Opinion
A125953
10-18-2011
MICHAEL H. CLEMENT et al., Plaintiffs and Appellants, v. FRANK C. ALEGRE, Sr., et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Contra Costa County Super. Ct. No. C06-00611)
INTRODUCTION
Plaintiffs Michael H. Clement and his wholly-owned corporation, Michael H. Clement Corporation (MHCC), appeal from a judgment of the Contra Costa County Superior Court in favor of defendants Frank C. Alegre, Sr., individually, and Frank C. Alegre, Sr. and Helen C. Alegre as Trustees of the Frank C. Alegre and Helen C. Alegre Revocable Trust (collectively Alegre) on plaintiffs' action against Alegre for specific performance of an alleged agreement for Alegre to resell certain real property (the Wilbur property) to plaintiffs, for rescission of MHCC's previous sale of the property to Alegre, and for declaratory relief. Plaintiffs also appeal the trial court's order holding Clement liable individually for its award of attorney fees and costs to Alegre.
The trial court granted Alegre's motion for judgment after plaintiffs' presentation of its case (Code Civ. Proc., § 631.8), finding that plaintiffs had failed to introduce admissible evidence that they were "ready, willing, and able" to purchase the property. It granted the motion for judgment after excluding plaintiffs' evidence of conditional approval of two loans to MHCC from Sonoma National Bank. The two loan commitments were for a $650,000 loan directly from the bank and a $520,000 loan to be paid by a Small Business Association (SBA) debenture loan guarantee. The court sustained defense objections and excluded the evidence on the ground that plaintiffs' refusal to provide discovery to Alegre that would allow Alegre to cross-examine the loan facilitator and the bank witness regarding the financial information they received from plaintiffs upon which the loan commitment was based, was fundamentally unfair to Alegre and denied him due process of law. Plaintiffs contend that the court committed prejudicial error in excluding evidence of the loan commitment. They further contend that the court erred in holding Clement individually liable for attorney fees and costs, notwithstanding his assignment of his interest in the lawsuit to MHCC, a corporation in Chapter 11 in the bankruptcy court. We shall affirm.
All statutory references are to the Code of Civil Procedure, unless otherwise indicated.
Although technically there were two sources of loan funding—the Sonoma National Bank loan and the SBA debenture loan guarantee—they were evidenced by a single loan commitment letter from Sonoma National Bank. The parties often refer to this as "the loan commitment" and we shall do the same.
PROCEDURAL BACKGROUND
The facts and the underlying transactions are complicated and add little to the analysis. They will be discussed as required in the body of the opinion.
On February 22, 2006, plaintiffs filed a complaint against Alegre in connection with Alegre's refusal to resell the Wilbur property to them.
MHCC filed for bankruptcy in late April 2009, shortly before the date set for trial, and at the time of trial was engaged in a Chapter 11 reorganization proceeding. Plaintiffs removed the matter to federal court and the bankruptcy court quickly remanded plaintiffs' action on the complaint to the state trial court, stating that the issues were "state law issues" and it would not take the case away from the state court after three years of litigation and just before trial. The bankruptcy judge opined that, if it were determined in the state law proceeding that debtor (MHCC) had a right to the Wilbur property and properly exercised the right, "[t]hen it comes back to court and we decide whether the Debtor can assume it or not." (The Alegre cross-complaint against plaintiffs remained in the bankruptcy court.)
Plaintiffs' action against Alegre was tried in June 2009, upon three claims for relief: declaratory relief, specific performance and rescission.
In the three years before trial, the parties engaged in lengthy and contested discovery. During discovery, Alegre sought documents regarding the financial ability of Clement, his wife Jeanette Yu, and MHCC to repurchase the Wilbur property. Plaintiffs disclosed a loan commitment from Sonoma National Bank and documents showing a deposit account with ING Bank, and two other lines of credit. However, plaintiffs asserted a right to financial privacy with respect to the financial information contained in their loan application and other documents that were used by the bank to determine whether to make the loan. Alegre moved to compel further responses, but the discovery commissioner denied the motion, "without prejudice to renewal should [Clement] attempt to introduce evidence of his ability to fund purchase of the [Wilbur property] in addition to that produced to date by plaintiffs." Clement had redacted all financial information regarding Clement, Yu, and MHCC from the loan application and commitment documents furnished by plaintiffs during discovery. Alegre advised the court in his April 27, 2009 issue conference statement that "[a]n issue exists as to the admissibility of any testimony regarding Clement's ability to perform, based on his assertion of a privilege . . . ." Alegre also raised this issue in his trial brief.
In Clement v. Alegre (2009) 177 Cal.App.4th 1277, we upheld the superior court's award of sanctions recommended by the discovery master against Clement and MHCC.
At trial, Clement testified, followed by Yu. He testified that he had available funds for the deposit, based upon the lines of credit and the ING Bank account previously disclosed. He acknowledged that any purchase of the property would have required additional financing.
Plaintiffs proposed to call two witnesses—Reuben Dobbs, a loan facilitator with Capital Access who assisted plaintiffs in seeking credit, and Scott Dykstra, a Sonoma National Bank employee who assisted them with obtaining the loan commitment. Plaintiffs sought to introduce the loan commitment letter and related documents and testimony about the loan application process and the loan commitment. Alegre objected that the loan commitment letter should not be admitted as it was based upon financial information that had been redacted from loan applications and other documents, and that neither witness should be permitted to testify because plaintiffs' assertion of a financial privacy privilege in discovery prevented Alegre from being able to cross-examine these witnesses as to the information upon which they had relied in processing the credit applications and in making loan commitment decisions.
Plaintiffs' counsel agreed that plaintiffs could not at trial offer the redacted information related to Clement, Yu, and MHCC's finances to show plaintiffs' ability to perform. He also acknowledged that without this information Alegre could not cross-examine the witnesses concerning the loan commitments. Nevertheless, counsel maintained the court and Alegre must accept the loan commitment letter at face value and that all plaintiffs needed to show was that they had received a loan commitment. "Whether it was proper, correct, [or] foolhardy is irrelevant." Plaintiffs' counsel argued that Dobbs and Dykstra could be questioned as to whether they reviewed the materials they received from plaintiffs, whether they believed they had received the information they needed, and whether they made the decision to issue the conditional loan commitment based on that information, but that "it's not proper for anyone to look behind the decision to make a loan in this situation." The court disagreed, observing that having made the decision to assert a privacy privilege during discovery, plaintiffs at trial were asking to allow witnesses to lay a foundation for the loan commitment letter "when the foundation was removed in discovery and that's fundamentally unfair."
