H.D. Arnaiz, Ltd. v. County of San Joaquin

• Decision Date: 21 March 2002
• Docket Number: No. C035433.,C035433.
• Citation: 118 Cal.Rptr.2d 71,96 Cal.App.4th 1357
• Parties: H.D. ARNAIZ, LTD., Plaintiff and Respondent, v. COUNTY OF SAN JOAQUIN, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

118 Cal.Rptr.2d 71

96 Cal.App.4th 1357

H.D. ARNAIZ, LTD., Plaintiff and Respondent, v. COUNTY OF SAN JOAQUIN, Defendant and Appellant.

No. C035433.

Court of Appeal, Third District.

March 21, 2002.

Review Denied June 19, 2002.

Freeman, D'Aiuto, Pierce & Gurev, Maxwell M. Freeman, Ronald J. D'Aiuto and Thomas H. Keeling, Stockton, for Defendant and Appellant.

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Kenneth G. Hausman, Pamela K. Fulmer, Amy E. Margolin and Deborah A. Kane, San Francisco, for Plaintiff and Respondent.

MORRISON, J.

County of San Joaquin appeals from the order granting H.D. Arnaiz, Ltd.'s motion to vacate its voluntary dismissal of an action against the County of San Joaquin (County). Arnaiz moves to dismiss the appeal on the grounds that the County accepted the benefit of the judgment; the order is not appealable; and the appeal is untimely. We conclude an order granting a motion to vacate a voluntary dismissal is not an appealable order, but will treat the appeal as a petition for a writ of mandate. We find the trial court did not abuse its discretion in vacating the voluntary dismissal and deny the writ.

FACTUAL AND PROCEDURAL BACKGROUND

In 1994, Arnaiz entered into an option to lease certain property near the Stockton airport from the County. Before exercising the option, Arnaiz sued the County for breach of its obligations under the contract. Arnaiz then exercised the option and began negotiating for development of the property. The litigation interfered with negotiations. On June 18, 1999, Arnaiz's request for dismissal of the lawsuit without prejudice was filed.

On June 21, 1999, the County sent Arnaiz notice that the lease was terminated. The notice recited the following. The County had previously sent Arnaiz notice that public financing would not be available for development of the infrastructure for the proposed project under the lease. After receiving this notice, Arnaiz had a duty under the lease to notify the County of its intentions. Arnaiz had not notified the County of its intentions, so pursuant to section 5.3.14.1 of the lease, the County terminated it.

Almost six months later, on December 17, 1999, Arnaiz moved to vacate its voluntary dismissal on the basis of mistake. Arnaiz claimed it had a good faith belief the dismissal would facilitate development under the ground lease. Howard Arnaiz submitted a declaration in support of the motion. He stated he believed that if the litigation was dismissed, the County would cooperate in proceeding with the development.

On January 31, 2000, the trial court granted the motion, on the condition Arnaiz pay the County $81,457. Arnaiz sent a check in that amount to County Counsel.¹

On February 28, the motion to vacate the dismissal was granted, the voluntary dismissal was vacated, and the first amended complaint was reinstated.

The County filed a notice of appeal on April 11, 2000.

Four months later, the County's opening brief noted: "Pending the outcome of this appeal, the $81,457, plus accrued interest, is being held by the County in a trust account."

Arnaiz moved to dismiss the appeal on three grounds. First, the County had waived its right to appeal by accepting the payment of $81,457. Second, the order granting the motion to vacate was not an appealable order. Third, the appeal was not timely as the appeal should have been taken from the January 31 order.

In an accompanying declaration, counsel for Arnaiz noted the County did not object when it received the check and Arnaiz had not received notice that the $81,457 was to be placed in trust, that the acceptance was conditional, or that the County intended to return the funds if the order vacating the dismissal was reversed.

In his declaration, Howard Arnaiz stated the account number on the back of the cancelled check he had sent the County was the same as the account number on a tax refund he had received from the County. "The fact that these account numbers are the same leads me to believe that the County deposited the payment from Arnaiz into its general fund at the time the County cashed that check."

In opposition, the County submitted the declaration of County Counsel Terrence Dermody. After reviewing and analyzing the February 28 order, it was decided the Office of the County Counsel would recommend an appeal. It was further decided that depositing the check into the general fund could give Arnaiz a basis for a waiver argument. To avoid the appearance of waiver, County Counsel recommended to the Board of Supervisors that a special trust account be created for the sole and express purpose of holding the Arnaiz payment pending appellate review of the trial court's ruling.

