IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (San Joaquin)
January 11, 2012
CITY OF STOCKTON ET AL., PLAINTIFFS AND APPELLANTS,
CENTRAL SAN JOAQUIN WATER CONSERVATION DISTRICT, DEFENDANT AND RESPONDENT.
(Super. Ct. No. CV021870)
The opinion of the court was delivered by: Raye , P. J.
City of Stockton v. Cent. San Joaquin Water Conserv. Dist.
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
In September 2003 plaintiffs City of Stockton (City) and California Water Service Company (Cal Water) brought an action for breach of contract against defendant Central San Joaquin Water Conservation District (Central). Plaintiff Stockton East Water District (Stockton East) filed a complaint in intervention.
As the five-year deadline to bring the case to trial neared, plaintiffs obtained Central's written stipulation extending the deadline to April 1, 2009. After plaintiffs failed to meet this deadline, Central filed a motion to dismiss, which the trial court denied. Central filed a petition for a writ of mandate, which we granted, issuing an alternative writ. (Central San Joaquin Water Conservation Dist. v. Superior Court (July 31, 2009, C062205) [order granting alternative writ] (Central v. Superior Court).) Ultimately, the trial court granted Central's motion to dismiss and awarded attorney fees.
Plaintiffs appeal, arguing Central waived the five-year limit, the May 2009 trial date was timely, the court erred in changing its ruling without giving plaintiffs an opportunity to be heard, and the award of attorney fees should be vacated. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND Background to the Current Litigation
In 1983 the United States Department of the Interior, Bureau of Reclamation (Bureau) entered into contracts with Central and Stockton East to provide water from the New Melones reservoir to Central and Stockton East. In reliance on these contracts, Stockton East entered into two contracts, one with City and Cal Water and the other with Central, to pay for construction and operation of wheeling facilities that would convey, or "wheel," the water.
The agreement entered into by Central and Stockton East required Stockton East to wheel Central's water through the Stockton East facilities to Central's service area, and required Central to pay a fee for the wheeling. The agreement also specified the procedures for calculating the annual payment reimbursing Stockton East for the costs of building and operating the conveyance facilities.
When the wheeling facilities were completed, the Bureau refused to make available the amount of water it had agreed to provide to Stockton East and Central. (Stockton East Water Dist. v. United States (Fed.Cir. 2009) 583 F.3d 1344, 1348-1349.) In 1993 Stockton East, Central, City, and Cal Water jointly sued the Bureau.
While the federal suit was pending, Central purchased water from the Bureau and had it wheeled by Stockton East using wheeling agreement facilities. Stockton East calculated the amount Central owed for the water under the wheeling agreement. From 1995 through 2008, Stockton East billed Central approximately $400,000 to $700,000 per year. Central paid either $150,000 per year or nothing. Central argued it did not have the money to pay what it owed because of the Bureau's breach of contract. City and Cal Water paid Central's debt to Stockton East.
According to City and Cal Water, these circumstances placed them in a quandary. Central's suit against the Bureau was ongoing. If Central won the suit, it could reimburse City and Cal Water, obviating the need for a suit by the latter parties. However, City and Cal Water faced the five-year statute of limitations on their claims against Central.
City and Cal Water filed a complaint against Central on September 11, 2003. The complaint alleges (1) Central breached the wheeling agreements, which required it to pay capital and operating costs relating to the conveyance facilities; (2) City and Cal Water paid what Central was obligated to pay; (3) Stockton East assigned its rights to City and Cal Water; and (4) City and Cal Water are entitled to reimbursement. The complaint includes counts for breach of contract, indebitatus assumpsit, and equitable subrogation. Stockton East intervened as a plaintiff on February 23, 2005. Stockton East sought the same relief as City and Cal Water. In February 2007 the federal court concluded that Stockton East, Central, City, and Cal Water failed to prove their case and entered judgment for the Bureau. Discovery in the current litigation began in 2009.