The trial court initially stated that the loan commitment was not "legally binding" as it contained outstanding conditions, including that the bank reserved the right to withdraw the commitment or to modify it if any material facts came to light that had not previously been revealed or if any material representations made in the application were incorrect. Relying upon case authority stating that the third party lender must be "legally bound by contract to advance the funds," the court concluded that "fundamental fairness" prohibited plaintiffs from relying upon the loan commitment where they had blocked Alegre's ability to cross-examine Clement, Yu, or the witnesses as to the truthfulness and completeness of the underlying financial information plaintiffs had provided in the loan applications and supporting documentation. According to the court, "[t]he technique of blocking [the underlying financial information] in discovery while saying that the conclusion about the granting of the loan is itself admissible without regard to the underlying factors, representations, and disclosures that seems to me to fly in the face of fundamental due process and is violative of the defendant's rights." The court then granted Alegre's motion to exclude Dobbs's and Dykstra's testimony "insofar as it relates to the granting of the loan reflected in" the loan commitment and underlying applications.
After a break, plaintiffs' counsel conceded that he had no additional evidence of plaintiffs' financial ability to perform other than the loan commitments shown in the loan commitment letter and the associated SBA document. Counsel made an offer of proof concerning the testimony of two other witnesses on a different issue and rested.
The record does not support the claim made at oral argument that plaintiffs made an offer of proof at trial that their witnesses would testify that the escrow was ready to close. After conferring with his clients, plaintiffs' counsel was clear that plaintiffs were relying on the loan commitment letter to demonstrate their ability to perform.
Alegre moved for judgment pursuant to section 631.8. The court granted the motion as to the specific performance cause of action. The following Monday, after extensive discussion, the court acknowledged that "the ability to perform may be evidenced by a loan letter, which does not have to be a legally binding loan letter." (Italics added.) Even so, the court concluded that the loan commitment letter could not "become a shield against the relevant inquiry as to whether or not the plaintiff has the financial ability to perform as a matter of fact on the date in question." The court reiterated its decision precluding plaintiffs from introducing evidence at trial of their financial ability to comply with the conditions of the loan commitment and whether or not they actually obtained the loan commitment. For the same reasons, the court also granted the section 631.8 motion as to the remaining causes of rescission and declaratory relief, concluding plaintiffs had not proved their ability to perform.
The court issued a statement of decision that found in relevant part: "An essential element of each of these causes of action was that plaintiffs demonstrate their 'ability to perform,' i.e., that they could repurchase property owned by defendants for a minimum of $1.3 million. Because plaintiffs did not offer admissible evidence to establish that essential element, the court finds against the plaintiffs and in favor of defendants on all three causes of action."
Judgment was entered on July 10, 2009, in favor of Alegre and the court awarded defendants their costs and attorney fees. On October 22, 2009, the trial court awarded Alegre attorney fees from Michael H. Clement individually in the amount of $816,683.80 and costs of $41,544.67.
Plaintiffs filed this timely appeal.
DISCUSSION
I. Standard of Review
The key question on this appeal is whether the trial court erred in sustaining Alegre's objections to introduction of the loan commitment letter, SBA approval, and related testimony from Dobbs and Dykstra. The parties disagree as to the appropriate standard of review.
Plaintiffs contend that the court's sustaining of the defense objection to admission of the loan commitment letter, related documents, and testimony by Dobbs and Dykstra that a loan commitment had been made was tantamount to a nonsuit, as it excluded all evidence on a particular claim. Therefore, they assert that the standard of review is the same as for a nonsuit, i.e., we must view the record in the light most favorable to plaintiffs and determine whether the evidence and inferences were sufficient to support a judgment in the plaintiffs' favor and we must accept as true evidence referenced in plaintiffs' arguments and offers of proof. (Dillingham-Ray Wilson v. City of Los Angeles (2010) 182 Cal.App.4th 1396, 1402-1403 (Dillingham); see Aas v. Superior Court (2000) 24 Cal.4th 627, 634-635 (Aas), superseded by statute on other grounds as stated in Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1202.)
In contrast, Alegre points out that traditional substantial evidence review is appropriate for appeals challenging a judgment rendered under section 631.8. "Appeals challenging an order granting a [section] 631.8 defense motion for judgment in a nonjury trial are reviewed under the substantial evidence standard: Appellate courts defer to the trial court's factual findings and will affirm so long as the findings are supported by 'substantial evidence.' [Citations.]" (Eisenberg et al., Civil Appeals and Writs (The Rutter Group 2010) ¶ 8:150, pp. 8-112 to 8-113 (Eisenberg), citing San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 528; Roth v. Parker (1997) 57 Cal.App.4th 542, 549-550.) Further, Alegre argues that trial court rulings on the admissibility of evidence, such as occurred here, are subject to the abuse of discretion standard of review. (Eisenberg, supra, at ¶ 8:96.1, p. 8-49, citing Gordon v. Nissan Motor Co., Ltd. (2009) 170 Cal.App.4th 1103, 1111 and Zhou v. Unisource Worldwide, Inc. (2007) 157 Cal.App.4th 1471, 1476.)
We agree with Alegre that the nonsuit standard of review discussed in Dillingham, supra, 182 Cal.App.4th 1396, and Aas, supra, 24 Cal.4th 627, is inapplicable here. Dillingham states the rule as follows: "When all evidence on a particular claim is excluded based on a motion in limine, the ruling is subject to independent review as though the trial court had granted a motion for judgment on the pleadings or, if evidence was offered, a motion for nonsuit. [Citations.]" (Id. at pp. 1402-1403.) The rationale for this rule is that "[i]n contrast to the usual motion in limine, which seeks to keep particular items of evidence from a jury, an 'objection to all evidence' is essentially the same as a general demurrer or motion for judgment on the pleadings seeking to end the trial without the introduction of evidence. Such an objection is properly sustained where even if the plaintiffs allegations were proven, they would not establish a cause of action. [Citations.]" (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 26 [motions in limine were not directed to particular items of evidence, but sought to bar all statements made by defendants as barred as a matter of law, even if statements were fraudulent]; accord, Aas, supra, 24 Cal.4th at pp. 634-635 [pretrial ruling excluding as a matter of law all evidence of construction defects that had not caused property damage]; Fergus v. Songer (2007) 150 Cal.App.4th 552, 569-570 [granting of motion in limine disposed of one or more causes of action and was the functional equivalent of grant of nonsuit as to those causes of action]; Mechanical Contractors Assn. v. Greater Bay Area (1998) 66 Cal.App.4th 672, 676-677 [at the outset of trial, the court's grant of in limine motion to exclude all plaintiffs evidence was in effect grant of a nonsuit—ultimate issue was whether a contract between the parties was invalid or void as a matter of law].) However, it is also recognized that "[i]n instances in which an in limine ruling does not preclude an entire claim but instead limits the evidence that will be offered to prove a claim, we review the ruling for an abuse of discretion. [Citation.]" (Dillingham at p. 1403.)
