Quan v. Delgado

Filed 3/28/07 Quan v. Delgado 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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, Andria K. Richey, Judge. Affirmed.

Kasai Law Group, Wayne T. Kasai and Kristin Snow Reynolds, for Plaintiffs and Appellants.

Law Offices of Thomas Swallow and Thomas Swallow for Defendant and Respondent.

______________________

INTRODUCTION

Plaintiffs Helen L. Quan and Nelson W. Quan appeal from a judgment which was based upon an order sustaining defendant Natividad Delgados demurrer without leave to amend to the sole cause of action against her and a subsequent order awarding attorneys fees to defendant as the prevailing party. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs leased and operated a Chevron gas station at 13905 Francisquito in Baldwin Park. Sheena Gray (Gray) and plaintiff Helen L. Quan (Helen) became friends. Gray was a real estate broker. Plaintiffs decided to purchase the Francisquito property from Chevron. On or about November 12, 1998, plaintiffs entered into a real estate agency agreement with Gray. Plaintiffs had previously purchased property located at 1616 Vineland Avenue in Baldwin Park, which was adjacent to the Francisquito property. Plaintiffs intention was to rebuild and expand their Chevron facility. They were using the services of Gray to obtain a $3,600,000 construction loan.

Prior to obtaining such a construction loan, Helen entered into an agreement with Gray whereby plaintiffs obtained a one-year, interest-only loan from defendant Natividad Delgado (Delgado) in the amount of $400,000. Delgado is Grays elderly mother and apparently lives in the Philippines. Helen executed a promissory note dated July 7, 1999 promising to repay Delgado the sum of $400,000, with interest at the rate of 17 percent per annum, payable in monthly installments of $5,666.67 from July 7, 1999 up to July 7, 2000 with the total principal amount of $400,000 due and payable on or before July 7, 2000. The note was secured by deeds of trust on the Francisquito property and the Vineland property.

Plaintiffs defaulted on the note. While seeking a loan from another lender to finance the payoff, they carried on negotiations with Delgado about the payoff required to avoid foreclosure on the deeds of trust. About June 2001, Delgado increased the interest rate to 20 percent per annum because the loan was overdue. On or about April 15, 2002, plaintiffs were threatened with foreclosure and were requested to pay $5,500 in order to stop the foreclosure process. Subsequently, plaintiffs were provided a payoff amount calculated at an interest rate of 24 percent per annum. When plaintiffs tendered a payoff amount based on their own calculations at an interest rate of 17 percent per annum, Delgado refused the tender. In May 2003, Delgado issued notices of default on the two deeds of trust. Then on or about August 26, 2003, Chicago Title Company issued notices of trustees sale set for September 23, 2003.

On August 21, 2003, a few days prior to issuance of the sale notices, plaintiffs filed the original complaint in this action against Gray and Delgado. The fifth cause of action alleged breach of written contract by Delgado based on the note. The specific terms of the note were not alleged, and no copy of the July 7, 1999 promissory note or any other contract was referenced in or attached to the complaint.

On September 18, 2003, plaintiffs filed an ex parte application for a temporary restraining order and order to show cause re preliminary injunction to stop Delgados foreclosure proceedings against the real property that secured the 1999 promissory note. On October 30, the trial court denied plaintiffs application for a preliminary injunction on the basis that plaintiffs could not show they had tendered the amount owed to the lender. On November 12, 2003, plaintiffs filed another ex parte application for injunctive relief, claiming plaintiffs tendered the amount due calculated using the 17 percent interest rate in the note and not the higher interest rate Gray and Delgado claimed was applicable. On November 12, 2003, the trial court denied plaintiffs second application.

Gray filed a cross-complaint against Helen on October 27, 2003, alleging various causes of action related to Helens failure to return borrowed fine jewelry and to pay for other fine jewelry Helen purchased from Gray, and causes of action for Helens failure to repay a personal loan and to pay real estate commissions owed to Gray.

