Vargas v. Latham Properties

Filed 6/26/08 Vargas v. Latham Properties CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County. Malcolm H. Mackey, Judge. Reversed with instructions.

Andrew M. Wyatt for Defendant and Appellant.

Wise Pearce Yocis & Smith and Michael J. Pearce for Plaintiff and Respondent.

Appellant Latham Properties LLC^[1](Latham) appeals from a final judgment granting specific performance on a sale of property to respondent Jose Vargas (Vargas). The judgment was entered after the trial court granted Vargass motion for a new trial and held a new trial of the matter. Because the order granting the motion for new trial was entered after the expiration of the mandatory, jurisdictional 60-day time limit for ruling on such a motion, it is void. We therefore reverse the judgment.

CONTENTIONS

Latham makes the following contentions regarding the timing and method of the trial courts granting of the motion for new trial: (1) the motion for new trial was denied by operation of law after the expiration of the 60-day statutory period; (2) the trial courts specification of reasons was insufficient and late filed; and (3) judgment should be entered nunc pro tunc consistent with the trial courts original findings and conclusions.

Latham also makes the following contentions regarding the law and facts applicable to the underlying lawsuit: (1) Vargass breach of lease and failure to demonstrate he was a ready, willing, and able buyer precluded his exercise of the right of first refusal; (2) assuming that the right of first refusal was a covenant running with the land, Vargas should not have been granted the remedy of specific performance; and (3) in the event that specific performance is enforced against Latham, Lathams equitable interests should be considered and Latham should be afforded consideration as well as indemnity.

As set forth below, our finding that the trial courts order granting a new trial was in excess of jurisdiction, and is therefore void, mandates reversal. Therefore, we shall not address any of Lathams contentions regarding the merits of the factual and legal issues underlying the final judgment.

FACTUAL BACKGROUND

1. The Property and the Lease

William Rogers (Rogers), who is not a party to this appeal, was the owner of two separate but contiguous parcels of real property located at 8623 and 8629 South Crenshaw Boulevard in Inglewood, California. They consisted of a laundromat at 8623 and a mini-mart at 8629.

In 2000, Rogers entered into a written agreement titled Store Lease (lease) to lease the 8623 parcel to Carl Jeter (Jeter). The lease was prepared by Rogers, who typed additional lease provisions on page two of the lease. When he prepared the lease, Rogers knew that one of the provisions was a right of first refusal to purchase 8623.

In February 2002, Vargas purchased the laundromat business at 8623 from Jeter. Before the purchase was executed, Jeter showed Vargas a copy of the lease he had with Rogers. Vargas read what he was able to understand of the lease.^[2] At the time of trial, he knew that the lease contained a right of first refusal, but he did not recall when he first learned of this. At the time that Vargas purchased the laundromat, neither he nor Jeter obtained Rogerss consent. The lease was never recorded. It was to expire on December 31, 2005, but gave Vargas an additional five-year option at a yearly rate of rent to be determined at that time.

Rogers first learned of the transfer of the laundromat business and lease when he was contacted by Jeter and informed that the City of Inglewood would not transfer utilities to Vargas unless Rogers signed a document. Subsequently, Rogers mailed the original lease, signed by Jeter, to Vargas. The terms of Vargass tenancy were to be the same as Jeters.

The parties agree that Vargas often paid his rent after the date it was due. However, Rogers testified that he always accepted the late payments and never notified Vargas of any default.^[3]

2. The Sale

During Vargass tenancy, Rogers called Vargas and informed him that the property was for sale. Vargas testified that he told Rogers that he was interested in purchasing the property many times. In October 2004, Rogers discussed a sale of the property to Vargas with Vargass son. Rogers testified that Vargas offered to buy the property for $150,000. Initially Rogers thought he would sell it, but after reviewing Vargass record of late rent payments, Rogers decided he wouldnt want to trust the deal with [Vargas] at that time. Rogers testified that given the late rental payments and city violations, he didnt believe he had to offer Vargas the right of first refusal.

