgment following nearly 20 years of protracted and convoluted litigation arising out of a partnership agreement between Frederick Kennerley and Larry Allred to develop several lots in Danville, California. Over the course of the litigation there have been several bankruptcies, an action on a bond, an irrevocable trust,[1] assignments of a number of claims and at least one divorce. Ultimately, the litigation boiled down to the disposition of proceeds from the sale of one of the lots: Lot 4. Allred, who had been charged with the responsibility of winding up the partnership, had used his own funds to purchase Lot 4 from the mortgage company. He then transferred title to himself, and subsequently transferred the property to his former wife, Shirley Allred. The superior court later ruled Allred had acted improperly in connection with those transfers. In a separate, derivative action, a different judge set aside the transfer to Shirley Allred. (Super. Ct. Contra Costa County, 1998, No. C96-04401.[2]) In the end, the court in these proceedings ordered the sale of Lot 4, ordering further that the proceeds from the sale be distributed in the following manner: (1) $106,000 to Allred to repay him for the sum spent to prevent foreclosure on Lot 4, plus taxes and interest; (2) $175,383.36 to an irrevocable trust that had been established by Rebecca Kennerley (the Trust) as the owner of a judgment against the partnership; (3) $37,931.50 to the Trust on the theory that it had purchased Kennerleys right to attorney fees, and (4) $15,000 to the Trust on the theory it had obtained Kennerleys right to wages.

Allred appeals, contending, in part, the court erred by concluding he was not entitled to purchase Lot 4 for himself, and also by ruling additional sums owed to him could not be set off against the sums to be paid to the Trust. Allred also contends the court erred by refusing to allow him to introduce evidence that the $175,383.36 obligation to the Trust was owed by a entity other than the partnership. He contends the court erred by finding the judgment creating the debt had in fact been transferred to the Trust, arguing further the court should have allowed him to introduce evidence the Trusts attorney at one time had taken a position inconsistent with that finding. He contends the court erred by finding the Trust was entitled to the sum representing attorney fees. Finally, he contends the evidence does not support an implied finding Kennerley had transferred his right to attorney fees and wages to the Trust.

We affirm.

Background

In 1986, Frederick Kennerley and Lawrence and Judith Walsh purchased 3.2 acres of land in Danville, California, intending to subdivide it into four lots. The Walshes were to reside in a home on one lotLot 3. Kennerley, a licensed contractor, planned to develop single-family residences on Lots 1, 2 and 4. The 1986 purchase was financed, in part, by a loan from Larry Allred. Although there is some dispute as to the exact date of this arrangement, at some point in 1987, Allred and Kennerley entered into a partnership agreement under which the partnership, Kennerley Development Company (the partnership), was to develop the property. Kennerley was the general partner. Also in 1987, Kennerley executed a bond with the Explorer Insurance Company (Explorer), guaranteeing the performance of certain work required by the Town of Danville in connection with the planned development.

The development never took place. In 1988, Allred, acting on his own behalf and on behalf of the partnership, filed a complaint against Kennerley, the partnership and the Walshes, seeking to dissolve the partnership and related relief. Kennerley cross-complained. The Town of Danville performed the work it had required, and executed on the bond, with the result Explorer paid the town approximately $76,000. In 1991, Explorer filed suit for subrogation against Kennerley Development Company, seeking reimbursement of the funds paid on the bond. Explorer ultimately obtained a default judgment against the partnership and also against Frederick Kennerley and his wife, Rebecca Kennerley.

In 1990, Rebecca Kennerley formed the Trust for her children, funded by her winnings in the California Lotterys Big Spin Grand Prize Drawing. Thereafter, she filed for personal bankruptcy. Ultimately, the Trust purchased Explorers judgment lien against the partnership for $60,000 and, as part of this transaction, Explorer assigned the judgment to Frederick and Rebecca Kennerley, as individuals.

