Hume v. Hume

Filed 10/30/06 Hume v. Hume CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

This appeal and cross-appeal concern three orders made after plaintiffs Edward A. Hume and Janet E. Hume obtained a December 7, 2004, judgment against defendant Edward D. Hume that incorporated the terms of the parties’ previous agreement to settle a lawsuit. Plaintiffs challenge (1) denial of their motion for postjudgment costs and attorney fees; and (2) denial of their motion to amend or correct satisfactions of judgment.[1] Defendant challenges an order granting plaintiffs’ motion to void a transfer of real property. We affirm each of the orders.[2]

FACTUAL AND PROCEDURAL BACKGROUND

A. Previous Litigation

In July 2004, the parties settled a lawsuit over the ownership of five parcels of land in a written agreement that required the parties to exchange certain interests in the properties and to release certain claims. The settlement agreement allowed the prevailing party in any legal proceeding arising out of the agreement to recover his or her costs and reasonable attorney fees. Even though the underlying action was dismissed, the parties agreed the trial court would retain jurisdiction to facilitate enforcement of the settlement.

When defendant purportedly failed to comply with the settlement, plaintiffs moved to enforce the agreement under Code of Civil Procedure section 664.6.[3] The trial court granted the motion and on December 7, 2004, entered judgment incorporating the terms of the settlement, including the costs and attorney fees provision. On March 22, 2005, the court granted plaintiffs’ request for costs and attorney fees incurred in enforcing the settlement agreement through December 31, 2004. The court’s order was “without prejudice” to plaintiffs requesting additional costs and attorney fees incurred after December 31, 2004.

B. Current Litigation

1. Plaintiffs’ Motion to Void Property Transfer

On December 2, 2004, five days before judgment was entered, plaintiffs moved to amend “the judgment“ to add as a defendant and judgment debtor Hollow Echo, LLC, and to void the transfer of defendant’s interest in certain real property to Hollow Echo, LLC (hereafter property transfer) on the ground the transfer violated the terms of settlement.

On December 29, 2004, the trial court granted plaintiffs’ motion, in part. The court granted the request to amend the December 7, 2004, judgment, by adding Hollow Echo, LLC as a defendant and judgment debtor. However, the court denied the request to void the property transfer because plaintiffs had not provided sufficient evidence that defendant violated the agreement. But, the court indicated it would entertain a new motion for reconsideration or renewal under section 1008 if plaintiffs acquired new evidence.

On January 4, 2005, plaintiffs timely filed a motion for reconsideration, or in the alternative, renewal of their motion to void the property transfer. In support of their new motion, plaintiffs included December 29, 2004, declarations by defendants’ children to support the request to void the transfer. Although the hearing on the motion was required to be set for the 16th court day after service by mail (§ 1005, subd. (a)), the motion was noticed to be heard on January 28, 2005, the 15th court day following service. On January 28, 2005, the court denied the motion without prejudice because defendant was not provided sufficient notice of the hearing date. On February 15, 2005, defendant served on plaintiffs’ notice of the court’s January 28, 2005, ruling. Meanwhile, on January 28, 2005, plaintiffs refiled their motion for reconsideration and renewal, and set it for a timely hearing for March 1, 2005.

On March 1, 2005, the court heard plaintiffs’ January 28, 2005, motion. The court rejected defendant’s arguments that the motion was untimely, noting that it had denied the January 4, 2005, motion without prejudice so that plaintiffs could refile. On the merits, the court found plaintiffs’ motion was proper because the additional evidence from defendant’s two children, was information plaintiffs would not have been able to obtain at the time they filed their original motion or even their reply. Based upon the new evidence, the court granted plaintiffs’ request to void the property transfer.

2. Plaintiffs’ Motion for Postjudgment Attorney Fees and Costs

On April 13, 2005, plaintiffs’ counsel signed a form acknowledging full satisfaction of the December 7, 2004, judgment by defendant. The satisfaction was recorded in Orange County on April 19, 2005. On April 22, 2005, plaintiffs moved to recover postjudgment attorney fees and costs incurred to enforce the judgment from January 1, 2005, through March 31, 2005. Before a hearing was held on the fees and costs motion, plaintiffs’ counsel executed a second acknowledgment of full satisfaction of judgment, dated May 5, 2005. This second satisfaction was recorded in San Mateo County on May 6, 2005. On May 18, 2005, defendant filed notice that plaintiffs twice acknowledged full satisfaction of the judgment based on the two forms signed by their counsel. On July 8, 2005, the trial court denied plaintiffs’ April 22, 2005, motion for postjudgment attorney fees and costs on the sole ground the motion was precluded by plaintiffs’ April 13, 2005, acknowledgment that the December 7, 2004, judgment was fully satisfied.

