Opinion
NOT TO BE PUBLISHED
San Francisco City and County Super. Ct. No. CGC-06-455065
Bruiniers, J.
These appeals present yet another chapter in a long-running saga over the ownership of certain real property bounded by Brewster, Joy, Holladay, and Esmeralda streets in the Bernal Heights neighborhood of San Francisco (the Property). There has been litigation relating to ownership of the Property in the San Francisco Superior Court extending for over 10 years and in this court for nearly that long. (Woo v. Lien (Oct. 2, 2002, A094960) [nonpub. opn.] review den. Dec. 18, 2002, S111311; Woo v. Lien (Oct. 3, 2002 A096145) [nonpub. opn.]; Shih v. Superior Court (June 13, 2005, A110431) [nonpub. order]; Woo v. Lien (Sept. 15, 2006, A113350) [nonpub. order]; Lien v. Lucky United Properties Investment, Inc. (2008) 163 Cal.App.4th 620 [appeal no. A117110]; Woo v. Lien (June 12, 2008, A114380) [nonpub. opn.]; Lucky United Properties Investment, Inc. v. Lien (June 16, 2008, A119134) [nonpub. order]; Shih v. Lee (Aug. 25, 2008, A120203) [nonpub. opn.]; Lien v. Lucky United Properties Investment, Inc. (Nov. 26, 2008, A118698/A120068) [nonpub. opn.; consolidation order Oct. 3, 2008]; Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125 [appeal no. A124965]; Shih v. Lien (A128525, app. pending).)
The instant action was brought by Salvio Street LLC (Salvio Street) to quiet title to the Property and to obtain declaratory relief. Salvio Street purchased the Property, in March 2006, from Lucky United Properties Investment, Inc. (Lucky United). Albert Lee (Lee) is an attorney who formerly represented two parties claiming ownership interests in the Property, Eric Lien (Lien) and Pi-Ching Yen (Yen). Lee now claims an interest in the Property by virtue of a fee agreement executed by Lien and Yen.
The trial court rendered judgment for Salvio Street and determined that Lee has no right, title, estate, lien, or interest in the Property. Lee appeals from that judgment (A122408).
Salvio Street was awarded its costs in the net amount of $8,190.05. Salvio Street also moved for its attorney fees, which the court denied. Lee filed a separate notice of appeal from the trial court’s order denying, in part, Lee’s motion to strike or tax costs (A123080). Salvio Street filed a cross-appeal with respect to the court’s order to the extent that it granted Lee’s motion (A123080). Salvio Street filed a separate notice of appeal from the postjudgment order denying attorney fees (A123080).
The appeals were consolidated for decision. With the exception of a minor adjustment to the cost award, we now affirm in all other respects. We further find that Salvio Street’s appeal from the attorney fees denial is frivolous, and we accordingly impose monetary sanctions.
I. Factual and Procedural Background
As noted, we have addressed the underlying dispute many times before. Our recitation of the underlying facts is largely taken from our prior opinion in Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068 (the 454501 Action), of which we have taken judicial notice, pursuant to Lee’s December 28, 2009 request and Salvio Street’s September 3, 2009 request. (Evid. Code, §§ 452, subd. (d), 459; Cal. Rules Court, rule 8.1115 (b)(1); Dunkin v. Boskey (2000) 82 Cal.App.4th 171, 180, fn. 4.) Accordingly, we grant Lee’s December 28, 2009 request for judicial notice and Salvio Street’s September 3, 2009 request for judicial notice.
Purchase of the Property
In late 1995 and early 1996, Ming Woo (Woo), Lien and Yen purchased the Property. For the sake of convenience, title was taken by Lucky United, a corporation owned solely by Woo. Under the agreement between Woo, Lien, and Yen (Woo-Lien-Yen Agreement), Woo would contribute $67,500 for a 37.5 percent share in the Property. Woo would loan $67,500 to Lien, which Lien would use to acquire his 37.5 percent share. Yen would contribute $45,000, which would entitle her to a 25 percent share. Woo, acting on behalf of Lucky United, signed a promissory note and deed of trust in favor of Yen. The deed of trust was recorded in February 1996.
The Property consists of 10 undeveloped contiguous lots and was offered for sale by the Resolution Trust Corporation. (Woo v. Lien, supra, A094960.)
The Woo-Lien-Yen Agreement gave Lien the right to sell the Property for an amount that exceeded a 25 percent annual return on the original purchase price, subject to a right of first refusal granted to Woo. The Woo-Lien-Yen Agreement also included an attorney fee provision. Between 1998 and mid-1999, several offers for the Property were received, including three offers from Christopher Cook. Woo, Lien, and Yen could not agree on a sale.
The 305809 Action
In August 1999, Woo and Lucky United sued Lien and Yen for breach of contract and other claims.
This action is referred to herein as the 305809 Action, which is a reference to the trial court case number.
In October 1999, Cook again offered to buy the Property. Lien and Yen accepted the offer and forwarded it to Woo asking that he accept it or exercise his right of first refusal. On December 13, 1999, Woo sent a letter through his attorney stating that he was exercising his right of first refusal. Lien and Yen did not believe Woo had validly exercised his first refusal right.
In January 2000, Lien and Yen, represented by Lee, filed a cross-complaint against Woo and Lucky United. Among other things, Lien and Yen’s cross-complaint sought a declaration that together they owned a 62.5 percent interest in the Property and asked that it be partitioned.
In March 2001, following a lengthy bench trial, the court [Judge Chaitin] issued a judgment in favor of Lien and Yen on all the causes of action alleged by Woo in his complaint, and in favor of Lien and Yen on all the causes of action alleged in their cross-complaint. Lien and Yen stated that they had recorded that judgment in April 2001.
Woo appealed. In September 2002, Lien, Yen, and Lee entered into a fee agreement, which provides: “[f]or the portion of their ownership interest in the Bernal Heights Property that exceeds $400,781.25, ... Lien and... Yen hereby conveys 40% of that excess portion to... Lee.”
Lee testified, at trial in the instant action, that no conveyance of the Property was made in September 2002, but that his interest in the Property matured in approximately May 2006, when he completed furnishing legal services to Lien and Yen.
On October 2, 2002, we affirmed the trial court judgment in part, reversed in part, and remanded for further proceedings. We affirmed the judgment in favor of Lien and Yen as to the first five causes of action alleged in Woo’s complaint. We also affirmed the trial court’s determination that before Woo’s exercise of his right of first refusal, Woo owned a 37.5 percent interest in the Property, Lien owned a 37.5 percent interest, and Yen owned a 25 percent interest. However, we reviewed the trial court’s legal conclusions de novo and reversed as to Woo’s sixth cause of action for declaratory relief, determining that Woo had effectively exercised his right of first refusal. We remanded for a new trial where Lien and Yen could present any evidence they might have to establish an affirmative defense to Woo’s exercise. We also reversed the trial court’s judgment in favor of Lien and Yen on their cross-complaint for partition, noting that the court’s ruling and the relief granted “were predicated on the determination that Woo did not validly exercise his right of first refusal. Because we conclude that that determination was erroneous, we necessarily reverse the trial court’s judgment for Lien and Yen and its order that the Property be partitioned.” (Woo v. Lien, supra, A094960.)
