USA Aisiqi Shoes v. Huang

Filed 11/12/08 USA Aisiqi Shoes v. Huang CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from an order of the Superior Court of Los Angeles County, Robert L. Hess, Judge. Affirmed.

Law Offices of Joel F. Tamraz for Defendant and Appellant.

Law Offices of Roger E. Naghash for Plaintiff and Respondent.

introduction

Plaintiff and respondent USA Aisiqi Shoes, Inc. (Aisiqi) filed a lawsuit against its employee, defendant and appellant Peter Zhuang Fei Huang (Huang). During trial, the parties reached a settlement agreement in open court and on the record, by which Huang agreed to pay Aisiqi a specified amount, and to execute a third deed of trust on his residence as security for the monetary obligation. When he defaulted on his obligations, Aisiqi brought a motion for the trial court to enter a stipulated judgment, and the court did so. As a result of Aisiqis instituting nonjudicial foreclosure proceedings, Huang paid Aisiqi the principal amount of the monetary obligation, but did not pay the attorney fees which the court had awarded as part of the stipulated judgment.

Aisiqi filed a motion for an award of the attorney fees it incurred in enforcing the settlement agreement, based on the provision in the deed of trust which allows for an award of attorney fees. The trial court granted the motion. Huang appeals from the resulting order, contending there was no basis for the award of attorney fees. We disagree and affirm the trial courts order.

factual and procedural background

Aisiqi filed a complaint against Huang on January 10, 2003, alleging breach of an employment agreement, breach of a loan agreement, breach of fiduciary duty, conversion, unjust enrichment, and fraud. Huang filed an answer in February 2003.

A jury trial commenced in late July 2004. The parties reached a settlement agreement in open court on August 12, 2004, the terms of which were stated on the record. Huang agreed to pay $80,000 to Aisiqi at the rate of $2,000 per month, with a $5,000 down payment to be paid on or before September 1, 2004. The $2,000 monthly payments were to be due on the first day of each month, with a five-day grace period; the down payment was not subject to a grace period. If monthly payments were not made by the end of the grace period, notification would be given to Huangs attorney, after which there would be a five-day period to cure the default. The obligation was to be secured by a promissory note and a third deed of trust on Huangs property located in Arcadia, California. The note was to bear interest at the rate of 10 percent per year. Each side agreed to execute a mutual release in favor of the other, and to bear their own costs and attorney fees.

The trial court retained jurisdiction to enforce the settlement agreement. (Code Civ. Proc.,  664.6.)[1]

Huang immediately defaulted on the terms of the settlement agreement by failing to make the $5,000 down payment, and apparently also by failing to execute the third deed of trust. On September 3, 2004, Aisiqi filed notice that Huang had defaulted on the terms and conditions of the court-approved settlement agreement. Aisiqi filed a second notice that Huang had defaulted on October 8, 2004. On October 14, 2004, Aisiqi filed a motion to enter judgment pursuant to the court-approved settlement. Aisiqi requested that the court (1) enter judgment in its favor for $80,000 plus interest, (2) order Huang to execute a deed of trust as agreed to in the settlement, and (3) order foreclosure of the security interest evidenced by the deed of trust.

On November 12, 2004, the court entered a stipulated judgment in favor of Aisiqi in the amount of $98,250, which included $16,250 in attorney fees.[2] Aisiqi filed and served notice of entry of judgment.

On December 2, 2004, the trial court issued an order to show cause regarding foreclosure of appellants property, turnover and delivery of Huangs personal property for sale, and an award of costs and expenses. The matter was set for hearing on January 4, 2005. On that date, Huang appeared at the end of the hearing, and the court ordered the matter continued until the next day. The following day, the court granted Aisiqis motion. Because Huang had refused to sign the deed of trust, the court ordered the clerk of court to execute the deed on Huangs behalf. Acting as a court-appointed elisor, on January 13, 2005, Winston E. Battle executed the deed of trust and secured installment note as trustor on behalf of Huang. The deed of trust contained an attorney fee provision.

