Opinion
A153597
08-07-2020
ROBYN REYNOLDS et al., Plaintiffs and Appellants, v. CORY LAU, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco County Super. Ct. No. CGC-15-547285)
Following a jury trial in an owner move-in eviction dispute, the trial court entered judgment notwithstanding the verdict in favor of respondent Cory Lau and against his former tenants, appellants Robyn and Ian Reynolds. In an August 2019 opinion, this court affirmed the judgment in Reynolds v. Lau (2019) 39 Cal.App.5th 953 (Reynolds I). After the judgment was entered, and before Reynolds I was decided, respondent moved to recover his attorney fees and other litigation expenses as the prevailing party. The trial court awarded Lau $243,557 in attorney fees. Appellants contest the award. The trial court correctly concluded that respondent met his burden of establishing an entitlement to an award of reasonable attorney fees. Accordingly, we affirm.
We sometimes refer to appellants by their first name in the interest of clarity. No disrespect is intended.
FACTUAL AND PROCEDURAL BACKGROUND
As we described in Reynolds I, appellants challenged respondent's decision to initiate an owner move-in eviction under section 37.9 of the San Francisco Residential Rent Stabilization and Arbitration Ordinance (rent ordinance). (Reynolds I, supra, 39 Cal.App.5th at pp. 955-956.) Lau served appellants with an eviction notice in June 2015 after he and his then fiancée, Sofia Bayawa, decided to move into the apartment he had been renting to appellants, located at 456 Broadway. Respondent later filed an unlawful detainer action against appellants.
Section 37.9, subdivision (a)(8)(i) of the San Francisco Administrative Code permits the eviction of a tenant when "[t]he landlord seeks to recover possession in good faith, without ulterior reasons and with honest intent . . . [¶] . . . [f]or the landlord's use or occupancy as his or her principal residence for a period of at least 36 continuous months." All undesignated statutory references are to the San Francisco Administrative Code.
In August 2015, appellants filed the underlying wrongful eviction action against respondent and various other defendants who are not parties to this appeal. The lawsuit alleged causes of action for declaratory relief, negligence, breach of the covenant of quiet enjoyment, violation of sections 37.9 and 37.10B (tenant harassment) of the rent ordinance, intentional infliction of emotional distress, intentional misrepresentation, and negligent misrepresentation. The parties settled the unlawful detainer action in November 2015. The settlement agreement included a clause stating that the parties would bear their own attorney fees and costs.
In March 2017, the jury found in favor of appellants on their claim for violation of section 37.9. The jury returned a defense verdict on the remaining causes of action and awarded $223,858 in damages for wrongful eviction. After the damages were trebled as required under the rent ordinance, judgment was entered against respondent in the amount of $671,574.
Respondent moved for a new trial and for judgment notwithstanding the verdict. On May 31, 2017, the trial court granted the motion for judgment notwithstanding the verdict and entered judgment in favor of respondent. The court authorized Lau, as the prevailing party, to recover costs of suit pursuant to Code of Civil Procedure section 1032. Respondent filed a memorandum of costs for $47,058. After appellants moved to strike/tax respondent's memorandum of costs, the trial court awarded him $42,871 in costs.
Appellants do not challenge the award of costs in their appeal.
Respondent moved to recover $255,925 in attorney fees incurred in his defense of the action. Appellants filed a motion to stay the trial court proceedings pending their appeal of the judgment. In their opposition to respondent's attorney fee motion, they asserted that respondent was improperly seeking fees that he had waived as part of the parties' unlawful detainer settlement agreement. In a supplemental opposition, they argued that respondent's fees should be reduced because defendants are not authorized to recover fees in connection with tenant harassment claims brought under section 37.10B of the rent ordinance.
On December 20, 2017, the trial court affirmed its tentative decision to award respondent a total of $243,557 in attorney fees as the prevailing party under the rent ordinance. The court found he could recover fees incurred in this wrongful eviction case while the unlawful detainer case was pending. It also concluded that appellants' tenant harassment claim did not impact Lau's entitlement to fees under section 37.9 of the rent ordinance because the claim "did not involve any real expenditure of defense time in this case." This appeal followed.
DISCUSSION
A. Standard of Review
"Whether attorney fees may be awarded is a question of law, which we review de novo." (Dzwonkowski v. Spinella (2011) 200 Cal.App.4th 930, 934.) To the extent our analysis requires statutory interpretation, the de novo standard also applies. (Ramon v. County of Santa Clara (2009) 173 Cal.App.4th 915, 920.) We review the amount of an attorney fees award for abuse of discretion. (Dzwonkowski, at p. 934.) B. Financial Hardship
Section 37.9, subdivision (f) of the rent ordinance describes the relief that may be sought in a legal proceeding instituted on the basis of an owner move-in eviction. With respect to attorney fees, the provision states: "The prevailing party shall be entitled to reasonable attorney's fees and costs pursuant to order of the court." Appellants contend that the trial court was required to address the financial hardship the attorney fee award would cause them. Respondent asserts they have forfeited this argument by not raising it in the trial court. We agree that the claim has been forfeited. Even had appellants preserved it, they rely on inapposite authorities concerning the discretionary award of attorney fees under different statutory schemes.