The case returned to the trial court for further proceedings. In November 2004, Lien and Yen recorded a lis pendens on the Property. Lucky United asked the court to expunge the lis pendens. The court (Judge Warren) agreed to do so and an order expunging the lis pendens was filed in October 2005. The order was recorded that same month.
A bench trial, before Judge Mellon, was conducted to determine whether Lien and Yen had any affirmative defenses to Woo’s exercise of his right of first refusal. On December 12, 2005, the trial court ruled that Lien and Yen had “failed utterly and completely” to established any affirmative defense, and entered judgment in favor of Woo on his sixth cause of action, confirming that he had effectively exercised his right of first refusal in December 1999. Consequently, and significantly for the issues before us, the court also ruled against Lien and Yen on their cross-complaint, including their cause of action for declaratory relief in which they sought to establish a continuing 62.5 percent interest in the Property, and their cause of action for partition. The court explained its ruling in its statement of decision as follows:
“The plaintiffs are accordingly entitled to the declaration determining, as the Court of Appeal held, that Woo properly exercised his right of first refusal. Given the Court of [Appeal’s] determination that the trial court’s ruling on the claims asserted in the cross-complaint and the relief the trial court granted on the cross-complaint each had to be reversed because that ruling and relief ‘were predicated on the determination that Woo did not validly exercise his right of first refusal, ’ the resolution now made of the Sixth Cause of Action of plaintiffs’ First Amended Complaint precludes any consideration by this court of the merits of any cause of action set forth in the cross-complaint.”
The court’s judgment included the following similar explanation:
“The Court of Appeal has previously affirmed the Judgment of [the] Superior Court in this action made on March 6, 2001 and filed and entered herein as to all causes of action other than the Sixth Cause of Action of Plaintiffs’ First Amended Complaint. The Court of Appeal stated as to the Cross-complaint of DEFENDANTS: ‘The trial court’s rulings on Lien and Yen’s claims, and the relief it granted, were predicated on the determination that Woo did not validly exercise his right of first refusal. Because we conclude that that determination was erroneous, we necessarily reverse the trial court’s judgment for Lien and Yen and its order that the property be partitioned.’ In light of this Court’s Judgment with respect to the Sixth Cause of Action of the First Amended Complaint and in accordance with [the] determination of the Court of Appeal affirming the prior Judgment with respect to all causes of action other than the Sixth Cause of Action of the First Amended Complaint and the quoted determination of the Court of Appeal with respect to the Cross-complaint, it is appropriate that this Court enter Judgment determining the disposition of the remainder of the First Amended Complaint and of the entire Cross-complaint. Good cause appearing, it is [¶] FURTHER ORDERED, ADJUDGED AND DECREED THAT PLAINTIFFS and each of the plaintiffs take nothing by reason of the allegations of the First, Second, Third, Fourth and Fifth Causes of Action of their First Amended Complaint; and that DEFENDANTS and each of the defendants take nothing by reason of anything alleged in their Cross-complaint.”
On April 5, 2006, the court [Judge Mellon] issued an order declaring Woo to be the prevailing party for purposes of recovering costs and attorney fees. Lien and Yen separately appealed both the judgment and the fee order. However, Lien and Yen then voluntarily abandoned their appeal from the judgment in August 2006. Thus, the 305809 court’s December 12, 2005 judgment became final.
Sometime in the spring of 2006, Lien and Yen hired new counsel and a substitution of attorneys was filed on June 1, 2006. Thus, Lee no longer served as Lien and Yen’s counsel at the time the appeal was abandoned.
The 454501 Action
In March 2006, Salvio Street obtained a grant deed for the Property from Lucky United, in exchange for $1.75 million.
In July 2006, undeterred by the prior judgment against them, Lien and Yen filed a new complaint claiming an equity interest in the Property. It named as defendants Lucky United, Chin Teh Shih (Shih), in her capacity as Trustee of the Woo Family 2000 Trust, and Salvio Street. Once again, Lien and Yen sought a declaration that together they owned a 62.5 percent interest in the Property and asked that it be partitioned.
Again, we refer to this action by its trial court case number, 454501.
Ming Woo was then deceased.
Lucky United, Salvio Street, and Shih moved for summary judgment arguing they were entitled to prevail as a matter of law because the December 12, 2005 judgment rejecting Lien and Yen’s cross-complaint was res judicata on the same ownership and partition claims that Lien and Yen were asserting in the current complaint. In addition, Salvio Street moved for summary judgment arguing it was entitled to prevail as a matter of law because it took title after the trial court had expunged the lis pendens that Lien and Yen filed, and, under Code of Civil Procedure section 405.61, a purchaser for value after an order of expungement takes without notice of any ownership claim of the proponent of the lis pendens.
All further statutory references are to the Code of Civil Procedure unless otherwise specified.
The trial court agreed with both arguments. Subsequently, Lucky United, Shih, and Salvio Street asked the court to award them the attorney fees they had spent in litigating the 454501 Action. They relied on attorney fee clauses contained in the original agreements between Woo, Lien, and Yen for acquisition of the Property. They also argued that “even if [Lien and Yen] really were, as they contend, seeking to enforce or interpret the [December 2005] judgment... [Lucky United, Shih, and Salvio Street] would still be entitled to attorneys’ fees under [section] 685.040....” The trial court rejected their request, ruling Lucky United, Shih, and Salvio Street were not entitled to fees.
Lien and Yen appealed the dismissal resulting from grant of the summary judgment motion. Lucky United, Shih, and Salvio Street filed a separate appeal from the court’s ruling rejecting their request for attorney fees. On November 26, 2008, we rejected the arguments advanced in both appeals and affirmed the judgment. On the issue of res judicata, we stated: “In the [454501 Action], Lien and Yen filed causes of action seeking a declaration that together, they owned a 62.5 percent interest in the Joy Street property and partition. Lien and Yen alleged the same causes of action in their prior cross-complaint. The court’s December 12, 2005 judgment rejecting Lien and Yen’s causes of action for declaratory relief and partition is both final, (Lien and Yen abandoned their appeal challenging it) and was on the merits. Indeed, prior to rejecting those causes of action, the court conducted not just one, but two trials. Finally, the parties against whom the doctrine is being asserted, Lien and Yen, were the same parties in the prior action. We agree with the trial court and conclude all the requirements for applying the doctrine of res judicata are present.” (Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068.)
We also concluded that Salvio Street had taken the property free and clear of any interest asserted by Lien and Yen. We observed: “Salvio Street purchased the property after Lucky United and Shih recorded a certified copy of the order expunging the lis pendens. Applying the plain language of... section 405.61, Salvio Street then took the property without ‘actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action, irrespective of whether [Lucky United] possessed actual knowledge....” (Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068.) Moreover, we held that Salvio Street owned the property free and clear of any interest Lien and Yen had asserted because, when the trial court rejected Lien and Yen’s earlier cross-complaint in the December 2005 judgment, the court effectively decreed that Lien and Yen did not possess their claimed 62.5 percent interest. “Lien and Yen have no interest pursuant to the trial court’s now final December 12, 2005 judgment rejecting Lien and Yen’s cross-complaint.” (Ibid., italics added.)