Based on the date that City and Cal Water filed their complaint, the five-year deadline to bring the case to trial was September 11, 2008. (Code Civ. Proc., § 583.310.) In April 2008 the parties stipulated that "[T]his matter shall be brought to trial at a time beyond the time limit set forth in Code of Civil Procedure section 583.310 and the time for said trial to commence is extended until April 1, 2009."*fn1 The court approved the stipulation.
On December 17, 2008, the trial court held a trial setting conference. No court reporter was present. The parties vehemently disagree over what happened next.
City and Cal Water's Version of Subsequent Events
According to Cal Water's counsel, "During this conference, Mr. Roberts [Central's counsel], the Court and I discussed the trial setting. Based on its calendar, the Court initially suggested a date in mid-April, beyond the date specified in the April, 2008 stipulation. Due to a conflict in my schedule I then requested that the trial be set for mid-May, 2009. The Court stated in substance that it wished to avoid any issues regarding Code of Civil Procedure Section 583.310 et seq.'s five year deadline, and asked the parties if they would agree to a May 18, 2009 trial date. Mr. Roberts said in substance that he was available for trial starting on May 18, 2009, and that he would communicate with his client about a waiver of the 5 year statute." The court set the matter for trial on May 18, 2009.
Following the trial setting conference, the parties added new counsel to take discovery and try the case. In February 2009 the parties participated in a long conference call, discussing procedures for discovery and preparing the case for trial. The May trial date was discussed several times. The new counsel agreed they would stipulate to continue the trial from May to August 2009 pending client approval. Mr. Vignolo, counsel for Central, volunteered to draft the stipulation.
Over the next few weeks, Central's counsel sent several e-mails reporting that Central's board was considering the proposal to continue the trial until August and that he expected a decision soon.
During the next month, the parties exchanged documents and took depositions. During discovery, Central's counsel never suggested Central objected to the May trial date.
Central's Version of Subsequent Events
According to Central, pursuant to a request by Cal Water's counsel, trial was scheduled for May 18, 2009. Roberts, Central's counsel, stated during the trial setting conference that he "did not agree, verbally or otherwise, to extend Plaintiffs' time to bring this action to trial beyond April 1, 2009." Central points out that the court's minute order following the hearing does not reflect any such agreement.
Central Moves for Dismissal
On April 10, 2009, the trial court granted City and Cal Water leave to file a first amended complaint, which they filed the same day. On April 14 the trial court granted Central leave to file a motion to dismiss on shortened time. Central filed the motion the same day, arguing the deadline to begin trial passed on April 1, 2009.
Following argument on the matter, the trial court denied the motion on April 29, 2009. The court found the five-year deadline was tolled during the time discovery was suspended; the automatic six-month grace period in section 583.350 made the trial date timely, and Central's words and conduct indicated it waived the five-year limit.
In June 2009 Central filed a petition for a writ of mandate, asking this court to issue a peremptory writ directing the trial court to grant its motion to dismiss or show cause why relief should not be granted. We issued an alternative writ. (Central v. Superior Court, supra, C062205.) In September 2009 the trial court vacated its April 29, 2009, order and granted Central's motion to dismiss.
Central filed a motion for attorney fees, which City, Cal Water, and Stockton East opposed. The trial court determined Central was the prevailing party and granted the motion. The court awarded attorney fees in the amount of $186,834.00. Following entry of judgment, plaintiffs filed timely notices of appeal.
DISCUSSION Standard of Review
We review a dismissal under the five-year statute for an abuse of discretion. We review the dismissal de novo only when the issue on appeal involves application of a legal doctrine to undisputed facts. (Tamburina v. Combined Ins. Co. of America (2007) 147 Cal.App.4th 323, 328.)
Plaintiffs contend de novo review is required because "the relevant facts are not in dispute." To the contrary, the parties disagree vehemently about what took place at the December 2008 trial setting conference. The facts as to what took place both during and after the trial setting conference are very much in dispute.
Plaintiffs contend statements by Central's counsel, Roberts, at the December 2008 trial setting conference constitute a waiver of the five-year limit. According to plaintiffs, when a trial court asks counsel whether he will agree to a May trial date despite the five-year rule and counsel responds by saying that he is available, "his response signifies agreement. It signifies consent. It does not express opposition or objection." Therefore, Roberts waived any objection to the May trial date.