3. Plaintiffs’ Motion to Amend or Correct Satisfactions of Judgment

On July 13, 2005, plaintiffs moved under section 473 to amend or correct their acknowledgements of satisfaction of judgment. Plaintiffs’ counsel declared that under the settlement agreement, defendant agreed (a) to pay money to plaintiffs upon the sale of certain real property in Orange County, and (b) to cooperate with plaintiffs’ in their efforts to refinance a loan secured by certain real property located in San Mateo County. Abstracts of the December 7, 2004, judgment were recorded in Orange and San Mateo Counties to effect a judgment lien on defendant’s interests in the properties located in those counties. To facilitate sale of the Orange County property and refinancing of the San Mateo County property, it was necessary to extinguish the judgment lien by acknowledgment of full satisfaction of judgment. Although when the acknowledgments of satisfaction were filed, counsel had not recovered costs and attorney fees incurred after December 31, 2004, counsel believed less than full satisfactions would be unacceptable to the title and escrow companies and would prevent a close of the sale of the Orange County property. Counsel felt she was obligated to immediately file an acknowledgment of the full satisfaction of judgment because defendant paid all of the moneys owed to plaintiffs under the judgment, and plaintiffs would be liable for damages if they failed to acknowledge the satisfaction. Since plaintiffs had yet to be awarded any postjudgment attorney fees and costs for the period after December 31, 2004, there was no unsatisfied order or judgment awarding those fees and costs. So, counsel signed and recorded acknowledgments that the December 7, 2004, judgment was fully satisfied, and she believed the satisfactions would not prevent plaintiffs from seeking additional attorney fees and costs or filing other motions to enforce the judgment. Defendant did not file any written opposition to plaintiffs’ motion for relief under section 473, but he asked the court to take judicial notice of the acknowledgments that the December 7, 2004, judgment was fully satisfied.

The court granted defendant’s request for judicial notice, and denied plaintiffs’ motion under section 473 to amend or correct the satisfactions of judgment. The court’s written order provides in relevant part: “[T]he mandatory ‘attorney affidavit of fault’ portion of CCP § 473(b) is inapplicable since the instant motion does not seek to set aside any default, default judgment, or dismissal. Under CCP § 685.080(a), any motion for attorney’s fees incurred in enforcing the judgment had to be filed before the judgment was satisfied in full. Since the mandatory ‘attorney affidavit of fault’ portion of CCP § 473(b) is inapplicable, [plaintiffs’ counsel’s] mistake of law is charged to Plaintiffs, and mere ignorance of the law or negligence in conducting legal research is not excusable neglect. Furthermore, the legal problem posed here was not ‘complex and debatable’ so as to constitute an honest mistake of law warranting relief.”

DISCUSSION

I. Plaintiffs’ Motion for Postjudgment Attorney Fees and Costs

Plaintiffs challenge the denial of their April 22, 2005, motion for postjudgment costs and attorney fees on several grounds. None warrant reversal.

Plaintiffs argue there is no reason or authority to conclude that filing a full satisfaction of judgment bars a later postjudgment motion for attorney fees and costs incurred in enforcement. They refer to cases that concern a party’s right to appeal a fully satisfied judgment (Heacock v. Ivorette-Texas, Inc. (1993) 20 Cal.App.4th 1665, 1670), and a party’s right to recover attorney fees after accepting a section 998 offer to compromise that did not address recovery of such fees. (Ritzenthaler v. Fireside Thrift Co. (2001) 93 Cal.App.4th 986, 989, 991.) Additionally, they rely on the costs and attorney fee provisions in sections 1032 and 1033.5, Civil Code section 1717, and California Rules of Court, rule 870. But these cases and statutes are inapposite because they concern prejudgment requests for relief.

