Simantob v. Lahijani

Filed 5/9/07 Simantob v. Lahijani 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEALS from a judgment and orders of the Superior Court of Los Angeles County, Jon M. Mayeda, Judge. Order of March 8, 2004 reversed; judgment and other orders affirmed.

Fuchs & Associates, Inc., John R. Fuchs and Gail S. Gilfillan for Plaintiffs, Cross-defendants and Appellants.

Lurie, Zepeda, Schmalz & Hogan, Steven L. Hogan, Troy L. Martin, and Lawrence J. Imel for Defendant, Cross-complainant and Respondent and Defendants and Appellants.

In this dispute involving two commercial properties, plaintiffs challenge (1) a summary judgment in favor of three defendants (Kaveh Lahijani, Micha Mottale, and Bahman Mashian) based on orders granting defendants two motions for summary adjudication of issues, which together disposed of all eight causes of action of the complaint, (2) a post-judgment order denying plaintiffs motions for reconsideration, (3) an order dismissing Kaveh Lahijanis cross-complaint against plaintiffs without prejudice rather than with prejudice, and (4) an order awarding defendants Kaveh Lahijani and Mashian approximately $184,000 in attorney fees. In a cross-appeal, Mottale and four Doe defendants appeal from an order denying their motion for attorney fees and the Doe defendants appeal from an order denying their motion for sanctions.

We reverse the award of attorney fees to defendants because there is no legal basis for such award. We affirm the summary judgment because it was based on plaintiffs unequivocal judicial admissions and other undisputed evidence which defeated their claims as a matter of law. We affirm the other orders from which plaintiffs appeal because plaintiffs fail to establish any error or prejudice. Finally, we affirm the orders denying defendants motions for sanctions and attorney fees because defendants fail to establish any error or abuse of discretion.

BACKGROUND

A. Defendants First Motion for Summary Adjudication

In May 2000, plaintiffs Kamiar Simantob, Kamran Simantob, and Nasser Lahijani (Nasser), investors in a commercial property, a coin laundry located on Vermont Avenue in Los Angeles (Vermont Property), filed an action for damages and other relief against defendants, including Kaveh Lahijani (Kaveh), the developer. The third amended complaint contained eight causes of action, six of which concerned the Vermont Property.

In the first, second, and third causes of action, the Simantobs (but not Nasser) asserted a variety of tort theories premised on allegations of intentional misrepresentation by Kaveh. Kaveh was alleged to have fraudulently induced the Simantobs to enter into an August 13, 1993 agreement (1993 agreement) to sell their interests in the Vermont Property to Kaveh, Nassers nephew. In particular, the complaint charged that Kaveh represented to the Simantobs that the amount of the encumbrances on the Vermont Property totaled $3.2 million and that all of the encumbrances were directly related to construction on, and financing of, the Vermont Property. But the foregoing representations were alleged to be false in that Kaveh had made arrangements with the primary lender to reduce the amount of the first trust deed by approximately 50 percent, and Kaveh utilized a substantial amount of the construction financing for other projects for which he was the contractor. The first and second causes of action sought damages, and the third cause of action sought rescission of the 1993 agreement, other equitable relief, and attorney fees.

The complaint did not seek to quiet title to the Vermont Property. Nor did the complaint allege the nature of plaintiffs interests in the Vermont Property, whether legal or equitable.^[1] According to the terms of the 1993 agreement, plaintiffs and others were currently in possession of the Vermont Property. Although the 1993 agreement included Nasser as one of those currently in possession of the property, the complaint did not allege that Nasser was a party to the 1993 agreement and Nasser admitted in requests for admissions that he was not a party to the 1993 agreement. The 1993 agreement further stated that the Vermont Property was encumbered by three separate trust deeds and the first trust deed (in the amount of $2 million) had accumulated some late fees. An attorney fee provision of the agreement provided, Should suit be brought to enforce or interpret any part of this Agreement, the prevailing party was entitled to recover, as an element of costs, reasonable attorney fees, regardless of whether the suit proceeded to final judgment.

Both the Simantobs and Nasser asserted in the fourth and fifth causes of action (both labeled conspiracy to defraud) and in the seventh cause of action (labeled imposition of constructive trust) that Kaveh and Mottale conspired to keep the Vermont Property out of Kavehs bankruptcy estate and out of the reach of plaintiffs, that Kaveh transferred the property without adequate consideration to his close personal friend, Mottale, and that Mottale then transferred the property to Mashian, Kavehs attorney.^[2]

In April 2002, defendants Kaveh, Mottale, and Mashian filed a motion for summary adjudication addressed to the first, second, third, fourth, fifth, and seventh causes of action of the complaint. The motion was based primarily on requests for admissions propounded by Kaveh on the Simantobs, and which the Simantobs were deemed to have admitted pursuant to a March 25, 2002 court order. Pursuant to the deemed admissions, the Simantobs admitted that Kaveh did not use any construction financing for the Vermont Property for any other projects; that before August 13, 1993, Kaveh had not made any arrangements with the primary lender to reduce the principal amount of the first trust deed; that at the time of the 1993 agreement, the Simantobs were aware of the status of the loans concerning the Vermont Property; that at the time of the 1993 agreement, Kaveh made no representations to any party concerning the encumbrances on the Vermont Property; that the Simantobs did not enter into the 1993 agreement based on any representation by Kaveh concerning the encumbrances on the Vermont Property; that pursuant to the 1993 agreement, Kaveh became the sole owner of the Vermont Property; and that both Mottale and Mashian acquired the Vermont Property for adequate consideration.

