Filed 2/11/14 Jeld-Wen v. Southcoast Sheet Metal CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JELD-WEN, INC., D062591
Plaintiff and Appellant,
v. (Super. Ct. No. GIC789367)
SOUTHCOAST SHEET METAL,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Richard
E.L. Strauss, Judge. Affirmed.
The Sieving Law Firm, Richard N. Sieving and Jennifer L. Snodgrass for Plaintiff
and Appellant.
Archer Norris, W. Eric Blumhardt and Namvar A. Mokri for Defendant and
Respondent.
This is the fourth opinion we have issued in this action. Jeld-Wen, Inc.
(Jeld-Wen) appeals from the trial court's award to Southcoast Sheet Metal (Southcoast) of all of the attorney fees it incurred since October 2009, when Jeld-Wen filed the appeal
that was the subject of our third opinion in this action. We conclude that the trial court
properly awarded the attorney fees pursuant to Code of Civil Procedure section 1038,1
and we accordingly affirm the judgment awarding Southcoast $129,760.50, plus interest,
in attorney fees.
I
FACTUAL AND PROCEDURAL BACKGROUND
We assume that the parties are thoroughly familiar with the history of this
litigation, which our previous three opinions explained in detail.2 We provide a
truncated procedural summary, focusing on the items most pertinent to the issues
presented in this appeal and omitting the procedural history concerning defendants other
than Southcoast.3
1 Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
2 The three previous opinion in this matter are: Jeld-Wen, Inc. v. Action Iron Works, Inc. (Oct. 29, 2008, D049908) [nonpub. opn.] (hereafter 2008 Opinion); Jeld-Wen, Inc. v. Action Iron Works, Inc. (Feb. 17, 2009, D051465) [nonpub. opn.] (hereafter 2009 Opinion); and Jeld-Wen, Inc. v. Pacific Coast Roofing (Nov. 17, 2011, D056204) [nonpub. opn.] (hereafter 2011 Opinion).
3 Jeld-Wen represents that it has fully satisfied the judgment as to all of the other defendants, so that Southcoast is now the only defendant involved in ongoing proceedings.
2 A. Jeld-Wen Files This Litigation to Recover from Southcoast and Other Defendants
Jeld-Wen filed this action after Pardee Construction Company (Pardee) obtained a
judgment against Jeld-Wen for $1,701,543 based on Pardee's costs of remediating
damage from rainwater that leaked into homes through windows installed by Jeld-Wen.
In an attempt to recover some of its liability to Pardee from other subcontractors on the
development, who Jeld-Wen contended shared responsibility for the water intrusion,
Jeld-Wen filed this lawsuit against numerous entities, including Southcoast. As relevant
here, the causes of action included negligence, breach of contract, equitable indemnity,
equitable contribution and declaratory relief.
Southcoast, along with other defendants, obtained a judgment on the pleadings on
the breach of contract and negligence causes of action, and it then successfully moved for
summary judgment on the remaining causes of action for equitable indemnity, equitable
contribution and declaratory relief.
B. Our 2008 Opinion
In the 2008 Opinion, we reversed the order granting judgment on the pleadings on
the breach of contract cause of action in favor of Southcoast and other defendants, and
returned the matter to the trial court for further proceedings on the breach of contract
cause of action.
C. Our 2009 Opinion
While the first appeal was pending, the trial court awarded attorney fees to
Southcoast and other defendants pursuant to sections 1038 and 1717. Jeld-Wen appealed
the attorney fee awards. In the 2009 Opinion, we reversed the attorney fee awards. We
3 reversed the award of fees under section 1717 because that award was premised on the
defendants obtaining judgment on the pleadings on the breach of contract cause of action,
which we reversed in the 2008 Opinion. We reversed the award of fees under section
1038, as that award was based on the defendants' success in obtaining summary judgment
on the claims for indemnity and contribution. Specifically, we explained that the
summary judgment that Southcoast and the other defendants obtained on the equitable
indemnity, contribution and declaratory relief causes of action had effectively been
transformed into a summary adjudication by virtue of the 2008 Opinion's reinstatement of
the breach of contract cause of action, and therefore no dispositive summary judgment
existed to support an award of attorney fees under section 1038.
Although the 2009 Opinion reversed the award of attorney fees under section 1038
on the procedural ground that no case-dispositive order existed as to the equitable
indemnity and equitable contribution causes of action, that opinion also specifically
analyzed and rejected all of Jeld-Wen's other challenges to the fee award under section
1038. As relevant here, the 2009 Opinion established that one of the fundamental
prerequisites for an award of fees under section 1038 was present because Jeld-Wen
lacked reasonable cause to pursue this action against Southcoast after September 7, 2006.
Further, we stated that Southcoast and the other defendants could bring another motion
for attorney fees under section 1038 in the event they prevailed on summary judgment or
another motion specified in section 1038.
