Filed 8/19/21 Betuel v. Luma Pictures CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
JONATHAN BETUEL, B297030
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC638231)
v.
LUMA PICTURES, INC.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of
Los Angeles County, William F. Fahey, Judge. Affirmed.
Jasper Law and Bernard C. Jasper for Plaintiff and
Appellant.
Brown, Neri, Smith & Khan, Ethan J. Brown, Jill R.
Glennon and Rowennakete P. Barnes for Defendant and
Respondent.
Plaintiff Jonathan Betuel and defendant Luma Pictures,
Inc. reached a settlement of their claims regarding Betuel’s
partial ownership of Luma, in which the parties agreed that
Luma would purchase Betuel’s shares in the corporation for an
amount to be determined by a valuation expert. Betuel now
appeals from the trial court’s order approving the valuation. He
argues that the court did so pursuant to terms that were not in
the parties’ settlement agreement, and therefore abused its
discretion. We disagree and affirm. However, we deny Luma’s
request for attorney fees incurred in connection with this appeal.
FACTUAL AND PROCEDURAL HISTORY
I. Complaint and Settlement Agreement
Betuel was a co-founder of and shareholder in Luma, an
entertainment production company. In October 2016, Betuel
filed a complaint against Luma and several individuals, alleging
claims related to the termination of his employment and the
running of the corporation.
The court held a mandatory settlement conference on
September 12, 2017. At that time, the parties1 entered into a
stipulation regarding settlement, reciting that they had reached
a “full and final settlement of all claims arising from the events
described in the complaint,” stating that the court could dismiss
the case without prejudice, and requesting that the court retain
jurisdiction to enforce the settlement pursuant to Code of Civil
1 The parties to the settlement agreement included plaintiff
Betuel, defendant Luma, and individual defendant Payam
Shohadai, Luma’s president. Shohadai is not a party to this
appeal.
2
Procedure section 664.2 Accordingly, the minute order from the
settlement conference stated that the parties entered into a
settlement and the court dismissed the case without prejudice.
The written settlement agreement provided that Luma
agreed to purchase all stock and equity interests in Luma held by
Betuel, and the parties would “undertake to agree on an
independent appraiser to perform a fair market value
determination” of the shares. If the parties could not agree to an
expert, they would each submit proposed experts and any
objections to the court for decision no later than October 18, 2017.
The expert “will be requested to provide a final valuation report
within 90 days of appointment or as soon thereafter as
practicable. Once the independent expert’s report is submitted to
the Parties, within 15 days, the Parties may make objections and
the Court will rule on such objections. The decision of the Court
on the valuation report will be final.” The settlement agreement
also provided, “If any party to the Agreement commences any
action arising out of this Agreement including, but not limited to,
any action to enforce or interpret the Agreement, the prevailing
party in such action shall be entitled to recover its reasonable
attorneys’ fees and other expenses incurred in such action.”
II. Selection of Valuation Expert
In October 2017, pursuant to the settlement agreement,
both parties submitted proposed expert valuation firms to the
court. Betuel proposed as experts the firms of FTI Consulting
and Salem Partners. Luma proposed the firms of Duff & Phelps
and Houlihan Lokey. The parties informed the court that
All further statutory references are to the Code of Civil
2
Procedure unless otherwise indicated.
3
because they could not reach an agreement on an expert, the
terms of the settlement agreement provided that the court should
select the expert from the nominees.
Each party submitted objections to the other party’s
proposed experts. Betuel also submitted a response to Luma’s
objections. Luma filed an unopposed ex parte application on
December 20, 2017, citing the term of the settlement agreement
providing that the court should select a valuation expert within
seven days of the parties’ submissions, and requesting that the
court appoint an expert or set a hearing on the matter. On
December 22, 2017, the court granted the ex parte application
and selected Houlihan Lokey (Houlihan) as the expert.