In the meantime, in September 1988, Judge Phelan of the Contra Costa Superior Court had removed Kennerley as the partnerships general partner, installing Allred in his place for purposes of winding up the partnerships affairs. By 1992, the partnership had defaulted on the mortgage on Lot 4. In order to prevent foreclosure, Allred filed suit against Union Bank, which held the mortgage, and later entered into a settlement with the bank under which he purchased the note and deed of trust for $68,232. Then, as winding up partner, he deeded Lot 4 to himself, and later transferred title to the lot to his former wife, Shirley Allred. Judge Phelan was elevated to the Court of Appeal, and the proceedings then were conducted by retired judge David Dolgin. Judge Dolgin ruled Lot 4 was a partnership asset, so that Allred was responsible to the partnership for its value. Kennerley amended his cross-complaint to allege Allred had breached various duties and responsibilities relating to winding up the partnership, some related to the work covered by the Explorer bond, some arising out of the sale of Lot 2 to Allred in his individual capacity, and some arising out of Allreds conduct in connection with Lot 4.

By this time, Kennerley had filed for bankruptcy, with the result any debts he owed to Allred were discharged in October 1990. The litigation in this action therefore centered on Kennerleys claims against Allred. Over several years, Judge Dolgin issued successive rulings that ultimately were incorporated into an April 1998 judgment. He ruled the partnership should be dissolved, Allred had not acted improperly in connection with the purchase of Lot 2, but had acted improperly in connection with the purchase and transfer of Lot 4. He held Allred therefore owed the partnership the value of the property, but was entitled to an offset of $106,000, representing the amount paid for the property plus taxes and interest. He found the fair market value of Lot 4 was $145,000, with the result that Allred was indebted to the partnership in the amount of $39,000.

Judge Dolgin noted he had no jurisdiction over Shirley Allred, but ordered if she quitclaimed Lot 4 to the partnership, the property would be sold and the proceeds distributed. Allred would be entitled to first priority in the amount of $68,000 plus interest. Frederick and Rebecca Kennerley would be entitled to second priority for the sole reason that they are the owners of the Explorer Insurance Company judgment lien in the amount of $78,536.11 plus interest from December 14, 1992 and since they step in the shoes of the judgment creditor, this amount is free of any offsets. Judge Dolgin found that Kennerleys personal obligations had been discharged in bankruptcy, but Allred was entitled to a number of credits, with a sum value of $124,032.45, against the partnership prior to any credit due Kennerley, but [a]fter the Explorer bond lien is paid to the Kennerleys. He noted, however, there was no evidence the partnership had any net worth that could be used to satisfy Allreds claims. Finally, Judge Dolgin ruled Kennerley was the prevailing party on the second (damages) phase of the proceedings, and therefore was entitled to his attorney fees under the terms of the partnership agreement. Judge Dolgin also found Kennerley was entitled to offsets of $15,000 for management fees and three months of preconstruction work. He reserved jurisdiction in the event that the Allreds return the property (Lot 4) to the partnership, or further partnership property is discovered.

Allred appealed from the 1998 judgment. That appeal was dismissed because the judgment did not finally determine all the rights and obligations between the parties arising from the litigation, so that it was interlocutory and not appealable.

In 1994, four years before Judge Dolgins judgment, the Kennerleys assigned all right, title and interest in the Explorer judgment lien to the Trust. Kennerley also filed a separate derivative action as a limited partner against Larry and Shirley Allred, asserting the conveyance of Lot 4 had been fraudulent. On July 28, 1998, in the derivative action, Judge David Flinn set that conveyance aside, ordering Shirley Allred to transfer Lot 4 back to the partnership. (Super. Ct. Contra Costa County, 1998, No. C96-04401.)

