APPEAL from a judgment of the Superior Court of Kern County. Sidney P. Chapin, Judge. (Super. Ct. Nos. CV-269732 & CV-269733)
The opinion of the court was delivered by: Kane, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
Plaintiff Brent Hutton sued defendant Fidelity National Title Company, the escrow company used in plaintiff's refinance of his home loan, for allegedly charging a notary fee in excess of the amount permitted by Government Code section 8211.*fn2 Under that statute, a notary may charge only $10 per signature for "taking an acknowledgment."*fn3 Since only two acknowledgments were taken by the notary in connection with plaintiff's loan refinance (with only one signature notarized as to each acknowledgement), plaintiff asserted that defendant violated the statute by charging him $75 for services performed by the notary.*fn4 Based on the supposed overcharge for notary services, plaintiff's complaint set forth causes of action for violation of California's unfair competition law (Bus. & Prof. Code, § 17200 et seq.; the UCL) and unjust enrichment. The complaint was styled as a statewide, multi-year class action on behalf of plaintiff and all others who used defendant's escrow services in real estate or loan refinance transactions and were allegedly overcharged for notary services.
After conducting discovery but before class certification, defendant
moved for summary judgment on two principal grounds: (1) The $75 fee
was not a violation of section 8211 because that section only limited
fees for certain services (e.g., taking acknowledgments) and the
notary involved in this case performed many other services (i.e.,
traveling to location of signing, presenting multiple documents for
signature, showing where to sign or initial each document, answering
questions, etc.) and (2) The $75 fee was charged and retained by a
third party independent contractor, not by defendant, even though
defendant as escrow holder disbursed the funds for such services. The
trial court granted defendant's motion for summary judgment on both
grounds. Plaintiff appeals from the resulting judgment. We find the
first ground noted above to be dispositive and conclude on that basis
that the trial court properly granted summary judgment.*fn5
Plaintiff also appeals from the trial court's
postjudgment order granting an award of attorney fees to defendant
pursuant to a contractual provision in the escrow instructions.
Plaintiff contends that said provision should not have been enforced
because it was unconscionable. We agree with plaintiff on that issue
and reverse the trial court's order granting attorney fees. In all
other respects, the judgment below is affirmed.
FACTS AND PROCEDURAL HISTORY
On February 26, 2010, plaintiff filed his complaint against defendant to obtain remedies for alleged violation of the UCL and unjust enrichment. According to the complaint, section 8211 made it unlawful for defendant to charge in excess of $10 for each notarized signature on a deed or deed of trust. In providing escrow services in connection with plaintiff's loan refinance, defendant allegedly billed a predetermined notary charge that exceeded the amount prescribed in section 8211. That same practice by defendant allegedly resulted in other persons (class members) being overcharged by defendant for notary services in connection with other real estate or loan refinance transactions. The complaint explained further: "The law could not be simpler. California Government Code Section 8211 sets a cap on notarization fees. Under Section 8211[, subdivision ](a), it is illegal to charge more than $10 per notarized signature on each deed or deed of trust used in a specific Real Estate Transaction. [¶] ... [Defendant] charged ... more than $10 per signature. Thus, [Defendant] violated the law." Based on these core facts, plaintiff alleged a first cause of action labeled as unfair business practices (elsewhere more specifically identified by plaintiff as a UCL cause of action) and a second cause of action for unjust enrichment. Both causes of action were explicitly premised upon defendant's alleged overcharge for notary fees in violation of section 8211.
Defendant's Motion for Summary Judgment
On December 23, 2010, defendant filed its motion for summary judgment. We have already summarized above the grounds upon which that motion was made. In support of the first ground for the motion (i.e., that section 8211 was not violated), defendant presented, among other evidence, the declaration of the individual notary who was involved in the document signing in this case--namely, Lauri E. Kilpatrick (Kilpatrick). In her declaration, Kilpatrick described a variety of services that she typically provided in connection with the signing of loan refinance documents in her capacity as a notary and a "certified signing agent" (or CSA). As a CSA, she is familiar with the various documents necessary in the loan closing process and is able to answer questions. Her declaration stated: "Generally, during a loan closing, I will (a) present all of the loan documents to the borrower which generally consists of about 60 to 150 pages, (b) make all necessary disclosures required by those loan documents, (c) explain the purpose of each loan document, (d) answer any questions the borrower may have about the loan documents or the loan closing process in general, (e) indicate where the borrower must sign each loan document, and (f) take an acknowledgment of the borrower's signature when necessary. I provided these services for Mr. Hutton's 2007 refinance closing. [¶] ... The majority of my loan signings are mobile loan signings where I will travel to the borrower's home, the lender's office, or the escrow holder's office." (Italics added.) Of the services mentioned by Kilpatrick, the taking of acknowledgments (or the notarizing of signatures) was merely one minor part. Defendant's motion noted plaintiff's testimony in which he (plaintiff) recalled that "a lady" (Kilpatrick) came to his home to conduct the signing of plaintiff's 2007 loan refinance papers, but he recalled little else about it.*fn6 Defendant's motion also pointed out that the $75 charge, as it appeared in the closing statement (the HUD-1 form), included an explicit reference to the fact that Kilpatrick was also a CSA. Specifically, the HUD-1 form stated: "Notary to Lauri Kilpatrick, APN & CSA."