On January 27, 2004 plaintiffs filed the first amended complaint pursuant to stipulation by the parties and an order granting leave to file it. Plaintiffs represented that the need to amend arose from the fact that, after filing the original complaint and denial of plaintiffs request for injunctive relief, plaintiffs paid Delgado the amount she demanded to pay off the note and cancel the trust deeds.

Delgado and Gray filed a demurrer to the first amended complaint on February 3, 2004. In its March 12, 2004 minute order, the trial court sustained the demurrer to the first amended complaint with leave to amend. It stated that plaintiff is running out of time to prepare a proper pleading, and this will be the last leave to amend granted. For a case that is already 7 months old, it is troublesome that plaintiff is unable to prepare a sufficient pleading.

Plaintiffs filed the second amended complaint on March 22, 2004. The sixth cause of action, breach of written contract, was the only cause of action against Delgado. Plaintiffs alleged that they had been forced to pay the full amount demanded by Delgado for payoff in order to stop the foreclosure sale on the two properties and had been financially damaged in that Delgado failed to credit Plaintiffs for all payments demanded on her Note, unilaterally and improperly increased the interest rate, improperly charged Plaintiffs a foreclosure fee, required Plaintiffs to pay her attorney fees and other penalties and charges related to the foreclosure and court proceedings. Plaintiffs alleged the terms of the note with specificity and that Delgado had failed to perform or tender performance of her obligations under the note. The failures plaintiffs alleged included failing to properly credit them with at least $47,168 in payments, increasing the interest rate to 24 percent, refusing to accept plaintiffs tender of payoff in May 2002 in an amount calculated using the 17 percent interest rate stated in the note, threatening foreclosure of the deed of trust and demanding $5,500 to stop the foreclosure process. Plaintiffs alleged they had performed the terms of the note [e]xcept for duties that they were excused from performing.

On April 1, 2004, Delgado and Gray filed a demurrer to plaintiffs second amended complaint. On May 17, 2004, the trial court entered an order sustaining the demurrer to the sixth cause of action, the sole cause of action against Delgado, without leave to amend. The order contained no reference to dismissal of the case as to Delgado. On May 26, 2004, Delgado served notice of entry of the order on plaintiffs, and filed the notice thereafter on June 1, 2004. The demurrer was also sustained without leave to amend as to all but the fifth cause of action against Gray. The fifth cause of action alleged Gray had converted Helens diamond bracelet to Grays own use.

On July 23, 2004, Delgado filed a motion to award her attorneys fees and costs as the prevailing party. In their opposition to Delgados motion, plaintiffs stated that [p]laintiffs do not dispute that Delgado is the prevailing party. Since Delgados demurrer to the breach of written contract cause of action in the second amended complaint was sustained without leave to amend, Delgado is the prevailing party. Plaintiffs opposition was to the amount of attorneys fees Delgado requested. At no point did plaintiffs assert that Delgados attorneys fees motion was premature in that no judgment had been entered in the case as to Delgado.

A jury trial was conducted on the remaining cause of action and cross-complaint, which pertained only to Gray. The minute order entered August 26, 2004 recorded the jury verdict rendered on that date and directed plaintiffs counsel to prepare the judgment. The minute order closed with the clerks certificate of mailing of notice of entry of the minute order on August 26, 2004. On October 6, 2004, judgment was entered and notice of entry of judgment was served. The judgment and the minute order on which it was based referred only to the disposition of the case as to Gray. There was no reference to Delgado.

On August 26, 2004, while the jury was deliberating on matters at issue in the trial, the trial court heard argument on Delgados attorneys fees motion and took it under submission. After the jury was discharged and plaintiffs counsel directed to prepare the judgment, the trial court granted Delgados attorneys fees motion, fixed the fees at $52,000, and ruled that plaintiffs had five days to provide proof of the credit they claimed against the amount awarded, and if they did, the amount awarded would be reduced accordingly. On the August 26, 2004 minute order, the trial courts attorneys fees award decision was recorded immediately preceding the clerks certificate of mailing of the notice of entry of the minute order. Subsequently, the parties submitted evidence of the claimed attorneys fees credit. On October 26, 2004, the order awarding attorneys fees to Delgado, with the net amount owing reflecting the credit, was entered. Delgado served a notice of entry of the order on October 28, 2004 and filed it on November 2, 2004.

