Fourth District, Division One So Holds In Partnership Dissolution Case.
In our June 27, 2008 post, we examined Roberts v. Ross, a recent Fourth District, Division One unpublished case construing trial court discretion to award certain non-specified, non-prohibited costs as routine costs “necessary for the litigation” under a catchall provision, Code of Civil Procedure section 1033.5(c)(4). One day later, the same division considered the same catchall, as well as determined how broadly an attorney’s fees clause should be interpreted under Civil Code section 1717. We now discuss this recent decision in Vesco v. San Diego Community Correctional Center, Case No. D049266 (4th Dist., Div. 1 June 26, 2008) (unpublished), written by Acting Justice Nares on behalf of a 3-0 panel.
In a partnership judicial dissolution action, the trial court awarded plaintiff Vesco $25,298.71 in court-appointed referee and appraiser costs. However, the trial judge denied plaintiff’s $224,000 fee request based on its view that the fees clause in a written buy/sell agreement was not broad enough to encompass the litigation at issue. Both sides appealed the respective adverse determinations.
First, the appellate court affirmed the costs award. Although suggesting that the referee and appraiser expenses were court-ordered expert fees awardable under Code of Civil Procedure section 1033.5(a)(8), the Court of Appeal hinged its affirmance—as it did in Roberts v. Ross—on catchall section 1033.5(c)(4). It made a nice summary of decisions awarding the expenses of various court-appointed assistants necessary for the conduct of the litigation as statutory costs under section 1033.5(c)(4). (See, e.g., Gibson v. Bobroff, 49 Cal.App.4th 1202, 1207-1210 (1996) [private mediator]; Winston Square Homeowner’s Assn. v. Centex West, Inc., 213 Cal.App.3d 282, 292-293 (1989) [special discovery/settlement master]; ABC Egg Ranch, Inc. v. Abdelnour, 223 Cal.App.2d 12, 19 (1963), abrogated on other grounds in Weiner v. Fleischman, 54 Cal.3d 476, 485 (1991) [accountant]; Most Worshipful Lodge v. Sons etc. Lodge, 140 Cal.App.2d 833, 834-835 (1956) [referee]; Estrin v. Fromsky, 53 Cal.App.2d 253, 255 (1942) [accountant].) Because no party disputed that the referee and appraiser costs were other than reasonable and necessary for the litigation, no abuse of discretion occurred under the trial court’s award of these expenses as statutory costs.
Next, focus turned to the decision declining to award Vesco attorney’s fees under the fees clause of the buy/sell agreement. Justice Nares, on behalf of the appellate panel, found error and reversed this decision.
Based on Neptune Society Corp. v. Longanecker, 194 Cal.App.3d 1233, 1250 (1987), the Court of Appeal determined that the trial court was too myopic in not enforcing the fees clause which was contained in one or more of several documents that formed an integrated transaction. It observed that only the operative documents in an integrated transaction need to contain a fee clause in order to authorize a grant to the prevailing party. (See also Torrey Pines Bank v. Hoffman, 231 Cal.App.3d 308, 325-326 (1991); South Bay Transportation Co. v. Gordon Sand Co., 206 Cal.App.2d 650, 660-661 (1988).) In the case before the Fourth District panel, the fees clause in the buy/sell agreement applied to the entire contract and to the litigation, negating the linchpin of the lower court’s analysis to the contrary.
Beyond that, Justice Nares rejected the argument that the fee clause language—applying to any action seeking to “enforce, protect, or establish any right or remedy under this agreement”—was too narrow so as to not apply in the pending litigation. The appellate court cited to numerous decisions holding that broad “any dispute under the agreement” language was sufficiently akin to “arising out of this agreement” language so as to make its terms apply to the partnership agreement as a whole. (See, e.g., Gil v. Mansano, 121 Cal.App.4th 739, 744 (2004); Santisas v. Goodin, 17 Cal.4th 599, 607 (1998); Xuereb v. Marcus & Millichap, Inc., 3 Cal.App.4th 1338, 1342 (1992); Thompson v. Miller, 112 Cal.App.4th 327, 335-336 (2003).) After finding error, the panel remanded to determine if Vesco was the prevailing party and, if so, the amount of any fee award.
(BLOG OBSERVATION—Again, the standards of review were very determinative in this case. Abuse of discretion was the one applied to the costs award, while de novo was the one used to interpret a contractual fees clause with no conflict in extrinsic evidence. Appellate courts are much more likely to reverse under the independent review standard, when interpreting statutory or unambiguous contractual provisions.)