Mitchell Brown Engineering v. The Artesia Companies

Filed 9/7/07 Mitchell Brown Engineering v. The Artesia Companies CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Tulare County. Lloyd L. Hicks, Judge.

Law Offices of Robert Krase, Robert Krase and Lee Guthrie for Plaintiff and Appellant.

Ericksen, Arbuthnot, Kilduff, Day & Lindstrom, Inc., and Michael D. Ott for Defendants and Respondents Rune Kraft and Kraft Americas Holdings, Inc.

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Appellant Mitchell Brown General Engineering, Inc., challenges the denial of its motion for attorney fees in the amount of $6,012 against Rune Kraft and Kraft Americas Holdings, Inc. (jointly, Krafts). Appellant obtained a judgment against The Artesia Companies, Inc., for failing to pay an account receivable and subsequently filed a motion to add Krafts as judgment debtors to that judgment. The superior court determined Krafts were alter egos of the original judgment debtor and added them to the judgment. The attorney fees sought by appellant were incurred in connection with the motion to add Krafts as judgment debtors.

The superior court denied the motion on the ground that attorney fees related to a motion to add judgment debtors were not incurred in enforcing a judgment for purposes of Code of Civil Procedure section 685.040.^[1]

The substantial evidence standard of review applies to the superior courts express and implied findings of fact. Under this standard, we must view the record in the light most favorable to the prevailing party. Furthermore, we cannot accept appellants assertion regarding facts that are not in the record. Applying these principles to the record on appeal, we conclude appellant failed to establish the facts necessary to its theory of reversible error.

Accordingly, the order denying appellants motion for attorney fees is affirmed.

FACTS AND PROCEEDINGS

Appellant filed a motion for additional attorney fees after prevailing on its motion to amend the judgment by adding Krafts as additional judgment debtors.

Appellants notice of motion stated that attorney fees of $6,012 were requested pursuant to CCP1021, 1032, 1032.5(a)(10)(A) and Rule of Court 870.2 as attorneys fees allowed after judgment, and/or pursuant to CCP 685.040 through 685.090 as post-judgment attorneys fees . Appellants memorandum of points and authorities in support of the motion for attorney fees stated that the request was made on alternate grounds to avoid any argument that the opposite procedure should have been used.

Respondents opposition to the motion argued, among other things, that they were not named as judgment debtors until December 16, 2005, and therefore, any fees incurred before that date were not incurred enforcing a judgment against them. ( 685.040.) In other words, Krafts contend that the fees and costs associated with adding them as judgment debtorsthat is, establishing their liabilitywere not costs of enforcing a judgment as that phrase is used in section 685.040.

In addition, Krafts argued that appellant failed to present any evidence or reference any documents in the record that proved the award of attorney fees against The Artesia Companies, Inc. was based on a contract.

The superior court heard the motion on March 2, 2006. Near the beginning of that hearing, the superior court identified two issues confronting appellant and its request for $6,012 in attorney fees. First, as a matter of statutory interpretation, the superior court was uncertain whether adding a judgment debtor was enforcing a judgment for purposes of section 685.040. Second, the superior court indicated that it could not find anything in the file that would constitute a contract, and the existence of a contract was necessary to establish the entitlement to attorney fees as costs under section 1033.5, subdivision (a)(10)(A).^[2]

The superior courts written ruling denying appellants motion for additional attorney fees stated that the court determined that a motion to add additional debtors is not costs incurred in enforcing a judgment under section 685.040, et. seq. The written ruling did not state any other basis for denying the motion.

In April 2006, appellant filed a timely notice of appeal.

DISCUSSION

I. Standard of Review

Findings of Fact

Appellate courts apply the substantial evidence standard when reviewing a superior courts express and implied findings of fact. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.) Under the doctrine of implied findings, an appellate court must generally conclude that the superior court impliedly made findings of fact that support its decision if the record contains substantial evidence to support such a finding. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143.)

The substantial evidence standard requires appellate courts to review the evidence in the light most favorable to the prevailing party. As a result, the prevailing party receives the benefit of every reasonable inference and all conflicts are resolved in its favor. (SFPP v. Burlington Northern & Santa Fe Ry. Co., supra, 121 Cal.App.4th at p. 462.)

II. Application of Substantial Evidence Standard

A. Factual Assertions About Contractual Attorney Fees

The California Supreme Court described the substantial evidence standard for review and the role of an appellate court applying that standard as follows:

Where findings of fact are challenged on a civil appeal, we are bound by the elementary, but often overlooked principle of law, that the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, to support the findings below. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.) We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor in accordance with the standard of review so long adhered to by this court. (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.)

In this appeal, appellant asks this court to turn these principles, which are fundamental aspects of appellate practice, on their head and draw inferences that are favorable to it and unfavorable to the prevailing party.

The critical factual issue is whether the attorney fees awarded against The Artesia Companies, Inc. were based on a contract and, therefore, were awarded in accordance with section 1033.5, subdivision (a)(10)(A).^[3]

1. Assertions of fact in appellants opening brief

Appellants opening brief asserted on page 2 that [a]ttorneys fees were awarded in the original judgement pursuant to  1033.5(a)(10)(a) [sic]. This assertion of fact was not supported by a citation to the record. Factual assertions in an appellate brief should be supported with specific citations to the record. (Cal. Rules of Court, rule 8.204(a)(1)(C); Wal-Mart Stores, Inc. v. City of Turlock (2005) 138 Cal.App.4th 273, 292.)

