Ratto v. Son

Filed 4/30/07 Ratto v. Son CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Good fences may make good neighbors, but retaining walls do not, at least when they are constructed in a location that does not conform to the common property line. In these consolidated appeals, we consider various procedural issues arising after the entry of a stipulated judgment in favor of plaintiff Louis Ratto against defendant Ki O. Son. Ratto contends: (1) the trial court erred when it set aside the stipulated judgment for the limited purpose of allowing Son to file a cross-complaint; (2) the trial court should have awarded Ratto attorneys fees as a prevailing party on a motion to enforce the settlement agreement underlying the judgment; (3) the court erred when it ordered Ratto to file an acknowledgment of satisfaction of judgment after the monetary portion of the judgment had been paid, but before the injunctive relief provided for had been accomplished; and (4) the court should have granted a motion to strike Sons third amended cross complaint as a strategic lawsuit against public participation (SLAPP) under Code of Civil Procedure section 425.16.[1] We agree with the first two contentions.

FACTUAL AND PROCEDURAL BACKGROUND

Son and Ratto are the owners of adjacent residential lots on Dover Court in San Mateo. The boundary line of their property had been in disputed since 2001. Son constructed a retaining wall on what he claimed was the appropriate boundary line, contrary to the advice of Triad/Holmes Associates, the surveyors he initially hired. Son hired a different surveying company, Al Pascual and Associates, and refused Rattos demands that he remove the wall. County officials advised Son on July 21, 2003, that this wall encroached upon Rattos property.

On September 16, 2003, Ratto filed a complaint against Son, Al Pascual and Al Pascual and Associates, alleging causes of action for trespass, slander of title, negligence, nuisance, intentional infliction of emotional distress, permanent injunction and declaratory relief. Represented by attorney William Conklin, Son filed an answer on January 28, 2004. On February 9, Son filed an amended answer and cross-complaint for declaratory relief against Ratto. The court set an initial trial date, which was later continued. On July 22, the parties stipulated to the entry of a permanent injunction requiring demolition of the wall and allowing Son 60 days after the date permits were issued to accomplish the demolition.

By September 3, 2004, Son had retained Norman Newhouse, Esq., who filed an amended cross-complaint alleging causes of action against Ratto for breach of contract, breach of the covenant of good faith and fair dealing, stalking, and negligent and intentional infliction of emotional distress. The amended cross-complaint also asserted claims for professional negligence and fraudulent misrepresentation against David Brown and Triad/Holmes Associates, newly named as cross-defendants. Son did not seek leave to file the amended cross-complaint even though section 428.50, subdivision (c) requires leave of court to file a cross-complaint against new parties after a trial date has been set. On November 2, the court granted a motion filed by Ratto seeking to strike the cross-complaint on the ground that it had been filed without leave of court.

Son filed a motion for leave to file the amended cross-complaint on November 3, 2004, and a hearing on that motion was set for November 22. On November 17, a mediation was held at which Son was represented by an attorney from the firm of Clapp, Moroney, Bellagamba & Vucinich. The parties settled Rattos claims against Son under his complaint. A written stipulation for settlement was executed by the parties and contained the following provisions: (1) the property lines shown in the initial survey by Triad/Holmes were deemed correct; (2) a judgment for permanent injunction would be entered against Son as had been stipulated that past July; (3) Son would pay Ratto $55,000 by November 29, 2004, in exchange for a dismissal with prejudice of the remaining (non-injunctive) causes of action; and (4) a referee would be appointed if Son did not comply with the injunction. The written stipulation for settlement made no mention of Sons pending motion for leave to file the amended cross-complaint.

On November 18, 2004, Ratto filed a supplemental opposition to Sons still-pending motion for leave to file the amended cross-complaint, which remained on calendar for November 22. The opposition advised the court that the lawsuit had settled and that Ratto would be filing a request for dismissal, and further stated that in view of these filings, a question arose as to whether the court could grant leave to file a cross-complaint. On November 19, Ratto submitted a judgment incorporating the terms of the stipulated settlement agreement, which was approved as to form by Sons counsel, an attorney with the Clapp, Moroney. Judgment was entered by the court and Rattos counsel filed the motion for dismissal.

