Filed 12/15/17 Toranji v. Kim CA4/3






NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE


SHADFAR TORANJI et al.,

Plaintiffs and Respondents,

v.

KYOUNG MIRI KIM,

Defendant and Appellant.


G054111

(Super. Ct. No. 30-2014-00740285)

O P I N I O N

Appeal from an order of the Superior Court of Orange County, Robert J. Moss, Judge. Reversed and remanded with directions.
Frederick W. Lee Law Firm and Sam M. Muriella for Defendant and Appellant.
Commerce Law Group and Sassan A. MacKay for Plaintiffs and Respondents.
* * *

INTRODUCTION
Plaintiffs Shafar Toranji and his wife Firoozeh Arghavani (collectively plaintiffs) sued, inter alia, Clark Kim and his wife Kyoung Kim (collectively the Kims) after the plaintiffs’ efforts to purchase the Kims’ home in Newport Coast failed. Toranji, Arghavani, and Clark Kim each signed a purchase agreement which included a prevailing party attorney fees provision stating that in any action between the buyer and seller arising out of the agreement, the prevailing buyer or seller shall be entitled to reasonable attorney fees and costs against the non-prevailing buyer or seller. However, the purchase agreement further provided that a prevailing party who commenced an action without first attempting to resolve the matter through mediation, or who before commencement of an action, refused a request to mediate, would not be entitled to recover attorney fees that would otherwise have been available.
The trial court granted Kyoung Kim’s motion for judgment after the plaintiffs completed their case-in-chief at trial of, inter alia, the breach of contract claim against Kyoung Kim. She then filed a motion for an order declaring her the prevailing party and awarding her prevailing party attorney fees. Plaintiffs argued Kyoung Kim was not entitled to prevailing party attorney fees because she and her husband failed to respond to plaintiffs’ requests to mediate contained in correspondence sent to Clark Kim. The trial court found Kyoung Kim to be the prevailing party as against plaintiffs, but denied her request for prevailing party attorney fees because she refused to mediate.
We reverse the order denying Kyoung Kim prevailing party attorney fees and remand with directions. Our record does not show Kyoung Kim ever “refuse[d] to mediate after a request has been made” because plaintiffs never made such a request to her. On remand, we direct the trial court to award Kyoung Kim’s prevailing party attorney fees after determining the proper apportionment of claimed attorney fees between those incurred in her defense as opposed to those incurred in the defense of other defendants.
FACTS
In a prior opinion (Toranji v. Lim (June 21, 2017, G053434) [nonpub. opn.]), we set forth the relevant facts as follows:
“In January 2012, Clark Kim and Kyoung Kim (collectively, the Kims) owned a single family residence in Newport Coast (the property) that was encumbered by a first deed of trust and a second deed of trust; both trust deeds were held by Bank of America (the bank). The Kims defaulted on both loans and foreclosure proceedings began.
“[Justin Jinhyong] Bae was a real estate sales person and Clark Kim’s friend. Bae introduced Clark Kim to his friend [Chris Sungduk] Lim, who was a broker and the sole shareholder of the real estate brokerage firm, Best 4U, Inc. The Kims retained Best 4U, Inc. to list their property for a short sale. The bank had to approve any sale because ‘it would be agreeing to accept less than was owed on the existing loans.’
“In February 2012, Dr. Tony Nahkla offered to purchase the property for $2.2 million. The bank countered with an offer to sell the property for $2.25 million. The Nahkla transaction did not go forward.
“In May 2012, plaintiffs contacted Lim about making an offer on the property. Toranji was a sophisticated businessman who had worked for years in the financial industry and Arghavani was an attorney. Lim convinced plaintiffs to retain him as their real estate agent so that he would be able to represent both the prospective buyers and sellers in the transaction.
“In May 2012, plaintiffs made an all cash offer to purchase the property for $2.1 million. The Kims promptly accepted the offer but the bank did not approve the transaction. Instead, the bank made a counter offer to sell the property for $2.4 million.
“Plaintiffs authorized Lim to raise their offer to $2.175 million. The bank’s records do not show that such an offer was ever communicated to it. Lim testified that he orally informed the bank’s representative of the offer, who informed Lim the bank would not accept it. An offer to purchase the property in the amount of $2.2 million was submitted to the bank on Toranji’s behalf. Although Toranji testified he had not authorized the $2.2 million offer, he further testified he was prepared to offer as much as $2.25 million to purchase the property ‘if he had to.’
“In August 2012, the bank made a counter offer to sell the property for $2.25 million. Toranji wanted to negotiate with the bank to see if he could get the property for less. On August 17, Toranji texted Lim, ‘I know they don’t want to go any lower, but will they go any lower? Initially, they told us they won’t consider anything that wasn’t close to $2.4MM and we know that they did not stick to that. Get them to go lower and I’ll go higher. Also, send me what they sent you saying they won’t go any lower.’
“That same day, Lim replied to Toranji: ‘Please let me know today if you want to buy at $2.25[ million] or not. If you want to buy, you need to make escrow deposit by Monday. Today is the last day to decide.’ Toranji responded to Lim: ‘I need to get a formal response from them in writing in response to my counter at $2.175MM. I am not going to do anything until I get a written response. They need to provide a formal response. If they are not going to respond in writing, there is another property that my wife likes, which I want to pursue. The ball is in their court, not in my court.’
“While these communications were going on between Toranji and Lim, and unbeknownst to plaintiffs, Lim received another offer to purchase the property for
$2.25[ million] from a prospective buyer (identified in the record as Cammilleri) who was represented by an independent real estate agent. Lim never told Toranji of the competing offer, although the Short Sale Addendum signed by the parties allowed for the seller and the bank to receive competing offers on the property. The bank ultimately accepted the competing offer by Cammilleri after Toranji did not promptly reply to its counter offer of $2.25 million.”

