Koefoed v. Camejo

Filed 7/30/07 Koefoed v. Camejo CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County.

Allan J. Goodman, Judge. Affirmed in part; reversed in part and remanded with directions.

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Nancy Kay Undem for Defendant and Appellant.

Jonathan Stein for Plaintiff and Respondent.

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On plaintiffs cause of action for partition the trial court ordered the sale of the real property owned by plaintiff and defendant as tenants in common, distributed the proceeds and awarded plaintiff his attorney fees and costs out of defendants share. Defendants appeal alleges the trial court erred in awarding one half the imputed rental value of the premises to plaintiff and in awarding plaintiff his attorney fees and costs from defendants share of the proceeds. We affirm the judgment insofar as it credits plaintiff with one half the imputed rental value of the premises and reverse as to the award of attorney fees and costs. We remand the cause to the trial court for an apportionment of both parties attorney fees and costs in proportion to their interest in the property.

FACTS AND PROCEEDINGS BELOW

Plaintiff Christopher Koefoed and defendant Suzanne Camejo began living together in the late 1980s. In 1987 Camejo gave birth to their daughter, Gabriella. A year later the couple purchased a home in West Los Angeles for $250,000. Camejo supplied approximately $28,000 toward the down payment and Koefoed contributed approximately $36,000.

Koefoed testified that he lived in the West L.A. home with Camejo and Gabriella until 1990 when Camejo pushed me out. Whether he was pushed or he jumped was a matter of dispute at trial. Camejo testified that she and Koefoed had an argument during which Koefoed told her he found another woman and wanted to leave. Koefoed did not deny that he and Camejo had a dispute over another woman but he did deny that he voluntarily left the home. He claimed that while he was out of the country on a job assignment Camejo ousted me out of my house and . . . hauled all my belongings to my office[.]

After Koefoed left the home he made a few sporadic child support payments but paid nothing toward the mortgage, taxes, insurance or upkeep on the house. Camejo maintained her daughter, herself and the house out of her own income. She did not pay rent to Koefoed nor did he ever ask her to. Koefoed and Camejo discussed issues involving child support and the house but never came to an agreement on either and no order for child support exists.

In 1999 Camejo, with the assistance of other defendants, refinanced the property without Koefoeds knowledge or consent. She did this by forging Koefoeds signature on a deed quit claiming the property to her. Based on the forged quit claim deed, the new lender made a loan to Camejo secured by a deed of trust on the property. On the same day, Camejo executed a quit claim deed conveying the property back to her and Koefoed. Camejo then caused all three deeds to be recorded on the same day. The forged quit claim deed was recorded first, followed by the deed of trust, then the second quit claim deed. The trial court found that Koefoed did not receive any of the net proceeds from refinancing the loan and that the terms of the new mortgage were less favorable than those of the prior one.

Koefoed brought this action seeking damages and equitable relief stemming from Camejos refinancing fraud. He also sought an order partitioning the property by sale and an allocation of the proceeds as provided by law and equity.

The case was tried in phases. A jury tried Koefoeds causes of action for fraud, slander of title, conversion, negligence and intentional infliction of emotional distress and Camejos affirmative defense of the statute of limitations. The trial court simultaneously tried the cause of action to quiet title. Then while the jury deliberated the court tried the partition action. This appeal only concerns the partition action.[1]

After hearing testimony from Koefoed, Camejo and their respective appraisers, the trial court issued a statement of decision in the partition action. The court found this was a proper case for partition by sale and that Camejo and Gabriella could remain in the home until the close of escrow. The court further found that the proceeds from the sale, after expenses, should be divided evenly between Koefoed and Camejo subject to the following credits and adjustments. Koefoed received a credit for the amount he contributed to the down payment above his one-half share and a credit equal to one-half the imputed rental value of the property from the time he ceased living there. The court held that notwithstanding Camejos fraudulent refinancing of the property Koefoed was responsible for one-half of the amount that would have been due under the original loan. Camejo received credits for the costs of improvements, insurance and property taxes she paid on the property, one-half of the imputed rental value and one-half the principal and interest she paid on the original loan and would have paid on that loan had she not refinanced it. The court denied Camejo a credit for child support.

Following the sale of the property for $683,250 the trial court entered a final judgment. In allocating the net proceeds of $393,654 between the parties the court credited Koefoed with $174,759 which it found to be one-half the imputed rental value of the property. The allocation to the parties prior to adjustments for attorney fees and costs was $218, 625 to Koefoed and $175,029 to Camejo. The court required Camejo to pay Koefoeds attorney fees and costs incurred in the partition action in the amount of $54,667. Thus, as a result of the sale Koefoed netted the sum of $273,292 while Camejo received $120,362 and is responsible for paying her own attorney fees and costs.

Camejo filed a timely appeal from the judgment. She contends Koefoed should not have been awarded any imputed rent. She also contends that the trial court erred in awarding Koefoed one hundred percent of his attorney fees and costs in the partition action. We reject Camejos first contention but agree with the second.