In August 1998, Kennerley filed a new petition for bankruptcy, which was apparently dismissed a few months later; however, in August 2001, Frederick and Rebecca Kennerley, separately, filed voluntary petitions and schedules of assets and debts for protection under 11 U.S.C., Chapter 7. In June 2003, Allred entered into a compromise agreement with the bankruptcy trustee under which Allred agreed to pay Kennerleys estate $39,000 in exchange for a release of the claims Kennerley, as an individual, had against Allred as of August 10, 2001 (the date of Kennerleys bankruptcy petition) and any claims Kennerley had to an interest in the partnership. The bankruptcy court approved the agreement on February 10, 2004. One year later, on March 12, 2005, the bankruptcy court approved the trustees motion to transfer to Allred whatever right, title and interest Rebecca Kennerleys bankruptcy estate had in the partnership and the Explorer judgment for $10,000.

On July 6, 2005, Judge Joyce Cram entered judgment to further effectuate Judge Dolgins interlocutory judgment (filed April 16, 1998, in this case), as modified by Judge Flinns judgment for fraudulent conveyance (filed August 3, 1998, in Contra Costa Superior Court Case Number C96-04401). Judge Cram ordered that Lot 4 be sold and the proceeds of the sale distributed into court. She also set forth the priorities for distributing the proceeds, as follows:

1. Allred, for $106,000.

2. The Trust, for $175,383.36.

3. The Trust, for attorney fees of $37,931.50.

4. The Trust, for wages in the amount of $15,000.

5. Any remaining proceeds to Allred.

This appeal followed.

I.

Issues Relating To 1998 Decision

Allreds Purchase and Transfer of Lot 4

Allred contends the court erred by ruling his redemption of Lot 4 from foreclosure proceedings simply preserved partnership property, as opposed to effectively passing title to Allred as an individual. It is not disputed that as of April 1989, the mortgage on Lot 4 was in default and Union Bank was threatening foreclosure. It also is not disputed that the partnership itself had no funds with which to pay the mortgage. Allred filed suit against Union Bank and ultimately settled the case by using his own funds to pay the bank. Nonetheless, Lot 4 was a partnership asset. In addition, when Allred signed the release and settlement, he signed it as the authorized representative of the partnership.

Partnership is a fiduciary relationship, and partners may not take advantages for themselves at the expense of the partnership. (Enea v. Superior Court (2005) 132 Cal.App.4th 1559, 1564; Jones v. Wells Fargo Bank (2003) 112 Cal.App.4th 1527, 1540.) A partner has no right to deal with partnership property other than for the sole benefit of the partnership. (Prince v. Harting (1960) 177 Cal.App.2d 720, 727.) When the bank released its claim, it meant only that the bank no longer held a mortgage on Lot 4. Lot 4 did not become Allreds any more than it would have become the property of some stranger had the stranger paid off the mortgage. It does not matter that but for Allreds conduct, the partnership would have had nothing, nor does it matter that Allred had no affirmative duty to preserve Lot 4 as a partnership asset. While Allred may have had no affirmative duty to redeem the property, once he did redeem it, it continued to be an asset of the partnership and Allred was required to treat it like any other partnership asset. It follows Allred had no right to take title to Lot 4 and no right to sell it to himself at anything less than full market value. By effectively selling the lot to himself at a reduced price, he therefore took an advantage for himself at the expense of the partnership.

It also makes no difference that Kennerley may have breached his own fiduciary duties. Allred has cited no authority for the proposition one partners improper actions excuse anothers improper actions or allows another partner to take title to partnership property. It is of no matter that the partnership agreement provided, with a single defined exception, Limited Partner shall not be required to loan any funds to the Partnership. Furthermore, neither Partner shall be permitted to loan funds to the Partnership without the consent of the other. Assuming Allreds payment to Union Bank might be characterized as a loan to the partnership, it means only that he breached the cited provision of the partnership agreement; it does not mean that his loan created a right in him free from his obligation to act as a fiduciary to the partnership.