Before the May 10, 2002 hearing on the motion for summary adjudication, the Simantobs filed a motion to amend or withdraw their deemed admissions, asserting that their attorneys secretary inadvertently failed to attach verifications when she mailed the Simantobs responses to the requests for admissions. But no verifications were attached to the motion to amend or withdraw the deemed admissions, and on May 1, 2002, the trial court denied the Simantobs motion.

Plaintiffs opposition to defendants summary adjudication motion (filed two days before May 1, 2002) discussed the impending motion to amend or withdraw the Simantobs deemed admissions, but also argued that even if the court denied the Simantobs motion to withdraw the deemed admissions, an adequate basis nevertheless existed for continuing defendants motion because plaintiffs needed to complete discovery and take defendants depositions.

After a hearing on May 10, 2002, the court denied plaintiffs request for a continuance and granted the motion for summary adjudication.

B. Defendants Second Motion for Summary Adjudication (Sixth and Eighth Causes of Action)

The sixth cause of action, for breach of fiduciary duty, was asserted by Nasser against Mashian. Nasser alleged that he engaged the law firm of Buchalter, Nemer, Fields & Younger (Buchalter) to represent him in various legal matters and that Mashian was a principal or employee of Buchalter. Mashian and Buchalter allegedly breached their fiduciary duty to Nasser by undertaking to represent him, notwithstanding an actual conflict in said representation by virtue of their representation of . . . Kaveh, by representing adverse clients without full disclosure, by Mashians self-dealing in acquiring the Vermont Property without disclosing the acquisition to Nasser, and by recommending to Nasser that Nasser not take legal action against Kaveh because Mashian would see to it that Kaveh paid Nasser the money Kaveh owed him.

In the complaints eighth cause of action against Kaveh for conversion, all three plaintiffs asserted that Kaveh converted for his own use money paid by the Superfund for the purpose of cleaning up contamination on property located on West First Street in Santa Ana (Santa Ana Property).

On July 1, 2002, defendants filed a second motion for summary adjudication, addressed to the sixth and eighth causes of action. The motion was set for hearing on July 31, 2002. The evidentiary support for the motion consisted primarily of the declarations of Kaveh and Mashian and the discovery responses of Nasser. Defendants contended that Nassers discovery responses contained express admissions establishing that the sixth and eighth causes of action were without merit. Nasser, in responses to special interrogatories, had listed all of the matters in which Mashian represented his interests. With respect to those 13 matters, Kaveh submitted a declaration stating, At no time was I a party to any of these matters. Mashian also declared, I have also never represented Nasser or Kaveh in any matter concerning or relating to the other, concurrently or successively. I never represented any of the parties concerning the [1993 agreement] which is the basis of Plaintiffs lawsuit. Furthermore, none of the parties to the [1993 agreement] ever discussed [it] with me prior to this lawsuit. I also never represented Kaveh, Nasser or any of the parties to the [1993 agreement] in any matter concerning the [Vermont Property]. [] . . . Furthermore, I did not obtain any information from Nasser during my representation of him which I assessed or used in my representation of Kaveh . . . .

In response to a special interrogatory asking Nasser what interest he had in the Vermont Property after he entered into the 1993 agreement, Nasser interposed an objection that the interrogatory was vague and assumed facts not in evidence, but then he answered, Notwithstanding said objection, none. And in response to a special interrogatory, Nasser admitted that [t]here was an error in the complaint, and that Mashian did not dissuade Nasser from taking legal action against Kaveh.

As to the eighth cause of action, defendants sought summary adjudication on two grounds: (1) As set out in Kavehs supporting declaration, Kaveh quitclaimed the Santa Ana Property to First Street Corporation in December 1993, so if the conversion occurred after December 1993, plaintiffs lacked standing to pursue the conversion cause of action because [c]laims for injury or damage to a corporation belong to the corporation and not its stockholders.^[3] (2) To the extent that plaintiffs were owners of the Santa Ana Property, their ownership ended at the latest when Kavehs quitclaim deed to First Street Corporation was recorded in June 1995. Because any claim for conversion by plaintiffs was required to be filed within three years of June 1995, this action filed in May 2000 was barred by the three-year statute of limitations.

Plaintiffs opposition to the second summary adjudication motion sought a continuance for 90 days to permit them to conduct discovery which is necessary to determine whether or not additional facts are available, which would establish the basis upon which the claims are being asserted. Plaintiffs contended that defendants failed to produce documents and cancelled their depositions, frustrating plaintiffs discovery for over a year. In response to each fact contained in defendants separate statement of undisputed facts, plaintiffs wrote, Disputed evidence will be derived from depositions and further discovery.

In reply, defendants argued that plaintiffs had not diligently pursued discovery, the outstanding discovery had nothing to do with the issues raised in the second motion for summary adjudication, and plaintiffs failed to copy documents which Kaveh made available to them in response to plaintiffs production demands.

On July 25, 2002, a week before the scheduled hearing on the second summary adjudication motion, plaintiffs filed a notice of removal of the case to the bankruptcy court, where Kaveh had been a debtor in a chapter 7 bankruptcy proceeding originally filed in 1998. Kavehs discharge and an order closing the case were entered in August 1999. But pursuant to a bankruptcy court order of June 6, 2002, Kavehs bankruptcy was reopened. Because of the notice of removal of the action to the bankruptcy court, the superior court took the hearing on the second motion for summary adjudication off calendar on July 31, 2002.

On December 23, 2002, the bankruptcy court remanded the action to state court, and in May 2003, the bankruptcy court granted Kavehs request for relief from the automatic stay permitting him to pursue the motion for summary adjudication in state court.

While in bankruptcy court, plaintiffs filed an adversary complaint against defendants and others, asserting the same fraud causes of action that had been summarily adjudicated in the first motion for summary adjudication; Nasser asserted the same claims against Mashian that were asserted in the sixth cause of action of the state court complaint. The adversary complaint also contained claims against Kaveh, Mottale, Mashian and other non-debtor defendants, alleging that they were involved in a series of fraudulent transfers of Kavehs assets, including the Vermont Property, and that Kaveh, Mottale and Mashian created fictitious or fraudulent entities in order to hide and conceal those assets.

