Opinion
A159689
08-13-2021
MARY MARGARET BUSH, Plaintiff and Respondent, v. NOREEN CARDINALE, Defendant and Appellant.
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG15755192
STREETER, J.
Defendant Noreen Cardinale prevailed at trial in the present action brought against her by plaintiff Mary Margaret Bush (an attorney who represented Cardinale during a portion of certain underlying litigation). Cardinale then filed a motion for attorney fees. The trial court denied the motion, concluding that none of the theories presented by Cardinale-contract, statute, or tort-supported an award of fees. Cardinale appeals, contending the court erred by denying her fee motion. For her part, Bush has filed a motion for sanctions, arguing Cardinale's appeal is frivolous.
We affirm the order denying fees and reject Cardinale's challenges to that order. We conclude, however, that Cardinale's appeal is not frivolous, and we deny Bush's sanctions motion.
I. BACKGROUND
A. The Underlying Litigation, Judgments, and Settlements
We derive this background from the parties' pleadings in this case. The underlying litigation is also discussed in Cardinale v. Miller (2014) 222 Cal.App.4th 1020, 1022-1024, an opinion by Division Three of this court.
In the underlying litigation, Cardinale obtained money judgments in 2002 and 2011 against various defendants, including two groups we will refer to as the “Miller defendants” and the “Knapp defendants.” Enforcement of these judgments proved arduous and time-consuming (and indeed the litigation leading to the 2011 judgment was part of an effort to enforce the 2002 judgment). Ultimately, Cardinale reached settlements with the Miller defendants in December 2012 and the Knapp defendants in January 2016.
During much of this underlying litigation, Cardinale was represented by attorney Martha Caron. In the period from October 2009 to early 2012, Bush also served (along with Caron) as an attorney for Cardinale. During this timeframe, Caron and Bush represented Cardinale on a contingent-fee basis. A written agreement dated October 2009 and signed by Cardinale, Caron, and Bush (the 2009 contingency agreement) memorialized this arrangement and specified the percentages of any recovery from the underlying litigation and judgment-collection efforts that would be paid to each of the parties to the agreement. The 2009 contingency agreement does not include a provision stating that, in the event of a dispute or litigation among the signatories, the prevailing party will be entitled to recover attorney fees.
Bush withdrew as Cardinale's counsel in or about January 2012. Caron continued to represent Cardinale.
As noted, Cardinale later reached settlements with the Miller defendants and the Knapp defendants. Cardinale and those defendants entered written settlement agreements (the Miller and Knapp agreements). Caron (and, in the case of the Knapp agreement, other attorneys as well) signed as counsel for Cardinale. Bush did not sign these agreements, and the agreements do not identify Bush as either a party to the agreements or as counsel for a party. The Miller and Knapp agreements include provisions authorizing an award of attorney fees to the prevailing party in the event of a future dispute arising out of the agreements.
The Knapp agreement states the agreement is between Cardinale and other named individuals and entities. The agreement's fee provision states in part: “The prevailing party in any litigation, arbitration, bankruptcy proceeding, or other formal or informal resolution (collectively, a ‘Proceeding') of any claims brought by any Party to this Settlement Agreement against any other Party to this Agreement based upon or arising from this Settlement Agreement, shall be entitled to recover from such other Party all reasonable fees and costs incurred in connection with the Proceeding, including reasonable attorneys' fees and costs.” The Miller agreement defines Cardinale (the plaintiff in the underlying litigation) and certain named defendants as the “Parties.” The fee provision in the agreement states in part: “In the event of any dispute arising out of or in connection with this Agreement, the prevailing Party shall be entitled to attorneys fees and costs incurred in addition to any other relief to which said Party may be entitled.”
B. The Present Litigation
Bush filed the present action against Cardinale and Caron in January 2015. In her operative complaints (a first amended complaint and a supplemental complaint, both filed in 2017), she alleges that, under the 2009 contingency agreement, she is entitled to a portion of the funds received by Cardinale from the Miller and Knapp defendants. Bush alleges Cardinale and Caron did not distribute any of those funds to Bush. Bush's complaints include causes of action for breach of the 2009 contingency agreement and for conversion, as well as (against Caron only) claims for interference with contract and interference with prospective economic advantage.