Here, costs and attorney fees are being sought for efforts to enforce a judgment. Plaintiffs’ right to recover those costs and fees is governed by the statutes concerning the enforcement of civil judgments in section § 680.010 et seq. Section 685.040 permits a judgment creditor to recover “reasonable and necessary costs of enforcing a judgment,” including attorney fees if, as in this case, “the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.” (§ 685.040.)[4] Procedures to recover postjudgment costs including attorney fees are provided in sections 685.070, 685.080, and 685.090. Section 685.070 states that a judgment creditor may claim certain costs of enforcing a judgment, including “[a]ttorney’s fees, if allowed by Section 685.040.” (§ 685.070, subd. (a)(6).) “Before the judgment is fully satisfied but not later than two years after the costs have been incurred,” (§ 685.070, subd. (b)), the judgment creditor may request costs including attorney fees by either filing a memorandum of costs (§ 685.070, subd. (b)) or a noticed motion (§ 685.080, subd. (a)). Under section 685.090 “Costs are added to and become a part of the judgment: Upon the filing of an order allowing the costs pursuant to this chapter” (§ 685.090, subd. (a)(1)), or “[i]f a memorandum of costs is filed pursuant to Section 685.070 and no motion to tax is made, upon the expiration of the time for making the motion.” (§ 685.090, subd. (a)(2).) “The costs added to the judgment . . . are included in the principal amount of the judgment remaining unsatisfied.” (§ 685.090, subd. (b).) In its entirety, this statutory scheme unambiguously requires the judgment creditor to request costs including attorney fees before the underlying judgment has been fully satisfied. In other words, once a judgment is satisfied in full, as in this case, a judgment creditor may not later seek additional costs and attorney fees.

We are not persuaded that plaintiffs’ April 22, 2005, motion was timely under section 685.080 because it was filed before defendant filed the “Notice of Acknowledgment of Satisfaction of Judgment [in] Full” on May 18, 2005. A judgment is satisfied when the defendant has paid the full amount required to satisfy the judgment. (§ 724.010.) The acknowledgment signed by plaintiffs’ counsel on April 13, 2005, states that the December 7, 2004, “judgment is satisfied in full.” Given that the April 22, 2005, motion was filed after defendant fully satisfied the December 7, 2004, judgment, as acknowledged by plaintiffs’ counsel on April 13, 2005, plaintiffs were precluded from recovering more postjudgment costs and attorney fees. We are similarly not persuaded by plaintiffs’ argument that the statutory scheme regarding the enforcement of judgments does not apply because they were seeking the “court-approved supplemental fees” pursuant to the trial court’s March 22, 2005, order. The court’s March 22, 2005, order did no more than grant plaintiffs the right to seek costs and attorney fees incurred “to enforce the judgment” as permitted by law. It did not authorize a motion for relief on a fully satisfied judgment.

II. Plaintiffs’ Motion to Amend or Correct Satisfactions of Judgment

It is well settled that a satisfaction of judgment erroneously entered may be cancelled or amended, either on a motion made in the original action or by an independent action in equity. (Kinnison v. Guaranty Liquidating Corp. (1941) 18 Cal.2d 256, 265; Cason v. Glass Bottle Blowers Assn. (1952) 113 Cal.App.2d 263, 268-269 (Cason).) Plaintiffs moved to amend the satisfactions of judgment by motion in the original action under section 473, subdivision (b) (hereafter § 473(b)). The trial court’s denial of section 473 relief does not warrant reversal.

A. Mandatory Relief Under Section 473

Section 473(b) provides: “Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (Italics added.) If the prerequisites for mandatory relief under section 473 are established, the trial court lacks discretion to deny it. (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 612.)

