Source: https://casetext.com/case/pac-w-bank-v-prospect-vill-lp
Timestamp: 2019-12-16 04:05:43
Document Index: 159863700

Matched Legal Cases: ['§ 1008', '§ 1008', '§ 13', '§ 2819', '§ 18004', '§ 18000', '§ 18000', '§ 1717', '§ 1033', '§ 904']

Pac. W. Bank v. Prospect Vill. L.P, G045790 | Casetext
Pac. W. Bank v. Prospect Vill. L.P.
G045790 (Cal. Ct. App. Jun. 17, 2013)
Pac. W. Bankv.Prospect Vill. L.P.
COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREEJun 17, 2013
G045790 G046274 G046276 G046646 G046652 G046995 G047079
PACIFIC WESTERN BANK, Plaintiff and Respondent, v. PROSPECT VILLAGE L.P. et al., Defendants and Appellants.
Enterprise Counsel Group, Patrick D. Flannery and James S. Azadian for Defendants and Appellants. Hodel Brigss Winter, Matthew A. Hodel and Ashley Merlo for Plaintiff and Respondent.
(Super. Ct. No. 30-2010-00376213)
Appeal from a judgment of the Superior Court of Orange County, Jamoa A. Moberly, Judge. Affirmed.
Plaintiff and Respondent Pacific Western Bank (PWB or the bank) made a commercial loan to Prospect Village L.P. (Prospect Village) to build a commercial project. John Tillotson, Jr., and Daniel Howse signed the promissory note on behalf of Prospect Village's general partner, Pelican Tustin LLC, and signed commercial guaranties, individually and as trustees of the Tillotson Family Trust and the Howse Family Trust, respectively. John's wife, Haydee, also signed a commercial guaranty as a trustee of the Tillotson Family Trust. The commercial venture failed to cover the unpaid amount of the loan. PWB sued Prospect Village on the promissory note and sued Howse and the Tillotsons on their guaranties. According to PWB's evidence, the outstanding amount due on the loan (with interest) was over $1.7 million.
The jury found in favor of PWB in the amount of $1,491,064.57 and against Prospect Village on the promissory note, against Howse and John on their personal guaranties, and against the Tillotson Family Trust and the Howse Family Trust. (See Portico Management Group, LLC v. Harrison (2011) 202 Cal.App.4th 464, 473 (Portico)[a trust cannot be a judgment debtor, i.e., "'the person against whom a judgment is rendered'" per Code of Civil Procedure section 680.250].) The court subsequently amended the judgment to delete the Tillotson Family Trust as a judgment debtor and placed in its stead John and Haydee in their representative capacities as trustees of the family trust.
Prospect Village, John, and Haydee appeal and contend the evidence does not support the jury's verdict, reasoning that the jury must have compromised, given the fact the jury awarded less damages than PWB claimed; the court erred in failing to instruct the jury pursuant to Civil Code section 2819; the court erred in amending the judgment to make John and Haydee judgment debtors in their representative capacities as trustees of the Tillotson Family Trust; and the trial court erred in awarding PWB additional attorney fees for time and effort in amending the judgment to make John and Haydee judgment debtors in their representative capacities as trustees of the Tillotson Family Trust. According to John and Haydee, the reason the jury found against the Tillotson Family Trust—which cannot be judgment debtor (Portico, supra, 202 Cal.App.4th at p. 473)—is because PWB's attorneys drafted the jury verdict form.
On March 1, 2007, PWB agreed to make an $11,200,000 construction loan to Prospect Village, a single entity business. Under the terms of the promissory note, Prospect Village agreed to pay off the principal and any unpaid accrued interest in one payment on September 1, 2008. Because a single entity business owns no other assets, PWB required the loan to be guaranteed by others.
Howse said he wrote to the bank four or five times, asking to be relieved of his guaranty. Shortly after the close of escrow on the last building, Howse received a letter from PWB stating there was a deficiency on the loan and the loan was set to mature on May 5, 2010. The maturity date came and went without Prospect Village or the guarantors paying off the deficiency. At that time, the outstanding loan balance, including interest, was $1,635,660.43. By the time of trial, PWB asked the jury to award it $1,774,603.84 as against each defendant.
Prospect Village, John, Haydee, and Howse filed their motions for a new trial and judgment notwithstanding the verdict on August 1, 2011. A week after that, the court denied without prejudice PWB's motion to amend the judgment. PWB contended the judgment should be modified to correct a clerical error, arguing the judgment should be amended because it "could be construed to be inconsistent with the pleadings and proof in this case insofar [as] it might suggest the judgment is entered against the Tillotson Family Trust, rather than the defendant trustees in their representative capacities." The defense took the position that the judgment was correct and "[t]he jury verdict makes no doubt John and Haydee's liability is in their representative capacity . . . ."
