Rostack Investments v. Sabella CA2/8

Filed 11/13/23 Rostack Investments v. Sabella CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 EIGHT

ROSTACK INVESTMENTS INC., B311811

Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC428298)
v.

ANGELA C. SABELLA,

Defendant and Appellant.

ROSTACK INVESTMENTS INC., B314779 (Consol. w/B316924)

Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC428298)
v.

ANGELA C. SABELLA,

Defendant and Appellant.

APPEALS from a judgment and orders of the Superior
Court of Los Angeles County. Holly J. Fujie, Judge. Affirmed.
 Mayer Brown, John Nadolenco, Daniel D. Queen, Jennifer
M. Chang, Neil M. Soltman, Matthew H. Marmolejo, C. Mitchell
Hendy, and Nicole A. Saharsky, pro hac vice, for Plaintiff and
Appellant.
Larson, Stephen G. Larson, and Jerry A. Behnke for
Defendant and Appellant.
_____________________________

INTRODUCTION
After over a decade of no-holds barred litigation that
culminated in a nine-day bench trial, the trial court entered a
judgment in favor of Rostack Investments, Inc. (Rostack) and
against Angela Sabella (Sabella) in the amount of $69,636,784.60.
While the history of this case is voluminous, it is essentially a
dispute between Sabella and her younger sister, Vivien Chen
(Vivien), over the distribution of assets by their late father, Chen
Din-Hwa (Chen). Chen was one of the richest persons in the
world and founder of the Nan Fung Group, a multi-billion-dollar
transnational conglomerate based in Hong Kong. The present
dispute involves a promissory note executed by Sabella to
purchase real property known as the Two Bear Ranch. Rostack,
a corporation wholly owned by Chen’s estate, was the lender on
the note. After entering judgment in Rostack’s favor, the trial
court awarded Rostack its attorney fees and costs. Both parties
appealed.
In the first appeal, Sabella argues the trial court deprived
her of her right to a jury trial after it severed her equitable
defenses from her legal ones and conducted a bench trial, then
concluded its findings of fact were dispositive of any remaining
legal claims.

2
 In the second appeal, Sabella argues the trial court erred
when it awarded Rostack attorney fees for legal work performed
by Rostack’s Hong Kong counsel, and then abused its discretion
when it did not reduce the attorney fee award based on Rostack’s
domestic counsel’s impermissible billing practices.
In the third appeal, Rostack argues the trial court erred by
not awarding Rostack additional costs related to Sabella’s
successful appeal in a nonpublished opinion Rostack Investments,
Inc. v. Sabella (Dec. 15, 2016, B260844) (Rostack I) where we
awarded Sabella her costs. On remand, the trial court entered
judgment in her favor in the amount of $1,366,104.28, allowing
her to recover her surety bond expenses. We affirmed Sabella’s
right to immediately enforce that judgment in Rostack
Investments Inc. v. Sabella (2019) 32 Cal.App.5th 70, 82 (Rostack
II). Rostack now asserts it is entitled to reimbursement of those
costs since it ultimately prevailed at trial.
For the reasons set forth below, we affirm the judgment
and orders.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Two Bear Ranch transaction
In 1995, Sabella located the Two Bear Ranch, a 36,000 acre
property on the Utah-Wyoming border, and approached Chen
about purchasing the property as an investment and for future
development. The purchase price was $25,500,000. While Chen
agreed to help Sabella purchase the property, he did not give the
purchase money to her outright. Instead, he loaned the money to
Sabella through Rostack, a Liberian corporation and a subsidiary
of another company wholly owned by Chen.
Sabella executed a promissory note in favor of Rostack,
dated July 5, 1995 for $30,000,000. The loan was for the

3
$25,500,000 purchase price with the balance as working capital
for development. The note had a 15-year term and required
Sabella to pay 10 percent annual interest on the loan and to pay
the outstanding principal and any unpaid interest in one lump
sum when the note matured. The note contained a California
choice-of-law clause and was subsequently modified to give
Sabella the option of extending the maturity date for five years.
The purpose of structuring the Two Bear Ranch transaction
in this manner conferred certain tax benefits to Chen and
Sabella. By loaning the money to Sabella through Rostack, Chen
avoided paying a substantial withholding tax while Sabella
deducted the annual interest payments from her taxable
investment income, thereby reducing her tax burden by millions
of dollars.
Each year between 1995 and 2006, Chen gifted Sabella the
approximate amount of the 10 percent annual interest due on the
note. In turn, Sabella would pay Rostack for the annual interest.
Sabella paid the annual interest on the note for the first eleven
years, and occasionally repaid some principal.
Shortly after the Two Bear Ranch transaction, Chen was
diagnosed with Alzheimer’s disease and by the early 2000’s, his
health was failing. Accordingly, he began considering how to
divide his assets between Sabella and Vivien. In one proposal
that was memorialized by Vivien on a handwritten document
called the “family table,” Chen proposed giving Sabella and
Vivian each $400 million in cash and other assets. Sabella would
get Chen’s real estate assets in the United States while Vivien
would get Chen’s Hong Kong real estate assets of the same value.
After August 2006, Sabella stopped making annual
payments on the note.

4
 In 2007, Sabella believed Vivien was taking advantage of
Chen’s deteriorating mental capacity and attempting to seize
control over the Nan Fung Group. To prevent this, Sabella
successfully petitioned for a conservatorship and had Chen
declared mentally incompetent. After the conservatorship,
Vivien assumed control over the Nan Fung Group.
In May 2009, Rostack notified Sabella she was in default
under the note and demanded the entire unpaid principal balance
of $28,273,000 and accrued unpaid interest in the amount of
$8,063,614.52. In a June 8, 2009 letter from Vivien to Chen’s
court-appointed conservator, Vivien wrote: “Regarding the Two
Bear Loan, Rostack decided to take aggressive action to chase the
loan because our auditors had started to question the status of
this loan. They were asking what steps we had taken to recover
the loan or should they actually write the loan off. Thus, we had
no choice but to take more aggressive actions to recover the loan.”
II. Rostack’s complaint and Sabella’s answer
On December 18, 2009, Rostack sued Sabella for breach of
contract, book account, and money lent. Rostack attached copies
of the note, the option agreement extending the loan’s maturity
date, and its demand letter as exhibits to the complaint.
Sabella’s answer pleaded seven affirmative defenses.
Sabella’s affirmative defenses were based on three theories.
First, Sabella alleged Rostack had suffered no damages because
it provided no consideration for the note as the funds to purchase
the property were provided by Chen, not Rostack. Second,
Sabella alleged, in any event, Chen forgave or discharged the
note by gifting the Two Bear Ranch to her. Third, if Chen did not
actually gift the Two Bear Ranch to Sabella and forgive the note,
Sabella executed the note with the understanding Chen would

5
gift the property or forgive the note at some point in the future,
therefore, Rostack was estopped from enforcing the note.
Sabella’s sixth affirmative defense was labelled “Estoppel”
and was based on the following allegations.
Chen gave Sabella all the funds to purchase the Two Bear
Ranch. Chen intended to eventually gift the Two Bear Ranch to
Sabella, but he “was a careful man and did not give [Sabella] the
gift outright.” On the advice of counsel and other tax
professionals, he structured the transaction to avoid a
withholding tax and to allow Sabella to deduct her interest
payments paid toward the note. Chen and Sabella understood
and agreed that Chen would provide annual gifts of funds to
Sabella to pay the interest on the note. Because the Two Bear
Ranch could not generate sufficient revenue to service the debt
obligation, Chen knew Sabella would not have signed the note or
assumed any liability for the note unless she received these
annual gifts from him. The purpose of this agreement was to
ensure Sabella would not be held financially responsible for
paying any amounts due under the note. In reliance on the
understandings and agreements, Sabella proceeded with the
transaction.
Rostack knew Chen provided Sabella the funds to make the
annual interest payments, which she paid to Rostack. Rostack
was also aware Chen gave the Two Bear Ranch loan to Sabella.
Nonetheless, Rostack wrongfully repudiated Chen’s donative
intent to make a gift to Sabella. “Under the circumstances, it
would be inequitable to require [Sabella] to pay Rostack any
amounts allegedly due on the Note.”
Because Chen and Rostack, as Chen’s agent, understood
and agreed that Sabella was dependent upon the gift

6
arrangement to fund the interest payments as evidenced by his
annual gifts to her from 1995 to 2006, and that she would never
have agreed to sign the note absent that arrangement, Rostack is
estopped from claiming the note is in default or recovering any
amounts due under the note. Rostack is further estopped from
enforcing the note since Sabella understood the Two Bear Ranch
loan was gifted to her by Chen, and did not take any steps to
refinance or obtain other sources of funding to repay the loan.
Sabella’s estoppel defense also incorporated “as if set forth
fully herein” all of the previously alleged paragraphs in her
answer, including “Facts Common to All Affirmative Defenses,”
which alleged the making and delivery of Chen’s gift of Two Bear
Ranch to Sabella.
III. Rostack’s motions for summary judgment and
Sabella’s successful appeals
In December 2011, Rostack filed a motion for summary
judgment, which was denied. The trial court found that while
Rostack had met its initial burden by showing a valid contract
and Sabella’s breach, Sabella successfully raised a triable issue of
fact regarding whether Chen gifted the note to her.
After the case was reassigned to a different judge, Rostack
filed a second motion for summary judgment, which was granted.
The trial court found Rostack met its burden to show a valid
contract, Rostack’s performance, and Sabella’s breach. The trial
court further found that Sabella’s defenses were insufficient to
defeat Rostack’s claims.
Sabella appealed the second summary judgment ruling.
She also filed a surety bond for approximately $77.8 million, the
amount required to stay enforcement of the judgment. She
procured a letter of credit to satisfy the insurer’s demand for