PROCEDURAL HISTORY
I.
PLAINTIFFS’ COMPLAINT AND AMENDED COMPLAINTS AGAINST THE KIMS AND THE KIMS’ DEMURRERS.
In August 2014, plaintiffs filed a complaint naming the Kims, Lim, Bae, and Best 4U as defendants. The complaint included claims for breach of contract, negligence, breach of fiduciary duty, fraud and deceit, and negligent misrepresentation against the Kims.
In December 2014, plaintiffs filed a first amended complaint which contained the same claims, except it did not contain a breach of fiduciary duty claim against the Kims. The Kims, along with other defendants, filed a demurrer to the first amended complaint. The trial court sustained the Kims’ demurrer to all the claims alleged against them with leave to amend.
In January 2015, plaintiffs filed a second amended complaint containing claims for breach of contract, negligence, fraud and deceit, and negligent misrepresentation against the Kims. The trial court sustained the Kims’ demurrer to the claims for negligence, fraud and deceit, and negligent misrepresentation without leave to amend, and overruled the Kims’ demurrer as to the claim for breach of contract (based on the purchase agreement Clark Kim had signed) against them.
II.
THE PARTIES STIPULATE TO DISMISS CLARK KIM FROM THE CASE; DURING TRIAL, THE COURT GRANTS KYOUNG KIM’S MOTION FOR JUDGMENT AS TO PLAINTIFFS’ SINGLE REMAINING CLAIM FOR BREACH OF CONTRACT AGAINST HER.
Before trial on plaintiffs’ remaining claim for breach of contract against the Kims and claims for breach of contract, negligence, and breach of fiduciary duty against other defendants, Clark Kim was dismissed by stipulation of the parties after a notice of bankruptcy court discharge for Clark Kim was filed in the trial court.
During trial, in February 2016, Kyoung Kim made a motion for nonsuit or, alternatively, for a motion for judgment pursuant to Code of Civil Procedure section 631.8. Kyoung Kim’s counsel argued that plaintiffs failed to prove she was liable for breach of contract against her because “there’s an absence of evidence. There’s an absence of lender approval which was the big condition to the whole transaction.” Counsel also argued plaintiffs did not produce evidence of damages. The trial court granted the motion for judgment on behalf of Kyoung Kim “for the reasons stated by counsel.”
III.
KYOUNG KIM FILES A MOTION TO DETERMINE PREVAILING PARTY STATUS AND FOR AN AWARD OF ATTORNEY FEES; THE TRIAL COURT DETERMINES KYOUNG KIM TO BE THE PREVAILING PARTY ENTITLED TO PREVAILING PARTY ATTORNEY FEES BUT CONTINUED THE HEARING ON THE DETERMINATION OF THE ATTORNEY FEES AWARD BECAUSE KYOUNG KIM HAD FAILED TO APPORTION FEES.
In March 2016, Kyoung Kim filed a “motion to determine prevailing party and to fix the amount of attorneys’ fees” pursuant to the prevailing party provisions of the purchase agreement. She argued that because the second amended complaint alleged she was liable for breach of contract of the purchase agreement, and because she prevailed on her motion for judgment, she was entitled to prevailing party attorney fees pursuant to paragraphs 21 and 26 A of the purchase agreement. Paragraph 21 of the purchase agreement states: “ATTORNEY FEES: In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 26A.”
