Court Opinion

ID: 9927383
Source: CourtListenerOpinion
Date Created: 2024-01-26 22:01:50.801236+00
Date Added: 2024-06-11T09:25:49.445353
License: Public Domain

Filed 1/26/24 Roberts v. Crandell CA2/3
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION THREE

REIKO ROBERTS,                                                 B320951

         Plaintiff and Respondent,                             Los Angeles County
                                                               Super. Ct. No.
         v.                                                    18STCV04640

ZAC CRANDELL et al.,

         Defendants and Appellants.

      APPEAL from a postjudgment order of the Superior Court
of Los Angeles County, Steven J. Kleifield, Judge. Affirmed.

     Mandel & Manpearl, Gerald Manpearl and Jan Goodman;
Rokita Law and Amanda M. Rokita for Defendants and
Appellants.

      Law Office of Parag L. Amin and Parag L. Amin; Law
Office of Ann Rosen and Ann Rosen for Plaintiff and Respondent.
                   _________________________
       Defendants Zac Crandell and Johnny’s Bar, LLC appeal
from the court’s order denying their motions for attorney fees
under Civil Code section 1717 after the court entered judgment
in defendants’ favor and against plaintiff Reiko Roberts on
the ground the statute of limitations barred her claims. The
court found defendants had no contractual right to attorney fees.
Finding no error, we affirm the court’s order.
                          BACKGROUND
       As this appeal concerns the court’s order denying
defendants’ motions for attorney fees, we provide only a
brief summary of the underlying facts. This litigation began
in November 2018 when Roberts sued Crandell, Johnny’s
Bar, LLC,1 and another business entity Crandell owned that
is not a party to this appeal. Roberts alleged she and Crandell
formed Johnny’s Bar with Crandell as the majority, 60 percent,
owner and Roberts as the minority, 40 percent, owner. Among
other things, Roberts alleged Crandell breached his fiduciary
duties to her, including by mismanaging and misappropriating
funds from the company. Defendants filed a cross-complaint
against Roberts and her separate businesses alleging she had
been removed from the company, and, among other things,
had breached the Johnny’s Bar operating agreement and
interfered in its business.
       The parties demurred to each other’s pleadings, resulting
in some causes of action being dismissed. The parties apparently

1     Johnny’s Bar, LLC was formed to own and operate
Johnny’s Bar, a bar in Los Angeles. We refer to the defendant
and the business interchangeably as “Johnny’s Bar.”

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agreed to bifurcate the trial with the court first to determine
whether Roberts was an owner of Johnny’s Bar. The parties
disputed which version of the operating agreement applied;
none was signed.2
       Ultimately, the trial court found in favor of defendants
on statute of limitations grounds on Roberts’s claims. The
court ordered defendants to submit a judgment for the court’s
signature that included a dismissal of the cross-complaint.
The judgment, as amended by the court, states judgment is
entered in favor of defendants against Roberts on all causes
of action, “and against . . . Roberts for costs in the amount of
$____ and attorney’s fees in the amount of $____ as allowed
by law.” (The court added “as allowed by law.”) The judgment
also states defendants’ cross-complaint against Roberts “shall be
dismissed upon entry of judgment and this Judgment becoming
final.” The court added, “Roberts to recover costs of $___
and attorney[’]s fees of $_____ as allowed by law.” Defendants
objected to Roberts’s entitlement to costs or fees because the

2     Defendants argue the trial court determined the controlling
operative agreement was that attached to Crandell’s 2015
complaint against Roberts in an earlier action. As Roberts notes,
the record does not include an order making that determination.
Nevertheless, Roberts asked the trial court to find that version
was the effective operating agreement and she had attached it to
her demurrer to the first amended cross-complaint. The parties
also appear to concede the attorney fee provision at issue was the
same in each version of the operating agreement. Accordingly,
for purposes of this appeal, we presume the trial court considered
the operative agreement attached to Crandell’s 2015 complaint
when it decided defendants’ motions for attorney fees.