7
collateral to secure its risk on the surety bond. Sabella’s bonding
costs totaled $1,366,104.28, which was comprised of $464,819.38
for the bond and $934,395.32 for the supporting letter of credit,
minus a $33,110.42 rebate.
We reversed the judgment in Rostack I, holding Sabella
had established a triable fact issue on her gift and estoppel
defenses, namely, whether Chen intended to forgive the note as a
gift to her and in fact did so at a family meeting in February
2005. (See Rostack I, supra, B260844.) We also held this triable
issue of fact applied equally to both Sabella’s gift and estoppel
defenses, noting “the estoppel affirmative defense relies upon,
and appears to be a restatement of, the gift defense.” (Id. at
p. 22, fn. 9.) We ordered Rostack pay Sabella’s costs on appeal.
(Id. at p. 22.)
Upon remand, Sabella filed a costs memorandum, seeking
to recover $464,819.38 in surety bond premium payments that
were necessary to obtain the appeal bond, and $934,395.32 in
costs to obtain a letter of credit as security for the surety bond.
Rostack moved to tax costs, arguing Sabella’s costs were not
reasonably incurred because she could have pursued a less
expensive alternative and it would be premature to enter a
judgment for those costs before the ultimate prevailing party was
determined. The trial court rejected those arguments and
entered a judgment in favor of Sabella, awarding her
$1,377,511.59 in appellate costs. Rostack appealed the award.
This court affirmed the judgment in Rostack II, supra,
32 Cal.App.5th at page 82, holding Sabella could enforce the
judgment immediately despite the possibility Rostack could
prevail at trial. (Ibid.) We rejected Rostack’s argument that it
was “premature to enter an enforceable judgment for appellate

8
costs when the trial is yet to be had.” (Id. at p. 78.) We relied on
the weight of authority which held that an “ ‘award of costs is
immediately enforceable’ ” and “ ‘[i]t cannot be affected by any
further proceedings in the trial court.’ ” (Id. at p. 80.)
Upon remand, Rostack satisfied the judgment, including
the approximately $1,377,511.59 in surety bond costs.
IV. Rostack’s motion to bifurcate and sever Sabella’s
estoppel defense
Before trial, Rostack moved to sever Sabella’s estoppel
defense from any remaining claims, and requested a bench trial
on the estoppel defense followed by a jury trial on any remaining
legal issues. Sabella opposed severance, arguing bifurcation
would not be judicially economical because “all or nearly all of the
same evidence would have to be presented for the factfinder to
properly adjudicate each defense.” The trial court granted
Rostack’s motion, finding Sabella’s estoppel defense was an issue
to be determined by the trial court and that severance was
judicially economical because of the substantial overlap between
the estoppel and gift defenses. In its ruling, the trial court stated
findings on Sabella’s estoppel defense may obviate the need for a
jury trial on her legal defenses.
V. Trial
The trial court conducted a nine-day bench trial on
Sabella’s estoppel defense. The trial court heard live and
videotaped testimony from 16 witnesses, and the parties
submitted thousands of pages of exhibits and deposition
transcripts.
At the conclusion of evidence, the trial court rejected
Sabella’s estoppel defense. It found Sabella was not a credible
witness and rejected her allegation that Chen promised to forgive

9
or gift the note to her. The trial court based its finding “in large
part upon her drastic and contradictory changes in testimony at
trial when she was confronted by evidence that her prior
testimony had been refuted.” The trial court noted Sabella
contradicted many of her prior filed declarations, specifically,
major contradictions in Sabella’s testimony regarding the
circumstances surrounding the family table.
The trial court also made the following findings of fact.
The note and the Two Bear Ranch transaction were part of
a tax-driven plan to allow Sabella to acquire the property while
taking tens of millions of dollars in tax deductions for her interest
payments paid to Rostack, which she did from 1996 through
2006. The transaction also allowed Rostack and Chen to avoid a
30 percent withholding tax. To achieve this dual purpose, the
loan had to be legitimate and the note needed to be fully
enforceable against Sabella. If Chen forgave or cancelled the
note, it would have generated a “huge tax bill” for Rostack and
“endanger[ed] the tens of millions of dollars in interest
deductions [Sabella] had already taken” if the tax authorities
audited the transaction for tax evasion. Likewise, if Sabella or
Chen intended the note to be unenforceable from the beginning or
that Chen would forgive it at some time in the future, “neither of
them would have been able to take advantage of the carefully-
planned tax advantages.”
There was no competent evidence as to the meaning of
Chen’s annotation on the family table and, in any event, it
became “nothing but a meaningless note on a draft document,”
since Chen’s ultimate distribution did not use the formula
proposed in the family table. Sabella never submitted a formal
written proposal to Chen, which the parties knew would have

10
been required, to cancel the note or pay it off. While Sabella
eventually submitted formal proposals to Chen to give her cash to
repay the principal on the note, the proposals came at least
16 months after the annotation on the family table was allegedly
made, and none of the proposals were signed by Chen. In fact,
there was no evidence Chen forgave or agreed not to enforce the
note.
Because Sabella’s pleadings did not specify whether she
was relying on promissory or equitable estoppel, the trial court
analyzed and applied its findings of fact to both theories.
With respect to promissory estoppel, the trial court found
that, while Chen did make a promise to Sabella in connection
with the note that she would not be “ ‘out of pocket’ ” in entering
into the transaction, Chen did not promise that he would forgive,
cancel, or not enforce the repayment of the principal of the note.
Nor did he promise to give Sabella the money to pay off the
remaining principal on the loan or forgive the note. From the
outset of the transaction, it was the parties’ intent that Sabella
be obligated to pay off the note when due from the proceeds of the
development and sale of the property. The trial court noted that
none of the evidence of events before the transaction “was
consummated referred to any agreement to forgive the [n]ote—
not surprisingly, as any such admission would be evidence that
the [t]ransaction was an elaborate tax fraud.”
In support of Sabella’s equitable estoppel theory, the trial
court found Sabella’s mistaken belief, that the note would not be
enforced if she failed to pay the interest and principal, was the
only alleged misrepresentation or fact unknown to Sabella on
which she detrimentally relied. However, Sabella’s claims were
belied by the record, which established Chen’s intent for Sabella

11
to act as if the note was valid and enforceable, and Sabella’s
understanding and treatment of the note as legitimate in order to
claim the tens of millions of dollars in interest deductions on her
tax returns from 1996 through 2006.
VI. The trial court declines to conduct the second phase
of trial and enters a judgment in favor of Rostack
In light of the overlap between Sabella’s estoppel defense
and gift defense, the trial court asked the parties to brief whether
a second phase of trial was necessary.
After accepting briefing and hearing argument, the trial
court concluded a second phase of trial was unnecessary.
The trial court explained that its findings about the purported
gift and Chen’s intent necessarily resolved Sabella’s gift defense.
The trial court noted Sabella’s “estoppel defense relied in part
upon a finding that a gift existed” and that Sabella’s operative
pleading expressly based the estoppel defense on Sabella’s
allegation Chen “intended to and did in fact gift her with the Two
Bear Ranch and consequently the [n]ote.” It also noted Rostack I
found and relied on the conclusion that Sabella’s “estoppel
defense . . . was a restatement of the gift defense.”
The trial court also rejected Sabella’s argument that she
did not have the opportunity to litigate the gift issue, noting
Sabella presented significant evidence on the gift issue in support
of her estoppel defense. The trial court relied on the fact that
Sabella’s operative pleading “expressly incorporated the
allegations of gift” into the estoppel defense, and that the trial
court “was required to address the issue of gift” to resolve the
estoppel defense.
The trial court also found a second phase of trial was
unnecessary because Rostack had proven its affirmative claims,

12
finding no factual disputes regarding the validity of the note or
whether Sabella breached the terms of the note. The trial court
held its findings on the estoppel defense resolved Sabella’s other
affirmative defenses that rested on the alleged gift, e.g.,
discharge and unjust enrichment. It also found that its findings
resolved Sabella’s other remaining defenses—lack of
consideration, failure to state a claim, and lack of damages—
because it found Sabella and Chen considered the note to be fully
enforceable at all times and Sabella acknowledged the note was a
valid loan. Thus, the trial court concluded there was nothing left
to submit to a jury.
The court issued a judgment in Rostack’s favor, ordering
Sabella to pay $28,273,000 in principal and $41,363,784.60 in
interest.
VII. Rostack’s attorney fees and costs award
Rostack filed a cost memorandum under Code of Civil
Procedure1 sections 1032 and 1033.5, seeking a total of about $1.6
million, including about $1.4 million in surety bond expenses it
paid to Sabella after Rostack I and Rostack II. The trial court
awarded Rostack $239,103.99 in costs but denied the request for
reimbursement of Sabella’s appellate cost award for the surety
bond.
Rostack also moved for an award of attorneys’ fees, costs,
and expenses under the note. Rostack provided four supporting
declarations, including two from Rostack’s primary counsel,
Mayer Brown LLP (Mayer Brown), one from an attorney at
Rostack’s Hong Kong counsel, Wilkinson & Grist, Solicitors &