In March 2005, Aisiqi retained an attorney to initiate nonjudicial foreclosure proceedings based on the power of sale contained in the deed of trust. In July 2005, Huang paid to Aisiqi $88,865.29, consisting of $80,000 in principal, interest of $7,473.97, and foreclosure fees and costs of $1,391.32. However, Huang did not pay any of the attorney fees ordered by the court.

On December 19, 2005, Huang executed a quitclaim deed transferring the Arcadia property to his wife as her sole and separate property.[3]

In October 2007, Aisiqis attorney filed a motion for attorney fees in the amount of $41,616. The motion was supported by a declaration from Aisiqis counsel detailing the actions he was required to undertake to enforce the settlement agreement.

After hearing the matter on November 5, 2007, the trial court granted the motion for attorney fees incurred in connection with the enforcement of parties settlement agreement, that is secured by a Deed of Trust, in the amount of $40,326.

On November 15, 2007, Aisiqi recorded a second notice of default which stated that a default had occurred in the obligation for which the deed of trust is security in that Huang had failed to pay attorney fees and expenses in the amount of $40,326.[4]

This appeal followed.

discussion

I. Authority to Award Attorney Fees

A. The Order is Appealable

This is an appeal from a postjudgment order awarding attorney fees. A postjudgment order awarding attorney fees is separately appealable. (Code Civ. Proc.,  904.1, subd. (a)(2); Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46.) (R.P. Richards, Inc. v. Chartered Construction Corp. (2000) 83 Cal.App.4th 146, 158.) The order is properly appealable as a final order after judgment, even though further proceedings may be necessary if and when a nonjudicial foreclosure sale is held, in the event that it proves necessary to determine the distribution of any surplus proceeds from the sale. The courts retention of jurisdiction in that regard does not render the attorney fee award interlocutory or otherwise provisional.

B. Contentions on Appeal

Huang argues that the trial courts order awarding attorney fees was erroneous because the parties settlement agreement specified that each party would bear its own costs and attorney fees. However, that settlement term referred to fees and costs incurred up to the point of reaching and effectuating the settlement agreement. The court, in detailing the terms of the parties agreement on the record, stated: both sides have run up bills for attorneys fees. Both sides have spent money for interpreters. And I believe at least the plaintiff for the jury fees and perhaps also one or both of you for the court reporters. All those costs of litigation each side has incurred will be borne by that party. And as to [plaintiffs counsel], whatever he is entitled to out of this settlement is a matter between you and him. It does not affect the validity of your settlement with the defendant. Based on the courts description of this term of the settlement, to which the parties consented in open court, it is clear that the parties agreed only that each side would bear its own costs and attorney fees up to and including the settlement agreement. The parties did not agree to bear their own costs and attorney fees in possible later proceedings to enforce the judgment.

Huang further contends that the trial courts order awarding attorney fees was not authorized either pursuant to contract or statute. We disagree. The determination of the legal basis for an attorney fee award is a question of law, which we review de novo. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175.)

Huang agreed to settlement terms which included execution of a deed of trust securing the settlement amount. The settlement agreement was silent as to whether the deed of trust would contain an attorney fee provision, but such provisions are routinely included in deeds of trust. The provision at issue here stated that To Protect the Security of This Deed of Trust, Trustor Agrees: [] . . . (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses including cost of evidence of title, expenses, and attorneys fees, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. Huang does not argue that the deed of trust was invalid because he did not personally sign it. Nor could he, as [o]nce the parties have reached a settlement, . . . they may not escape their obligations by refusing to sign a written agreement that conforms to the oral terms. (Elyaoudayan v. Hoffman [(2003)] 104 Cal.App.4th [1421] at p. 1431.) (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) By agreeing to secure his monetary obligation to Aisiqi by executing a deed of trust, Huang implicitly agreed to be contractually bound to pay attorney fees in any action or proceeding purporting to affect the security [of the deed of trust] or the rights or powers of Beneficiary [Aisiqi].