Allreds Entitlement to Offsets

Allred made a number of claims against the partnership. These are listed in an exhibit to his issue conference statement, and include such things as legal fees paid on behalf of the partnership, partnership taxes, loan fees incurred in obtaining the money to make his original capital contribution and various other matters. Judge Dolgin ultimately ruled the partnership owed Allred the sum of $193,673.40, reduced by the sum of $69,640.95, representing the sum Allred had obtained through the sale of Lot 2, for a net amount owed by the partnership to Allred of $124,032.45. Judge Dolgin ruled, however, the debt represented by the Explorer judgment had priority over Allreds claim, so Allred would be entitled to reimbursement for these sums only to the extent any partnership assets remained after payment of the Explorer judgment lien.

Allred appears to concede the partnership agreement,[3] or the Corporations Code,[4] or both, required claims of third party creditors to be satisfied before any partnership assets could be distributed to the partners. His contention is his payments to the partnerships creditors made him a third party creditor of the partnership so he should have been given the same priority as Explorer (or the owner of the Explorer judgment or judgment lien; i.e., Kennerley, Rebecca Kennerley and/or the Trust).

The Explorer judgment was purchased by the Trust and assigned to the Kennerleys who, as Allred appears to concede, then were entitled to assert Explorers third party claim against the partnership. Similarly, Allred in effect stepped into the shoes of Union Bank when he settled the banks claims against Lot 4, and thereby was given first priority to the proceeds from the sale of Lot 4. There is no evidence Allred purchased any additional debts owed by the partnership to anyone or received any assignment of a debt or contract right owed by the partnership, other than the Union Bank mortgage. It seems Allred simply decided to satisfy some of the partnerships debts out of his own pocket or to purchase goods or services on behalf of the partnership. Had he not done so, any existing creditor would have had priority as a third party claimant. Had he obtained an assignment of claims, he would have been in a position similar to the Trust with respect to the Explorer judgment. Allred, however, did not obtain the rights of any third party. He simply paid off partnership obligations or purchased partnership property with his own funds. Any debt owed to him by the partnership therefore was owed to him as a partner and not as a third party creditor.

As we are concerned here only with the distribution of partnership assets, we do not determine if Allred had some right of contribution from Kennerley, as an individual, or if any right Allred may have had against Kennerley was discharged in the bankruptcy proceedings. Cases such as Kazman v. Light (1921) 53 Cal.App. 732, 734 (Kazman), cited by Allred,[5] therefore have no application.

II.

Explorer Judgment And Judgment Lien

As noted above, Explorer issued a bond guaranteeing certain work required by the Town of Danville in connection with the development of the partnership property. When that work was not done by the partnership, the town did it and executed on the bond. Explorer paid the town $76,000 and, in 1991, filed suit and obtained judgment against the partnership and the Kennerleys. In 1994, the Trust paid Explorer $60,000 and Explorer assigned the judgment to Frederick and Rebecca Kennerley. In 1998, Judge Dolgin ruled the Kennerleys, as assignees of the judgment lien, therefore were entitled to recover $78,536.11 (the value of the lien), plus interest, from the partnership assets.

At the 2005 trial before Judge Cram, Allred asserted two arguments concerning the Explorer judgment, arguing he had become the owner of the judgment. Allred also argued that irrespective of who owned it, the Explorer judgment was not against the partnership and therefore could not form the basis of any claim to partnership assets. Allred sought to introduce evidence the Explorer judgment, entered against an entity entitled Kennerley Development Company, was not actually entered against the partnership, but against a different entity also entitled Kennerley Development Company, which pre‑dated the partnership.[6] Judge Cram ruled against Allred on both points. Allred contends both rulings were attended by error.