On July 9, 2003, the bankruptcy court dismissed the claims in plaintiffs adversary complaint which the bankruptcy court determined were duplicative of the fourth, fifth, sixth, seventh, and eighth causes of action of the state court complaint. The bankruptcy court also dismissed without prejudice several claims for fraudulent conveyance and transfer on the grounds that this claim benefits the bankruptcy estate, not just the Plaintiffs, and that the Trustee therefore maintains exclusive standing to pursue these claims. The Plaintiffs have presented no evidence that the Trustee has abandoned this claim or otherwise authorized Plaintiffs to prosecute this claim. In addition, this Court has not authorized the Plaintiffs to prosecute this claim.

On April 8, 2003, the superior court set a hearing on defendants second summary adjudication motion for June 19, 2003, but on June 16, 2003, the court continued the hearing on the motion to September 2003, because plaintiffs requested additional time to conduct discovery. The minute order stated, No further continuances of the hearing will be granted unless opposing party strictly complies with [Code of Civil Procedure section 473c, subdivision (h)] and [Los Angeles County Superior Court] Rule 9.21(g).

In June 2003, Nasser filed a second opposition to the second motion for summary adjudication and a declaration wherein he admitted that the Santa Ana Property did not ever belong to me or to the other Plaintiffs.

Between June and September 2003, plaintiffs filed and served four Doe amendments to add new defendants and new transactions to the case, notwithstanding the trial courts dismissal of all unserved defendants, including Doe defendants, in November 2001. The Doe defendants were among the non-debtors previously dismissed from the adversary proceeding in the bankruptcy court.^[4] Plaintiffs also served subpoenas and sought discovery from the Doe defendants. The Doe defendants brought a motion to quash service on them, which motion was granted on September 18, 2003.

On August 8, 2003, plaintiffs moved for leave to file a fourth amended complaint. The proposed pleading contained not only the same eight causes of action asserted in the complaint, but six new tort causes of action for fraudulent conveyance of the Vermont Property and other real and personal property assets of Kaveh. The new causes of action alleged that Kaveh, Mottale, Mashian, and other defendants engaged in a scheme to fraudulently transfer Kavehs assets without adequate consideration before Kaveh filed for bankruptcy protection in order to deceive and defraud Kavehs creditors, including plaintiffs. By minute order dated September 5, 2003, the court denied plaintiffs motion for leave to file the proposed fourth amended complaint, ruling that [t]he court was previously presented with the [first, second, third, fourth, fifth, and seventh] causes of action, that were dismissed following hearing on the May 10, 2002 motion for summary adjudication of issues. Moving party lacks standing to assert causes of action 9 to 14 because trustee of defendant [Kavehs] bankruptcy estate maintains exclusive standing to pursue these claims. . . . The bankruptcy court dismissed these causes of action finding there was no evidence the trustee abandoned the claims. In addition, the bankruptcy court did not authorize plaintiffs to prosecute.

On August 11, 2003, plaintiffs filed an ex parte application to deny defendants second motion for summary adjudication for willful obstruction of discovery, or alternatively, a motion to continue the hearing on the summary adjudication motion to December 8, 2003. Among other discovery problems, plaintiffs claimed that when Mashian appeared for his deposition, he was argumentative, evasive, uncooperative, nasty, and sarcastic, and that it is likely that Plaintiffs will have to file a Motion to Compel Answers to many of the questions posed [to Mashian] . . . . Nasser also argued that he had filed a complaint with the State Bar against Mashian and Buchalter because they refused to return Nassers files as to the 13 matters on which Mashian represented Nasser, which files are critical to [Nassers] ability to defeat the [summary adjudication of issues] Motion as to the breach of fiduciary duty claim against Mashian. Although the court denied plaintiffs ex parte application, the court set plaintiffs motion for the same date set for hearing of the summary adjudication motion. Sometime before the September 2003 hearing, Buchalter produced the records relating to Mashians representation of Nasser. At no time before the September 2003 hearing did plaintiffs move to compel Mashians further deposition testimony.

On August 25, 2003, plaintiffs filed a third opposition to the second summary adjudication motion. Their opposition contained a separate statement disputing many of defendants alleged undisputed facts based on Nassers June 5, 2003 declaration and Nassers supplemental declaration dated August 25, 2003. According to Nassers supplemental declaration, Nasser and the other two plaintiffs invested money with Kaveh, who built and managed small shopping centers for the investors.

In plaintiffs memorandum of points and authorities in opposition to the second summary adjudication motion, they also asserted that plaintiffs had standing to bring the conversion claim because Kamiar Simantob was the sole shareholder and assignee of the assets of that now-defunct entity [First Street Corporation]. But the evidence upon which they relied to support their assertions, First Street Corporations bankruptcy petition, revealed only that Kamiar Simantob was the corporations president, that he held at least 20 percent of the voting securities, and that he had authority to make all decisions on behalf of the corporation and approved the filing of the voluntary petition for relief under chapter 11 of the United States Bankruptcy Code.

On August 29, 2003, defendants filed opposition to plaintiffs motion to continue the hearing on the second summary adjudication motion. Defendants maintained that because the summary adjudication motion as to the sixth cause of action for breach of fiduciary duty was based in large part on Nassers admissions in discovery, his attempt to controvert his previous admissions with his June 5, 2003 declaration or any other discovery should be disregarded as irrelevant and inadmissible. With respect to the eighth cause of action for conversion of the cleanup funds, defendants argued that no facts exist which would establish a viable cause of action because any such claim, if it arose before the Santa Ana Property was conveyed to First Street Corporation (at the latest in June 1995), was barred by the three-year statute of limitations. And if the claim arose after the conveyance of the property to First Street Corporation, then plaintiffs lacked standing to bring the claim.

