(San Mateo County Super. Ct. No. CIV440930) (San Mateo County Super. Ct. No. CIV451036) (San Mateo County Super. Ct. No. CIV461115) (San Mateo County Super. Ct. No. CIV461115)
The opinion of the court was delivered by: Banke, J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
These appeals and cross-appeal arise from (a) orders granting Mike Rosen a new trial in three cases (San Mateo case Nos. 440930, 451036, and 461115 (appeal No. A123458)) and (b) a final judgment in favor of Stephanie Rosen in one of these cases (San Mateo case No. 461115 (appeal No. A123558)). The records in these appeals provide only a sketchy understanding of the events that led to this morass of litigation. Suffice it to say, the parties entered into real estate transactions that did not proceed as expected. The records make it abundantly clear, however, that the litigation became extremely contentious, and even the parties' lawyers became infected with the rancor and ceased to act reasonably or with professional civility. The parties are now before this court in appeal No. A123458 in the wake of a failed attempt to reach a global settlement. They are before the court in appeal No. A123558 following entry of judgment after a court trial.
The briefing on appeal sheds little light on the procedural history of this litigation, and we have been required to comb the records, including the extensive superior court dockets in these cases (their unusual size reflecting the contentiousness of the litigation) to understand the chronology of events. After reviewing the records and the applicable law, we hold as follows:
In appeal No. A123458: As to case No. 440930--in which judgment was entered on March 24, 2006, in favor of Mike and Stephanie Rosen, and which judgment was on appeal at the time of the attempted settlement--the trial court had no jurisdiction to enter an "Amended Judgment" as to Mike Rosen on August 1, 2008 or, likewise, to grant a new trial as to that "Amended Judgment" on September 25, 2008. Moreover, the voluntary dismissal of the appeal on August 7, 2008, had the effect of affirming the judgment. The judgment in favor of the Rosens therefore remains in full force and effect and is binding on all parties thereto. As to case Nos. 461115 and 451036--in which judgments were entered as to Mike Rosen on August 1, 2008--the new trial orders are affirmed, including on the ground the settlement agreement failed of its essential terms and therefore is not enforceable. Accordingly, as to Mike Rosen and the other parties who signed the settlement agreement, these cases return to the procedural position they were in before the attempted settlement.
In appeal No. A123558, we affirm the judgment in favor of Stephanie Rosen and against Christopher Cook and Moreland LLC. We reverse the ruling that Stephanie Rosen was not a "prevailing party" on the first cause of action for judicial foreclosure and remand for a determination of reasonable contract attorney fees incurred in the trial court and on appeal.
Given our disposition of these appeals and cross-appeal, we strongly encourage all parties to make a good faith effort to reach a global resolution of this litigation, which has now spanned more than six years and unduly consumed their own resources and the resources of the courts.
II. Factual and Procedural Background
In February 2002, Mike Rosen borrowed $15,000 from Christopher Cook (Cook).*fn1 Mike signed a promissory note, secured by a deed of trust on property located on Moreland Drive (the Moreland property) in the City of San Bruno. Mike's wife, Stephanie, did not sign either document.*fn2 In March 2003, Mike and Cook entered into an agreement whereby Mike would complete the subdivision process for the Moreland property and Cook, through his company, LegacyQuest, would purchase four of five newly created lots. Stephanie did not sign this document either. The agreement contemplated Cook would build homes on the four lots he acquired. The Rosens would build a home on the lot they retained, and they paid Cook $150,000 to build it. Cook also conveyed other property to the Rosens (the Palmetto property). The following month, and apparently to effectuate these agreements, Mike executed a grant deed to add Stephanie to the title of the Moreland property and the Rosens, as the owners, signed off on the subdivision map for the property. Cook also signed the map as a "beneficiary" and did so as "a married man, as his sole and separate property."
A year later, in July 2004, the Rosens filed suit for breach of contract against Cook and LegacyQuest (San Mateo case No. 440930). Moreland LLC, another entity owned by Cook and to which the four Moreland lots had been conveyed, was later added as a defendant. After numerous demurrers and amended complaints, followed by exhaustive discovery disputes, the case finally went to trial on February 21, 2006. On March 8, the jury returned a verdict in favor of the Rosens and against Cook and LegacyQuest, for $434,743.36, and against Moreland LLC on its cross-complaint. The court ruled against the Rosens, however, on their equitable claim against Moreland LLC for fraudulent conveyance. Judgment was entered accordingly. After unsuccessful posttrial motions, Cook, LegacyQuest, and Moreland LLC appealed from the judgment (appeal No. A114176).
In the meantime, in 2005, the Rosens filed a second lawsuit, this one for fraud, against a number of individuals and entities, including Cook, Natalie Cook, Ruo Hui Chen, and several construction companies (San Mateo case No. 451036). Again, there was extensive law and motion, followed by exhaustive discovery disputes.