Paragraph 26A of the purchase agreement states: “MEDIATION: Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action. Buyer and Seller also agree to mediate any disputes or claims with Broker(s), who, in writing, agree to such mediation prior to, or within a reasonable time after, the dispute or claim is presented to the Broker. Mediation fees, if any, shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any party (i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencement of an action, refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.”
Plaintiffs filed an opposition to the motion to determine prevailing party status and to fix the amount of attorney fees on the ground Kyoung Kim “failed to mediate despite plaintiffs’ attempts to mediate.” Plaintiffs filed declarations in support of their opposition stating that in September 2012, the following communications were sent to Clark Kim to request mediation of their dispute regarding the purchase agreement: (1) on September 4, Arghavani sent a letter to Clark Kim, “C/O Mr. Chris Kim” at Bestway Mortgage Realty requesting mediation; (2) on September 5, Arghavani and Toranji sent another letter to Clark Kim containing the same request for mediation; (3) on September 5, Arghavani and Toranji sent a letter to Chris Lim requesting that he agree to mediate and that he pass along to Clark Kim the copy of the letter dated September 5 addressed to Clark Kim that plaintiffs enclosed in their letter to Lim ; and (4) on September 12 and September 13, Toranji sent an e-mail to Chris Lim reminding him that he “and the Seller need to respond to the request for mediation.” Plaintiffs stated in their respective declarations that no response to their mediation requests was ever received.
In support of her reply brief, Kyoung Kim filed a declaration stating that she had never received “any request for mediation from either Shadfar Toranji or Firoozeh Arghavani.”
The trial court determined Kyoung Kim was a prevailing party entitled to contractual attorney fees. The court stated in its minute order: “The court finds that as between plaintiffs and moving party, defendant Kyoung Kim was the prevailing party. Nonsuit was granted in her favor. She is entitled to attorney fees based on the reciprocity rule related to Civil Code § 1717. Mediation was not a condition precedent because Kyoung Kim did not commence litigation, plaintiffs did. [¶] The motion is continued because moving party has not apportioned the claimed attorney fees between her defense and the defense of the agent defendants. The supporting documentation includes entries clearly related to only the agent defendants such as separate demurrers on behalf of the agent defendants; discovery and discovery motions/responses related to only the agent defendants; and trial related matters that occurred after the court granted nonsuit on 2/3/16. [¶] Moving party shall file a supplemental declaration setting forth her claim for attorney fees based solely on work that was done on behalf of the sellers as opposed to the agents no later than 6/17/16. Plaintiffs may file an opposition to the supplemental declaration 10 days before the hearing date.”