At the September 18, 2003 hearing on the second summary adjudication motion, the court denied plaintiffs motion to continue the matter and granted summary adjudication on the sixth and eighth causes of action of the complaint. With respect to the sixth cause of action, the court determined that there was no conflict in the representations of . . . Nasser . . . in matters unrelated to the instant action and representations of Kaveh . . . ; therefore no substantial relationship exists between the representations. As to the eighth cause of action, the court concluded that plaintiffs lacked standing to sue for conversion and plaintiffs failed to submit any admissible evidence or law relating to Plaintiffs assertion that the corporation no longer exists or of Kamiar Simantobs assignee rights.

C. Dismissal of Cross-complaint and Entry of Summary Judgment

Kaveh cross-complained against plaintiffs for breach of the 1993 agreement, seeking $2 million in damages and attorney fees pursuant to the agreement. On February 12, 2002, the court sustained with leave to amend a demurrer to the cross-complaint on the ground that Kavehs chapter 7 proceedings in the bankruptcy court conferred all rights and standing to prosecute the cross-complaint on the bankruptcy trustee, but leave to amend was granted to allow the trustee to undertake to prosecute the claims or give notice of abandonment of them. Thereafter, the trustee did not give notice of abandonment of the claims or file an amended cross-complaint. On its own motion on January 13, 2004, the trial court dismissed the cross-complaint without prejudice due to inaction by the Trustee in the Chapter 7 proceedings in Bankruptcy Court.

On January 20, 2004, a summary judgment in favor of defendants on the complaint was entered based on the orders granting the two motions for summary adjudication. On March 22, 2004, plaintiffs filed a notice of appeal from the summary judgment, from the order denying their motion for leave to file the fourth amended complaint, from the order denying their motion for a continuance of the second summary adjudication motion, and from the order dismissing the cross-complaint without prejudice.

D. Doe Defendants Motion for Sanctions

On September 16, 2003 pending the hearings on plaintiffs motion for leave to file the proposed fourth amended complaint and on the Doe defendants motion to quash service of the Doe amendments the four Doe defendants filed a motion seeking $8,350 in sanctions against plaintiffs under Code of Civil Procedure section 128.7. The Doe defendants maintained that the Doe amendments and the proposed fourth amended complaint were frivolous because there was no basis in law or fact for the action against them and plaintiffs refused to withdraw their motion for leave to file the fourth amended complaint and to withdraw the service of the Doe amendments after being asked to do so by their letter of July 28, 2003. Plaintiffs filed opposition to the motion for sanctions, and the Doe defendants filed a reply. In their reply brief, filed on October 24, 2003, the Doe defendants argued that even after the trial court had denied plaintiffs motion for leave to file the fourth amended complaint on September 5, 2003, plaintiffs still failed to dismiss them. Rather, the Doe defendants were forced to pursue their motion to quash service, which the court granted on September 18, 2003.

On October 30, 2003, the court denied the motion for sanctions. At the hearing, plaintiffs attorney stated that he had prepared opposition to the motion to quash service before he had received notice that plaintiffs motion for leave to file the fourth amended complaint was denied. Plaintiffs attorney also argued that at the time of the September 18, 2003 hearing, plaintiffs had not yet received the motion for sanctions filed on September 16, 2003, but served by mail on plaintiffs. The trial court stated that its inclination in general was not to grant sanctions unless its crystal clear. And this is far from crystal clear to me. I mean, there seems to be so much overlap and so much . . . fuzziness in my own mind as to exactly what happened here [and] its just not the kind of set of circumstances that I would be inclined to grant your request [for sanctions].

E. Attorney Fees

The summary judgment provided in pertinent part that Kaveh, Mottale, and Mashian shall be deemed the prevailing parties herein, and said Defendants shall recover from . . . Plaintiffs costs of suit including reasonable attorneys fees as an element of costs as permitted by applicable law.

On February 5, 2004, Kaveh and Mashian filed a memorandum of costs and a companion motion for attorney fees, seeking $184,036 in attorney fees. They argued that they were entitled to attorney fees under the equitable doctrine of estoppel because the claims asserted by the Simantobs arose from the 1993 agreement and the claim asserted by Nasser against Mashian for breach of fiduciary duty arose from a December 1993 retainer agreement.^[5]

On February 5, 2004, Mottale and the four Doe defendants filed a cost memorandum and a companion motion seeking $40,150 in attorney fees based on the 1993 contract.

Plaintiffs opposed the motions, contending, among other things, that the attorney fee provision of the 1993 agreement did not apply to the instant litigation because the claims were not ones to enforce or interpret the agreement and the retainer agreement also did not afford a basis for fees to Mashian because the sixth cause of action was not a claim arising out of that retainer agreement. Plaintiffs also argued that the estoppel theory as a basis for attorney fees has been rejected by the appellate courts, so defendants cannot obtain fees merely because plaintiffs complaint sought recovery of attorney fees. And if plaintiffs were successful in defeating Kavehs and Mashians motion for attorney fees, they sought $3,200 in attorney fees under Civil Code section 1717 (section 1717).^[6]

With respect to the motion of Mottale, plaintiffs argued that because Mottale was sued on tort theories for conspiracy and was not sued as a party to the 1993 agreement, Mottale was not a prevailing party on a contract within the meaning of section 1717. As to the Doe defendants, plaintiffs argued that a party who succeeds on a motion to quash service of summons is not a prevailing party on a contract within the meaning of section 1717. If plaintiffs succeeded in defeating the Doe defendants fee motion, plaintiffs sought $5,000 in attorney fees from them.

