Hammer v. Landmark Merchant Solutions

Filed 3/16/07 Hammer v. Landmark Merchant Solutions 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appeal from a judgment of the Superior Court of Orange County, Eleanor M. Palk, Temporary Judge. (Pursuant to Cal. Const., art. VI, 21.) Affirmed. Motion to dismiss and request for sanctions. Denied.

Law Offices of Mark B. Plummer and Mark B. Plummer for Plaintiff and Appellant.

Daniel S. Latter for Defendant and Respondent.

* * *

INTRODUCTION

Plaintiff Steven Hammer appeals from a judgment entered in favor of defendant Landmark Merchant Solutions (Landmark) following a bench trial. In January 2004, the parties mutually rescinded a service contract. Two months later, Landmark mistakenly referred Hammers account to a collection agency. Hammer filed a complaint which contained causes of action for rescission and fraud against Landmark. Even though Landmark corrected the error within one week after Hammer was notified his account had been referred to collections, Hammer served Landmark with the complaint and sought a Judgment of Rescission against Landmark. The trial court found there was no evidence Landmark engaged in fraud, and rejected Hammers claim for rescission on the ground [t]here is nothing left to rescind.

Hammers sole argument on appeal is that the trial court erred by failing to enter a judgment of rescission in his favor. We affirm.

Hammers rescission cause of action has not been a recognized cause of action in California since revisions to the Civil Code in 1961 abolished such claims. While a legal action for restitution based on a completed unilateral rescission is recognized, Hammer contends the contract was rescinded by mutual consent, and he has not claimed Landmark failed to return any payments made under the contract.

Even if Hammers rescission claim was a valid cause of action, substantial evidence showed the parties rescinded the contract before the lawsuit was filed and served; there was no existing contract left to rescind. We find no error.

BACKGROUND

Hammer operates a business involved in the manufacture and resale of motorcycle parts. At the end of 2003, Hammer received a telephone call from Landmark, a company in the business of selling credit card processing services to small businesses. Hammer testified he was under the impression Landmarks services included the processing of international credit card transactions. Landmarks sales representative who assisted Hammer denied making any such representation. Based on his understanding of the scope of Landmarks services, Hammer entered into a credit card transaction processing services agreement and an equipment lease agreement with Landmark.[1]

On January 6, 2004, Hammer received a credit card swipe terminal from Landmark. After Hammer realized that Landmark was unable to process international credit card transactions, he spoke with a manager at Landmark and explained that he could not use Landmarks equipment on that basis. William Keefe, Landmarks chief operating officer, testified that he was informed about Hammers account and that Hammer thought Landmark offered international credit card transaction processing services when he entered the contract. Keefe authorized the cancellation of Hammers account and personally spoke with Hammer about the matter.[2] Ultimately, Hammer and Landmark agreed the contract would be cancelled, and it was cancelled on January 7, 2004. Hammer testified one of Landmarks managers told him, [w]e will cancel the account on that condition, because it doesnt meet the things that the salesman told you it did, and your contract would be over.

Landmark sent a courier to pick up the equipment from Hammer the following day. In a letter dated February 23, 2004, Landmark confirmed Hammers account was closed and no balance was due. Hammer denied receiving that letter. Landmarks records showed the account was closed.

Due to an error by Landmarks risk management department, Hammers account was referred to Landmarks collection agency. The risk management department failed to check to see whether the contract had been cancelled before referring the account to collections. Consequently, on or about March 12, 2004, Hammer received a letter from the collection agency informing him that his account with Landmark had been referred to collections for nonpayment. Hammer testified he repeatedly called Landmark, but each time he spoke with one of its representatives, the representative refused to speak with him because his account was in collections.

Hammer called the collection agency on or about March 12, 2004 and spoke to Chris. Hammer explained to Chris that there had been a mistake because his account had been closed. Chris stated Landmarks position was that Hammer owed money on the account, and further stated, you have great credit. It would be a waste to ruin it. Hammer testified Chris told him his credit would be ruined if he did not pay. At Hammers request, the collection agency confirmed again in writing that Hammer owed Landmark money and must pay immediately. In its letter dated March 15, 2004, the collection agency offered to settle the matter for $1,920 instead of the stated outstanding balance of $2,399.52.