In February 2007, Cook and Moreland LLC sued the Rosens (San Mateo case No. 461115), and in May 2007, filed an amended complaint. In the first cause of action, Cook sought judicial foreclosure on the 2002 note and deed of trust executed by Mike. In the second cause of action, Moreland LLC sought damages for malicious prosecution based on the Rosens' lack of success on their claim for fraudulent conveyance and their having filed lis pendens notices in connection therewith. In the third cause of action, Cook and Moreland LLC sought damages for conversion based on the Rosens' efforts to execute on the judgment in their favor before Cook and Moreland LLC filed a personal surety bond, staying the judgment on appeal. Another round of law and motion ensued, eventually causing the trial court to chastise the parties for their contentiousness: "No OSC's will issue. The entire discussion of same is uncalled for."
On August 8, 2007, Mike and Cook and their respective lawyers attended a mediation session before a third party neutral. Stephanie and Natalie Cook did not attend. In mid-September, the Rosens' attorney sent by e-mail a draft settlement agreement and release to the Cooks' attorney. In summary, the agreement provided all three cases (the case on appeal and the two pending cases) would be resolved by (a) Cook, Natalie Cook, LegacyQuest, Moreland LLC, Ruo Hui Chen, 101 Construction, 101 Construction, Inc., Ruo Wu Chen, Cabrillo Construction Company, Inc., and CRW Construction (the Cook parties) paying a total of $830,000 to the Rosens and (b) the Rosens transferring their Moreland lot to Cook. The escrow to accomplish this exchange was to close not later than January 5, 2008.
The Cook parties filed a notice that a conditional settlement had been reached in case No. 461115, which triggered an OSC and dismissal hearing on December 18, 2007. Counsel for Cook and Moreland LLC claimed he had never received a draft written settlement agreement, and both counsel then accused the other of dragging his feet and not following through with the settlement.
In January 2008, the Cook parties filed a motion to enforce the settlement even though Natalie Cook had not signed the written agreement. She did so just prior to the hearing on the motion and only after the Rosens opposed the motion, in part on the ground Natalie Cook had not signed the agreement. The Rosens also claimed there was a dispute over their right to "structure" the payment to be made by the Cook parties and the latter had rejected the Rosens' proposed "structure." In addition, Stephanie also had not signed the settlement agreement, and the Rosens asserted her failure to do so rendered the agreement ineffectual since it required the conveyance of community property, which could not be accomplished without her agreement and signature.
At the hearing on the motion to enforce the settlement, the trial court (Judge Marie S. Weiner) rejected the Rosens' argument there was some uncertainty about "structuring" the payment by the Cook parties. Calling the settlement agreement "pretty simple," the court pointed out the Rosens could have returned to the mediator to resolve any supposed questions about their right to "structure" the payment. As for the problem engendered by Stephanie's failure to sign the agreement--which precluded conveyance of the community property--the court stated whether the settlement was "workable" or "enforceable" was the Cook parties' "problem" and immaterial to whether the settlement could be judicially enforced. The only thing that mattered, said the court, was whether the parties had "stipulated" to the terms, and since Mike had signed the agreement, it could and would be enforced as against him. The court then said, however, Mike was not entitled to any cash payment from the Cook parties until Stephanie signed the conveyance documentation, "so obviously [he] ha[d] to wait" until the litigation against Stephanie was concluded. The court did not explain how concluding the litigation as to Stephanie could or would compel her to execute the documentation necessary to transfer the community property to Cook.
Mike promptly opened an escrow to effectuate the settlement, and Stephanie signed the written settlement agreement. However, despite having just moved to enforce the settlement, the Cook parties now refused to accept her signature. The Cook parties' lawyer later told an understandably incredulous trial court they refused her signature because they were mad--she signed only after the Rosens "lost" a purported "gamble" to "change" the settlement, "no legal basis" compelled the Cook parties to accept her signature, and the parties were "in warfare at the time." Instead, the Cook parties offered a new global settlement proposal wherein they would pay $550,000, rather than the originally agreed to $830,000, supposedly reflecting changed market conditions. The Rosens rejected this proposal.
On April 18, 2008, the trial court (Judge Weiner) finally signed written orders enforcing the settlement as to Mike in all three cases. Stephanie was ordered to file an answer in case No. 461115, the stay on discovery was lifted, and trial was set for August 8, 2008. As for case No. 451036, in which Stephanie was a plaintiff, the court ordered it to be set for a new case management conference.
On June 23, 2008, the Rosens moved to continue the trial date in case No. 461115. At this point, there was an issue as to whether Moreland LLC had signed the settlement agreement, thus resolving all claims involving Mike. The Cook parties' lawyer asserted all claims involving Mike had been settled, accused the Rosens of trying to subvert the settlement and get more money, and claimed Stephanie was "estopped" from "forcing her way into the settlement" because she had opposed the motion to enforce it. The trial court (Judge Robert D. Foiles) heard and denied the motion to continue on July 11, 2008.
