Baldwin v. Home Sav. of America

• Decision Date: 09 December 1997
• Docket Number: No. A075927,A075927
• Citation: 69 Cal.Rptr.2d 592,59 Cal.App.4th 1192
• Court: California Court of Appeals Court of Appeals
• Parties: , 97 Cal. Daily Op. Serv. 9240, 97 Daily Journal D.A.R. 14,875 Patrick and Penny BALDWIN, Plaintiffs and Appellants, v. HOME SAVINGS OF AMERICA, et al., Defendants and Respondents.

Page 592

69 Cal.Rptr.2d 592

59 Cal.App.4th 1192, 97 Cal. Daily Op. Serv. 9240,

97 Daily Journal D.A.R. 14,875

Patrick and Penny BALDWIN, Plaintiffs and Appellants, v. HOME SAVINGS OF AMERICA, et al., Defendants and Respondents.

No. A075927.

Court of Appeal, First District, Division 2, California.

Dec. 9, 1997.

Townsend and Townsend and Crew, LLP, Daniel J. Furniss, Palo Alto, Law Offices of Patrick Baldwin, Menlo Park, Daniel R. Schwarz, Redwood City, for Plaintiffs and Appellants.

Thomas J. Cahill, Lakin-Spears, LLP, Palo Alto, for Defendants and Respondents.

KLINE, Presiding Justice.

This appeal is from an order granting reconsideration of and vacating an order awarding appellants attorney fees as the prevailing party in this litigation. The question presented is whether, pursuant to Code of Civil Procedure section 1008, parties applying for reconsideration of a prior order on the basis of "different law" must make the same showing of diligence required of those seeking reconsideration on the basis of "different facts." We hold they must.

I. FACTUAL AND PROCEDURAL BACKGROUND ¹

Appellants, Patrick and Penny Baldwin, purchased their residence at 57 Amador Avenue in Atherton in 1988 for $1,200,000. The purchase was financed in part with a $600,000 loan from respondent, Home Savings of America (HSA). In March 1990 appellants refinanced the property, resulting in an new first deed of trust securing a loan in the amount of $870,000.

In May of 1992, HSA sent appellants a notice of foreclosure on the property. Appellants claimed that during June and July of that year negotiations between the parties resulted in an oral agreement, whereby, among other things, in consideration for larger Appellants filed their complaint against HSA and others ² in the San Mateo County Superior Court on February 16, 1994. As amended, the complaint alleges four causes of action against HSA: "wrongful foreclosure" (i.e., breach of the alleged oral agreement not to foreclose), intentional misrepresentation, negligent misrepresentation, and conspiracy. The matter was submitted to the jury on a special verdict form which related only to the first three causes of action, omitting any reference to conspiracy. On May 31, 1996 (all subsequent dates refer to that year), the jury found HSA did not wrongfully foreclose on the property and made no intentional misrepresentation, but concluded there was negligent misrepresentation and awarded plaintiffs compensatory damages of $100,000. Judgment was entered on June 4.

payments to HSA than would otherwise have been required, but not on a monthly basis, HSA would stop the foreclosure process. Apparently disagreeing with this interpretation of the understanding of the parties, and believing it had a right to do so, HSA proceeded with the foreclosure sale originally noticed. The sale took place in March 1993.

On June 19 appellants moved for attorney fees and other costs. The grounds of the motion were that the underlying deed of trust contained an attorney fee provision in favor of HSA as trustee which was made reciprocal by Civil Code section 1717 (hereafter section 1717), and that, as the "prevailing party," appellants were entitled to an award of fees under that statute. On July 2, six days prior to the hearing on appellants' motion, HSA filed a motion to tax costs, which opposed appellants' motion for attorney fees and other costs. With respect to attorney fees, HSA argued that section 1717 was inapplicable because "[t]here was no cause of action for breach of any provisions of the Deed of Trust." Arguing that "[a] tort action for fraud arising out of a contract is not an action 'on a contract' within the meaning of Civil Code section 1717," and citing Stout v. Turney (1978) 22 Cal.3d 718, 730, 150 Cal.Rptr. 637, 586 P.2d 1228, HSA maintained that fees were not available under that statute. HSA contended that the only agreement implicated in this case was the oral agreement described in the complaint, which was not alleged to include any attorney fee provisions. According to HSA's trial brief on the issue, "[a] cause of action does not warrant a recovery under Civil Code section 1717 merely because a contract with an attorneys' fees provisions is part of the backdrop of the case."