The hearing on the motion for leave to file the cross-complaint was held November 22, 2004. Attorney Newhouse, who was representing Son on the cross-complaint, acknowledged that the judgment and dismissal had deprived the court of the power to order the filing of a cross-complaint. The court denied the motion for leave after noting that it had no jurisdiction. Newhouse filed a motion for reconsideration, arguing that the court could order the cross-complaint filed because it had retained jurisdiction over the portion of the judgment granting injunctive relief, an argument he had not previously made because he had received copies of the dismissal and judgment only a few minutes before the hearing on the motion for leave began and had not had a chance to analyze the issue. The court denied reconsideration.

Attorney Newhouse also filed a motion to set aside the judgment under section 473, on the ground that Son was surprised by the entry of judgment and dismissal because the parties had agreed during mediation that the settlement would not affect the pending motion for leave to file the amended cross-complaint. Ratto opposed the motion, noting that oral communications during a mediation were inadmissible unless certain requirements not present in this case had been met. On January 25, 2005, the trial court held a hearing, granted the motion, and, on January 31, 2005, issued an order setting aside the judgment for the limited purpose of allowing Son to file a cross-complaint within five days. It denied as moot a motion by Son to stay enforcement of the judgment and a motion by Ratto to affirm and enforce the judgment under section 664.6. In an order issued September 2, 2005, the court denied Rattos request for attorneys fees incurred in connection with the section 664.4 motion.

Son filed his cross-complaint. The court granted an anti-SLAPP motion under section 425.16 and ordered stricken the causes of action for breach of contract and breach of the covenant of good faith and fair dealing because those claims were based on Rattos filing of the underlying lawsuit. Son filed a second amended cross-complaint alleging the same causes of action. The court granted a motion to strike the contract claims and sustained a demurrer to the cause of action for infliction of emotional distress. Son filed a third amended cross-complaint in which the only cause of action against Ratto was for stalking. The court denied an anti-SLAPP motion attacking that cause of action on December 20, 2005, but it ordered certain factual allegations stricken in response to a companion motion to strike under sections 435-437.

Meanwhile, Son had paid Ratto $55,000 plus interest after the order setting aside the judgment issued. He filed a demand for acknowledgment of satisfaction of judgment pursuant to section 724.050, subdivision (d), which the court granted in an order filed June 29, 2005.

Ratto filed three separate notices of appeal from the following orders: the January 31, 2005, order setting aside the judgment and granting leave to file the cross-complaint (A109870), the September 2, 2005, order denying Ratto attorneys fees for his motion to affirm and enforce the judgment and the June 29, 2005, order granting Sons motion to compel acknowledgment of satisfaction of judgment (A111572), and the December 20, 2005, order denying Rattos motion to strike the third amended cross-complaint pursuant to section 425.16 (A113352). We have ordered those appeals consolidated.[2]

DISCUSSION

I. Order Setting Aside Judgment Based on Surprise (Appeal No. A109870)

Ratto argues that the trial court erred when it granted Sons motion to set aside the judgment under section 473, subdivision (b), and allowed Son to file the amended cross-complaint. We agree.

Section 473, subdivision (b), provides in relevant part, 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. A party seeking relief under section 473 bears the burden of establishing his or her position by a preponderance of the evidence. (Luz v. Lopes (1960) 55 Cal.2d 54, 62.)

Son sought to set aside the stipulated judgment on the ground that his attorneys were surprised when Rattos counsel obtained entry of that judgment before Sons request for leave to file the amended cross-complaint could be heard. Sons moving papers contained declarations to the effect that the parties had agreed during mediation that the settlement would not affect Sons pending cross-complaint. The trial court stated that it would disregard the statements made during mediation, but that it was in the interests of justice to set aside the judgment and allow Son to file his cross-complaint.

