Opinion
NOT TO BE PUBLISHED
Superior Court County of Ventura No. CIV203232, Henry J. Walsh, Judge
Jaffe & Martin, Howard M. Jaffe, Arthur L. Martin for Defendant and Appellant.
Law Offices of Henry N. Jannol, APC, Henry N. Jannol, Tracey P. Hom for Plaintiffs and Respondents.
COFFEE, J.
This is the second time this case has been before us. In 2008, we reversed a judgment awarding respondents damages in the amount of $925,000 and remanded the case with directions to reduce the damages. (Spartan v. Gurney (2008) B201820 [nonpub. opn.] ("Gurney I").) Larry Gurney, Jr., appeals from the judgment entered by the trial court on remand. He argues that the court erred by awarding respondents prejudgment interest. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In 1996 or 1997, appellant, his father, Larry Lane Gurney, Sr., and his brother, Darrell Gurney (collectively "the Gurneys"), purchased stock in Metropolis Publications, Inc. ("Metropolis"). On October 15, 1999, appellant and David Bergstein signed three Settlement Agreements and Mutual and General Releases ("settlement agreements") for the purchase by Spartan and Bergstein of Metropolis stock from each of the Gurneys. Appellant signed the settlement agreements on behalf of each of the Gurneys. Bergstein provided cashier's checks for the Gurneys' stock to appellant. The Gurneys endorsed and cashed those checks, and appellant surrendered his stock certificate to Bergstein. These transactions generated three lawsuits against respondents and Metropolis.
On May 7, 2001, after prevailing in two lawsuits, respondents and Metropolis filed this action to recover their defense costs, pursuant to the settlement agreements. Their complaint sought an "amount exceeding $100,000[], according to proof," but "at least $200,000[]," and prayed for "interest on the foregoing damages to the extent permitted by law."
On February 10, 2003, Superior Court Judge Henry J. Walsh signed a judgment for respondents and against appellant in the amount of $925,000, which included statutory costs and interest "at the legal rate," from May 7, 2001, the complaint filing date. Appellant moved to set aside the judgment. Superior Court Judge Steven E. Hintz denied the motion and appellant appealed his ruling.
On March 17, 2008, we issued our Gurney I opinion and reversed the order denying appellant's motion to set aside the judgment. On April 15, 2008, we denied appellant's petition for rehearing and modified our opinion to read, in relevant part, as follows: "We reverse the order denying the motion to vacate the judgment to the extent that the judgment exceeds $200,000. The trial court shall reduce the damages to $200,000 and enter the modified judgment unless, within 30 days after issuance of our remittitur, respondents serve and file in the superior court a notice electing the option to amend their complaint to pray for a different amount of damages and/or other appropriate relief.... The parties are to bear their own costs."
On April 21, 2008, appellant's counsel filed a notice of change of business address with the court below and served a copy of that notice on counsel for respondents. Respondents' counsel acknowledged their awareness of that notice.
On May 20, 2008, we issued the remittitur in Gurney I, which the trial court filed on May 27, 2008. In early June 2008, respondents' counsel prepared a proposed modified judgment for Judge Walsh's signature, "based" on the original judgment that he had signed on February 10, 2003.
Appellant's counsel "first learned of the existence" of the proposed modified judgment at approximately 9:15 a.m., on June 11, 2008, "during a status conference in another matter in another court when one of respondents' attorneys orally referred to it," (Gurney v. Spartan et al. (L. A. Super. Ct. No. BC 379422)). On the same day, respondents' counsel faxed a copy of the proposed modified judgment to appellant's counsel.
Later, on June 11, 2008, appellant filed objections to the proposed modified judgment. He challenged it on several grounds, including respondents' noncompliance with service and notice requirements, and the court's inclusion of prejudgment interest and statutory costs.
On June 12, 2008, respondents filed a response to appellant's objections to the proposed modified judgment, with an accompanying declaration of respondents' counsel. The response explained that because of a clerical mistake, the proposed modified judgment was served on appellant's counsel at his former office, instead of his new office address. (The offices are on different floors of the same building). The response also stated that counsel for respondents was "requested to prepare" the proposed modified judgment; it did not identify who made that request.