III. Completion of Report and Submission of
Stipulations
At a status conference on January 10, 2018, the court set
deadlines for the completion of the valuation report, followed by
filing of objections/oppositions and replies by the parties, and
scheduled oral argument on the report for May 25, 2018.
On May 18, 2018, Luma filed a motion pursuant to section
664.63 to enforce the settlement agreement. As of that date, the
expert report was not complete, and Luma contended that Betuel
had “obstructed the process” of assisting the valuation by failing
3 Section 664.6 provides, “If parties to pending litigation
stipulate, in a writing signed by the parties outside the presence
of the court or orally before the court, for settlement of the case,
or part thereof, the court, upon motion, may enter judgment
pursuant to the terms of the settlement. If requested by the
parties, the court may retain jurisdiction over the parties to
enforce the settlement until performance in full of the terms of
the settlement.”
4
to pay his portion of the valuator’s fee and disputing the scope of
the valuation. Luma requested that the court issue an order
“establishing firm deadlines and an expedited procedure for
raising disputed issues with the court.”
Although the valuator had not yet issued its report, the
court held a status conference on May 25, 2018, the date
previously set for oral argument on the report. Luma’s counsel
was not present. The court conferred with Betuel’s counsel
regarding the status of the uncompleted valuation report and
issued an order to show cause why the case should not be
dismissed for noncompliance with the court’s prior deadlines.4
Betuel filed an opposition to the motion to enforce the
settlement. He argued that the motion was unnecessary and
moot, since he had paid the outstanding portion of the valuator’s
fee and the parties had resolved an issue regarding the scope of
the valuation. He further contended that the settlement
agreement had not been breached and did not require
enforcement.
At the June 13, 2018 hearing on Luma’s section 664.6
motion, the court denied the motion. The court resolved the
4 Only Betuel’s counsel was present for the hearings on
January 10 and May 25, 2018; both times, the court ordered
Betuel to give notice following the hearing. Luma later informed
the court that it was not aware of either hearing and did not
receive any notice from Betuel. Thus, Luma was also unaware of
the deadlines set by the court at the January 2018 hearing.
Luma later told the court that it discovered the existence of these
hearings and the court’s orders when reviewing the case docket
on another issue. The court ultimately discharged the order to
show cause.
5
parties’ dispute over the valuation date to be used by the expert,
setting that date as June 30, 2018. The court ordered the expert
to serve the valuation report on counsel by October 1, 2018,
ordered the parties to file objections by October 15, 2018, and set
oral argument for October 26, 2018. On September 21, 2018, the
court issued a minute order continuing the oral argument date on
the court’s own motion to November 16, 2018.
The parties submitted a joint stipulation on October 19,
2018 (first stipulation). They stated that the valuator was unable
to complete the report by October 1, and stipulated to extend the
deadline by five weeks from the date of the stipulation. The court
signed the stipulation and order, continuing the due date for the
valuation report to November 30, the objection deadline to
December 14, and the oral argument to January 4, 2019.
Houlihan submitted its report on November 30, 2018, in
compliance with the deadline. The parties submitted a second
stipulation on December 14, 2018 to amend the briefing schedule
(second stipulation). They stated that after Houlihan submitted
the expert report, the parties “requested an in-person meeting
with the valuator to clarify ambiguities in the report and to
resolve the Parties [sic] questions.” The parties also agreed that
any objections to the report “would be informed by a meeting with
the valuator.” The court signed the stipulation and order,
continuing the due date for submission of objections to January 4,
2019 and oral argument to January 18, 2019.
The parties submitted a third stipulation on January 14,
2019 to amend the briefing schedule (third stipulation). They
informed the court that the in-person meeting with the valuator
occurred on January 7, 2019. The court signed the stipulation
and order, continuing the deadline to submit objections to
6
January 22, 2019 and the oral argument to February 15, 2019.
The court further indicated in its minute order and in the signed
order that there would be no further continuances.