On March 8, 2004, the court granted the motion of Kaveh and Mashian, awarding them all of the attorney fees they requested. But the court denied the motion of Mottale and the Doe defendants, with the minute order stating that the court declines to declare these defendants the prevailing parties for purposes of awarding attorneys fees, as the court granted their motion to quash service of the summons and thus does not have the authority to award the requested fees.

On March 19, 2004, plaintiffs appealed from the order awarding attorney fees to Kaveh and Mashian. In response to plaintiffs March 22, 2004 notice of appeal from the summary judgment, Mottale and the Doe defendants filed a cross-appeal on April 8, 2004, challenging the order denying the motion of the Doe defendants for sanctions and the order denying the motion of Mottale and the Doe defendants for attorney fees.

F. Motions for Reconsideration

On March 12, 2004, plaintiffs filed three motions for reconsideration, challenging (1) the orders granting the motions for summary adjudication, (2) the order denying plaintiffs leave to file the fourth amended complaint, and (3) the order denying plaintiffs motion to continue or deny the second summary adjudication motion. Plaintiffs argued that after conducting discovery in the adversary proceeding in bankruptcy court, they were able to obtain thousands of pages of bank records and other documents in November and December 2003, and that the documents absolutely prove the fraudulent conduct that Plaintiffs have been alleging here and that Plaintiffs set forth in their proposed Fourth Amended Complaint . . . .

Defendants opposed the motions on the ground that they were untimely, having been filed more than 10 days after the challenged orders, and on the ground that the trial court lacked jurisdiction because the matters were on appeal. At the May 5, 2004 hearing, the trial court denied the motions for lack of jurisdiction, or alternatively, as untimely.

DISCUSSION

A. Appeal

1. Motions for Summary Adjudication

Our review of the orders granting summary adjudication is governed by the same principles applicable to review of a summary judgment. (Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1471.)

The burden of a defendant moving for summary judgment only requires that he or she negate plaintiff's theories of liability as alleged in the complaint. A moving party need not . . . refute liability on some theoretical possibility not included in the pleadings. . . . . . . [A] motion for summary judgment must be directed to the issues raised by the pleadings. The [papers] filed in response to a defendants motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings. . . . [Citation.] (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 332333, italics omitted.)

A request for admissions is more than a mere discovery device; it also serves a function similar to the pleadings in that it is aimed primarily at setting to rest a triable issue so it will not have to be tried. (Murillo v. Superior Court (2006) 143 Cal.App.4th 730, 735736 (Murillo).) Thus, [a] matter admitted in response to a request for admission is conclusively established against the party making the admission, unless the court has permitted amendment or withdrawal of the admission. (Code Civ. Proc., [former]  2033 [see now  2033.410].) (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1272.) Absent an amendment or withdrawal of the admission, no contradictory evidence may be introduced because the admission constitutes an incontrovertible judicial admission. (Murillo, supra, 143 Cal.App.4th at p. 736.) The same conclusive effect is not always accorded to answers to interrogatories. (Ibid.) Nevertheless, the California Supreme Court in DAmico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22 (DAmico), established a rule that bars a party opposing summary judgment from filing a declaration that purports to impeach his or her own prior sworn testimony. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1522.)

Although plaintiffs opening brief lists as one of nine issues on appeal whether the trial court erred in refusing to grant the Simantobs application to withdraw their deemed admissions, plaintiffs briefs do not comply with California Rules of Court, former rule 14(a)(1)(B) (see now, rule 8.204(a)(1)(B)) because they do not contain a separate heading or any argument or authority pertaining to their claim that the court erred in denying their application to withdraw their deemed admissions. The point is waived for lack of a heading and legal argument or authority in plaintiffs briefs. (Uhrich v. State Farm Fire & Casualty Co. (2003) 109 Cal.App.4th 598, 612 [issues are waived on appeal by failing to head an argument in [the] brief attacking the trial courts ruling, and failing to provide legal analysis to demonstrate error].) Accordingly, the deemed admissions stand.

The Simantobs deemed admissions are responsive to each of the allegations of the complaint and establish that the causes of action involving the 1993 agreement and the Vermont Property are without merit. We conclude that the first summary adjudication motion was properly granted as to the Simantobs.

Nasser also presents no basis for reversal of the order granting the first summary adjudication motion. He never alleged he was a party to the 1993 agreement, and in a May 2002 verified response to a special interrogatory, he admitted having no interest in the Vermont Property. Although the May 2002 response was not brought to the attention of the trial court before it ruled on the first summary adjudication motion, our review is de novo. Under DAmico, supra, 11 Cal.3d at page 22, we may disregard Nassers later attempts in his June 5, 2003 and August 25, 2003 declarations to contradict his sworn discovery response, which Nasser did not attempt to explain. Accordingly, Nasser fails to establish any prejudicial error justifying reversal of the first summary adjudication motion. (See Code Civ. Proc.,  475 [judgment shall not be reversed for error unless appellant shows prejudice].)

Because the first summary adjudication motion is properly granted based on deemed admissions of the Simantobs, and on Nassers sworn discovery response, which are accorded preclusive effect, we conclude that plaintiffs motion for a continuance to conduct additional discovery was properly denied. Any evidence obtained in such discovery would have been inadmissible under DAmico, supra, 11 Cal.3d at page 22.

We also reject as without merit plaintiffs remaining contentions that (1) the first summary adjudication motion should have been denied because of defendants abuse of the discovery process and (2) the order was void as entered in violation of the automatic stay in Kavehs bankruptcy case. The first of the contentions does not refer to any specific trial court order involving defendants alleged abuse of discovery and is a point that was not raised or decided below. The second contention is unsupported by any authority or evidence showing that a bankruptcy court stay was in effect on May 10, 2002.