On the issue of fees, we stated: “whatever right to fees Lucky United, Shih, and Salvio Street may have possessed based on the original agreements that were signed by Woo, Lien, and Yen were merged into the now final December 12, 2005 judgment. That judgment ‘extinguish[ed] all further contractual rights, including the contractual attorney fees clause.’ [Citation.] Since there was no longer a valid contractual provision upon which a fee award under Civil Code section 1717 could be based, the court properly denied the request for fees. [¶]... [¶] Turning next to... section 685.040, that section states that a judgment creditor may recover ‘[a]ttorney’s fees incurred in enforcing a judgment’ but only if... ‘the underlying judgment includes an award of attorney’s fees to the judgment creditor....’ Here, on April 5, 2006, the trial court awarded Woo and Lucky United the fees they had spent to obtain the December 12, 2005 judgment. This court reversed that order on June 12, 2008. Thus, at the present time there is no fee award upon which an award of fees under... section [685.040] might be based.” (Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068.)
The Instant Action
On August 11, 2006, Salvio Street filed a complaint to quiet title and for declaratory relief. In its verified complaint, Salvio Street alleged that “[t]o the best of [its] knowledge, none of the thirteen lots in San Francisco Assessor’s Block Number 5577 have ever been surveyed or the subject of a legal description, including metes and bounds of such lot. [¶]... Accordingly, [Salvio Street] desires to establish legal metes and bounds of each and every lot contained in Block Number 5577....” Salvio Street also alleged that it “is the owner in fee simple of Lots 1, 2, 4, 5, 6, 8, 9, 10, 11 and 13 of Block 5577.”
Defaults were entered against all of the named defendants, with the exception of Washington Mutual Bank and the City and County of San Francisco who, respectively, disclaimed their interests or were dismissed.
On September 18, 2007, Lee, who was not a named party in the complaint, filed an answer, in which he claimed an interest in the Property. Lee alleged that Salvio Street was not a bona fide purchaser of 100 percent of the Property because Lucky United was not the 100 percent owner of the Property and could not sell such an interest. Lee also alleged: “In or about late 1995 to early 1996, ... Lien and... Yen purchased a 62.5% ownership interest in the [Property]. [¶]... Lee obtained his interest in the [Property] from Mr. Lien and Ms. Yen in September 2002. Mr. Lien and Ms. Yen agreed that for the portion of their ownership interest in the [Property] that exceeds $400,781.25 in value, 40% of that portion belongs to Lee.” Lee prayed for affirmative relief “including, but not limited to, a determination of the current interests in the [Property] and for Lee to be determined to have an ownership interest in the [Property], for the Court to adjudge that the record title shall state Lee’s interest in the [Property], to quiet title in favor of Lee, and for possession, or alternatively for a determination that Lee has a lien on the [Property] or other interest in the [Property] that is just and proper....”
After a bench trial, the court (Judge Karnow) concluded that the issues determined in the 305809 Action had preclusive effect. The court’s statement of decision provides: “Among other things, the [305809] case determines that Woo properly exercised his right of first refusal. Lien and Yen, therefore, emerged from this litigation with a right to certain sums of money in exchange for their property interest, but not an interest in the property as such. [¶]... [¶] Lee plainly claims a property interest through Lien and Yen, who had been conclusively determined not to have such an interest. This poses an insuperable conundrum for Lee.” The trial court rejected Lee’s claims that Lucky United did not own 100 percent of the Property and thus could not convey as much to Salvio Street. The court stated: “Lucky did, however, have record title to the property; that is not in dispute. Woo, Lien and Yen agreed to have Lucky so hold title from the beginning of their business relationship. The only factor suggesting lack of sufficient title for transfer is the adverse interests of Lien and Yen. But the lis pendens averring their interest was expunged, and accordingly the subsequent Lucky/Salvio transfer was free and clear of such adverse interests.”
The court’s statement of decision continued: “Lee has no cognizable interest in the property for a number of independent reasons. First, the persons through whom he claims, Lien and Yen, have no property interest, by virtue of [sections 405.60 and 405.61]. [¶] Secondly, Lee never recorded his interest, and thus his interest is void as against the recorded interest of Salvio, as long as Salvio acquired the property in good faith and for valuable consideration.... [¶] Treating Lee’s interest as a function of a grant based on a condition precedent (that he complete his duties as counsel to Lien and Yen), I note that the interest would not pass until the performance of that condition. [Citation.] Lee testified that this occurred around May 2006. But Yen and Lien had no property to transfer to Lee in May 2006.”
The court also observed that Lee had failed to establish that, if Lien and Yen had in interest in the Property, it would exceed the amount of $400,781.25 required to trigger any lien to Lee.
Accordingly, the trial court entered judgment for Salvio Street. The judgment states: “the Court grants [Salvio Street’s] requests and hereby quiets title in [the Property] in Salvio Street LLC as the sole owner in fee simple... as defined by the metes and bounds included in the recorded survey.... No defendant has any right, title, estate, lien, or interest in the [the Property] adverse to [Salvio Street’s] interest. [¶] As to the Second Cause of Action, the Court declares that Salvio Street LLC is the 100% owner of the [Property] in fee simple.... [¶] [Lee] shall take nothing by reason of his pleadings including his Answer, and his requests for any affirmative relief are denied.” Lee filed a timely notice of appeal from the judgment and the trial court’s denial of his motion for new trial.
Judge Karnow noted that this action was “the latest, and one hopes perhaps the last, chapter in a lengthy and expensive battle over the rights to this property.” We join in that hope, but given the history of the proceedings set forth here and despite repeated efforts by the trial court and this court to establish finality, one cannot help but be pessimistic.
Salvio Street filed a memorandum of costs, and, later, an amended memorandum of costs in the amount of $13,183.97, including expert witness fees, pursuant to section 998. Lee filed a motion to strike costs, or alternatively to tax costs, which was granted in part and denied in part. The court taxed $4,993.92 in costs but allowed the balance of Salvio Street’s claimed costs. Lee filed a timely notice of appeal from the costs order and Salvio Street filed a timely cross-appeal.
Salvio Street also moved for an award of attorney fees in the amount of $176,470.75, relying on Civil Code section 1717 and the attorney fee provisions contained in the Woo-Lien-Yen Agreement. The trial court denied Salvio Street’s motion for attorney fees, stating in its order: “Lee was not and did not claim to be an assignee of rights in the original Woo-Lien[-]Yen contract. Accordingly, the motion for attorney’s fees must be denied.” Salvio Street filed a timely notice of appeal from the order denying fees.
II. Discussion
A. Lee’s Appeal from the Judgment
In his opening brief, Lee asserts the following arguments with respect to Salvio Street’s quiet title claim: (1) that Salvio Street did not comply with the requirements for service via publication; (2) that the trial court had no basis to issue a decree regarding the metes and bounds lot lines; (3) that Salvio Street failed to establish the prima facie case necessary to quiet title because it did not trace its title back to an original government patent; and (4) that the trial court erred in concluding that Salvio Street purchased 100 percent of the Property. We need not address Salvio Street’s responsive argument that Lee’s claim of ownership is barred by res judicata or collateral estoppel because none of Lee’s arguments have merit.