However, as plaintiffs concede, Roberts also informed the court he would communicate with his client about the waiver of the five-year statute. Plaintiffs argue this fact "is of no significance."
Plaintiffs contend that the right to waive the five-year limit belonged exclusively to Roberts, not to Central. Not so. The appearance of counsel at a trial setting conference that sets the trial date beyond the expiration of the five-year limit does not operate to forfeit a defendant's right to a dismissal for the plaintiff's failure to bring the case to trial within the statutory period. (Preiss v. Good Samaritan Hospital (1959) 171 Cal.App.2d 559, 563.)
Plaintiffs also contend Roberts's statement that he would communicate with his client "is only a comment, not an objection." According to plaintiffs, Roberts was required to make a clear objection when questioned by the trial court. In support, plaintiffs cite Griffis v. S. S. Kresge Co. (1984) 150 Cal.App.3d 491 (Griffis).
In Griffis, the plaintiff's counsel calculated the statutory deadline for bringing the case to trial. The trial court asked the defendant's counsel whether he agreed with the calculation; counsel stated he had not made the computations but had no reason to dispute them. Accordingly, the court set the trial date. Subsequently, the defendant moved to dismiss for failure to bring the case to trial within five years. The trial court granted the motion; the appellate court reversed. (Griffis, supra, 150 Cal.App.3d at pp. 495-500.)
The appellate court found "[i]f a trial court encounters statements or conduct by a defendant which lulls the plaintiff into a false sense of security resulting in inaction, and there is reasonable reliance, estoppel must be available to prevent defendant from profiting from his deception." (Griffis, supra, 150 Cal.App.3d at p. 499.) The defendant's counsel was an officer of the court under a duty to never seek to mislead the court by artifice or false statements of fact or law. By stating he had no reason to dispute the plaintiff's calculations of the expiration of the five-year limit, the defense counsel breached this duty. (Id. at pp. 499-500.) The court characterized the defense counsel's statement: "At best, this response negligently withheld from the court the vital information that the matter had been ordered to arbitration on a date substantially later than that relied upon by [the plaintiff's counsel]; at worst, the response was an overtly false statement, for Attorney Slavin did have, or should have known he had reason to dispute the basis for the calculations." (Id. at p. 500.)
Plaintiffs argue, as in Griffis, that the conduct of Central's counsel lulled them into a false sense of security by stating he was available for the May trial date, leading the court to set the case for trial. Allowing Central to profit from such misleading behavior would, as in Griffis, subvert the concept of substantial justice.
The present case is quite different from Griffis. Even accepting plaintiffs' version of events, Central's counsel Roberts told the court he was available for trial starting May 18, 2009, and that he would communicate with his client about a waiver of the five-year statute. In Griffis, counsel posed no objection to an incorrectly calculated trial date, in effect compounding the error to the plaintiff's detriment.
Here, Roberts did not mislead the court; instead, he informed the court of his potential availability and his willingness to ask his client, Central, about a waiver of the statute. Neither of these two pieces of information was incorrect or deceptive: they represented the facts as Roberts knew them at that moment.
Moreover, nothing that occurred at the trial setting conference "sealed the deal" or completed the puzzle. One piece, Central's acquiescence, was missing. Subsequently, plaintiffs never received any confirmation from Central that it agreed to a further waiver of the five-year statute. Central never entered into a stipulation to extend the statutory period beyond April 1, 2009. Central's silence on the extension cannot be construed to mean acquiescence. (Iott v. Franklin (1988) 206 Cal.App.3d 521, 528-529.)
Plaintiffs disagree, arguing: "When a trial court asks a party whether it agrees to a trial date beyond the five-year limit, it is asking whether the party objects to that date. If in response the party does not object, it waives any objection." Plaintiffs contend Central waived any objection by not "reporting back" to the trial court.
Although plaintiffs cite cases cautioning counsel from misleading the court through silence, Central's counsel was not silent during the conference. Roberts informed the court he was available on the proposed date and would consult with his client. Plaintiffs cite no authority for the proposition that Central had the burden of later reporting back to the court concerning the time extension.
