On v. Cow Hollow Properties

• Decision Date: 22 August 1990
• Docket Number: No. A045502,A045502
• Citation: 272 Cal.Rptr. 535,222 Cal.App.3d 1568
• Court: California Court of Appeals Court of Appeals
• Parties: Lewis C. ON, et al., Plaintiff and Appellant, v. COW HOLLOW PROPERTIES, et al., Defendant and Respondent.

Page 535

272 Cal.Rptr. 535

222 Cal.App.3d 1568

Lewis C. ON, et al., Plaintiff and Appellant, v. COW HOLLOW PROPERTIES, et al., Defendant and Respondent.

No. A045502.

Court of Appeal, First District, Division 1, California.

Aug. 22, 1990.

Barton S. Selden, San Francisco, for plaintiff and appellant.

Joel D. Adler, San Francisco, for defendant and respondent.

NEWSOM, Associate Justice.

In a second appeal of this case, Lewis C. On (hereafter appellant) challenges an award of $88,784.88 in attorneys' fees to Cow Hollow Properties, a partnership, Lloyd Wiborg, Martin Davis, Patrick Short, and James Curran (hereafter collectively Cow Hollow). ¹

On November 10, 1981, appellant filed a complaint in the San Francisco Superior Court against Cow Hollow seeking specific performance of a real estate purchase agreement dated September 8, 1981. Cow Hollow responded by filing a cross-complaint against On and two other defendants seeking damages for wrongful filing of a lis pendens relating to the action. Both complaint and cross-complaint were later amended and duly answered by the opposing parties.

In a statement of decision filed April 16, 1984, the court found for Cow Hollow, both as defendant to the complaint and as cross-complainant. Ruling that Cow Hollow was also entitled to attorneys' fees, the statement of decision referred to Cow Hollow as cross-complainant but, as we will note later, articulated grounds for awarding the fees that would actually apply to Cow Hollow as defendant to the complaint itself. The judgment on the cross-complaint, filed nunc pro tunc as of May 2, 1984, awarded Cow Hollow $324,435.50 in compensatory damages, plus damages of $363.90 per day until the lis pendens was expunged. The judgment included "attorneys fees and costs incurred by cross-complainants in an amount to be determined by the Court upon application by cross-complainants, ..." Pursuant to this directive, the parties filed a stipulation that Cow Hollow could recover from appellant $50,000 in attorneys' fees. Like the judgment, the stipulation referred to Cow Hollow as cross-complainant.

On appeal, this court reversed the judgment on the cross-complaint. The opinion acknowledged: "[T]he record reveals more than a frivolous lawsuit and an abuse of judicial process; the appellant's claim of relief is based wholly on the intentional misrepresentation...." Nevertheless, the court concluded that the filing of the lis pendens was privileged under Civil Code section 47, thus barring the claim for compensatory damages in the cross-complaint.

Upon remand to the trial court, appellant contended that the reversal of the judgment on the cross-complaint invalidated the award of attorneys' fees to Cow Hollow as cross-complainant. Cow Hollow countered that language awarding attorneys' fees to it as cross-complainant was a clerical error; it remained entitled to attorneys' fees as the successful defendant to the complaint. Accepting Cow Hollow's position, the court set aside the stipulated attorney's fees of $50,000 and stated that it would "entertain a motion" for a "determination of a reasonable fee...." In response to Cow Hollow's application, the court determined that Cow Hollow was entitled to attorneys' fees of $88,784.88, and entered a judgment in this amount.

Appellant contends, first, that the trial court erred in refusing to credit against the award of attorneys' fees the sum of $60,000 paid under a bond it posted as a condition to maintaining the lis pendens in this action. The record reveals that Cow Hollow moved to expunge appellant's lis pendens shortly after appellant filed this action. On February 23, 1982, the trial court denied the motion on the condition that appellant "file [a] bond in the amount of $60,000.00 pursuant to Code of Civil Procedure section 409.1(b)." After securing a judgment on the cross-complaint, Cow Hollow received full payment on the bond.

In refusing to credit the $60,000 against the award of attorneys' fees, the court reasoned that a lis pendens bond filed by a plaintiff is available for payment only of "damages resulting directly from the non-expungement of the lis pendens." Such damages, the court ruled, did not include the defendant's attorney's fees. We find the premise mistaken. A successful defendant can in fact recover attorneys' fees to which it is entitled from a lis pendens bond filed by a plaintiff. We look first to the purpose of the statute.