We also need not consider Lee’s argument that Salvio Street’s declaratory relief claim fails along with its quiet title claim. However, we deny Lee’s May 13, 2009 request for judicial notice, which sought judicial notice of two grant deeds recorded in January of 2009. Lee argues that the grant deeds demonstrate that the judgment should be reversed because Salvio Street “no longer claims an ownership interest in these two lots that are the subject of the quiet title and declaratory relief judgment.” The grant deeds are irrelevant. (See § 368.5 [“[a]n action or proceeding does not abate by the transfer of an interest... [and] may be continued in the name of the original party”]; Zimberoff v. Bank of America (1952) 112 Cal.App.2d 555, 556–557 [either original owners or new owners could maintain quiet title action after conveyance of property during pendency of action].)
1. Lee has no standing to complain regarding service
Salvio Street obtained an order directing service of summons by publication. On appeal, Lee argues that the judgment for Salvio Street must be reversed because Salvio Street did not comply with the posting requirements for service by publication.
Lee is correct that section 763.020, subdivision (a), provides that, whenever service by publication is ordered, “[t]he plaintiff shall post, not later than 10 days after the date the order is made, a copy of the summons and complaint in a conspicuous place on the real property that is the subject of the action.” Furthermore, “[w]henever the court orders service by publication, the court before hearing the case shall require proof that the summons has been served, posted, published as required, and that the notice of pendency of action has been filed.” (§ 763.040.)
However, Lee has no standing to challenge Salvio Street’s compliance with these requirements. Lee does not argue that he was deprived of notice of pendency of the quiet title action. Quite to the contrary, the record shows that Lee answered Salvio Street’s complaint and vigorously asserted his claims throughout the litigation. The filing of an answer is a general appearance. (§ 1014.) When a defendant makes a “general appearance” in litigation, actual service of process is unnecessary. (§ 410.50, subd. (a) [general appearance equivalent to personal service of summons]; § 417.30 [proof of service of summons shall be filed unless defendant previously made general appearance]; Hamilton v. Asbestos Corp. (2000) 22 Cal.4th 1127, 1147.)
It is clear that Lee was not aggrieved in any manner by any failure to post a copy of the complaint and summons on the Property, assuming that such failure to post occurred. Accordingly, he does not have standing to raise his current argument and we need not address it further. (See § 902 [“[a]ny party aggrieved may appeal”]; In re Caitlin B. (2000) 78 Cal.App.4th 1190, 1193–1194 [mother without standing to assert that fathers did not receive notice of termination hearing]; Rebney v. Wells Fargo Bank (1990) 220 Cal.App.3d 1117, 1128 [appellant “may not assert error that injuriously affected only nonappealing coparties”].)
2. Metes and bounds
Next, Lee argues that “there is no basis for the trial court issuing a decree regarding the metes and bounds lot lines.” We need not consider this argument because Lee’s argument is inadequately developed and includes no citation to supporting authority. (People v. Stanley (1995) 10 Cal.4th 764, 793 [where no legal argument with citation to authority “ ‘is furnished on a particular point, the court may treat it as waived, and pass it without consideration’ ”].)
3. Salvio Street established a prima facie case
Lee contends that Salvio Street did not establish the prima facie case necessary to quiet title because it did not trace title back to the original government patent. “ ‘In a quiet title action the plaintiff must prove his title in order to recover.’ [Citation.] Merely presenting evidence challenging the defendant’s title is insufficient. [Citation.]” (Preciado v. Wilde (2006) 139 Cal.App.4th 321, 326.) However, the Supreme Court authority relied on by Lee does not support his position that Salvio Street was required to trace title back to the government patent. Lee relies on the following statement in Coffin v. Odd Fellows Hall Assn. (1937) 9 Cal.2d 521: “Where both parties to an action to quiet title do not claim through a common grantor, a plaintiff who relies upon the paper or record title must trace it either to the government or to a predecessor shown to have been in possession at the time of the conveyance made by him. [Citations.]” (Id. at p. 525, italics added.) Lee also cites Ernie v. Trinity Lutheran Church (1959) 51 Cal.2d 702, in which the Supreme Court stated: “Where the plaintiff relies on a paper title alone he must trace his title (1) to the government; or (2) to a grantor in possession at the time of the conveyance to the plaintiff; or (3) to a source common to the chains of title of plaintiff and defendant. [Citations.]” (Id. at p. 706, italics added.)
Salvio Street met its burden by presenting: (1) a grant deed for the Property, recorded on February 15, 1996, from the Federal Deposit Insurance Corporation (FDIC), in its capacity as receiver for Continental Savings of America, to Lucky United, and (2) a grant deed for the Property, recorded on March 17, 2006, from Lucky United to Salvio Street.
Lee’s own claim to the Property relies on the grant from FDIC to Lucky United. “Where both parties claim title from a common source it is sufficient to show a conveyance of title from that source without further establishing that the grantor himself had title.” (Phillips v. Menotti (1914) 167 Cal. 328, 329–330; accord, Lake Merced Golf & Country Club v. Ocean Shore R.R. Co. (1962) 206 Cal.App.2d 421, 444–445.) Lee cannot attack the title of the party through whom he claims, which is precisely what he attempts to do by arguing that Salvio Street had to prove its chain of title back to the original patent. We conclude that Salvio Street established a prima facie case.
Lee misplaces his reliance on 14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, in arguing that Salvio Street cannot present the common grantor theory for the first time on appeal. In that case, the court “decline[d] to consider a theory unsupported by authority and raised in a manner that prevents [the responding party] from developing the underlying facts.” (Id. at p. 1403, fn. 1.) Here, we exercise our discretion to address this issue of law based on undisputed facts. (See Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 23–24.) Lee failed to preserve his arguments regarding authentication and judicial notice by waiting to raise them only in his reply brief. (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 761, fn. 4; Tilton v. Reclamation Dist. No. 800 (2006) 142 Cal.App.4th 848, 864, fn. 12.)
4. Salvio Street took free and clear of the interests asserted by Lien and Yen
Lee argues that the trial court erred in concluding that Salvio Street purchased the Property free and clear of the interests asserted by Lien and Yen.
In March 2006, Salvio Street purchased the Property from Lucky United via a grant deed that was recorded that same month. Salvio Street admits that it had actual notice of the deed of trust in favor of Yen, as well as constructive notice of the Woo-Lien-Yen Agreement, at the time it purchased the Property. However, the lis pendens filed by Lien and Yen, in November 2004, was expunged by an order filed and recorded in October 2005.
Accordingly, Salvio Street argues that the trial court’s judgment must be upheld because, pursuant to sections 405.60 and 405.61, Salvio Street was a purchaser after an order of expungement and took without notice. The trial court agreed, stating in its statement of decision: “Lee has no cognizable interest in the property for a number of independent reasons. First, the persons through whom he claims, Lien and Yen, have no property interest, by virtue of [sections 405.60 and 405.61].” The trial court did not err.
