Yi v. Kim

Filed 9/28/06 Yi v. Kim CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEALS from a judgment and order of the Superior Court of Los Angeles County. Ernest George Williams and Tricia A. Bigelow, Judges. Affirmed.

Allan E. Wilion; Park & Lim and Aidan Butler for Plaintiff and Appellant.

Law Offices of Steven C. Kim & Associates, Steven C. Kim and S. Calvin Myung for Defendant and Appellant.

Sang S. Yi appeals from a judgment entered after the trial court granted Ki S. Kim’s motion for judgment under Code of Civil Procedure section 631.8[1] with respect to Yi’s action for breach of contract and specific performance against Kim. Kim appeals from the trial court’s order awarding Kim attorney fees in the amount of $8,100.[2] We affirm.

CONTENTIONS

Yi contends that Kim was bound by the admissions in her cross-complaint, in which she sought to enforce an agreement to sell real property to Yi. Yi also contends that the evidence did not support the trial court’s finding that: (1) there was no meeting of the minds with respect to the challenged escrow agreement; (2) Yi was not ready, willing, and able to perform; (3) Yi committed anticipatory breach of the challenged escrow agreement; and (4) Yi breached the implied covenant of good faith and fair dealing.

Kim urges that the trial court abused its discretion in refusing to award the full amount of attorney fees requested by Kim.

FACTS AND PROCEDURAL BACKGROUND

On July 15, 2002, Yi filed a complaint for breach of contract and specific performance, alleging that he entered into an agreement with Kim to purchase real property located on Beverly Boulevard (the property) for the sum of $415,000.

In 1989,[3] Kim purchased the property for $485,000. The property was encumbered by an all-inclusive deed of trust, securing a note of $310,000 (AITD Note), which had been paid down by Kim to $260,000. Kim also had an unsecured loan of $50,000, and an unsecured line of credit of $130,000.

Yi had leased the property for his auto repair business from the prior owner. After Kim’s purchase, he leased the property from Kim. On April 23, 1999, Yi and Kim executed escrow instructions for the sale and purchase of the property for the amount of $415,000. The escrow instructions did not contain a clause stating that time was of the essence. On that same day, Yi and Kim executed amended escrow instructions which provided: “(a) Buyer and Seller are aware that purchase price to be adjustable by seller’s net proceed $180,000.00 (excluded [sic] security deposit if any), at the close of escrow. Seller’s net proceed to be $180,000.00 plus commission, any pay off shall be the purchase price.” Closing of escrow was contingent on Kim obtaining a full clearance on possible soil contamination on the property within two years.

Yi testified that when he signed the escrow instructions and amended escrow instructions (referred to collectively as the agreement), he believed the purchase price of the property was $415,000. Yi did not read or speak English, and the documents, which were in English, were not translated for him. Yi did not know that he was responsible for paying the brokers’ commissions, or the escrow fees, charges and costs, or that the amended escrow instruction would require him to pay more than $415,000 for the property. He knew that he was purchasing the property “as is.” He believed, however, that Kim had hired architects to bring the property into compliance with environmental regulations. Yi testified that the escrow was to close as soon as possible, but he did not know whether such a provision was contained in the agreement. He first became aware that the agreement did not match his understanding when his broker translated the documents for him in 2002.

Kim testified that while she did not know the exact purchase price of the property, she knew she was to net $180,000. Kim hired a company to clean up the polluted underground water. The work was completed on May 13, 2002. James Ahn, Kim’s broker, advised Yi by letter dated May 29, 2002, that the cleanup contingency was satisfied. On May 23, 2002, by amended escrow instructions, Kim requested the escrow closing date to be July 8, 2002. Kim testified that she received a letter from the holder of the AITD Note, stating that he would foreclose on the property if she did not send him an amended document signed by the buyer, stating that escrow would close before June 14, 2002.

Sam Yi, Yi’s broker, testified that the parties and their brokers agreed on a purchase price of $415,000. However, Kim initially refused to sign the escrow instructions on April 23, 1999, until an amended escrow instruction was submitted allowing her to net $180,000. Sam Yi testified that at the time the agreement was executed, he told Yi that in order for Kim to net $180,000, Yi would have to pay $440,000, due to the AITD Note of $260,000. Sam Yi testified that he had been informed that Kim had unsecured loans of $50,000 and $130,000, in addition to the $260,000 AITD Note. He wanted to clarify that Yi was to pay off the AITD Note of $260,000, but was not responsible for the other loans. Therefore, he prepared a letter dated August 13, 2002, clarifying the terms, identifying Yi as a “prospective buyer,” and containing an additional clause requiring Kim to take care of a Building and Safety Code violation. He testified that the new purchase price was about $465,000.