                                3
cross-complaint was a “defense action, similar to affirmative
defenses” that became moot after the court dismissed Roberts’s
claims. Defendants also argued they had made an offer to
Roberts under Code of Civil Procedure section 998 that she
had rejected.
       Defendants moved for attorney fees as the prevailing
parties in the action under an attorney fee clause in the Johnny’s
Bar operating agreement.3 Roberts opposed the motion arguing
(1) defendants were not the prevailing party as they did not
receive a net monetary recovery, and (2) the attorney fee clause
in the operating agreement was limited to recovery of fees
incurred in an arbitration, not a court trial. Crandell replied.
He argued he was the prevailing party, he was entitled to
reimbursement of expenses incurred for the LLC under the
operating agreement, and the parties intended for the attorney
fee provision to apply to litigation. Crandell noted arbitration
was not required under the agreement, and the agreement
intended the parties to attempt to resolve their issues through
alternative dispute resolution first, eventually requiring the
losing party to pay the prevailing party’s attorney fees and costs.
       The court heard defendants’ motions for attorney fees on
March 21, 2022. The court denied both motions finding there
was “no contractual right to attorney fees.” There is no reporter’s
transcript of the hearing. The next day, defendants filed a
request for a statement of decision, which Roberts opposed.
After reviewing the parties’ briefing on the issue, the court found

3    Defendants had separate counsel and thus filed separate
motions.

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the request was untimely, and defendants were not entitled to
a statement of decision as the motions for attorney fees were
not a trial of a question of fact under Code of Civil Procedure
section 632.
       Defendants filed separate notices of appeal and proposed
a settled statement. The court certified the proposed settled
statement was accurate.4
                            DISCUSSION
1.     Applicable law and standard of review
       Civil Code section 1717 authorizes the award of attorney
fees to a prevailing party “[i]n 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.” (Civ. Code,
§ 1717, subd. (a).) A contract’s attorney fee provision “ ‘must be
analyzed on its own terms, and in context, pursuant to the usual
rules of contract interpretation for determining the actual intent
of the parties. [Citations.]’ ” (GoTek Energy, Inc. v. SoCal IP
Law Group, LLP (2016) 3 Cal.App.5th 1240, 1249.)
       In interpreting a contract, the court “give[s] effect to
the mutual intention of the parties as it existed at the time
of contracting.” (Civ. Code, § 1636.) “Ordinarily, the objective
intent of the contracting parties is a legal question determined
solely by reference to the contract’s terms.” (Wolf v. Walt Disney

4     The settled statement quoted from the provisions of
the operating agreement relating to nonliability of members
for expenses and entitlement to reimbursement and the attorney
fee provision, summarized the parties’ positions, and stated the
court “found that there is no contractual right to attorney fees.”

                                 5
Pictures & Television (2008) 162 Cal.App.4th 1107, 1126 (Wolf);
Civ. Code, § 1639 [“[w]hen a contract is reduced to writing, the
intention of the parties is to be ascertained from the writing
alone, if possible”]; id., § 1638 [the “language of a contract is to
govern its interpretation, if the language is clear and explicit, and
does not involve an absurdity”].) We consider the attorney fee
provision in context, rather than in isolation, and in light of the
contract as a whole. (Id., § 1641 [“The whole of a contract is to
be taken together, so as to give effect to every part, if reasonably
practicable, each clause helping to interpret the other.”].) Courts
may consider extrinsic evidence even if the terms of a contract
appear clear and unambiguous, however, if it is relevant to prove
the language is “reasonably susceptible” to another meaning.
(Pacific Gas & Elec. Co. v. G. W. Thomas Drayage & R. Co. (1968)
69 Cal.2d 33, 37; Hewlett-Packard Co. v. Oracle Corp. (2021)
65 Cal.App.5th 506, 538 (Hewlett-Packard) [“ ‘Extrinsic evidence
is “admissible to interpret the instrument, but not to give it a
meaning to which it is not reasonably susceptible.” ’ ”].)
       Generally, interpretation of a contract is a judicial function.
(Wolf, supra, 162 Cal.App.4th at p. 1125.) Our review is thus
de novo, absent any conflict in extrinsic evidence. (Id. at p. 1126;
Gilkyson v. Disney Enterprises, Inc. (2021) 66 Cal.App.5th 900,
915 (Gilkyson).)
2.     The attorney fee provision applies only to arbitrations
       Defendants contend they are entitled to recover their
attorney fees from Roberts under subsection “(4) Mediation and
Arbitration of Disputes Among Members” of section “VII. General
Provisions” of the operating agreement. That provision provides
in full:

                                  6
       “In any dispute over the provisions of
this operating agreement and in other disputes
among the members, if the members cannot
resolve the dispute to their mutual satisfaction,
the matter shall be submitted to mediation.
The terms and procedure for mediation shall
be arranged by the parties to the dispute.
       “If good-faith mediation of a dispute
proves impossible or if an agreed-upon
mediation outcome cannot be obtained by
the members who are parties to the dispute,
the dispute may be submitted to arbitration
in accordance with the rules of the American
Arbitration Association. Any party may
commence arbitration of the dispute by sending
a written request for arbitration to all other
parties to the dispute. The request shall state
the nature of the dispute to be resolved by
arbitration, and, if all parties to the dispute
agree to arbitration, arbitration shall be
commenced as soon as practical after such
parties receive a copy of the written request.
       “All parties shall initially share the
cost of arbitration, but the prevailing party
or parties may be awarded attorney fees,
costs and other expenses of arbitration. All
arbitration decisions shall be final, binding
and conclusive on all the parties to arbitration,
and legal judgment may be entered based upon