Plaintiffs also argue they relied on Central's actions following the trial setting conference in assuming that Central agreed to extend the trial date. Plaintiffs cite the willingness of Central's counsel to continue the trial date from May to August and his offer to draft the stipulation as further proof Central approved the May trial date. In addition, according to plaintiffs, between February and April Central repeatedly scheduled discovery and entered into agreements consistent with the May trial date. This lulled plaintiffs into a false sense of security.
However, plaintiffs previously obtained a written stipulation from Central extending the time to bring the case to trial. Plaintiffs obviously understood the importance of complying with section 583.330 through a written stipulation but failed to obtain one prior to the April 1, 2009, deadline.
Nor does Central's continued discovery compel us to find an estoppel. In Brookview Condominium Owners' Assn. v. Heltzer Enterprises-Brookview (1990) 218 Cal.App.3d 502, the appellate court affirmed the dismissal of a complaint on the basis of a failure to serve within the three-year statutory period. The court found a defendant does not waive the right to seek dismissal by filing pleadings and participating in discovery before moving to dismiss. Such actions do not lead a plaintiff to believe the time for service has been tolled. (Id. at p. 514.)
Plaintiffs contend the May 18, 2009, trial date was timely under section 583.350. Under plaintiffs' reading of the statute, if the parties execute a written stipulation extending the deadline for a plaintiff to bring the case to trial, the plaintiff gets an additional six-month extension from that deadline. Therefore, since the parties agreed to a deadline of April 1, 2009, it automatically extended the deadline to October 1, 2009.
Section 583.350 states: "If the time within which an action must be brought to trial pursuant to this article is tolled or otherwise extended pursuant to statute with the result that at the end of the period of tolling or extension less than six months remains within which the action must be brought to trial, the action shall not be dismissed pursuant to this article if the action is brought to trial within six months after the end of the period of tolling or extension."
According to plaintiffs, all elements of section 583.350 were met in the present case. First, the time within which the action must have been brought was extended pursuant to statute, since section 583.330 provides a statutory basis for parties to stipulate extending the five-year limit.*fn2 Plaintiffs also contend the second element of the statute is met since the stipulation extended the five-year statute to April 1, 2009, and at that point "'less than six months remain[ed] within which the matter must be brought to trial.' In fact, no such time remained." Therefore, trial would have been timely within six months after the end of the period of tolling, on October 1, 2009, making the May 18, 2009, trial date timely.
However, the stipulation entered into between plaintiffs and Central clearly and unequivocally states: "[P]ursuant to Code of Civil Procedure section 583.330[, subd.] (a) this matter shall be brought to trial at a time beyond the time limit set forth in Code of Civil Procedure section 583.310 and the time for said trial to commence is extended until April 1, 2009." The parties made no mention of and did not contemplate a further extension of six months beyond the April 1, 2009, deadline.
An extension by stipulation of the parties is authorized by section 583.330, subdivision (a), but the extension is not entered into pursuant to that statute such that section 583.350 applies. In Miles v. Speidel (1989) 211 Cal.App.3d 879, the parties stipulated to a trial date of May 26, 1987, and that the five-year statute would run on September 4, 1987. The plaintiff moved for and received a continuance of the May 26, 1987, trial date to October 13, 1987. On December 29, 1987, defendant filed a motion to dismiss under section 583.310. (Miles, at p. 882.) The appellate court upheld the trial court's dismissal of the action because the matter was not brought to trial by September 4, 1987, the date to which the parties stipulated. The court did not automatically extend the September 4, 1987, date by six months. Although the court in Miles did not refer to section 583.350, it did not apply the six-month extension to a stipulation. (Miles, at pp. 884-885.)
Plaintiffs fail to offer any authority that section 583.350 applies to stipulations between parties. Instead, plaintiffs cite Lakkees v. Superior Court (1990) 222 Cal.App.3d 531 (Lakkees). In Lakkees, the wife filed a petition for dissolution of marriage on March 3, 1983. In 1985 the court entered a child custody and support order. Trial was set for February 16, 1990. On January 5, 1990, the husband filed a motion to dismiss under section 583.310. The court denied the motion and the defendant filed a petition for a writ of mandate or prohibition with the Court of Appeal. (Lakkees, at pp. 534-535.)