The first amended complaint also included a quantum meruit claim against Cardinale. At trial, Bush dismissed (1) the quantum meruit claim, and (2) the breach of contract claim as against Caron.
As later summarized by the trial court in its order denying Cardinale's posttrial fee motion, the parties in August 2019 tried to a jury “the issues raised in” Bush's first amended and supplemental complaints (other than the dismissed claims) and in a cross-complaint filed by Caron against Bush. Cardinale had filed a cross-complaint against Bush as well, but as the trial court noted in its fee order, that cross-complaint “was not a part of the trial because the Court struck it and [Cardinale] did not file an Amended Cross-Complaint.”
After striking Cardinale's second amended cross-complaint, the court denied a motion by Bush to take the further step of entering a pretrial dismissal of that pleading. (See Code Civ. Proc., § 581, subds. (a)(2), (5), (f)(4) [court “may” dismiss cross-complaint if (1) it strikes the pleading with leave to amend and the cross-complainant does not amend, and (2) either party moves for dismissal].) Stating that dismissal was “unnecessary” since Cardinale had decided not to file a third amended cross-complaint, the court stated that, rather than exercise its discretion to dismiss the second amended cross-complaint, it would enter a single judgment at the conclusion of trial. Specifically, the court struck Cardinale's second amended cross-complaint; she decided not to file a third amended cross-complaint. (The court previously sustained (with leave to amend) challenges to Cardinale's prior cross-complaints-a demurrer to the original cross-complaint and a motion for judgment on the pleadings as to the first amended cross-complaint.)
The jury returned a special verdict finding that Bush failed to meet her burden of proof as to any of the remaining claims in her amended and supplemental complaints and that Caron failed to meet her burden of proof on her cross-complaint. The jury did not award damages to any party. The court's judgment, entered on August 30, 2019, likewise awarded no relief to any party, directing specifically that Bush take nothing on her complaints and that Caron take nothing on her cross-complaint.
In November 2019, Cardinale filed a motion for an award of prevailing-party attorney fees payable by Bush. Cardinale argued such an award was proper under (1) contract principles, (2) Code of Civil Procedure section 685.040, a provision of California's statutory scheme governing the enforcement of judgments, and (3) the “tort of another” doctrine. Cardinale sought $178,608.50 in fees incurred in defending against Bush's claims in the present action (plus the expense of litigating the fee motion). Cardinale also requested $250,127.73 in attorney fees incurred in the underlying litigation after Bush withdrew as her counsel.
Undesignated statutory references are to the Code of Civil Procedure.
The court denied the fee motion after a hearing, concluding none of the three theories proffered by Cardinale provided a basis for an award of fees. Cardinale appealed, initiating the present appeal (No. A159689). As noted, Bush has filed a motion for sanctions.
Another related appeal is pending (No. A158757)-an appeal by Cardinale's attorney, Phyllis Voisenat, of a trial court order imposing monetary sanctions on her for filing the second amended cross-complaint without first complying with court-ordered preconditions for doing so. Caron also filed a motion for an award of attorney fees, raising some of the same arguments presented by Cardinale. The court denied Caron's motion, and she appealed (No. A159598). In July 2020, we granted Bush's motion to consolidate the appeals of the two fee orders. In September 2020, however, prior to the filing of the appellate record, Caron filed in the trial court an abandonment of her appeal, apparently as part of a settlement with Bush. (See Cal. Rules of Court, rule 8.244(b)(1).) This filing “effect[ed] a dismissal” of Caron's appeal. (Ibid.)
II. DISCUSSION
A. Standard of Review
As a general matter, we review an award of attorney fees for abuse of discretion. (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751.) We review de novo the question whether there is a legal basis to award fees. (Ibid.; Guo v. Moorpark Recovery Service, LLC (2021) 60 Cal.App.5th 745, 749-750.)
B. Statutory Attorney Fees
Parties generally bear their own attorney fees unless a statute or agreement provides otherwise. (§ 1021; Aozora Bank, Ltd. v. 1333 North California Boulevard (2004) 119 Cal.App.4th 1291, 1294.) Cardinale argues that, under section 685.040, she was entitled to recover the attorney fees she incurred in defending against Bush's claims in the present lawsuit. We disagree.