Section 405.60 provides: “Upon the withdrawal of a notice of pendency of action pursuant to Section 405.50 or upon recordation of a certified copy of an order expunging a notice of pendency of action pursuant to this title, neither the notice nor any information derived from it, prior to the recording of a certified copy of the judgment or decree issued in the action, shall constitute actual or constructive notice of any of the matters contained, claimed, alleged, or contended therein, or of any of the matters related to the action, or create a duty of inquiry in any person thereafter dealing with the affected property.” (Italics added.)
Section 405.61 provides: “Upon the withdrawal of a notice of pendency of action pursuant to Section 405.50 or upon recordation of a certified copy of an order expunging a notice of pendency of action pursuant to this title, no person except a nonfictitious party to the action at the time of recording of the notice of withdrawal or order, who thereafter becomes, by conveyance recorded prior to the recording of a certified copy of the judgment or decree issued in the action, a purchaser, transferee, mortgagee, or other encumbrancer for a valuable consideration of any interest in the real property subject to the action, shall be deemed to have actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action, irrespective of whether that person possessed actual knowledge of the action or matter and irrespective of when or how the knowledge was obtained. [¶] It is the intent of the Legislature that this section shall provide for the absolute and complete free transferability of real property after the expungement or withdrawal of a notice of pendency of action.”
Thus, under the plain language of section 405.61, because the lis pendens was expunged Salvio Street took the Property without “actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action, irrespective of whether [Salvio Street] possessed actual knowledge....” Accordingly, the trial court correctly determined that Salvio Street took the Property free and clear of any interest claimed by Lien and Yen. (See Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 318, fn. 2 [“[a]s to a nonparty transferee of the property, an order expunging a notice of lis pendens would likewise operate as a judgment that no [mechanic’s] lien exists”]; Knapp Development & Design v. Pal-Mal Properties, Ltd. (1987) 195 Cal.App.3d 786, 790 [“any notice to a nonparty transferee of the pendency of an action affecting real property is entirely eliminated once a lis pendens is expunged[, which] permits such nonparty to become a bona fide purchaser”].)
Lee’s reliance on Lewis v. Superior Court (1994) 30 Cal.App.4th 1850 (Lewis) is misplaced. The Second District Court of Appeal, in Lewis, did pronounce that once a lis pendens is expunged, “title to the property must be treated as though the lis pendens had never been filed.” (Id. at p. 1871.) According to Lee, if the Property is treated as though the lis pendens had never been filed, Yen’s deed of trust remained, providing notice to Salvio Street that Lucky United was not the 100 percent owner. But, Lewis did not address this issue. And, section 405.61 mandates additional consequences of the expungement of a lis pendens, including the fact that no nonparty who thereafter purchases the property “shall be deemed to have actual knowledge of the action or any of the matters contained, claimed, or alleged therein, or of any of the matters related to the action....” It is this latter consequence that allowed Salvio Street to take free and clear of Lien and Yen’s interests, regardless of the recording of Yen’s deed of trust and the March 2001 judgment. The Legislature made clear its intent “that this section shall provide for the absolute and complete free transferability of real property after the expungement... of a notice of pendency of action.” (§ 405.61.) We must apply the statute as it is written.
Contrary to Lee’s implicit assertion, there is no evidence in the record to show that our unpublished opinion, Woo v. Lien, supra, A094960, was recorded.
Lee’s reliance on Federal Deposit Ins. Corp. v. Charlton (1993) 17 Cal.App.4th 1066 (Federal Deposit) is similarly misplaced. The issue in Federal Deposit was whether an abstract of judgment that reflected a prior final judgment was affected by a subsequent order, in a separate action, expunging a lis pendens. The Federal Deposit court ruled the expungement order had no effect on the abstract of judgment because the statutory schemes for lis pendens and abstracts of judgment are different. (Id. at pp. 1069–1070.) Here, Lien and Yen did not record an abstract of judgment that reflected a final judgment. Rather, when they recorded the March 2001 judgment, they recorded a prior judgment that was reversed by this court on appeal on all of the affirmative claims raised in their cross-complaint. Therefore, Federal Deposit is not controlling.
None of the additional authority relied on by Lee supports his claim. (See GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 879 [“[a]lthough the expungement of a lis pendens wipes out constructive notice of a lawsuit..., the expungement does not insulate from a damages award (based on lost profits) a subsequent purchaser of the Property... which, with actual knowledge of GHK’s contractual rights, purchased the Property and conspired to develop the Project in derogation of GHK’s rights under the agreements”]; Bishop Creek Lodge v. Scira (1996) 46 Cal.App.4th 1721, 1734 [“the statutory provision that an expunged or withdrawn lis pendens does not constitute actual or constructive notice of the underlying action is likewise irrelevant in a fraud action” (italics added)].)
Our conclusion that Salvio Street took free and clear of Lien and Yen’s ownership interests in the Property is necessarily determinative of Lee’s asserted interest in the property. If Lien and Yen had no interest in the Property after Salvio Street’s purchase in March 2006, then Lee received nothing by way of the fee agreement in May 2006. The trial court did not err.
We have previously held, aside from Salvio’s status as a bona fide purchaser, Lien and Yen had no interest in the Property pursuant to the trial court’s final December 12, 2005 judgment.
Accordingly, we need not consider Lee’s arguments that the “conveyance” from Lien and Yen gave him a valid ownership interest or lien against the Property or Salvio Street’s arguments to the contrary.
B. Lee’s Appeal and Salvio Street’s Cross-Appeal from the Costs Order
Lee argues that the trial court’s costs award should be reversed if the judgment is reversed. However, for the reasons stated above, the judgment is affirmed. In the alternative, Lee contends: (1) that Salvio Street’s costs memoranda were not properly verified; (2) that Salvio Street’s amended cost memorandum should have been stricken; and (3) that certain deposition and postage costs should have been taxed. In its cross-appeal, Salvio Street argues that the trial court erred by denying its request for expert witness fees. We address each of these arguments in order.
1. Verification of costs memoranda
Lee argues that the cost memoranda filed by Salvio Street did not comply with applicable verification requirements because it was not signed under penalty of perjury. The trial court rejected Lee’s argument.
Salvio Street’s cost memoranda appear on Judicial Council Forms, form MC-010, and are signed by Salvio Street’s trial counsel below a statement that provides: “I am the attorney, agent, or party who claims these costs. To the best of my knowledge and belief this memorandum of costs is correct and these costs were necessarily incurred in this case.”
In support of his argument that the above language is insufficient, Lee relies on California Rules of Court, rule 3.1700 and section 2015.5. But, rule 3.1700 (a)(1) provides: “A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the notice of entry of judgment or dismissal by the clerk.... The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.” (Italics added.) Salvio Street clearly complied with the verification requirement of rule 3.1700(a)(1).
All subsequent rule references are to the California Rules of Court unless otherwise noted.