The parties submitted a fourth stipulation to the court on
January 22, 2019 (fourth stipulation), in which they agreed that
the valuator “should have the opportunity to consider their
comments and objections to the report and to amend [the]
valuation report in response, if warranted, before the final report
is presented to the court.” They stipulated that the parties would
provide comments and objections to the valuator by January 22,
2019, the valuator would provide them with a final report on
February 12, 2019, the parties would submit the final report
along with any objections and comments to the court by February
25, 2019, and the oral argument would be set on March 15, 2019
or the next available court date. On January 24, 2019, the court
issued a minute order denying the stipulation and proposed
order, noting that it had granted “multiple continuances” and
citing to its January 14, 2019 order that there would be no
further continuances.
The parties filed a joint ex parte application “for a final
continuance” of the valuation schedule on January 29, 2019.
They argued that the fourth continuance5 was necessary to allow
the valuator “the opportunity to consider the Parties [sic]
objections in writing and include a response in its final report.”
The parties asserted that their third stipulation had not
anticipated “Houlihan’s review of the comments and did not
5The ex parte application and supporting declaration
erroneously asserted that the parties had requested two, rather
than three, prior continuances.
7
afford adequate time for Houlihan to issue a final report,” and
that their proposed amendment would “provide the Court with
the best information to consider any remaining objections the
Parties may have.” They further stated that they had already
provided their objections to the valuator and “do not expect there
will be any further delays.”
The court held a hearing on the ex parte application on
January 29, 2019, at which defense counsel appeared. The court
denied the application, ordering the valuator to file any
“supplemental papers, objections, and/or responses” by February
8, 2019 and allowing the parties until the same date to file
“objections and/or additional comments.” The oral argument
remained set for February 15, 2019.
IV. Approval of Report
Luma submitted the valuator’s revised report to the court
on February 8, 2019. The same day, Luma submitted its
response to the report. According to Luma, after meeting with
Houlihan in person on January 7, 2019, the parties submitted
comments and objections to Houlihan on January 22. Houlihan
issued supplemental questions and requests for information from
Luma on February 1, and Luma responded on February 4.
Houlihan then provided its revised valuation to the parties on
February 8. Luma raised several objections to the valuation
report that it believed benefitted Betuel, but stated that it was
“nonetheless prepared to accept its conclusion”; it therefore urged
the court to approve Houlihan’s valuation.
Betuel submitted his objections to the valuation on
February 14, 2019, the day before the scheduled hearing. He
attached a report prepared by FTI Consulting, which criticized
the valuation prepared by Houlihan and proposing a “much
8
simpler and conventional approach” to the valuation. Betuel
argued that given the “glaring problems” with the valuator’s
opinion, the court should ignore the valuation provided by
Houlihan and “determine Luma’s valuation on its own reasonable
basis.”
The court heard oral argument regarding the valuation
report on February 15, 2019. The court found that Betuel’s
objections were untimely. The court took the matter under
submission.
On February 19, 2019, the court issued a written order
approving the expert valuation report. The court noted that it
had granted several continuances “to accommodate the parties
and the appraiser,” and “allow the parties to review and respond
to the report.” The court also noted that while Luma filed its
response on February 8, Betuel did not timely file any objections.
Instead, Betuel belatedly lodged copies of his objections and
accompanying evidence “without first seeking permission of the
court,” and the court did not receive them until the morning of
the hearing. The court stated that at the hearing, the court
permitted Betuel’s counsel “to summarize his arguments against
the final report. However, it was clear that he was merely
attempting to summarize FTI’s comments.”
The court found that the valuation report was “thorough,
well supported, and well reasoned. The report relies upon data
provided by the parties as well as other objective and reliable
data.” Moreover, the court overruled Betuel’s objections as
untimely and because his “attempt to rely on the analysis of FTI
Consulting, a firm previously rejected by this Court, is clearly
outside the terms of the settlement agreement.”