On November 1, 2011, the trial court partially granted PWB's motion for attorney fees, awarding PWB $467,643 in attorney fees. On December 6, 2011, the superior court amended the judgment. The amended judgment reflected postjudgment interest, the award of $467,643 in attorney fees, and an award of more than $18,000 in costs and disbursements to PWB. Ten days later, on December 16, 2011, the court denied appellants' motions for reconsideration of its motions for a new trial and judgment notwithstanding the verdict.
On March 1, 2012, the trial court granted PWB's ex parte application for entry of a second amended judgment. This version deleted the language of the jury's verdict wherein the jury found in favor of PWB and against the Tillotson Family Trust and the Howse Family Trust. The second amended judgment stated, in pertinent part: "IT IS ORDERED, ADJUDGED, AND DECREED that plaintiff [PWB] shall recover from defendants Prospect Village L.P., John . . . individually and as Trustee for the Tillotson Family Trust, and Haydee . . . as Trustee for the Tillotson Family Trust, these additional sums: . . . ."
In support of their motion for a new trial, appellants submitted the declaration of one of their attorneys concerning a conversation he had with the foreperson of the jury. According to that declaration, (1) the foreperson did not believe the defendants were liable and (2) other jurors were divided on the amount of damages to be awarded PWB. Some of the jurors believed the defendants were liable for the full $1.7 million-plus amount sought by PWB and others felt PWB should recover less because it had not "dealt properly" with appellants, although those same jurors recognized that under the promissory note and the guaranties, Prospect Village and the guarantors were liable to PWB. These jurors felt appellants were liable for the unpaid principal, but not all the interest sought by PWB. The jury then reached a middle ground, concluding the amount of damages should be limited to the amount owed at the time the last unit was sold and that PWB should not receive interest on the amount thereafter.
The attorney's declaration was inadmissible hearsay. (Burns v. 20th Century Ins. Co. (1992) 9 Cal.App.4th 1666, 1670-1672; People v. Williams (1988) 45 Cal.3d 1268, 1318 ["'a jury verdict may not be impeached by hearsay affidavits'"].)
The trial court denied the motion for reconsideration because it was untimely and did not contain new facts. (Code Civ. Proc, § 1008.) Appellants do not contest the trial court's decision denying the motion. We therefore do not consider the affidavit. Were we to consider it, the result would be the same. The affidavit did not demonstrate a compromise on the issue of liability; only that the jurors who returned the verdict in favor of PWB did so because the law and facts required it, but they reduced the damages based on the banks performance in this matter.
"An order denying a motion for reconsideration made pursuant to subdivision (a) is not separately appealable. However, if the order that was the subject of a motion for reconsideration is appealable, the denial of the motion for reconsideration is reviewable as part of an appeal from that order." (Code Civ. Proc., § 1008, subd. (g).)
Appellants also allege substantial evidence does not support the "inadequate" amount awarded by the jury, while conceding the evidence would support an award for the more than $1.7 million sought by PWB. Because the evidence would support an award in excess of $1.7 million, it necessarily supports the verdict in this matter—i.e., the evidence is not insufficient to support a lesser amount of damages. As the jury did not reach an improper compromise, it was PWB's ox that was gored by the jury's "inadequate" award, not appellants'. (See Baroni v. Musick (1934) 3 Cal.App.2d 419, 421-422 ["we fail to see how defendant has been injured because plaintiff has accepted a verdict for something less than he could have had"].) Reversal requires the objecting party to have been prejudiced. (Cal. Const., art. I, § 13.) But when the amount awarded the plaintiff is less than the evidence would otherwise support and the award is not the result of an improper compromise on the issue of liability, the defendant is not entitled to relief since he or she has not been prejudiced by the award. We therefore reject appellants' contention that the evidence does not support the judgment. B. Jury Instruction Issue
After the jury was instructed and PWB argued its case to the jury, appellants' counsel told the jury that if it found "Prospect Village is obligated to pay [PWB], then these guarantors aren't obligated to pay it back." As a consequence of PWB's objection to that statement, the trial judge directed appellants' counsel to bring to court authority for the objected to proposition. Counsel did not return with any, but instead cited Civil Code section 2819 and requested the jury be instructed in the terms of the statute.
"A surety is exonerated, except so far as he or she may be indemnified by the principal, if by any act of the creditor, without the consent of the surety the original obligation of the principal is altered in any respect, or the remedies or rights of the creditor against the principal, in respect thereto, in any way impaired or suspended. However, nothing in this section shall be construed to supersede subdivision (b) of Section 2822." (Civ. Code, § 2819.)