Attached as exhibits to Dermody's declaration were documents showing the establishment of the trust fund. These included county counsel's recommendation to the board of supervisors, the agenda of the board of supervisors meeting with the establishment of the trust account as a consent item, the minutes of the meeting showing the same, the order of the board of supervisors establishing a trust account to deposit and retain funds from Arnaiz "until such time a higher court renders its decision", and a treasury deposit receipt for the funds.

In reply, Arnaiz pointed out the County had failed to address why it paid a tax refund out the same account that the funds were deposited into. Arnaiz argued the use of these funds to pay a tax refund established that the County had exercised control and domination over the funds that was inconsistent with retaining the right to appeal.

The County then submitted a declaration from its auditor-controller stating that no funds had been withdrawn or diverted from the Arnaiz trust account to fund a tax refund or for any other purpose.

DISCUSSION

I

"It is the settled rule that the voluntary acceptance of the benefit of a judgment or order is a bar to the prosecution of an appeal therefrom. [Citation.]" (Schubert v. Reich (1950) 36 Cal.2d 298, 299, 223 P.2d 242.) "The right to accept the fruits of a judgment or order, and the right to appeal therefrom, are not concurrent, but are wholly inconsistent, and an election of either is a waiver and renunciation of the other. [Citation.]" (San Bernardino v. Riverside (1902) 135 Cal. 618, 620, 67 P. 1047.)

Waiver, however, only arises where the appellant has actually accepted the proceeds of the judgment. (Norco Delivery Service, Inc. v. Owens-Corning Fiberglass, Inc. (1998) 64 Cal.App.4th 955, 961, 75 Cal.Rptr.2d 456.) "Indeed, before any waiver will be found, there must be an unconditional, voluntary, and absolute acceptance of the fruits of the judgment. [Citation.]" (Id.) at pp. 961-962, 75 Cal. Rptr.2d 456.

Courts have found no waiver of the right to appeal where the benefits of the judgment are retained, but not used by the appellant. (E.g., Miller v. Lobdell (1952) 109 Cal.App.2d 628, 241 P.2d 30 [no waiver where appellant sellers took possession of property to preserve it].) In Phillips v Isham (1951) 105 Cal.App.2d 608, 233 P.2d 637, the trial court rendered a judgment that title to the disputed property would be quieted in defendant upon payment of $250 to plaintiffs. Defendants sent $250 to plaintiffs' counsel by registered mail. When counsel opened the registered letter and found the currency, he deposited it in his trust account. He wrote opposing counsel, acknowledging receipt of the money and stating, "I have deposited this money in my trustee account and will hold the same pending the decision of the appeal in this case." (Id. at pp. 609-610, 233 P.2d 637.) The court found that while counsel perhaps should have returned the money, his notice that he was holding it in trust, with no objection from the other side, was not an acceptance of benefits that justified a dismissal of the appeal. (Id. at p. 611, 233 P.2d 637.)

In Ramsey Trucking Co. v. Mitchell (1961) 11 Cal.Rptr. 283, 188 Cal.App.2d Supp. 862, the order setting aside the default and granting a new trial was conditioned upon payment of $200 to plaintiff. Counsel for defendant sent a check in that amount to counsel for plaintiff. Plaintiffs counsel called and said he would return the money and was told he should keep it until defendant's insurer took action or the appeal was resolved. Counsel then deposited the check in his office account. In open court he tendered the $200 back to defendant if the order was reversed. The court found the conditional retention of the money in the office account did not waive the appeal, as it was not "`unconditional, voluntary and absolute.'" (Id. at p. 864, 11 Cal.Rptr. 283.)

Arnaiz contends these cases are distinguishable from the present case, as the County deposited the funds into its general fund and failed to notify Arnaiz of the trust account or offer to return the money, and Arnaiz did not acquiesce in the trust arrangement.

As to the first point, the County has provided declarations and documentation to establish that the $81,457 was never deposited in the County's general fund.² Instead, the check was held until the trust account was established. Further, the supplemental declaration by the auditor-controller indicates the funds, plus interest, remain untouched and have not been used for other purposes, such as to fund tax refunds. Arnaiz's evidence that the same account was used for depositing the $81,457 check and to pay a tax refund shows at most that the County may use a single trust account for various purposes. An attorney may use a single unsegregated account for client trust funds. (Vapnek et al., Cal. Practice Guide: Professional Responsibility (The Rutter Group 2000) ¶ 9:78, p. 9-8.1; see Bus. & Prof.Code, § 6211.) We see no reason why the County may not do the same.

More troubling is the County's failure to offer to return the funds or even to notify Arnaiz about the trust account. It is true that the County's actions in this regard were public and that it filed its notice of appeal...