9
Betuel timely appealed from the court’s February 19, 2019
order approving the valuator’s report.6
DISCUSSION
Betuel contends the trial court erred in denying the parties’
fourth request for a continuance of the schedule for submission of
the valuation report and their objections thereto. Specifically, he
argues that by refusing the parties’ request for additional time
and ordering the simultaneous submission of the revised report
and any objections, the court materially altered the terms of the
settlement agreement and deprived him of his right to a fair
hearing.7 Luma contends that the trial court acted well within
6 We review the order approving the valuator’s report as a
final judgment entered after a stipulated dismissal pursuant to
the terms of a settlement agreement. (§ 904.1, subd. (a)(1); see
also Steinman v. Malamed (2010) 185 Cal.App.4th 1550, 1554-
1555.)
7In his opening brief, Betuel also argued that the trial court
lacked subject matter jurisdiction to enforce the settlement
agreement. However, in his reply brief he stated: “Betuel
abandons his argument that the trial court lacked jurisdiction to
enforce the settlement agreement. Betuel has reconsidered that
argument in light of the absence of a reporter’s transcript of the
proceedings following the mandatory settlement conference, and
believes this court must presume that the trial court granted a
request from the parties to retain jurisdiction to enforce the
settlement following the dismissal of the action.” Despite this
unequivocal abandonment, Betuel’s counsel incredibly suggested
during oral argument that he had only partially conceded the
issue related to whether the parties requested that the court
retain jurisdiction under section 664.6. Conversely, he claimed
that Betuel had not abandoned the portion of the argument
regarding whether the trial court accepted such jurisdiction. This
10
the boundaries of the agreement and exercised its inherent
authority to manage the proceedings before it. Luma also argues
that it is entitled to recover attorney fees as the prevailing party
under the settlement agreement.
We conclude that the trial court did not err in approving
the valuation report. However, we deny Luma’s request for
attorney fees, as Luma has not established it was the prevailing
party in the litigation.
I. The Court’s Approval of the Valuation Report
Betuel contends the trial court erred by imposing terms
outside of the settlement agreement when it denied the parties’
fourth stipulation and subsequent ex parte application, and then
ordered the valuator to file any “supplemental papers, objections,
and/or responses” by February 8, 2019 (10 days later) and set the
same deadline for the parties to file “objections and/or additional
comments.” He argues that under the settlement agreement, the
parties should have had 15 days after the valuator’s last
submission to file their objections with the court, and the court
lacked the authority to order otherwise. This argument is not
supported by the express language of the settlement agreement
or a reasonable interpretation of that agreement based on the
subsequent conduct of the parties.
contention is directly contradicted by Betuel’s concession in his
reply brief that “this court must presume that the trial court
granted a request from the parties to retain jurisdiction to
enforce the settlement.” Moreover, Betuel advanced no
arguments in his reply brief regarding subject matter
jurisdiction. As such, Betuel’s attempt to resurrect an argument
he previously abandoned is meritless.
11
“Section 664.6 was enacted to provide a summary
procedure for specifically enforcing a settlement contract without
the need for a new lawsuit.” (Weddington Productions, Inc. v.
Flick (1998) 60 Cal.App.4th 793, 809 (Weddington).) A court
acting under section 664.6 may “receive evidence, determine
disputed facts, and enter the terms of a settlement agreement as
a judgment.” (Id. at p. 810; see also Fiore v. Alvord (1985) 182
Cal.App.3d 561, 566.) Section 664.6’s “‘express authorization for
trial courts to determine whether a settlement has occurred is an
implicit authorization for the trial court to interpret the terms
and conditions to settlement.’” (Skulnick v. Roberts Express, Inc.
(1992) 2 Cal.App.4th 884, 889, citing Fiore v. Alvord, supra, 182
Cal.App.3d at p. 566.)