In support of the second ground for the motion, defendant presented evidence that Kilpatrick was an independent contractor who charged and retained the entire fee, and that she was not an agent or employee of defendant.*fn7 Preliminarily, defendant asserted that as an escrow company, it frequently made use of third party mobile notaries (like Kilpatrick) for loan closings. Defendant did so for several reasons, including that it freed up their escrow officers for other critical tasks since loan signings may take one to two hours, and because loan signings often involved travel to the borrower's residence and often occurred outside of normal business hours to accommodate a borrower's schedule. Defendant disbursed a check to Kilpatrick for $75 after she submitted an invoice for a "loan signing." Defendant's evidence showed that Kilpatrick was an independent contractor doing business since 2005 as "A Good Deed Document & Notary Service." Kilpatrick was on defendant's approved list of third party notaries for closing loans, based in part on her completion of a "Notary Approval Request" packet that included an "Independent Contractor Status Test." Defendant further asserted that Kilpatrick had her own business office, had other clients besides defendant, made her services available to other escrow companies, set her own hours and did not take instructions from defendant on how to perform her essential work. At a typical loan signing, Kilpatrick's practice was to disclose to the borrower that she was an independent contractor and was not an employee of the lender or the escrow holder.
Plaintiff filed opposition to the motion for summary judgment, arguing that the fees charged were unlawful under section 8211 even if other services were provided because, allegedly, the only essential notary function performed was the taking of two acknowledgments and the HUD-1 described the fee as "Notary to Lauri Kilpatrick, APN & CSA." Plaintiff's opposition further argued that even if the fees were not unlawful, they were potentially unfair or fraudulent under the UCL because (1) defendant did not itemize or disclose the various services being provided and (2) Kilpatrick's answering of questions would constitute the unauthorized practice of law. According to plaintiff, since defendant's motion did not negate these other potential theories, defendant did not meet its initial burden as the moving party. Additionally, plaintiff's opposition argued that there were triable issues of fact whether Kilpatrick was defendant's agent, based in part on defendant's guidelines regarding its approved notaries, which guidelines may, according to plaintiff, indicate a degree of control over the manner of performing services. For these and other reasons, plaintiff argued that the motion for summary judgment should be denied.
Defendant's reply in support of its motion responded that all of plaintiff's claims were premised on violation of section 8211 and that no other theories were alleged in the complaint. Since in summary judgment proceedings the material issues are framed and limited by the pleadings, defendant's reply insisted it was not necessary for defendant to negate theories that were not pled. Additionally, defendant argued that the material facts showing Kilpatrick to be an independent contractor were not in dispute and, therefore, that issue could properly be decided as a matter of law.
The hearing of the motion for summary judgment was held on March 14, 2011. Following oral argument, the trial court took the matter under submission. On May 13, 2011, the trial court issued its written order granting the motion for summary judgment. The court granted the motion because "no overcharge occurred as ... [section] 8211 only sets a price for taking an acknowledgment," and it "does not limit what notaries can charge for services which are not listed in that statute." Secondly, the trial court concluded that Kilpatrick was a third party independent contractor and, therefore, defendant was not liable even if there was an overcharge. On June 17, 2011, the trial court entered judgment in favor of defendant. Plaintiff timely appealed from that judgment.
Defendant's Motion for Attorney Fees
The judgment entered below made defendant the prevailing party in the action. On August 8, 2011, defendant moved for an award of attorney fees based on a provision in the escrow instructions. Defendant's motion requested $266,801 in attorney fees. Defendant argued that this sum, though large, was reasonable in light of the fact that plaintiff had aggressively litigated and engaged in extensive and wide-ranging discovery, which treated the case as a multi-year, statewide class action, even though there had been no class certification. Defendant substantiated the actual amount of time spent in defending the litigation by submitting declarations and copies of billing statements or invoices.
Plaintiff objected to the enforcement of the attorney fees provision, contending it was so oppressive and one-sided that it was unconscionable. Plaintiff also objected that the amount of attorney fees requested was unreasonable. The motion was heard on September 1, 2011, and following oral argument the trial court took the matter under submission. On October 21, 2011, the trial court granted the motion and awarded defendant attorney fees in the sum of $266,801. Plaintiff then separately appealed from the order granting attorney fees, and the two appeals were consolidated by this court.
I. Summary Judgment Law and Standard of Review
We begin with the summary judgment motion. Summary judgment is appropriate when all of the papers submitted show there is no triable issue of material fact and the moving party is entitled to a judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) "The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)
A defendant may move for summary judgment if it is contended that the action has no merit. (Code Civ. Proc., § 437c, subd. (a).) A defendant moving for summary judgment has the initial burden of showing a cause of action is without merit. A defendant meets that burden by showing that one or more elements of the cause of action cannot be established, or that there is a complete defense thereto. (Id., subd. (p)(2).) If the defendant makes such a showing, the burden shifts to the plaintiff to produce evidence demonstrating the existence of a triable issue of material fact. (Ibid.; Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 849.)
The pleadings play a key role in a summary judgment motion. "'The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues'" and to frame "the outer measure of materiality in a summary judgment proceeding." (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381.) As our Supreme Court has explained it: "The materiality of a disputed fact is measured by the pleadings [citations], which 'set the boundaries of the issues to be resolved at summary judgment.' [Citations.]" (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250 (Conroy).) Accordingly, the burden of a defendant moving for summary judgment only requires that he or she negate plaintiff's theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings. (Id. at pp. 1254-1255; County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 332; Lockhart v. County of Los Angeles (2007) 155 Cal.App.4th 289, 304; see also Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 182 ["We do not require [defendant] to negate elements of causes of action plaintiffs never pleaded."].)
Furthermore, "'"'[t]he [papers] filed in response to a defendant's motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings.'"' [Citation.]" (County of Santa Clara v. Atlantic Richfield Co., supra, 137 Cal.App.4th at p. 332.) An opposing party's separate statement is not a substitute for amendment of the complaint. (Lackner v. North (2006) 135 Cal.App.4th 1188, 1201-1202, fn. 5.) Similarly, "'"[d]eclarations in opposition to a motion for summary judgment 'are no substitute for amended pleadings.' ... If the motion for summary judgment presents evidence sufficient to disprove the ...