The wife argued the action was tolled and, under section 538.350, she was entitled to an additional six months because under section 583.161 a petition for dissolution of marriage shall not be dismissed if an order for child support has been issued. (Lakkees, supra, 222 Cal.App.3d at p. 538.) The court agreed, finding that once section 583.161 terminates, section 583.350 allows a further six months in which to bring the action to trial. (Lakkees, at p. 539.)
In Lakkees a specific statute controlled when a claim could be dismissed; once that statute ceased to operate, section 583.350 kicked in to extend the case for six months. Section 583.340 outlines other situations in which section 583.350 would apply: "In computing the time within which an action must be brought to trial pursuant to this article, there shall be excluded the time during which any of the following conditions existed: [¶] (a) The jurisdiction of the court to try the action was suspended. [¶] (b) Prosecution or trial of the action was stayed or enjoined. [¶] (c) Bringing the action to trial, for any other reason, was impossible, impracticable, or futile." In Lakkees, and in the situations described in section 583.340, parties are prevented from bringing the case to trial due to circumstances beyond their control. In these cases the extra six-month grace period makes sense: it protects a litigant from being rushed to trial once the impediment is removed.
However, a stipulation between the parties does not mirror these situations. When the parties stipulate to an extension of time, they are in control of the timing of the litigation; a grace period makes no sense in this scenario. Therefore, we conclude that plaintiffs' time to bring the litigation to trial ended on April 1, 2009, the date that plaintiffs and Central both agreed was the last day on which the case could go to trial. Section 583.350 does not apply.
Prosecution Was Stayed
Plaintiffs argue the five-year statute was tolled for at least 26 months based on an agreement between the parties not to conduct discovery. Plaintiffs cite section 583.340, which excludes the time during which prosecution or trial of the action was stayed or enjoined from the five-year statute. In the alternative, plaintiffs argue the parties intended to stay the entire prosecution of the case, pending the resolution of Central's suit against the Bureau.
The stipulation entered into between the parties undercuts plaintiffs' contention. Although statements by the parties refer to a suspension of discovery in an effort to negotiate a settlement, the parties entered into a settlement extending the five-year deadline to April 1, 2009. If the parties had believed the action had been stayed for 26 months, no such stipulation would have been necessary.
Plaintiffs rely on rule 3.515 of the California Rules of Court, which governs motions for a stay, arguing a stay can apply to either the entire action or any part of the action. Rule 3.515 states: "Unless otherwise specified in the order, a stay order suspends all proceedings in the action to which it applies. A stay order may be limited by its terms to specified proceedings, orders, motions, or other phases of the action to which the order applies." (Cal. Rules of Court, rule 3.515(h).) Therefore, as plaintiffs would have it, a stay of discovery operated to stay the entire proceeding.
However, the parties never presented the trial court with a stay. Section 583.330, which provides the statutory basis for parties to stipulate in writing to extend the five-year limit, states: "The stipulation need not be filed but, if it is not filed, the stipulation shall be brought to the attention of the court if relevant to a motion for dismissal." (§ 583.330, subd. (a).)
Plaintiffs argue the stipulation for a stay of discovery was written "because both parties referred to it, in writing, in the case managements [sic] statements filed with the court." Unfortunately, the case management statements merely state that the parties "expect the parties to agree to suspend discovery for six months, except as otherwise agreed . . . ." Such equivocation hardly qualifies as a stipulation brought to the attention of the court.
Notice and Opportunity to be Heard
Following our issuance of an alternative writ, the trial court reversed itself and granted Central's motion to dismiss. Plaintiffs argue the trial court's failure to give notice and an opportunity to be heard constitutes reversible error.
An alternative writ of mandate directs a trial court to perform an act requested by the petitioning party or show cause why the act has not been performed. (§ 1087.) A trial court has the authority to reconsider a prior interim ruling. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1109 (Le Francois).)
