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MARINA GLENCOE, LP v. AMA CONSTRUCTION & REAL ESTATE, LLC, B204839 (2010)

Court: Court of Appeals of California Number: incaco20101206007 Visitors: 6
Filed: Dec. 06, 2010
Latest Update: Dec. 06, 2010
Summary: NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS GILBERT, P.J. Marina Glencoe, LP (Marina) appeals a judgment and an award of attorney's fees and costs in favor of Amidi Partners, LLC (Amidi) and AMA Construction and Real Estate, LLC (AMA). We affirm. Stephen Gaggero appeals an order imposing $12,000 sanctions, payable to Amidi and AMA, as sanctions for his failure to appear at trial. We affirm. 1 FACTS AND PROCEDURAL HISTORY In 2004, Amidi owned commercial property located at 701 East Santa C
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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

GILBERT, P.J.

Marina Glencoe, LP (Marina) appeals a judgment and an award of attorney's fees and costs in favor of Amidi Partners, LLC (Amidi) and AMA Construction and Real Estate, LLC (AMA). We affirm.

Stephen Gaggero appeals an order imposing $12,000 sanctions, payable to Amidi and AMA, as sanctions for his failure to appear at trial. We affirm.1

FACTS AND PROCEDURAL HISTORY

In 2004, Amidi owned commercial property located at 701 East Santa Clara Street in Ventura. Rahim Amidhozour, the principal manager of Amidi and an experienced real estate investor, decided to sell the property when a long-term tenant vacated. On August 12, 2004, Amidi and a local developer, James Mesa, executed a purchase agreement on a standard real estate form.

The agreement identified "James Mesa or Assignee" as the buyer. It provided that "Buyer shall have the right to assign Buyer's rights hereunder, but any such assignment shall not relieve Buyer of Buyer's obligations herein unless Seller expressly releases Buyer." The agreement provided for escrow closing on November 16, 2004, and stated that "[t]ime is of the essence of this Agreement." Paragraph 8.8 provided that escrow would close on the expected closing date "or as soon thereafter as the Escrow is in condition for Closing." The agreement contained this provision for extension: "[I]f the Closing does not occur by the Expected Closing Date and said Date is not extended by mutual instructions of the Parties, a Party not then in default under this Agreement may notify the other Party, Escrow Holder, and Brokers, in writing that, unless the Closing occurs within 5 business days following said notice, the Escrow shall be deemed terminated without further notice or instructions."

The agreement provided for a sales price of $3,150,000, including a $90,000 deposit and a $1,102,500 down payment. Amidi agreed to finance the balance of the purchase price for two years. The agreement obligated the buyer to deposit the cash portion of the purchase price "no later than 2:00 P.M. on the business day prior to the Expected Closing Date." The seller was obligated to provide to escrow "in time for delivery to buyer at the Closing" an executed original grant deed, among other documents.

Paragraph 16 of the agreement provided for attorney's fees in the event of litigation: "If any Party . . . brings an action or proceeding . . . involving the Property, to enforce the terms hereof, or to declare rights hereunder, the Prevailing Party . . . in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees."

In October 2004, Mesa requested a 30-day escrow extension. Amidi agreed, but conditioned the extension upon payment of $20,000. Mesa and the real estate broker for the transaction paid the additional sum and escrow was extended for 30 days by the parties' written agreement.

In November 2004, Mesa informed Amidhozour that he was unable to complete the purchase of the property. Instead, he proposed entering into a development agreement with Amidi to build condominiums and offices on the property. On November 17, 2004, Amidhozour met with Mesa to discuss the proposal. The parties discussed preparing a written development agreement, rescinding the purchase agreement, and cancelling the escrow.

On December 3, 2004, Mesa sent Amidi an unsigned "Letter of intent for development agreement at 701 E. Santa Clara Street Ventura CA." The letter set forth the financial terms and Mesa's responsibilities for the project. Amidhozour executed the letter on behalf of Amidi and returned it to Mesa. Mesa did not execute the letter nor did he agree in writing to cancel the escrow.

Meanwhile, Gaggero, an agent for Marina, contacted the escrow officer and stated that Marina was Mesa's assignee for purchase of the property. The escrow officer prepared supplemental instructions stating that Marina would take title to the property and requested Amidi to acknowledge an assignment of Mesa's interest. Gaggero also requested the escrow officer to prepare an instruction deleting the due-on-sale clause in the purchase agreement. Gaggero later telephoned Amidhozour and asked if he would agree to the removal of the due-on-sale clause. Amidhozour responded that he would not.