Judgment as Against Entity Other Than Partnership

Allred first contends that Judge Cram erred in refusing to allow him to introduce evidence that the Kennerley Development Company named as a defendant in the Explorer judgment was not the partnership. He asserts he would have testified the issue had been mentioned, but never decided, in the earlier proceedings. Judge Cram noted that up until that moment, it appeared as if everyone had acted on the understanding the Explorer judgment had been entered against the partnership, pointing out that Judge Dolgins ruling necessarily was based on that understanding. Judge Cram ruled that Allreds failure to argue the point in earlier proceedings estopped him from raising the argument in 2005. Kennerley responds only by asserting Allred failed to demonstrate the relevance of the evidence. While we believe the evidence was indeed relevant, we, like Judge Cram, are of the opinion the argument was not raised in a timely manner. The partnerships responsibility for the judgment lien was at issue during the proceedings conducted by Judge Dolgin, and any arguments Allred had regarding that responsibility should have been litigated there. Appellate courts are familiar with the principle that a party may not present its case at trial on one theory and then later urge a completely different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant. (Ernst v. Searle (1933) 218 Cal. 233, 240-241; and see Webster v. Southern Cal. First Nat. Bank (1977) 68 Cal.App.3d 407, 416-417.) Rationale for the principle has equal application here, where the litigation took place in the proceedings conducted by Judge Dolgin, and Judge Crams task was to implement Judge Dolgins decision. The time to litigate the partnerships liability for the judgment was during the proceedings conducted by Judge Dolgin. Mentioning, but not litigating, the issue in those proceedings was not enough. By failing to litigate the point, Allred effectively misled the court into assuming it was not an issue, and allowing him to raise the question years after those proceedings were completed would be unfair both to the court and to Kennerley. In the alternative, assuming the point was in fact in some way addressed in the earlier proceedings, it was decided against Allred when Judge Dolgin held the Explorer judgment would be paid from partnership assets. In either event, Judge Cram correctly ruled Allred could not argue the issue in 2005.

Allred notes Judge Cram at one time seemed to confuse the relevance of who was entitled to enforce the judgment with the relevance of deciding against whom the judgment might be enforced.[7] On our review of the proceedings, the confusion was completely understandable, but we also find it did not affect Judge Crams ruling that Allred was no longer entitled to argue the partnership was not the company on the bond.

Ownership of the Judgment

Allreds other argument, that he owned the judgment, was based on his purchase of assets from the bankruptcy estates of Kennerley and Rebecca Kennerley. It will be recalled that some years after Judge Dolgins ruling, Kennerley and Rebecca Kennerley each filed for bankruptcy. Allred paid $39,000 to Kennerleys bankruptcy trustee in return for a release of all claims Kennerley had as an individual against Allred as of August 10, 2001, and all claims Kennerley had to an interest in the partnership. Allred also paid $10,000 to Rebecca Kennerleys bankruptcy trustee in return for the bankruptcy estates interest in the partnership and in the Explorer judgment. (Ante, p. 5.) Allred, accordingly, claimed he, and not the Trust, owned the Explorer judgment. The Trust disputed this claim, pointing out that in 1994, long before Rebecca Kennerley declared bankruptcy, Kennerley had assigned to Rebecca all of his right, title and interest in the proceeds from the Explorer Insurance Company Judgment Lien and Rebecca, in turn, had assigned all her right, title and interest in the proceeds from the Explorer Insurance Company judgment Lien to the Trust.

Allred took the position that the only thing that had been assigned to the Trust was the judgment lien and not the judgment itself. In his opinion, while a judgment and a judgment lien are not the same things, a judgment lien cannot be assigned apart from the judgment. As the judgment was not assigned, the judgment and the judgment lien remained with Rebecca Kennerley, were part of her bankruptcy estate and were purchased by Allred in 2001. Kennerley, as trustee of the trust, took the position that notwithstanding that the assigning documents stated that a judgment lien was being assigned, the intent was to assign both the judgment and the lien, so when Allred later purchased the judgment from Rebecca Kennerleys bankruptcy estate, he purchased nothing. Judge Cram, after taking evidence on the question, ruled in favor of the Trust.