On May 10, 2005, plaintiffs served Delgado with a document entitled Judgment in Favor of Defendant Natividad Delgado and Against Plaintiffs Helen L. Quan and Nelson W. Quan, and filed it June 13, 2005 after the trial court signed it.[1]In the blank space provided for the date on which the judge signed the document, no date was inserted, but the notation No objection received was hand-written in the space.

On June 15, 2005, plaintiffs served a document entitled Notice of Entry of Judgment on Delgado, and filed it on June 16, 2005. The notice of entry of judgment recited that the judgment was entered on June 12, 2005.[2] On August 5, 2005, plaintiffs filed a notice of appeal from the judgment.

DISCUSSION

Plaintiffs contend that the judgment should be reversed, in that Delgados demurrer to the cause of action against her, the sixth cause of action, was sustained due to the trial courts erroneous finding that the allegations failed to state a cause of action. They also contend that the reversal of the judgment would warrant vacating the order awarding Delgado attorneys fees as the prevailing party. Delgado contends that plaintiffs appeal is not timely and must be dismissed for lack of jurisdiction. We first consider this jurisdictional issue.

Timeliness of Appeal

Delgado contends that plaintiffs August 5, 2005 appeal is untimely and must be dismissed. Plaintiffs claim their appeal was filed within the statutorily required time, in that they appeal from the judgment they submitted which was signed by the trial court and entered June 13, 2005 and for which the notice of entry was served on June 15, 2005. The judgment was based on the May 17, 2004 order sustaining Delgados demurrer to the sixth cause of action, the only cause of action against her, and the October 26, 2004 order awarding attorneys fees to Delgado as prevailing party. Delgado contends that the time for appeal began to run for each order from the date the notice of entry of each order was served on plaintiffs, and at the latest, the time for appeal began when notice of entry of the October 6, 2004 judgment was served. We agree with plaintiffs that the appeal is timely.

At issue is when did the time for filing the appeal begin. California Rules of Court, rule 8.104 (formerly rule 2) provides that a notice of appeal must be filed on or before the earliest of: [] (1) 60 days after the superior court clerk mails the party filing the notice of appeal a document entitled Notice of Entry of judgment or a file-stamped copy of the judgment, showing the date either was mailed; [] (2) 60 days after the party filing the notice of appeal serves or is served by a party with a document entitled Notice of Entry of judgment or a file-stamped copy of the judgment, accompanied by proof of service; or [] (3) 180 days after entry of judgment, subject to limited exceptions inapplicable here. Rule 8.104 defines judgment as including an appealable order. The outside limit for filing a notice of appeal is 180 days after entry of judgment and the filing period cannot be extended beyond that limit. (In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 109.) The requirement as to the time for taking an appeal is mandatory, and the court is without jurisdiction to consider one which has been taken subsequent to the expiration of the statutory period. [Citations.] [Citation.] (Hollister Convalescent Hosp., Inc. v. Rico (1975) 15 Cal.3d 660, 667, italics omitted.)

In order to apply the filing time requirements, it is necessary first to determine whether any of the orders or judgments relied upon by either party is appealable. Code of Civil Procedure section 904.1 provides that an appeal may be taken from a final judgment or an order made after such an appealable judgment. (Id., subd. (a)(1), (2).)

An order sustaining a demurrer without leave to amend is a nonappealable order pursuant to Code of Civil Procedure section 904.1, and an appeal can be taken after entry of such an order only after the court subsequently enters an order or judgment of dismissal. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695.) Code of Civil Procedure section 581d requires that a judgment or order of dismissal must be in the form of a written order or judgment signed by the trial court. Thus, if a written and signed order sustaining a demurrer without leave to amend as to all causes of action against a defendant also specifically orders that the case be dismissed as to the defendant, then it effectively terminates the action as to the defendant and constitutes an appealable final judgment. (Hudis v. Crawford (2005) 125 Cal.App.4th 1586, 1590, fn. 4.)