1 All undesignated statutory references are to the Code of
Civil Procedure.

13
Notaries (Wilkinson), and one from an expert fee witness. Mayer
Brown’s and Wilkinson’s declarations described the division of
labor between the two firms, with Mayer Brown acting as lead
counsel and the sole firm ever appearing on Rostack’s behalf in
this action, and Wilkinson’s assistance with the coordination of
Hong Kong-based witnesses and documents, advice on issues of
Hong Kong law and procedure relevant to Sabella’s gift and
estoppel defenses, and advice regarding the numerous
depositions taken in Hong Kong under Hong Kong law.
Rostack also submitted Mayer Brown’s and Wilkinson’s
voluminous billing entries, documenting the fees it sought to
recover for the 12-year-long litigation. Mayer Brown explained it
had written off approximately $1.8 million in legal fees and costs
before invoicing Rostack. Rostack claimed it was requesting
94 percent of the fees it had paid Mayer Brown and 40 percent of
the fees paid to Wilkinson. Mayer Brown’s attorneys explained
they had eliminated fees for 48 out of 60 timekeepers who billed
less than 250 hours to the litigation to reduce the risk of
duplicative fees. Wilkinson also eliminated any potentially
overlapping work performed by Mayer Brown.
In total, Rostack sought $25,230,719.34 for fees paid to
Mayer Brown and $3,882,908.53 paid to Wilkinson. Additionally,
Rostack again sought reimbursement for Sabella’s appellate costs
awarded in Rostack I.
Sabella opposed the fee request, arguing it should be
reduced to $9,834,162.43 and submitted her own fee expert’s
declaration in support. Sabella argued the trial court should
exclude any recovery by Wilkinson, and that Mayer Brown’s fees
should be drastically reduced as excessive and because Mayer
Brown utilized block-billing, billed in quarter-hour increments,

14
and engaged in noncompensable intra-office conferencing.
With respect to Rostack’s costs, Sabella argued Rostack was not
entitled to recover the bond costs because she was already
awarded those costs after Rostack I and Rostack II, and Rostack
could not recover the costs under the terms of the note.
The trial court awarded Rostack $21,375,529.27 in fees,
applying historical rates and reducing Rostack’s fee request by
$5,234,293.45. The trial court found the length and complexity of
the litigation, and Rostack’s counsel’s reputation as one of the
world’s leading law firms, justified the substantial fee award.
The trial court recounted various factors contributing to the
case’s complexity, including litigating Rostack’s standing to sue
in two rounds, litigating issues related to gift law in both Hong
Kong and California, litigating issues of whether the issuer of the
note was an indispensable or necessary party, taking depositions
in Hong Kong, litigating Sabella’s attempts to disqualify one of
the five trial judges on the case, litigating three writ petitions in
the Court of Appeal and two petitions for review in the California
Supreme Court, and preparing for trial several times between
2011 and 2019. It also found Mayer Brown’s use of block billing,
quarter-hour billing increments, and intra-office conferencing did
not justify a further downward departure. The trial court held
Wilkinson was entitled to its fees because it advised Rostack on
matters related to Hong Kong law relevant to the litigation.
VIII. The parties’ appeals
Rostack and Sabella both appealed with Sabella appealing
the trial court’s decision to sever her estoppel defense and the
attorney fee award. Rostack appealed the trial court’s decision to
not award Rostack the surety bond costs. On March 24, 2022,
we consolidated Sabella’s appeal from the fee award and

15
Rostack’s appeal from the cost award under case No. B314779.
We consolidated all three appeals for purposes of argument and
decision.

DISCUSSION
Sabella’s first appeal concerns the trial court’s decision to
enter judgment in Rostack’s favor without a jury trial, after it
severed Sabella’s estoppel defense and conducted a bench trial on
that issue. Sabella argues this was error as her estoppel defense
was not severable, she consistently took the position her estoppel
defense was distinct from her legal gift defense, and she was
deprived of her right to a jury trial on her remaining legal
defenses and Rostack’s affirmative claims.2
Sabella’s second appeal concerns the substantial attorney
fees awarded to Rostack for work performed by Mayer Brown and
Wilkinson. Sabella argues the trial court erred in awarding any
fees to Wilkinson, which engaged in the unauthorized practice of
law in California and was therefore not entitled to compensation.
Sabella further asserts the trial court abused its discretion in not
reducing Rostack’s fee award based on Rostack’s counsel’s
duplicative work, block billing, billing in quarter-hour

2 Rostack requested judicial notice of an excerpt of the
reporter’s transcript of the trial proceedings and an excerpt of the
transcript of the videotaped deposition of Alan Chan Cheuk Yin
dated February 20, 2013. Sabella did not oppose the request.
We deferred ruling on the request until we considered the merits
of this appeal. We now grant the request after finding the
transcripts to be a proper subject of judicial notice. (Evid. Code,
§ 452, subds. (d)(1) and (h).)

16
increments, billing for excessive intra-office conferencing, and
billing for clerical tasks.
Rostack’s appeal concerns the trial court’s decision to not
award Rostack additional costs for reimbursement for the surety
bond expenses awarded to Sabella in Rostack I. Rostack argues it
is entitled to recoup those costs as the prevailing party by statute
or as legal expenses under the note.
We address each appeal in turn.
I. The trial court had discretion to decide Sabella’s
equitable defense first, and it correctly found that its
findings foreclosed any remaining claims
Sabella puts forth several arguments in support of her
contention that the trial court erred in severing her estoppel
defense, thus depriving her of her right to a jury trial.
First, she argues the trial court’s decision to sever her
estoppel defense violated section 597, which allows a trial court
to sever certain defenses, but only when those defenses do not
involve the merits of the plaintiff’s claims. Second, she argues
her estoppel defense was nonseverable because it overlapped
significantly with her legal defenses, therefore, the “gist of the
action” was legal and the entire action should have been
submitted to a jury. Third, Sabella argues, even if the trial court
could sever her estoppel defense and conduct a separate bench
trial on that issue, the trial court should have empaneled an
advisory jury, and the law-of-the-case doctrine required the trial
court to try the legal issues first or concurrently. Fourth, Sabella
argues that irrespective of the trial court’s findings of fact after
the bench trial, there remained unresolved issues that should
have been tried to a jury.
We are not persuaded.

17
 A. Standard of review
After a bench trial, we review the trial court’s factual
findings for substantial evidence and its conclusions of law de
novo. (Schmidt v. Superior Court (2020) 44 Cal.App.5th 570,
581.) We review the question of whether a party was entitled to a
jury trial de novo. (DiPirro v. Bondo Corp. (2007) 153
Cal.App.4th 150, 179 (DiPirro).) “We review the court’s order
determining the sequence of a bifurcated trial for abuse of
discretion.” (Orange County Water Dist. v. Alcoa Global
Fasteners, Inc. (2017) 12 Cal.App.5th 252, 353 (Orange County).)
We will only reverse “a decision regarding the management of a
case for trial and the order in which issues are to be tried only for
a manifest abuse of discretion.” (Huff v. Securitas Sec. Servs.
USA, Inc. (2018) 23 Cal.App.5th 745, 763.)
B. The trial court did not err or abuse its
discretion by severing Sabella’s equitable
defense and conducting a bench trial to decide
the issue
1. Section 597 was only one of several
statutes granting the trial court the
authority to sever Sabella’s estoppel
defense
Sabella contends the trial court erroneously severed her
estoppel defense under section 597, which allows a trial court to
sever special defenses when those defenses do not go to the
merits of the plaintiff’s causes of action.
Section 597 provides in part: “When the answer . . . sets up
any other defense not involving the merits of the plaintiff’s cause
of action but constituting a bar or ground of abatement to the
prosecution thereof, the court may, either upon its own motion or

18
upon the motion of any party, proceed to the trial of the special
defense or defenses before the trial of any other issue in the case,
and if the decision of the court, or the verdict of the jury, upon
any special defense so tried . . . is in favor of the defendant
pleading the same, judgment for the defendant shall thereupon
be entered and no trial of other issues in the action shall be had
unless that judgment shall be reversed on appeal or otherwise set
aside or vacated . . . .” (Ibid.)
Sabella argues it is indisputable her estoppel defense
involved the merits of Rostack’s claims given the trial court
rendered judgment on Rostack’s claims based solely on its
findings on her estoppel defense. According to Sabella, this is the
exact scenario forbidden by section 597.
We note, initially, it is not entirely clear section 597 applied
here. The issue of whether Sabella’s estoppel defense constituted
a “special defense” under section 597 was never litigated. Both
Rostack’s motion to sever Sabella’s estoppel defense and the trial
court’s order appear to presume without analysis that section 597
applied. Likewise, Sabella’s opposition did not address the issue,
containing no citations to section 597. Given the trial court’s
conclusion that its findings on Sabella’s estoppel defense
foreclosed the need for a jury trial on any remaining legal claims,
it certainly appears the estoppel defense involved the merits of
Rostack’s claims and was not a special defense under section 597.
However, even assuming the trial court erroneously relied
on section 597 to sever Sabella’s estoppel defense, the error was
not prejudicial as the trial court had additional authority for
severance. Indeed, the trial court also relied on section 1048,
subdivision (b), which codifies the trial court’s authority to sever
issues and bifurcate the trial. Section 1048, subdivision (b),

19
reads: “The court, in furtherance of convenience or to avoid
prejudice, or when separate trials will be conducive to expedition
and economy, may order a separate trial of any cause of action,
including a cause of action asserted in a cross-complaint, or of
any separate issue or of any number of causes of action or issues,
preserving the right of trial by jury required by the Constitution
or a statute of this state or of the United States.” (Ibid.)
Further, as Rostack correctly points out, section 598 provides
that even if an issue does not qualify as a “special defense,”
a court still may sever and try “any issue or any part thereof” if
doing so would promote “the convenience of witnesses, the ends of
justice, or the economy and efficiency of handling the litigation.”
(Ibid.) Additionally, Evidence Code section 320 provides the trial
court with discretion to “regulate the order of proof.” (Ibid.)
Thus, even if the trial court erred by partially relying on
section 597, there were other provisions on which the trial court
could and did rely on as grounds for severance. Accordingly,
because the trial court arrived at correct result, any purported
error is not grounds for reversal. (See D’Amico v. Board of
Medical Examiners (1974) 11 Cal.3d 1, 19.)
To the extent the trial court relied on section 1048,
subdivision (b), Sabella argues bifurcation of the equitable and
legal issues was not economical because the estoppel and gift
defenses did “not substantially overlap.” However, Sabella’s
argument is inconsistent with her other argument that the issues
overlapped to such an extent that the defenses were
nonseverable.
In any event, whether severance is judicially economical is
a decision entrusted to the trial court’s broad discretion. (Pilliod
v. Monsanto Co. (2021) 67 Cal.App.5th 591, 625–626.) Here,

