Court Opinion

ID: 4107194
Source: CourtListenerOpinion
Date Created: 2016-12-14 19:02:48.552432+00
Date Added: 2024-06-11T11:30:45.651963
License: Public Domain

Filed 11/22/16 Certified for publication 12/14/16 (order attached)

                   COURT OF APPEAL, FOURTH APPELLATE DISTRICT
                                               DIVISION ONE
                                        STATE OF CALIFORNIA

BEACH BREAK EQUITIES, LLC,                                       D069313
         Plaintiff and Respondent,
         v.
MARTIN LOWELL,                                                  (Super. Ct. No. 37-2010-0031619-
                                                                 CL-UD-SC)
         Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of San Diego County, Joel M.

Pressman, Judge. Reversed.

         Legal Aid Society of San Diego and Richard Steiner for Defendant and Appellant.

         Goode, Hemme & Peterson and Thomas B. Goode for Plaintiff and Respondent.

         Landlord Beach Break Equities, LLC. (Beach Break) filed an unlawful detainer

action against tenant Martin Lowell.1 The court granted Beach Break's summary

adjudication motion on the possession issue, and issued a writ of possession (reserving

1     Martin Lowell is often referred to throughout the record as Lowell Martin. For
purposes of clarity, we refer to appellant as Lowell.
damage issues). Lowell appealed the possession order to the appellate division of the

superior court (appellate division). While the appeal was pending, Beach Break evicted

Lowell under the authority of the writ of possession.

       The appellate division reversed the possession order, finding triable issues of fact

on the possession issue and remanded for a trial. In so doing, the appellate division

expressly ordered that Lowell was entitled to seek restitution for any damages caused by

the premature eviction. After the matter was transferred to an unlimited civil department,

the trial court ruled Lowell was not entitled to a restitution hearing because he had not

filed an affirmative cross-complaint. Over Lowell's objection, Beach Break then

dismissed its action and the court entered a final judgment.2

       Lowell appeals. We determine the court erred in denying Lowell's request for a

hearing on his restitution claim. Under settled law, Lowell was entitled to a restitution

hearing even without filing a cross-complaint. We reverse the judgment.

                   FACTUAL AND PROCEDURAL BACKGROUND

       In June 2005, Lowell entered into a written agreement to lease a residence for five

years for $1,200 per month with three automatic five-year renewals. On August 2010,

Beach Break acquired the property at a foreclosure sale and recorded a trustee's deed

upon sale. Shortly after, Beach Break filed an unlawful detainer action against Lowell.

2     Under Code of Civil Procedure section 581d, the dismissal order constitutes the
judgment in this action. All further statutory references are to the Code of Civil
Procedure unless otherwise stated.
                                             2
       In March 2011, the trial court entered an order granting Beach Break's summary

adjudication motion for possession. Lowell appealed to the appellate division. While the

appeal was pending, Beach Break evicted Lowell and sold the property to a third party.

       In November 2013, the appellate division reversed the possession order, finding

triable issues of fact existed on several matters related to Beach Break's claimed

possession right.3 The appellate division remanded the matter to the trial court for

further proceedings consistent with its opinion, "including appropriate restitution

hearings and orders to restore [Lowell] 'so far as possible to the position [he] occupied

before the enforcement or execution of the judgment.' (Code Civ. Proc.,

§ 908; see also Munoz v. MacMillan (2011) 195 Cal.App.4th 648.)" (Fn. omitted.)

       During the next 14 months, the parties engaged in various procedural

maneuverings, including Beach Break's unsuccessful attempt to dismiss the case.

       In April 2015, Beach Break filed a second amended complaint converting the

unlawful detainer action to an unlimited action seeking damages for unpaid rent while

Lowell was in possession of the premises. Lowell moved for summary judgment

contending that he was entitled to the court-ordered restitution hearing. The trial court

(Superior Court Judge Gary Kreep) denied the motion on procedural grounds.