Summary adjudication was also properly granted on Nassers sixth cause of action against Mashian for breach of fiduciary duty and the eighth cause of action for conversion of clean-up funds.

The gravamen of the sixth cause of action was Mashians alleged actual conflict in representing both Nasser and Kaveh without full disclosure, Mashians self dealing with respect to the Vermont Property, and Mashians failure to disclose to his interest in the Vermont Property to Nasser. But Nasser admitted in responses to requests for admissions that he had no discussions with Mashian about the 1993 agreement or the Vermont Property and Mashian did not represent him in connection with those matters. Kaveh submitted a declaration stating that he was not involved in any of the matters in which Mashian represented Nasser, and Mashian also declared that he never represented Nasser or Kaveh in any matter involving the other.

Although Nasser challenges such evidence as too conclusory and equivocal to support summary adjudication, no authority is cited to support this assertion, and we find it to be without merit. Mashians evidence unequivocally controverted the allegations of the complaint and established that he did not represent Kaveh in the matters in which he represented Nasser. Mashians evidence met his burden in his motion for summary adjudication on the allegations in the sixth cause of action.

Nasser alternatively argues that a triable issue of fact is created by his lengthy June 5, 2003 declaration and its 125 pages of exhibits. But other than directing us to those documents, his appellate briefs fail to discuss any specific statement in his declaration or a specific exhibit. He fails to show how his evidence controverts the declarations of Kaveh and Mashian. Accordingly, Nasser fails to establish any error with respect to the order granting summary adjudication on the sixth cause of action. (See In re S.C. (2006) 138 Cal.App.4th 396, 411412 [it is not our role to carry appellants burden of establishing error].)

As to the eighth cause of action for conversion of cleanup funds for the Santa Ana Property, Nasser admitted in a declaration that the Santa Ana Property never belonged to him or the other plaintiffs, thus establishing that they lacked standing to bring the claim. Even if Nassers admission is not binding on the Simantobs, defendants also presented uncontroverted evidence that Kaveh quitclaimed the Santa Ana Property to a corporation in 1993 and the Simantobs did not present sufficient evidence establishing their standing to bring the conversion claim. As noted by the trial court, there was insufficient evidence to support plaintiffs assertion that the corporation no longer existed or that Kamiar Simantob was assigned rights which entitled him to bring the claim. Even on appeal, plaintiffs fail to discuss the particular evidence which they claim establishes Simantobs standing. Our examination of the evidence offered in plaintiffs opposition to the summary adjudication motion does not establish an assignment or that plaintiffs were successors in interest to the rights of the corporation owning the Santa Ana Property.

With respect to the denial of their motion requesting a continuance of the second summary adjudication motion, plaintiffs fail to establish any abuse of discretion. It was undisputed that Buchalter produced the records relating to Mashians representation of Nasser before the hearing on the motion, so Nasser had obtained the materials which he claimed were crucial to defeat summary adjudication on the sixth cause of action. And on the conversion claim, plaintiffs fail, even now, to explain why a continuance was needed to obtain evidence to refute the contention that they lacked standing, the basis for the order granting summary adjudication on the eighth cause of action.

Without merit also is plaintiffs argument that the order granting the second summary adjudication motion was void on the ground that the bankruptcy stay was violated. Plaintiffs contend that the stay was violated because defendants July 2002 motion was filed after Kavehs bankruptcy case was reopened in June 2002. But the bankruptcy courts May 2003 order lifting the stay specifically permitted Kaveh to proceed with the second summary adjudication motion, and plaintiffs fail to establish with pertinent authority that Kavehsact offiling the motion was void or that plaintiffs have standing to challenge that act as a violation of the automatic stay. (See Shorr v. Kind (1991) 1 Cal.App.4th 249, 258 [only the debtor or trustee has standing to assert violations of the automatic stay].)

2. Motion for Leave to File Fourth Amended Complaint, Dismissal of

Cross‑complaint, and Motions for Reconsideration

Plaintiffs fail to establish that the trial court erred in denying them leave to file the proposed fourth amended complaint. The first eight causes of action of the proposed pleading duplicated the claims already before the trial court and the first, second, third, fourth, fifth and seventh causes of action had already been summarily adjudicated. With respect to the new ninth through fourteenth causes of action of the proposed fourth amended complaint, the trial court denied leave to amend on the ground that only the trustee in bankruptcy had standing to assert the proposed claims. On appeal, plaintiffs do not discuss the duplication of the sixth and eighth causes of action and do not meet their burden of establishing that the trial courts determination of the standing issue was erroneous.

With respect to the dismissal of Kavehs cross-complaint without prejudice, plaintiffs contend that such dismissal was erroneous and that they were entitled to a dismissal with prejudice and on the merits, rather than a dismissal which permitted defendants to reassert the same claims in another forum. But Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, the authority relied upon by plaintiffs, is distinguishable because that case involved a plaintiffs right to a voluntary dismissal without prejudice after the plaintiff failed to file an amended complaint within the time permitted by the court to file an amended complaint after a general demurrer was sustained with leave to amend.

Here, plaintiffs do not provide any authority to support their proposition that the trial court erred in dismissing Kavehs cross-complaint without prejudice on its own motion, when the bankruptcy trustee failed to prosecute the cross-complaint after the demurrer was sustained on the ground of Kavehs lack of standing to do so.

Because there is no notice of appeal of the ruling denying plaintiffs motions for reconsideration, we lack jurisdiction to address the ruling on those motions. Were there jurisdiction, we would conclude that plaintiffs fail to establish that the trial court abused its discretion in denying the motions. Given the allegations of the complaint, the Simantobs deemed admissions, Nassers discovery admissions and responses, and summary adjudication principles, plaintiffs fail to explain in a meaningful fashion how any of the evidence offered in their reconsideration motions should result in rulings in their favor. (See In re S.C., supra, 138 Cal.App.4th at p. 408 [to demonstrate error, appellant must present meaningful legal analysis supported by authority and facts in the record].)