20
Sabella based her defenses on the same factual allegations,
specifically, that Chen intended to and did in fact gift her with
the Two Bear Ranch and consequently the note. Because
Sabella’s defenses had significant factual overlap, the trial court
was correct to assume resolution of certain factual issues would
obviate the need for a lengthy jury trial. (Hoopes v. Dolan (2008)
168 Cal.App.4th 146, 156–157 (Hoopes).)
2. The trial court properly followed
California’s equity first preference and
the “gist of the action” did not entitle
Sabella to a jury trial on her estoppel
defense
Sabella contends regardless of the trial court’s statutory
authority to sever her equitable defense, the “gist of the action”
was legal, therefore, the trial court should have submitted the
entire case to a jury. Sabella further contends the trial court’s
refusal to do so deprived her of her right to a jury trial, which is
reversible per se. We disagree.
“Article I, section 16 of the California Constitution—the
jury trial provision—states in relevant part that ‘[t]rial by jury is
an inviolate right and shall be secured to all . . . .’ ” (Nationwide
Biweekly Administration, Inc. v. Superior Court of Alameda
County (2020) 9 Cal.5th 279, 315 (Nationwide).) “ ‘Our state
Constitution essentially preserves the right to a jury in those
actions in which there was a right to a jury trial at common law
at the time the Constitution was first adopted.’ ” (Ibid.)
In contrast, “suits in equity that were not triable by a jury in
1850” generally afford litigants no right to jury trial.
(Nationwide, at p. 315, citing C & K Engineering Contractors v.
Amber Steel Co. (1978) 23 Cal.3d 1, 8–9 (C & K Engineering).)

21
 “ ‘ “In determining whether the action was one triable by a
jury at common law, the court is not bound by the form of the
action but rather by the nature of the rights involved and the
facts of the particular case—the gist of the action. A jury trial
must be granted where the gist of the action is legal, where the
action is in reality cognizable at law.” ’ ” (Nationwide, supra,
9 Cal.5th at p. 315.)
“When the legal and equitable causes of action or issues
presented in a case are severable, past California decisions
establish that a party retains the right to a jury trial of the
severable legal issues and a court trial of the severable equitable
issues.” (Nationwide, supra, 9 Cal.5th at pp. 316–317.)
Nonetheless, “[a] trial court handling such a combined action
could, and in many cases should, hold a bench trial on any
equitable issues first. [Citation.] ‘[I]f any legal issues remain
[after the bench trial], a jury may be called.’ [Citations.] Thus,
while a plaintiff retained his jury trial right, the extent of the
issues actually tried by jury could be impacted by the trial court’s
findings in equity.” (Orange County, supra, 12 Cal.App.5th at
pp. 354–355. The court’s findings in equity “may leave nothing
for a jury to resolve.” (Nationwide, at p. 317.)
The equity trial may limit the scope of a later jury trial
because “ ‘Issues adjudicated in earlier phases of a bifurcated
trial are binding in later phases of that trial and need not be
relitigated.’ ” (Orange County, supra, 12 Cal.App.5th 252, 355,
fn. 52.) “And although a trial court retains discretion regarding
the order in which the issues should be tried, the governing
California cases express a preference that the equitable issues be
tried first.” (Nationwide, supra, 9 Cal.5th at p. 317; see also
Orange County, at p. 355 [citing cases].) “This general ‘equity

22
first preference’ is a long standing feature of California law and
has always been viewed as fully compatible with the right to jury
trial embodied in the California Constitution.” (Nationwide,
supra, 9 Cal.5th at p. 317.)
Here, Sabella’s estoppel defense, whether characterized as
promissory estoppel or equitable estoppel, was an equitable
defense to be determined by the court, not a jury.3 (See C & K
Engineering, supra, 23 Cal.3d at p. 8 [promissory estoppel];
Hoopes, supra, 168 Cal.App.4th at p. 161 [equitable estoppel].)
As the master of her pleading, Sabella chose to separately allege
her estoppel defense while also relying on the same underlying
theory and factual allegations for each of her affirmative
defenses—that the note was unenforceable because Chen gifted
Two Bear Ranch to Sabella and forgave the note. By asserting a
purely equitable defense that relied on the same allegations as
her legal defenses, once the trial court severed the estoppel
defense and bifurcated trial, Sabella bore the risk of having the
trial court’s factual findings bind the jury. (See Hoopes, at
p. 156.) Moreover, at any point, Sabella could have abandoned
her equitable defense to preserve the jury trial, but she chose not
to. (See Darbun Enterprises, Inc. v. San Fernando Community
Hospital (2015) 239 Cal.App.4th 399, 411 (Darbun).)
We find our Supreme Court’s decision in C&K Engineering,
supra, 23 Cal.3d 1, instructive. There, the plaintiff sued the
defendant for breach of contract related to a construction bid.
Plaintiff’s complaint alleged money damages when plaintiff was

3 Sabella’s operative answer did not specify whether she was
relying on promissory or equitable estoppel. Accordingly, the
trial court made findings as to both theories.

23
forced to perform the work that defendant had promised to
perform and alleged “ ‘[i]njustice can be avoided only by
enforcement of defendant’s promise to perform.’ ” (Id. at p. 5.)
“Defendant’s answer to the complaint alleged its bid was the
result of an ‘honest mistake’ in calculation; plaintiff knew of the
mistake but failed to notify defendant or permit it to revise its bid
as is customary in the industry; and plaintiff’s conduct in this
regard should bar it from recovering damages.” (Ibid.)
The defendant demanded a jury trial. (Ibid.) The trial court
denied the request, deeming the case to be “essentially in equity”
but still empaneled an advisory jury “to consider the sole issue of
plaintiff’s reasonable reliance on defendant’s promise.” (Ibid.)
The jury found that plaintiff reasonably relied to its detriment on
defendant’s bid. (Ibid.) The trial court adopted this finding and
entered judgment in plaintiff’s favor in the amount of its prayer.
(Id. at pp. 5–6.) Defendant appealed, arguing it was improperly
denied a jury trial of plaintiff’s action for damages. (Id. at p. 6.)
After concluding the doctrine of promissory estoppel was
“essentially equitable in nature,” the court turned to whether
“the equitable nature of plaintiff’s action precluded a jury trial as
a matter of right.” (C & K Engineering, supra, 23 Cal.3d at p. 8.)
While the court recognized plaintiff’s complaint sought damages
for breach of contract, the “gist of the action” was equitable
because “the complaint seeks relief which was available only in
equity, namely, the enforcement of defendant’s gratuitous
promise to perform its bid through application of the equitable
doctrine of promissory estoppel.” (Id. at p. 9.)
Like C & K Engineering, here, Rostack sued for breach of
contract “in form an action at law in which a right to jury trial
ordinarily would exist.” (C & K Engineering, supra, 23 Cal.3d at

24
p. 9.) However, Sabella’s estoppel defense was wholly equitable
as it assumed the note was valid, but that enforcement would be
inequitable based on Chen’s supposed gift of the Two Bear Ranch.
(See id. at p. 11) Whether alleged as promissory estoppel or
equitable estoppel, Sabella’s defense was always a matter of
equity, which left its determination up to the trial court. (See A–
C Co. v. Security Pacific Nat. Bank (1985) 173 Cal.App.3d 462,
472 (A–C Co.); Strong v. County of Santa Cruz (1975) 15 Cal.3d
720, 725.)
The case authority cited by Sabella does not persuade us
otherwise or warrant a different result.
In Unilogic, Inc. v. Burroughs Corp. (1992) 10 Cal.App.4th
612 (Unilogic), the appellate court affirmed the trial court’s
decision to exercise its discretion to submit defendant’s equitable
defense of unclean hands to the jury, when the underlying facts of
the defense were intertwined with the parties’ legal causes of
action. (Id. at pp. 622–623.) However, while the Unilogic court
recognized “it was particularly prudent for the trial judge to
exercise his discretion to submit [defendant’s] unclean hands
defense to the jury,” nothing in the decision required the trial
court to do so. (Id. at p. 623.) Likewise, Sabella’s pleading an
equitable defense to a legal cause of action did not entitle her to a
jury trial on that defense. (See C & K Engineering, supra,
23 Cal.3d at p. 9.)
In Ford v. Super. Ct. (1959) 176 Cal.App.2d 754, the
defendants asserted various affirmative defenses in response to
allegations they had fraudulently sold stock. (Id. at p. 755.)
The plaintiffs filed a writ petition asking the appellate court to
restrain the trial court from proceeding in action without
granting them a jury trial. There, the trial court sustained the

25
defendants’ objection to plaintiffs’ jury trial demand on the
grounds the affirmative defenses were “equitable.” (Id. at
pp. 755, 759.) The appellate court found that while the
affirmative defenses were labeled as “equitable” they were “in
reality legal issues” and the plaintiffs were entitled to a jury trial.
(Id. at pp. 758–759.) Here, as discussed above, Sabella’s estoppel
defense was equitable as it assumes the note was a valid
agreement. However, she alleged that it would be inequitable to
require her to pay on the note because of Chen’s purported
promise that she would not be held financially responsible for the
note, and because Chen gifted or promised to eventually gift her
the Two Bear Ranch property.
In DiPirro, supra, 153 Cal.App.4th, the plaintiff sued the
defendant seeking enforcement of the California Safe Drinking
Water and Toxic Enforcement Act of 1986. (Id. at p. 163.) The
trial court bifurcated the trial and tried defendant’s statutory
exemption defense first without a jury. (Ibid.) The trial court
entered a judgment in favor of the defendant and the plaintiff
appealed, arguing he was denied his right to a jury trial. (Ibid.)
The appellate court affirmed, holding plaintiff was not entitled to
a jury trial on defendant’s affirmative defense as the “essential
character and purpose” of the statute plaintiff sought to enforce
was equitable. The appellate court explained the statute’s
purpose was to prevent contamination of sources of drinking
water and required businesses “ ‘to warn individuals about
carcinogens and reproductive toxins to which they are exposed
through consumer transactions, employment, and the
environment.’ ” (Id. at p. 180.) “An action that seeks to enforce
the consequences of the listing of a chemical fundamentally seeks
a form of declaratory relief—that the product requires a warning