Thus, the trial court acted well within its authority in entering the order challenged by this appeal. Attorney fees can be awarded as costs to the prevailing party when authorized by contract. (Code Civ. Proc.,  1021, 1033.5, subd. (a)(10); Santisas v. Goodin (1998) 17 Cal.4th 599, 607, fn. 4.)

Indeed, when the trial court entered the stipulated judgment, it awarded Aisiqi its attorney fees incurred to enforce the settlement agreement. Huang did not contest that judgment. Nor did Huang appeal from the courts later ruling on Aisiqis motion for an order to show cause by which the court ordered an elisor to execute the deed of trust on Huangs behalf. Huang thus forfeited his right to challenge the inclusion of an attorney fees provision in the deed of trust.

The attorney fees provision obligated Huang, [t]o appear in and defend any action or proceeding purporting to affect . . . the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses including . . . expenses, and attorneys fees, in any such action or proceeding . . . , and in any suit brought by Beneficiary to foreclose this Deed. The efforts undertaken by Aisiqis counsel to enforce the settlement agreement, including bringing the motion to enter the stipulated judgment, bringing the ex parte application for an order to show cause, and recording a notice of default and pursuing foreclosure proceedings, come within the description set forth in the attorney fees provision in the deed of trust.

Huang does not present any argument or authority to dispute the amount of the attorney fees, or the inclusion of any particular item or billed activity. He argues only that the court lacked authority to enter the award of attorney fees. Having concluded the court properly awarded attorney fees pursuant to the parties contract, the deed of trust, we affirm the ruling.

II. Huangs Other Contentions Are Not Properly Before Us

Huang argues that it is undisputed that he paid the obligation secured by the deed of trust, and the obligation under the deed of trust was extinguished.[5] He also argues that allowing a foreclosure for the payment of attorney fees against property owned by someone who is not a party to the action (i.e., his wife) and did not receive notice is unauthorized and constitutes reversible error. Because this appeal is taken solely from the post-judgment order awarding attorney fees, these issues are not properly before us.

In his reply brief, Huang contends for the first time that the motion for attorney fees was untimely. Although we grant Huangs motion to file the late reply brief, we do not consider arguments raised for the first time in the reply brief because it would deprive the respondent of an opportunity to counter the argument. (City of Corona v. Naulls (2008) 166 Cal.App.4th 418, 426-427.)

In any event, we conclude that the court entered a valid order by which Huang is now obligated to pay to Aisiqi $40,326 in attorney fees. Unlike the typical situation involving a deed of trust which contains an attorney fee provision and a nonjudicial foreclosure results, the matter now before us is unique in that it involves a settlement agreement by which the parties agreed to execution of a deed of trust as security for the monetary obligation created by the settlement. The obligation to pay attorney fees arose out of contract, i.e., the deed of trust, but not in the context of nonjudicial foreclosure proceedings. Rather, it occurred as an outgrowth of the stipulated judgment, and was based upon the trial courts continuing jurisdiction to enforce the settlement agreement. The means of enforcement chosen by Aisiqi to enforce the judgment is beyond the scope of our consideration on this appeal.

disposition

The order awarding attorney fees is affirmed. Costs on appeal are awarded to respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

WILLHITE, Acting P. J.

We concur:

MANELLA, J.

SUZUKAWA, J.

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[1] Code of Civil Procedure 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.

[2] Huang was present at the hearing.

[3] The trial court had issued an order on December 2, 2004, prohibiting Huang from selling, exchanging, borrowing money against, or transferring the real property at issue.

[4] While we granted Huangs request to take judicial notice of the quitclaim deed and the second notice of default, upon consideration of the merits of this appeal, we conclude that neither document is relevant to the resolution of the appeal.

[5] We note that the record contains no evidence, such as a deed of reconveyance or executed beneficiarys demand, to demonstrate that the obligation secured by the deed of trust has been fully satisfied. (See Civ. Code,  2941, 2943.) However, it is undisputed that the judgment has been partially satisfied.