3. Award of Attorney Fees of $184,036 to Kaveh and Mashian

We agree with plaintiffs that the trial court erred in awarding attorney fees to Kaveh and Mashian because the contracts do not provide for an attorney fee award for tort claims. The complaint contains only tort claims based on fraud, and in Mashians case, a claim for breach of fiduciary duty based on violations of the ethical rules governing attorneys.

Attorney fees incurred by a prevailing party in prosecuting or defending an action may be recovered as costs only when they are otherwise authorized by statute or by the parties agreement. (Santisas v. Goodin (1998) 17 Cal.4th 599, 607, fn. 4; Code Civ. Proc.,  1021, 1033.5, subd. (a)(10).) Civil Code section 1717 does not apply to tort claims; it determines which party, if any, is entitled to attorneys fees on a contract claim only. [Citations.] As to tort claims, the question of whether to award attorneys fees turns on the language of the contractual attorneys fee provision, i.e., whether the party seeking fees has prevailed within the meaning of the provision and whether the type of claim is within the scope of the provision. (Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698, 708 (Exxess Electronixx).) As here, where no extrinsic evidence was presented to interpret the attorney fee provisions of the contracts, we determine de novo, under ordinary rules of contract interpretation, whether the contractual attorney fee provision entitles the prevailing party to attorney fees. (Gil v. Mansano (2004) 121 Cal.App.4th 739, 743.)

Mashians retainer agreement with Nasser afforded attorney fees to the prevailing party in the event of litigation between Client and Attorneys [arising] out of this Retainer Agreement. (See fn. 5, ante.)

Whether an action is based on contract or tort depends upon the nature of the right sued upon, not the form of the pleading or relief demanded. If based on breach of promise it is contractual; if based on breach of a noncontractual duty it is tortious. [Citation.] If unclear the action will be considered based on contract rather than tort. [Citation.] [] In the final analysis we look to the pleading to determine the nature of plaintiffs claim. [Citation.] (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 11781179 [breach of fiduciary duty arose out of escrow agreement, so prevailing plaintiff entitled to attorney fees under section 1717].)

In Loube v. Loube (1998) 64 Cal.App.4th 421 (Loube), a legal malpractice action, the court recognized that without a contractual relationship, no professional duties would have existed and that professional negligence is both a tort and a breach of contract. Nonetheless, the court concluded that attorney fees were not recoverable pursuant to section 1717 because, although the parties had a contractual relationship, and appellants claim for legal negligence arose from the relationship between them, which relationship was founded on a contract, the cause of action sounded in tort and was no more on the contract than a claim for breach of fiduciary duty or for fraud involving a contract. (Loube, at p. 430.)

Here, Nassers breach of fiduciary duty cause of action contains no allegations that Mashian breached any provision or promise of the retainer agreement. Rather, the gravamen of the sixth cause of action is the breach of duty arising from the California Rules of Professional Conduct governing attorneys. The language in Mashians retainer agreement affording attorney fees for the prevailing party in litigation arising out of this Retainer Agreement is specific and refers only to obligations dealing with compensation and billing. The retainer agreement cannot reasonably be interpreted to include attorney fees for the prevailing party in litigation alleging violation of the rules of professional conduct. Because Nassers claim is not one that arises out of the retainer agreement as a matter of law, we conclude that the retainer agreement does not afford any basis for an award of attorney fees to Mashian. Because the sixth cause of action is not one arising out of the retainer agreement, it also is not one on the contract within section 1717.

Nor does the 1993 agreement afford any basis for the recovery of attorney fees by either Kaveh or Mashian. The 1993 agreement provides fees to the prevailing party in a suit to enforce or interpret any part of this Agreement. The claims involving the 1993 agreement are all premised on allegations of misrepresentations inducing the execution of the 1993 agreement. The gravamen of these claims is fraud, a tort theory of recovery, and not a contract theory of recovery.

In Exxess Electronixx, a lessee sued its broker for fraud in the inducement and breach of fiduciary duty and the broker was awarded attorney fees under a lease provision entitling the prevailing party to such fees in an action to enforce the terms hereof or declare rights hereunder. (Exxess Electronixx, supra, 64 Cal.App.4th at pp. 702, 704, fn. 5.) The Court of Appeal reversed the award of fees to the broker, holding that the lessees tort claims were not actions to enforce the terms of the lease, nor were they actions to declare rights thereunder. (Id. at pp. 709710.) The Court of Appeal also rejected the brokers argument that by asserting a defense based on a lease provision, the broker was enforcing the terms of the lease. (Id. at p. 712.)^[7]

As stated in Exxess Electronixx, [a]n action premised on fraud in the inducement seeks to avoid the contract rather than to enforce it; the essential claim is I would not have entered into this contract had I known the truth. The duty not to commit such fraud is precontractual[;] it is not an obligation undertaken by the entry into the contractual relationship. [Citation.] (Exxess Electronixx, supra, 64 Cal.App.4th at p. 711.) And the courts have held that a contract authorizing an award of attorney fees to enforce or interpret a provision of the contract does not cover tort claims. (Id. at p. 709.)

In light of Exxess Electronixx, the cases cited therein, and rules of contract interpretation, we conclude that this action does not constitute one to enforce or interpret the 1993 agreement. (See also Gil v. Mansano, supra, 121 Cal.App.4th at p. 743.)