As the language of section 607a of the Code of Civil Procedure makes evident, a request for an instruction made during closing argument is untimely (Wilson v. Gilbert (1972) 25 Cal.App.3d 607, 613 [instruction requested after first witness had been sworn was untimely]), but the court has discretion to give additional instructions at that point. Absent an abuse of discretion in denying a belated request for a particular instruction, the trial court's decision must be upheld. (Ibid.) Appellants have not demonstrated an abuse of discretion.
Additionally, the evidence did not support the instruction. Appellants argue the modification of the price release schedule was the modification that would, pursuant to Civil Code section 2819, exonerate the guarantors from their guaranties. However, the guaranties waived any such defense. Under the guaranties, the guarantors waived all rights and defenses arising by reason of "any modification or change in terms of the indebtedness, whatsoever . . . ." Accordingly, we conclude the trial court did not err in refusing to instruct the jury in the terms of Civil Code section 2819. C. Amendment of the Judgment to Remove the Reference to the Family Trusts as Judgment Debtors
A trust cannot be a judgment debtor because it is not a person. (Portico, supra, 202 Cal.App.4th at p. 473.) "„A claim based on a contract entered into by a trustee in the trustee's representative capacity, . . . may be asserted against the trust by proceeding against the trustee in the trustee's representative capacity . . . .' (Prob. Code, § 18004.)" (Ibid.) Thus, for a judgment to be enforceable against trust property, judgment should be "entered against those who held title to such property—the trustees." (Id. at p. 474.)
Less than a month after the original judgment, PWB brought a motion to amend the judgment to provide: "The above judgment is corrected only to clarify the following: All references to the Tillotson Family Trust shall mean and refer to John . . . and Haydee . . . as trustees for the Tillotson Family Trust. Accordingly, as the judgment pertains to the Tillotson Family Trust, judgment is entered against each John . . . and Haydee . . . as trustees for the Tillotson Family Trust in the amount of $1,491,064.57."
John and Haydee opposed the proposed amendment, arguing it was "an attempt to try to create an ambiguity that would allow [PWB] to attempt to proceed against [Haydee's] personal assets." A judgment entered against a trustee in her representative capacity as trustee does not suggest personal liability on the trustee's part. (Prob. Code, § 18000 ["[u]nless otherwise provided in the contract or in this chapter, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administration of the trust . . . ."]) John and Haydee argued the original judgment was proper and did not need correction: "[W]e think it makes sense that in the normal course of events if [PWB] seek[s] to levy or writs of execution, that people are going to understand that you can go after a trustee in its representative capacity." They argued PWB could satisfy the judgment by "going to . . . accounts that are held by the trustee in its representative capacity, because . . . a trustee has to hold legal title to the trust assets . . . ." They further argued, "The jury verdict makes no doubt John and Haydee's liability is in their representative capacity and extends to trust assets only, not to their personal estates." (Italics added.) The trial court apparently agreed with the Tillotsons' argument and denied PWB's request, although it did so without prejudice to PWB renewing the motion.
Eventually the court amended the judgment at PWB's request and over appellants' objection. The second amended judgment stated the judgment in favor of PWB was "against defendants Prospect Village L.P., John . . . individually and as Trustee for the Tillotson Family Trust, Haydee . . . as Trustee for the Tillotson Family Trust, and Daniel S. Howse, individually and as Trustee for the Howse Family Trust . . . ."
In Portico, the trustees of the Harrison Children's Family Trust agreed to sell Portico a building held by the trustees in trust. (Portico, supra, 202 Cal.App.4th at p. 466.) When the sale fell through, Portico sued the Harrisons as trustees for the trust. (Id. at pp. 466-467.) The matter went to arbitration and the arbiter entered an award in favor of Portico and against the trust. The superior court subsequently confirmed the arbitration award. (Id. at p. 467.) "Portico did not seek to correct or modify either the arbitration award or the judgment to indicate the arbitration award and judgment were properly against the trustees; nor did Portico appeal from the judgment against the trust. Instead, years of protracted litigation ensued. Portico sought to enforce the judgment by levying on funds generated by the apartment building [held in trust] and to add as judgment debtors the successor trustees of the [trust] . . . ." (Ibid.) The court held Portico waited too long to have the judgment modified, although it had several remedies available when faced with the arbitration award. (Portico, supra, 202 Cal.App.4th at p. 477.)