IV.
PLAINTIFFS FILE A MOTION FOR RECONSIDERATION; THE TRIAL COURT CONCLUDES KYOUNG KIM IS THE PREVAILING PARTY BUT DENIES HER PREVAILING PARTY ATTORNEY FEES BECAUSE SHE FAILED TO MEDIATE; KYOUNG KIM APPEALS.
Plaintiffs filed a motion for reconsideration of the court’s order finding Kyoung Kim the prevailing party entitled to an attorney fees award because she failed to mediate despite plaintiffs’ attempts to mediate.
The trial court reaffirmed its prior ruling that Kyoung Kim was a prevailing party, but concluded she was not entitled to prevailing party attorney fees because she failed to mediate pursuant to paragraph 26A of the purchase agreement. The court’s minute order stated:
“1. Motion by Kyoung Kim for attorney fees. Motion denied.
“In the court’s minute order of 6/3/16 the court states that mediation was not a condition precedent to this defendant recovering attorney fees because she did not ‘commence litigation, plaintiffs did.’ However, as plaintiffs point out ‘commencing’ litigation is only one of two actions that could waive a claim of attorney fees. Pursuant to paragraph 26A of the Purchase Agreement attorney fees can also be waived if a party is requested to mediate and refuses.
“Here the defendants sent letters addressed to Kyoung Kim’s husband, Clark Kim, on 9/4/12 (Exhibit B of opposition) and to the seller’s agents on 9/5/12 (Exhibit C of the opposition) asking them to submit the matter to mediation per the contract. The letter to the agents asked the agent to pass on the request to the seller, Mr. Kim. None of the defendants responded to either of these letters.
“While it is true Kyoung Kim is not mentioned by name in either letter, the court finds that it was implicit in these requests that . . . plaintiffs were proposing mediation against all defendants, including Mrs. Kim. It was known by all that Mr. Kim was the one handling the sale on behalf of both himself and his wife and, understandably, that correspondence would be addressed to him. While Mrs. Kim was on title with her husband, she remained entirely passive in the negotiation. The husband, Mr. Kim, handled the entire transaction on behalf of both of them. They were both represented by the same attorneys. The court has little doubt that the defendants and their attorneys understood at all times that the mediation request pertained to all defendants. It would be nonsensical to request arbitration for the agents and only one of the sellers. Clearly, had the defendants agreed to mediation it would have included all parties.
“Since all defendants declined to arbitrate, they all waived any claim for attorney fees, including Kyoung Kim.
“Moving party to give notice.
“2. Motion for reconsideration of order regarding Kyoung Kim’s motion to determine prevailing party. Motion denied.
“Since the motion for attorney fees was not final when the minute order was issued on 6/3/16, this motion is probably premature. Also, in light of the court’s tentative ruling above, it is probably moot. However, on the merits, the motion is denied because no new facts or law have been raised that would justify relief. Kyoung Kim prevailed on her motion for judgment and was clearly the prevailing party in this matter.”
Kyoung appealed.