Appellants made no mention of financial hardship in their initial opposition to respondent's attorney fee motion. Instead, they raised four other arguments, asserting that the motion was untimely, that it should be stayed while the appeal was pending, that respondent was not the prevailing party, and that the amount of fees requested was unreasonable and excessive because respondent included time spent on the prior unlawful detainer case.
In a supplemental opposition, appellants filed a one-page declaration from Robyn which stated that "having a judgment of more than $200,000 against me would a [sic] significant hardship for me, as this judgment would negatively impact my finance and my credit report, and that would make my life more difficult." She claimed a judgment would likely prevent her from obtaining a new apartment, and stated that she had already "endured significant financial hardship in the form of moving costs and increased rent." She identified herself as an executive assistant and Ian as a bartender who had "lost over 10 days of paid work as a result of the trial." (3 CT 588)~ While the declaration alluded to these financial concerns, the pleading was included "to further support their position that the issue of fees should be decided after [their] appeal has been resolved."
Similarly, in their reply to respondent's opposition to their motion to stay trial court proceedings, appellants averred that "[a] judgment for fees of over $250,000 against Plaintiffs would be a significant hardship for Plaintiffs. Such judgment would negatively impact Plaintiffs' credit score and make their lives more difficult in the meantime." They stated in a supplemental opposition that they "would be significantly prejudiced since they would have a judgment against them for $250,000 which invariably affect[s] their credit and cause[s] them significant difficulty," and that "a judgment of over $250,000 would cause significant personal and financial hardship to them." They did not make these same arguments in their opposition to respondent's motion for attorney fees.
The motion to stay was not litigated, as the parties stipulated to delaying the filing of a formal order or an amended judgment pending the result of appellants' initial appeal of the merits.
While these declarations make general mention of appellants' concern that a judgment exceeding $200,000 would pose significant financial hardship, appellants did not ask the trial court to make findings concerning their ability to pay respondent's attorney fees, nor did they submit any evidence of their gross income, net income, monthly expenses, assets, or any other information in support of a claim that they would suffer financial hardship. Moreover, at no time during the hearing on the motion for attorney fees did appellants challenge the award by asserting it would result in financial hardship should respondent prevail on appeal. Accordingly, we conclude that the trial court did not err in failing to address the issue of appellants' ability to pay the judgment because they did not adequately present it below. "It is axiomatic that arguments not asserted below are waived and will not be considered for the first time on appeal." (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3.)
Even if the argument had not been forfeited, we are not persuaded that the trial court was under a sua sponte obligation to address the financial impact of the fee award on appellants. Appellants rely on Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro (2001) 91 Cal.App.4th 859 (Rosenman) and related authorities for the proposition that a plaintiff's ability to pay fees must be given consideration by the trial court before exercising its discretion to award attorney fees, and that a fee award " ' "should not subject the plaintiff to financial ruin." ' " (Id. at pp. 868-869, fn. 42.).
Rosenman involved a discretionary attorney fee award to the prevailing defendant in a discrimination suit brought under the Fair Employment and Housing Act (FEHA). (Rosenman, supra, 91 Cal.App.4th at p. 861.) Government Code section 12965, subdivision (b) of the FEHA provides in relevant part: "In civil actions brought under this section, the court, in its discretion, may award to the prevailing party . . . reasonable attorney's fees and costs, . . . except that . . . a prevailing defendant shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so." (See Villanueva v. City of Colton (2008) 160 Cal.App.4th 1188, 1204 ["we are confident that a trial court has an obligation to consider a losing party's financial status before assessing attorney fees under the FEHA"]; Patton v. County of Kings (9th Cir. 1988) 857 F.2d 1379, 1382 [district courts must consider plaintiff's financial condition before awarding discretionary attorney fees to a prevailing defendant in a federal civil rights action under 42 U.S.C. § 1983].)