Evidently unimpressed with these arguments, the trial judge awarded appellants attorney fees in the amount of $110,382. This was apparently done at the hearing on July 8th. ³

On July 23, HSA filed a "Motion for Reconsideration re Attorney Fees pursuant to CCP 1008 and to Vacate the Judgment as it Relates to Attorney Fees Pursuant to CCP 663." ⁴ On August 12, after a hearing that day, the motion for reconsideration was granted. The court's one sentence order states simply that "Good cause appearing, [p] IT IS ORDERED that the motion for reconsideration be granted and the judgment vacated as to the award of attorney fees in the amount of $110,382.50."

Notice of appeal was timely filed on September 27, 1996. The post-trial order granting reconsideration and vacating a portion of an appealable judgment is itself appealable. (Code Civ. Proc., § 904.1, subd. (a)(1) and (2).)

II. DISCUSSION

Appellants' numerous contentions boil down to three claims: first, that the trial court acted in excess of its jurisdiction by granting the motion for reconsideration, since the motion did not meet the prerequisites for relief under Code of Civil Procedure section 1008 (hereafter section 1008); second, that section 1717 authorized an award of attorney fees in this case; and, third, that if section 1717 does not authorize such fees here they can and should be awarded under Code of Civil Procedure section 1021 and Civil Code section 1654. ⁵ It is unnecessary to address the second and third claims because we find that the first has merit and is dispositive.

Subdivision (a) of section 1008 provides in material part as follows: "(a) When an application for an order has been made to a judge, or to a court, and ... granted ... any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make an application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown."

HSA's motion for reconsideration was accompanied by an affidavit of its counsel, Thomas J. Cahill, declaring that Moallem v. Coldwell Banker Com. Group, Inc. (1994) 25 Cal.App.4th 1827, 31 Cal.Rptr.2d 253 ("Moallem "), "a case not considered at the initial hearing" provided the "new or different ... law" that justifies reconsideration. The declaration explains that "[a]t the initial hearing, Home Savings believed the more relevant issue was Plaintiff's tort recovery as opposed to recovery under a contract. The court based its award of attorney fees on reciprocity under Civil Code section 1717. In considering further options following the initial hearing to tax costs, the Moallem case was found. Since it appears relevant to the facts of this case, Home Savings requests its consideration at the present time."

Moallem clearly does not provide the "new" law that authorizes trial court reconsideration of a prior order, because the opinion issued in 1994 and could therefore have been provided the trial court prior to its initial ruling on the motion for attorney fees. The opinion does, however, present "law," or at least a legal principle, "different" from that originally produced by HSA when it opposed appellants' motion for attorney fees.

As we have explained, HSA originally opposed an award of attorney fees under section 1717 on the ground that appellants prevailed only on their cause of action for the tort of negligent misrepresentation, which was not based on the contract. ⁶ This was not the theory that justified the denial of fees in Moallem. In Moallem, as here, the plaintiff prevailed on a cause of action for negligence (as well as a cause of action for breach of fiduciary duty), but not on its claim for breach of contract. The plaintiff originally sought fees under section 1717 because the attorney fee provision of the brokerage agreement between the parties was not reciprocal. On appeal from the denial of fees, the plaintiff switched to a different theory. He no longer invoked section 1717, the Court of Appeal observed, in recognition of the fact that the terms of that statute allow fees only to "the party prevailing on the contract," in an "action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded ...." (§ 1717, subd. (a).) (Moallem, supra, 25 Cal.App.4th at p. 1830, 31 Cal.Rptr.2d 253.) On appeal, the plaintiff instead relied "primarily on a series of cases allowing attorney fees for tort claims where a contractual attorney fees provision was phrased broadly enough to cover such noncontractual claims." (Id., at p. 1831, 31 Cal.Rptr.2d 253, citing Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 5 Cal.Rptr.2d 154; Palmer v. Shawback (1993) 17 Cal.App.4th 296, 21 Cal.Rptr.2d 575; Lerner v. Ward (1993) 13 Cal.App.4th 155, 16 Cal.Rptr.2d 486; 3250 Wilshire Blvd. Bldg. v. W.R. Grace & Co. (9th Cir.1993) 990 F.2d 487.) The Moallem court noted, however, that in all of those cases "the contract provisions that the courts enforced also provided for attorney fees to whichever party prevailed, whereas here the provision in question runs only in favor of Coldwell. Moallem thus occupies the difficult position of arguing that the 'public policy' of reciprocity of contractual attorney fee provisions, which section 1717 appears to implement, should...