The term surprise, as used in section 473, refers to  some condition or situation in which a party . . . is unexpectedly placed to his injury, without any default or negligence of his own, which ordinary prudence could not have guarded against.   (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 611.) Son and his counsel cannot establish surprise under this standard because ordinary prudence on their part could have avoided entry of a judgment and dismissal before a hearing on the cross-complaint could be held. Most apparently, the settlement agreement could have specifically provided that Rattos complaint against Son would not be dismissed until after the court had ruled on Sons pending request for leave to file the cross-complaint. Additionally, Sons counsel could have opposed the entry of judgment, rather than approving the form of the judgment prior to the hearing on the motion for leave to file the amended cross-complaint. Having neither clarified that the motion for leave would proceed nor protested the entry of judgment after having received notice and an opportunity to do so, Son cannot now carry his burden of establishing that he and his attorneys were surprised, within the meaning of section 473, subdivision (b), by the entry of the judgment and dismissal.

The courts ruling under section 473, subdivision (b), is a discretionary one that shall not be reversed absent an abuse of that discretion. (State Farm Fire & Casualty Co. v. Pietak, supra, 90 Cal.App.4th at p. 610.) Although this standard is deferential, it is not empty. Although variously phrased in various decisions [citations], it asks in substance whether the ruling in question falls outside the bounds of reason under the applicable law and the relevant facts [citations]. (People v. Williams (1998) 17 Cal.4th 148, 162.) A trial court abuses its discretion when it does not consider relevant factors and therefore misapplies the law. (See Los Angeles Times Communications v. Los AngelesCountyBd. of Supervisors (2003) 112 Cal.App.4th 1313, 1327.) The trial court in this case misapplied the law, and consequently abused its discretion, when it concluded that the criteria of section 473, subdivision (b), had been met notwithstanding the opportunities that Son and his counsel had to prevent the entry of judgment.

Son argues that his counsel reasonably relied on the parties agreement at the mediation that the cross-complaint was unaffected by the settlement. Those statements cannot be considered and were properly disregarded by the trial court in reaching its decision. Evidence Code section 1119, subdivision (a), states the general rule that statements made during the course of a mediation are confidential and are not admissible in a civil action. Evidence Code section 1124 creates an exception for oral agreements made during a mediation which meet specified combinations of the criteria of Evidence Code section 1118, namely, (a) The oral agreement is recorded by a court reporter, tape recorder, or other reliable means of sound recording. []  (b) The terms of the oral agreement are recited on the record in the presence of the parties and the mediator, and the parties express on the record that they agree to the terms recited. [] (c) The parties to the oral agreement expressly state on the record that the agreement is enforceable or binding or words to that effect. [] (d) The recording is reduced to writing and the writing is signed by the parties within 72 hours after it is recorded. (Evid. Code  1118; see also Id.,  1122, subd. (a) [communication during mediation admissible if parties agree in writing or orally in accordance with  1118].) There is no evidence of any oral agreement during the mediation that met these criteria and would have allowed filing of a cross-complaint.

Son also posits that because the motion for leave to file a cross-complaint was pending, the lack of any reference to that cross-complaint in the final written settlement agreement demonstrates the parties intended the motion on the cross-complaint to go forward. He claims that the divestiture of the courts ability to consider that motion through the filing of a dismissal was not something they could have foreseen. We disagree. It is just as reasonable to assume that the parties failed to mention the pending cross-complaint in the written settlement because they did not anticipate further action on that proposed pleading. The admissible evidence (i.e., the evidence that does not consist of inadmissible oral statements made during a mediation) does not support the conclusion that Son and his attorneys were affirmatively led to believe that no dismissal would be filed. Absent such a showing, they were not entitled to rely on surprise as ground for relief under section 473. Sons motion to set aside the judgment on the grounds of surprise should have been denied.

Because the court erred when it set aside the judgment, it also erred in allowing Son to file a cross-complaint. Leave to file a cross-complaint may only be granted during the course of the action, and a cross-complaint cannot be filed once judgment is entered on the underlying action. ( 428.50, subd. (c); City of Hanford v. Superior Court (1989) 208 Cal.App.3d 580, 586-589.) Both the order setting aside the judgment and the order granting leave to file the cross-complaint must be reversed.

II. Denial of Attorneys Fees for Enforcement of Settlement and Judgment (Appeal No. A111572)

Ratto contends the court should have awarded him attorneys fees because he was required to file a motion to enforce performance of his settlement agreement with Son as memorialized in the judgment. We agree that the denial of fees was an abuse of discretion. (See Abouab v. City & County of San Francisco(2006) 141 Cal.App.4th 643, 660-661.)