3      The appellate division determined there were triable factual issues on several
matters including whether Beach Break had notice of Lowell's lease; whether Lowell was
a bona fide tenant entitled to notice under applicable statutes; and whether Beach Break
was a bona fide purchaser.

                                             3
        In September 2015, Beach Break filed a motion to dismiss its second amended

complaint, arguing it had an absolute right to voluntarily dismiss its own action even if

the dismissal would eliminate Lowell's restitution. The court (Judge Kreep) denied the

dismissal motion on procedural grounds. A trial was scheduled for the next month.

        At the outset of the trial, Beach Break filed a motion in limine seeking to exclude

Lowell's evidence regarding restitution. Beach Break argued that Lowell was not entitled

to restitution in this action because he had not filed either a cross-complaint or an

affirmative defense seeking restitution. Lowell opposed the motion, arguing that a tenant

who has obtained reversal of an unlawful detainer action is entitled to seek restitution

without filing a separate claim.

        After a hearing, the court (Superior Court Judge Joel Pressman) ruled that Lowell

waived any right to restitution because he had not filed an affirmative pleading requesting

this form of relief. After the ruling, Beach Break moved to dismiss its entire case with

prejudice. The court granted the motion. Lowell filed written objections. After

considering Lowell's objections, the court signed a written order of dismissal. Lowell

filed a timely notice of appeal in this court.

                                        DISCUSSION

        Both sides agree the sole issue on appeal is whether a party who has obtained a

reversal of a judgment in an unlawful detainer case must file a cross-complaint seeking

restitution to obtain this form of relief. Because this is a question of law, we review the

trial court's determination de novo. (Cho v. Superior Court (1995) 39 Cal.App.4th 113,

119.)

                                                 4
                                     I. Legal Principles

       As a general rule, when a judgment is reversed on appeal, the appellant is entitled

to restitution for all things lost by reason of the judgment. (Levy v. Drew (1935) 4 Cal.2d

456, 459.) This principle is embodied in California statutory law and settled equitable

principles. (§ 908; Munoz v. MacMillan (2011) 195 Cal.App.4th 648, 657-658 (Munoz).)

       Section 908 provides that, upon the reversal or modification of a judgment, "the

reviewing court may direct that the parties be returned so far as possible to the positions

they occupied before the enforcement of or execution on the judgment or order. In doing

so, the reviewing court may order restitution on reasonable terms and conditions of all

property and rights lost by the erroneous judgment or order, so far as such restitution is

consistent with rights of third parties and may direct the entry of a money judgment

sufficient to compensate for property or rights not restored. The reviewing court may take

evidence and make findings concerning such matters or may, by order, refer such matters

to the trial court for determination."

       Even if the reviewing court has not ordered restitution, the trial court whose order

or judgment has been reversed on appeal has the inherent authority to afford

restitutionary relief. (Munoz, supra, 195 Cal.App.4th at p. 657; see Shubert v. Bates

(1947) 30 Cal.2d 785, 789 (Shubert); Gunderson v. Wall (2011) 196 Cal.App.4th 1060,

1065 (Gunderson); Rogers v. Bill & Vince's, Inc. (1963) 219 Cal.App.2d 322, 324

(Rogers); 9 Witkin, Cal. Procedure (5th ed. 2008), Appeal, § 900, p. 964.) " 'The

fundamental rule guiding the court in [such] proceeding[s] [i]s, so far as possible, to place

the parties in as favorable a position as they could have been in had the judgments not

                                             5
been enforced pending appeal.' [Citation.]" (Gunderson, at p. 1065.) A person whose

property has been taken under a judgment is entitled to restitution as a matter of right if

the judgment is reversed or set aside, unless restitution would be inequitable. (Id. at

p. 1064; Stockton Theatres, Inc. v. Palermo (1953) 121 Cal.App.2d 616, 619 (Stockton

Theatres).)

       Numerous courts have applied these principles in the unlawful detainer context.