On June 16, 2008, Judge Walsh signed a modified judgment, which was filed on June 17, 2008. It provides, in relevant part, "that plaintiffs Spartan Funding Group... and David Bergstein... shall have judgment against defendant Larry Lane Gurney, Jr.,... in the principal sum of $200,000[], plus interest thereon in the amount of $35,286.41 (calculated at the rate of 10% per annum from May 7, 2001, to and including February 10, 2003), plus statutory costs."
DISCUSSION
The Modified Judgment Did Not Violate Our Ruling in Gurney I
Appellant contends that because the court "materially violated the specification of this court's mandate" in Gurney I by signing the modified judgment which awarded prejudgment interest to respondents, the modified judgment is void. We disagree.
In reviewing a claim that a judgment is void for failure to follow our directions on remand, we must determine whether an apparent variance in the trial court's execution of our ruling was material. (See In re Candace P. (1994) 24 Cal.App.4th 1128, 1131-1132.) In this case, we find no material variance in the court's modification of the judgment.
Appellant's contention might have merit if Gurney I had addressed respondents' right to prejudgment interest or any "statutory interests and costs." It did not. The original judgment in Gurney I awarded respondents damages in the amount of $925,000, together with statutory costs and interest, "at the legal rate," from May 7, 2001, the date that the complaint was filed. Prejudgment interest is authorized by statute. (Civ. Code, § 3287, subd. (b); see also § 3289, subd. (b) [which sets an "interest rate of 10% per annum," where contract does not stipulate a legal rate of interest].)
In Gurney I, we considered the limit on the damages that respondents could recover. We then specified that the amount of damages should be reduced to $200,000, unless respondents took action described in the opinion. The parties in Gurney I did not address or challenge the trial court's authority to award statutory interest, including prejudgment interest. Consequently, we did not consider, rule upon, or restrict the availability of statutory interest. The court's execution of the modified judgment providing prejudgment interest did not constitute a failure to follow our directions on remand.
The Court Acted Within Its Discretion in Awarding Prejudgment Interest
The court has discretion to decide whether prejudgment interest should be awarded on an unliquidated claim arising from a contract action and to decide the date from which such interest should be awarded. (Civ. Code, § 3287, subd. (b); North Oakland Med. Clinic v. Rogers (1998) 65 Cal.App.4th 824, 829 (North Oakland).) The court cannot, however, award prejudgment interest prior to the date that the action was filed. (Civ. Code, § 3287, subd. (b); Rifkin v. Achermann (1996) 43 Cal.App.4th 391, 398.)
Appellant also complains that post-judgment interest will compound on the prejudgment interest and the principal amount. That possibility does not, however, establish that the trial court materially violated our mandate in Gurney I by signing a modified judgment that specified the amount of prejudgment interest.
Citing North Oakland, supra, 65 Cal.App.4th 824, 829-831, appellant further argues that the court erred in awarding prejudgment interest because it was not properly and timely requested from the court. In North Oakland, the court concluded that the request for prejudgment interest was not timely because it was not made either prior to entry of judgment or "no later than the time allowed for filing" a motion for new trial. (Id. at p. 831.) North Oakland does not apply here. (See Steiny & Co. v. California Elec. Supply Co. (2000) 79 Cal.App.4th 285, 294 [despite failure to follow procedure specified in North Oakland, request for prejudgment interest was timely where plaintiff had requested interest in its complaint, and defendant had stipulated before judgment was entered that the plaintiff's request for interest would be adjudicated in a post-judgment hearing].)
Moreover, neither the Legislature nor the California Rules of Court address the method or means for seeking prejudgment interest. Instead, rule 3.1802 of the California Rules of Court simply directs "[t]he clerk... [to] include in the judgment any interest awarded by the court and the interest accrued since the entry of the verdict."
There are some matters for which the Legislature expressly mandates that the party seeking certain relief must follow the noticed motion procedure. For instance, a judgment creditor's claim for recovery of costs incurred to enforce the judgment must be enforced "by noticed motion [which] shall be made before the judgment is satisfied in full, but not later than two years after the costs have been incurred." (Code Civ. Proc., § 685.080, subd. (a).) In contrast, the Legislature opted not to require a noticed motion procedure for the recovery of prejudgment interest. (§ 685.110 ["Nothing in this chapter affects the law relating to prejudgment interest"].)
All statutory references are to the Code of Civil Procedure unless otherwise stated.
Here, respondents' complaint prayed for interest on damages "to the extent permitted by law." The court had the discretion to treat that prayer as a timely request for prejudgment interest. It did not err by awarding respondents prejudgment interest in the amount of $35,286.41.