Section 685.040 “authorizes the recovery of attorney fees incurred for enforcement of a judgment when the underlying judgment includes an award of attorney fees pursuant to a contract.” (Guo v. Moorpark Recovery Service, LLC, supra, 60 Cal.App.5th at p. 747.) The statute states: “The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney's fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorney's fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney's fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5 .” (§ 685.040, italics added.) “Review of section 1033.5, subdivision (a)(10)(A), shows that attorneys' fees may be recovered as costs when authorized by contract.” (Cardinale v. Miller, supra, 222 Cal.App.4th at p. 1025.)
Accordingly, under section 685.040, “there are two requirements before a motion for an award of postjudgment attorney fees may be awarded as costs: (1) the fees must have been incurred to ‘enforce' a judgment; and (2) the underlying judgment had to include an award for attorney fees pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), which provides that attorney fees may be awarded when authorized by contract.” (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 935.)
Here, as the trial court noted, there was no evidence Cardinale incurred any attorney fees in seeking to enforce the August 2019 judgment entered against Bush in the present action. Nor does that judgment include an award of contractual attorney fees. Cardinale does not dispute these points. Cardinale contends, however, that the fees she incurred in defending the present action were incurred to “enforce” the 2002 and 2011 judgments she obtained against the Miller and Knapp defendants, and that those judgments do include awards of contractual fees.
As to the second of these points, the 2002 and 2011 judgments are not in the record here, but it appears from the discussion in Cardinale v. Miller, supra, 222 Cal.App.4th at pages 1024-1026 and footnote 8, that the 2002 judgment included a fee award that would satisfy the second prerequisite for recovery under section 685.040. But as to the first requirement (that the fees must have been incurred to “enforce” a qualifying judgment), we reject Cardinale's argument that the fees she incurred in defending against Bush's present lawsuit were incurred to “enforce” the 2002 and 2011 judgments.
It is true that “enforcement” of a judgment under section 685.040 can include actions beyond direct efforts to collect from the judgment debtor. A judgment creditor's defense of a separate action may constitute an effort to “enforce” the underlying judgment, such as where the collateral litigation is necessary to “defend[] the validity” of the judgment. (Globalist Internet Technologies, Inc. v. Reda (2008) 167 Cal.App.4th 1267, 1274, 1276 [creditor “incurred attorney fees in enforcing the judgment by defending the judgment from attack against its enforcement” in a separate case, in which debtors were trying to enforce a purported settlement agreement that would have required the creditor to accept a greatly reduced amount in satisfaction of the judgment]; see Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125, 140.) And litigation against nonparties to the original judgment may constitute “enforcement” of the judgment. (Cardinale v. Miller, supra, 222 Cal.App.4th at p. 1025 [“the statute by its terms is broad enough to encompass fees expended to enforce a judgment against third parties who conspired with the judgment debtor to evade its enforcement”].)
But the statute cannot be extended so far as to include the fees Cardinale incurred in defending against Bush's action here. Bush's lawsuit did not challenge the validity of the 2002 and 2011 judgments, nor did she seek to obstruct Cardinale's enforcement of those judgments against the debtors. Bush also did not allege that the settlement agreements Cardinale reached with the Miller and Knapp defendants to resolve the claims arising from the judgments were invalid. Bush only argued that, under a separate agreement among Cardinale, Caron, and Bush (the 2009 contingency agreement), Bush was entitled to a portion of the funds Cardinale received from the Miller and Knapp defendants.
Cardinale contends Bush's lawsuit was an “attack” on the earlier judgments or settlements because if Bush had prevailed, Cardinale's “recovery would have [been] substantially diminished.” We are not persuaded. Bush's action to enforce a separate agreement as to the disbursement of settlement proceeds (i.e., a dispute about how to allocate the recovered funds) was not an attack on the validity of the underlying judgments or settlements themselves, and Cardinale's defense against Bush's claims was not an effort to “enforce” the underlying judgments within the meaning of section 685.040. (See Slates v. Gorabi (2010) 189 Cal.App.4th 1210, 1214-1215 [litigation between creditors about priority in recovering from debtor's limited assets was not an effort to “enforce” the judgment against the debtor under section 685.040].)
Since we conclude section 685.040 does not apply, we do not address Bush's argument that Cardinale's claim for fees under that statute was untimely or otherwise procedurally improper.