On December 13, 2004, Amidhozour spoke with Joseph Praske, the general partner of Marina. Praske stated that he wanted to purchase the property as a tax-deferred exchange. Amidhozour requested that Praske provide financial information and bank references and the parties discussed increasing the down payment and the interest rate on the promissory note.

At the same time, Marina was negotiating to purchase real property in Malibu as a tax-deferred exchange. On December 16, 2004, Marina terminated the Malibu purchase agreement, cancelled escrow, and commenced litigation against the seller of that property.

On December 16, 2004, the Santa Clara Street property escrow was due to close. Marina had not deposited the down payment and Amidi had not submitted its executed documents. The escrow officer described the situation as "a standoff" because Marina "failed to put their money in" and Amidi "said they weren't going to sign [the required documents]." The following day, Amidhozour and his attorney inquired of the escrow officer if she had an executed assignment of Mesa's interest in her file. When she replied that she did not, Amidhozour cancelled the escrow. On December 20, 2004, Marina informed escrow that its down payment was ready and available upon Amidi's filing of an executed grant deed and beneficiary statement with escrow. Amidi did not deposit the executed documents with escrow. Four months later, on March 28, 2004, Amidi sold the property to AMA, a related entity, pursuant to the terms of a December 17, 2004 agreement.

On December 28, 2004, Marina filed an action against Amidi seeking specific performance of the August 12, 2004, purchase agreement, and damages for breach of contract. Amidi filed a second amended cross-complaint against Marina, Mesa, and Gaggero, seeking specific performance of the . . . agreement and damages for misrepresentation, among other remedies. After presentation of Marina's case, Amidi moved for judgment pursuant to Code of Civil Procedure section 631.8.2 The trial court granted the motion. Thereafter, Amidi dismissed its cross-action.

The trial court issued a brief statement of decision pursuant to section 632. It found that the agreed-upon date for close of escrow was December 16, 2004, and that Marina failed to deposit the down payment and required documents into escrow by the close of business that day. The court concluded that Marina "failed to timely perform its duties" and "thus cannot establish that it was ready, willing and able to purchase" the property. Relying upon our decision in Pittman v. Canham (1992) 2 Cal.App.4th 556, 559-560, the court determined that neither Marina nor Amidi performed their duties by December 16, 2006, and therefore both parties were discharged from performing. (Ibid. ["The failure of both parties to perform concurrent conditions during the time for performance results in a discharge of both parties' duty to perform"].)

The trial court expressly found that there was insufficient evidence of an oral agreement between Mesa and Amidi to rescind the purchase agreement and that they did not rescind the agreement by conduct. The court also concluded that the statute of frauds precluded an oral rescission.

Thereafter, Amidi sought $943,543 in attorney's fees pursuant to Paragraph 16 of the purchase agreement, and nearly $75,000 in costs. Marina opposed the motion. The trial court directed Amidi to exclude any attorney's fees or costs associated with its cross-complaint. Amidi later submitted amended statements of attorney's fees and costs. The trial court thereafter awarded Amidi $538,884 in attorney's fees and $16,876.69 in costs, allowing only those fees and costs incurred in defense of Marina's complaint. In ruling, the trial court stated: "The magnitude of these fees is due, in part, to the scorched earth mentality which prevailed during both discovery and trial. Marina was a willing participant in this, and has no basis to now complain[] [t]hat the fees are too high."

Sanctions against Gaggero

On May 24, 2007, Amidi served a notice to appear at trial to Gaggero by mailing the notice to his attorney. (§ 1987, subd. (b).) Gaggero did not appear and on October 3, 2007, his attorney stated that he did not receive the notice: "I didn't get it, but I'm not saying they didn't serve it." Counsel explained that Gaggero was then overseas.

The trial court determined that the notice to appear had been served but that "through some administrative oversight" Gaggero's attorney "was not personally aware of it." The court added that Gaggero was "a significant witness" regarding Amidi's cross-complaint. The parties then discussed options to deal with Gaggero's absence. The court printed a list of the possibilities for the parties to consider, ranging from a mistrial to imposing money sanctions. The court made no decision that day, however, and trial continued.