Code of Civil Procedure sections 409.1 and 409.2 ² both give the court discretion to require the defendant to post a bond as a condition for expungement of the lis pendens. In such cases, the purpose of the bond is clear: it allows the defendant to dispose of the property subject to suit while remaining capable of responding in damages to the plaintiff's claim. But section 409.1 also gives the court discretion to require the plaintiff to post a bond as a condition to denying a motion for expungement of the bond. In such a case, the purpose of the bond is more obscure. If it has any utility, the bond must benefit the defendant. But under Albertson v. Raboff (1956) 46 Cal.2d 375, 295 P.2d 405, the defendant cannot recover damages from the plaintiff for slander of title resulting from filing of the lis pendens. The defendant moreover cannot recover on the bond for damages unrelated to the filing of the lis pendens. (Elder v. Carlisle Ins. Co. (1987) 193 Cal.App.3d 1313, 238 Cal.Rptr. 897.) Nor can the bond be reserved for payment of damages in a subsequent action for malicious prosecution; the undertaking on the bond cannot extend beyond the period that the lis pendens is in effect, that is, beyond final judgment in the action. (Hertzberg and Regele, Cal. Lis Pendens Practice (Cont.Ed.Bar 1983) § 4.1, p. 121.) The bond would in fact have limited and uncertain value if the defendant could not use it to collect attorneys' fees and costs in the successful defense of the action. Consequently the statutory authority to require the plaintiff to post the bond will ordinarily best serve the legislative purpose of benefiting the defendant if he is allowed to use it to collect attorneys' fees.

Attorneys' fees may be recovered as an element of damages from bonds posted on the issuance of preliminary injunctions (Allen v. Pitchess (1973) 36 Cal.App.3d 321, 327, 111 Cal.Rptr. 658; Russell v. United Pacific Ins. Co. (1963) 214 Cal.App.2d 78, 89, 29 Cal.Rptr. 346), attachments (Mart, Inc. v. National Auto. & Cas. Co. (1967) 250 Cal.App.2d 772, 774, 58 Cal.Rptr. 877), and stop notices (Flintkote Co. v. Presley of Northern California (1984) 154 Cal.App.3d 458, 464, 201 Cal.Rptr. 262; Systems Inv. Corp. v. National Auto. & Cas. Ins. Co. (1972) 25 Cal.App.3d 1057, 1061, 102 Cal.Rptr. 378). The same considerations should apply here. The statutory language regarding a preliminary injunction bond is especially close to that applying to a lis pendens bond. Under section 529, the applicant for a preliminary injunction may be required to post a bond "to the effect that the applicant will pay to the party enjoined such damages ... as the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction." Section 409.1, subdivision (b) provides that the lis pendens bond may be "to the effect that such prevailing party will indemnify the other party for all damages which he may incur if he ultimately prevails in the action."

We conclude that, since attorneys' fees are recoverable under a lis pendens bond, the amount Cow Hollow has recovered under the bond should be credited against the award of attorneys' fees.

Appellant next advances a series of objections to the award of attorneys' fees under Civil Code section 1717. Citing the rule that judicial errors may not be corrected after entry of judgment, he contends that the court had no jurisdiction to alter the original judgment which awarded attorneys' fees to Cow Hollow as cross-complainant. (See 7 Witkin, Cal.Procedure (3d ed. 1985) § 66, p. 500.) But the statement of decision reasoned that Cow Hollow could recover attorneys' fees under "the document of September 8, 1981," i.e., the real estate purchase agreement. Since the significance of this agreement was adjudicated under the complaint, not the cross-complaint, it is clear that the court intended to award attorneys' fees to Cow Hollow for successful defense of the complaint. The language of the judgment awarding attorneys' fees to Cow Hollow as cross-complainant was plainly an inadvertent clerical error that the court was empowered to correct under section 473.

Appellant contends that Cow Hollow never obtained a ruling that it was the prevailing party as required by Civil Code section 1717. In fact, the order for attorneys' fees stated explicitly that Cow Hollow was entitled as the prevailing party to attorneys' fees under Civil Code section 1717. The ruling was correct. Civil Code section 1717 establishes a policy of mutuality of remedy. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128, 158 Cal.Rptr. 1, 599 P.2d 83.) If appellant had succeeded in enforcing the real estate purchase agreement, the contract provisions would have entitled it to attorneys' fees. Civil Code section 1717 gave Cow Hollow the reciprocal right to recover attorneys' fees upon successfully proving that the agreement was unenforceable. (Jones v. Drain (1983) 149 Cal.App.3d 484, 486, 196 Cal.Rptr. 827.)

Three further contentions can be answered briefly. (1) For the first time on appeal, appellant claims that Cow Hollow is estopped to claim more than the $50,000 attorneys' fees stipulated after the entry of the initial judgment. In the trial court, however, appellant himself moved to set aside the stipulation. He cannot now claim estoppel. (2) Appellant also maintains for the first time on appeal that Cow Hollow is barred by laches from claiming attorneys' fees, but he fails to point to any inordinate delay in...