Here, there was no motion in limine. Nor was there any "objection to all evidence" on any claim. The court did not preclude all evidence relating to plaintiffs' ability to perform. Clement testified he had the ability to perform "with financing," but acknowledged that without financing plaintiffs would not be able to purchase the property. He testified about the sources available to plaintiffs to make the down payment. Specifically, he testified that, in the Spring of 2006, MHCC had a source of funds for the down payment from savings and from two lines of credit, including an ING savings account of close to $100,000, a Wells Fargo line of credit for $105,000, and a $50,000 line of credit with the Bank of America.
The court sustained separate objections to exhibits relating to these sources of funding for the down payment on the grounds that the foundation had not been laid because they were dated before the Spring of 2006.
The court below did not grant a pretrial motion in limine to exclude all evidence on a particular claim. Instead, the court ruled on Alegre's objections at trial as the evidence was introduced. Rather than excluding all evidence on a claim, the court excluded evidence of the specific loan commitment by Sonoma National Bank, the SBA approval, and the testimony about them. The court stated: "I grant the motion excluding Rubin Dobbs and Scott Dykstra's testimony insofar as it relates to the granting of the loan reflected in Exhibit 28 [loan commitment letter], TTT, UUU [loan applications], and I think that was all that that related to." After the ruling, Clement's counsel conferred with his clients and stated: "we believe that there is no evidence of our financial ability to perform other than the loan commitment that is shown in Exhibit 28 and the associated SBA venture [exh. No. 29]." Hence, it was plaintiffs' counsel who determined that, based upon the trial court's ruling, plaintiffs had no other evidence to support their assertion that they were financially able to purchase the property. The court never made a ruling as a matter of law, but exercised its discretion to sustain objections to the particular evidence as it was presented at trial. Thus, the heightened standard of review does not apply.
The question, then, is whether the trial court abused its discretion in excluding evidence of and testimony regarding the Sonoma National Bank loan commitment letter and the SBA approval.
II. The Trial Court Did Not Abuse Its Discretion in Sustaining Defendants' Objections to Evidence of the Loan Commitment and SBA Approval A. Exclusion of evidence of the loan commitment
Plaintiffs contend that the trial court abused its discretion in excluding evidence of the loan commitment, the SBA approval, and related testimony. They argue that the loan commitment and down payment established their ability to perform as a matter of law. We disagree with plaintiffs' assertion that they established their ability to pay "as a matter of law" by introducing this evidence. We being with basic principles.
To obtain specific performance of a contract to sell real property, the buyer must prove "not only that he was ready, willing and able to perform at the time the contract was entered into but that he continued ready, willing and able to perform at the time suit was filed and during the prosecution of the specific performance action." (C. Robert Nattress & Associates v. CIDCO (1986) 184 Cal.App.3d 55, 64; e.g., Behniwal v. Mix (2005) 133 Cal.App.4th 1027, 1044 (Behniwal); Ninety Nine Investments, Ltd. v. Overseas Courier Services (Singapore) Private, Ltd. (2003) 113 Cal.App.4th 1118, 1126 (Ninety Nine Investments); Greenwald and Asimow, Cal. Practice Guide: Real Property Transactions (2011) ¶11:240, p. 11-52.7 (Greenwald and Asimow).) Although the seller's repudiation excuses tender of payment by the buyer, it does not excuse the buyer from proving the essential element that the buyer was and is ready, willing, and able to perform. (Buckmaster v. Bertram (1921) 186 Cal. 673, 677-678; Am-Cal Investment Co. v. Sharlyn Estates, Inc. (1967) 255 Cal.App.2d 526, 545-546 (Am-Cal Investment Co.)
Case authorities discussing the evidence required to show a buyer is ready, willing, and able to perform conclude that what proof is required depends on all of the surrounding circumstances. (Behniwal, supra, 133 Cal.App.4th at pp. 1044-1045; Henry v. Sharma (1984) 154 Cal.App.3d 665, 672 (Henry).) Ability to perform may be shown by loan commitments, liquid assets, and the like. (Henry, at p. 671.) Whether a buyer is ready, willing, and able to perform is a question of fact. (Id. at p. 670; Am-Cal Investment Co., supra, 255 Cal.App.2d at p. 539.)
In cases where the buyer's proof of its ability rests upon arrangements it had made to borrow the required funds, several cases have indicated that the buyer must show its lender was legally bound to advance the funds and had the financial ability to do so. (Am-Cal. Investment Co., supra, 255 Cal.App.2d at pp. 539-540; accord, C. Robert Nattress & Associates v. CIDCO, supra, 184 Cal.App.3d 55, 65; see also Greenwald and Asimow, supra, ¶11:243, pp. 11-52.8 to 11-53.) However, more recent cases have concluded the need for the borrower to show it has a legally binding loan agreement is not an "iron-clad rule." (Henry, supra, 154 Cal.App.3d at p. 672; accord, Behniwal, supra, 133 Cal.App.4th at p. 1045; WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702, 1716; Greenwald and Asimow, supra, at ¶ 11:243, pp. 11-52.8 to 11-53.) These and other cases have accepted evidence of conditional loan commitments as evincing ability to perform in appropriate circumstances.
In Henry, supra, 154 Cal.App.3d at pages 670-672, the trial court found that the purchasers were ready, willing, and able to pay for the property and the appellate court affirmed, finding substantial evidence supported the trial court's finding. The buyers had intended to pay a portion of the purchase price with their own funds, and to obtain the balance from an institutional lender. There was evidence they had received oral and written approval for the loan. The Court of Appeal held: "We believe the evidence supports the trial court's finding that the buyers had the ability to pay in the sense that they „ "commanded resources upon which [they] could obtain the requisite credit." ' [Citations.] Both buyers were employed. They owned a home which they had on the market at the time they contracted to buy the property at issue here. They proceeded to sell that home and realized $26,500, from the sale. In addition, buyers owned a six-unit apartment house and a duplex in Los Angeles. When the deal at issue here fell through, buyers purchased another home on almost identical terms to those in the instant transaction. From this evidence the trial court could reasonably conclude the buyers had the ability to perform their end of the bargain." (Id. at p. 672.) The court rejected the "iron-clad rule . . . that plaintiffs could only establish ability to perform by proving they had obtained a legally enforceable loan contract. Rather, the proof needed to show ability depends on all the surrounding circumstances." (Ibid.)
