IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FIVE
December 30, 2010
RICHARD MADDOCK ET AL., PLAINTIFFS AND APPELLANTS,
COUNTY OF SONOMA, DEFENDANT AND RESPONDENT
(Sonoma County Super. Ct. No. SCV234081)
The opinion of the court was delivered by: Jones, P.J.
Maddock v. County of Sonoma
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Richard and Gaylyn Maddock appeal from a judgment that enforces a prior settlement agreement. They contend the trial court erred when it declined to award them the attorney fees and costs they incurred to enforce the agreement. We conclude the court did not abuse its discretion and will affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Maddocks own property located on Alexander Valley Road in Healdsburg. A creek is located adjacent to the Maddock's property and water from the creek flows into a culvert and underneath Alexander Valley Road. The County of Sonoma (County) was performing work on the culvert as part of the Geysers Project. That work was performed improperly and three times in December 2002, the creek overflowed its banks and flooded the Maddock's property and home. The County performed some emergency repairs but the Maddocks wanted a more permanent solution. In December 2003, they filed a complaint against the County and others alleging negligence, nuisance, trespass and inverse condemnation.
The complaint was settled in December 2006 when the parties executed a written settlement agreement. As is relevant here, the County agreed as follows:
--"to construct a new concrete headwall at the existing culvert . . . ."
--"to install a W beam guardrail for the full length of the wall."
--"to provide [the Maddocks] with plans for the headwall construction."
--"to grant the Maddocks the right to review and approve the plans."
--"to complete the work by October 15, 2007, subject to there being no Presidential Declaration of Disaster in the County of Sonoma . . . ."
--and that "no staging or work will be performed on the subject property."
Section 9.2 of the agreement also states, "In the event that legal action . . . is instituted by any settling party . . . to enforce or interpret the provisions of this agreement, the prevailing party shall be entitled to recover reasonable costs and expenses, including reasonable attorneys' fees from the non-prevailing party."
The October 15, 2007 completion deadline proved to be wildly optimistic. The County did not even provide the Maddocks with plans for the new headwall until October 9, 2007, and the Maddock's civil engineer, Matthew Donohue, considered the plans to be not sufficiently detailed for him to review and approve. Nevertheless, the parties continued to negotiate even after October 15, 2007, a process that continued for almost two more years. During that period, the County proposed and the Maddocks rejected no less than four different plans to complete the headwall. The County even offered to give the Maddocks money so they could complete the project, but the Maddocks rejected that too. At the risk of oversimplification, it appears the parties' inability to reach an agreement was a matter of perspective. The County viewed the proposed headwall as a relatively simple project that was similar to hundreds of headwalls the County had built throughout its road system. The Maddocks viewed the project more critically and demanded a level of planning and detail that was far greater than what the County ordinarily provided.
In August 2009, the Maddocks filed a motion under Code of Civil Procedure section 664.6*fn1 to enforce the settlement agreement. Even after the motion was filed, the parties continued to negotiate, and in January 2010, Donahue approved plans that had been submitted by the County.
Even though the parties had finally reached an agreement about what plans were appropriate, areas of disagreement remained. Three of them are relevant here. First, the new agreement contemplated that the project would be completed by August 31, 2010; but the parties could not agree on what the consequence would be if that date was not met. The County was willing to accept a liquidated damage clause if it included an exception that the clause would not apply if any delay was caused by third persons. The County wanted that exception because a portion of the guardrail that was called for in the settlement agreement would have to be installed on a neighbor's property and the neighbor had not yet agreed. The Maddocks rejected that exception noting that the County had almost three years to obtain the consent of the neighbor.
Second, the Maddocks' engineer would not approve a plan for the proposed headwall that did not include wing walls demanded by the Maddocks, and the final approved design did include that element. In order to construct wing walls, the County would need to obtain a slope and maintenance easement from the Maddocks. The County indicated it was willing to pay $1,126 for such an easement. The Maddocks declined to execute the easement.
Third, the Maddocks wanted assurance from the County that the work that was being performed would not trigger any upgrade requirement or affect "the existing 50 foot setback requirement that applies to the septic system for the Maddocks' real property . . . ." The County took the position that the construction would not affect whatever setback otherwise applied, but it was unwilling to agree to the 50 foot figure because, in the words of County counsel Tamara Curtis, "the County cannot guarantee what the setback requirement will be in the event of an upgrade[.]"
The court considered all these issues at a hearing conducted on February 26, 2010. After hearing the arguments of counsel, the court granted the motion to enforce in part and denied it in part. The court ruled the County must construct the headwall in accordance with the January 5, 2010 plans that had been approved by Donahue and that the construction must be completed by August 31, 2010. However, the court ruled "[t]here shall be no liquidated damages provision." The court ruled the Maddocks must execute a slope and maintenance easement and that they would be paid $1,126 for doing so. In addition, the court stated the County had represented that the headwall project would not "trigger any upgrade requirements or alter the existing setback requirement that applies to the septic system . . . ." However, the court said that "[n]o other representation as to what the current setback requirement is need be made." Finally and importantly for purposes of this appeal, the court ruled that the "County has acted reasonably in attempting to provide a headwall plan and should not be penalized for Plaintiffs' delays in approving a headwall plan. The deadline in the Agreement has now passed and both parties appear to have been at least partly at fault for the delays. There is no prevailing party, and both parties' requests for fees and costs under the Settlement Agreement are denied in their entirety."