On June 7, 2002, Kim canceled the escrow and sought financing to pay off the AITD Note and avoid foreclosure. On July 15, 2002, Yi filed his complaint and recorded a lis pendens against the property. On September 27, 2002, after Yi withdrew the lis pendens, Kim refinanced the debt and stopped the foreclosure proceedings. Kim filed a fourth amended cross-complaint (FACC) for breach of contract, fraud, interference with economic relationship, and declaratory relief, which she subsequently dismissed on November 24, 2004.[4]

After Yi’s presentation of evidence, Kim made a motion for judgment under section 631.8.[5] The trial court rendered a judgment in favor of Kim and issued a statement of decision. The court held the agreement was not enforceable because there was no meeting of the minds as to the essential elements, including purchase price, time, and manner of payment. Even if the agreement was enforceable, Yi failed to perform his obligations and did not have the financial resources to purchase the property, whereas Kim acted reasonably and performed her obligations. Also, the court held that Yi breached the implied covenant of good faith and fair dealing by failing to proceed with the purchase of the property, refusing to execute the necessary escrow agreement for the closing of escrow, and repudiating the agreement by demanding additional terms and making a completely new offer.

Yi’s motion for new trial was denied. The trial court granted in part Kim’s motion for attorney fees, and awarded her the amount of $8,100.

This appeal followed.

DISCUSSION

I. Kim was not bound by the allegations in her cross-complaint, and the trial court’s finding that there was no enforceable contract is supported by substantial evidence

Yi urges us to apply a de novo standard of review and to find that because Kim sought to enforce the agreement in her cross-complaint, she was estopped from denying that there was a contract. We conclude that substantial evidence supports the trial court’s finding that there was no enforceable contract. (Dickey v. Pattison (1949) 92 Cal.App.2d 659, 662 [findings that a purported agreement is too indefinite to ascertain the intention of the parties will not be reversed on appeal if supported by substantial evidence].)

An admission of fact in a pleading conclusively binds the pleader, and the pleader cannot offer contrary evidence unless permitted to amend. (Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1272.) The doctrine of judicial admissions applies to unverified as well as verified complaints. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 836.) Yi urges that Kim is bound by the allegation in her FACC that the sales price of the property was $463,000, and the allegation in her answer to Yi’s complaint that a contract existed. However, Kim’s allegation that she entered into an agreement with Yi is not inconsistent with the trial court’s ruling that there was no mutuality of agreement as to the essential terms of the agreement.

Every contract requires mutual consent. (Civ. Code, § 1550; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 (Weddington).) That is, the parties must all agree upon the same thing in the same sense. (Civ. Code, § 1580; Weddington, supra, at p. 811.) The terms of the contract must be reasonably certain. (Civ. Code, § 3390; Weddington, supra, at pp. 811-812.) Real estate contracts must specify the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred. (King v. Stanley (1948) 32 Cal.2d 584, 589.)

Here, Kim believed she entered into a contract with Yi to purchase the property at a price that would allow her to net $180,000. Yi, however, testified that he entered into a contract to purchase the property at a price of $415,000. He did not believe that he was required to pay the brokers’ commissions. His broker thought that the purchase price would be around $440,000, and was aware that the AITD Note of $260,000 existed. But, the broker did not know until 2002 whether the loans of $50,000 and $130,000 were secured by the property. Therefore, he submitted a new offer in August 2002, stating that Yi was responsible for paying off the $260,000 AITD Note, that the purchase price was $465,000, and that Kim was responsible for ensuring the property was not in violation of the Building and Safety Code. We conclude that substantial evidence supports the trial court’s finding that at the time the parties entered into the agreement in 1999, the terms of the agreement, especially with respect to Yi’s obligation regarding paying off the AITD Note, were uncertain. (Bruggeman v. Sokol (1954) 122 Cal.App.2d 876, 881-882.)

Nonetheless, in seeking specific performance, Yi also contends that the amended escrow agreement requiring Kim to net $180,000 was sufficiently certain to comprise a meeting of the minds. He cites Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710 for the general rule that the acceptor of a contract will be bound by the contract terms even though he is ignorant of some or all of its terms, and Hutton v. Gliksberg (1982) 128 Cal.App.3d 240, 245 (Hutton) for the proposition that a net price provision is not fatally lacking in certainty. In Hutton, the parties executed an amended escrow instruction requiring that the broker reduce his commission by an amount necessary to enable the sellers to net $700,000. (Id. at p. 244.) There was no such clear understanding here. Yi understood that the price was $415,000, and did not know he was responsible for the commissions. Kim knew only that she wanted to net $180,000. Yi’s broker concluded that Yi had to pay an extra $20,000 for commissions in order for Kim to net $180,000. The amended escrow instruction, however, stated that at the close of escrow, “Seller’s net proceed to be $180,000.00 plus commission, any pay off shall be the purchase price.” Thus, the amended escrow instruction added the commission to Kim’s net, which is different from both Yi and his broker’s understanding.