Kaveh and Mashian argue that the third cause of action for rescission constituted a contract claim, but the following authorities upon which they rely involve contract theories of recovery or attorney fee provisions which are distinguishable and hence inapposite. (Hastings v. Matlock (1985) 171 Cal.App.3d 826 [suit for specific performance of a settlement agreement which rescinded two earlier agreements containing attorney fee provisions]; Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541 [defendant who was a non-signatory to contract was denied attorney fees under section 1717]; Siligo v. Castellucci (1994) 21 Cal.App.4th 873, 878, fn. 5 [contract permitted fees to prevailing party [i]n any action or proceeding arising out of this Agreement; plaintiff who prevailed on his contract claim was also entitled to fees in defeating non-contractual cross-complaint challenging validity of the contract].)

For all of the foregoing reasons, we conclude that neither Mashian nor Kaveh was entitled to attorney fees pursuant to the 1993 agreement because the action asserted tort claims based on fraud, not contract claims to enforce or interpret the 1993 agreement. Nor was the action one on a contract within the meaning of section 1717. The March 8, 2004 order awarding attorney fees of $184,036 must be reversed.

Plaintiffs contend that they are entitled to attorney fees incurred in successfully defeating defendants attorney fee motion. The authority upon which they rely, M. Perez Co., Inc. v. Base CampCondominiums Assn. No. One (2003) 111 Cal.App.4th 456, 470 (M. Perez Co.), enunciated the principle that even if a party is unsuccessful in the underlying litigation but successful in defeating the attorney fee motion, that party is entitled to the attorney fees incurred in defeating the attorney fee claim. But M. Perez Co. involved an underlying action for breach of contract and the application of section 1717. Because this case involves tort claims for fraud and does not implicate section 1717, M. Perez Co. is inapposite. Plaintiffs are thus not entitled to their attorney fees.

B. Cross-appeal

1. Doe Defendants Motion for Sanctions

The Doe defendants contend that the trial court abused its discretion in denying their motion for sanctions against plaintiffs for pursuing the Doe amendments and the motion for leave to file the proposed fourth amended complaint, proceedings which they claim were frivolous and obviously intended by [plaintiffs] to harass the Doe Defendants. But, under the circumstances here, which the trial court found complicated and far from clear, the trial courts denial of sanctions was not arbitrary or irrational and did not exceed the bounds of reason. (See Maughan v. Google Technology, Inc. (2006) 143 Cal.App.4th 1242, 1249.)

2. Doe Defendants and Mottales Motion for Attorney Fees

The Doe defendants contend that the trial court erred in denying their motion for attorney fees on jurisdictional grounds. But because we review the ruling and not the trial courts rationale or reasons (DAmico, supra, 11 Cal.3d at p. 19), and because the Doe defendants fail to establish any entitlement to attorney fees under a contract or statute, they fail to show that the denial of their motion for attorney fees constituted reversible error.

And for the same reasons set out in part A.3. of the Discussion portion of this opinion, Mottale is not entitled to attorney fees. We also reject Mottales and the Doe defendants contention that they are entitled to attorney fees against the Simantobs under section 1717 because, had the Simantobs prevailed, they could have recovered attorney fees from defendants. For the reasons set out in part A.3. of the Discussion, we conclude that had the Simantobs prevailed, they would not have been entitled to their attorney fees.

DISPOSITION

The March 8, 2004 order awarding Kaveh Lahijani and Bahman Mashian attorney fees of $184,036 is reversed. The judgment and the other orders appealed from are affirmed. The parties are to bear their own costs on appeal.

NOT TO BE PUBLISHED.

MALLANO, Acting P. J.

We concur:

VOGEL, J.

JACKSON, J.^*

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by El Cajon Property line Lawyers.

^[1]In a declaration not before the trial court at the time it granted the first motion for summary adjudication, but only submitted in connection with the second motion for summary adjudication, Nasser declared on June 5, 2003, that he and his partners were the true, equitable owners of the . . . Vermont Property, that Kaveh only held legal title for our benefit, because he falsely told us that he had to be the legal owner to obtain the loans and to do the development and construction, and that the Vermont Property was purchased in 1987 for $1.2 million and paid for with our money.

^[2]But according to Nassers June 5, 2003 declaration, the Vermont Property was sold in September 1995 to Venice & Vermont, Inc. pursuant to a trustees sale after default under a trust deed executed by Kaveh. In May 1996, a grant deed was recorded showing transfer of the property from Venice & Vermont, Inc., to Mashian. According to Nassers declaration, Kaveh created a phony corporation, Venice & Vermont, in June 1995 and falsely claimed that his friend, Mottale, was the owner of that corporation; Kaveh caused the Vermont Property to be transferred to the corporation by a trustees deed upon sale, and then forged Mottales name on the grant deed transferring the Vermont Property from the corporation to Mashian.

^[3]According to an exhibit to First Street Corporations chapter 11 bankruptcy petition, Kamiar Simantob was president of First Street, owned 20 percent or more of the corporations voting securities, and had the authority to make decisions on behalf of the corporation.

^[4]The Doe defendants were Elan Enterprises, Inc., Safie Mirsafavi, 630 Vista Lane LLC, and First & Fairview, Inc. According to the allegations of the proposed fourth amended complaint, Elan was a corporation which held title to residential real property in Laguna Beach. Elan was purportedly owned by Mottale and managed by Mirsafavi, but was in fact owned and managed by Kaveh. 630 Vista Lane LLC was alleged to be the company that owned Kavehs residence in Laguna Beach, which residence the company sold to Mashian, who allegedly allowed Kaveh to continue to reside there. First & Fairview, Inc., allegedly was a shell corporation created by Kaveh in 1997 for the purposes of accepting the fraudulent transfer of title to real property located in Santa Ana in preparation for Kavehs filing of his chapter 7 bankruptcy petition.