Allred does not contend, nor can he, the evidence fails to support a finding that the settlorRebecca Kennerleyintended to transfer the judgment, and not just the judgment lien, to the Trust. Rebecca Kennerley testified at length about her intentions, which quite clearly were to transfer whatever rights she had in the judgment to the Trust. Allred complains Judge Cram did not allow him to introduce evidence that irrespective of Rebecca Kennerleys testimony, only the lien was transferred to the Trust. Specifically, he contends Judge Cram erred by refusing to allow him to introduce evidence of correspondence between the Trusts attorney and the attorney for Rebeccas bankruptcy trustee at the time Allred was proposing to purchase the judgment from the Trust.

The correspondence in question is made up of two letters that appear to have been written in connection with Allreds offer to purchase the judgment from Rebecca Kennerleys bankruptcy estate for $10,000. The first is a letter dated February 24, 2005, from the bankruptcy trustees attorney to the Trusts attorney (who also represents Kennerley), responding to an assertion that the judgment had been transferred into the trust, and therefore could not be sold to Allred. The trustees attorney disagreed with that assertion, pointing out the relevant documents established only that the judgment lien had been transferred. The second letter is the response from the Trusts attorney, asking that it be made clear that anyone purchasing the Explorer judgment would be purchasing the judgment and not the judgment lien. In Allreds opinion, the Trust accordingly took the position the judgment had not been transferred to the Trusta position at odds with the its later argument to Judge Cram that Rebecca Kennerley had transferred both the judgment and the judgment lien to the Trust.

Assuming for purposes of argument the letters are a proper part of the appellate record, we nonetheless perceive no error or abuse of discretion in Judge Crams decision to exclude them as evidence. Allreds theory is the doctrine of judicial estoppel precludes the Trust from claiming Rebecca Kennerley transferred both the judgment and the judgment lien to the Trust, when the Trust earlier had agreed only the judgment lien had been transferred. The doctrine of judicial estoppel is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181 (Jackson).)  The policies underlying preclusion of inconsistent positions are general consideration[s] of the orderly administration of justice and regard for the dignity of judicial proceedings.  . . . Judicial estoppel is intended to protect against a litigant playing fast and loose with the courts.  [Citation.] It seems patently wrong to allow a person to abuse the judicial process by first [advocating] one position, and later, if it becomes beneficial, to assert the opposite. [Citation.] (Ibid.)[8] The doctrine has no application here, where the Trust never advocated Rebecca had transferred only the judgment lien to the Trust or sought to obtain a benefit by asserting that Rebecca had transferred no more than the judgment lien. To the contrary, the Trusts position was that the bankruptcy estate had nothing to sell to Allred because everything had been transferred to the Trust. At most, the Trust expressed a willingness to concede to the bankruptcy trustee that even if the judgment lien could be separated from the judgment, the trustee could not sell the right to execute on the judgment lien because the judgment lien had been transferred. A concession is not the same thing as a positive assertion, and when the concession does not inure to the benefit of the party making it, the judicial process will not be adversely affected by a later reassertion of the partys original position. In sum, the doctrine of judicial estoppel could not bind the Trust to its earlier concession, and the letters in question therefore were irrelevant to any issue, and inadmissible.

III.