In Behniwal, supra, 133 Cal.App.4th 1027, the appellate court reversed the trial court's judgment in favor of the sellers in the buyers' action for specific performance. The trial court had concluded that no contract had been formed and the sellers had not ratified their agent's action in writing. (Id. at p. 1030.) The Court of Appeal reversed, holding that there was a "deal that satisfied the statute of frauds" and the buyers' signatures ratified the actions of their agents. (Id. at pp. 1030, 1039-1042.) Therefore, the court held the trial court should have granted the buyers' request for specific performance. (Id. at p. 1042.)
As described by the appellate court, "[d]espite an obvious inclination based on its findings to grant the [buyers'] request for specific performance, the trial court felt compelled to deny the request. Basically, the trial court concluded, as matters of law, (1) no contract had been formed because a paragraph in a counteroffer made by the sellers' agent had not been re-signed as contemplated by the counteroffer itself; and (2) there was no writing on the sellers' part ratifying their agent's actions (including forgeries of their signatures on the offer, counteroffer and an addendum to the counteroffer)." (Behniwal, supra, 133 Cal.App.4th at p. 1030; see id. at p. 1046.)
The sellers in Behniwal, supra, 133 Cal.App.4th 1027, argued that even if a contract existed, there was no evidence the buyers had the ability to pay. There was evidence that, initially, the buyers had money for the down payment and had secured preapproval for a loan for the balance. But they later spent some of the down payment on attorney fees. In addition, their loan preapproval had expired. The buyers had then secured a loan from a relative for the down payment. The Court of Appeal held this was sufficient evidence the buyers were ready, willing, and able to meet their contract obligations: "In the present case, there was easily enough evidence to show that the [buyers] were ready, willing, and able to perform, independent of the financial fallout of the litigation. Primarily . . . they obtained a preapproval on a loan. Secondly, [they] had arranged with [a relative] to help with the deposit since they had spent their original savings for the deposit on attorney fees." (Id. at p. 1045.) Relying upon Henry, supra, 154 Cal.App.3d at page 672, Behniwal also rejected the sellers' assumption that the ability to complete the transaction could only be shown by the presence of a current lender, legally bound to give the buyers a loan. Rather, the proof needed depends on " 'all the surrounding circumstances.' [Citation.]" (Behniwal, at pp. 1044-1045.) Behniwal and Henry addressed the "structural problem of mandating that buyers must show a legally binding contract with a lender while the buyers are still in litigation. . . . [T]here is 'no purpose in requiring the buyers to bind themselves to a loan for which they have no immediate need. Moreover, we question whether a lender would make a firm commitment to loan money for the purchase of property the present owner refuses to sell.' [Citation.]" (Behniwal, at p. 1045.) Finally, the Behniwal court also observed that "the ability-to-perform problem is ultimately self-correcting. If the trial court orders specific performance, it is hardly going to hold the [sellers] in contempt for not selling to the [buyers] if the [buyers] ultimately can't come up with the money. And if [they] really can't come up with the money . . . then the [sellers] will get their wish and the property simply will not be sold to the [buyers]." (Id. at p. 1045, fn. omitted.)
We note that, in the instant case, the problem would not necessarily be "self-correcting." (Behniwal, supra, 133 Cal.App.4th at p. 1045.) Plaintiffs assert that should this court reverse and order the trial court to grant specific performance or rescission, the trial court should order the transfer of the Wilbur property to the plaintiffs and the matter should then return to the bankruptcy court for that court to determine how much, if any, of the purchase price should be paid and to what extent Alegre should be treated as any other creditor. We hazard no opinion as to the accuracy of plaintiffs' suggestion.
Plaintiffs attempt to refashion the foregoing rejection of "the idea that a legally binding loan agreement is an absolute prerequisite for specific performance" (Behniwal, supra, 133 Cal.App.4th at p. 1045, italics added) into a rule that a nonbinding loan commitment is necessarily admissible as a matter of law. Although these cases have held that conditional loan commitments can satisfy the obligation of a purchaser seeking specific performance to show ability to perform, none stands for the propositions advanced by plaintiffs here: that such commitments necessarily establish ability to perform and that once the conditional loan commitment has been introduced, the seller may not question the buyer's ability to satisfy the condition.
The cases recognize that the requirement that a buyer be ready, willing and able to perform is a question of fact for the trial court and what evidence the buyer requires to prove his ability to perform depends upon all the circumstances. In both Henry and Behniwal, the appellate courts expressly so stated. (Henry, supra, 154 Cal.App.3d at p. 672; Behniwal, supra, 133 Cal.App.4th at pp. 1044-1045.) Henry concluded that substantial evidence supported the trial court's findings that the buyers had the ability to perform their end of the bargain. (Henry, at p. 672.) Although the appellate court in Behniwal reversed the trial court's refusal to order specific performance, it repeatedly pointed out that the trial judge "might have preferred to grant the [buyer's] request for specific performance, but felt hamstrung by the need for a writing to ratify [the seller's agent's] signing of the contracts." (Id. at p. 1046.)
In Stratton v. Tejani (1982) 139 Cal.App.3d 204 (Stratton), the evidence showed the buyer satisfied the only condition on the loan—that he possess the funds to make the down payment following paying off a car loan. (Id. at p. 212.) The appellate court held that substantial evidence supported the trial court's finding that the buyers had the ability to perform. The buyers "had received a firm loan commitment from a financially capable lender. (See Am-Cal Investment Co. v. Sharlyn Estates, Inc., supra., 255 Cal.App.2d at pp. 539-540.)" (Stratton, at p. 212.) Furthermore, with approximately $44,600 in bank deposits, the buyers had ample funds with which to meet the conditions of the loan, payment of $36,000 for the down payment, and payoff of an auto loan of $7,800. (Stratton, at p. 212, citing Am-Cal Investment Co. v. Sharlyn Estates, Inc., at p. 545.)