At some point during the tenancy, Vargas and his son notified Rogers that the laundromat roof was leaking. Rogers contacted Latham to have the roof inspected. When Rogers paid the repair bill, Latham offered to buy the property. Rogers initially said no, but then changed his mind because he lives in San Bernardino and had trouble coming in and out to Los Angeles. Rogers explained that he had to come in to Los Angeles often recently because of problems I had with the code violation people. Rogers told Latham he would sell Latham both properties for $150,000. Rogers said he arrived at that figure because it was the same amount at which he had previously offered to sell the property to Vargas. Rogers did not mention any right of first refusal in the lease because he did not think Vargas was entitled to exercise the right.

On or about January 22, 2005, Latham accepted Rogerss offer and a contract to purchase was made. On January 27, 2005, Rogers and Latham entered escrow. On January 28, 2005, Rogers sent a letter to Vargas stating that he had agreed to sell the properties to Latham, and that the sale was already in escrow. Vargas testified that this was the first notice he had of the sale and that he was very surprised to learn of it.

Latham was aware that there were tenants in each of the two properties. Prior to the close of escrow, Latham was provided with a lease and insurance information for the market at 8629, but not for the laundromat at 8623. Latham testified to having been told that the lease with Vargas could not be found.

3. Vargass Claim for Right of First Refusal

Several days after he was informed of the sale, Vargas had his son write a letter to Rogers in which he claimed, You said that you would let me know when you decided to sell. The letter also expressed Vargass disappointment at Rogerss failure to notify him of the sale, because Vargas had the first option to purchase the property.

On February 11, 2005, Vargas received a letter from Rogers specifying the reasons that Rogers did not consider him to be a good prospective buyer. The reasons included Vargass late rent payments; a city violation involving a trailer parked on the property; and Vargass statements to Rogers that he was injured on the job, had lost his job, and was about to lose his home.

On February 24, 2005, Vargass counsel wrote a letter to Rogers concerning the nasty surprise. The letter apparently complained that the pending sale to Latham constituted a breach of contract because Rogers did not honor Vargass right of first refusal.^[4] After receiving the letter, Rogers called Vargass counsel and told him that he would cancel the escrow.

Latham testified to having first learned of Vargass claimed right of first refusal when the real estate agent reported that Vargass February 24, 2005 letter had been sent to escrow. Latham contacted Rogers, who explained that he had previously offered to sell the property to Vargas and that Vargas was not a viable buyer. Rogers believed that language in the lease requiring that there be no breach of lease covenants precluded Vargass right to exercise the right of first refusal. Nevertheless, Rogers asked Latham to cancel the escrow so that he could avoid a potential lawsuit. Latham declined to cancel escrow on that basis. Escrow closed on March 11, 2005, and a Grant Deed was recorded.

PROCEDURAL HISTORY

1. The Pleadings and Partial Settlement

On June 7, 2005, Vargas filed a complaint against Latham and Rogers seeking damages and specific performance. Both answered, and Latham cross-complained against Vargas and Rogers for declaratory relief and indemnity.

At mediation, Vargas reached a financial settlement with Rogers. Rogers filed a good faith settlement motion in an effort to eliminate Lathams cross-complaint, but it was denied. Vargas agreed to defend Rogers and hold him harmless against the cross-complaint.

2. Trial

The parties waived a jury and the matter proceeded to a bench trial on June 19 and 20, 2006. The parties waived a written statement of decision.^[5] The court expressly determined that specific performance did not apply. After noting that Vargas had settled with Rogers, the court stated, I dont find any liability of Latham in the case . . . and I find no tangible damages against Latham. So thats my ruling, counsel. After permitting Vargass counsel some additional argument, the court repeated: I dont find Latham has any liability. No. I find judgment on behalf of [Latham]. The court directed the parties to prepare the judgment, then stated: I dont find that [Vargas] was ready, willing and able to -- he had a lot of financial problems -- to pay Rogers. But Rogers is no longer involved. He settled the case. . . . [S]pecific performance is denied.^[6]

Pursuant to the courts instruction, on June 27, 2006, Latham submitted a Proposed Judgment After Trial.