On August 1, 2008, the trial court (Judge Weiner) entered "judgments" in all three cases pursuant to its April 18, 2008, written orders granting the Cook parties' motion to enforce the settlement as to Mike. However, rather than entering judgments in accordance with the terms of the settlement agreement (and leaving it to the Cook parties to figure out how to enforce the deal), the trial court attempted to work around the fact the property to be conveyed was community property. The court thus entered judgments for essentially "half" the settlement--requiring Mike to convey his community property interest in the property to Cook ("half" the property) and requiring the Cook parties, in turn, to pay Rosen $415,000 (half of the $830,000 settlement amount). The trial court also attempted to deal with the procedural posture of case No. 440930, in which judgment had been entered in favor of the Rosens in March 2006, and which was on appeal, by entering an "Amended Judgment" as to Mike for ostensibly "half" the settlement.
In the meantime, Cook, LegacyQuest, and Moreland LLC had apparently made numerous requests for extensions of time to file their opening brief on appeal in case No. 440930 (appeal No. A114176) on the ground the parties were in the process of settling the case. Finally, this court issued an order to show cause requiring the parties to appear and explain why the appeal should not be dismissed. The parties appeared before the court on August 7, 2008, and Cook, LegacyQuest, and Moreland LLC requested a dismissal of their appeal, which the court granted.
On August 15, 2008, Mike filed a notice of intent to move for a new trial as to the August 1, 2008, judgments in case Nos. 461115 and 451036 and amended judgment in case No. 440930. He asserted, among other things, that the trial court had committed an error of law by imposing on the parties terms and conditions different from those set forth in the written settlement agreement and that the orders requiring him to convey his community property interest in the Moreland property violated Family Code section 1102.
On August 19, 2008, a two-day court trial commenced in Cook and Moreland LLC's case against Stephanie (case No. 461115).*fn3 The court (Judge Steven L. Dylina) found against Cook and Moreland LLC, and in favor of Stephanie, on all three causes of action. The court also ruled there was no "prevailing party" on the first cause of action for judicial foreclosure and therefore denied Stephanie's request for contractual attorney fees.
On August 21, 2008, the trial court (Judge Weiner) issued an order vacating the hearing date for Mike's new trial motions and deemed the motions "submitted." Nevertheless, a hearing was held on September 15, 2008, at which only Mike appeared due to the procedural confusion caused by the court's order. Mike repeated the entire history of the efforts to settle the cases, from his perspective. He also repeated his claim that because the settlement required the conveyance of community property, it simply was not effective without Stephanie's agreement and signature. He also advised the court the property was now in foreclosure.
The court (Judge Weiner) held a further hearing on the new trial motions on September 24, 2008, at which Mike and counsel for the Cook parties appeared. Both sides continued to accuse the other of sabotaging the settlement. The Cook parties also argued the judgments against Mike for ostensibly "half" of the settlement were justified because the property, by this point, was probably worth only half of the original settlement amount.
On September 25, 2008, the trial court (Judge Weiner) granted the new trial motions on the ground it had committed an error of law by entering judgments requiring Mike to transfer his community property interest in the property. The court's new trial order further stated, however, that as to its "orders" enforcing the settlement against Mike, "no error of law" had been shown.
On October 29, 2008, the Rosens attempted to conduct a debtor's examination of the Cooks in connection with their efforts to collect on the judgment in their favor in case No. 440930 (in which the appeal had been dismissed). The Cooks objected that the judgment "ha[d] been ordered settled by Judge Weiner" and there "no longer" was a judgment in favor of Mike. They further asserted that when Mike settled, the judgment was "liquidated." The trial court (Judge Foiles), annoyed with all parties, set aside the subpoena on the ground the judgment in case No. 440930 appeared "uncertain."
On November 21, 2008, the Cook parties appealed from the new trial orders.
In light of the questions raised by the statement in the new trial orders that "no error of law" had been shown as to the court's "orders" enforcing the settlement against Mike, Mike returned to the trial court on December 5, 2008, seeking an order vacating the April 18, 2008, orders granting the Cook parties' motion to enforce the settlement. The trial court (Judge Weiner) concluded it had no jurisdiction to take any action with respect to the orders enforcing the settlement in light of the Cook parties' appeal from the new trial orders. The court also believed Mike could advance his argument that the orders enforcing the settlement were invalid as an additional ground for affirming the new trial orders.
On December 10, 2008, Stephanie filed a notice of "cross-appeal" from the ruling in case No. 461115 that there was no "prevailing party" on the first cause of action for judicial foreclosure and denying her request for attorney fees. On December 18, 2008, Cook and Moreland LLC filed a ...