Chen v. Valstock Ventures, LLC

• Decision Date: 29 July 2022
• Docket Number: A161885
• Citation: 81 Cal.App.5th 957,297 Cal.Rptr.3d 666
• Parties: Shao Yan CHEN et al., Plaintiffs and Respondents, v. VALSTOCK VENTURES, LLC, et al. Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

81 Cal.App.5th 957

297 Cal.Rptr.3d 666

Shao Yan CHEN et al., Plaintiffs and Respondents,

v.VALSTOCK VENTURES, LLC, et al. Defendants and Appellants.

A161885

Court of Appeal, First District, Division 4, California.

Filed July 29, 2022

As Modified August 24, 2022

California Appellate Law Group LLP, Johanna Schiavoni, San Diego, Jennifer Teaford; Kronenberg Law PC, William S. Kronenberg, Oakland, V. Sathienmars, for Defendants and Appellants.

Ropes & Gray LLP, Douglas H. Hallward-Driemeier, Washington, Rocky C. Tsai, San Francisco; Winifred V. Kao, San Francisco, for Plaintiffs and Respondents.

BROWN, J.

The trial court awarded a group of plaintiffs approximately $1.1 million in attorney's fees under Civil Code section 1717 after granting their motion for summary adjudication of the sole cause of action on the contract in this case, before trial or disposition of the remaining non-contract causes of action.¹ The defendants appeal, arguing the award of attorney's fees was premature because the litigation as a whole had not yet ended. We agree and will therefore reverse.

BACKGROUND

Because the issue in this appeal is purely procedural, we need not describe in detail the factual background. In brief, Shao Yan Chen, Han Lin Liu, Zhi Hua Mo, Yuk Yee Cheng, Hui Zhen Hu, Ruizhao Wu, and Qi Di Wu (collectively, tenants) had a dispute with Valstock Ventures, LLC and 371 Broadway Street, LLC (together, Valstock) over which of two documents was the operative lease governing the tenants’ tenancies in two of Valstock's apartment buildings. The tenants filed suit against Valstock seeking a declaratory judgment on this question, alleging a civil conspiracy, and stating claims for violations of the Fair Employment and Housing Act ( Gov. Code, §§ 12900 – 12996 ) (FEHA), Unfair Competition Law ( Bus. & Prof. Code, § 17203 ) (UCL), and section 37.10B of the San Francisco Rent Ordinance.²

After approximately a year of litigation, Valstock filed a motion for summary judgment and the tenants filed a motion for summary adjudication of their declaratory judgment cause of action and Valstock's related affirmative defenses. In September 2020, the trial court denied Valstock's motion and granted the tenants’ motion. The tenants’ allegation of civil conspiracy and their other causes of action remained pending.

The tenants then moved under section 1717 for an award of roughly $2.1 million in attorney's fees, arguing that the trial court's summary adjudication ruling meant they were the prevailing parties on the sole cause of action on the contract. Valstock responded by filing an ex parte application asking the court to continue the filing deadlines and hearing date on the fees motion until after a settlement conference and certain pre-trial deadlines had passed. The record does not contain a transcript of the ex parte hearing or reflect any orders issued after the hearing. Other documents in the record indicate, however, that the trial court suggested at the hearing that plaintiffs voluntarily continue the hearing date on their fees motion until after trial or entry of judgment. The trial court also ordered the parties to meet and confer regarding Valstock's request for a continuance.

The parties were unable to come to an agreement, and the next day Valstock filed a second ex parte application, this time to continue the hearing date until after entry of a final judgment in the action. The second ex parte application argued the trial court should continue the hearing date until after entry of final judgment under the court's authority to manage its proceedings, in order to promote judicial economy. Valstock also asserted that a fee award was premature because the court had not entered final judgment and the remaining causes of action were in trial. Again, there is no direct record of the court's actions at the ex parte hearing, but we infer that the trial court denied Valstock's application, since briefing proceeded on the attorney's fees motion.

The trial court ultimately awarded the tenants approximately $1.1 million in fees.³ A few weeks later, the tenants moved to enforce the fee award. Valstock then appealed the fee award. The trial court denied the tenants’ motion to enforce the fee award, concluding that Valstock's appeal automatically stayed enforcement of the fee order. Valstock later filed an amended notice of appeal.

