Court Opinion

ID: 6498424
Source: CourtListenerOpinion
Date Created: 2022-07-07 16:02:28.961255+00
Date Added: 2024-06-11T08:51:05.356912
License: Public Domain

Filed 7/7/22 Cable v. O’Neill CA4/1

                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

 DENISE CABLE et al.,                                                 D079096

           Plaintiffs and Appellants,

           v.                                                         (Super. Ct. No. 37-2019-
                                                                      00018657-CU-BC-CTL)
 MICHAEL THOMAS O’NEILL,

           Defendant and Respondent.

         APPEAL from an order of the Superior Court of San Diego County,
Joel R. Wohlfeil, Judge. Reversed.
         Dean Gazzo Roistacher, Lee H. Roistacher, Samuel C. Gazzo and
Joseph M. Radochonski for Plaintiffs and Respondents.
         No appearance for Defendant and Respondent.

         Denise and James Cable appeal an order denying their motion for
attorney fees after the trial court entered judgment in their favor on their
breach of contract claim against Michael O’Neill for failing to repay a debt
under the terms of a written agreement.1 The trial court concluded that the
Cables’s action was based on a debt extension agreement that did not contain
an attorney fee provision. The Cables contend that the court erred in
declining to read the extension agreement in conjunction with the original
loan agreement, which does contain an attorney fee provision. O’Neill did not
file a respondent’s brief. We agree with the Cables’s contention and reverse
the order denying their motion for attorney fees. On remand, the court shall
enter a new order granting the Cables attorney fees and conduct further
proceedings to fix the amount of fees.
              FACTUAL AND PROCEDURAL BACKGROUND
      O’Neill asked the Cables to loan him $100,000 in February 2016.
O’Neill intended to loan the money, in turn, to the owner of Ocean
Enterprises, a company that conducted three different types of business:
a scuba gear retail store, which included service, rental, and instructional
departments; military sales; and a travel division that took clients on scuba
diving trips. O’Neill was interested in purchasing the scuba gear retail
portion of the business. O’Neill assured the Cables that their loan was solely
to him and that he would pay it back quickly with interest. Denise wrote a
check to O’Neill in the amount of $100,000 on February 16, 2016.
      O’Neill drafted and executed a two-page “loan agreement” dated
February 17, 2016. The terms of the loan agreement required O’Neill to
repay the $100,000 with interest at a rate of 10 percent per annum. He
agreed to repay the loan “in consecutive monthly installments of interest
only . . . commencing the month following the execution of this Agreement

1     In a separate opinion issued concurrently with this opinion, we affirm
the judgment in favor of the Cables. (Cable et al. v. O’Neill (July 7, 2022,
D078601) [nonpub. opn.].)

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and continuing until July 1, 2016. With the balance then owing under this
Agreement being paid at that time.”
      The agreement contains an integration clause and states, “This
Agreement may only be modified by a written instrument executed by both
the Borrower and the Lender.” The agreement also contains a cost provision
that states, “All costs, expenses and expenditures including, without
limitation, the complete legal costs incurred by enforcing this Agreement as a
result of any fault by the Borrower, will be added to the principal then
outstanding and will immediately be paid to Borrower.”
      O’Neill deposited the check on February 17, 2016. He made three
interest-only payments between March and May 2016. O’Neill did not repay
the loan by July 1, 2016. He resumed making interest-only payments
between July 2016 and January 2018. In February 2018, the Cables and
O’Neill discussed a plan for repayment of the loan.
      O’Neill prepared and executed a second written agreement on February
12, 2018, titled “Debt Repayment Extension Agreement” (extension
agreement) memorializing the parties’ agreement to extend the debt
repayment period under additional terms. In the extension agreement,
O’Neill agreed that he owed the Cables “the sum of $100,000.00, said sum
being presently due and payable.” In consideration for the Cables’s
“forbearance,” O’Neill agreed to make monthly principal payments of $5,000
plus interest until paid in full, with a full maturity date of October 10, 2019.
He further agreed that if he failed to make any payments “punctually on the
agreed upon extended terms,” the Cables would have “full rights to proceed
for the collection of the entire balance then remaining.” O’Neill made loan
payments between February and November 2018. However, he stopped
making payments after November 8, 2018.

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      The Cables sued O’Neill for breach of contract, alleging that he entered
into a written contract in 2016 to repay the $100,000 plus interest by July
2016. When he did not repay the loan on time, they entered into a written
agreement to extend the debt payments, which O’Neill breached by failing to
make payments after November 8, 2018.
      The Cables moved for attorney fees based on the cost provision in the
2016 agreement. O’Neill opposed the motion, contending that the Cables
based their breach of contract action on the extension agreement, which does
not contain an attorney fee provision. O’Neill further contended that even if
the action were based on the original loan agreement, the cost provision in
that agreement does not contain a valid attorney fee provision. He also
challenged the amount of the fees request.
      In ruling on the motion, the trial court recognized that the Cables were
the prevailing parties and would be entitled to attorney fees as costs, if fees
and costs are recoverable under the contracts. The court determined that the
parties intended the reference to “complete legal costs” in the 2016
promissory note to include attorney fees and stated that it would have
awarded $31,345.00 in attorney fees if the 2016 agreement was the basis for
the Cables’s breach of contract action. The court concluded, however, that
the Cables based their action on the 2018 extension agreement, which does
not contain an attorney fee provision and does not refer to or incorporate the
terms of the 2016 agreement.
                                 DISCUSSION
      Codifying what is commonly known as the American rule, section 1021
of the Code of Civil Procedure provides: “Except as attorney’s fees are
specifically provided for by statute, the measure and mode of compensation of
attorneys and counselors at law is left to the agreement, express or implied,