3. Vargass Motion for a New Trial

On June 26, 2006, Vargas filed a Notice of Motion for New Trial (notice of motion). The notice of motion stated that Vargas intended to move for a new trial pursuant to Code of Civil Procedure sections 657 and 659. On July 6, 2006, Vargas filed his supporting memorandum of points and authorities. Hearing on the motion was set for July 25, 2006. On July 14, 2006, Vargass counsel filed a Notice of Continuance of New Trial Motion, continuing the hearing date to August 16, 2006. Vargas explains that this notice of continuance was filed as a professional courtesy to Lathams counsel, in order to accommodate Lathams counsels vacation schedule.

At the hearing on August 16, 2006, the trial court ordered further briefing on the question of whether the right of first refusal was a covenant running with the land. On August 22, 2006, Latham filed its supplemental brief, and on August 28, 2006, Vargas filed his supplemental responsive brief.

On September 5, 2006, 71 days after Vargas filed and served his notice of intent to move for a new trial, the court ruled on the submitted matter. The courts ruling states: Motion for new trial pursuant to Civil Code of Procedure 657 is granted. The Court grants a trial on all issues and reopens the case for further proceedings from the issue of specific performance. The court set a trial setting conference for September 21, 2006.

4. Lathams Motion for Reconsideration

On September 15, 2006, Latham filed a motion for reconsideration of the trial courts order granting a new trial. Latham argued that the trial court had exceeded its jurisdiction by ruling on the motion more than 60 days after service of the intent to move for new trial pursuant to Code of Civil Procedure section 660 (section 660). Vargas opposed on the ground that no judgment had been previously entered. Vargas further claimed that Latham was estopped from arguing that the trial court had lost jurisdiction to rule on the motion for new trial since the hearing on the motion had been postponed at the request of Lathams counsel. Latham filed a reply, arguing that the 60-day time limit found in section 660 is mandatory and jurisdictional and was unrelated to whether a judgment had previously been entered. The court set the hearing on Lathams motion for reconsideration for October 25, 2006, and ordered that the parties be ready to go forward with a new trial if the motion were to be denied.

On October 25, 2006, the court denied Lathams motion for reconsideration, stating: I did rule on the motion for new trial within -- as fast as possible, taking all the briefing that I had to and considering it, so your motion for reconsideration is denied. After the parties stipulated that the evidence at a new trial would be the same as that adduced at the original trial on June 19, 2006, the court ruled in favor of Vargas. The court stated that its ruling was based on Maron v. Howard (1968) 258 Cal.App.2d 473, finding that the case was directly on point, and I am sorry I missed it previously. However, it came to my attention on the motion. And in applying that case, the right of first refusal comes into play; and therefore, unless you want to have further testimony, Vargas would be entitled as a matter of law to enforce the right of first refusal against Latham. The court ordered Latham to sell the property to Vargas for $100,000, with escrow fees to be divided equally between the parties.

On November 8, 2006, judgment was entered in favor of Vargas for specific performance. On November 13, 2006, Vargas served notice of entry of judgment. On November 16, 2006, Vargas served a declaration asserting that he had complied with the requirements of the judgment respecting the purchase of the property from Latham.

Enforcement of the courts order was stayed pending appeal, conditioned upon Latham posting an undertaking in the amount of $17,000. The undertaking was filed.

Latham filed its notice of appeal on January 10, 2007.

DISCUSSION

I. The Motion for New Trial

A. Standard of Review

Latham first presents a question of law: whether the 60-day time limit set forth in section 660 renders the trial courts new trial order, which was made after the expiration of that 60-day period, invalid. As a question of statutory construction, this issue is subject to de novo review by this court. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860.)