Here, counsel’s purported mistake in acknowledging the December 7, 2004, judgment was fully satisfied before seeking postjudgment costs and attorney fees was not related to a “default” or “dismissal” that allows mandatory relief under section 473. The issuance of the satisfaction of judgment was not the functional equivalent of a “dismissal,” or “default,” as those words are used in section 437(b). (See English v. IKON Business Solutions, Inc. (2001) 94 Cal.App.4th 130, 143-145; Generale Bank Nederland v. Eyes of the Beholder, Ltd. (1998) 61 Cal.App.4th 1384, 1398; Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 683.) While the mandatory provision of section 473(b), “on its face, ‘affords relief from unspecified “dismissal” caused by attorney neglect, our courts have, through judicial construction, prevented it from being used indiscriminately by plaintiffs’ attorneys as a “perfect escape hatch” [citations] to undo dismissals of civil cases.’ [Citation.] Courts have limited the application of the mandatory provision to those dismissals procedurally equivalent to defaults.” (Gotschall v. Daley (2002) 96 Cal.App.4th 479, 483.) Thus, courts have held the mandatory provision cannot be relied on to vacate a voluntary dismissal pursuant to a settlement (Huens v. Tatum (1997) 52 Cal.App.4th 259, 264-265, disapproved on another point in Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 256), a judgment based on an arbitration award due to an untimely filing of a request for trial de novo (Brown v. Williams (2000) 78 Cal.App.4th 182, 188-189), or a cost order uncontested by a timely motion to tax costs (Douglas v. Willis (1994) 27 Cal.App.4th 287, 291-292). The mandatory relief for dismissals was not “ ‘intended to be a catch-all remedy for every case of poor judgment on the part of counsel which results in a dismissal.’ [Citation.]” (Generale Bank Nederland, supra, at p. 1397.)

Plaintiffs rely on Yeap v. Leake (1997) 60 Cal.App.4th 591, 601 and Avila v. Chua (1997) 57 Cal.App.4th 860, 868. However, those decisions have been criticized as improperly extending the reach of the mandatory relief under section 473(b) “beyond the language of the statute itself and beyond what the Legislature intended when it added the word ‘dismissal’ to the statute.” (English v. IKON Business Solutions, Inc., supra, 94 Cal.App.4th at pp. 147, 148; see Leader v. Health Industries of America, Inc., supra, 89 Cal.App.4th at p. 621; Generale Bank Nederland v. Eyes of the Beholder, Ltd., supra, 61 Cal.App.4th at p. 1398; Garcia v. Hejmadi, supra, 58 Cal.App.4th at p. 683.) “It is not an appellate court’s task, nor, indeed, its prerogative, when interpreting a statute, to extend the scope of the statute to encompass situations ‘analogous’ to those the statute explicitly addresses.” (English, supra, at p. 144.) The terms “default,” “default judgment,” and “dismissal,” as used in section 473(b) cannot reasonably be construed to encompass the situation at issue here, i.e., the operative effect of an acknowledgment of satisfaction of judgment to preclude further awards of postjudgment costs and attorney fees.

B. Discretionary Relief Under Section 473

Section 473(b) also allows for relief within the court’s discretion upon application as follows: “The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise or excusable neglect.” We review the trial court’s refusal to grant relief for an abuse of discretion. (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 257.) “[W]hile section 473 of the Code of Civil Procedure should be liberally construed to meet the ends of justice [citation], a decision of a trial court on a motion under that section will not be disturbed on appeal unless there is a plain abuse of judicial discretion. [Citations.]” (Estate of Nelson (1954) 127 Cal.App.2d 732, 735.) We cannot conclude there was an abuse of discretion.

Counsel’s failure to understand the effect of acknowledging the full satisfaction of the December 7, 2004, judgment was a mistake of law that did not require the court to grant discretionary relief under section 473. “ ‘[T]he issue of which mistakes of law constitute excusable neglect presents a fact question; the determining factors are the reasonableness of the misconception and the justifiability of lack of determination of the correct law. [Citation.] Although an honest mistake of law is a valid ground for relief where a problem is complex and debatable, ignorance of the law coupled with negligence in ascertaining it will certainly sustain a finding denying relief. [Citations.]’ [Citations.]” (Anderson v. Sherman (1981) 125 Cal.App.3d 228, 238 (Anderson); see also Alvarado v. City of Port Hueneme (1982) 133 Cal.App.3d 695, 707.)

The court below relied on Anderson, supra, 125 Cal.App.3d 228, and distinguished Cason, supra, 113 Cal.App.2d 263, cited by the plaintiffs. In Anderson, nonresident defendants were served with process according to the general rules for service, and not pursuant to Vehicle Code provisions that permitted another method on nonresident motorists. (Anderson, supra, at p. 236.) Defendants failed to respond to the complaint, and unsuccessfully sought to vacate their default on the ground their counsel mistakenly believed service of process was ineffective because it was not done according to the Vehicle Code. (Id. at p. 238.) The appellate court rejected the defendants’ argument and affirmed denial of relief under section 473. (Anderson, supra, at p. 238.) The court stated: “We are mindful, of course, that the law favors trials on the merits and are reluctant to penalize litigants for the omission of counsel. [Citation.] Nevertheless, considering the simple and obvious point of law about which defendants claim to have been mistaken and the elementary legal research which would have cleared it up, we can hardly say the court below exceeded the bounds of reason and thus abused its discretion when it refused to set aside the defaults.” (Ibid.) In Cason, the trial and appellate courts agreed that the plaintiff’s counsel could not have ascertained from statutes or case law that the legal effect of signing a satisfaction of judgment in full discharged the defendant’s nonmonetary obligations under the judgment, and it was debatable whether it did. (Cason, supra, at p. 268.)