DISCUSSION

It is a well settled rule of appellate practice that a judgment of the trial court is presumed correct on appeal and all intendments and presumptions are indulged in favor of its correctness. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) This rule is codified in Code of Civil Procedure section 634 with respect to statements of decision. The statute provides in relevant part that [w]hen a statement of decision does not resolve a controverted issue . . . and the record shows that the omission . . . was brought to the attention of the trial court either prior to entry of judgment or in connection with a motion [for new trial or to vacate the judgment] it shall not be inferred on appeal . . . that the trial court decided in favor of the prevailing party as to those facts or on that issue. To put it another way, if the omission is not brought to the trial courts attention the appellate court will imply findings to support the judgment. (In re Marriage of Arceneaux, supra, 51 Cal.3d at pp. 1133-1134.)

Here, the trial courts statement of decision did not state the factual basis for its determination Koefoed was entitled to one-half the imputed rent but Camejo did not call this omission to the courts attention. Our review of the record, however, convinces us that sufficient evidence supports the trial courts implied findings entitling Koefoed to one half the imputed rent based on a physical ouster.

Generally when two persons own real property as tenants in common and only one of them lives on the property the cotenant out of possession is not entitled to recover the imputed rental value of the property from the cotenant in possession. (Brunscher v. Reagh (1958) 164 Cal.App.2d 174, 176; and see 5 Miller & Starr, Cal. Real Estate (3d Ed. 2000) 12:4, p. 12-11 (Miller & Starr).)[2] California law recognizes three exceptions to this rule: when there is an agreement between the cotenants to share the rents and profits from the property (Black v. Black (1949) 91 Cal.App.2d 328, 332); when one cotenant has been ousted from possession by the other (Estate of Hughes (1992) 5 Cal.App.4th 1607, 1611); and, in a partition action, when recovery of the imputed rental value by the cotenant out of possession would be just and consonant with equitable principles. (Hunter v. Schultz (1966) 240 Cal.App.2d 24, 32.)

The evidence supported Koefoeds claim Camejo physically ousted him from the home. Koefoed testified that Camejo pushed me out and hauled all my belongings to my office with the exception of some expensive electronic items and his financial records she kept locked in the garage and would not allow him to retrieve. Although Camejo refuted some of Koefoeds testimony her credibility was severely damaged by the evidence in the fraud phase of the trial and the trial court reasonably could have rejected it. The trial courts credibility decisions, of course, are binding on us on appeal. (Weathers v. Kaiser Foundation Hospitals (1971) 5 Cal.3d 98, 109.)

For these reasons we conclude the evidence supports the trial courts judgment.

The award of attorney fees and costs in partition actions is governed by Code of Civil Procedure sections 874.010 and 874.040.[3] Section 874.010 states: The costs of partition include: [] (a) Reasonable attorneys fees incurred or paid by a party for the common benefit [and] (e) Other disbursements or expenses determined by the court to have been incurred or paid for the common benefit. Section 874.040 provides in relevant part: [T]he court shall apportion the costs of partition among the parties in proportion to their interest or make such other apportionment as may be equitable. (Italics added.) Thus, an award of attorney fees and costs is a two step process. In the first step the court determines the reasonable attorney fees and costs incurred or paid by the parties for the common benefit. In the second step the court apportions the fees and costs incurred for the common benefit among the parties in proportion to their interests in the property unless the court determines some other apportionment is equitable.

Finding the existence of exceptional circumstances, the trial court ordered that Koefoed recover 100 percent of his attorney fees and costs in the partition portion of the action. This award is subject to our review for abuse of discretion and will be affirmed unless there is no substantial evidence to support the trial courts findings or there has been a miscarriage of justice. (Finney v. Gomez (2003) 111 Cal.App.4th 527, 545.) For the reasons set forth below we hold the trial court abused its discretion in awarding Koefoed his attorney fees and costs from Camejos share of the proceeds.

The trial court gave two reasons for awarding Koefoed his attorney fees and costs. First, the court found: There need not have been any trial on the partition matter. . . . It was only [Camejos] intransigence that brought about the two additional days of trial and substantial post-trial proceedings. The court reasoned that once the jury found Camejo had committed and profited from a forgery of Koefoeds signature on the quit claim deed there was no reason to try the partition phase[.] Second, the court found Camejos challenges to the accounting figures submitted by Koefoeds expert were generally unsupportable and the accounting issues could easily have been resolved in two hours but for the defense obfuscation.

Camejo argues the award constituted a miscarriage of justice because Koefoed did not incur his attorney fees and costs for the common benefit ( 874.010, subd. (a)). In the alternative she maintains there was no equitable basis for deviating from an equal apportionment of the fees and costs between the parties. ( 874.040.) We find her second argument persuasive.