The trial court also held that even if the agreement was sufficiently certain as to the purchase price, the essential terms of manner and time of payment were not agreed upon with respect to the amount above the original $415,000 purchase price. (Bruggeman v. Sokol, supra, 122 Cal.App.2d at pp. 881-882 [agreement to purchase real property was unenforceable where consummation of escrow was made contingent on undetermined loan amounts; and interim financing conditions and time and amount of second trust deed payments were not determined].) Since the purchase price was unclear, the amount of the loan required by Yi was uncertain. As it turned out, the timing of the close of escrow was also uncertain, because Kim believed escrow was to close upon soil clean up, while Yi believed (and still contends) that escrow was to close after a final report by the Water Board. Accordingly, the trial court’s finding that there was no mutuality of agreement was supported by the evidence. (Dickey v. Pattison, supra, 92 Cal.App.2d at p. 662 [where substantial evidence supports finding that no enforceable contract was made, judgment will not be upset on appeal].)

Yi’s argument in his reply brief that the trial court abused its discretion in denying his counsel leave to amend the complaint to conform to proof at trial, also fails, simply because Yi testified that he believed the contract price to be $415,000, as alleged in his complaint.

We conclude the trial court’s findings were supported by substantial evidence.

II. Substantial evidence supports the trial court’s findings that Yi failed to perform; was not ready, willing and able to perform; committed anticipatory breach of contract; and breached the implied covenant of good faith and fair dealing

We disagree with Yi’s further arguments that substantial evidence did not support the trial court’s finding that even had a contract been formed, Yi failed to perform; was not ready, willing and able to perform; committed anticipatory breach of contract; and breached the implied covenant of good faith and fair dealing.

The trial court found that Yi did not fulfill his obligations under the agreement by tendering performance. Despite Yi’s contention that he was not required to tender performance until the final report was issued by the Water Board, no such condition precedent was contained in the agreement. Rather, the agreement merely provided that Kim was to make a diligent effort to clean contaminated soil within two years of the opening of escrow, and that “escrow shall not be closed until cleaning soil contaminated [sic].” If Kim failed to clean the soil within two years, Yi would be required to pay rent of $3,648.56 per month until the soil was cleaned. The record shows that Yi did not execute the necessary escrow amendment for the closing of the escrow and never tendered the requisite $78,000 into escrow two days before closing. (Gaffney v. Downey Savings & Loan Assn. (1988) 200 Cal.App.3d 1154, 1165 [tender must be of full performance].)

The trial court’s finding that Yi was not ready, willing and able to perform is supported by substantial evidence. While the record shows that Yi testified he had the financial ability to buy the property in 2002, and his broker testified that he helped Yi fill out a loan application on May 20, 2002, there is no evidence that Yi had a loan commitment or that any of the financial data he provided in his loan application was true. (Am-Cal Investment Co. v. Sharlyn Estates, Inc. (1967) 255 Cal.App.2d 526, 533 [proof of liquid assets, property which could be sold, or actual loan commitment, is evidence of ability and willingness to perform].)

The evidence also shows that Yi expressly repudiated the agreement by refusing to close escrow and demanding additional terms requiring Kim to cure a Building and Safety Code violation. (Hertz Driv-Ur-Self v. Schenley Distil. (1953) 119 Cal.App.2d 754, 758 [request for revision of contract terms is express repudiation].)

Finally, the evidence also supports the trial court’s finding that Yi breached the implied covenant of good faith and fair dealing by failing to close escrow, and instead proposing additional terms to Kim. (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417 [the implied covenant of good faith and fair dealing imposes upon each party to a contract to do everything to accomplish the purpose of the contract].)

We conclude that substantial evidence supports the trial court’s findings. (J. H. McKnight Ranch Inc. v. Franchise Tax Bd. (2003) 110 Cal.App.4th 978, 984 [appellate court must determine whether trial court’s statement of decision is supported by substantial evidence].)

III. The trial court did not abuse its discretion in awarding attorney fees of $8,100 to Kim

Kim urges that the trial court abused its discretion in granting only $8,100 out of $170,106.25 requested in attorney fees. We disagree.

The matter of the reasonableness of attorney fees is within the sound discretion of the trial court. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 659 [disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53 ,68, fn. 5].) Citing Salawy v. Ocean Towers Housing Corp. (2004) 121 Cal.App.4th 664, 669, however, Kim requests de novo review and urges that the “‘determination of whether the criteria for an award of attorney fees and costs have been met is a question of law.’ [Citations].” Here, it is undisputed that Civil Code section 1717 applies, as a matter of law; hence, we review the trial court’s award of fees under the substantial evidence standard of review.