The May 17, 2005 order sustaining Delgados demurrer contained no reference to dismissal of the case as to her. Review of the record indicates that Delgado never requested or obtained a written order or judgment of dismissal. Because no appealable final judgment had been entered, the October 26, 2004 order awarding attorneys fees to Delgado did not constitute an order issued after a final appealable judgment, and therefore, also was not appealable. (Code Civ. Proc., 904.1, subd. (a)(2).) Thus, the time for appeal could not have begun to run upon mailing or service of the notice of entry of either order.

The judgment entered on October 6, 2004 was against Gray only, and it did not reference directly or indirectly Delgado. Accordingly, it cannot qualify as final judgment as to Delgado, and the time for appeal could not have begun to run upon service of notice of entry of that judgment.

The only judgment which concluded the instant case as to Delgado is the judgment submitted by plaintiffs in June 2005, which was signed by the trial judge and entered on June 13, 2005, and for which notice of entry was served on June 15, 2005. California Rules of Court, rule 8.104, subparagraph (2), specifies that if it is the earliest of the three possible statutory deadlines, the appeal filing deadline is 60 days after the party filing the notice of appeal serves or is served by a party with a document entitled Notice of Entry of judgment or a file-stamped copy of the judgment, accompanied by proof of service. Plaintiffs filed their notice of appeal on August 5, 2005, which is fewer than 60 days after they served the notice of entry of judgment on June 15, 2005. If Delgado had promptly obtained a judgment or order of dismissal and served notice of entry of the dismissal judgment or order, then Delgado may have been correct that plaintiffs appeal was untimely. Delgado had the opportunity to do so, but failed to take it. We conclude plaintiffs appeal is timely.

Contentions Arising from Order Sustaining Demurrer

Plaintiffs contend the trial court erred in sustaining Delgados demurrer, in that the facts alleged in the second amended complaint are sufficient to state a cause of action against Delgado for breach of the promissory note. We review a trial courts sustaining of a demurrer without leave to amend de novo, exercising independent judgment as to whether a cause of action has been stated. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1038.) To state a cause of action for breach of contract, a plaintiff must plead the contract, his performance of the contract or excuse for nonperformance, defendants breach and the resulting damage. (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458.) The plaintiff must indicate in the complaint whether the contract is written, oral, or impliedby conduct. (Id. at pp. 458-459) If the action is for alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference. (Id. at p. 459.)

Plaintiffs allege the contract as being the written promissory note, and allege the terms of the note. Delgado claims, however, that she could not be found in breach of the note because the note included no obligation for her to perform, but rather constituted a unilateral contract requiring performance only by plaintiffs. It is well settled that a promissory note is a unilateral contract, and only the promisor is obligated to perform. A unilateral contract is one in which a promise is given in exchange for some act, forbearance or thing; there is only one promisor. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, 105, p. 148.) It is undisputed that Delgado lent plaintiffs $400,000. The promissory note was plaintiffs agreement to repay Delgado on certain terms by a certain date.

Nonpayment is what constitutes a breach of the obligation created by a promissory note. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, 534, pp. 621.) In their allegations against Delgado, plaintiffs admit they defaulted on the note due July 7, 2000, in that they tendered payment in full in May 2002, almost two years after the due date. At the hearing on the demurrer, in response to the trial courts questions, plaintiffs counsel admitted that the actions plaintiffs allege to be in breach of Delgados obligations under the promissory note all occurred after the note came due and plaintiffs defaulted. One of the breaches alleged was that Delgado refused the May 2002 tendered amount. The other dates on which plaintiffs allege Delgados breaches on the note occurred are also well after the due date. As the trial court indicated, clearly Delgados alleged breaches had nothing to do with the promissory note, and if there was a whole new agreement or the note had been extended, plaintiffs did not plead such allegations. We agree with the trial court that plaintiffs failed to state a cause of action against Delgado.