A central issue on appeal in Stratton v. Tejani was whether the trial court properly extended escrow to a date three days later than that originally scheduled by the parties, at which time the buyers had the ability to perform. The Court of Appeal held there was substantial evidence to support the trial court's finding that the sellers' conduct in impeding the buyers' performance operated to excuse the buyers' performance on the original date escrow was to close and that the buyers had the ability to perform on the extended escrow date. (Stratton v. Tejani, supra, 139 Cal.App.3d at pp. 210-211.)
In Hutton v. Gliksberg (1982) 128 Cal.App.3d 240, no conditions remained to be fulfilled on the loan commitment. The sellers contended that buyers were in default because they did not deposit $400,000 cash, in addition to their other cash deposits, in escrow. The Court of Appeal termed the argument "absurd" where the trial court had found that an institutional lender was prepared to deliver loan funds to escrow immediately upon request, that this loan commitment constituted the equivalent of cash for purposes of measuring performance by the buyers, and that the buyers performed in a timely manner all acts required on their part. The Court of Appeal found the trial court's findings were "amply supported" by the evidence. (Id. at p. 247.)
In Ninety Nine Investments, supra, 113 Cal.App.4th 1118, the buyer had met all conditions required of him to fund the loan. The trial court found the seller had not met all conditions for closing escrow, but found that the seller's failure to deposit documents into escrow did not prevent the buyer from performing. The Court of Appeal reversed, holding the trial court's finding that the seller did not prevent the buyer's performance was not supported by substantial evidence. (Id. at pp. 1126-1127.) According to the appellate court, "[t]he evidence was uncontroverted that the loans could not fund and the escrows could not close by January 14 due to [the seller's] failure to comply with its escrow obligations." (Id. at p. 1129.) "[T]he loan officer in charge of the transaction, testified that there were certain conditions that had to be fulfilled prior to funding, as was the case in almost all loan approvals. But she also testified that as of the scheduled January 14 closing date, [the buyer] had fulfilled all of its loan conditions and had done nothing to prevent funding by that date, and that the only outstanding conditions were escrow obligations. According to [the loan officer], the loans could have funded on January 14, 2000, if the escrows had been ready to close." (Ibid.)
In none of these cases does it appear the seller was prevented from questioning the loan commitment or the ability of the buyer to comply with conditions of the loan commitment. The case before us is very different. The court recognized—and plaintiffs conceded at trial—that because of plaintiffs' refusal to disclose the financial information upon which the loan commitments were premised, Alegre would be unable to go behind the conditional loan commitment letter to cross-examine plaintiffs or their witnesses as to plaintiffs' financial ability to comply with the conditions of the loan.
That the discovery commissioner refused to compel plaintiffs to disclose their finances does not preclude Alegre from objecting to the admission of the loan commitment at trial. Nor does it preclude the trial court from exercising its discretion to exclude evidence. As with a pretrial ruling on a motion in limine, previous discovery rulings do not necessarily bind a court considering admission of evidence at trial. (See Rufo v. Simpson (2001) 86 Cal.App.4th 573, 608 ["ruling on a pretrial motion in limine is necessarily tentative because subsequent evidentiary developments may change the context"]; see also People v. Rodrigues (1994) 8 Cal.4th 1060, 1174-1175 [trial court retains discretion to make a different ruling as the evidence unfolds]; People v. Morris (1991) 53 Cal.3d 152, 189-190, disapproved on other grounds in People v. Stansbury (1995) 9 Cal.4th 824, 830, fn. 1 [same].)
Furthermore, although not essential to our analysis, it appears the discovery commissioner erred in refusing to compel plaintiffs to disclose financial information relevant to their ability to perform. In Gaggero v. Yura (2003) 108 Cal.App.4th 884, the buyer seeking specific performance of a property sale contract had refused to answer deposition questions about his financial ability to purchase the property on privacy grounds. The Court of Appeal observed that the buyer's "objection does not appear to have been well-taken, for [the buyer] may not refuse to divulge this specific financial information after putting his ability to purchase the . . . property directly at issue by the allegations in his complaint. [Citations.]" (Gaggero v. Yura, at p. 891.)
Nevertheless, the appellate court reversed a summary judgment for the seller, holding that the buyer's unjustified refusal to answer deposition questions about his condition did not in that case show that the buyer did not possess and could not reasonably obtain, needed evidence to satisfy this element of his claim. Unlike the case here, the seller in Gaggero had failed to move to compel a further response. (Gaggero v. Yura, supra, 108 Cal.App.4th at pp. 891-892.)
In support of his claim that the court abused its discretion in excluding the loan commitment letter and testimony that the bank had made such a commitment, plaintiffs rely upon the "basic rule that all relevant evidence is admissible, except as specifically provided by statute. (Evid. Code, §§ 210, 351.)" (Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1357 (Elkins).) Constitutional provisions are considered "statutes" under the Evidence Code. (Evid. Code, § 230 [" 'Statute' includes a treaty and a constitutional provision"]; Cal. Law Revision Com. com., 29B pt. 1A West's Ann. Evid. Code (1995 ed.) foll. § 351, p. 257; 1 Jefferson, Cal. Evidence Benchbook (4th ed. 2011) § 21.2, p. 346.) "Thus, for example, when a particular section is subject to any exceptions 'otherwise provided by statute,' exceptions provided by the Constitution also are applicable. [7 L.Rev.Comm. Reports 1 (1965).]" (Cal. Law Revision Com. com., 29A pt. 1A West's Ann. Evid. Code (1995 ed.) foll. § 230, p. 72.)
" 'One of the elements of a fair trial is the right to offer relevant and competent evidence on a material issue. Subject to such obvious qualifications as the court's power to restrict cumulative and rebuttal evidence [citation], and to exclude unduly prejudicial matter [citation], denial of this fundamental right is almost always considered reversible error. [Citations.]' (3 Witkin, Cal. Evidence (4th ed. 2000) Presentation at Trial, § 3, pp. 28-29, italics added.)" (Elkins, supra, 41 Cal.4th at p. 1357.) In Elkins, the Supreme Court held that a local superior court rule and trial scheduling order that required parties in marital dissolution proceedings to present their case by means of written declarations were inconsistent with the hearsay rule and various statutory provisions. The rule and order prevented litigants from having their " 'day in court,' including the opportunity to present all relevant, competent evidence on material issues . . . ." (Id. at p. 1345.)