However, “nothing in section 664.6 authorizes a judge to
create the material terms of a settlement, as opposed to deciding
what terms the parties themselves have previously agreed upon.”
(Weddington, supra, 60 Cal.App.4th at p. 810, emphasis in
original.) “[T]he trial court is under a duty to render a judgment
that is in exact conformity with an agreement or stipulation of
the parties. ‘If interpretation of a stipulation is in order the rules
applied are those applied to the interpretation of contracts.
[Citations.] It is not the province of the court to add to the
provisions thereof [citations]; to insert a term not found therein
[citations]; or to make a new stipulation for the parties.’”
(Machado v. Myers (2019) 39 Cal.App.5th 779, 792 (Machado),
quoting Jones v. World Life Research Inst. (1976) 60 Cal.App.3d
836, 840; see also Leeman v. Adams Extract & Spice, LLC (2015)
236 Cal.App.4th 1367, 1375 [“‘[W]hat the court could not do in
considering approval of a settlement under . . . section 664.6 was
to add to or modify an express term of the settlement.’”].)
12
We affirm the factual determinations made by the trial
court if they are supported by substantial evidence. (Weddington,
supra, 60 Cal.App.4th at p. 815; Skulnick v. Roberts Express, Inc.,
supra, 2 Cal.App.4th at p. 889.) We review the trial court’s legal
conclusions de novo. (See Connerly v. State Personnel Bd. (2006)
37 Cal.4th 1169, 1175.)
In addition, the court has inherent power “‘to insure the
orderly administration of justice’” (Walker v. Superior Court
(1991) 53 Cal.3d 257, 266), including the power to “provide for the
orderly conduct of proceedings before it” (§ 128, sub. (a)(3)). We
uphold the court’s exercise of its broad discretion, such as the
determination whether to grant a continuance, absent an abuse
of that discretion. (See Mahoney v. Southland Mental Health
Associates Medical Group (1990) 223 Cal.App.3d 167, 170
[“unless a clear case of abuse is shown and unless there has been
a miscarriage of justice a reviewing court will not substitute its
opinion and thereby divest the trial court of its discretionary
power”]; In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th
814, 823.)
Betuel acknowledges the court’s discretion to “provide for
the orderly conduct of proceedings before it” (§ 128, sub. (a)(3)),
but contends the court abused that discretion when it imposed a
schedule outside the terms of the settlement agreement. We
disagree. The court’s order was consistent with the plain
language of the settlement agreement. “A settlement agreement
is a contract, and the legal principles which apply to contracts
generally apply to settlement contracts.” (Weddington, supra, 60
Cal.App.4th at p. 810; see also In re Marriage of Hibbard (2013)
212 Cal.App.4th 1007, 1013 (Hibbard).) “‘The fundamental goal
13
of contractual interpretation is to give effect to the mutual
intention of the parties. [Citation.] If contractual language is
clear and explicit, it governs.’” (People v. Shelton (2006) 37
Cal.4th 759, 767.) Here, the agreement provided that the expert
would “be requested to provide a final valuation report within 90
days of appointment or as soon thereafter as practicable. Once
the independent expert’s report is submitted to the Parties,
within 15 days, the Parties may make objections and the Court
will rule on such objections.” In other words, the agreement
expressly contemplated a three-step procedure: first, submission
of the expert report to the parties; second, objections by the
parties within 15 days of that submission; and finally, the court’s
ruling.
The parties signed the agreement in September 2017 and
the court appointed Houlihan as the expert in December 2017.
Pursuant to the schedule agreed upon in the first stipulation,
Houlihan submitted its report on November 30, 2018. In their
second and third stipulations, which the court approved, the
parties did not seek to continue the time for submission of the
report, but only the time for submission of their objections and
the subsequent hearing date to allow them to meet with the
valuator in person. Thus, at the time the court denied the fourth
stipulation on January 24, 2019 and ordered the parties to
submit objections by February 8, 2019, they had received the
benefit of almost two months longer to make objections than the
15 days contemplated under the agreement. The court’s refusal
to grant the parties additional time did not deviate from the
terms of the agreement.