When a jury returns an ambiguous verdict, the party adversely affected should request a "'more formal and certain verdict'" (Hathaway v. Spiro (1985) 164 Cal.App.3d 359, 366), but if the party does not and the verdict has been accepted and the jury discharged, "the duty devolves upon the trial judge to interpret the verdict from its language, taking into account the pleadings, evidence and instructions." (Ibid.) "'[A]n appellate court will interpret the verdict if it is possible to give a correct interpretation,' but will reverse if the verdict is 'hopelessly ambiguous.' [Citation.]" (Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 705.) The jury's verdict in this matter was ambiguous to the extent it found in favor of PWB as against the Tillotson Family Trust instead of against the trustees of the trust.
However, given the complaint, the evidence, and the jury instructions, the only way the jury could possibly return a verdict against the Tillotson Family Trust— other than because they were provided a faulty verdict form—was as a result of jurors concluding PWB proved John and Haydee breached the guarantee they signed as trustees of the family trust. The jury impliedly found in favor of PWB on every fact essential for PWB to prevail on the breach of guaranty claim. (Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 673.) The jury also found in favor of PWB and against John and Howse on their individual guaranties. The guaranty signed by John and Haydee as trustees of the Tillotson Family Trust was identical in all important respects to those signed by Howse and John as individuals. Furthermore, the forbearance and modification was signed John and Haydee in their representative capacities. Accordingly, it appears beyond dispute the jury found the John and Haydee breached the guaranty they signed as trustees and that breach was the basis for naming the trust as a judgment debtor in the verdict. The trial court did not, therefore, err when it entered the second amended judgment against John and Haydee as trustees for the Tillotson Family Trust. The second amended judgment does not contravene the verdict.
The amendment did not violate John and Haydee's right to due process. John and Haydee's personal property is not subject to satisfying the judgment in connection with their guaranties as trustees of the Tillotson Family Trust; only the property held in the trust is subject to satisfying the judgment against them as trustees. (Prob. Code, § 18000, subd. (a).)
Although Portico holds a trust cannot be a judgment debtor (Portico, supra, 202 Cal.App.4th at pp. 473-474), it does not go so far as to hold a judgment naming a trust as a judgment debtor cannot be amended. Tellingly, if amendment of such a judgment was prohibited, the Portico court would not likely have noted "Portico did not seek to correct or modify either the arbitration award or the judgment to indicate the arbitration award and the judgment were properly against the trustees . . . ." (Id. at p. 467.) What is more, the Portico court remanded the matter to the superior court to consider whether one of the defendants should be added to the judgment as a judgment debtor. (Id. at p. 479.) D. Award of Attorney Fees
A contract may contain a provision providing for attorney fees in enforcing the contract. When the contract contains such a provision, the court must fix reasonable attorney fees as an element of the costs of the lawsuit. (Civ. Code, § 1717, subd. (a); Code of Civ. Proc., § 1033.5, subd. (a)(10)(A).) The promissory note and the guaranties each contained an attorney fees clause. The trial court initially awarded PWB $474,548 in attorney fees. It later granted PWB's request for an additional award of $6,925 in attorney fees incurred in responding to the appellants' motion for reconsideration of the motions for new trial and judgment notwithstanding the verdict, and noted there was no dispute on the amount of the additional award. PWB then attempted to have appellants stipulate to a second amended judgment reflecting the additional attorney fees awarded by the court. According to PWB's ex parte motion to amend the judgment, defense counsel objected to the form of the proposed second amended judgment, asserting for the first time that judgment had been entered against the Tillotson Family Trust, not against John and Haydee in their capacities as trustees of the trust. After PWB successfully obtained the second amended judgment, the court awarded PWB further attorney fees in the amount of $19,139. The latter award, reflected in the third amended judgment, was for attorney fees incurred in successfully litigating the ex parte motion.
An appeal from a "postjudgment award of attorney fees is separately appealable as an order after judgment. (Code of Civ. Proc., § 904.1, subd. (a)(2); Citizens Against Rent Control v. City of Berkeley (1986) 181 Cal.App.3d 213, 223.)" (Building a Better Redondo, Inc. v. City of Redondo Beach (2012) 203 Cal.App.4th 852, 869-870, fn. omitted.) We review the trial court's award of attorney fees for an abuse of discretion. (Serrano v. Stefan Merli Plastering Co., Inc. (2011) 52 Cal.4th 1018, 1025-1026.)
"The 'experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.' [Citations.]" (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) "'It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court . . . . [Citations.] The value of legal services performed in a case is a matter in which the trial court has its own expertise. [Citation.] The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. [Citations.] The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.' [Citation.]" (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096. Thus, the trial court has broad authority in determining a reasonable amount of attorney fees (id. at p. 1095) and we uphold a trial court's award absent an abuse of discretion. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175.)
We cannot say on this record the trial court abused its discretion in awarding PWB the additional $19,139 in attorney fees.