Judicial Council rules have the force of statutes so long as they are not inconsistent with legislative enactments or constitutional provisions. (In re Richard S. (1991) 54 Cal.3d 857, 863.) Section 2015.5 is not inconsistent. Section 2015.5 merely provides, in relevant part: “Whenever, under any law of this state or under any rule, regulation, order or requirement made pursuant to the law of this state, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may with like force and effect be supported, evidenced, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person which recites that it is certified or declared by him or her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed within this state, states the date and place of execution, or (2), if executed at any place, within or without this state, states the date of execution and that it is so certified or declared under the laws of the State of California.” (Italics added.)
We agree with the trial court that section 2015.5 “is permissive, in the sense that it allows or permits a verification requirement to be complied with by the described statement under penalty of perjury. But [section] 2015.5 does not prescribe the sole necessary form of a verification.” The Legislature has expressly directed that prejudgment costs “shall be claimed and contested in accordance with rules adopted by the Judicial Council.” (§ 1034, subd. (a).) Salvio Street’s costs memoranda complied with the verification requirement found in rule 3.1700(a)(1). Lee has pointed to no case law, and we know of none, that suggests anything more is required.
Likewise, section 446, subdivision (a), does not assist Lee’s cause. That section provides, in relevant part: “A person verifying a pleading need not swear to the truth or his or her belief in the truth of the matters stated therein but may, instead, assert the truth or his or her belief in the truth of those matters ‘under penalty of perjury.’ ” (Italics added.)
None of the cases relied on by Lee hold that the language required by rule 3.1700 is insufficient to verify a memorandum of costs. (See Fries v. Rite Aid Corp. (2009) 173 Cal.App.4th 182; Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836; Nelson v. Anderson (1999) 72 Cal.App.4th 111; Rayna R. v. Superior Court (1993) 20 Cal.App.4th 1398; Russell v. Trans Pacific Group (1993) 19 Cal.App.4th 1717, superseded on other grounds as stated in Lee v. Wells Fargo Bank (2001) 88 Cal.App.4th 1187, 1197; Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761; People ex. rel. Dept. of Transportation v. Superior Court (1992) 5 Cal.App.4th 1480; Appleton v. Superior Court (1988) 206 Cal.App.3d 632; Brake v. Beech Aircraft Corp. (1986) 184 Cal.App.3d 930; Sheeley v. Santa Clara (1963) 215 Cal.App.2d 83; Snodgrass v. Snodgrass (1930) 103 Cal.App. 412.)
2. Late-filed cost memorandum
Lee contends that Salvio Street’s amended cost memorandum was untimely and should have been stricken. We need not address the argument because the trial court did not award the expert witness fees sought by Salvio Street’s amended memorandum of costs.
3. Deposition and postage costs
Finally, Lee maintains that the trial court improperly allowed Salvio Street to recover costs for two duplicative sets of deposition exhibits and for postage costs misclassified as deposition costs. However, section 1033.5, subdivision (a)(3), specifically allows for the recovery of costs for “[t]aking, video recording, and transcribing necessary depositions including an original and one copy of those taken by the claimant and one copy of depositions taken by the party against whom costs are allowed, and travel expenses to attend depositions.” (Italics added.) Thus, the trial court did not err by allowing Salvio Street to recover the costs for two sets of exhibits from Lee’s deposition.
However, section 1033.5, subdivision (b)(3), provides that “[p]ostage, telephone, and photocopying charges, except for exhibits” are ordinarily not allowable as costs. Salvio Street does not argue that any exception allowing recovery of postage costs applies here. The trial court had no authority to award such expressly disallowed costs “except when expressly authorized by law.” (§ 1033.5, subd. (b)(3); Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616, 1627–1628.) Accordingly, the trial court erred by awarding $49 in disallowed postage costs.
4. Expert witness fees
Salvio Street argues that the trial court erred when it denied its request, under section 998, for expert witness fees. The trial court provided the following explanation for its denial of expert witness fees: “The claim depends on the service of a timely [section] 998 demand. Lee notes this was served 11 days before trial (March 21, when trial commenced April 1). Because an additional five days is needed for service by mail, [section] 1013(a), Lee thus argues the 998 [offer] was untimely and so defeats the claim for expert fees. Salvio has a few ripostes. First, Salvio says Lee was timely served pursuant to ‘substituted personal service.’ The argument is that as Lee only provided a post box address and no office or home address, Salvio was unable literally to serve him personally and therefore did so by fax. But the parties had not agreed to fax service. In any event, Lee could have been served personally at various deposition and court hearings. These costs are disallowed.” (Fn. omitted.) We agree with the trial court that Salvio Street’s section 998 offer was untimely.
Section 998 provides, in relevant part: “(a) The costs allowed under Sections 1031 and 1032 shall be withheld or augmented as provided in this section. [¶] (b) Not less than 10 days prior to commencement of trial or arbitration... any party may serve an offer in writing upon any other party to the action to allow judgment to be taken or an award to be entered in accordance with the terms and conditions stated at that time.... [¶]... [¶] (c) (1) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer. In addition, in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant. [¶]... [¶] (d) If an offer made by a plaintiff is not accepted and the defendant fails to obtain a more favorable judgment or award in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant to pay a reasonable sum to cover postoffer costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the plaintiff, in addition to plaintiff’s costs.” (Italics added.)
See section 1013, subdivision (e), discussed post.
Salvio Street relies on section 1011, subdivision (a), to support its argument that the section 998 offer was timely. That section provides: “The service may be personal, by delivery to the party or attorney on whom the service is required to be made, or it may be as follows: [¶] (a) If upon an attorney, service may be made at the attorney’s office, by leaving the notice or other papers in an envelope or package clearly labeled to identify the attorney being served, with a receptionist or with a person having charge thereof. When there is no person in the office with whom the notice or papers may be left for purposes of this subdivision at the time service is to be effected, service may be made by leaving them between the hours of nine in the morning and five in the afternoon, in a conspicuous place in the office, or, if the attorney’s office is not open so as to admit of that service, then service may be made by leaving the notice or papers at the attorney’s residence, with some person of not less than 18 years of age, if the attorney’s residence is in the same county with his or her office, and, if the attorney’s residence is not known or is not in the same county with his or her office, or being in the same county it is not open, or a person 18 years of age or older cannot be found at the attorney’s residence, then service may be made by putting the notice or papers, enclosed in a sealed envelope, into the post office or a mail box, subpost office, substation, or mail chute or other like facility regularly maintained by the Government of the United States directed to the attorney at his or her office, if known and otherwise to the attorney’s residence, if known. If neither the attorney’s office nor residence is known, service may be made by delivering the notice or papers to the address of the attorney or party of record as designated on the court papers, or by delivering the notice or papers to the clerk of the court, for the attorney.” (Italics added.)
The proof of service attached to Salvio Street’s section 998 offer shows only that, on March 21, 2008 (11 days before the start of trial on April 1, 2008), the offer was mailed to a post office box in California, from an address within California, and faxed. (§ 998, subd. (b)(3) [“a trial or arbitration shall be deemed to be actually commenced at the beginning of the opening statement of the plaintiff or counsel”].) Salvio Street cites no case law supporting its contention that “[u]nder Section 1011(a), [mail “delivery”] effects... a same day service.” In fact, the only authority we are aware of is to the contrary. (See Prefumo v. Russell (1906) 148 Cal. 451, 454 [“[i]f the plaintiff’s position were correct, all that would be necessary in case of service by mail would be to show that there had been actual receipt of the paper in the usual course of mail delivery, and thereupon to invoke the rule that actual receipt is equivalent to personal service, and by that means change the character of the service from a mail service to personal service, and practically in every case materially shorten the time allowed by law for the doing of an act after such service”].)