On October 12, 2007, the trial court reconsidered the possibility of sanctions after Amidi called Gaggero to testify. Gaggero's attorney stated that Gaggero was in Vietnam and would not be present at trial. The court ruled that sanctions were appropriate because Gaggero's absence hindered Amidi's proof of its cross-complaint. The court then imposed $12,000 sanctions against Gaggero, payable to Amidi and AMA.

Following the imposition of sanctions, Amidi dismissed Mesa as a party to the cross-complaint, and dismissed three of its causes of action. Five days later, Amidi dismissed the remainder of the cross-complaint.

Gaggero thereafter moved to vacate the monetary sanctions. The trial court denied the motion. In a written ruling, the court stated: "The arguments that the sanctions were inappropriate at the time they were ordered are not new, and do not cause the court to doubt that its original order was correct. . . . Amidi's presentation of the case was clearly harmed. . . . Amidi's pragmatic decision not to pursue the cross-complaint was motivated by the absence of the key witness, exactly the predictable harm that justified the sanctions." The court also decided that the reporter's transcript provided a clear basis for the sanction order.

Marina appeals and contends that: 1) the trial court erred by entering a motion for judgment; 2) the trial court erred by awarding $538,884 attorney's fees to Amidi; and 3) the trial court abused its discretion by awarding certain costs.

Gaggero appeals and challenges the contempt order imposing monetary sanctions.

DISCUSSION

I.

Marina argues that the trial court erred by granting a motion for judgment because the evidence established that it was a ready, willing, and able buyer. Relying upon Paragraphs 8.3, 8.8, and 15, Marina asserts that the purchase agreement remained enforceable even after the expected closing date of December 16, 2004. Marina also claims that Pittman v. Canham, supra, 2 Cal.App.4th 556, is inapplicable because it is distinguishable.

In particular, Paragraph 8.3 of the agreement authorized the escrow holder "to conduct the Escrow in accordance with [the] Agreement, applicable law and custom and practice of the community in which [the escrow] is located." Marina points out that the escrow officer testified that escrow remained open at time of trial because it had not been cancelled by both parties. Marina adds that the officer testified that under local escrow custom, the buyer deposits funds after the seller deposits the required documents.

Paragraph 8.8 provides that if escrow does not close on the expected closing date, "a Party not then in default under this Agreement may notify the other Party, Escrow Holder, and Brokers, in writing that, unless the Closing occurs within 5 business days following said notice, the Escrow shall be deemed terminated without further notice or instructions." Marina points out that after December 16, 2004, it demanded that Amidi perform its obligations as seller.

Paragraph 15 provides that the parties shall act "diligently and in good faith . . . to place the Escrow in condition for Closing." Marina points out that it contacted Amidi on December 13, 2004, and requested a timely closing.

Section 631.8, subdivision (a) provides: "After a party has completed his presentation of evidence in a trial by the court, the other party . . . may move for a judgment. The court as trier of the facts shall weigh the evidence and may render a judgment in favor of the moving party. . . ." The purpose of the section is to enable the trial court to weigh evidence and make factual findings when it finds that plaintiff's case does not require the defendant to produce evidence. (Pettus v. Cole (1996) 49 Cal.App.4th 402, 424.) Our standard of review of the evidence is "the same as if the court had rendered judgment after a completed trial [i.e.,] . . . the substantial evidence rule applies." (Id. at pp. 424-425.)

The interpretation of a written instrument is a question of law for the court. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865; DVD Copy Control Assn., Inc. v. Kaleidescape, Inc. (2009) 176 Cal.App.4th 697, 713.) We independently interpret the purchase agreement because the parties did not offer disputed evidence regarding its meaning. (Parsons, at pp. 865-866.) Our interpretation must give effect to the mutual intention of the parties as it existed at the time they entered the contract. (Civ. Code, § 1636; Parsons, at p. 865.)

In our independent review, the purchase agreement required the buyer to deposit the purchase funds by 2:00 p.m. on the day prior to the expected closing date. (Par. 10.3.) The agreement also states that "[t]ime is of the essence of this Agreement." (Par. 23.3.) Although Paragraph 8.3 authorized the escrow officer to conduct the escrow in accordance with local custom, Paragraph 8.1 provides that the agreement constitutes the agreement of purchase and sale as well as the instructions to the escrow holder. Thus the specific requirement that the buyer deposit the purchase funds on the day prior to the expected closing date governs.