C. Attorney Fees as Tort Damages
Cardinale contends that, under the “tort of another” doctrine, she was entitled to recover certain attorney fees she incurred in the underlying litigation (totaling over $250,000), allegedly as a result of Bush's wrongful withdrawal as her counsel. We reject this claim as well.
The “tort of another” doctrine was summarized by our Supreme Court in Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 620: “A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other expenditures thereby suffered or incurred.” In that circumstance, attorney fees are recoverable as an item of tort damages, rather than as costs. (Id. at p. 621; Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 61, fn. 11, 79.)
A party seeking fees as tort damages ordinarily must plead and prove them to the trier of fact, rather than seeking them in a posttrial motion. “Unless the parties stipulate otherwise, a claim for attorney fees under the ‘tort of another' doctrine may not be asserted by post-trial motion but rather must be pleaded and proved to the trier of fact.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 869, fn. 4.) The trial court noted this rule in rejecting Cardinale's claim for fees as tort damages (a claim she asserted in her posttrial fee motion). On appeal, Cardinale objects to the court's ruling, contending she did plead and prove the alleged damages, by raising relevant defenses in her answers to Bush's complaints (i.e., defenses asserting a right to a setoff of her alleged damages against Bush's recovery, and alleging the amount owed to her “may equal or exceed” any damages proved by Bush), and through trial testimony from attorney Michael Boli about his work representing Cardinale after Bush withdrew as her counsel.
There is no basis here for an award of fees as damages under the “tort of another” doctrine. Since Cardinale's second amended cross-complaint had been stricken, no affirmative claims by Cardinale for relief against Bush were tried or submitted to the jury. Defenses asserted in an answer cannot provide a basis for the recovery of damages or other affirmative relief; at most they can establish the defendant's right to a setoff that reduces or eliminates any recovery by the plaintiff. (§§ 431.30, subd. (c), 431.70; Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 197-198.) Contrary to Cardinale's suggestion, the trial court did not purport to alter this rule when it noted in a pretrial order that Cardinale had decided to “plead her claims” for setoff as affirmative defenses in her answer rather than by filing a third amended cross-complaint. And because Bush recovered nothing on her complaints, there was nothing against which any amounts claimed by Cardinale could be set off.
Finally, Cardinale argues the jury made findings about Bush's conduct (such as that she abandoned Cardinale by withdrawing as her counsel in the underlying litigation) that “support [Bush's] liability.” But the jurors did not award (and the verdict form did not ask them to award) any damages to Cardinale. Consistent with the state of the pleadings, the verdict form did include questions allowing the jury to award damages to Bush on her complaints and to Caron on her cross-complaint (although the jury did not award any such damages), and asking whether the amounts Cardinale paid to Boli “constitute[d] a set off from [Bush's] recovery for damages” (if Bush had recovered damages). We are not persuaded that Cardinale's piecing together of these special verdicts and the trial evidence as to damages provides a basis for the trial court or this court to award affirmative damages to Cardinale.
Because we resolve the “tort of another” issue on the grounds discussed in the text, we need not address Bush's argument that her withdrawal as Cardinale's counsel did not cause Cardinale to have to defend a lawsuit.
D. Contractual Attorney Fees
Cardinale argues she is entitled to a fee award under contractual attorney fee provisions. We disagree.
Bush sued Cardinale for breach of the 2009 contingency agreement, which was attached as an exhibit to her amended and supplemental complaints. That agreement does not include a provision requiring the losing party to pay the prevailing party's attorney fees in the event of a dispute about the parties' rights and obligations. Cardinale argues, however, as she did in the trial court, that she is entitled to recover fees from Bush pursuant to the attorney fee clauses in the settlement agreements between Cardinale and the Miller and Knapp defendants.
The trial court rejected this argument, finding it “facially frivolous.” We agree there is no basis for awarding contractual attorney fees. Bush was not a party to the settlement agreements between Cardinale and the Miller and Knapp defendants, nor did she sign the agreements as an attorney for Cardinale who might potentially be bound by some or all of the provisions. And the fee provisions in the settlement agreements do not purport to bind nonparties.
Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, cited by Cardinale, is inapposite. The court there held that, where counsel for the parties signed a settlement agreement with the notation that they approved the agreement as to form and content, such a “notation does not preclude a factual finding that counsel both recommended their clients sign the document and intended to be bound by its provisions” (including, as relevant in that case, a confidentiality provision). (Id. at pp. 785-786.) Monster Energy does not support a conclusion that Bush (who no longer represented Cardinale and did not negotiate or sign the settlement agreements) somehow intended to be bound by their provisions.
Cardinale suggests, however, that Bush made arguments or took actions that amounted to an effort to become a party to the settlement agreements, such as filing a lien to claim a portion of the settlement proceeds. Cardinale argues that Bush, “in essence, ” claimed she was a third-party beneficiary of the settlement agreements, and that because she sought the “ ‘benefit' ” of those agreements, she also had to accept the “ ‘burden' ” (i.e., being bound by the attorney fee provisions). Finally, Cardinale asserts that, if Bush had continued as Cardinale's counsel in the underlying litigation, Bush “would have” signed the settlement agreements and been bound by them.
We are not persuaded by these arguments. Based on the record before us, including Bush's complaints, we do not understand Bush to have claimed she was a party to, or a third-party beneficiary of, the settlement agreements between Cardinale and the Miller and Knapp defendants. Instead, she claimed that, under the 2009 contingency agreement, she was entitled to a portion of the proceeds Cardinale received from those defendants (whether by judgment or settlement). In our view, these claims by Bush did not trigger a fee obligation (or an entitlement to fees had she prevailed at the 2019 trial) under the fee provisions in the settlement agreements Cardinale reached with other parties.
To the extent Cardinale's appellate reply brief presents new arguments (including certain “policy arguments”) as additional purported grounds for a fee award, we decline to address them.
E. Sanctions
Bush has filed a motion asking this court to impose monetary sanctions on Cardinale and her attorney. Bush argues that Cardinale's appeal is frivolous and that Cardinale has misrepresented facts to this court. Bush requests an award of sanctions in the amount of $10,000, the amount she paid her attorney to oppose Cardinale's appeal. We shall deny the motion.
This court may impose sanctions on a party or an attorney for taking a frivolous appeal or appealing solely to cause delay. (§ 907; Cal. Rules of Court, rule 8.276(a)(1).) An appeal is frivolous “only when it is prosecuted for an improper motive-to harass the respondent or delay the effect of an adverse judgment-or when it indisputably has no merit-when any reasonable attorney would agree that the appeal is totally and completely without merit.” (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.) Bush contends primarily that the second of these standards is met here, i.e., the appeal is frivolous because Cardinale's arguments do not have “any validity, ” “and no reasonable attorney would think they did.”
In our view, Cardinale's appellate contentions (although we have rejected them) do not warrant the imposition of sanctions, which “should be ‘used most sparingly to deter only the most egregious conduct.' ” (In re Marriage of Gong & Kwong (2008) 163 Cal.App.4th 510, 518.) Cardinale made colorable but unmeritorious arguments for extending existing legal doctrines to the somewhat unusual factual situation presented in this case.
For example, as to Cardinale's request for fees incurred to “enforce” a judgment under section 685.040, there is case law (discussed in pt. II.B., ante) permitting recovery in circumstances other than direct enforcement by the judgment creditor against the judgment debtor, although we have concluded that statute does not extend to the scenario at issue here. And the “tort of another” doctrine might have provided a basis for an award of fees as damages in light of the background facts here (i.e., Bush's withdrawal as Cardinale's counsel), if an appropriate claim for affirmative relief had been tried and submitted to the jury.
Finally, as to Cardinale's claim for contractual attorney fees, we note the trial court stated this theory of recovery was “facially frivolous.” We agree this claim is weak. But we think Cardinale's argument that fees were appropriate because Bush sought benefits under the Miller and Knapp settlement agreements, while unpersuasive, is not so baseless as to warrant the imposition of sanctions.
We have reviewed the remaining arguments in Bush's motion (including her criticisms of Cardinale's reply brief), and we find no basis for imposing sanctions.
III. DISPOSITION
The order denying Cardinale's motion for attorney fees is affirmed. Bush's motion for sanctions is denied. Bush shall recover her costs on appeal.
WE CONCUR: POLLAK, P. J., TUCHER, J.