Court Opinion

ID: 1057505
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:18:00.078128+00
Date Added: 2024-06-11T11:11:46.213400
License: Public Domain

Filed 10/9/13 Pellegrino v. Pellegrino 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                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

FRANCIS V. PELLEGRINO, as Trustee,                                  D062635
etc.,

      Plaintiff, Cross-defendant and
Respondent,                                                         (Super. Ct. No. 37-2011-00085451-
                                                                    CU-CO-CTL)
         v.

GINA MARIE PELLEGRINO, Individually
and as Trustee, etc.,

      Defendant, Cross-complainant and
Appellant.

         APPEAL from postjudgment orders of the Superior Court of San Diego County,

Timothy B. Taylor, Judge. Affirmed.

         Mayfield Bustarde, Gayle Mayfield-Venieris; McKenna Long & Aldridge and

Charles A. Bird for Defendant, Cross-complainant and Appellant.

         Duckor Spradling Metzger & Wynne, Anna F. Roppo, James E. Chodzko and

Robert M. Shaughnessy for Plaintiff, Cross-defendant and Respondent.
       Francis V. Pellegrino (Frank), Alexander C. Pellegrino (Alex), and Gina Marie

Pellegrino (Gina) are siblings and partners of Nicholas Pellegrino Investments, LP (NPI),

a California limited partnership started by their late father.1 After years of disputes and

escalating tensions, Frank and Alex filed a declaratory relief action to determine the

rights and obligations of the managing partners and limited partners of NPI. Gina filed,

but later dismissed, a cross-complaint for involuntary dissolution of NPI. A provision in

the NPI partnership agreement allows the prevailing party to recover attorney fees.

       Following a bench trial, Frank and Alex prevailed on all aspects of the litigation

and the court ordered Gina to pay attorney fees. Gina argues that she should not have to

pay the attorney fees Frank and Alex incurred defending her cross-complaint because she

voluntarily dismissed it. The NPI partnership agreement's provision on attorney fees was

broadly worded and covered "any dispute between the partners." Absent a statutory

reason not to honor the intent of the contracting parties, we affirm the orders.

                   FACTUAL AND PROCEDURAL BACKGROUND

       Nicholas Pellegrino died in 2000, leaving Frank, Alex, and Gina as equal partners

in NPI.2 NPI's real estate holdings include several apartment buildings and an office

1      "[W]e refer to the parties by their first names for purposes of clarity and not out of
disrespect." (Rubenstein v. Rubenstein (2000) 81 Cal. App. 4th 1131, 1136, fn. 1). Frank
is more formally referred to as Francis V., Alex as Alexander C., and Gina as Gina
Marie. However, we refer to them by their less formal names because this is how they
were referred to in the record.

2     There are technically three different classes of ownership and various trust entities
involved, largely due to tax considerations. For our purposes, however, Frank, Alex, and
Gina were given equal partnership interests.
                                              2
building.3 In 2005 the siblings became embroiled in disputes about management of the

jointly controlled assets. In 2008 Frank, Alex, and Gina signed a "Compromise

Agreement and Mutual General Release" (Compromise Agreement) to resolve their

issues. The Compromise Agreement included several changes to the then-existing

limited partnership agreement. NPI's attorney drafted the "Second Amended and

Restated Partnership Agreement of NPI" (Second Amended Agreement) to incorporate

changes from the Compromise Agreement. Negotiating this Second Amended

Agreement took more than two years. In its statement of decision, the trial court

remarked the Second Amended Agreement was "heavily lawyered by all parties." The

Second Amended Agreement addressed a number of issues, but only paragraph 16.2 of

the Second Amended Agreement is relevant for this appeal:

          "16.2 Attorneys' Fees: In any dispute between the partners, whether
          or not resulting in arbitration, the prevailing party shall be entitled to
          recover from the other party all reasonable costs, including, but not
          limited to, reasonable attorneys' fees."

       Despite the Second Amended Agreement, which was signed in 2010, the working

relationship among the siblings deteriorated further. Frank and Alex tried to assert power

as a two-thirds majority, but Gina blocked their efforts. In some cases, she asserted

unanimous consent of the partners was required. In others, she acted unilaterally without

authority or simply refused to recognize the authority held by her brothers.

3      A second entity that managed and operated NPI's properties, Pell Property
Management, Inc. (PPM) was also part of the litigation. However, details related to PPM
are unnecessary for resolving this appeal and thus are omitted.

                                              3
       In February 2011 Frank and Alex filed a declaratory relief action to determine the

rights and obligations of the managing general partners and limited partners of NPI. In

August, Gina filed a cross-complaint for involuntary dissolution of the partnership. To

avoid involuntary dissolution, Frank and Alex offered to purchase Gina's interest in NPI.