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of the parties.” Thus, while each party to a lawsuit ordinarily pays its own
attorney fees, the parties may agree to a different rule for payment of fees.
“In other words, section 1021 permits parties to ‘ “contract out” of the
American rule’ by executing an agreement that allocates attorney fees.
[Citations.] Thus, ‘ “[p]arties may validly agree that the prevailing party will
be awarded attorney fees incurred in any litigation between themselves,
whether such litigation sounds in tort or in contract.” ’ ” (Mountain Air
Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751
(Mountain Air).)
      Code of Civil Procedure section 1033.5, subdivision (a)(10)(A) provides
that a prevailing party is entitled to recover attorney fees authorized by
contract as an element of costs, which are fixed upon noticed motion. (Code
Civ. Proc., § 1033.5, subd. (c)(5); see also Civ. Code, § 1717, subd. (a).)
      We independently review the determination of the legal basis for
awarding or denying a request for attorney fees. (Mountain Air, supra,
3 Cal.5th at p. 751.)
      The Cables are prevailing parties in this action for breach of contract.
The only issue in this appeal is whether the 2018 extension agreement should
be construed together with the original 2016 agreement to trigger the
attorney fee provision.
      “Courts will construe together several documents concerning the same
subject and made as part of the same transaction (Civ. Code, § 1642;
[citation]) even though the documents were not executed contemporaneously
[citation] and do not refer to each other [citation]. It is generally a factual
question whether several documents were intended to govern the same
transaction. [Citations.] However, ‘[i]nterpretation of a contract presents a
question of law unless it depends on conflicting evidence, and an appellate

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court is not bound by a trial court’s interpretation which does not depend on
the credibility of extrinsic evidence.’ ” (Boyd v. Oscar Fisher Co. (1989)

210 Cal.App.3d 368, 378 (Boyd).)2
      “ ‘Whether a document is incorporated into the contract depends on the
parties’ intent as it existed at the time of contracting.’ [Citation.] ‘ “ ‘For the
terms of another document to be incorporated into the document executed by
the parties the reference must be clear and unequivocal . . . .’ ” ’ ([Citation],
italics added . . . ) ‘The contract need not recite that it “incorporates” another
document, so long as it “guide[s] the reader to the incorporated document.” ’
[Citation.] To be construed together, the separate instruments must be ‘so
interrelated as to be considered one contract.’ [Citation.]” (R.W.L.
Enterprises, supra, 17 Cal.App.5th at pp. 1027–1028.)
      The original loan agreement and the extension agreement are clearly
interrelated. Although the 2018 extension agreement does not expressly
refer to the original 2016 agreement, it is an agreement between the same
parties to “Extend Debt Payment,” i.e., payment of the debt memorialized in
the 2016 loan agreement. The extension agreement refers to the debt that
“O’Neill presently owes the creditors the sum of $100,000.00, said sum being
presently due and payable.” The extension agreement also refers to the
Cables’s “forbearance” and agrees to additional “extended terms” to pay the
existing debt in consideration for this forbearance. These references guide

2      The Cables did not specifically refer to Civil Code section 1642 in their
briefing before the trial court, but they argue that the 2018 loan agreement
was merely a modification of the 2016 agreement and that it was entitled to
the attorney fee provision in the 2016 agreement. “[W]e may review a new
theory on appeal that presents a question of law on undisputed facts.”
(R.W.L. Enterprises v. Oldcastle, Inc. (2017) 17 Cal.App.5th 1019, 1031–1032
(R.W.L. Enterprises).)

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the reader to the 2016 loan agreement, which establishes the amount
presently due and payable and the right of the Cables to enforce the original
agreement. These agreements govern the same transaction—the $100,000
loan to O’Neill—and they are inextricably intertwined. (Boyd, supra,
210 Cal.App.3d at p. 378.) The Cables’s breach of contract action based on
the extension agreement necessarily implicated the original loan agreement.
Therefore, the Cables are entitled to attorney fees based on the terms of the
original agreement.
                                DISPOSITION
      The order denying the Cables’s motion for attorney fees is reversed.
The matter is remanded with directions to enter a new order granting
attorney fees and to conduct further proceedings to fix the amount of attorney
fees. The Cables are entitled to recover costs on appeal.

                                                            AARON, J.

WE CONCUR:

HUFFMAN, Acting P. J.

O’ROURKE, J.

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