B. Section 660s 60-Day Limitation on the Trial Courts Power

Section 660 provides, in pertinent part:

Except as otherwise provided in Section 12a of this code, the power of the court to rule on a motion for a new trial shall expire 60 days from and after the mailing of notice of entry of judgment by the clerk of the court pursuant to Section 644.5 or 60 days from and after service on the moving party by any party of written notice of the entry of the judgment, whichever is earlier, or if such notice has not theretofore been given, then 60 days after filing of the first notice of intention to move for a new trial. If such motion is not determined within said period of 60 days, or within said period as thus extended, the effect shall be a denial of the motion without further order of the court. (Italics added.)

Section 660s 60-day time limit on the trial courts power to rule on a new trial motion is mandatory and jurisdictional. (Dodge v. Superior Court (2000) 77 Cal.App.4th 513, 517-518, citing Van Beurden Ins. Servs., Inc. v. Customized Worldwide Weather Ins. Agency (1997) 15 Cal.4th 51, 56, 64 & Siegal v. Superior Court (1968) 68 Cal.2d 97, 101; Jones v. Sieve (1988) 203 Cal.App.3d 359, 369.) The period may not be enlarged under the rubric of mistake, inadvertence, surprise, excusable neglect under [Code of Civil Procedure] section 473 or by means of a nunc pro tunc order. [Citation]. [A]n order made after the 60-day period purporting to rule on a motion for new trial is in excess of the courts jurisdiction and void. [Citation]. (Dodge, supra, at p. 518.)

C. The Trial Courts Order Granting a New Trial is Void

Vargass notice of intention to move for a new trial was filed on June 26, 2006. Thus, at the latest, the 60-day period described under section 660 expired August 25, 2006.^[7] The computation of the 60-day period is undisputed. The trial courts order granting a new trial was entered on September 5, 2006. The court thus acted in excess of jurisdiction and the order granting a new trial is void. (Dodge v. Superior Court, supra, 77 Cal.App.4th at p. 518.) Vargass motion for a new trial was denied by operation of law on August 25, 2006. ( 660.)

Despite the extensive authority declaring the 60-day time limit to be mandatory and jurisdictional, Vargas argues that we should uphold the order granting the new trial. First, he argues that a reversal of the new trial order elevates form over substance. If the motion for new trial had been captioned differently, Vargas claims, Latham would have no colorable grounds for this type of argument. We reject this argument. There was no question as to the type of motion filed. It was clearly captioned as a notice of motion for new trial. Nor was there any question as to the applicable statutes governing the motion. Vargas set forth his statutory authority for the motion as Code of Civil Procedure sections 657 and 659, both of which are specifically applicable to new trial motions. In addition, the trial court specified that its intention was to grant a new trial pursuant to Vargass motion, stating: Motion for new trial pursuant to Civil Code of Procedure 657 is granted. Because there is no doubt as to the nature of the motion, the rules governing such a motion, or the significance of the trial courts order, we find it irrelevant to discuss the outcome of this matter in the event that the motion had a different title.

Next, Vargas points to Lathams notice of appeal, which specifies that the appeal is from the Judgment entered on November 8, 2006. Because the notice of appeal does not specifically mention the order granting a new trial filed on September 5, 2006, Vargas argues that Latham has forfeited his right to contest that order. Vargas presents no authority for his position that Latham has forfeited his right to appeal the order granting a new trial by not mentioning it in the notice of appeal. In addition, under Code of Civil Procedure section 906, this court has the power to review any intermediate ruling, proceeding, order or decision which involves the merits or necessarily affects the judgment. Here, we exercise that power to review the September 5, 2006 order granting a new trial.