                     7
             such decision in accordance with applicable law
             in any court having jurisdiction to do so.”
       The plain, unambiguous language of the provision clearly
limits the award of attorney fees to disputes resolved through
arbitration: if the parties to a dispute agree to arbitration,
then they “shall initially share the cost of the arbitration, but
the prevailing party or parties may be awarded attorney fees,
costs and other expenses of arbitration.” (Italics added.) The
award of attorney fees to the prevailing party is referred to in
conjunction with the initial payment of the cost of arbitration
by all parties, and is qualified by the descriptor “of arbitration,”
making it clear the provision is intended to apply to the party
prevailing in an arbitration alone. (Italics added.) Moreover,
the attorney fee provision falls under the subsection entitled,
“Mediation and Arbitration of Disputes Among Members.”
(See Ogburn v. Travelers’ Ins. Co. (1929) 207 Cal. 50, 52–53
[considering entire insurance policy including introductory clause
or caption to interpret intended coverage].) As it is undisputed
no arbitration took place here, the provision does not authorize
a fee award.
       Without citing any relevant authority, defendants argue
because arbitration was not mandatory—and it was Roberts who
chose litigation and avoided arbitration—Roberts cannot “escape”
paying their attorney fees under the contract. Yet, had Roberts
prevailed on her complaint, she too would have been unable to
enforce the attorney fee provision of the operating agreement,
having chosen litigation over arbitration.5

5      Defendants also argue—without cognizable legal argument
or citation to authority—Roberts “is acting with unclean hands”

                                 8
      Defendants cite Titan Group, Inc. v. Sonoma Valley County
Sanitation Dist. (1985) 164 Cal.App.3d 1122 to support their
contention the arbitration provision in the operating agreement
was nonbinding. We agree the operating agreement did not
require the parties to arbitrate their disputes unless both sides
consented. Roberts does not appear to contend otherwise.
However, Titan Group says nothing about a party’s ability to
enforce an attorney fee provision that is part of a nonbinding
arbitration provision where no arbitration has taken place.
      Defendants nevertheless contend the parties intended
for the prevailing party in a superior court action to be entitled
to recover attorney fees. Defendants argue the parties’ conduct
“in their pleadings in this action indicate unequivocally that they
both believed that the attorneys’ fees provision in the contract
applied to civil actions in the [s]uperior [c]ourt.”6 Defendants

by asking the court to interpret the fee provision as applicable
only in arbitrated matters when she filed an action in superior
court and asked for attorney fees. We need not consider this
contention. (See, e.g., City of Santa Maria v. Adam (2012) 211
Cal.App.4th 266, 287 [“we may disregard conclusory arguments
that are not supported by pertinent legal authority or fail to
disclose the reasoning by which the appellant reached the
conclusions he wants us to adopt”].)
6     Defendants’ operative cross-complaint, as did its first
amended cross-complaint, prayed for “[a]ttorneys’ fees, expenses,
and costs as per the [o]perating [a]greement.” As defendants
note, Roberts’s demurrer to the first amended cross-complaint
asked for “reasonable attorney fees and costs,” and her answer
to the second amended cross-complaint asked for “reasonable
attorney’s fees and costs from cross-complainants and their

                                 9
also argue “Roberts’ understanding that the operating agreement
would grant attorneys’ fees to the prevailing party, even if
arbitration did not occur, is apparent in Roberts’ admissions”
in her reply to defendants’ objection to the judgment.
       As to the latter, Roberts made no such admission. In
responding to defendants’ objection to the court having added
a space in the judgment for Roberts to recover “costs . . . and
attorney[’]s fees . . . as allowed by law” based on defendants’
dismissal of their cross-complaint, Roberts simply acknowledged
Civil Code section 1717 does not bar recovery of attorney fees
on voluntarily dismissed noncontract claims if the fees clause
is broad enough to encompass those claims. But she went on
to argue, citing the language of the fee provision, “either neither
of the parties are entitled to attorney’s fees since this matter
did not go to arbitration, or if the Court is inclined to honor the
prevailing party attorney’s fees provision despite the language
regarding arbitration, then Roberts is entitled to move for her
attorney’s fees and costs for prevailing on the Cross-Complaint
to the extent that Defendants are entitled to move for attorney’s
fees or costs on the Complaint.” (Italics added.) Thus, Roberts
simply argued she would have the same rights as defendants
if the court were to apply the attorney fees provision despite
its limitation to arbitration.

attorneys defending this frivolously filed and prosecuted action.”
Roberts’s first amended complaint in turn prayed for “an award
of attorneys’ fees pursuant to the [o]perating [a]greement
pled by Crandell in his Cross-Complaint and First Amended
Cross-Complaint.”