Betuel’s reliance on Machado, supra, 39 Cal.App.5th 779
does not assist his argument. In Machado, a dispute between
14
neighbors, the trial court granted a section 664.6 motion to
enforce the parties’ stipulated settlement and later entered
judgment. (Id. at pp. 787-788.) The Court of Appeal held that
the trial court acted properly in finding that the parties had
entered into an enforceable agreement and granting the motion
to enforce the settlement. But the trial court erred in entering a
judgment as proposed by the plaintiffs, as it “was different from
the terms of the parties’ stipulated settlement agreement.” (Id.
at p. 792.) In particular, the judgment omitted any reference to
multiple terms contained in the settlement agreement, including
the parties’ obligation to enter a license agreement, the plaintiffs’
“obligation to remove certain solar panels, the parties’ agreement
to each bear their own attorney fees and costs, the agreement
that the court would retain jurisdiction under section 664.6 to
enforce the terms of the settlement agreement, and the mutual
release of claims contemplated to occur upon the completion of
the settlement terms.” Additionally, “[o]ther settlement
agreement terms appeared in the judgment with modifications.”
(Id. at p. 793.) Thus, because the judgment entered was
materially different from the parties’ settlement agreement, the
trial court exceeded its authority under section 664.6 to enter
judgment “‘pursuant to the terms of the settlement.’” (Id. at p.
794, italics omitted; see also Hines v. Lukes (2008) 167
Cal.App.4th 1174, 1185 [reversing judgment that “states some of
the settlement terms, but omits others”].)
Here, by contrast, the court acted in conformity with the
parties’ express agreement. It selected an expert, resolved a
dispute as to the valuation date, and granted several requests
from the parties to extend the submission schedule. Once the
expert submitted the report and long after the 15 days to make
15
objections had elapsed, the court set a final deadline for the
parties to submit any further objections or comments, and then
considered those objections before approving the valuation.8
Betuel also argues that the court misinterpreted the
settlement agreement when it found that the “final” valuation
report was submitted on November 30, 2018. He contends the
parties’ conduct during the valuation process demonstrated that
they agreed the report would not be “final” within the meaning of
the settlement agreement—thereby triggering the 15-day
deadline to submit objections—until they “were satisfied they had
been given sufficient opportunity to influence the expert.” He did
not raise this argument below prior to the court’s approval of the
valuation report, and has therefore forfeited it. (See Kashmiri v.
Regents of University of California (2007) 156 Cal.App.4th 809,
830 [“‘[I]t is fundamental that a reviewing court will ordinarily
not consider claims made for the first time on appeal which could
have been but were not presented to the trial court.’”]; see also In
re Marriage of Eben–King & King (2000) 80 Cal.App.4th 92, 117
[“It is well established that issues or theories not properly raised
or presented in the trial court may not be asserted on appeal, and
8 At oral argument, Betuel’s counsel for the first time
asserted that the trial court erred by rejecting Betuel’s objections
to the valuation report on “procedural” grounds. Specifically, he
argued that the court dismissed the objections out of hand
because they were based on opinions proffered by FTI. "We need
not consider points raised for the first time at oral argument.”
(Santa Clara County Local Transportation Authority v. Guardino
(1995) 11 Cal.4th 220, 232, fn. 6; see also Haight Ashbury Free
Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th
1539, 1554, fn. 9.)
16
will not be considered by an appellate tribunal.”].)
