Wertheim, LLC v. Bar Plan Mut. Ins. Co.

• Decision Date: 01 December 2016
• Docket Number: B268539
• Parties: WERTHEIM, LLC, Plaintiff and Appellant, v. THE BAR PLAN MUTUAL INSURANCE COMPANY, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

WERTHEIM, LLC, Plaintiff and Appellant, v. THE BAR PLAN MUTUAL INSURANCE COMPANY, Defendant and Respondent.

B268539

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE

December 1, 2016

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC535737)

APPEAL from a judgment of the Superior Court of Los Angeles County, Elizabeth R. Feffer, Judge. Affirmed as modified.

Howard Posner; The Newell Law Firm and Felton T. Newell; The Law Offices of F. Jay Rahimi and F. Jay Rahimi, for Plaintiff and Appellant.

Diem Law and Robin L. Diem for Defendant and Respondent.

Plaintiff and appellant Wertheim, LLC (plaintiff) obtained a money judgment against defendant Currency Corp. (defendant). Defendant obtained a bond from The Bar Plan Mutual Insurance Company (Insurer) to forestall collection on the judgment while defendant appealed it. Plaintiff prevailed on appeal and later sued Insurer to recoup the sum plaintiff believed it was owed in connection with the judgment. After an initial spate of litigation activity, Insurer moved to deposit the bond proceeds with the trial court and be discharged from liability, as permitted by certain provisions of the Code of Civil Procedure. The trial court granted the motion and dismissed Insurer as a defendant. Insurer then sought an order compelling plaintiff to pay all of its attorney fees, and that brings us to the question presented: did the trial court abuse its discretion in awarding Insurer attorney fees (to be paid out of the deposited bond proceeds) for all work related to the appeal bond, or should the fee award have been limited solely to a reasonable amount to cover the filing of a motion to deposit the contested funds with the court? For reasons we shall explain, we affirm the attorney fee award except as to a small portion of fees that were not recoverable.

I. BACKGROUND

A. The Initial Judgment, the Appeal Thereof, and Initial Efforts to Collect on the Appeal Bond

The details of the initial action between plaintiff and defendant are not important to the question we confront. What is important is that plaintiff prevailed in the lawsuit and initially obtained a judgment of $38,554.48 against defendant. Just over eight months later, the trial court amended the judgment to include costs and attorney fees, bringing the total to $190,718.48.

When the parties took cross-appeals from the judgment, defendant obtained from Insurer an "Undertaking on Appeal and to Stay Execution Under Section 917.1 C.C.P." (the Appeal Bond) in the amount of $286,078. The Appeal Bond exceeded the amount of the judgment entered in the initial action because it was intended to cover additional costs—most significantly, interest on the judgment—that would accrue while the appeal proceeded. In May 2012, the Court of Appeal affirmed the judgment entered in plaintiff's favor, and the remittitur issued on July 25, 2012.

Well over a year later, in November 2013, plaintiff submitted a written demand to Insurer requesting payment of $275,000.37, the amount it contended was necessary to satisfy the judgment. Aware of the demand, defendant wrote to Insurer and protested the release of any Appeal Bond funds on the ground that plaintiff's calculation of the amount due was "greatly exaggerated and completely incorrect." In light of the disagreement regarding the amount due, Insurer wrote to both parties to inform them it would need a court order setting forth the correct amount to be paid before it could release any funds. Insurer also told the parties it was aware they were working to come to some agreement as to the amount to be paid, and that if no agreement could be reached, it would retain counsel to "interplead the funds into the court, and let the court determine who should be paid, and how much."

The parties came to no mutual agreement. Instead, plaintiff applied ex parte to have the trial judge in the original action enforce liability on the Appeal Bond. Defendant opposed the motion, arguing plaintiff had erred in calculating interest on the full $190,718.48 amount as of the date the judgment was firstentered rather than calculating interest so as to account for the fact that the bulk of the money judgment was only awarded eight months thereafter, when the court entered the amended judgment. The trial judge denied plaintiff's motion because it was untimely under Code of Civil Procedure section 996.440,¹ which permits a party to move to enforce liability on a bond in the original action only if the motion is made within a year after any appeal is finally determined. In its order denying plaintiff's application, the trial judge also stated that, "[t]o the extent it seeks to confirm the [amount] of the judgment, [plaintiff's application] is incorrect because it seeks to compute interest or costs and attorneys fees back to [the date of the original judgment], when those sums were awarded much later."