The written stipulation for settlement provided that Son would pay Ratto $55,000 by November 29, 2004, and would agree to the entry of a permanent injunction. It further stated that its terms could be enforced by any party by a motion under section 664.6[3] and that [t]he prevailing party in a motion to enforce this settlement shall recover their [sic] attorneys fees. At Rattos request, a judgment was entered on November 19, 2004, which approved all aspects of this stipulation.

Son filed his motion to set aside the judgment under section 473 and a companion motion to stay enforcement of the judgment pending the outcome of the former motion. Ratto filed a countermotion to affirm and enforce the judgment under section 664.6. Following a hearing held on January 25, 2005, the court set aside the judgment for the limited purpose of allowing Son to file a cross-complaint, ordered that the remainder of the judgment remain in place, and denied as moot the motions to stay and the motion to affirm. Son paid Ratto $55,000 on that date and tendered additional checks for the interest owed on that amount thereafter. Ratto filed a motion to recover the attorneys fees he incurred to collect the $55,000, arguing that Sons refusal to timely pay him required him to seek enforcement of the settlement. This motion was denied on the ground that Ratto was not the prevailing party on a motion to enforce under section 664.6.

Under the terms of the settlement agreement, Son was required to pay Ratto $55,000 by November 29, 2004. He did not do so, instead filing a motion to set aside the judgment. That motion did not seek relief from the requirement that Son pay Ratto the $55,000 by a date certain. Instead, Son filed the motion as a vehicle to enable him to file his cross-complaint. When the trial court set the judgment aside for the limited purpose of allowing the cross-complaint to be filed, it declared that all other aspects of the judgment (including Sons obligation to pay $55,000) would remain in place. In so ruling, the court effectively granted Rattos motion to enforce that portion of the settlement, even if it ruled that his separate motion to do so was moot. Ratto prevailed in his efforts to have the $55,000 settlement enforced and is entitled to fees pursuant to the settlement agreement.

Son suggests it was reasonable for him to postpone paying the $55,000 until after the court had ruled on the motion to set aside the judgment. But he was not challenging that aspect of the judgment and the settlement agreement was clear that payment had to be made by November 29, 2004. The settlement agreement was silent on the issue of the cross-complaint, but even if Son assumed that silence meant he would be permitted to pursue his cross-complaint against Ratto, he could not reasonably have believed that the filing of a cross-complaint would entitle him to postpone the $55,000 payment beyond the date specified in the agreement. When Son failed to make a timely payment, Ratto reasonably sought relief under the terms of the settlement agreement, and he is entitled to recover his reasonable fees for doing so.

III. Order Granting Sons Motion to Compel Filing of Satisfaction of Judgment (Appeal No. A111572)

Ratto recorded an abstract of judgment on December 3, 2004, which reflected that Son owed Ratto a money judgment of $55,000. After Son paid this amount plus all interest due, he served Ratto with a written demand that Ratto file an acknowledgement of satisfaction of judgment. ( 724.050, subd. (a).) When Ratto declined to do so on the ground that the non-money portion of the judgment had not yet been satisfied, Son filed a motion for an order requiring Ratto to file the acknowledgment. ( 724.050, subd. (d).) The trial court held a hearing and issued an order granting the motion on June 29, 2005. Ratto argues that the court should have denied the motion. We disagree.

Section 724.030 provides in relevant part, When a money judgment is satisfied, the judgment creditor immediately shall file with the court an acknowledgment of satisfaction of judgment. When a judgment creditor refuses to file an acknowledgment after a written demand by the judgment debtor, the judgment debtor may file a motion under section 724.050, subdivision (d), for an order requiring the judgment creditor to comply with the demand. . . . If the court determines that the judgment has been satisfied and that the judgment creditor has not complied with the demand, the court shall either (1) order the judgment creditor to comply with the demand or (2) order the court clerk to enter satisfaction of the judgment.

Ratto does not dispute that Son had paid the $55,000 with interest owed by the time the motion under section 724.050 was heard.[4] He claims Son was not entitled to an acknowledgment of full satisfaction of judgment because Son had not yet complied with the permanent injunction requiring him to remove the wall, and it was possible that Son would incur additional financial obligations if further proceedings against him were necessary to enforce the injunction.