No such blanket rule or order applied to prevent the parties in this case from presenting their case below. Rather, the court exercised its discretion to exclude the commitment letter and testimony about it in order to prevent plaintiffs from taking advantage of their own refusal to produce the financial information underpinning the conditional loan commitment, where admitting this evidence would deny Alegre his "opportunity to present all relevant, competent evidence" (Elkins, supra, 41 Cal.4th at p. 1345) on the material issue of plaintiffs' ability to perform, both by precluding access to any financial information Alegre might use to show plaintiffs in fact were unable to command sufficient financial resources to perform the purchase and by blocking Alegre's ability to conduct cross-examination as to whether this conditional loan commitment was secured through misrepresentations of plaintiffs' true financial condition. The court did so on the basis that failure to exclude this evidence in the circumstances would deny Alegre "due process" and would be fundamentally unfair.
The opportunity to conduct a meaningful cross-examination on plaintiffs' financial condition and their ability to perform was particularly important in the circumstances presented here. In June 2005, plaintiffs had been hit with a judgment for approximately $180,000 against MHCC in litigation over its failed attempt to purchase another property, and Clement testified he had borrowed money from his parents at 18 percent interest to pay off that judgment. (Clement also testified that loan was later made a gift to him by his mother.) Plaintiffs had previously been turned down for a loan by CIT in February 2006, because the "historical cash flow from business operations was not sufficient to repay the loan and other obligations." Counsel acknowledged that plaintiffs only had the ability to perform after the Sonoma National Bank loan was issued in March 2006, and that "[s]ome time after that, and I can't be precise about the time, the economy declined." The loan was conditioned, among other things, upon there being no "adverse change in credit, outstanding liabilities or employment" by the plaintiff borrowers, and correspondence from the lender to plaintiffs indicates that the lender was seeking more information from plaintiffs as late as April 18, 2006. Moreover, by the date of trial, the named purchaser of the property, MHCC, was in bankruptcy. Unlike the circumstances in any of the cases relied upon by plaintiffs, where conditional loan commitments or loan preapproval evidenced the buyer's ability to perform, the circumstances here raise considerable doubt as to plaintiffs' actual ability to perform. This made vigorous cross-examination regarding plaintiffs' financial condition and the accuracy of the information upon which the loan commitment was based critical.
The trial court did not sustain Alegre's objection to admission of the loan commitment letter, related redacted documents, and testimony about them on the ground that the loan commitment was not a legally binding commitment. Although initially accepting Alegre's argument that the loan commitment must be "legally binding," the court later revised its ruling to make clear that it was not relying upon the fact that the loan commitment was conditional. Rather, it excluded the evidence based upon its rejection of plaintiffs' argument that they were entitled to introduce the loan commitment letter and to prevent Alegre from inquiring into financial disclosures that resulted in that conditional loan commitment. The court determined that principles of fundamental "fairness" and "due process" required Alegre to have the opportunity to conduct meaningful cross-examination as to plaintiffs' ability to perform.
In the unusual circumstances presented, we conclude the trial court did not abuse its discretion in excluding evidence of the Sonoma National Bank loan commitment and related testimony. B. Statement of decision
Plaintiffs also criticize the court's determination in the statement of decision that "plaintiffs did not offer admissible evidence" to establish their ability to perform. They assert their evidence was "admissible," whether or not properly excluded, and that the language of the statement of decision ignores "the basic rule that all relevant evidence is admissible, except as specifically provided by statute." (Elkins supra, 41 Cal.4th 1337, 1357, citing Evid. Code, §§ 210, 351.) However, as we have determined that the court did not err in refusing to admit into evidence the loan commitment and related testimony on the ground that to do so would violate Alegre's due process right to cross-examination, we believe the court could properly term that evidence as not "admissible."
III. Rescission
Plaintiffs maintain that even if the court did not err in denying specific performance on the ground that plaintiffs had failed to demonstrate they were able to perform the contract, it erred in denying rescission of the Wilbur property sale on that ground. We disagree.
The trial court found for defendants on plaintiffs' rescission claim, stating that plaintiffs had "produced no substantial or admissible evidence that they made any valid tender to restore the purchase price to defendants or that they had the financial ability to do so at the time of the alleged rescission, or a reasonable time thereafter." Although the court erred in concluding that plaintiffs' failure to "tender" restoration of the purchase price to defendants precluded them from effectively rescinding the Wilbur property sale, nevertheless, substantial evidence supports its refusal to order rescission on the ground that plaintiffs failed to prove they had the financial ability to restore the purchase price to defendants at the time of rescission or at any reasonable time thereafter.
Rescission is a remedy that disaffirms the contract. (Civ. Code, § 1688 et seq.) This remedy assumes the contract was properly formed, but effectively extinguishes the contract ab initio as though it never came into existence; thereafter, its terms cease to be enforceable. (Greenwald and Asimow, supra, | 11:460, p. 11-87; NMSBPCSLDHB v. County of Fresno (2007) 152 Cal.App.4th 954, 959-960.) The ultimate purpose of rescission is restoration of the parties to their pre-contract status quo positions. Thus, in a real property purchase and sale transaction, a rescission normally requires the buyer to return the property (title) to the seller and the seller to return the funds received from the buyer. (Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1145-1146 ["seller must refund all payments received in connection with the sale" as "[s]uch recovery of the consideration exchanged is part of restitution"]; NMSBPCSLDHB, at pp. 959-960 [very definition of rescission is " 'to restore the parties to their former position' "]; Greenwald and Asimow, supra, at ¶ 11:500, p. 11-100,4; see 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 938, pp. 1032-1033.)
The party seeking rescission must "[r]estore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise, unless the latter is unable or positively refuses to do so." (Civ. Code, § 1691, italics added.) Hence, a formal offer to restore the contractual benefits received is not required where, as here, the other party positively refuses to return the property that is the subject of the rescission action. In addition, under the statute, the plaintiff's service of a pleading seeking rescission "shall be deemed" to be the requisite offer. (Civ. Code, § 1691; see Greenwald and Asimow, supra, at ¶ 11:501, p. 11-100.4.) Consequently, plaintiffs' offer to return the funds received from the sale of the Wilbur property was not required where they sought rescission in their complaint.
However, the trial court also found that plaintiffs were unable to return the funds received from Alegre for the purchase of the property. This finding is amply supported by the evidence and, in the circumstances, is sufficient to support the court's judgment denying rescission.