Hammer retained an attorney. In a letter faxed to the collection agency on March 17, 2004, Hammers attorney informed the collection agency that he had filed a lawsuit against Landmark. Attached to the letter was a copy of Hammers complaint which was filed on March 17, 2004. The complaint sought rescission of the contract and contained a fraud claim. In his letter, Hammers attorney stated, I noticed that it is St. Patricks Day today. In honor of the good spirit and celebration associated with this day, you can settle this case now for only $35,000.00, as a St. Patricks Day special. This offer will expire one week from today if not accepted in writing. May the spirit of the Irish be with you.

Keefe testified he was very surprised to learn that Hammers account had been sent to collections. On March 18, 2004, Keefe had a conversation with Hammer, during which Keefe apologized that Hammers account was erroneously sent to collections, and confirmed that the account was closed. The account was immediately taken out of collections. Keefe zeroed out the balance on the account to make sure that would never happen again. Keefe, believing the matter had been resolved, was surprised when the summons issued on Hammers complaint on March 29, 2004.

Hammer testified he did not lose any business as a result of his dealings with Landmark, his credit was never adversely affected, and the dispute was never reflected in his credit report. Hammer claimed he spent 40 hours of his time trying to resolve the matter, and his time is worth $200 an hour. He also testified he suffered stress during the previous year as a result of his dealings with Landmark, but he did not seek any psychiatric help and did not have any doctors bills.

Following a bench trial, the court stated, [b]asically, I am entering judgment for the defendant. [] I think there was a mistake made. I would hope that Landmark has changed some of their procedures so something like this doesnt happen again. At least immediately, when you realize a mistake, send a letter, a follow[-]up. You cant necessarily trust someone is going to understand what had happened or, you know, they may not need the letter. [] There [are] two causes of action. The first is for fraud, the second is for re[s]cis[s]ion. [] There is absolutely no evidence at all any fraud was perpetrated on Mr. Hammer. [] And the second is for re[s]cis[s]ion. There is nothing left to rescind. The contract had been canceled. [] I do not agree that the plaintiff was forced to file the lawsuit. [] I do agree that Mr. Hammer is an innocent guy here and I dont think that the fact of the lawsuit, frankly, generated from him. [] So, judgment for the defendant, and I think that is everything.

On January 12, 2006, the following judgment was entered: IT IS HEREBY ORDERED, ADJUDGED AND DECREED: [] 1.  On the first cause of action set forth in the Complaint for rescission, judgment is rendered for Defendant and Plaintiff shall take nothing. [] 2.  On the second cause of action set forth in the Complaint for fraud, judgment is rendered for Defendant and Plaintiff shall take nothing. [] IT IS SO ORDERED. JUDGMENT IS ENTERED FOR DEFENDANT.

Landmark filed a motion to recover costs under Code of Civil Procedure sections 1032 and 1033.5. On April 12, 2006, the trial court granted Landmarks motion and awarded Landmark $10,869.63 (comprised of $9,960 in attorney fees and $909.63 in other costs). On May 19, 2006, Hammer filed a notice of appeal; he appeals from the judgment only.

DISCUSSION

I.

Motion to Dismiss Appeal and Request for Sanctions

Landmark contends Hammers appeal must be dismissed because the notice of appeal was not timely filed. Landmark argues it served Hammers counsel with a file‑stamped copy of the judgment along with a proof of service showing the file‑stamped copy of the judgment was served on January 30, 2006. Landmark contends the appeal must be dismissed because Hammer failed to file his notice of appeal within 60 days of that date of service pursuant to rule 8.104(a)(2) of the California Rules of Court. Landmark also seeks sanctions on the ground Hammers appeal is frivolous because the filing of the notice of appeal is untimely. Landmarks motion does not request sanctions on any basis other than the untimeliness of Hammers notice of appeal.

Landmarks proof of service of the judgment states service occurred on January 30, 2006, but also states Landmarks counsel signed the proof of service on January 20, 2006. Landmarks counsel explained that the reference to January 20, 2006 was a typographical error and that he signed the proof of service on the same date as serviceJanuary 30, 2006.