Even if Betuel had properly raised this issue below, we
would reject it on the merits. As noted above, where the
“contractual language is clear and explicit, it governs. On the
other hand, ‘[i]f the terms of a promise are in any respect
ambiguous or uncertain, it must be interpreted in the sense in
which the promisor believed, at the time of making it, that the
promisee understood it.’ “The mutual intention to which the
courts give effect is determined by objective manifestations of the
parties’ intent, including the words used in the agreement, as
well as extrinsic evidence of such objective matters as the
surrounding circumstances under which the parties negotiated or
entered into the contract; the object, nature and subject matter of
the contract; and the subsequent conduct of the parties.””
(Hibbard, supra, 212 Cal.App.4th at p. 1013, quoting People v.
Shelton, supra, 37 Cal.4th at p. 767; accord, In re Marriage of
Simundza (2004) 121 Cal.App.4th 1513, 1518 [“‘The basic goal of
contract interpretation is to give effect to the parties’ mutual
intent at the time of contracting.’”].)
Even assuming the settlement was ambiguous, there is no
indication in the record that at the time they entered into the
agreement, the parties contemplated anything other than the
three-step process outlined in the written agreement. Indeed, the
first three stipulations recognized the same process, with
submission of the expert’s report on November 30, 2018, followed
by a deadline for the parties’ objections, followed by a hearing. It
was only in the parties’ fourth stipulation, submitted over a year
after the settlement, that the parties proposed additional
procedures—first, providing additional comments and objections
to the valuator, then the valuator’s submission of a revised
17
report, and finally submission of the revised report and any
remaining objections to the court. In urging the court to approve
the new schedule, they argued that they had not previously
anticipated needing time for Houlihan to review their comments
and issue a revised report, and they desired to “provide the Court
with the best information to consider any remaining objections
the Parties may have.” They also proposed a deadline for
objections that was 13 days after the revised submission by the
expert, rather than the 15 days called for in the original
agreement. As such, substantial evidence supports the trial
court’s determination that the expert’s submission of the
settlement agreement in November 2018 was “final” within the
meaning of the settlement agreement, and that the later
submission of a revised report did not reset the 15 day deadline
for objections. Moreover, several months had elapsed since the
submission of the expert’s report, during which the parties had
already exchanged additional comments and objections with the
expert. At this point, the court was well within its authority to
cut off any further continuances, set a deadline for any further
submission by the expert and for objections by the parties, and
move forward with its review of the valuation report. As such,
the trial court did not err in denying the parties’ fourth
stipulation and, ultimately, in approving the valuation report.
II. Attorney Fees
Luma contends it is the prevailing party in this appeal, and
therefore entitled under the settlement agreement to recover its
reasonable attorney fees. We disagree.
“Section 1032 is the fundamental authority for awarding
costs in civil actions. It establishes the general rule that ‘[e]xcept
as otherwise expressly provided by statute, a prevailing party is
18
entitled as a matter of right to recover costs in any action or
proceeding.’” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103,
1108, quoting § 1032, subd. (b).) Section 1033.5 specifies the
“items . . . allowable as costs under Section 1032,” including
attorney fees when authorized by contract. (§ 1033.5, subd.
(a)(10).)
Further, under Civil Code section 1717, where a written
contract expressly provides for the award of attorney fees, the
prevailing party in an action under or relating to the contract is
entitled to recover its fees. (Hsu v. Abbara (1995) 9 Cal.4th 863,
876.) Thus, “[w]hen a party obtains a simple, unqualified victory
by completely prevailing on or defeating all contract claims in the
action and the contract contains a provision for attorney fees,
[Civil Code] section 1717 entitles the successful party to recover
reasonable attorney fees. . . . [Citation] If neither party achieves
a complete victory on all the contract claims, it is within the
discretion of the trial court to determine which party prevailed on
the contract or whether, on balance, neither party prevailed
sufficiently to justify an award of attorney fees.” (Scott Co. v.
Blount, Inc., supra, 20 Cal.4th at p. 1109, citing Hsu v. Abbara,
supra, 9 Cal.4th at p. 876.)