Moreover, Paragraph 8.8, permitting "a Party not then in default" to demand that the other party perform within five days or suffer termination of escrow does not assist Marina. Among other reasons, the plain meaning of the provision does not extend the escrow under the agreement; the provision merely allows one party to warn that escrow will terminate unless the other party performs within five business days. Paragraph 8.8. does not give a party the unilateral right to demand performance after the time for performance has passed.

Pittman v. Canham, supra, 2 Cal.App.4th 556 is on point. In Pittman, a real estate purchase agreement had a clause making time of the essence. Neither party tendered performance by the closing date. We held that the failure of both parties to tender performance by the closing date discharged them from performing. (Id. at pp. 559-560.) "[T]he failure of both parties to perform concurrent conditions does not leave the contract open for an indefinite period so that either party can tender performance at his leisure. The failure of both parties to perform concurrent conditions during the time for performance results in a discharge of both parties' duty to perform." (Ibid.) The factual circumstances of Pittman are similar to those here, including a time-is-of-the-essence clause.

II.

Marina asserts that the trial court erred by awarding attorney's fees to Amidi because, in its view, there is no prevailing party in the action. Marina points out that Amidi dismissed its cross-complaint which alleged in part a contract cause of action. Marina argues that Amidi did not properly apportion its attorney's fees between defending the main action and prosecuting the cross-complaint, and that Amidi's second attorney was unnecessary and duplicative. (El Escorial Owners' Assn. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1366-1367 ["A court may substantially reduce fees where multiple counsel represent a party leading to a duplication of effort"].)

In determining whether there is a prevailing party on the contract, the trial court must compare the relief awarded on the contract claim or claims with the parties' demands and their litigation objectives as disclosed by pleadings, trial documents and other sources. (Hsu v. Abbara (1995) 9 Cal.4th 863, 876.) "The prevailing party determination is to be made only upon final resolution of the contract claims and only by `a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.'" (Ibid.) A party who is denied direct relief on a claim may nevertheless be found to be a prevailing party if it is clear that he has otherwise achieved his main litigation objective. (Id. at p. 877.) If the trial court concludes that a defendant's cross-action on a contract was "essentially defensive in nature," it may properly find defendant to be a prevailing party although he does not obtain any relief on his cross-action. (Id. at p. 875, fn. 10.)

Here the trial court properly found Amidi to be the prevailing party because it defeated Marina's recovery on the contract claim for breach of contract and specific performance. Although Amidi cross-complained against Marina, Gaggero, and Mesa, the cross-complaint sought to enforce Mesa's oral contract to rescind the written purchase agreement and to develop the property with Amidi. Amidi alleged that Marina abandoned the purchase agreement by failing to fund escrow by December 16, 2004, and by failing to complete necessary documents. Amidi achieved its litigation objective and its cross-complaint was "essentially defensive" concerning Marina.

Following the trial court's order that Amidi apportion its attorney's fees and costs between defending Marina's complaint and prosecuting its cross-complaint, Amidi submitted a motion and supporting documents seeking $598,884 in attorney's fees. The trial court expressly found Amidi's apportionment reasonable, but further reduced its fees and awarded $538,884. The apportionment of attorney's fees is within the discretion of the trial court. (El Escorial Owners' Assn. v. DLC Plastering, Inc., supra, 154 Cal.App.4th 1337, 1365.) We cannot say the trial court's decision was unreasonable or that Amidi's documentation and suggested apportionment percentages were insufficient or unreasonable.

Moreover, Marina misreads our decision in El Escorial Owners' Assn. v. DLC Plastering, Inc., supra, 154 Cal.App.4th 1337, 1366-1367. The decision does not hold that the trial court lacks discretion to award attorney's fees to each of the lawyers representing one party. The decision affirms the trial court's discretion to "substantially reduce fees where multiple counsel represent a party leading to a duplication of effort." (Ibid.) Here the trial court found that Marina practiced "scorched earth" litigation; it impliedly found that the legal services of a second attorney (Amidi's general counsel) were reasonably necessary to defend the lawsuit.

III.