                                10
       As for the parties’ pleadings, it is the construction given
the contract by the parties’ conduct “before any controversy arises
as to its meaning” that is relevant to the parties’ mutual intent
at the time of contracting. (Southern Pacific Transportation Co.
v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232,
1242, italics added [considering parties’ mutual pretrial methods
to evaluate rent]; see also City of Hope National Medical Center
v. Genentech, Inc. (2008) 43 Cal.4th 375, 393 [“A party’s conduct
occurring between execution of the contract and a dispute about
the meaning of the contract’s terms may reveal what the parties
understood and intended those terms to mean.”].) The parties’
post-controversy pleadings and arguments thus are not reliable
indicators of their mutual intent as it existed at the time they
entered into the operating agreement. Moreover, to be entitled
to attorney fees based on its opponent’s prayer for them, a
party must prove its opponent would have been entitled to fees
if the opponent had prevailed. (Blickman Turkus, LP v. MF
Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 898–899;
see also Hasler v. Howard (2005) 130 Cal.App.4th 1168, 1171
[“A prevailing party is not entitled to fees simply because the
opposing party requested them.”].) The mere fact both parties
requested fees does not demonstrate they intended—at the time
of contracting—for the prevailing party to recover attorney fees
outside of arbitration.
       In any event, even if the parties’ pleadings and memoranda
demonstrate they subjectively believed the attorney fee provision
in the operating agreement applied to a superior court action,
the provision is not reasonably susceptible to that interpretation.
(Hewlett-Packard, supra, 65 Cal.App.5th at p. 538 [extrinsic
evidence not admissible to give contract “ ‘ “a meaning to which

                                11
it is not reasonably susceptible” ’ ”]; see also Gilkyson, supra,
66 Cal.App.5th at p. 916 [parties’ intent at time they entered
into contract “is interpreted according to objective, rather than
subjective, criteria”].) As we discussed, the only reference in
the agreement to a prevailing party and an attorney fee award
is in the context of an arbitration. Had the parties intended for
attorney fees to be recoverable in any forum, they easily could
have written the clause to state the prevailing party may be
awarded attorney fees, costs, and other expenses “of arbitration
or litigation” or “of any proceeding” or “in connection with the
parties’ dispute.”
       Defendants also appear to argue this Court should
strike the references to arbitration in the attorney fee provision
as unconscionable because there is no mandatory right to
arbitration under the agreement. We treat this argument
as forfeited. Not only did defendants fail to make this so-called
unconscionability argument in the trial court, they neither
cite authority nor provide any rationale—other than to
note the severability clause refers to a court’s or arbitrator’s
determination that a provision is invalid or unenforceable—
as to why limiting the recovery of attorney fees to instances
where the parties consent to resolve their dispute through
arbitration is unconscionable. (In re Marriage of Falcone & Fyke
(2008) 164 Cal.App.4th 814, 830 [“The absence of cogent legal
argument or citation to authority allows this court to treat
the contentions as waived.”].)
       Finally, defendants argue in their reply brief—but not in
their opening brief—that Crandell is entitled to reimbursement
from Roberts for expenses he incurred on behalf of Johnny’s Bar
in this action under section II, subsection (2) of the operating

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agreement. Crandell also cited this subsection, which governs
“[r]eimbursement for [o]rganizational [c]osts,” in his reply
in support of his motion for attorney fees. Whether Crandell
can recover his expenses under this provision is not relevant
to whether the agreement authorized an award of attorney fees
to the prevailing party in an action on the contract under Civil
Code section 1717, subdivision (a). We thus do not consider
the issue and can infer the trial court did not either. (Denham
v. Superior Court of Los Angeles County (1970) 2 Cal.3d 557, 564
[appellate court indulges all presumptions to support trial court’s
order on matters as to which the record is silent].)
       As we have concluded the trial court correctly found the
operating agreement did not give the parties a contractual right
to recover attorney fees if they prevailed in this action, we need
not consider the parties’ other contentions.

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                        DISPOSITION
     The court’s order denying appellants Zac Crandell’s
and Johnny’s Bar, LLC’s motions for attorney fees is affirmed.
Respondent Reiko Roberts is to recover her costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                    EGERTON, J.

We concur:

             EDMON, P. J.

             LAVIN, J.

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