Gina rejected the offer, but indicated she was amenable to a buyout.

       The parties hired an experienced mediator, but the negotiations were not

successful. In December 2011 Gina voluntarily dismissed the cross-complaint without

prejudice. In early 2012 a five-day bench trial resolved all issues in favor of Frank and

Alex. The court provided a 31-page statement of decision, which included a finding that

Frank and Alex were "prevailing parties" within the meaning of paragraph 16.2 of the

Second Amended Agreement and could seek attorney fees and costs.

       In a minute order, the trial court confirmed that Frank and Alex were entitled to

attorney fees resulting from both the complaint and the dismissed cross-complaint. The

proceeding was continued until July 6, 2012, so Frank and Alex's memoranda of costs

and Gina's motion to tax costs could be considered together. Though denying some costs

related to appraisals, the court ordered Gina to pay $213,110.78 to Alex and $314,584.76

to Frank. Gina filed a notice of appeal to set aside the attorney fees and costs related to

the dismissed cross-complaint.4 Gina also objects to the court's characterization of the

three siblings as a "profoundly dysfunctional family" and requests reassignment to a new

judge on remand.

4      Gina later dismissed the appeal as to Alex.

                                              4
                                       DISCUSSION

                                              I

       "On review of an award of attorney fees after trial, the normal standard of review

is abuse of discretion. However, de novo review of such a trial court order is warranted

where the determination of whether the criteria for an award of attorney fees and costs in

this context have been satisfied amounts to statutory construction and a question of law.

[Citations.]" (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal. App. 4th 132, 142.) Because

Gina asserts an issue of statutory construction, we review de novo.

                                             II

       Attorney fees can be awarded as costs to the prevailing party when authorized by

the parties' agreement. (Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10); Santisas v.

Goodin (1998) 17 Cal. 4th 599, 607, fn. 4.) An agreement can encompass fees incurred in

both contract and noncontract causes of action, or can be more narrowly drawn.

(Santisas v. Goodin, supra, at p. 608.) Here, paragraph 16.2 of the Second Amended

Agreement uses very broad language: "in any dispute." As noted ante, all parties were

represented in the agreement and the document went through numerous revisions. Had a

more restrictive attorney fees provision been intended, the parties could have written

paragraph 16.2 more narrowly.

       It is undisputed that Frank and Alex were the prevailing parties in all aspects of

the litigation tried. Only the voluntary dismissal of the cross-complaint is at issue. Code

of Civil Procedure section 1032, subdivision (a)(4) defines " '[p]revailing party' " as

including, among others, "a defendant in whose favor a dismissal is entered." The

                                              5
section specifically states, " '[d]efendant' includes a cross-defendant." (Id., § 1032,

subd. (a)(2).) Frank and Alex were cross-defendants on the cross-complaint and thus are

covered by the statute.

       Gina contends Corporations Code section 15908.02, subdivision (d), bars Alex

and Frank's recovery of attorney fees incurred on the dismissed cross-complaint because

it contains a unilateral attorney fees provision. Corporations Code section 15908.02,

subdivision (d), applies to the judicial dissolution of a limited partnership. The provision

she cites is intended to ensure the purchasing party acts within the time specified by the

court. The relevant language of subdivision (d) is: "If the purchasing parties do not

make payment for the partnership interests within the time specified, judgment shall be

entered against them . . . for the amount of the expenses, including attorneys' fees, of the

moving parties."

       NPI was not at the stage of judicial dissolution addressed by Corporations Code

section 15908.02, subdivision (d). There was no judicially ordered dissolution in place,

there were no "purchasing parties" yet, and there was no court-specified time to act.

(Ibid.) Corporations Code section 15908.02 does not apply in the context Gina asserts

it.5 Given our conclusion on the merits of the appeal, we decline to address Gina's

contention a new trial judge should be assigned on remand.

5      In the appellant's opening brief, Gina asserted Civil Code section 1717,
subdivision (b)(2), bars Frank and Alex from receiving attorney fees on her cross-
complaint. In her reply brief, Gina conceded that "when attorney fees can be awarded
under a statute other than Civil Code section 1717, the no-fees-on-voluntary-dismissal
                                              6
                                      DISPOSITION

       The orders are affirmed. Respondent is entitled to costs on appeal.

                                                                      MCCONNELL, P. J.

WE CONCUR:

BENKE, J.

NARES, J.

rule of that section does not apply." The appellant's reply brief refocuses her appeal
solely based on Corporations Code section 15908.02.
                                             7