(See Shubert, supra, 30 Cal.2d at p. 789; Munoz, supra, 195 Cal.App.4th at p. 658;

Stockton Theatres, supra, 121 Cal.App.2d at p. 619; Erickson v. Boothe (1954) 127

Cal.App.2d 644, 648.) When a landlord who has secured a writ of possession evicts a

tenant before the appellate rights of the tenant have been exhausted, the landlord assumes

the risk it will be subject to a full accounting and restitution if the judgment granting the

writ of possession is reversed on appeal. (Erickson v. Boothe, supra, 127 Cal.App.2d at

p. 649.) The Munoz court explained that after a reversal in an unlawful detainer action,

"restitution can be recovered in the underlying unlawful detainer action when a judgment

for the landlord is reversed or in a separate [breach of contract] action instituted to

recover losses incurred as a result of a reversed judgment."4 (Munoz, at p. 658.)

       Whether a party is entitled to restitution following reversal presents a question

calling for judicial discretion. (Gunderson, supra, 196 Cal.App.4th at p. 1065; Munoz,

4       Practically speaking, the restitution remedy does not differ greatly from the breach
of contract remedy. (Munoz, supra, 195 Cal.App.4th at p. 659, fn.7.) The Munoz court
stated that after prevailing on appeal, the tenant's "most straightforward remedy [is] to
seek restitution in the underlying unlawful detainer action, not to bring a subsequent
action for breach of contract." (Id. at p. 650.)
                                              6
supra, 195 Cal.App.4th at pp. 655-656.) The trial court's ruling will not be disturbed in

the absence of a showing of manifest abuse of discretion. (Munoz, at p. 662.)

                                           II. Analysis

       In this case, the trial court declined to exercise its discretion and instead ruled that

Lowell was not entitled to restitution as a matter of law because he did not file a cross-

complaint seeking this relief. This ruling was erroneous for two reasons.

       First, citing section 908 (which authorizes an appellate court to order restitution

after a reversal) and Munoz (which expressly recognized the restitution right), the

appellate division ordered that Lowell be provided an "appropriate restitution hearing[]"

to restore him "so far as possible to the position [he] occupied before the enforcement . . .

of the judgment." Under settled appellate principles, this order was binding on the trial

court and the court had the affirmative obligation to follow the mandatory direction. (See

Rice v. Schmid (1944) 25 Cal.2d 259, 263 ["Where a reviewing court reverses a judgment

with directions . . . the trial court is bound by the directions given."]; Butler v. Superior

Court (2002) 104 Cal.App.4th 979, 982 [trial court is not authorized to materially depart

from appellate directions on remand]; see also People v. Dutra (2006) 145 Cal.App.4th

1359, 1365-1367.)

       Second, even without an order from the reviewing court, the party prevailing on

appeal may seek restitutionary relief through a motion in the remanded matter, rather than

by filing a new cross-complaint or filing an independent action. (Gunderson, supra, 196

Cal.App.4th at p. 1065 ["Following reversal, a party may seek restitution from the trial

court by a motion ' "in the original action itself . . . , or . . . in a separate action instituted

                                                 7
for that purpose," ' " italics added]; 9 Witkin, Cal. Procedure, supra, Appeal, § 900, p.

965 ["successful appellant may make a motion in the trial court, and obtain restitution in

this summary proceeding"]; accord Ward v. Sherman (1909) 155 Cal. 287, 291; Rogers,

supra, 219 Cal.App.2d at pp. 324-326; Stockton Theatres, supra, 121 Cal.App.2d at p.

620.) The party entitled to seek restitution is not required to file additional pleadings

because the power to restore benefits lost exists by virtue of section 908 and the trial

court's equitable powers. (Schubert, supra, 30 Cal.2d at p. 789 [referring to section 957,

the former version of section 908]5; see Rogers, supra, 219 Cal.App.2d at pp. 324-326.)