Under Civil Code section 1717, in any action on a contract, where the contract specifically provides for attorney fees and costs, the party determined to be the party prevailing on the contract shall be entitled to reasonable attorney fees. Civil Code section 1717 makes the right to attorney fees reciprocal. (Pacific Custom Pools, Inc. v. Turner Construction Co. (2000) 79 Cal.App.4th 1254, 1268.) Moreover, attorney fees may be awarded to a party who successfully defends an action on a contract containing an attorney fees clause by establishing the contract’s invalidity, unenforceability, or non-existence. (Ibid.)

Our review of the record shows that the trial court acted well within its discretion. The escrow instructions provided that in the event of legal proceedings, the prevailing party shall be entitled to receive all legal fees and damages. At the hearing on Kim’s motion, the court found that if Yi had prevailed, the agreement would have been enforceable, and he would have been entitled to attorney fees. Thus, Kim was entitled to attorney fees. But, the trial court found that the declarations from Kim’s attorneys revealed that a significant portion of the attorney fees sought by Kim were unrelated to Yi’s contract action, and were incurred during Kim’s prosecution of the tort claims in her cross-complaints, as well as during an unlawful detainer action she brought against Yi. The trial court ordered Kim to file a supplemental brief within 60 days, specifying which fees were incurred in the contract action.

Apportionment of a fee award between fees incurred on a contract cause of action and those incurred on other causes of action is within the trial court’s discretion. (Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111.) The supplemental brief filed by Kim merely urged that the fees incurred in prosecuting her cross-complaint need not be apportioned because the issues relating to her breach of contract claim were common to her tort claims. Kim attached numerous billing statements from her attorney, but only some of the items identified the actions to which they applied. Her supplemental brief in support of her motion for attorney fees was likewise vague: although the brief referred to specific bills, Kim only stated that she “may” have incurred approximately 90.25 hours in prosecuting her cross-claims. Kim did not submit declarations from her three attorneys indicating which fees were incurred in prosecuting her cross-complaints and which fees were incurred in defense of Yi’s complaint. Thus, Kim failed to show that the claims were “‘inextricably intertwined’“ making it impracticable to separate the billed activities. (Abdallah, at p. 1111.)

The trial court did not allow Kim’s request for $15,450 in attorney fees for prosecuting the cross-complaints and $5,307 for prosecuting the unlawful detainer action. It also determined that Kim did not meet her burden of proving that she incurred attorney fees in the defense of Yi’s complaint under section 1033.5, subdivision (c)(5), which states, in part, that “[a]ny claim not based upon the court’s established schedule of attorney’s fees for actions on a contract shall bear the burden of proof.”

The trial court determined that since the judgment in the unlawful detainer action was entered on December 16, 2003, fees incurred after Kim’s dismissal of her FACC on November 24, 2004, were attributable to the defense of the action on the contract. These hours totaled 32.4.[6] At a rate of $250 per hour, the trial court determined the total attorney fees award to be $8,100, which we find to be a reasonable exercise of discretion.

We are not convinced by Kim’s argument that the trial court acted arbitrarily in awarding fees incurred after Kim’s dismissal of her FACC, and failed to consider factors such as the nature of the litigation, its difficulty, the amount involved, the skill required, the success of the attorney’s efforts, and his experience, among other things. (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 659.) The trial court was the trier of fact and the attorneys submitted declarations attesting to their experience and the difficulty of the litigation. Its statement of decision clearly and carefully set forth its reasoning, and Kim has not shown that the trial court failed to consider the proper factors. Her claim that most of the fees related to discovery were incurred prior to the filing of the FACC, does not eliminate the possibility that the discovery was conducted in litigation involving Kim’s previous cross-complaints. Yi also points out that the billing statements contain inconsistencies between fees projected by Kim’s attorneys and the amount of fees for which she was billed. Nor do we agree that an award of less than five percent of that sought was an abuse of discretion; Kim simply failed to meet her burden of proving her claim to fees.

We conclude that the trial court did not abuse its discretion in awarding $8,100 in attorney fees.

DISPOSITION

The judgment and order are affirmed. Each party to bear its own costs of appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________, J.

CHAVEZ

We concur:

____________________, Acting P. J.

DOI TODD

_______________________, J.

ASHMANN-GERST

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[1] All further statutory references are to the Code of Civil Procedure.

[2] On August 3, 2006, we filed an order consolidating case No. B185809, Kim’s appeal from the order awarding attorney fees, with case No. B183643.

[3] The briefs and statement of decision refer to the purchase date as 1989. Through an interpreter, Kim testified at trial that she had purchased the property in 1998.

[4] The FACC is not a subject of this appeal.

[5] Section 631.8 provides that in a court trial, a party may move for a judgment after the other party has completed his presentation of evidence.

[6] The trial court’s order indicated total hours of 32.9, rather than 32.4. However, its final calculation was based on the correct number of hours, 32.4.