26
under the Act—which is equitable in nature and does not carry
with it the guarantees of a jury trial.” (Id. at p. 181.)
Sabella argues that DiPirro demonstrates that the proper
inquiry in determining the gist of the action is the nature of the
action and the relief sought, and that because the nature of
Rostack’s action was legal, Sabella was entitled to a jury trial.
However, DiPirro held “the trial court’s bifurcation of the
proceeding and separate initial adjudication of [defendant’s]
warning exemption defense did not transform the case into an
action at law or require a jury trial.” (DiPirro, supra, 153
Cal.App.4th at p. 184.) Notably, DiPirro agreed with other cases
that, “even though issues of fact would be resolved in the
adjudication of the warning exemption defense asserted under
the Act, there is no ‘jury trial right on affirmative defenses that
can be tried separately and first.’ ” (Id. at p. 186.)
Sabella claims this case is akin to Darbun, supra, 239
Cal.App.4th 399 because the trial court misled her into believing
regardless of the outcome of the first phase of trial, there would
be a second phase to try her legal defenses. We find Darbun
distinguishable.
In Darbun, the plaintiff sued defendant for breach of a
lease agreement. (Darbun, supra, 239 Cal.App.4th at p. 401.)
The trial court bifurcated the trial and held a bench trial on the
equitable remedy of specific performance, and then held a second
phase jury trial on the issues of breach and damages. (Ibid.)
Although a jury found for the plaintiff and awarded damages, the
trial court granted the defendant’s motion for judgment
notwithstanding the verdict based on its findings on the equitable
issue. (Ibid.) The appellate court reversed, holding, “in cases
involving mixed issues of equity and law, a trial court may not

27
act as a fact finder on issues it specifically reserves for jury
determination.” (Ibid.)
Unlike Darbun, the trial court did not expressly reserve
any issues for the jury. Indeed, the trial court expressly stated
when it severed the estoppel defense that its findings from the
equitable phase of trial could obviate the need for a jury trial.
Sabella also cites to Walton v. Walton (1995) 31
Cal.App.4th 277 (Walton) for the proposition that where “one
party raised cumulative legal and equitable remedies that were
not mutually exclusive . . . [¶] . . . all claims—legal and
equitable—must be tried, and the right to a jury trial cannot be
defeated by severance of the equitable claim.” (Id. at p. 293.)
Sabella argues that her estoppel defense was not mutually
exclusive from her legal defenses because her estoppel defense
overlapped with her gift defense, as well as Rostack’s breach of
contract claim.
We note the language from Walton on which Sabella relies
is dicta and a more recent appellate decision rejected it as such,
noting that the language was “not supported by the authorities
cited by Walton” and was otherwise unpersuasive given the “well-
settled ‘equity first’ rule.” (Orange County, supra, 12 Cal.App.5th
at p. 358.)
In sum, Sabella’s estoppel defense was an equitable defense
to be decided by the trial court. Consequently, she has not shown
an abuse of discretion where the trial court severed that defense
and tried it before submitting the remaining legal claims to a jury
under California’s long-held equity first rule.

28
 3. The trial court was not required to
empanel an advisory jury and the law-of-
the-case doctrine did not mandate a trial
on her gift defense
Sabella argues that even if bifurcation was appropriate, the
trial court should have empaneled an advisory jury on the
equitable issues. However, Sabella has cited no authority
holding an advisory jury must be empaneled. Indeed, a trial
court has the authority to try an equitable defense with or
without an advisory jury. (C & K Engineering, supra, 23 Cal.3d
at p. 11.) Moreover, even if the trial court empaneled an advisory
jury here, it would still have “to make its own independent
findings” on Sabella’s estoppel defense and could “adopt or reject
the findings of the jury as it deem[ed] proper.” (A–C Co., supra,
173 Cal.App.3d at p. 474.)
Sabella also argues that the trial court abused its
discretion in following the equity-first procedure because our
decision in Rostack I concluded there was a triable issue of fact
on Sabella’s gift defense, therefore, the trial court had to submit
the gift defense to the jury first. We do not agree with Sabella’s
interpretation of Rostack I.
Under the law-of-the-case doctrine, “ ‘ “the decision of an
appellate court, stating a rule of law necessary to the decision of
the case, conclusively establishes that rule and makes it
determinative of the rights of the same parties in any subsequent
retrial or appeal in the same case.” ’ ” (Bell v. Farmers Ins.
Exchange (2004) 115 Cal.App.4th 715, 727.) While Rostack I
found triable fact issues on the estoppel and gift defenses based
on Sabella’s allegations that Chen intended to gift Two Bear
Ranch to Sabella and discharged the note, it made no conclusions

29
on the order in which her defenses should be tried or whether
they should be tried by the judge or reserved for a jury.
4. There were no remaining issues for the
jury to decide after the first phase of trial
Sabella argues that even if the trial court’s factual findings
resolved her gift defense, they did not resolve other issues in the
case. These issues are “whether the contract was supported by
consideration,” “whether Rostack was damaged by any breach,”
and her “other affirmative defenses, including unjust enrichment
and discharge.” We disagree.
The trial court’s findings in resolving the estoppel defense
also resolved these remaining issues. Because Sabella’s estoppel
defense alleged that Chen never intended for her to pay back the
amount due on the note, the trial court addressed whether the
note was a valid contract between Rostack and Sabella.
Accordingly, the trial court found the note “was a legitimate loan
from Rostack to [Sabella], enforceable against her if she missed
any payments” and that it had to be a valid loan to “fulfill its
intended tax consequences.” There was also no dispute Sabella
breached her obligations under the note nor how much she still
owed under the note. There was no dispute Sabella executed the
note in favor of Rostack or that Sabella actually borrowed money
on the note and only repaid $5 million. There was also no dispute
Sabella failed to make interest or principal payments on the note
after July 5, 2006. These facts establish all of the elements of
Rostack’s claims, and Sabella could not argue to the jury that the
note was not enforceable because the trial court already had
found that it was.
The trial court also correctly held that its findings during
the first phase of trial necessarily precluded Sabella’s other

30
affirmative defenses. Sabella’s discharge and unjust enrichment
defenses are premised on the existence of a gift from Chen, which
the trial court found did not occur. Sabella’s remaining
defenses—lack of consideration, failure to state a claim, and lack
of damages—were all based on her assertion that she did not
receive borrowed funds directly from Rostack. But there was no
dispute that Sabella executed the note in favor of Rostack or that
Sabella and Chen “considered the [n]ote to be fully enforceable at
all times.” During her testimony, Sabella was unequivocal that
the note was a “valid loan,” on which she stopped making
payments. Thus, there was nothing left for the jury to decide.
Sabella next argues that she did not have an opportunity to
litigate the facts regarding whether Chen gifted her Two Bear
Ranch or forgave the note, therefore, the trial court’s findings
cannot preclude her gift defense. Again, we disagree.
The record reflects Sabella litigated the facts relevant to
her gift defense as part of the estoppel defense. An issue is
“ ‘actually litigated “[w]hen [it] is properly raised, by the
pleadings or otherwise, and is submitted for determination, and
is determined.” ’ ” (Ayala v. Dawson (2017) 13 Cal.App.5th 1319,
1330, citing People v. Sims (1982) 32 Cal.3d 468, 484; Murray v.
Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 871.) Here, Sabella
based her estoppel defense on the alleged gift and litigated those
allegations at trial. The trial court made findings regarding
whether a gift occurred or whether Chen had the donative intent
to establish a gift.
Nonetheless, Sabella argues the trial court should not have
ruled on whether there was a completed gift because her estoppel
defense was based only on the intent to make a gift. But that
argument is belied by Sabella’s operative pleading, which based

31
her estoppel defense on both a completed gift and the promise to
make the gift in the future. In either case, the estoppel defense
required the trial court to determine Chen’s alleged donative
intent. The trial court thus appropriately decided whether the
supposed gift had been completed.
Sabella chose to base her estoppel and gift defenses on the
same allegations regarding the gift and presented extensive
evidence on those allegations at trial. As such, the trial court
was correct to decide the issue and Sabella was not entitled to
present the same disputed facts to different fact finders. (See
Orange County, supra, 12 Cal.App.5th at p. 355, fn. 52.)
II. The trial court did not abuse its discretion in
awarding Rostack attorney fees
Sabella’s second appeal challenges the trial court’s
$21,371,996.77 attorney fee award to Rostack. That fee award
included approximately $18.7 million in fees for Mayer Brown
and $2.7 million in fees for Wilkinson, a Hong Kong law firm that
assisted Mayer Brown during the litigation. Sabella puts
forward two primary arguments in support of her contention that
the fee award should be reduced.
First, Sabella asserts the trial court erred in awarding fees
for work performed by Wilkinson. Sabella argues recovery of
Wilkinson’s fees is legally impermissible under Business and
Professions Code section 6125 because Wilkinson’s attorneys
were not licensed to practice in California, and their work
constituted the unlawful practice of law. Sabella also contends
Wilkinson’s work on the case was duplicative of Mayer Brown’s.
Second, Sabella asserts the trial court abused its discretion
by not reducing Rostack’s fee request on the grounds that Mayer
Brown engaged in excessive block billing; improperly rounded up

32
its time entries; engaged in excessive intra-office conferencing;
and billed for clerical work.
Sabella’s assertions are not persuasive.
A. Standard of review
We review the trial court’s determination of a reasonable
attorney fee for abuse of discretion. (Los Angeles Unified School
District v. Torres Construction Corp. (2020) 57 Cal.App.5th 480,
516.)
“ ‘The “experienced trial judge is the best judge of the value
of professional services rendered in his court, and while his
judgment is of course subject to review, it will not be disturbed
unless the appellate court is convinced that it is clearly wrong.” ’ ”
(Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 488
(Laffitte).) “Accordingly, there is no question our review must be
highly deferential to the views of the trial court.” (Nichols v. City
of Taft (2007) 155 Cal.App.4th 1233, 1239.) We will not reverse
an attorney fee award absent a showing that the trial court
clearly abused its discretion. (Track Mortg. Group, Inc. v.
Crusader Ins. Co. (2002) 98 Cal.App.4th 857, 868.)
“An abuse of discretion is shown when the award shocks
the conscience or is not supported by the evidence.” (Jones v.
Union Bank of California (2005) 127 Cal.App.4th 542, 549–550.)
“ ‘The trial court’s decision will only be disturbed when there is
no substantial evidence to support the trial court’s findings or
when there has been a miscarriage of justice. If the trial court
has made no findings, the reviewing court will infer all findings
necessary to support the judgment and then examine the record
to see if the findings are based on substantial evidence.’ ” (Frei v.
Davey (2004) 124 Cal.App.4th 1506, 1512.)