Because the 998 offer was served by mail, Salvio Street was required to give an additional five days’ notice of the offer. (§ 1013, subd. (a) [“service is complete at the time of the deposit, but any period of notice and any right or duty to do any act or make any response within any period or on a date certain after the service of the document, which time period or date is prescribed by statute or rule of court, shall be extended five calendar days, upon service by mail”]; Lecuyer v. Sunset Trails Apts. (2004) 120 Cal.App.4th 920, 927 [when “a section 998 offer is mailed from an address in California to an address in California..., the section 998(b) 10-day notice period is extended by five days under section 1013(a), and the offeror is required to mail the offer not less than 15 days prior to commencement of trial”].)
The record does not show that the parties had an agreement to accept fax service. (§ 1013, subd. (e) [“[s]ervice by facsimile transmission shall be permitted only where the parties agree and a written confirmation of that agreement is made”].) Even if the parties had such an agreement, a section 998 offer served by fax requires two additional court days for effective notice. (§ 1013, subd. (e) [“service is complete at the time of transmission, but any period of notice and any right or duty to do any act or make any response within any period or on a date certain after the service of the document, which time period or date is prescribed by statute or rule of court, shall be extended, after service by facsimile transmission, by two court days”]; see Lecuyer v. Sunset Trails Apartments, supra, 120 Cal.App.4th at pp. 926–927.) Furthermore, the record supports the trial court’s conclusion that the 998 offer could have been hand delivered to Lee, who appeared at a deposition on March 21. Thus, the trial court was correct that Salvio Street’s section 998 offer was not timely.
Salvio Street provides no authority for its argument, made in passing, that, because Lee refused to provide a physical address, he should be estopped to challenge the timeliness of the section 998 offer. Accordingly, we need not address the argument. (People v. Stanley, supra, 10 Cal.4th at p. 793.) We conclude that Salvio Street’s section 998 offer was not timely and was, accordingly, invalid. The trial court’s order denying expert witness fees must be affirmed.
C. Salvio Street’s Appeal from the Order Denying Attorney Fees
Salvio Street contends the trial court erred in concluding that it was not entitled to attorney fees pursuant to Civil Code section 1717. Section 1033.5, subdivision (a)(10), provides that attorney fees are “allowable as costs” when they are “authorized by” either “Contract, ” “Statute, ” or “Law.” We consider whether there is a contractual basis for fees in this case. Salvio Street relies on the attorney fee provision contained in the Woo-Lien-Yen Agreement.
Civil Code section 1717, subdivision (a) provides: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”
Salvio Street argues: “Lee’s rights were claimed through those purportedly held by Lien/Yen under the original contract between Lien/Yen, Woo and Lucky United. That agreement included an attorney’s fee clause. Lee’s answer plainly asserted rights arising from this ‘late 1995 to early 1996’ agreement and sought ‘affirmative relief’ challenging Salvio Street’s bona fide purchaser status.... In so doing, Lee sought to establish that Salvio Street was a mere assignee/transferee (against whom Lee would presumably seek recovery of attorney’s fees under the original agreement).... As such, under the reciprocity principles of [Civil Code] [s]ection 1717, Salvio is now entitled to its attorney’s fees since it has prevailed against Lee with respect to these claims.”
Lee argues that collateral estoppel bars Salvio Street from obtaining attorney fees under the Woo-Lien-Yen Agreement. We agree. “Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’ [Citation.]... [¶]... A predictable doctrine of res judicata benefits both the parties and the courts because it ‘seeks to curtail multiple litigation causing vexation and expense to the parties and wasted effort and expense in judicial administration.’ [Citation.]” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896, 897.)
“The doctrine ‘has a double aspect.’ [Citation.] ‘In its primary aspect, ’ commonly known as claim preclusion, it ‘operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. [Citation.]’ [Citation.] ‘In its secondary aspect, ’ commonly known as collateral estoppel, ‘[t]he prior judgment... “operates” ’ in ‘a second suit... based on a different cause of action... “as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.” [Citation.]’ [Citation.]” (People v. Barragan (2004) 32 Cal.4th 236, 252–253.)
Here, we address collateral estoppel (issue preclusion). “[R]es judicata does not merely bar relitigation of identical claims or causes of action. Instead, in its collateral estoppel aspect, the doctrine may also preclude a party to prior litigation from redisputing issues therein decided against him, even when those issues bear on different claims raised in a later case. Moreover, because the estoppel need not be mutual, it is not necessary that the earlier and later proceedings involve the identical parties or their privies. Only the party against whom the doctrine is invoked must be bound by the prior proceeding. [Citation.] [¶] Accordingly, the collateral estoppel doctrine may allow one who was not a party to prior litigation to take advantage, in a later unrelated matter, of findings made against his current adversary in the earlier proceeding.” (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828–829.)
The requirements for invoking collateral estoppel are the following: “1) the issue to be precluded must be identical to that decided in the prior proceeding; 2) the issue must have been actually litigated at that time; 3) the issue must have been necessarily decided; 4) the decision in the prior proceeding must be final and on the merits; and 5) the party against whom preclusion is sought must be in privity with the party to the former proceeding. [Citations.]” (People v. Garcia (2006) 39 Cal.4th 1070, 1077.) Lee, as the party asserting collateral estoppel, has the burden to establish these requirements. (Dunkin v. Boskey, supra, 82 Cal.App.4th at p. 181.) “Even if these threshold requirements are established, res judicata will not be applied ‘if injustice would result or if the public interest requires that relitigation not be foreclosed.’ [Citation.]” (Ibid.) Our review is de novo. (Murphy v. Murphy (2008) 164 Cal.App.4th 376, 399.)
As noted above, Lucky United, Shih, and Salvio Street previously argued on appeal that they were entitled to an award of attorney fees, based on the Woo-Lien-Yen Agreement’s fee provision, incurred in defending Lien and Yen’s claims in the 454501 Action. (Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068.) We rejected the argument, holding that “whatever right to fees Lucky United, Shih, and Salvio Street may have possessed based on the original agreements that were signed by Woo, Lien, and Yen were merged into the now final December 12, 2005 judgment. That judgment ‘extinguish[ed] all further contractual rights, including the contractual attorney fees clause.’ [Citation.]” and we affirmed the trial court’s judgment denying fees. (Id.)
Because our opinion in the 454501 Action had not yet been filed when the motion for attorney fees in the current action was denied, we may address the issue of collateral estoppel regardless of whether it was raised before the trial court. (See Sutton v. Golden Gate Bridge Highway & Transportation Dist. (1998) 68 Cal.App.4th 1149, 1154, fn. 1.)