The instant case is not a FEHA or a federal civil rights case, and appellants do not explain how the cases they rely upon pertain to claims brought under the rent ordinance. Under section 37.9, subdivision (f) of the rent ordinance, "[t]he prevailing party shall be entitled to reasonable attorney's fees and costs pursuant to order of the court." (Italics added). Unlike the FEHA, which permits a prevailing defendant to recover attorney fees only upon a finding that the underlying suit was frivolous or groundless, and then at the trial court's discretion, section 37.9, subdivision (f) provides for mandatory attorney fees to the prevailing party. While the FEHA's fee-shifting provision and public policy considerations may require inquiry into a plaintiff's ability to pay before a defendant is awarded discretionary fees and costs, appellants offer no explanation why those requirements would apply here. The burden is on appellants to affirmatively demonstrate error. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564 (Denham).) We find no error in the trial court's failure to make express findings concerning appellants' financial condition prior to awarding respondent his attorney fees under section 37.9, subdivision (f). C. Section 37.10B's Unilateral Attorney Fee Provision
Section 37.10B, subdivision (c)(5) provides that in a suit for violation of the rent ordinance's tenant harassment provisions, "a prevailing plaintiff shall be entitled to reasonable attorney's fees and costs pursuant to order of the court." Appellants contend that the trial court wrongfully failed to deduct attorney fees for time respondent's counsel spent addressing the section 37.10B tenant harassment claim. They also argue that section 37.10B, subdivision (c)(5), precluded an award of fees to respondent under section 37.9, subdivision (f) to the extent the two rent ordinance claims were inextricably intertwined. The trial court did not allocate any of respondent's attorney fees towards the section 37.10B claim.
"Where fees are authorized for some causes of action in a complaint but not for others, allocation is a matter within the trial court's discretion. [Citation.] A trial court's exercise of discretion is abused only when its ruling ' " ' "exceeds the bounds of reason, all of the circumstances before it being considered." ' " ' " (Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1604.) " ' "The burden is on the party complaining to establish an abuse of discretion, and unless a clear case of abuse is shown and unless there has been a miscarriage of justice a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power." ' " (Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 449, quoting Denham, supra, 2 Cal.3d at p. 566.)
Section 37.10B, subdivision (c)(5), is a "unilateral fee-shifting provision" that does not permit a prevailing defendant to recover attorney fees. (See Carver v. Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 498, 503-504 (Carver).) Such nonreciprocal provisions "are created by the Legislature as a deliberate stratagem to encourage more effective enforcement of some important public policy." (Wood v. Santa Monica Escrow Co. (2007) 151 Cal.App.4th 1186, 1191 (Wood); see Carver, at p. 504.) "The statutory language authorizing fee awards only to prevailing plaintiffs reflects a determination that prevailing defendants should not receive a fee award for hours spent defending such claims." (Turner v. Association of American Medical Colleges (2011) 193 Cal.App.4th 1047, 1060 (Turner).)
When there is "inextricable overlap" between claims subject to a unilateral attorney fees provision and claims for which a prevailing defendant ordinarily would be able to recover attorney fees, courts have held that the prevailing defendant may not be awarded fees. (See Turner, supra, 193 Cal.App.4th at p. 1071 [prevailing defendant could not recover bilateral attorney fees under Disabled Persons Act where such recovery conflicted with unilateral attorney fee provisions of Unruh Civil Rights Act]; Carver, supra, 119 Cal.App.4th at p. 504 [prevailing defendant could not recover fees under contractual fee shifting provision where such claims were inextricably intertwined with unilateral fee provision for antitrust claims]; Wood, supra, 151 Cal.App.4th at p. 1191 [bilateral fees for tort claims not recoverable where a conflict exists with unilateral fee-shifting provision for elder abuse claims].)
Appellants argue that the same considerations in Turner should preclude respondent from recovering some or all of his attorney fees because section 37.10B was "enacted as additional protections were necessary to prevent wrongful acts meant to displace tenants." Appellants' reliance on Turner falls short for several reasons. In the first place, their tenant harassment claim under section 37.10B is derivative of their owner move-in eviction claim under section 37.9. Section 37.10B, entitled "Tenant Harassment," prohibits a landlord from engaging in specified acts of "bad faith" conduct, such as failing to provide required housing services, repairs and maintenance, attempting to influence a tenant to vacate a rental unit through fraud, intimidation or coercion, threatening a tenant with physical harm, or interfering with a tenant's privacy. (§ 37.10B, subds. (a)(1), (2), (3), (5), (6), (8), (13), (14).) Section 37.10B was added to the rent ordinance to prevent tenant harassment such as intimidation, coercion, and other bad faith acts undertaken to cause a tenant to vacate a rental unit.