33
 B. Rostack was entitled to recover Wilkinson’s
fees
Sabella argues Rostack cannot recover attorney fees paid to
Wilkinson because Wilkinson engaged in the unauthorized
practice of law in California, which is prohibited by Business and
Professions Code section 6125. Sabella also argues, even if
recovery of Wilkinson’s attorney fees were not barred, the trial
court abused its discretion in not reducing Wilkinson’s fees for
work that was unnecessary and duplicative of Mayer Brown’s.
1. Wilkinson was not engaged in the
unlawful practice of law in California
Business and Professions Code section 6125 reads: “No
person shall practice law in California unless the person is an
active licensee of the State Bar.” Our Supreme Court has
interpreted this statute as a bar to recovery of attorney fees for
work performed by out-of-state attorneys, who were not licensed
or otherwise authorized to practice law in California when the
fees were incurred. (Birbrower, Montalbano, Condon & Frank v.
Superior Court (1998) 17 Cal.4th 119, 126 (Birbrower).) This bar,
however, does not prohibit an award of attorney fees to an out-of-
state attorneys, who “did not practice law ‘in California’ within
the meaning of [Business and Professions Code] section 6125.”
(Estate of Condon (1998) 65 Cal.App.4th 1138, 1148 (Condon).)
In determining whether an out-of-state attorney violated
Business and Professions Code section 6125, and therefore was
not entitled to attorney fees, “[t]he primary inquiry is whether
the unlicensed lawyer engaged in sufficient activities in the state,
or created a continuing relationship with the California client
that included legal duties and obligations.” (Birbrower, supra,
17 Cal.4th at p. 128; Condon, supra, 65 Cal.App.4th at p. 1145.)

34
Birbrower, at pages 128 and 129, states: “Physical presence here
is one factor we may consider in deciding whether the unlicensed
lawyer has violated section 6125, but it is by no means exclusive.
For example, one may practice law in the state in violation of
section 6125 although not physically present here by advising a
California client on California law in connection with a California
legal dispute by telephone, fax, computer, or other modern
technological means. Conversely, . . . we do reject the notion that
a person automatically practices law ‘in California’ whenever that
person practices California law anywhere, or ‘virtually’ enters the
state by telephone, fax, e-mail, or satellite.” “Implicit in
[Birbrower’s] formulation of the rule is the ingredient that the
client is a ‘California client,’ one that either resides in or has its
principal place of business in California. This conclusion is not
only logical, it comports with the reason underlying the
proscription of section 6125.” (Condon, supra, 65 Cal.App.4th at
p. 1145.) “It is therefore obvious that . . . the client’s residence or
its principal place of business is determinative of the question of
whether the practice is proscribed by section 6125. Clearly the
State of California has no interest in disciplining an out-of-state
attorney practicing law on behalf of a client residing in the
lawyer’s home state.” (Condon, at p. 1146.)
Here, Rostack was not a California client. Rostack is a
Liberian corporation based in Hong Kong with Hong Kong-based
officers and directors. Nor is there any indication Wilkinson was
practicing law in California. Indeed, Rostack only sought fees for
Wilkinson’s “taking instructions at the outset of the case,
interviews with witnesses and preparation of their statements,
review and product of documents for Rostack’s production of
documents throughout the case”; and “taking instructions from,

35
and discussing the case with, Rostack.” This was not practicing
law in California and was perfectly reasonable given the global
nature of this case. As this case again proves, “[s]ocial
interaction and the conduct of business transcends state and
national boundaries; it is truly global.” (See Condon, supra,
65 Cal.App.4th at pp. 1145–1146.)
Sabella argues Wilkinson was practicing law in California
because “Wilkinson continuously and unlawfully advised Rostack
on matters of California law and legal instruments for issues
presented before a California Court” and “conducted legal work
on pleadings related to issues ruled under California law and to
be filed in a California court.” Sabella cites to examples
contained in a Wilkinson attorney’s declaration in support of the
fee motion, which states that he was “advising [Rostack] about
[the] draft Complaint,” “[w]riting to client for instructions with
regard to the Answer,” “[w]riting to client for instructions in
relation to draft Motion,” and “[w]riting to client for instruction in
relation to the draft [discovery] Responses.” However, our review
of those examples show Wilkinson often acted as an intermediary
between Mayer Brown and Rostack, which was reasonable given
“[v]irtually all percipient witnesses in the case reside in or about,
and/or were deposed in, Hong Kong” and Wilkinson was familiar
“with certain procedures in Hong Kong relating to litigation and
to conduct effectively certain Hong Kong proceedings involving
judicial officers known as examiners.” These examples do not
show Wilkinson was practicing law in California within the
meaning of Business and Professions Code section 6125 under
the circumstances. (Birbrower, supra, 17 Cal.4th at 128.)
Sabella cites to Golba v. Dick’s Sporting Goods, Inc. (2015)
238 Cal.App.4th 1251 to argue Wilkinson attorneys should have

36
applied to appear pro hac vice. We find that case inapposite.
There, the appellate court affirmed the trial court’s decision not
to award attorney fees to an out-of-state attorney, who was
effectively acting as lead counsel in a class action where
California residents were putative class members. (Id. at
p. 1264.) The attorney “though not physically present in
California, had ‘sufficient contact with the California client to
render the nature of the legal service a clear legal representation’
and ‘created a continuing relationship with the California client
that included legal duties and obligations.’ ” (Id. at pp. 1264–
1265, citing Birbrower, supra, 17 Cal.4th at p. 128.) As discussed
above, Wilkinson attorneys never appeared in this case, thus, pro
hac admission was unnecessary for recovery of fees.
2. Wilkinson’s work was not duplicative
Next, Sabella argues the trial court abused its discretion by
not eliminating Wilkinson’s fees as duplicative and unnecessary.
Sabella takes issue with the fact that Rostack retained two
law firms in this case. Citing Donahue v. Donahue (2010)
182 Cal.App.4th 259, Sabella contends the trial court must
approach the use of multiple firms with caution because
“simultaneous representation by multiple law firms pose[s]
substantial risks of task padding, over-conferencing, attorney
stacking (multiple attendance by attorneys at the same court
functions), and excessive research.” (Id. at p. 272.) While there
is no per se bar on retaining more than one law firm in a
litigation, duplicative efforts by counsel may not be compensated.
(Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 (Ketchum).)
Accordingly, a party may recover fees for multiple law firms so
long as the work is not duplicative and unnecessary. (See

37
Raining Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363,
1375–1376.)
In support of its attorney fee request, Wilkinson provided
the monthly invoices billed to Rostack, which totaled
$6,764,812.97. However, to avoid recovery of work done by
Wilkinson that may have been duplicative of work done by Mayer
Brown, Wilkinson sought fees for only three categories of work
mentioned above. This exclusion of other types of legal work
reduced the requested fees to $2,666,257.05.
Despite these exclusions, Sabella points to several
examples to show Wilkinson’s work duplicated Mayer Brown’s.
In one instance, two Wilkinson attorneys spent over 33 hours
preparing for and attending a deposition. For that same
deposition, Mayer Brown attorneys traveled to Hong Kong, and
spent over 44 hours preparing and attending the same
deposition.
This example is not persuasive. Sabella ignores the fact
that Mayer Brown’s time entries also included time for preparing
and attending the deposition of other witnesses. Moreover,
Sabella’s example rings especially hollow where Sabella’s own
Hong Kong counsel appeared alongside her California counsel at
the same deposition. As we do here, “ ‘The court can look to how
many lawyers the other side utilized in similar situations as an
indication of the effort required.’ ” (See Donahue v. Donahue,
supra, 182 Cal.App.4th at p. 272.)
Sabella also cites an example where a Mayer Brown
attorney spent 59.5 hours on an opposition to Sabella’s motion to
strike Rostack’s motion for summary judgment. On the same
motion to strike, three Wilkinson attorneys billed 23 hours for
writing to Rostack for comments and instructions in relation to