We issued an alternative writ of mandate directing the trial court to grant the relief requested by Central, granting Central's motion to dismiss, or to show cause why such relief should not be granted. In response, the trial court granted Central's motion to dismiss.
Plaintiffs argue that procedural fairness requires the trial court, when it reconsiders a prior ruling, to provide notice and an opportunity to be heard. According to plaintiffs, the court's error in reversing an interim order without first providing the parties notice and opportunity to be heard is reversible per se and not subject to the harmless error standard.
In support, plaintiffs cite Le Francois, supra, 35 Cal.4th at page 1108. The Supreme Court in Le Francois rejected a harmless error argument, noting "defendants have made no such harmless error argument, and thus plaintiffs have had no chance to argue against it." (Id. at p. 1109, fn. 6.) In addition, the court observed: "[T]he trial court did not inform the parties that it might change its previous ruling on its own motion and give them an opportunity to be heard . . . [and the court did] not know what would have occurred if it had done so." (Ibid.) However, the Supreme Court in Le Francois did not announce the harmless error standard of review never applies in such cases.
Here, unlike in Le Francois, the applicability of section 583.310 was a central issue in the case. The parties briefed the issue, and the trial court heard arguments on the issue. Any hearing on the alternative writ would merely duplicate the issue before us: whether plaintiffs brought the action to trial within five years. Therefore, any error in not holding a hearing was harmless and does not run afoul of Le Francois.
Following entry of judgment, Central moved for attorney fees under Civil Code section 1717, arguing the underlying agreements authorized attorney fees to the prevailing party. The trial court granted Central's motion. Plaintiffs argue, incorrectly, that Central was not the prevailing party.
Elms v. Builders Disbursements, Inc. (1991) 232 Cal.App.3d 671 (Elms) is instructive. In Elms, the defendant obtained an involuntary dismissal for failure to prosecute the action within five years under Code of Civil Procedure section 583.310. (Elms, at pp. 672-673.) Following the dismissal, the defendant moved for attorney fees based upon the prevailing party provision in the contract between the parties. The trial court denied the defendant's motion, finding no prevailing party under Civil Code section 1717. (Elms, at p. 673.)
On appeal, the court considered whether a defendant who is sued upon a contract entitling a successful litigant to attorney fees under Civil Code section 1717 can recover when the plaintiff's action is dismissed because it was not brought to trial within five years. (Elms, supra, 232 Cal.App.3d at p. 672.) Citing Winick Corp v. Safeco Insurance Co. (1986) 187 Cal.App.3d 1502, the appellate court awarded the defendant attorney fees. In Winick, the defendant successfully obtained a dismissal of the plaintiff's action under Code of Civil Procedure section 581a for failure to serve and return summons within three years. As explained in Elms, "The [Winick] court undertook a '"pragmatic inquiry"' into whether the defendant prevailed, and reasoned: 'The most Safeco--or any other civil defendant--ordinarily can hope to achieve is to have the plaintiff's claim thrown out completely. This is exactly what happened here. . . . In any practical sense of the word, the defendant "prevailed."'" (Elms, supra, 232 Cal.App.3d at pp. 674-675, quoting Winick, supra, 187 Cal.App.3d at p. 1508.) The appellate court found the defendant the prevailing party under section 1717 and awarded attorney fees. (Elms, at p. 675.)
Accordingly, in the present case, Central obtained the relief it requested and is entitled to attorney fees. However, plaintiffs argue that because they have filed a new lawsuit based on the same claims, Central cannot be considered the prevailing party in this action. Under this hypothesis, Central has only eliminated some of the claims asserted against it and, "as a practical matter," the dispute is still pending.
Tellingly, plaintiffs provide no authority or citations to support this argument. Civil Code section 1717 provides that the "party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract." (Civ. Code, § 1717, subd. (b)(1).) Here, on the action at issue, Central recovered greater relief and was entitled to attorney fees.
The judgment is affirmed. Central shall recover costs on appeal.
We concur: ROBIE , J. DUARTE , J.