       Further, " 'the fact that [a] judgment was merely set aside and that no final

judgment was entered . . . does not prevent restitution.' " (Stockton Theatres, supra, 121

Cal.App.2d at p. 623.) If the appellate court vacates the judgment and orders a new trial,

a person who has satisfied the judgment may be entitled to restitution depending on the

circumstances. (See Rodgers v. Bill & Vince's, Inc., supra, 219 Cal.App.2d at pp. 324-

326; see also Shubert, supra, 30 Cal.2d at p. 788; Stockton Theatres, at p. 623; 9 Witkin,

Cal. Procedure, supra, Appeal, § 903, p. 966.)

       Additionally, a party cannot defeat the opposing party's right to a restitution

hearing by dismissing the action before the opposing party has had the opportunity to

seek restitution. (Schubert, supra, 30 Cal.2d at pp. 789-790; 9 Witkin, Cal. Procedure,

supra, Appeal, § 903, p. 966.) "[W]hile the plaintiff has the right to dismiss the action

before trial, where no counterclaim or request for affirmative relief has been filed, that

5     Former section 957, enacted in 1872, was repealed and replaced without material
change by section 908 in 1968. (Stats. 1968, c. 385, § 2, p. 814.)
                                              8
right, after a trial and reversal of the judgment, is subject to the right of the defendant to

restoration of benefits lost by virtue of the erroneous judgment. The court has inherent

power to enforce that right, unaffected by the right of the plaintiff to dismiss the action.

The existence of the power to restore benefits after reversal flows from the rule that upon

reversal the action is as though it had never been tried, and the court will, where justice

requires it, place the parties as nearly as may be in the condition in which they stood

previously." (Shubert, at pp. 789-790.)

        This principle is consistent with the rule that a party facing an adverse ruling on a

dispositive motion in a trial court cannot avoid the impact of an impending adverse

ruling by dismissing the case. (See Cravens v. Bd. of Equalization (1997) 52 Cal.App.4th

253, 257-258; see also Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 175.) A party is

not permitted to dismiss to avoid a trial court's " ' determinative adjudication' " in an

attempt to "unfairly 'wipe the slate clean.' " (Cravens, at pp. 256-257.) A fortiori, a party

cannot escape an adverse appellate court ruling by simply dismissing the underlying

case.

                                       III. Conclusion

        Lowell was entitled to a restitution hearing. The court erred in ruling he was

precluded from seeking this relief because he had not filed an affirmative pleading for

restitution. In reaching this conclusion, we do not intend to suggest any opinion on the

merits of Lowell's restitution claim, including whether he is entitled to any monetary

recovery. The reversal of the dismissal judgment is without prejudice to Beach Break's

right to pursue the claims alleged in its second amended complaint. Both parties retain

                                               9
the right to seek affirmative relief for their claims and/or to seek offsets from the other

party's recovery.

                                       DISPOSITION

       The judgment is reversed. The court is ordered to conduct a restitution hearing

under section 908. The reversal of the judgment is without prejudice to Beach Break's

right to renew the claims it attempted to dismiss. Lowell is awarded costs on appeal.

                                                                                PRAGER, J.*

WE CONCUR:

McCONNELL, P. J.

IRION, J.

*       Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
                                              10
Filed 12/14/16

                                      CERTIFIED FOR PUBLICATION

                         COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                             DIVISION ONE

                                       STATE OF CALIFORNIA

BEACH BREAK EQUITIES, LLC,                                 D069313

        Plaintiff and Respondent,
                                                         (Super. Ct. No. 37-2010-0031619-          CL-
                                                         UD-SC)
        v.

                                                           ORDER GRANTING PUBLICATION
MARTIN LOWELL,

        Defendant and Appellant.

THE COURT:
        The opinion in this case filed November 22, 2016 was not certified for publication. It appearing
the opinion meets the standards for publication specified in California Rules of Court, rule 8.1105(c) the
request pursuant to California Rules of Court, rule 8.1120(a) for publication is granted.
        IT IS HEREBY CERTIFIED that the opinion meets the standards for publication specified in
California Rules of Court, rule 8.1105(c); and
        ORDERED that the words "Not to Be Published in the Official Reports" appearing on page one of
said opinion be deleted and the opinion herein be published in the Official Reports.

                                                                                         McCONNELL, P. J.
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