However, appellants did not allege that Lau committed any of these acts in their underlying complaint. Rather, their complaint asserted that "[b]y performing this false owner move in [Lau] interfered with Plaintiffs' quiet enjoyment and where [Lau's] acts caused the Plaintiffs severe stress." While appellants reference provisions concerning the failure to provide housing services and engaging in conduct likely to disturb a tenant's peace and comfort (§ 37.10B, subds. (a)(1) & (a)(15)), they do not cite any portion of the record showing that they alleged in their complaint or offered evidence at trial other acts of tenant harassment. At oral argument, appellants' counsel asserted that the tenant harassment claim was also based on disruptive parties staged by another tenant's Airbnb short-term rentals. It is questionable whether such a claim is even cognizable under section 37.10B because there was no evidence that Lau had any involvement with these parties.
In any event, appellants also relied on the short-term rental activity to support several related claims, including wrongful eviction and breach of the covenant of quiet enjoyment. (See Reynolds I, supra, 39 Cal.App.5th at pp. 968-969.) "[A] plaintiff's joinder of causes of action should not dilute its right to attorney's fees. Attorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed." (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130 [contractual fee entitlement]; see Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133 [statutory fee entitlement].)
In addition, the record discloses that very little time was devoted by respondent's counsel to the section 37.10B claim. Appellants' opening brief reproduces 13 time entries prepared by respondent's counsel that reflect time spent on the section 37.10B claim. Respondent points out that those 13 entries total six hours out of 1,396 hours respondent's counsel billed to the litigation. Under the circumstances, we cannot conclude that the trial abused its discretion in determining that the harassment claim did not involve any real expenditure of defense time in this case.
In sum, there is no evidence that the section 37.10B tenant harassment claim played any significant or independent role in the litigation. Appellants' tenant harassment claim was based on an alleged failure to follow the requirements for a valid owner move-in eviction under section 37.9, subdivision (a)(8). Since the principal cause of action in this litigation was the owner move-in eviction, we find no abuse of discretion in the trial court's award of attorney fees to respondent as the prevailing party under the bilateral fee award provision of section 37.9, subdivision (f). D. Fees Incurred During Unlawful Detainer Action
Appellants next contend that respondent's attorney fee award should be reduced by $8,833—the amount respondent's litigation counsel billed for attending Lau's and Bayawa's depositions in the unlawful detainer action—because the settlement agreement in the unlawful detainer case provided that the parties would bear their own attorney fees and costs in that action. Respondent attorney billed 7.5 hours for meeting with Lau and Bayawa before their depositions and for travel and attendance at the depositions.
In its ruling, the trial court accepted respondent's argument that this time was properly billed and recoverable because Lau's and Bayawa's testimony would be admissible against Lau in the underlying lawsuit, even though the depositions were taken in the unlawful detainer action. The court stated: "The contention that attorney for defendant cannot recover for certain fees it incurred while the unlawful detainer was pending is rejected based on the evidence supplied by Defendant that counsel was associated in at the unlawful detainer stage for purposes of representation of Defendant in the subsequent proceedings for treble damages brought by the Plaintiff pursuant to [section] 37.9(a)(8)."
Appellants argue the trial court's reasoning contravenes the parties' settlement agreement, asserting that if respondent had wanted to preserve the time "he could have sought a carve out for that time" in the contract. They note that litigation counsel associated into the unlawful detainer matter and participated as Lau's attorney. Respondent counters that the challenged fees were included when his insurer was billed for Lau's fees as a part of this lawsuit. He also notes that counsel did not bill Lau for any legal work in prosecuting the unlawful detainer action.
We find no abuse of discretion. Our high court has recognized that " '[a]ttorney fees incurred in one action may be considered necessary litigation costs in another.' " (Conservatorship of McQueen (2014) 59 Cal.4th 602, 613.) While the parties agreed to pay for their own attorneys in the unlawful detainer action, the depositions were also relevant to the present case. There is no suggestion that appellants agreed to refrain from using Lau's and Bayawa's deposition testimony from the unlawful detainer case to impeach them in this wrongful eviction case. Accordingly, the challenged attorney fees were incurred in the underlying case as a necessary litigation expense and may be recovered notwithstanding the parties' unlawful detainer settlement agreement. E. Additional Findings Argument is Forfeited
Finally, appellants claim that the trial court made incorrect statements of law when it declared that Lau was the prevailing party under Code of Civil Procedure section 1032 when it referenced Civil Code section 1717, the code section that applies to contractual fee claims. They do not argue that Lau is not the prevailing party for purposes of awarding attorney fees. Instead, they merely state that the court erred in citing to Code of Civil Procedure section 1032 because "costs are treated differently than attorney fees." As to the trial court's reference to Civil Code section 1717, they claim the court erred because that section "applies to contractual fee claims and in this instance the trial court did not base its decision on the contract." It is unclear to what issue these arguments are directed, and we decline to speculate. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
DISPOSITION
The order is affirmed.
/s/_________
Sanchez, J. WE CONCUR: /s/_________
Margulies, Acting P. J. /s/_________
Banke, J.