DISCUSSION
The trial court concluded Kyoung Kim was the prevailing party on plaintiffs’ breach of the purchase agreement claim. Notwithstanding the court’s finding Kyoung Kim was the prevailing party, the court denied her request for prevailing party attorney fees on the sole ground she failed to meet the contractual condition that she accept the plaintiffs’ request to mediate their dispute before plaintiffs filed this lawsuit. For the reasons we will explain, plaintiffs never asked Kyoung Kim to mediate. Kyoung Kim, therefore, cannot be denied prevailing party attorney fees for refusing a mediation request that was never made of her.

I.
APPLICABLE LEGAL PRINCIPLES GOVERNING CONTRACTUAL PREVAILING PARTY ATTORNEY FEES PROVISIONS AND STANDARD OF REVIEW.
Attorney fees, when authorized by contract, are allowable as costs. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Code of Civil Procedure section 1021 leaves the “measure and mode of compensation” for attorney fees to the agreement of the parties. Civil Code section 1717 governs attorney fee awards for enforcing contracts that include fee-shifting clauses.
Civil Code section 1717, subdivision (a) awards attorney fees to the “party prevailing on the contract, whether he or she is the party specified in the contract or not.” The California Supreme Court in Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128 held: “Section 1717 was enacted to establish mutuality of remedy where contractual provision makes recovery of attorney’s fees available for only one party [citations], and to prevent oppressive use of one-sided attorney’s fees provisions. [Citation.] [¶] Its purposes require section 1717 be interpreted to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney’s fees should he prevail in enforcing the contractual obligation against the defendant.” (See Santisas v. Goodin (1998) 17 Cal.4th 599, 611 [“To ensure mutuality of remedy in this situation, it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed”].)
“‘The standard of review on issues of attorney’s fees and costs is abuse of discretion. The trial court’s decision will only be disturbed when there is no substantial evidence to support the trial court’s findings or when there has been a miscarriage of justice. If the trial court has made no findings, the reviewing court will infer all findings necessary to support the judgment and then examine the record to see if the findings are based on substantial evidence.’” (Frei v. Davey (2004) 124 Cal.App.4th 1506, 1512.)
II.
THERE WAS NO SUBSTANTIAL EVIDENCE TO SUPPORT THE TRIAL COURT’S FINDING KYOUNG KIM REFUSED TO MEDIATE.
The purchase agreement provides at paragraph 26A that a prevailing party may not recover prevailing party attorney fees if that party either “(i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencement of an action, refuses to mediate after a request has been made.”
The trial court found Kyoung Kim “refuse[d] to mediate after a request ha[d] been made” within the meaning of paragraph 26A of the purchase agreement because in September 2012, plaintiffs had sent letters and e-mails either directly to her husband Clark Kim or to Clark Kim through Chris Lim requesting that they mediate. Although the court acknowledged Kyoung Kim was not mentioned by name in any letter, the court found it was “implicit in these requests that . . . plaintiffs were proposing mediation against all defendants, including Mrs. Kim.” No evidence supports this finding. Based on this record, there is nothing to support the implication that she was asked to mediate.
Our record does not show that in September 2012, when the letters and e-mails regarding mediation were sent, plaintiffs considered Kyoung Kim a potential party to the dispute to whom a mediation request should have been directed. She had not signed the subject purchase agreement—only Clark Kim signed the purchase agreement in which he alone is referred to as the “Seller.” Plaintiffs do not cite evidence showing the date on which they first learned Kyoung Kim was even on the deed of the property as an owner. Nor did plaintiffs explain when they decided to name Kyoung Kim a defendant. Notably, neither of plaintiffs’ declarations offered in opposition to the motion for a prevailing party determination and an attorney fees award refers to Kyoung Kim at all, much less states that either intended to direct their mediation requests to Kyoung Kim as well as to Clark Kim.
In its minute order, the trial court stated that the Kims were represented by the same attorneys. Our record, however, does not show that either were represented by counsel at the time plaintiffs sent correspondence to Clark Kim to request that he mediate the parties’ dispute in 2012. Plaintiffs did not initiate this lawsuit until August 2014—almost two years after this correspondence requesting mediation. Even if the Kims had been represented by counsel almost two years before they were sued, there is no evidence any such counsel was aware of plaintiffs’ mediation requests to Clark Kim.
In addition, there is no other evidence Kyoung Kim was otherwise aware, or reasonably should have been aware, of the correspondence to Clark Kim, or that she was aware plaintiffs had directed a mediation request to anyone. While plaintiffs might have intended that their mediation request to Clark Kim include Kyoung Kim, they did not say so in September 2012. In the respondent’s brief, plaintiffs argue that Clark Kim was acting as Kyoung Kim’s agent in his negotiation and execution of the purchase agreement and therefore was Kyoung Kim’s agent in receiving plaintiffs’ correspondence regarding mediation. The record does not support plaintiffs’ argument. Plaintiffs’ correspondence requesting mediation clearly requests that Clark Kim mediate. As discussed ante, nothing in their correspondence to Clark Kim suggested the request to mediate extended to anyone other than Clark Kim.
Furthermore, that Clark Kim was solely involved in negotiating the plaintiffs’ failed attempt to purchase the subject property from May until August 2012 did not excuse plaintiffs from expressly requesting that Kyoung Kim mediate the dispute before they named her as an individual defendant in their lawsuit.


DISPOSITION
The order denying Kyoung Kim prevailing party attorney fees is reversed. We remand with directions that the trial court determine the amount of Kyoung Kim’s attorney fee award after apportioning fees shared with other defendants. Appellant shall recover costs on appeal.



FYBEL, J.

WE CONCUR:



BEDSWORTH, ACTING P. J.



ARONSON, J.