Attorney Fees

In July 1998, Judge Dolgin ruled Allred was the prevailing party in the first phase of the proceedings, and but for Kennerleys bankruptcy could have obtained an award of attorney fees. Kennerley was the prevailing party in the second phase and was entitled to fees for that litigation. Judge Dolgin therefore ordered, Attorney fees are allowed to Kennerley for all services from the date [Judge Dolgin] was stipulated to act as Temporary Judge not including any costs. The attorney for Kennerley is ordered to itemize such fees and Allred shall have 15 days to object and to request any further hearing. Kennerleys attorney responded on August 5, 1998, by filing a declaration, supported by invoices itemizing fees of $37,931.50 for the relevant time period. There is no record of any objection filed by Allred. Nothing further happened on the question of fees until 2005, when, as part of her judgment, Judge Cram ordered the partnership to pay attorney fees of $37,931.50 to the Trust. Allred complains that Judge Crams order was improper because Judge Dolgin never fixed attorney fees as an item of costs.[9] While his complaint is unclear, it seems Allreds point is that there is no separate, postjudgment order fixing Kennerleys attorney fees. The reason for allowing a court to fix fees, postjudgment, is to provide an order from which a party who wishes to contest that award can appeal. (See Code Civ. Proc.,  904.1, subd. (a)(2).) That reason is satisfied here. Judge Crams order effectively fixed attorney fees and provided a vehicle for appeal. Allred has no cause for complaint.

In his reply brief, Allred complains Judge Cram said in announcing the decision that [the fee] amount should not come out of Mr. Allreds portion, but that is not what the judgment as entered three months later, in July, 2005, said in paragraph 3(c). If it had, it would not be a subject of this appeal. The judgment did not order the fees were to come out of Allreds portion. The order set priorities for payments of partnership debts. Allreds portion had first priority. The attorney fees had third priority and were to be paid out of any remaining partnership assets, not out of Allreds portion. It is true any partnership assets remaining after partnership debts were satisfied were to be distributed to Allred, but this was not because of some claim he had against the partnership. It was because Allred had purchased Kennerleys partnership interest and therefore was entitled to whatever partnership assets existed after the debts had been paid. In any event, fees were awarded under paragraph 19(c) of the partnership agreement, which provides, In any dispute between or among the Partners, whether or not resulting in litigation, the party or parties substantially prevailing shall be entitled to recover from the other party or parties to the dispute all reasonable costs, including without limitation reasonable attorneys fees.

Allreds final argument is the Trust is not entitled to the fee award because the fee award had not been assigned to the Trust, but remained a part of the Kennerleys bankruptcy estate and was purchased by Allred in 2001.[10] The argument is based on Allreds interpretation of the documents assigning the Kennerleys assets to the Trust, which, as relevant, read that the assigned assets include, All right, title and interest in the proceeds from the settlement of the lawsuit with Larry and/or Shirley Allred, the sale of the property or any other assets of Kennerley Development Company, the collection of any attorneys fees related to the fraudulent transfer of Lot 4, and any other matters which are not known at this time. Allred contends that a close reading of the provision supports an interpretation that Kennerley assigned something other than the fees and wages he might recover as a result of this action, such as fees he might obtain in connection with the derivative action.[11] The problem with this argument is it is quite clear from the Kennerleys conduct and from the proceedings as a whole the Kennerleys intended to assign any and all assets they had to the Trust to prevent Allred or any other creditor from reaching them. While the wording of the assignment is less than ideal, it is reasonably consistent with the clear intent of the Kennerleys, and we perceive no basis for imposing some other construction on it. We also note, contrary to Allreds claim, this interpretation is supported by the evidence, as Rebecca Kennerley testified her intent was to assign to the Trust the attorney fees incurred in prosecuting this action.

Conclusion

The judgment is affirmed.

_________________________

STEIN, J.

We concur:

_________________________

MARCHIANO, P. J.

_________________________

SWAGER, J.

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Analysis and review provided by Chula Vista Property line attorney.

[1] The California lottery is peripherally involved, as the trust in question was made up in large part of winnings from the lotterys Big Spin. (See Kennerley v. Allred (Oct. 25, 1995, A067902 [nonpub. opn.]); Allred v. Scott (Mar. 11, 1996, A071627 [nonpub. opn.]); Allred v. State of California (Mar. 11, 1996, A070205 [nonpub. opn.]); Willard v. Stuart (Feb. 11, 1999, A079314 [nonpub. opn].)

[2] We take judicial notice of the judgment entered in the related proceeding.