Vargas further argues that the time limit set forth in section 660 presupposes the existence of a judgment. Thus, because no judgment had been entered in the present matter before Vargas filed his notice of motion, the 60-day time limit of section 660 did not begin to run. Vargas concludes that the trial court never lost its jurisdiction to act.

Our interpretation of the statutory scheme governing motions for new trial leads us to conclude otherwise. First, we note that Code of Civil Procedure section 656 defines a new trial as a re-examination of an issue . . . after a trial and decision by a jury, court or referee. Because the trial in this matter was concluded within one calendar day or in less than eight hours over more than one day, the statement of the courts decision was properly made orally on the record in the presence of the parties. (Code Civ. Proc.,  632.) As the authorities pointed out by Vargas agree, Code of Civil Procedure section 659 ( 659), which discusses the procedures for filing a notice of motion for new trial, specifies that such notice may be filed before the entry of judgment.^[8] While case law has made it clear that a notice of motion for new trial is premature if filed before determination of all issues in a case (Cobb v. Univ. of So. Cal. (1996) 45 Cal.App.4th 1140, 1144), such was not the situation in this matter. The trial court had made a finding that Latham was not liable to Vargas and found no damages against Latham. The court stated: So thats my ruling, counsel. The court later repeated: I dont find Latham has any liability. No. I find judgment on behalf of [Latham]. While judgment had not yet been entered in the case, it had been rendered.

The case is distinguishable from In re Marriage of Hafferkamp (1998) 61 Cal.App.4th 789, cited by Vargas for the proposition that a judgment must be signed and filed before a motion for new trial may properly be made. There, the Court of Appeal noted that what the trial court had issued was merely a Memorandum of Intended Decision, now more usually termed a tentative decision. (Id. at p. 793.) In addition, the Court of Appeal noted that the decision at issue did not constitute a rendition of judgment because [t]here is nothing about that document that bespeaks a judgment. Among other things, it was not entitled judgment and it was not signed by the court.^[9] (Ibid.) In contrast, the judge in the present matter made it clear that the oral decision constituted his judgment. We therefore find that, under the circumstances of this case, the trial courts decision on all issues was sufficiently final such that the motion for new trial was not premature.^[10]

Vargass final two arguments regarding the order granting new trial are that: (a) if there was any error, it was invited by Latham; and (b) if there was any error, it was harmless. As set forth below, we disagree with both of these contentions.

As to invited error, Vargas argues that the hearing on Lathams motion for new trial was continued for 22 days, from July 25, 2006, to August 16, 2006, at the request of Lathams counsel to accommodate his vacation schedule. We decline to find that Lathams counsels action in requesting a continuance of the hearing led to invited error. The 60-day period within which the trial court had to rule extended to August 25, 2006. Thus, the court had nine days after the August 16, 2006 hearing within which it could have timely issued its order. It was up to Vargas to appropriately draw the courts attention to the 60-day time limit on its powers to rule on the new trial motion in order to preserve his rights. (See Dodge v. Superior Court, supra, 77 Cal.App.4th at p. 524 [counsel might have attempted to appear ex parte . . . to advise the judge it was his last day to rule].)

We further find that the courts error in granting the motion for new trial beyond the time within which it had the power to do so was not harmless error. Vargas cites article VI, section 13 of the California Constitution, which states that [n]o judgment shall be set aside . . . in any cause . . . for any error as to any matter of procedure, unless . . . the error complained of has resulted in a miscarriage of justice.

We do not reach the question of whether any miscarriage of justice has occurred because the trial courts action in granting the motion for new trial was not merely a procedural error. The motion for new trial was denied by operation of law upon expiration of the 60-day time period. The courts action in granting the new trial motion 11 days later was beyond its jurisdiction and void. Thus, we are compelled to reverse the order. Upon reversal of the order, the prior judgment is automatically reinstated. (Miller v. Los Angeles County Flood Control Dist. (1973) 8 Cal.3d 689, 699; Mercer v. Perez (1968) 68 Cal.2d 104, 124.)