Appellant Had No Right Under Section 170.6 to Exercise a Peremptory Challenge Upon Remand Following Reversal in This Case
Appellant claims, as he did below, that he had the right under section 170.6, subdivision (a)(2) to exercise a peremptory challenge of the court that conducted proceedings upon remand. We reject that claim.
"Section 170.6 permits a party in civil and criminal actions to move to disqualify an assigned trial judge on the basis of a simple allegation by the party or his or her attorney that the judge is prejudiced against the party. Various restrictions on the timing of the motion are imposed by this statute, and a party may exercise such a challenge only once during the trial of an action or a special proceeding. A motion that conforms to all the requirements of section 170.6, however, must be granted." (Peracchi v. Superior Court (2003) 30 Cal.4th 1245, 1248-1249 (Peracchi).)
A section 170.6 motion "may be made following reversal on appeal of... a trial court's final judgment, if the trial judge in the prior proceeding is assigned to conduct a new trial on the matter.... [T]he party who filed the appeal that resulted in the reversal of a final judgment of a trial court may make a motion under this section regardless of whether that party or side has previously done so. The motion shall be made within 60 days after the party or the party's attorney has been notified of the assignment." (Id. at subd. (a)(2).)
Several courts have considered whether various types of proceedings following reversal on appeal constitute a new trial for purposes of section 170.6, subdivision (a)(2). For example, in Hendershot v. Superior Court (1993) 20 Cal.App.4th 860, 865, the court reversed a judgment against a plaintiff who moved for restitution because he had paid the judgment. The courtconcluded that the proceedings on remand were a new trial under section 170.6, subdivision (a)(2), because they involved a post-trial "reversal and remand for trial of a contested issue in which trial court discretion or fact determination is involved," and the appellant could exercise a peremptory challenge on remand. (Hendershot, at p. 865) Other courts have reached similar conclusions. (See, e.g., Pfeiffer Venice Properties v. Superior Court (2003) 107 Cal.App.4th 761, 763-764 [proceedings regarding attorney fees in a § 425.16 "SLAPP" motion]; Stubblefield Const. Co. v. Superior Court (2000) 81 Cal.App.4th 762, 765 [proceedings following a reversal of the granting of summary judgment].) In Geddes v. Superior Court (2005) 126 Cal.App.4th 417, however, the court concluded that a plaintiff was not entitled to file a peremptory challenge against the first trial judge where summary judgment was reversed for procedural reasons rather than upon the merits.
In Paterno v. Superior Court (2004) 123 Cal.App.4th 548 (Paterno), the court reversed a judgment in favor of one defendant on the issue of liability in a flood damage case and remanded the matter solely on the issue of damages for one category of plaintiffs. On remand, the trial court denied plaintiffs' peremptory challenge to the judge who presided over the first trial. The reviewing court upheld that ruling because a proceeding to adjudicate damages is not a new trial within the meaning of section 170.6, subdivision (a)(2). It stressed that in 1985, the Legislature had rejected a proposed amendment to section 170.6 that would have permitted a new peremptory challenge every time there was a contested hearing following reversal on appeal. (Paterno, at p. 561, citing Peracchi, supra, 30 Cal.4th at p. 1262.) "By inserting the term 'new trial' in section 170.6 [subdivision] (a)(2), the Legislature made it plain that a new peremptory challenge following a reversal on appeal will only be permitted where the court is required to reexamine issues litigated in the prior proceeding." (Id. at p. 561.)
Here there is no suggestion that the parties litigated the amount of prejudgment interest in a prior proceeding. In fact, appellant complains that the request for prejudgment interest was untimely. Moreover, the terms of our Gurney I opinion precluded the court from reexamining the principal amount of damages payable to appellant. In this case, the proceedings upon remand following appeal did not involve a new trial within the meaning of section 170.6, subdivision (a)(2). (Paterno, supra, 123 Cal.App.4th at p. 562.)
We recognize that because of a clerical error, respondents did not provide adequate notice of the proposed modified judgment to appellants. We do not condone that failure. Under such circumstances, it would have been preferable for the court to allow appellant additional time to challenge the proposed modified judgment. Nonetheless, in view of our conclusions concerning the issues, it would serve no purpose to remand this case again.
DISPOSITION
The judgment is affirmed. Costs are awarded to respondents.
We concur: GILBERT, P.J., YEGAN, J.