38
the opposition to the motion to strike, and then discussing and
considering Rostack’s comments. Again, we do not find this
example indicative that Wilkinson’s work was duplicative of
Mayer Brown’s. Mayer Brown’s time entries at issue also include
work on its reply brief in support of its motion for summary
judgment, which was filed around the same time. Further,
communicating with and getting comments from the client are
distinct tasks from drafting a motion or opposition brief.
Sabella also takes issue with Rostack’s claim that
Wilkinson’s assistance was necessary to navigate procedural
issues in Hong Kong, when Rostack is a Liberian corporation
litigating in California under California law. Rostack’s country of
incorporation notwithstanding, Rostack’s directors, accountants,
in-house attorneys, documents, and witnesses were located in
Hong Kong. Sabella also questions Rostack’s need for Hong
Kong-specific counsel when Mayer Brown is a sophisticated,
international law firm, with a sizable presence in Hong Kong.
However, Sabella does not explain how employing more lawyers
from the same law firm would have resulted in less hours
worked.
Sabella also questions how Wilkinson could accumulate
nearly $3 million in fees given its limited contribution to the case.
Sabella seems to ignore the undeniable fact that this case was
hard fought for 12 years in California and Hong Kong. Indeed, as
Sabella herself acknowledged in a motion for an undertaking, the
case was “aggressively litigated” since its inception, and disclosed
in that motion that one of her three law firms had billed
approximately $1.5 million for 11 months of work at the
beginning of the case. “A comparative analysis of each side’s
respective litigation costs” is “a useful check on the

39
reasonableness of any fee request.” (Donahue v. Donahue, supra,
182 Cal.App.4th at p. 272.)
Sabella also complains that Wilkinson billed for tasks that
Mayer Brown could have handled itself, for example, taking
client instruction, dealing with local witnesses, or communicating
with the client. However, as we have already discussed, whether
these tasks were done by one firm or two, the trial court correctly
found the hours spent on those tasks were compensable.
C. The trial court properly exercised its discretion
in not applying a negative multiplier to the fee
request
Sabella next argues that the trial court abused its
discretion when it declined to apply a negative multiplier to work
performed by Mayer Brown which engaged in block billing,
improperly rounded up its time entries, engaged in excessive
intra-office conferencing, and billed for clerical work.
1. Block billing
“Block billing occurs when ‘a block of time [is assigned] to
multiple tasks rather than itemizing the time spent on each
task.’ ” (Mountjoy v. Bank of America, N.A. (2016) 245
Cal.App.4th 266, 279.) While block billing is “not objectionable
per se,” a trial court may penalize a party for the practice when it
hinders the trial court’s ability to discern between compensable
and noncompensable tasks. (Christian Research Institute v.
Alnor (2008) 165 Cal.App.4th 1315, 1325.)
Here, we find no abuse of discretion in the trial court’s
decision not to reduce Rostack’s fee award as a penalty for block
billing. The trial court is the best judge of the professional
services rendered (Laffitte, supra, 1 Cal.5th at p. 488) and block
billing is only inappropriate to the extent it obscures the ability of

40
the trial court “to determine whether the tasks described . . .
reasonably required the total amount of time billed.”
(Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99,
102–103.) In Sabella’s cited example entries of Mayer Brown’s
block billing, the trial court correctly found the entries were
sufficiently detailed to allow the trial court to discern between
compensable and noncompensable tasks. Under the
circumstances, we are not convinced that the trial court’s
judgment regarding these entries was “ ‘ ‘clearly wrong.” ’ ”
(Laffitte, at p. 488.)
2. Quarter-hour billing
Sabella next argues that the trial court abused its
discretion in declining to apply a negative multiplier to Mayer
Brown’s entries because they were billed in quarter-hour
increments rather than in one-tenth-hour increments.
Citing Lopez v. S.F. Unified Sch. Dist. (N.D. Cal. 2005)
385 F.Supp.2d 981, Welch v. Metropolitan Life Ins. Co. (9th Cir.
2007) 480 F.3d 942, and Zucker v. Occidental Petroleum Corp.
(C.D. Cal. 1997) 968 F.Supp. 1396, Sabella contends that quarter-
hour billing is “roundly condemned by courts.” In response,
Rostack cites Warren v. Kia Motors America, Inc. (2018)
30 Cal.App.5th 24, to argue “California courts routinely award
fees based on time billed in quarter-hour increments.” However,
neither parties’ citations appear correct.
Just as with block billing, the issue is not the practice
itself, but whether the amount of hours claimed are an accurate
reflection of the time expended on the case. As the Ninth Circuit
explained, “The [trial] court was in the best position to determine
in the first instance whether counsel’s practice of billing by the
quarter-hour resulted in a request for compensation for hours not

41
reasonably expended on the litigation.” (Welch v. Metropolitan
Life Ins. Co., supra, 480 F.3d at p. 948.)
Here, the trial court found that Rostack’s fee request was
reasonable based on the hourly rates, which were comparable to
the rates of Sabella’s counsel, and because the total amount of
time expended was appropriate given the length and complexity
of the action. “[Sabella] has not articulated specific examples of
instances where [Rostack’s] counsel’s bill seems to reflect an
unreasonable amount of time and labor spent.” Accordingly, we
find no abuse of discretion in the trial court’s decision to not
reduce Rostack’s fee award.
3. Excessive intra-office conferencing
Sabella next argues that the trial court should have
reduced Rostack’s fee award for excessive intra-office
conferencing. Sabella takes issue with the number of attorneys
that were staffed on the case, and the fact that a large percentage
of Mayer Brown’s time entries included intra-office conferencing.
Sabella’s comment that it is “inconceivable to justify the
need for so many lawyers” and her characterization of the case as
a simple disagreement between two parties over a loan is not well
taken.
Mayer Brown’s declarations submitted to the trial court in
support of its fee conclusively refute Sabella’s
mischaracterization of the litigation. While Rostack
acknowledged that it initially believed this case would be a
straightforward collection action, the case became “materially
complicated” when Sabella claimed the loan was actually a gift
from the outset, and then further complicated the issue, when she
switched theories to claim the loan was gifted to her at some later
point in time. We agree with Rostack that this case involved

42
litigating “numerous and complex issues rarely found in
collection cases.” Moreover, as Rostack stated in its attorney
declarations in support of its fee motion, which the trial court
accepted, additional factors complicated the litigation, including:
service of Sabella under the Hague Service Convention since
Sabella lived in Hong Kong when the action was filed; the
issuance and enforcement of letters rogatory in connection with
the depositions of Vivien Chen and Alan Chan; Rostack’s
standing to sue; gift law and conflicts of law in both Hong Kong
and California; at least 35 motions (including in limine motions)
since 2009; ink-dating experts based on Sabella’s claims someone
doctored the original proposal drafted on Sabella’s behalf
requesting that Chen gift her money to repay the note; the
alleged theft from Sabella of the original proposal; examining
Hong Kong police reports and questioning Sabella about them;
Sabella’s laches defense that Rostack did not diligently pursue its
claim; taxpayer privilege based on Sabella’s “tax planning”
defense and whether Sabella’s U.S. income tax treatment of the
note was consistent with her claims regarding the alleged gift;
whether Chen or his estate was an indispensable or necessary
party; Sabella’s attempt to disqualify a trial judge for personal
bias; three writ petitions in the Court of Appeal and two petitions
for review in the Supreme Court involving taxpayer privilege and
disqualification issues; issues related to Sabella’s posting of $70
million in security to stay enforcement of the 2014 judgment and
whether the surety bond costs were immediately required to be
paid; undertaking expensive preparation for trial on numerous
occasions, including once in 2011, twice in 2012, twice in 2013,
once in 2014, and once in 2019; preparing exhibit lists, witness
lists, jury instructions, deposition designations, outlines of

43
witness testimony and cross-examinations, motions in limine and
factual investigation, including obtaining documents from Hong
Kong immigration authorities to show where Sabella and Vivien
were on certain dates; trying the case for nine days over a multi-
month period; and litigating whether the result of the bench trial
fully resolved Rostack’s claims and Sabella’s remaining defenses
under the equity first rule.
In declining to reduce the fee award for intra-office
conferencing, the trial court found that “[t]his case involved
complex litigation strategies and it is not unreasonable for
[Mayer Brown’s] attorneys to confer with each other as to how
the firm decided to litigate this case.” Thus, the trial court had a
reasonable basis for awarding Rostack its requested fees. (See
Heritage Pacific Financial, LLC v. Monroy (2013) 215
Cal.App.4th 972, 1008.)
4. Clerical tasks
Finally, Sabella argues that the trial court abused its
discretion by not reducing Rostack’s fee award for clerical tasks.
As an initial matter, necessary overhead support services
that secretaries and paralegals provide to attorneys may be
included in an attorney fees award. (City of Oakland v.
McCullough (1996) 46 Cal.App.4th 1, 7.) Administrative tasks
are recoverable in the trial court’s discretion. However, charging
for purely clerical tasks at an attorney’s hourly rate is
questionable. (Ketchum, supra, 24 Cal.4th at p. 1132.)
Sabella’s expert extracted numerous entries from Mayer
Brown’s billing records that showed approximately 1,080 hours’
worth of time entries including clerical tasks. Our review of
these records does not demonstrate the trial court abused its
discretion in not reducing the fee award for these entries. Nearly

44
every item identified by Sabella’s expert was completed by Mayer
Brown’s paralegal or a document clerk. Therefore, Mayer Brown
did not count attorney time towards clerical tasks. To the extent
Sabella’s expert identified clerical tasks billed by a law firm
associate or partner, our review of those time entries shows that
they were not clerical.
III. Rostack is not entitled to recover its bond costs
under any statute or under the terms of the note
In Rostack’s appeal, Rostack challenges the trial court’s
decision to not award Rostack costs in the amount of
$1,366,104.28, which are the costs awarded to Sabella in
Rostack I. (Rostack I, supra, B260844.) Rostack argues it is
entitled to these costs by statute and under the terms of the note.
We disagree.
A. Standard of review
“ ‘ “[T]he right to recover costs is purely statutory, and, in
the absence of an authorizing statute, no costs can be recovered
by either party.” ’ ” (Gorman v. Tassajara Dev. Corp. (2009)
178 Cal.App.4th 44, 71.) We review whether the criteria for an
award of costs have been satisfied de novo. (Berkeley Cement,
Inc. v. Regents of University of California (2019) 30 Cal.App.5th
1133, 1139.) We “independently review contract interpretation
where, as here, there is no extrinsic evidence about contract
meaning and the facts are undisputed.” (Bravo v. RADC
Enterprises., Inc. (2019) 33 Cal.App.5th 920, 922.)
B. The law-of-the-case doctrine does not apply to
whether Rostack is entitled to recover the bond
expenses
As an initial matter, Sabella argues that the law-of-the-
case doctrine bars Rostack’s recovery of those appellate costs