Plaintiffs contend that even if they did not state a cause of action for breach of the promissory note, they alleged facts sufficient to support some valid cause of action against Delgado. Plaintiffs cite the principle stated in Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39, that, in testing the sufficiency of a complaint against a demurrer, the trial court must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory, and if so, then the demurrer cannot be sustained. If there is a reasonable possibility that the complaint can be amended to state a cause of action, then the trial court may sustain the demurrer, but must grant leave to amend. (Ibid.) Plaintiffs contend that, therefore, they did all that was required by law with regard to stating a cause of action.

On appeal, plaintiffs bear the burden of proving the trial court erred in sustaining the demurrer or abused its discretion in denying leave to amend. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) To show abuse of discretion, plaintiffs must show in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; J.B. Aguerre, Inc. v. American Guarantee & Liability Ins. Co. (1997) 59 Cal.App.4th 6, 18.) In the instant case, in neither the trial court nor on appeal did plaintiffs identify any other specific cause of action that they contend would be supported by the facts they pled. Plaintiffs also have failed to show how they could amend their complaint to state a cause of action. Plaintiffs having failed to meet their burden of showing error, we conclude that the trial court did not err or abuse its discretion in sustaining Delgados demurrer without leave to amend. (Blank v. Kirwan, supra, at p. 318; City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, at p. 459.)

Attorneys Fees Order

Plaintiffs address their appeal from the attorneys fees order in only one sentence in their opening brief: On remand the trial court should also vacate the attorney fees order in favor of Delgado based on the prevailing party finding. The implication is that if their appeal from the portion of the judgment related to the demurrer results in reversal, then the attorneys fees order must be vacated. We agree that would be the appropriate result. As previously discussed, however, we conclude that the portion of the judgment arising from the order sustaining the demurrer without leave to amend must be affirmed. Having raised no other contentions on appeal, plaintiffs have waived any other claims they have as to the attorneys fees portion of the judgment. (Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn. 1.) We conclude that the portion of the judgment on the attorneys fees award must also be affirmed.

Sanctions on Appeal

Delgado requests that monetary sanctions be imposed on plaintiffs, in that their appeal is frivolous and appears to be taken solely to delay paying the attorneys fees awarded by the trial court. Code of Civil Procedure section 907 provides as follows: When it appears to the reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just. Due process requires that prior to sanctions being imposed, the party to be sanctioned must be given notice of the basis for the sanctions and an opportunity to respond, including a hearing. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 651-652.) Delgado provides insufficient information as to the basis for the requested sanctions, in that she presents no argument showing that specific facts in the record support a conclusion that the appeal is frivolous or taken solely for delay. Sanctions for a frivolous or dilatory appeal should be imposed sparingly and only for egregious conduct because of the potential danger of improperly chilling valid appeals. (Coleman v. Gulf Ins. Group (1986) 41 Cal.3d 782, 788.) Accordingly, we decline Delgados request for sanctions on appeal.

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED

SPENCER, P. J.

I concur:

ROTHSCHILD, J.

I concur in the judgment only:

VOGEL, J.

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Analysis and review provided by Santee Property line attorney.

[1] The body of the judgment stated the following: The Court, having sustained defendant Natividad Delgados demurrer without leave to amend to the sixth cause of action of plaintiffs Helen L. Quan and Nelson W. Quans Second Amended Complain and since the sixth cause of action is the only cause of action alleged in the Second Amended Complaint against defendant Natividad Delgado; [] THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED that: Plaintiffs Helen L. Quan and Nelson W. Quan shall recover nothing from defendant Natividad Delgado; and Natividad Delgado shall have and recover costs, including attorney fees, against Helen L.[] Quan and Nelson W. Quan, in the sum of $25,441.25 . . . , together with interest on said judgment as provided by law.

[2] The June 12 date is inaccurate. The date the judgment was filed, June 13, 2005, is the date of its entry. (Code. Civ. Proc.,  668.5.)