Marina contends that the trial court abused its discretion by awarding certain costs. It complains of $2,189,39 travel costs for Amidi's counsel from Northern California, $745.84 for rental cars, and $20.87 Internet charges, amounting to $2,956.10. Marina also claims that the cost of $1,065.39 for trial exhibits is improper because Amidi's exhibits were of little value at trial. (§ 1033.5, subd. (a)(12) [costs of photocopies of exhibits allowable if reasonably helpful to trier of fact].) Relying upon Carr Business Enterprises, Inc. v. City of Chowchilla (2008) 166 Cal.App.4th 25, 30, Marina asserts that recovery of $11,000 discovery referee costs is not recoverable because Amidi agreed to share the cost of the referee. Amidi does not respond to these specific contentions.

Section 1033.5, subdivision (a) sets forth costs recoverable by a prevailing party. Subdivision (a)(3) allows travel expenses to attend depositions as an allowable cost. Subdivision (c)(4) permits an award or denial of costs for items not specifically mentioned in the statute "in the court's discretion." (Gibson v. Bobroff (1996) 49 Cal.App.4th 1202, 1208.) To recover a cost, it must be reasonably necessary to the litigation and reasonable in amount. (Thon v. Thompson (1994) 29 Cal.App.4th 1546, 1548.) "Whether a cost item was reasonably necessary to the litigation presents a question of fact for the trial court and its decision is reviewed for abuse of discretion." (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.)

In an amended memorandum of costs, Amidi requested $49,053.05 in reimbursement. The trial court allowed $8,332.53 for depositions, $7,152,75 for travel costs associated with depositions, $312 for filing fees, $14 for process server fees, and $1,065.39 for trial exhibits, for a total of $16,876.69. The court disallowed all other costs.

The trial court properly allowed deposition travel expenses for Amidi's Northern California attorney. Section 1033.5, subdivision (a)(3) does not limit deposition travel reimbursement to attorneys practicing within the trial court's jurisdiction. (Thon v. Thompson, supra, 29 Cal.App.4th 1546, 1548.) The court also properly allowed cost reimbursement for each of Amidi's attorneys. Marina practiced "scorched earth" litigation against Amidi and cannot complain now that Amidi required two attorneys in its defense. Moreover, the court impliedly found that the rental car and Internet expenses were associated with the depositions, and that Amidi's trial exhibits were helpful at trial. The court did not award reimbursement of the discovery referee costs and we do not discuss that contention.

IV.

Gaggero argues that the trial court lacked jurisdiction to impose sanctions because it expressly found that neither he nor his attorney knew of the notice to appear pursuant to section 1987, subdivision (b). The court stated: "[S]ome sanction is appropriate for Gaggero's failure to attend the trial. The selection of the sanction is mitigated by my finding that [Gaggero's attorney] was not aware that the order to appear had been issued and Gaggero was not aware that it had been issued." Gaggero points out that disobedience "connotes a specific violation of command or prohibition." (Coomes v. State Personnel Board (1963) 215 Cal.App.2d 770, 775.) Gaggero also asserts that the court lacked jurisdiction regarding sanctions because Amidi later dismissed its cross-complaint against him. He reasons that Amidi "is manipulating the system" by seeking sanctions and then dismissing its cross-complaint.

Although Gaggero and his attorney may not have received notice by the written notice to appear mailed on May 24, 2007, they received notice from the trial proceedings on October 3, 2007, 10 days before Amidi called Gaggero as a witness. Indeed, the trial court printed a list of possible sanctions and provided them to the attorneys for purposes of discussion. Imposition of monetary sanctions was a listed sanction.

Moreover, Gaggero's argument that the trial court lacked jurisdiction to impose sanctions because Amidi later dismissed its cross-complaint against him is specious. The trial court properly rejected this argument and stated: "[The argument] fails because Amidi's pragmatic decision not to pursue the cross-complaint was motivated by the absence of the key witness, exactly the predictable harm that justified the sanctions." In addition, the court's written order, supported by three pages of reporter's transcript (which it attached), provides sufficiently specific findings to support the sanctions order.

In view of our discussion, it is not necessary to discuss the parties' remaining contentions.

The judgment and orders are affirmed. Respondent shall recover costs on appeal.

We concur:

COFFEE, J.

PERREN, J.

FootNotes


1. On October 17, 2008, we consolidated the appeals for decision.
2. All further statutory references are to the Code of Civil Procedure unless stated otherwise.
Source:  Leagle

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