We conclude that Son was entitled to an acknowledgment of full satisfaction of judgment whether or not he had fully complied with the injunction. Section 724.030 applies only to money judgments. Section 680.270 defines a money judgment as that part of a judgment that requires the payment of money. The court-ordered injunctive relief that was yet to be obtained at the time of the hearing in this case was not a money judgment, even if it is possible that Son may ultimately be required to pay additional amounts to Ratto if enforcement proceedings are necessary.

IV. Denial of Anti-SLAPP Motion to Strike Third Amended Cross-Complaint (Appeal No. A113352)

The trial court granted Rattos motion to strike certain factual allegations in the third amended cross-complaint that was filed by Son after the court set aside the judgment. It denied a special motion to strike that cross-complaint as a SLAPP suit within the meaning of section 425.16. Ratto contends the trial court should have granted the latter motion and should have awarded him attorneys fees as authorized by the anti-SLAPP law.

Our reversal of the order allowing Son to file a cross-complaint renders moot the question of whether the third amended cross-complaint as drafted violates the anti-SLAPP statute. However, a victory on the anti-SLAPP motion would have entitled Ratto to attorneys fees. ( 425.16, subd. (c).) We therefore consider the merits of the issue, and conclude the trial court properly denied the anti-SLAPP motion.

The special motion to strike authorized by the anti-SLAPP statute lies against [a] cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or California Constitution in connection with a public issue. . . . ( 425.16, subd. (b)(1).) An act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue includes (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. ( 425.16, subd. (e).)

In his third amended cross-complaint, Son asserted a single cause of action against Ratto for the tort of stalking under Civil Code section 1708.1.[5] It alleged, Specific conduct by Ratto includes, but is not limited to, beating loudly on Sons front door, entering Sons house in a menacing fashion, threatening Son and his immediate family members, terrifying Sons children, locking Son in an unventilated attic so hot and airless that Son required medical treatment, throwing objects at Son aggressively, menacing Sons immediate family members with threatening gestures and words delivered hostilely and with copious profanity. The stalking claim was not based on constitutionally protected activities and the trial court properly denied the special motion to strike under section 425.16.

It does not matter that other portions of the third amended cross-complaint alleged that Ratto had breached a contractual agreement by disputing the location of the property line. Although these allegations were apparently based on the constitutionally protected activity of filing a lawsuit against Son, they were not the basis for the stalking cause of action and were in any event stricken by the court in response to a separate motion to strike under sections 435-437. Ratto was not entitled to prevail on his special motion to strike the stalking cause of action under section 425.16, nor was he entitled to recover his attorneys fees on this basis.

DISPOSITION

In appeal A109870, the January 31, 2005, order setting aside the judgment and granting Son leave to file a cross-complaint is reversed. In appeal A111572, the September 2, 2005, order denying Ratto attorneys fees for his motion to affirm and enforce the judgment is reversed and the case is remanded to the trial court with directions to calculate and award reasonable attorneys fees. The June 29, 2005, order granting Sons motion to compel acknowledgment of satisfaction of judgment is affirmed. In appeal A113352, the December 20, 2005, order denying Rattos motion to strike the third amended cross-complaint pursuant to section 425.16 is affirmed.

The parties shall bear their own costs in these consolidated appeals.

_________________________

McGuiness, P.J.

We concur:

_________________________

Parrilli, J.

_________________________

Pollak, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by San Diego County Property line attorney.

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

[2] In Appeal No. A109870, Ratto filed a request for judicial notice of various superior court documents. We deny this requests as moot, because the relevant documents are contained in the other records on appeal.

[3] Section 664.6 provides, If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

[4] A portion of the interest was paid after the motion was filed, but before the hearing was held. The trial court elected to grant the motion to obviate the need for a second noticed motion and hearing, but it denied the attorney fees to which Son would have been entitled under section 724.080 as the prevailing party. Son has not challenged the denial of fees on this basis.

[5] The third amended cross-complaint alleged additional causes of action against third parties David Brown and Triad/Holmes Associates, the surveyors Son retained to locate the boundary lines of his property. Brown and Triad/Holmes are not parties to this appeal.