In its interpretation of the common benefit provision of section 796, the predecessor of section 874.010, our Supreme Court explained that distribution of the proceeds from a sale is an inherent part of a partition proceeding and therefore it is an act for the common benefit of the parties to the action regardless of whether or not there had arisen and been litigated controversies either over the question as to whether or not the parties to the action were cotenants or over the extent of their respective interests as such in the property thus sought to be divided. (Capuccio v. Caire (1932) 215 Cal. 518, 525-526 Capuccio II; italics omitted; quoting from the courts earlier opinion in Capuccio v. Caire (1929) 207 Cal. 200, 208 (Capuccio I).) In other words, fees and costs do not cease being for the common benefit merely because they were incurred in matters controversial in nature. (Capuccio II, supra, 215 Cal. at p. 528.) Litigation ceases to be for the common benefit when it arises between some of the parties only (id. at p. 529; italics omitted; quoting from former section 796) or when one party seeks to deny any benefit at all to the other parties. (Williams v. Miranda (1958) 159 Cal.App.2d 143, 158.) In this case, where the parties disputed not only Koefoeds entitlement to a partition of the property but the proper allocation of the proceeds from the sale of the property, the fees and costs incurred by each party were for the common benefit as the Supreme Court has interpreted that term.

Under section 874.040, the default allocation of fees and costs among the parties is in proportion to their interests. (Finney v. Gomez, supra, 111 Cal.App.4th at p. 547.) As noted above, the trial court deviated from the normal allocation because it found two exceptional circumstances.

The first exceptional circumstance was the fact that, in the trial courts view, once the jury had found for Koefoed in the fraud action [t]here need not have been any trial on the partition matter but for Camejos intransigence. The court did not explain what the fraud action had to do with the partition action and we fail to see the connection.

Koefoeds fraud action was directed at recovering damages he suffered as a result of Camejos improper refinancing of the property by forging his name on a quit claim deed. Koefoed recovered approximately $375,000 for this fraud and it is undisputed the award was satisfied by other defendants on that cause of action. The partition action was an equitable action directed at forcing a sale of the property over the objection of the cotenant. Koefoed had the burden of proving a sale of the property would be more equitable than a physical division (Miller & Starr, supra, 12:17, p. 12-41) and Camejo was entitled to raise the equitable defense that Koefoed had waived his right to seek partition of the property. (Id. at 12:21, pp. 12-53-12-54.) These issues and extensive evaluation testimony from experts for both parties consumed the two day partition trial.

Furthermore, the trial courts remark that there would have been no need for a trial but for Camejos intransigence suggests the court was punishing Camejo for not settling the matter instead of going to trial. Such punishment is clearly an abuse of discretion because the decision to defend rather than settle an action has long been recognized as a matter vested solely in the defendants discretion even if the defendant lacks a meritorious defense to the action. (Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1422; and see West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 703. Here, the defense to imputed rent was not unreasonable.

The second exceptional circumstance was that [t]he defense position . . . on the accounting matters was generally unsupportable; the issues could easily have been resolved in 2 hours but for the defense obfuscation. On this ground the trial court erred factually and legally. Our review of the reporters transcript shows the testimony of Camejos evaluation expert was completed in approximately two hours. The testimony of Koefoeds expert took longer.

For the reasons stated above we conclude the trial court abused its discretion in awarding attorney fees and costs to Koefoed.[4] We will remand the cause to the trial court for an equal apportionment of the combined attorney fees and costs of both parties.

DISPOSITION

The portion of the judgment awarding attorney fees and costs to plaintiff is reversed and the cause is remanded to the trial court with directions to apportion both parties attorney fees and costs in proportion to their interest in the property. In all other respects the judgment is affirmed. The parties shall bear their own costs on appeal.

NOT TO BE PUBLISHED.

ROTHSCHILD, J.

We concur:

VOGEL, J.

MALLANO, Acting P.J.

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Analysis and review provided by La Mesa Property line Lawyers.

[1] In the first phase of the trial a jury awarded Koefoed damages in the amount of $372,732 on his causes of action for fraud, negligence and slander of title. Of this amount, $338,000 was to reimburse Koefoed for the attorney fees and costs he incurred in clearing his title to the property. This sum was paid by the other defendants and this portion of the judgment is not an issue in this appeal.

[2] This is not the rule in every jurisdiction. For a thorough discussion of cotenant liability for the rental value of real property see Lewis, Struggling With Quicksand: The Ins And Outs Of Cotenant Liability And A Call For Default Rule Reform (1994) 1994 Wis. L. Rev. 330.

[3] Future statutory references are to the Code of Civil Procedure.

[4] We find no merit in Koefoeds contention that the $54,000 the court awarded him for attorney fees and costs was to make him whole in connection the refinancing of the trust deed. The trial court specifically rejected this rationale for the award and made clear it was only awarding fees and costs for the partition portion of the case. Koefoed had already been awarded $338,000 as attorney fees and costs on his slander of title cause of action. See footnote 1, above.