Plaintiffs argue that even if they could not restore the money Alegre paid for the Wilbur property, the court should still have granted rescission because in doing so the court may order whatever relief is necessary to "adjust the equities" between the parties to ensure restoration to the precontract status quo. (Civ. Code, § 1692; Runyan v. Pacific Air Industries, Inc (1970) 2 Cal.3d 304, 316 (Runyan); see Sharabianlou v. Karp, supra, 181 Cal.App.4th at p. 1144; Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534, 1553 ["trial court has full authority under . . . [Civil Code] section 1692 and . . . principles of equity to fashion a full and fair remedy in its judgment which takes into account and equitably addresses the respective rights and interests of all of the participants in" the transaction giving rise to rescission remedy]; Greenwald and Asimow, supra, at ¶ 11:505, p. 11-100.5.) "The goal is to reach an equitable result by returning the parties to the position they were in before the contract was entered into and avoiding unjust enrichment. Therefore, such additional relief may operate in favor of either or both parties. [Citations.]" (Greenwald and Asimow, supra, at ¶ 11:506, p. 11-100.6, first italics added, citing Runyan, at p. 316; Akin v. Certain Underwriters at Lloyd's London (2006) 140 Cal.App.4th 291, 298.)
That the trial court has the authority under the rescission statutes and principles of equity to fashion a "full and fair remedy," necessarily implies that it has the discretion to determine that equity requires it to reject rescission as a remedy in circumstances such as these where it could determine the remedy would be inequitable. Those circumstances include the following: There is no reasonable prospect that plaintiffs can restore to defendants the monetary consideration plaintiffs received for the Wilbur property. Further, plaintiffs have had the benefit of the use of much of the property rent free for years following sale of the property to Alegre and received rents from another tenant during that time. Moreover, a rescission judgment would likely mean that the property would become part of the bankruptcy estate such that Alegre might never receive restoration of its consideration. Nor in this case would a judgment making restoration of consideration a condition of the judgment necessarily restore the equities. (See Civ. Code, §§ 1692, 1693.) Plaintiffs themselves urge that the bankruptcy court in the pending Chapter 11 reorganization is the "appropriate forum to adjust and implement the equities," including the determination of how much money MHCC would have to pay Alegre.
As plaintiffs point out, the fact that the parties cannot be restored to the exact status quo ante will not prevent a court of equity from granting rescission. However, the purpose of the exercise of the court's equitable powers is to "grant such relief as will achieve substantial justice under the circumstances of the case . . . ." (Snelson v. Ondulando Highlands Corp. (1970) 5 Cal.App.3d 243, 258, citing Civ. Code § 1692, among others.) Given these circumstances of this case, we cannot say the court abused its discretion in finding for Alegre on the rescission cause of action. Substantial evidence supports that finding.
IV. Attorney Fees
A. Attorney fee award against Michael Clement
Plaintiffs contend the trial court improperly held Clement liable individually for all attorney fees and costs, despite his assignment of his interests in the litigation to MHCC on the eve of trial. They argue that, having assigned all of his interests to MHCC pursuant to section 368.5, Clement had no further standing as an individual in the action and the court erred in awarding attorney fees against him. They do not contest the award of attorney fees to Alegre pursuant to Civil Code section 1717, or the amount of the award.
Section 368.5 provides: "An action or proceeding does not abate by the transfer of an interest in the action or proceeding or by any other transfer of an interest. The action or proceeding may be continued in the name of the original party, or the court may allow the person to whom the transfer is made to be substituted in the action or proceeding."
At the outset of trial, Alegre advised the court that he had received that morning a document filed by plaintiffs providing notice that before trial, Clement had assigned all of his claims in the action to coplaintiff MHCC. Alegre therefore moved to dismiss the first amended complaint as to Clement individually. Relying upon section 368.5, plaintiffs' counsel argued against dismissing the action as to Clement. Rather, he argued that the action was transferred to MHCC. Counsel stated his willingness to continue the action in the name of Clement individually as well as MHCC, or to substitute MHCC in Clement's stead. Plaintiffs' counsel told the court candidly that "I think we're all talking about the same issue without mentioning it, and that is a judgment of dismissal carries with it the issue of costs of suit, and that I think is the problem." The trial court repeatedly asked counsel how plaintiffs wished to proceed—dismissing Clement individually from the action or allowing the action to proceed in his name. Plaintiffs maintained that, under section 368.5, they did not have to do anything. The action could continue in his name. The court asked whether counsel was saying "you don't want to make an election, you just want to leave the pleadings as they are? Is that what I'm understanding you to say?" Counsel answered, "For now, yes." Whereupon, the court denied Alegre's motion for a judgment of dismissal against Clement individually.
The court expressed its concern that "the problem with your argument is that you can then have back and forth transfers forever, right? You could just have the passing of the ball to some other entity and then back again to the original person without end . . . ."
The court specifically advised counsel that, "today you're objecting to and not agreeing to dismiss Mr. Clement personally. You're saying that under 368.5 you're wanting to maintain him in the case so—
"MR. GOLDSTEIN: Only in name.
"THE COURT: Assuming I granted that when we come later at the end of the trial to the question of judgment and costs, that's a factor that you're going to have to deal with, because you wouldn't stipulate today following the assignment to have him dismissed."
The judgment in favor of Alegre entered by the court provided, "Defendants are to recover costs and attorney fees." In its October 22, 2009 order setting attorney fees, the trial court ordered Alegre "shall recover attorney fees from Michael H. Clement in the amount of $816,683.80." The court granted in part and denied in part MHCC's motion to tax costs, reducing costs by approximately $4,000 for a cost award of $41,544.67.
As stated in Johnson v. County of Fresno (2003) 111 Cal.App.4th 1087, 1096: "An assignment carries with it all the rights of the assignor. [Citations.] 'The assignment merely transfers the interest of the assignor. The assignee "stands in the shoes" of the assignor, taking his rights and remedies, subject to any defenses which the obligor has against the assignor prior to notice of the assignment.' [Citation.] Once a claim has been assigned, the assignee is the owner and has the right to sue on it. [Citation]; Code Civ. Proc., § 368.5 [action or proceeding does not abate by the transfer of an interest].) In fact, once the transfer has been made, the assignor lacks standing to sue on the claim. [Citation.]"