45
awarded to Sabella in Rostack I based on this court’s decision in
Rostack II. As stated above, the law-of-the-case doctrine applies
when “ ‘ “the decision of an appellate court, stating a rule of law
necessary to the decision of the case, conclusively establishes that
rule and makes it determinative of the rights of the same parties
in any subsequent retrial or appeal in the same case.” ’ ” (Bell v.
Farmers Ins. Exchange, supra, 115 Cal.App.4th at p. 727.)
We disagree that Rostack II conclusively decided the issue
before us here. Indeed, we specifically declined to address
whether Rostack would be able to recover those costs at the end
of the litigation if it was the prevailing party. (Rostack II, supra,
32 Cal.App.5th at p. 80.) We stated it would be “premature” to
consider that issue given there had “been no trial, no prevailing
party on the contract, and no attempt to recover any such costs
under the [note].” (Ibid.)
Because that issue was not decided in the prior appeal,
the law-of-the-case doctrine does not apply. (Nissan Motor
Acceptance Cases (2021) 63 Cal.App.5th 793, 824.)
C. Rostack is not statutorily entitled to recover
the surety bond costs under any statute
Turning to the merits, Rostack argues, because it is the
prevailing party under section 1032, subdivisions (a)(4) and (b),
as well as under Civil Code section 1717, subdivision (a), it is
entitled to reimbursement for the amount paid to satisfy the
judgment entered in Sabella’s favor for the amount of the surety
bond expenses that were awarded to her in Rostack I and
affirmed in Rostack II. We disagree.
“ ‘Costs are allowances which are authorized to reimburse
the successful party to an action or proceeding and are in the
nature of incidental damages to indemnify a party against the

46
expense of successfully asserting his rights.’ ” (DeSaulles v.
Community Hospital of Monterey Peninsula (2016) 62 Cal.4th
1140, 1147, citing Purdy v. Johnson (1929) 100 Cal.App. 416, 418;
§ 1033.5.) “ ‘The party to blame pays costs to the party without
fault.’ ” (Purdy v. Johnson, at p. 418.)
Section 1032, subdivision (b), provides “[e]xcept as
otherwise expressly provided by statute, a prevailing party is
entitled as a matter of right to recover costs in any action or
proceeding.” Section 1032, subdivision (a)(4) defines a
“ ‘[p]revailing party’ ” as the party with a net monetary recovery.
Civil Code section 1717, subdivision (a), provides: “In any action
on a contract, where the contract specifically provides that
attorney’s fees and costs, which are incurred to enforce that
contract, shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the
party prevailing on the contract, whether he or she is the party
specified in the contract or not, shall be entitled to reasonable
attorney’s fees in addition to other costs.” The party who
recovered “greater relief in the action on the contract” is the
prevailing party under Civil Code section 1717. (Frog Creek
Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515,
529.)
Here, Rostack is undoubtedly the prevailing party under
both section 1032 and Civil Code section 1717. Nevertheless, we
hold Rostack is not entitled to reimbursement for the appellate
costs awarded to Sabella in Rostack I.
Rostack asserts, as the prevailing party under section 1032,
it is entitled to the surety bond expenses under section 1033.5,
subdivisions (a)(6) and (a)(16), which list as allowable costs
“[p]remiums on necessary surety bonds” and “[a]ny other item

47
that is required to be awarded to the prevailing party pursuant to
statute as an incident to prevailing in the action at trial or on
appeal.” However, “the very language and context of . . .
section 1033.5 indicates that it does not govern costs on appeal.”
(Alan S. v. Superior Court (2009) 172 Cal.App.4th 238, 259.)
“ ‘The context of section 1032—using language that speaks of
plaintiffs, defendants and prevailing parties being those with a
“net monetary recovery”—implies that the statute is directed at
the trial court. So does the context of section 1033, with its
reference to a party recovering a judgment. Section 1033.5,
which is a list of what is, and is not, allowable as a cost, similarly
is trial-court-oriented, with items exclusively related to trial
court proceedings (e.g., references to jury fees, taking depositions,
process servers, etc.).’ ” (Stratton v. Beck (2018) 30 Cal.App.5th
901, 910.) In fact, “ ‘section 1034, subdivision (b) . . . tells us
specifically what law governs costs on appeal.’ [Citation.]
It provides, ‘The Judicial Council shall establish by rule allowable
costs on appeal and the procedure for claiming those costs.’
(§ 1034, subd. (b).) That rule is California Rules of Court,
rule 8.278, which is entitled ‘Costs on appeal.’ ” (Ibid.)
Cal. Rules of Court, rule 8.278(a)(1) provides: “Except as
provided in this rule, the party prevailing in the Court of Appeal
in a civil case other than a juvenile case is entitled to costs on
appeal.” Under Cal. Rules of Court, rule 8.278(a)(2), “[t]he
prevailing party is the respondent if the Court of Appeal affirms
the judgment without modification or dismisses the appeal.
The prevailing party is the appellant if the court reverses the
judgment in its entirety.”
The provisions allowing costs on appeal do not depend on
the party winning the appeal being the ultimate prevailing party

48
in the lower court. (Presley of Southern California v. Whelan
(1983) 146 Cal.App.3d 959, 2.) This is why, as we explained in
Rostack II, supra, 32 Cal.App.5th at page 78, a successful litigant
on appeal may immediately enforce an award of costs on appeal.
(See also First Nat. Bank of San Pedro v. Stansbury (1931)
214 Cal. 190, 192; see also Butler-Rupp v. Lourdeaux (2007)
154 Cal.App.4th 918, 927.) This is so because “[t]here is no
interdependence between the judgment for costs of the former
appeal and any judgment which may subsequently be entered in
the main case.” (Rostack II, at p. 78.) Rather, an appellate cost
award is enforceable as a separate money judgment and
“conceptually separate” from the underlying trial court judgment.
(Lucky United Properties Investment, Inc. v. Lee (2013) 213
Cal.App.4th 635, 655.)
Thus, we conclude that whether Rostack is the prevailing
party under section 1032 has no bearing on the cost award in
Rostack I where Sabella was the prevailing party under
California Rules of Court, rule 8.278.
We likewise reject Rostack’s argument that it is entitled to
reimbursement for the surety bond expenses because it is the
prevailing party under Civil Code section 1717.
“The provisions allowing costs on appeal . . . are entirely
separate from [Civil Code section 1717] and do not depend on the
party winning the appeal being the ultimate prevailing party.”
(Mustachio v. Great Western Bank (1996) 48 Cal.App.4th 1145,
1150.) A party who successfully appeals a judgment, but who is
still not a prevailing party under section 1717 based on the final
judgment, is still entitled to recover his costs on the successful
appeal. (See Snyder v. Marcus & Millichap (1996) 46
Cal.App.4th 1099, 1102.) Thus, even though Rostack is the

49
prevailing party under Civil Code section 1717, it is not entitled
to reimbursement for Sabella’s award of appellate costs in
Rostack I.
Our ruling finds analogous support in those cases that
held, where a party is entitled to recover costs by virtue of its
success on its first appeal but ultimately loses at trial, the trial
court should set off the costs when determining the amount to
award the party who prevailed at trial. (Crenshaw v. Smith
(1946) 74 Cal.App.2d 255, 269; Layne v. Superior Court, City and
County of San Francisco (1932) 121 Cal.App. 206, 208; Passow &
Sons v. U.S. Fidelity & Guaranty Co. (1922) 56 Cal.App. 72, 78–
79.)
D. Rostack is not entitled to recover the bond
costs under the terms of the note
Rostack argues, even if it is not entitled to recover the costs
as a matter of right under California law, it is still entitled to
recover them under the note. Again, we disagree.
The terms of the note provide: “Upon [Sabella’s] failure to
pay all amounts declared due pursuant to this section, including
failure to pay upon final maturity, [Rostack] may hire or pay
someone else to help collect this [n]ote if [Sabella] does not pay.
[Sabella] also will pay [Rostack] that amount. This includes,
subject to any limits under applicable law, [Rostack’s] attorneys’
fees and [Rostack’s] legal expenses . . . for bankruptcy
proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment
collection services.” (Italics added.)
Under the terms of the note, Rostack’s entitlement to legal
expenses is subject to any limits under applicable law. As we
explained in Rostack II, Sabella was entitled to recover her costs

50
on appeal in Rostack I. (Rostack II, supra, 32 Cal.App.5th at
p. 78.) And, as we have explained above, the bond costs were not
allowable costs under section 1033.5 and Rostack is not entitled
to reimbursement for those costs under either section 1032 or
Civil Code 1717 as the prevailing party in the litigation. Sabella
remains the prevailing party in Rostack I under California Rules
of Court, rule 8.278.
We also reject Rostack’s argument that the note provides a
broader definition of allowable costs. “[C]ontractual costs
provisions are presumed to adopt the statutory definition absent
evidence to the contrary.” (Hsu v. Semiconductor Systems, Inc.
(2005) 126 Cal.App.4th 1330, 1341.)

DISPOSITION
The judgment and orders are affirmed. Costs are awarded
to Rostack in Case No. B311811. With respect to Case
No. 314779, the parties are to bear their own costs.

VIRAMONTES, J.

WE CONCUR:

STRATTON, P. J.

GRIMES, J.

51