During the time that plaintiff's application to enforce liability on the Appeal Bond was pending, Insurer had attempted to deposit the full amount of the Appeal Bond, $286,078, with the Clerk of the Los Angeles Superior Court for disbursement "as the Court sees fit." But the Clerk returned the check transmitted by Insurer, explaining deposit of an appeal bond "would require a Court Order 'Deposit in Lieu of Appeal Bond.'"

B. Plaintiff Sues to Collect, and Insurer Eventually Deposits the Proceeds with the Court and Is Discharged from Liability

With the trial judge having rejected plaintiff's application to enforce liability on the Appeal Bond, and with the funds still not deposited with the superior court, plaintiff in February 2014filed a new lawsuit against Insurer and defendant pursuant to section 996.430, which permits liability on a bond to be enforced by a civil action against the principal and the surety. The sole cause of action alleged the sum of $269,425.89 (with interest continuing to accrue at 10% per annum) was past due and owing. The prayer for relief sought judgment in that amount and also attorney fees and costs of suit.²

One or both of the defendants filed a demurrer and a motion to strike,³ and plaintiff subsequently filed a first amended complaint in June 2014. The amended complaint was identical to the original in most respects, but it included updated figures with respect to the amount plaintiff contended was due and owing as of the day before the filing of the amended complaint: $280,120.87, with interest continuing to accrue at $52.25 per day. Like the original complaint, the first amended complaint prayed for attorney fees and costs of suit in addition to this amount.

Not long after filing the amended complaint, plaintiff filed a motion for summary adjudication that sought, among other things, a court order that the amount due on the judgment as ofthe date of the filing of the motion, October 3, 2014, was $291,668.12, plus interest accruing at $52.25 a day. The summary adjudication motion was the first court filing to assert that plaintiff's demand—excluding undetermined costs and attorney fees—exceeded the $286,078 value of the Appeal Bond. Insurer opposed the motion, and the court denied it at a hearing in January 2015, finding the issues raised were not subject to summary adjudication.

About a month later, Insurer filed a motion pursuant to section 386.5, which allows a defendant holding money in which it holds no interest to apply to a court for an order discharging it from liability and dismissing it from the action upon deposit of the funds.⁴ Plaintiff opposed the motion, arguing the amount of the judgment (including accrued interest) exceeded the amount of the Appeal Bond and asserting Insurer was attempting to evade its full liability.

The trial court heard Insurer's deposit and discharge motion in May 2015. At the same hearing, the court apparentlyalso heard a motion filed by plaintiff for attorney fees and costs.⁵ The trial court denied the discharge and deposit motion without prejudice and denied plaintiff's motion for attorney fees and costs in its entirety.

The trial court thereafter issued an order to show cause why it should not vacate its earlier decision to deny Insurer's deposit and discharge motion. Insurer then filed a renewed deposit and discharge motion asking the court to dismiss it from the litigation with prejudice. The renewed motion, accompanied by a declaration from counsel, set forth Insurer's understanding of what prompted the trial court to issue the order to show cause: "[T]he Court subsequently invited [Insurer] to renew its motion after [plaintiff] conceded that the amount in dispute, as per its original Complaint and First Amended Complaint, was less than the amount of the Undertaking. Notably, [plaintiff's] counsel . . . stated in open court that the amount in controversy was actually $250,000—$38,000 less than the amount of the Undertaking."⁶

Plaintiff opposed Insurer's renewed deposit and discharge motion, again asserting Insurer's liability exceeded the amount ofthe Appeal Bond, among other reasons. At a hearing in September 2015, the trial court granted Insurer's motion, and ordered it to deposit the Appeal Bond proceeds no later than October 16, 2015. The trial court further found plaintiff was "collaterally estopped from pursuing" Insurer in this action because plaintiff's demand for interest on the full sum of the originally entered judgment had been ruled "improper" by the trial judge in the first action. Having so found, the trial court ordered Insurer discharged from liability and dismissed from the case—reserving the issue of whether Insurer was entitled to attorney fees (the issue we confront on...