DISPOSITION

The trial courts order granting a new trial is vacated, and the subsequent judgment is reversed. The trial court is directed to enter judgment consistent with its first order. Each party shall bear its own costs of appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

_______________________, J.

CHAVEZ

We concur:

_______________________, P. J.

BOREN

_______________________, J.

DOI TODD

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^[1] Rondie Latham is the sole owner and president of Latham Properties LLC, a real estate company formed to purchase, rehabilitate, and sell residential and commercial real property. Rondie Latham and Latham Properties LLC shall be collectively referred to as Latham.

^[2] Vargas immigrated to the United States from Mexico in 1981. At the time of trial he was 42 years old, and testified through an interpreter. He testified that he could not speak much English and could read English a little.

^[3] In its opening brief, Latham includes a discussion of various lease violations on the part of Vargas, including late rent payments; damaging the roof; flying a pennant outside of the business in violation of Inglewoods City Municipal Code as well as the express provisions of the lease; keeping a trailer on the property in violation of zoning laws; and storing old washers and dryers outside the business where they were not allowed. Because we shall not reach the question of whether there were breach[es] of the covenants on the part of the lessee precluding Vargass right of first refusal under the lease, we shall omit the details of these purported violations.

^[4] Although the letter was admitted as a trial exhibit, the parties have not included a copy of it in the record.

^[5] In addition, the parties were not entitled to a statement of decision under Code of Civil Procedure section 632 because the trial was concluded in less than eight hours over more than one day. (Code Civ. Proc., 632.)

^[6] Despite the characterization by counsel at oral argument that this was a tentative decision, we treat the courts statement as its decision after trial.

^[7] Notice of entry of judgment had not been mailed by the clerk or served by any party at the time that respondent filed his notice of motion. Therefore, the only possible date from which the 60-day period may be calculated is the day on which Vargas filed the notice of motion.

^[8] Section 659 states: The party intending to move for a new trial must file with the clerk and serve upon each adverse party a notice of his intention to move for a new trial . . . either [] 1. Before the entry of judgment; or [] 2. Within 15 days of the date of mailing notice of entry of judgment by the clerk of the court pursuant to Section 664.5, or service upon him by any party of written notice of entry of judgment, or within 180 days after the entry of judgment, whichever is the earliest.

^[9] While the Hafferkamp court concluded that where a statement of decision is waived, the rendition of judgment means the signing and filing of judgment (Hafferkamp, supra, 61 Cal.App.4th at p. 793), that conclusion was based in part on the fact that former California Rules of Court, rule 232(e) was applicable to that case because the trial was not completed within one day. (Hafferkamp,at p. 793, fn. 8; see also Ehrler v. Ehrler (1981) 126 Cal.App.3d 147, 152 [also relying on former rule 232(a) of the California Rules of Court in determining that rendition of judgment occurs when the court signs and files the findings, conclusions, and the judgment].) In addition, the court stated that even if rule 232 did not apply, as a matter of common law the court was free to change its tentative decision. (Hafferkamp,at p. 794.) Here, the court made it clear that its ruling was not a tentative decision.

^[10] In addition, we note that the consequence of a premature notice of motion is that it is void and of no effect. (Ehrler v. Ehrler, supra, 126 Cal.App.3d at p. 152.) Such a premature notice of motion would have also rendered the subsequent proceedings on the motion for new trial to be void. (Id. at p. 153 [The mere act by the trial court in hearing the motion does not operate to give the trial court jurisdiction over the matter . . . [a]s the notice of motion was void and of no effect there is nothing for us to review]; see also Ruiz v. Ruiz (1980) 104 Cal.App.3d 374, 379 [Proceedings for a new trial taken prematurely are ineffective for any purpose . . . [a]ccordingly, the court was without jurisdiction to make its order granting defendants motion for new trial. Such order therefore is void and of no force and effect as completely as if never entered].)