However, it is also the case that: "Where the subject matter of the assignment (e.g., a bilateral contract) involves reciprocal rights and duties, the assignor may transfer the benefits, i.e., the assignor may transfer his or her rights, but cannot escape the burden of his or her obligation by a mere assignment. The assignor still remains liable to the promisee. Even if the assignee assumes the obligation, i.e., agrees to perform it, the assignor still remains secondarily liable as a surety or guarantor, unless the promisee releases him or her or the parties execute a complete novation. [Citations.]" (1 Witkin, Summary of Cal. Law, supra, Contracts, § 730, p. 815.) Consequently, the assignment of Clement's rights to his wholly-owned corporation would not suffice to free him from his attorney fee obligations to the prevailing defendants.
Plaintiffs rely upon Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265 (Heppler), Erickson v. R.E.M. Concepts, Inc. (2005) 126 Cal.App.4th 1073, 1087 (Erickson), Exarhos v. Exarhos (2008) 159 Cal.App.4th 898 (Exarhos), and California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598 (California Wholesale), for the proposition that the trial court should have awarded attorney fees solely against the assignee, MHCC, rather than against Clement individually. Plaintiffs reason that, after the assignment, Clement remained in the action in name only and the corporation, rather than Clement individually, would have been entitled to attorney fees based on the contract had plaintiffs prevailed at trial.
Plaintiffs overlook the fact that Heppler, Erickson and Exarhos affirmed the trial court's conclusion that the plaintiff assignee was required to pay attorney fees to the prevailing defendants. As Heppler explained with respect to the award of attorney fees: "When a trial court has resolved a disputed factual issue, an appellate court reviews the ruling according to the substantial evidence rule. The trial court's resolution of the factual issue must be affirmed if it is supported by substantial evidence. [Citation.] We look at the evidence in support of the trial court's finding, resolve all conflicts in favor of the respondent and indulge in all legitimate and reasonable inferences to uphold the finding. Substantial evidence supports the court's finding." (Id. at p. 1290.) In affirming the trial court's award of attorney fees to the defendant against the successor plaintiff, the appellate court in Exarhos, supra, 159 Cal.App.4th at page 906, also observed, "[i]n the context of an assignment of contractual rights, there is the additional question of whether any attorney fee obligations fall within the scope of the assignment. (See Heppler, supra, 73 Cal.App.4th at p. 1289 . . . .)"
California Wholesale, supra, 96 Cal.App.4th 598, reversed a decision denying attorney fees to the prevailing party. The trial court had denied attorney fees on the ground that the plaintiff-assignee's action against the defendant arose out of a security agreement between the assignee and the assignor that did not contain an attorney fees provision. The appellate court held that the assignee's action against the defendant arose out of the subcontract between defendant and the assignor-subcontractor that did contain an attorney fees provision, that the subcontract had been assigned pursuant to the security agreement, and that plaintiff-assignee would clearly be entitled to attorney fees should it prevail in enforcing the contractual obligation against the defendant. (Id. at pp. 604-605, 608.)
None of the foregoing cases nor any other case cited or relied upon by plaintiffs holds that a plaintiff may evade its liability for attorney fees by assigning its rights in the litigation to its coplaintiff.
Here, the trial court determined that fees should be born by Michael Clement as an individual. That allocation is reasonable and supported by substantial evidence in the circumstances. The assignment itself does not reference attorney fees or other obligations of the assignor and the court was not required to imply such assignment was intended. Clement controlled the action from its inception to the eve of trial. As MHCC was wholly-owned by him, he continued to control plaintiffs' conduct of the litigation as a practical matter, despite continuing in the matter "in name only" following the assignment. Furthermore, the court's determination was reasonable in these circumstances where the assignment was by an individual to his wholly-owned and bankrupt corporation. As stated above, an assignor "cannot escape the burden of his or her obligation by a mere assignment." (1 Witkin, supra, at § 730, p. 815.) B. Allocation
Plaintiffs also assert that even if an award against Clement individually could be supported, the trial court erred in awarding all fees and costs against him. Plaintiffs recognize "[i]t is within the trial court's discretion to allocate awards of attorney fees." (Heppler, supra, 73 Cal.App.4th at p. 1297.) They argue that the trial court's failure to consider an allocation of attorney fees (presumably as between Clement and MHCC) constituted an abuse of discretion. They also argue that the court erred in failing to explain its decision to impose all the attorney fees and costs on Clement. We disagree.
Contrary to plaintiffs' assertion, the trial court was not required to issue a statement of decision in connection with its attorney fee award. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140; Maria P. v. Riles (1987) 43 Cal.3d 1281, 1294; 2 Pearl, Cal. Attorney Fee Awards (Cont.Ed.Bar 3d ed. Feb. 2011 update) § 11:65, pp. 696-697.) Plaintiff does not challenge Alegre's entitlement to fees under Civil Code section 1717, or the fee calculation, or the amount of fees awarded. Unlike Donahue v. Donahue (2010) 182 Cal.App.4th 259, 269, which plaintiffs characterize as reversing for failure to adequately explain rulings on attorney fees, the trial court here did not fail to sufficiently determine whether the amount of attorney fees claimed was for hours reasonably expended. (See id. at p. 271.) Nor should this trial court have apportioned fees between Clement and MHCC on the ground that the legal or factual issues involved could be segregated between the two. " 'The barrier to segregation for purposes of calculating fee awards is inextricably intertwined issues.' " (Heppler, supra, 73 Cal.App.4th at p. 1297 [finding the court erred in refusing to apportion attorney fees between plaintiffs and the sole losing contractor where much of the trial concerned issues not involving the sole losing subcontractor, but rather counsel preparation for and trial of issues involving three other prevailing party subcontractors].) On appeal, plaintiffs have failed to identify any legal or factual issues that were distinct as between Clement and MHCC.
We note the court did issue a tentative ruling finding that the case was "vigorously litigated by both sides" and that the fees sought were "reasonable." The court found it unnecessary "to allocate the fees amongst the defendants . . . ." It also stated that the "apportionment of fees to the issues that are stayed pending appeal or dismissed by defendants" was at issue. The court observed that Alegre's "apportionment seems reasonable under the circumstances but out of abundance of caution and to be even more conservative" it reduced the total sought in the motion by an additional 10 percent overall. In rejecting plaintiffs' request for a statement of decision, the court observed that "neither party contested the tentative ruling or sought clarity" and termed the request for a statement of decision "to be borderline frivolous as it is not based on any statute, rule of court or other basis."
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The court did not abuse its discretion in failing to allocate the attorney fees between Clement and MHCC.
DISPOSITION
The judgment is affirmed. Alegre is awarded his costs on this appeal.
Kline, P.J. We concur: Haerle, J. Richman, J.