The Maddocks then filed the present appeal challenging the trial court's decision to deny their request for attorney fees and costs.
The Maddocks contend the trial court erred when it denied their request to recover the attorney fees and costs they incurred to enforce the settlement agreement.
Code of Civil Procedure section 664.6 permits a trial court to enter judgment on a settlement agreement without the need for filing a new lawsuit. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) A court ruling on a motion under that section must determine whether the parties entered into a valid settlement agreement and the terms thereof. (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1182.) A court's ruling on those issues must be affirmed on appeal so long as they are supported by substantial evidence. (Ibid.)
Here, the Maddocks focus on the fact that the trial court denied their request for attorney fees and costs. A settlement agreement is a contract (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810), and Civil Code section 1717 sets forth the rules that apply when a party seeks to recover fees and costs based on a contract. As is relevant here, it states: "(a) In any action on a contract, where the contract specifically provides [for] attorney's fees and costs . . . the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorney's fees in addition to other costs. [¶] . . . [¶] (b)(1) The court . . . shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section."
The trial court is granted broad discretion to determine who, if anyone, is the prevailing party for purposes of Civil Code section 1717 and its ruling will be reversed on appeal only where the court clearly abused its discretion. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.)
Applying those principles here we note that the December 2006 settlement agreement required the County to construct a new headwall on the culvert that ran adjacent to the Maddocks' property, but it also required the Maddocks to approve any proposed construction plans. Obtaining that approval proved to be an arduous task. Apparently, because the parties viewed the complexity of the project differently, it took them more than two years to negotiate a plan to which they both could agree. Even then, the Maddocks and the County still could not agree about everything. They disagreed about the terms of any possible liquidated damage provision, whether the Maddocks would be required to execute a slope and maintenance agreement, and whether County would be required to agree to language about the possible effect of the project on the Maddock's septic system. Nevertheless, the trial court resolved those conflicts as part of the motion to enforce the settlement agreement and determined that the parties did enter into an enforceable settlement. The court accepted the construction plan that the parties had negotiated, but the court did not give the Maddocks everything they asserted they were entitled to. In deciding the parties' respective settlement obligations, the court ruled there would be no liquidated damage provision, that the Maddocks were required to execute the slope and maintenance easement they had resisted, and it declined to include language in the judgment concerning the project's possible effect on the Maddocks' septic system. Given the mixed nature of the trial court's ruling, the court reasonably could conclude that neither party had prevailed on the motion to enforce the settlement agreement. We conclude the court did not abuse its discretion when it declined to award the Maddocks their attorney fees and costs. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, supra, 162 Cal.App.4th at p. 894.)
None of the arguments the Maddocks make convince us the trial court did abuse its discretion. First and primarily, the Maddocks argue the court should have ruled they prevailed on their motion to enforce because the County failed to complete the headwall project on or before October 15, 2007, the date set forth in the December 2006 settlement agreement. The Maddocks argue that because the County breached the agreement, they were the prevailing party as a matter of law. We reject appellants' argument and its faulty conclusion. Significantly, the Maddocks did not stop negotiating and sue for a breach when the County failed to complete the headwall project by October 15, 2007. They continued to negotiate with the County for more than two more years to get the project completed. Indeed, those negotiations continued in earnest even after the Maddocks filed a claim with the County in March 2008 alleging it had violated the settlement agreement. The general rule is that a party who continues to accept performance from a beaching party after knowledge of the breach can be deemed to have waived the breach. (Whitney Inv. Co. v. Westview Dev. Co. (1969) 273 Cal.App.2d 594, 602-603; Leiter v. Eltinge (1966) 246 Cal.App.2d 306, 317-318.) The trial court here could and impliedly did conclude that the Maddocks had waived the right to complain about the County's failure to meet the October 15, 2007 completion date by continuing to negotiate and accept performance. Because that ruling is supported by substantial evidence, we are obligated to affirm it on appeal. (Hines v. Lukes, supra 167 Cal.App.4th at p. 1182.)
The primary cases upon which the Maddocks rely, Hsu v. Abbara (1995) 9 Cal.4th 863, and Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394, do not convince us the trial court erred. In both cases, the court ruled that a party who has obtained a "simple, unqualified win" must be deemed the prevailing party for purposes of awarding attorney fees under Civil Code section 1717. (Hsu. v. Abbara, supra, 9 Cal.4th at p. 876; Deane Gardenhome Assn. v. Denktas, supra, 13 Cal.App.4th at p. 1398.) Here, the Maddock's motion to enforce the settlement agreement did not result in a "simple, unqualified win." Rather, as the trial court ruled, both parties won on some points and lost on others. Neither Hsu nor Deane are controlling here.
The final issue we must address concerns the recovery of attorney fees on appeal. The Maddocks and the County both argue that because the December 2006 settlement agreement contains a clause that states the prevailing party is entitled to recover its attorney fees, then they are entitled to an award of fees, if they or it should prevail on appeal. We disagree. The trial court ruled that neither party had prevailed in the court below and as another court stated when faced with this same argument, "The absence of any fee award in the underlying judgment precludes the recovery of fees as costs in the trial court . . . and necessarily precludes the award of attorney fees on this appeal." (Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540, 558.)
The judgment enforcing the settlement agreement is affirmed.
We concur: Simons, J. Bruiniers, J.