[3] The partnership agreement set forth the priorities for payment of partnership debts upon dissolution, providing, On dissolution, the business of the Partnership shall be wound up by the General Partner, unless the General Partner is unable to do so or has been removed, in which event a person selected by the Limited Partner shall wind up the Partnership business. In winding up the Partnership business, the assets shall be liquidated or distributed in kind, and any available proceeds shall be applied in the following order of priority to (1) payment of Partnership debts, including expenses of the liquidation, except for obligations owed to secured creditors which will be assumed by any person to whom the property securing the obligation is transferred; (2) the creation of a reasonable reserve for the payment of any further [liabilities] and expenses; and (3) payment of amounts due to Partners with respect to their interests in the Partnership pursuant to Section 11. Section 11, entitled Distributions and Allocations, provided: All Partnership proceeds shall first be applied to Partnership expenses and liabilities, including loans by Partners to the Partnership.

[4] See Corporations Code section 16807.

[5] Allred cites Kazman for the proposition a partner who has paid a partnership debt is entitled to maintain an action against the other partner for contribution after the partnership has been dissolved. (See Kazman, supra, 53 Cal.App. at p. 734.)

[6] It seems that Kennerley operated under the name Kennerley Development Company before entering into the partnership with Allred. Allred pointed out Kennerley had admitted to back-dating the partnership agreement, and sought to introduce evidence suggesting Kennerley was acting through an earlier version of Kennerley Development Company when the bond issued.

[7] Judge Cram said to Allreds attorney: Well, thats the issue. If there was a valid transfer, then you get zip. We are back to the same issue. It doesnt matter who the judgment was against. It seems to me thats a red herring. It doesnt matter who its against. If they owned a judgment, it could have been a judgment against General Motors. But if the judgment was transferred [from the Kennerleys to the Trust], your client gets nothing. If it wasnt transferred, then it was in the bankruptcy estate, and he got it. [] . . . [] . . . So then the only issue is whether there was a valid assignment of the judgment to the trust, period, right? No other issues.

[8] In Jackson, supra, 60 Cal.App.4th 171, for example, the plaintiff was injured on the job and, for purposes of obtaining workers compensation benefits, successfully claimed he suffered from a disability rendering him unable to perform the essential functions of his job. He later filed a claim under the Americans with Disabilities Act of 1990 (42 U.S.C.  12101-12213), which required him to prove he could perform the essential functions of the job he had held with or without reasonable accommodation. Summary judgment was granted to the employer, and upheld on appeal. The appellate court found that the plaintiff could succeed only by asserting a position totally inconsistent with the position he successfully had pursued in the workers compensation proceeding, ruling [t]he doctrine of judicial estoppel forecloses that attempt. (Id.at p. 189.)

[9] Allred cites Code of Civil Procedure section 1033.5, which provides, in subdivision (c)(5), that attorney fees are an item of costs that may be fixed (A) upon a noticed motion, (B) at the time a statement of decision is rendered, (C) upon application supported by affidavit made concurrently with a claim for other costs, or (D) upon entry of default judgment.

[10] The contention is phrased as an attack, on substantial evidence grounds, on an implied finding by Judge Cram that Kennerley had transferred his right to fees and wages to the Trust. Kennerley responds to the contention by asserting that Allred actually is attacking the judgment for failing to make a specific finding, arguing that by failing to seek a statement of decision, Allred waived any right to complain about a failure to make a specific finding. We read the contention as a claim that there is no evidence supporting the judgment, a contention that is not waived by failing to request a statement of decision.

[11] For example, Allred points out that the assignment refers to the settlement of the lawsuit with Larry and/or Shirley Allred, noting that the only lawsuit involving Shirley Allred was the 1996 derivative action. He concedes that the derivative suit had not been filed at the time of the 1994 assignment, but addresses this inconsistency by asserting that it explains the less than precise description of it.