Here the trial court properly relied on Anderson and not Cason, despite plaintiffs’ arguments. Had plaintiffs’ counsel researched the law on postjudgment costs and attorney fees incurred, she would have readily ascertained that if the December 7, 2004, judgment were acknowledged as fully satisfied, a later motion for postjudgment costs and attorney fees would be untimely (§ 685.080). We cannot say the court abused its discretion when it refused to grant plaintiffs discretionary relief under section 473.

Finally, we are not persuaded by plaintiffs’ argument that their attorney was not authorized to acknowledge that the December 7, 2004, judgment had been satisfied in full. An attorney of record for a judgment creditor has authority to execute an acknowledgment of satisfaction of judgment unless the client has previously revoked it. (§§ 283, subd. (2);[5] 724.060, subd. (c)(3);[6] see Wherry v. Rambo (1950) 97 Cal.App.2d 569, 571.) The record contains no evidence that plaintiffs revoked their lawyer’s authority to acknowledge full satisfaction of the December 7, 2004, judgment before the April 13, 2005, acknowledgment was executed.

III. Plaintiffs’ Motion to Void Property Transfer

Defendant challenges the order voiding a property transfer solely on the basis the trial court had no jurisdiction to “reconsider” plaintiffs’ “second” motion for reconsideration filed on January 28, 2005, because the “first” motion was previously denied. Defendant’s argument ignores that the court denied plaintiffs’ January 4, 2005, motion for reconsideration without prejudice. “Denial of a motion without prejudice impliedly invites the moving party to renew the motion at a later date, when he can correct the deficiency that led to the denial.” (Farber v. Bay View Terrace Homeowners Assn. (2006) 141 Cal.App.4th 1007, 1015.) Because plaintiffs timely renewed their motion on January 28, 2005, the trial court had jurisdiction to consider its merits.

DISPOSITION

The postjudgment orders filed April 12, 2005, July 20, 2005 and August 18, 2005, are affirmed. Defendant’s appeal from an order expunging a lis pendens is dismissed. Each party shall bear their own costs on the appeal and cross-appeal.

_________________________

Siggins, J.

We concur:

_________________________

Parrilli, Acting P.J.

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Pollak, J.

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Analysis and review provided by Chula Vista Property line Lawyers.

[1] Although defendant argues plaintiffs waived their right to appeal these postjudgment orders by accepting payment of all moneys demanded under the December 7, 2004, judgment, this contention is meritless. Unlike the situation in Epstein v. DeDomenico (1990) 224 Cal.App.3d 1243, 1246, cited by defendant, plaintiffs are not complaining about any terms of the December 7, 2004, judgment. The orders are appealable because they are orders after final judgment. (See Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 654-656.)

[2] Defendant’s notice of cross-appeal also seeks review of an “ ‘[o]rder expunging [a] Lis Pendens.’ “ Because defendant does not present any argument regarding the order, we dismiss the appeal from that order as abandoned.

[3] Unless otherwise noted all further statutory references are to the Code of Civil Procedure.

[4] Section 1033.5, subdivision (a), lists the items that are allowing as costs in obtaining a judgment, including: “Attorney’s fees, when authorized by . . . [c]ontract.” (§ 1033.5, subd. (a)(10)(A).)

[5] Section 283, subdivision (2), provides: “An attorney and counsel shall have the authority: . . . 2. To receive money claimed by his client in an action or proceeding during the pendency thereof, or after judgment, unless a revocation of his authority is filed, and upon the payment thereof, and not otherwise, to discharge the claim or acknowledge satisfaction of the judgment.”

[6] Section 724.060, subdivision (c)(3), provides that an acknowledgment of satisfaction of judgment shall be executed and acknowledged by “[t]he attorney for the judgment creditor or assignee of record unless a revocation of the attorney’s authority is filed.”