The prerequisites for collateral estoppel have been met. First, there is no dispute that Salvio Street was a party to the 454501 Action. Second, our opinion in the 454501 Action is both final and was on the merits. Finally, the identical issue was litigated and decided in the 454501 Action. In the 454501 Action, as here, Salvio Street argued that it was entitled to attorney fees under Civil Code section 1717 because the Woo-Lien-Yen Agreement contained an attorney fees provision. Thus, we have previously decided that Salvio Street cannot recover fees on the basis of the very same attorney fee clause on which it relies in the current action. Salvio Street unpersuasively argues that “Lee’s reliance on his contingency fee agreement (which was never previously litigated) and claims that he is not an assignee add an additional layer of analysis that make the attorney fee issues in this case different than those in the [305809] Case.” But, we have already expressly determined that the December 12, 2005 judgment extinguished the attorney fees provision of the Woo-Lien-Yen Agreement. Without an operative contractual attorney fees provision there is no need to address any of these additional issues, which Salvio Street concedes are derivative in nature.
We reject Salvio Street’s argument that our prior opinion suggests that the issue of fees under the Woo-Lien-Yen Agreement has not been finally resolved. Salvio Street relies on the fact that we “state[d] no opinion on the issue of whether Lucky United, Shih, and Salvio Street might be entitled to fees if the court should ultimately find Lucky United and Shih to be the prevailing parties pursuant to this court’s June 12, 2008 opinion in the prior attorney fee appeal [(305809 Action)]. (Cf. Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 628 [the court declines to state its opinion on an issue that might not arise on remand].)” (Italics added.) Salvio Street ignores the context of the footnote on which it relies. We stated no opinion on whether Lucky United, Shih, and Salvio Street might be entitled to fees pursuant to section 685.040, under which a judgment creditor may recover “[a]ttorney’s fees incurred in enforcing a judgment... if the underlying judgment includes an award of attorney’s fees to the judgment creditor....” Salvio Street has not raised section 685.040 as a basis for fees in the current action. Accordingly, we deny Salvio Street’s February 19, 2010 and May 21, 2010 requests for judicial notice and Lee’s April 15, 2010 request for judicial notice, allof which sought notice of proceedings in the 305809 court, because the material sought to be judicially noticed is irrelevant. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1135, fn. 1 [material to be judicially noticed must be relevant].)
The public policies served by collateral estoppel would also be furthered if the doctrine is applied here. A possibility of inconsistent judgments is presented. Furthermore, the efficiency interests served by the doctrine of collateral estoppel will not be served if Salvio Street can relitigate its entitlement to attorney fees under a contractual provision previously deemed extinguished. Salvio Street does not argue otherwise.
We have previously conclusively determined that the attorney fee provision of the Woo-Lien-Yen Agreement has been extinguished. Thus, Salvio Street’s appeal is without merit and we need not address the parties’ other arguments with respect to fees.
We note briefly, however, that Salvio Street has failed to show that Lee himself would be entitled to attorney fees from Salvio Street under the Woo-Lien-Yen Agreement had he prevailed. (See Loduca v. Polyzos (2007) 153 Cal.App.4th 334, 341 [in cases involving nonsignatories to contract with attorney fee provision “ ‘ “[a] party is entitled to recover its attorney fees pursuant to a contractual provision only when the party would have been liable for the fees of the opposing party if the opposing party had prevailed” ’ ”].) Here, Salvio Street was itself not a party to the Woo-Lien-Yen Agreement. Thus, putting aside the issue of whether Lee was an assignee of the Woo-Lien-Yen Agreement, Salvio Street does not explain how it would be liable for Lee’s attorney fees, had Lee prevailed.
D. Sanctions
Lee has argued that Salvio Street’s appeal on the attorney fees issue is frivolous because this court’s prior opinion made clear that the contractual attorney fee clauses at issue were extinguished and no longer valid, and he moved for sanctions, in the sum of $25,000, under section 907 and rule 8.276. We gave Salvio Street notice that we were considering sanctions and requested opposition. (Rule 8.276(c).) We note that in its opposition to the sanctions motion, Salvio Street failed to dispute Lee’s collateral estoppel argument, arguing only that res judicata does not apply.
We have already found that Salvio Street’s appeal of the denial of its claim for attorney fees lacks merit. That an appeal lacks merit does not, alone, establish it is frivolous. (In re Marriage of Gong & Kwong (2008) 163 Cal.App.4th 510.) “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. [Citation.]’ [Citation.] The first standard is tested subjectively. The focus is on the good faith of appellant and counsel. The second is tested objectively. [Citation.]” (Id. at p. 516, first brackets in In re Marriage of Gong & Kwong.)
While we find no evidence to support a conclusion that Salvio Street or its counsel acted in bad faith, and the issues Salvio Street raises may have had arguable merit at the time its notice of appeal was filed, we do find that any reasonable attorney would have agreed the appeal was completely without merit once this court’s prior opinion in Lien v. Lucky United Properties Investments, Inc., supra, A118698/A120068 was filed on November 26, 2008. (See Cohen v. General Motors Corp. (1992) 2 Cal.App.4th 893, 896.) The appeal should have been promptly dismissed. (Ibid.)
Our Supreme Court has cautioned that sanctions should be “used most sparingly to deter only the most egregious conduct.” (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650–651.) Since Salvio Street was the prevailing party in the underlying litigation below, its appeal, while meritless, was not one undertaken for purposes of delay. We also consider Lee’s own continuing pursuit of arguments that, while not completely frivolous, were of marginal merit at best. We further agree with Salvio Street that Lee’s request for $25,000 in sanctions is grossly overstated. Since we do not find the circumstances here to be especially egregious, we will award sanctions to Lee in the amount of $1,000.
We will also order sanctions, to be paid by Salvio Street and its counsel, directly to the clerk of this court for a waste of the court’s time and resources. (Pierotti v. Torian (2000) 81 Cal.App.4th 17.) A conservative estimate of the costs of processing an average appeal, based on a calculation made in 1992, is $5,900 to $6,000. (In re Marriage of Gong & Kwong, supra, 163 Cal.App.4th at pp. 519–521; Pierotti v. Torian, supra, at p. 36.) Since the frivolous issues raised by Salvio Street represented only a relatively small proportion of the issues presented in the consolidated appeals, we believe that a sanctions award of $1,000, payable to the clerk of this court, is appropriate.
III. Disposition
The judgment and order denying an award of attorney fees are affirmed. The costs order is modified to reduce the allowed costs by $49.
Sanctions are awarded to Lee in the amount of $1,000, payable by Salvio Street and its counsel. Sanctions in the amount of $1,000 are assessed against Salvio Street and its counsel, payable to the clerk of this court. Sanctions shall be paid no later than 15 days after the date the remittitur is filed. The clerk of this court is directed to deposit said sum in the general fund. The clerk of this court is directed to forward a copy of this opinion to the State Bar upon return of the remittitur. (Bus. & Prof. Code, § 6086.7, subd. (c).)
As modified and in all other respects the judgment is affirmed. Salvio Street shall recover its costs on Lee’s appeals. Lee shall recover his costs on Salvio Street’s fee appeal.
We concur: Jones, P. J., Simons, J.