Here, the settlement agreement provided that if any party
“commences any action arising out of this Agreement . . . the
prevailing party in such action shall be entitled to recover its
reasonable attorneys’ fees.” Luma did not seek attorney fees in
the trial court and does not contend it was the “prevailing party”
below. Instead, it argues that this appeal constitutes an “action
arising out of” the settlement agreement. Luma therefore urges
that we look only to its success on appeal to find that it is the
prevailing party and entitled to attorney fees.
19
We cannot do so. California case law is “clear that [Civil
Code] section 1717 does not support an award to the prevailing
party on appeal, but only to the prevailing party in the lawsuit.”
(Wood v. Santa Monica Escrow Co. (2009) 176 Cal.App.4th 802,
808 (Wood II).) “[T]he trial and appeal are treated as parts of a
single proceeding. The party prevailing on appeal is not
necessarily the prevailing party for the purposes of awarding
contractual attorney fees.” (Id. at p. 806.) Instead, “the
prevailing party must be determined by who prevails overall in
the lawsuit.” (Ibid.) For example, in Snyder v. Marcus &
Millichap (1996) 46 Cal.App.4th 1099, 1101 (Snyder), the trial
court entered judgment for the plaintiff, awarding compensatory
damages, as well as damages for emotional distress and punitive
damages. The defendant prevailed in an appeal challenging
some, but not all, of the damages awarded. (Ibid.) The defendant
then sought attorney fees under Civil Code section 1717 as the
prevailing party on appeal.
The trial court denied the request and the Court of Appeal
affirmed, reasoning that the defendant “was not the prevailing
party in the lawsuit” because the net judgment remained in the
plaintiff’s favor. (Snyder, supra, 46 Cal.App.4th at p. 1102; see
also Wood II, supra, 176 Cal.App.4th at p. 806 [denying attorney
fees for party who prevailed on appeal because “the prevailing
party must be determined by who prevails overall in the
lawsuit”]; Mustachio v. Great Western Bank (1996) 48
Cal.App.4th 1145, 1150 [finding the plaintiff was the “party
prevailing on the contract,” although her damages were reduced
on appeal].)
20
As such, we reject Luma’s attempt to carve out this appeal
as an independent “action” in which it prevailed, separate from
the underlying lawsuit and settlement. Moreover, the trial court
made no finding of a prevailing party below, nor is it clear based
on the court’s approval of the valuation report which party, if
either, would qualify as prevailing for the purpose of awarding
attorney fees. Notably, the court previously denied Luma’s
motion to enforce the settlement agreement. Under these
circumstances, Luma cannot establish it was the prevailing
party.
We agree with Betuel that Starpoint Properties, LLC v.
Namvar (2011) 201 Cal.App.4th 1101, is distinguishable. There,
the trial court entered judgment in favor of the plaintiffs
pursuant to a settlement agreement. (Id. at p. 1103.) Defendants
appealed, challenging the validity of the trial court’s entry of
judgment, but the appellate court dismissed the appeal as
untimely. (Id. at pp. 1104, 1107.) The court also granted the
plaintiffs’ request for attorney fees incurred in connection with
the appeal, based on a provision in the settlement agreement
awarding fees to the prevailing party. (Id. at p. 1111.) Although
the court did not directly address the issue, it is evident from the
circumstances of the case that the plaintiffs in Starpoint were the
prevailing parties in the underlying litigation as well as on
appeal, and were therefore entitled to attorney fees under the
settlement agreement.
Here, by contrast, the trial court did not enter judgment
expressly in favor of one party, nor has Luma argued it was the
prevailing party below. As such, Luma’s success on appeal,
alone, does not trigger the attorney fee provision of the
settlement agreement.
21
DISPOSITION
The order approving the valuation is affirmed. Luma is
awarded its costs on appeal, but we deny Luma’s request to
include attorney fees as recoverable costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
COLLINS, J.
We concur:
WILLHITE, ACTING P.J.
CURREY, J.
22