Wertheim, LLC v. Currency Corp.

• Decision Date: 25 August 2017
• Docket Number: B270926
• Court: California Court of Appeals Court of Appeals
• Parties: WERTHEIM, LLC, Plaintiff and Appellant, v. CURRENCY CORP., INC., Defendant and Appellant.

WERTHEIM, LLC, Plaintiff and Appellant, v. CURRENCY CORP., INC., Defendant and Appellant.

B270926

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

August 25, 2017

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 in part, reversed in part, and remanded.

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 Appellant.

This is the second appeal from a lawsuit to recover against an appeal bond involving plaintiff and appellant Wertheim, LLC (plaintiff) and defendant and cross-appellant Currency Corp. (defendant). In the first appeal, we affirmed, with modification, an award of attorney fees to the insurer that issued the bond and deposited its proceeds with the trial court. In this appeal, we consider whether the trial court erred when it determined two issues relating to the accrual of interest on the judgment plaintiff obtained against defendant, namely, when the interest began to accrue under applicable law, and when it stopped accruing. We also review whether the trial court abused its discretion in ordering payment for the insurer's attorney fees to be made entirely from plaintiff's interest in the appeal bond funds. Finally, on defendant's cross-appeal, we are asked to decide whether the trial court erred when it did not apply a judgment lien in favor of defendant (in yet another lawsuit) to the judgment against plaintiff in this action.

I. BACKGROUND

The parties are familiar with the facts, which we generally recounted in Wertheim, LLC v. The Bar Plan Mutual Insurance Company (Dec. 1, 2016, B268539) [nonpub. opn.] (Wertheim I). We briefly recount the facts here, drawing on our opinion in Wertheim I and focusing on those facts that are relevant to our discussion of the issues in this appeal.

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

Plaintiff prevailed in an earlier lawsuit (the Underlying Proceeding) and obtained a judgment of $38,554.48 againstdefendant, which the trial court entered on June 16, 2009. Just over eight months later, on February 18, 2010, the trial court amended the judgment to include attorney fees and costs, bringing the total judgment to $190,718.48.

When the parties took cross-appeals from the judgment in the Underlying Proceeding, defendant obtained from The Bar Plan Mutual Insurance Company (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. Division One of this court later affirmed the judgment in the Underlying Proceeding, and the remittitur issued on July 25, 2012. That affirmance, however, did not resolve the final amount of the judgment because interest remained to be calculated on the award.

Over a year later, in November 2013, plaintiff submitted a written demand to Insurer requesting payment of $275,000.37, i.e., 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."

Plaintiff and defendant came to no agreement. Instead, plaintiff applied ex parte to have the trial judge in the originalaction enforce liability on the Appeal Bond. Defendant and Insurer opposed the application, arguing plaintiff erred in calculating the amount due on the judgment. Specifically, they opposed plaintiff's contentions that (1) interest continued to accrue after the remittitur issued from the appeal of the judgment in the Underlying Proceeding and (2) interest began accruing on the attorney fees and costs added to the judgment as of the date it was first entered rather than eight months later when the amount of fees and costs amounts were inserted in an amended judgment. Defendant and Insurer also contended the amount due plaintiff should be offset by the amount of judgments defendant had obtained against plaintiff in other cases.¹ The trial judge denied plaintiff's application, finding it was untimely under Code of Civil Procedure section 996.440,² 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.

Importantly for our purposes, on December 17, 2013, while plaintiff's application to enforce liability on the Appeal Bond was pending, Insurer provided a check in the full amount of the Appeal Bond ($286,078) to the Clerk of the Los Angeles Superior Court for disbursement "as the Court sees fit." The clerk,however, returned the check transmitted by Insurer and advised the court "would require a Court Order 'Deposit in Lieu of Appeal Bond'" before accepting the check.

B. Plaintiff Sues to Collect the Appeal Bond Funds

With the trial court having rejected plaintiff's application to enforce liability on the Appeal Bond in the original lawsuit, plaintiff in February 2014 filed 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.

Insurer responded by filing a motion pursuant to section 386.5, which allows a defendant holding money in which it claims 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 (a deposit and discharge motion). 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 ultimately granted Insurer's motion, ordered it to deposit the Appeal Bond proceeds with the trial court, discharged Insurer from liability, and dismissed it from the case.

C. The Court Awards Insurer Attorney Fees, Which We Affirmed But Modified in Wertheim I

After Insurer deposited the Appeal Bond proceeds with the court, it filed a motion to recover its attorney fees and costs pursuant to section 386.6, which gives courts discretion to award costs and attorney fees to a party who pursues the deposit anddischarge procedure. The trial court granted Insurer's motion and awarded it the sum of $83,213.05.

On appeal, we affirmed the attorney fee award to Insurer, except as to a small portion that was not compensable under the applicable statute. This resulted in a modified order of attorney fees and costs to Insurer in the amount of $73,218.219. (Wertheim I, supra, at p. 18.)

D. The Court Allocates the Attorney Fees Awarded to Insurer Entirely to Plaintiff's Share of the Appeal Bond Funds

Following the award of attorney fees to Insurer, defendant filed a motion asking the trial court to allocate the entire amount of the attorney fees paid to Insurer to plaintiff's share of the Appeal Bond funds. Defendant argued plaintiff should be responsible for Insurer's fees because plaintiff engaged in "dilatory and bad faith conduct" that necessitated and prolonged the litigation. After a hearing, the trial court granted defendant's motion, finding that allocation of the fees solely to plaintiff was warranted because plaintiff (a) did not make a timely claim on the Appeal Bond and (b) "insisted . . . on recovering an amount which the court had determined to be improper."

E. Trial and Judgment

A month later, the parties appeared to present evidence on the sole issue remaining to be decided in plaintiff's section 996.430 lawsuit against Insurer and defendant: when interest on the judgment plaintiff obtained against defendant stopped accruing. Defendant argued interest stopped running on July 25, 2012, (the date the remittitur issued on appeal from thejudgment in the Underlying Proceeding) because the existence of the Appeal Bond meant the funds were available to plaintiff and that availability was tantamount to satisfaction of the judgment. Plaintiff argued the existence of the bond was not comparable to satisfaction of the judgment because it had still not received payment.

The trial court agreed with defendant. Specifically, the court concluded: "The posting of the undertaking [i.e., the Appeal Bond] satisfies the [relevant Code of Civil Procedure] statute. This is because the funds were available on July 25, 2012, the date the remittitur issue[d] in the underlying action . . . ."

The trial court then calculated how the Appeal Bond funds should be disbursed. The court accepted defendant's calculation that the total judgment in favor of plaintiff was $239,724.80, which included attorney fees, costs, and interest consistent with the rulings the trial court had previously made on those issues. Subtracting this amount from the total $286,078 amount of the Appeal Bond, the court ordered $46,353.20 disbursed to defendant who, as the principal on the Appeal Bond, was entitled to the remainder of the deposited funds. Then, from the $239,724.80 judgment...