Rule 8.104(a)(2) of the California Rules of Court provides that a notice of appeal must be filed within 60 days after the party filing the notice of appeal serves or is served by a party with a . . . file‑stamped copy of the judgment, accompanied by proof of service. Here, Landmarks proof of service is defective and thus failed to comply with the rule requiring that a proper proof of service be served with the file‑stamped copy of the judgment.

At oral argument, Landmarks counsel argued Hammers appeal was untimely because he failed to file the notice of appeal within 60 days of March 13, 2006the date he was served with Landmarks motion to recover costs to which a copy of the file-stamped judgment was attached as one of several exhibits. Even if service of the judgment under rule 8.104(a)(2) of the California Rules of Court could be effected in this manner, that file‑stamped copy of the judgment was not accompanied by a proof of service confirming that Hammer was served with a copy of the file‑stamped judgment. The 60‑day period set forth in rule 8.104(a)(2) was not triggered in this case.

We therefore deny Landmarks motion to dismiss and request for sanctions.

II.

The Trial Court Correctly Entered Judgment in Landmarks Favor.

In this appeal, Hammer does not challenge the trial courts finding he failed to produce any evidence of fraud. Hammer solely argues the court erred in failing to enter a Judgment of Rescission in Hammers favor based on his first cause of action for rescission.

Hammers rescission claim, however, is not an authorized cause of action. Prior to 1961, the Civil Code provided for the adjudication of a rescission claim by a party. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading,  502, pp. 590‑591.) In 1961, however, that equitable action was abolished, and the remedy is now a legal action for restitution based on a completed unilateral rescission. (Id. at p. 591.) Hammer did not allege a claim for restitution based on a completed unilateral rescission. He contends the contract was rescinded by mutual consent. Furthermore, Hammer does not seek the return of any payments he made to Landmark under the contract.

Where the plaintiffs theory is that there has been a rescission by mutual consent [citation], a declaratory judgment would appear to be the appropriate remedy, for he merely seeks a determination that the rescission has been accomplished. (4 Witkin, Cal. Procedure, supra, Pleading,  504, p. 593.) Hammer has not sought declaratory relief in this case.

Even if Hammers rescission claim were a viable cause of action, by showing the parties mutually consented to the rescission of the contract on January 7, 2004, Hammer established there was no existing contract left to rescind. It is true the parties used the word cancel in describing their dealings. Hammer seizes upon this word choice to suggest an issue exists whether the contract was rescinded or merely cancelled.

A contract is cancelled when either party puts an end to the contract because of the other partys breach. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts,  925, p. 1022.) The effect of such a cancellation is the same as that of termination of the contract, except that the cancelling party retains any remedy for the other partys breach of the whole contract or any unperformed balance. (Ibid.) On the other hand, rescission extinguishes a contract by not only terminating further liability but also by restoring the parties to their former position by requiring each to return whatever he or she received as consideration under the contract. (1 Witkin, supra,  926 at p. 1023.)

Notwithstanding Hammers and Keefes use of the word cancel during their trial testimony, substantial evidence establishing the parties conduct shows they mutually rescinded the contract on January 7, 2004. Landmark took back its equipment, closed Hammers account, and confirmed no balance was due on the account. Both parties believed their dealings were complete at that point. Neither Hammer nor Landmark ever took the position the other breached the contract, much less retained any remedy for any breach of the contract or any unperformed balance of the contract by the other. The collection agencys mistaken action regarding Hammers account during the course of one week in March, did not undo the rescission. On March 18, 2004, Keefe spoke with Hammer, apologizing for the error and assuring him the account was closed. Nevertheless, the summons on the complaint issued shortly thereafter. There was no contract between the parties to rescind after January 7; thus, there was no basis for Hammers pursuit of a Judgment of Rescission.

DISPOSITION

The judgment is affirmed. Respondent shall recover costs on appeal.

FYBEL, J.

WE CONCUR:

SILLS, P. J.

OLEARY, J.

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[1] It appears Hammer and Landmark entered into two separate agreements. For purposes of this appeal, we refer to both agreements as the contract.

[2] Hammer denies he ever spoke with Keefe.