DISCUSSION

I. Forfeiture

The tenants argue that we should not entertain Valstock's challenge to the timing of the fee award because Valstock failed to raise it below. " ‘ "As a general rule, theories not raised in the trial court cannot be asserted for the first time on appeal; appealing parties must adhere to the theory (or theories) on which their cases were tried. This rule is based on fairness—it would be unfair, both to the trial court and the opposing litigants, to permit a change of theory on appeal." ’ " ( Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 548, 280 Cal.Rptr.3d 21.)

Valstock's ex parte application to continue the hearing on the tenants’ fee motion until after final judgment raised two arguments, albeit cursorily. First, Valstock asserted it was "premature" to hear the fees motion because the trial court had not yet entered final judgment and the remaining causes of action were in trial. Second, it argued the trial court had authority to continue the hearing to promote judicial economy. The first argument is essentially the same as Valstock's argument on appeal. Valstock did not cite any of the same authority that it presents here—indeed, it cited no authority at all to support its prematurity argument—but that is not significant. "We are aware of no prohibition against citation of new authority in support of an issue that was in fact raised below." ( Giraldo v. Department of Corrections & Rehabilitation (2008) 168 Cal.App.4th 231, 251, 85 Cal.Rptr.3d 371.) Valstock might have saved itself considerable time, effort, and expense had it spent more time developing its prematurity argument in the trial court, but it raised the issue sufficiently to preserve it for appeal.

Even if Valstock had not raised the issue below, we would still reject the tenants’ forfeiture argument. As the tenants acknowledge, appellate courts "have discretion to consider a new theory on appeal when it is purely a matter of applying the law to undisputed facts." ( Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316, 88 Cal.Rptr.2d 758.) That is the situation here, where the only relevant facts are undisputed: the trial court entered summary adjudication of the single cause of action in the case that is "on the contract" and then awarded attorney's fees under section 1717 to the tenants as the parties who prevailed on the contract. The tenants argue we should not exercise our discretion to address the issue, but the only justification they offer is that they believe Valstock's arguments are meritless and an invitation to error. Whatever the merits of this rationale for applying the forfeiture doctrine, it has no bearing here because, as we explain, post , we agree with Valstock on the merits of this case.

II. Mootness

The tenants suggest that because Valstock's appeal of the fee award is based entirely on prematurity and the absence of a final disposition of the litigation, Valstock's argument will be moot if the trial court enters a final judgment while this appeal is pending. This argument is hypothetical, because there is not a final judgment. Valstock's request for judicial notice contains the most recent evidence on the state of proceedings in the trial court, and it indicates only that as of September 2021, trial of the tenants’ remaining causes of action was set to begin in January 2022 and conclude in February 2022.⁴ During the July 12, 2022, oral argument, the parties indicated that they have an August 2022 trial date. There is thus no final judgment in this matter.⁵

We will therefore proceed to the merits of the parties’ dispute.

III. Interim fee awards

A. Standard of review

Valstock contends that section 1717 did not allow the trial court to make an interim award of attorney's fees based on the summary adjudication order. This is a legal question that turns on the interpretation of a statute, so we interpret it de novo. ( Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 523, 141 Cal.Rptr.3d 834 ( Frog Creek ) [" ‘ "On appeal this court reviews a determination of the legal basis for an award of attorney fees de novo as a question of law" ’ "].)⁶

"In interpreting a statute, our primary goal is to determine and give effect to the underlying purpose of the law. [Citation.] ‘Our first step is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning.’ [Citation.] ‘ "If the words of the statute are clear, the court should not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history." ’ [Citation.] In other words, we are not free to ‘give words an effect different from the plain and direct import of the terms used.’ [Citation.] However, ‘ "the ‘plain meaning’ rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose or whether such a construction of one provision is consistent with other provisions of the statute." ’ [Citation.] To determine the most reasonable interpretation of a statute, we look to its legislative history and background." ( Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332, 104 Cal.Rptr.3d 219, 223 P.3d 77.)

B. Analysis

1. Finality of summary adjudication ruling

The parties’ disagreement over whether the trial court was authorized to make an attorney's fees award is in part a dispute about the effect of the summary adjudication order on which the trial court based the fee award. Without argument or authority, Valstock asserts that the fee award was an interim fee award because the FEHA, UCL, and San Francisco Rent Ordinance...