Citations to the recordspecifically, pages 3, 4, and 41 of the clerks transcriptdo appear at the end of the paragraph that contained appellants foregoing factual assertion. Assuming for the sake of argument that appellant meant the citations to provide the required support, we conclude those citations are inadequate.

Pages 3 and 4 of the clerks transcript are the first two pages of appellants memorandum of points and authorities in support of its motion for additional attorney fees. These pages of the memorandum are not evidence. The assertion on the second page of the memorandum that [a]ttorneys fees were awarded in the original judgement pursuant to 1033.5(a)(10)(a) [sic] is no more evidence than is the same assertion when set forth in appellants opening brief. Furthermore, the cited pages of the memorandum do mention that the original cause of action was for an open book account, but do not identify any contract, much less where it could be located in the record.

Page 41 of the clerks transcript is a request for judicial notice of (1) the original complaint that appellant filed in this case and (2) the original judgment. The original complaint in this courts record from the prior appeal did not include as an attachment a copy of any contract. The original judgment stated that appellant shall have judgment against The Artesia Companies, Inc. in the sum of $184,870.98 plus attorneys fees of $48,071.00 plus costs of $2,753.10, plus sanctions previously awarded . The judgment does not identify a contract as the basis for the award of attorney fees.

Page 6 of appellants opening brief included a similar assertion of fact: In this case on appeal, it has already been determined that there is an underlying contract for attorneys fees. [CT 3]. As discussed, page 3 of the clerks transcript, which is the first page of appellants memorandum of points and authorities in support of its motion for additional attorney fees, is not evidence.

2. Assertions of fact in appellants reply brief

Appellants reply brief asserted there was ample evidence to establish that the attorney fees awarded in the original judgment were based on Civil Code section 1717 and therefore embodied an award under section 1033.5, subdivision (a)(10)(A). Specifically, appellants reply asserted:

The judgment awarded the requested fees in the sum of $48,071.00. [CT 13.] This sum is in excess of the 25% of the principal obligation and therefore precludes the fees having been awarded under Civil Code 1717.5, Attorneys Fees Action on Book Account or from an award based on any statute other than Civil Code 1717, Action on Contract-Recovery of Attorneys fees.

The footnote to the last sentence of this quote stated: There was a hearing on this very issue subsequent to the order at issue on appeal. At that hearing, the Trial Court ruled conclusively that the fees were awarded pursuant to Civil Code 1717. That determination was never appealed. The footnote contained no citation to the record. More remarkably, this courts own search of the record presented for this appeal did not reveal a copy of (1) the ruling referenced in the footnote, (2) the reporters transcript of the hearing, or (3) any declarations filed to support the positions taken at the hearing. Accordingly, we cannot accept appellants assertions of fact as accurate.

3. Appellants use of inference

Appellant also seems to argue that this court can infer that the award of attorney fees reflected in the original judgment was authorized by a provision in a contract because it slightly exceeds 25 percent of the principal amount awarded in the original judgment. We cannot draw this inference for two reasons. First, only prevailing parties are entitled to have appellate courts draw inferences of fact in their favor. Second, our review of the reporters transcript from the March 2, 2006, hearing establishes that the superior court was unwilling to draw this inference.

In summary, appellant has failed to establish that the attorney fees awarded in the original judgment were, in fact, based on a contractual attorney fees provision.

B. Theories Presented

Appellant presented two legal theories in support of its motion for attorney fees. The prejudgment theory was based on the existence of a contract permitting the recovery of attorney fees. The postjudgment theory was based on section 685.040, which provides in full:

The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorneys fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorneys fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorneys fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.

Appellants postjudgment theory relied on the last sentence of section 685.040, which involves an award of attorney fees under contract. (See  1033.5, subd. (a)(10)(A) [contractual attorney fees allowed as costs].)

Therefore, both of the theories presented by appellant required it to establish that attorney fees were awarded pursuant to the terms of a contract.

Under the substantial evidence rule, we must conclude either that (1) the superior court found that the attorney fees awarded in the original judgment were not authorized by contract or (2) the superior court determined appellant failed to carry its burden of presenting sufficient evidence to establish the disputed fact. In either event, appellants version of the facts has not been established for purposes of this appeal.

Accordingly, appellant has failed to demonstrate reversible error.

Therefore, we need not address the issue of statutory interpretation explicitly decided by the superior courtthat is, whether adding a judgment debtor constitutes enforcing a judgment under section 685.040.

DISPOSITION

The postjudgment order denying appellants motion for attorney fees is affirmed. Costs on appeal are awarded to respondents.

DAWSON, Acting P.J.

WE CONCUR:

_______________________________

HILL, J.

_______________________________

KANE, J.

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^[1]All further statutory references are to the Code of Civil Procedure unless indicated otherwise.

^[2]The following statements by the superior court further illustrate its concern about the existence of a contract with an attorney fees provision:

See, I have to go by the record. And thats notthat doesnt appear anywhere in the record.

I mean I would have no doubt that if you had proved that up and there was somewhere in the record that that would be deemed a contract for attorneys fees upon which he could based the 1033.5(a). I dont see that in here.

^[3]Section 1033.5, subdivision (a)(10) allows as costs [a]ttorney fees, when authorized by any of the following: [] (A) Contract. [] (B) Statute. [] (C) Law.