4 D. Our 2011 Opinion
Upon remand, Jeld-Wen attempted to voluntarily dismiss the remaining cause of
action for breach of contract, but the trial court rejected the dismissal and granted
summary judgment in favor of Southcoast and other defendants on the breach of contract
cause of action. The trial court also once again awarded attorney fees to Southcoast and
the other defendants pursuant to both section 1717 and section 1038. As to Southcoast
specifically, the trial court awarded defense costs of $178,976.91 pursuant to section
1038 and $29,539.70 pursuant to section 1717. Judgment was entered accordingly.
Jeld-Wen appealed. In the 2011 Opinion we concluded that the trial court should
have allowed Jeld-Wen to voluntarily dismiss the remaining cause of action for breach of
contract rather than considering and granting the summary judgment motions filed by
Southcoast and other defendants. We deemed Jeld-Wen's voluntary dismissal of the
breach of contract cause of action to be effective as of April 15, 2009, and we reversed
the summary judgment on the breach of contract cause of action. Because Southcoast
and the other defendants had not prevailed on the summary judgment cause of action, we
also reversed the award of attorney fees under section 1717, which requires that a party
prevail on a breach of contract claim.
However, we affirmed the award of attorney fees to Southcoast and the other
defendants under section 1038. We stated, "[B]y virtue of Jeld-Wen's voluntary
dismissal of the breach of contract cause of action, the trial court's 2007 orders granting
summary judgment on the equitable contribution, equitable indemnity and declaratory
relief causes of action may properly be considered orders granting summary judgment,
5 not summary adjudication. Because [Southcoast and the other defendants] were granted
summary judgment in an action for equitable contribution and equitable indemnity, the
procedural prerequisites for an award of defense costs under section 1038 are satisfied."
The 2011 Opinion addressed and rejected numerous arguments made by Jeld-Wen
against the section 1038 attorney fee award, several of which we had already rejected in
the 2009 Opinion.
Among other arguments we addressed in the 2011 Opinion was Jeld-Wen's claim
that only a limited category of defense costs qualified for an award under section 1038,
namely those incurred in bringing the dispositive motion. We disagreed, explaining that
Jeld-Wen's interpretation was overly restrictive and that "[c]ase law authorize[d] an
award of defense costs incurred in numerous types of proceedings that take place during
the course of litigation," including defense costs incurred on appeal and in seeking an
award of attorney fees.
We also rejected Jeld-Wen's argument that Southcoast and the other defendants
should not be awarded defense costs incurred during the prior appeals because Jeld-Wen
partially prevailed in those appeals. We explained that that an award of defense costs
incurred in the prior appeals was warranted because the defendants' efforts in those
appeals had assisted them in successfully resolving this litigation. Specifically, we
explained that our prior opinions (1) affirmed the trial court's ruling in favor of
defendants on the equitable indemnity and equitable contribution causes of action; and
(2) resolved issues regarding the availability of defense costs under section 1038 that
6 formed the basis for the defendants' subsequent success on the renewed section 1038
motions.
E. Proceedings After Remittitur of the 2011 Opinion
As we have explained, the 2011 Opinion affirmed the portion of the judgment
awarding $178,976.91 to Southcoast pursuant to section 1038. Nevertheless, after the
remittitur issued for the 2011 Opinion on February 24, 2012, Jeld-Wen did not agree to
pay the judgment to Southcoast. Instead, it filed a motion to modify the judgment to
delete a significant portion of the defense costs that had been initially awarded to
Southcoast under section 1038 and affirmed by this court. Jeld-Wen argued that because
we had determined in the 2011 Opinion that Jeld-Wen dismissed the action with
prejudice effective April 15, 2009, Southcoast was not entitled to an award of defense
costs incurred after that date. The trial court eventually denied that motion on July 27,
2012, pointing out that in the 2011 Opinion, we unambiguously affirmed the portion of
the judgment awarding $178,976.91 in defense costs to Southcoast under section 1038,
despite our determination that Jeld-Wen had dismissed the remaining cause of action for
summary judgment effective April 15, 2009.
Further, when Jeld-Wen refused to make payment to Southcoast of the
$178,976.91 judgment, plus interest, within 30 days after the remittitur from the 2011
Opinion, Southcoast brought a motion in March 2012 to enforce liability on the appellate
bond issued by Jeld-Wen's surety. (§§ 917.1, subd. (b), 996.440.)
In May 2012, Jeld-Wen made a payment of $213,120.41 to Southcoast in partial
satisfaction of the judgment after the surety indicated it was prepared to make payment
7 on the bond.4 Jeld-Wen then filed an opposition to Southcoast's motion to enforce
liability on the appellate bond, arguing that Southcoast should reimburse Jeld-Wen for
$25,717.41 of Jeld-Wen's $213,120.41 partial payment of the judgment.
The trial court granted Southcoast's motion to enforce liability on the appellate
bond on July 27, 2012, ruling that Jeld-Wen still owed $15,132.68 to Southcoast on the
judgment after its partial payment.
Meanwhile, in April 2012, Southcoast brought a motion seeking the attorney fee
award that is at issue in this appeal. Specifically, Southcoast brought a motion pursuant
to section 1038 to recover the attorney fees it had incurred since Jeld-Wen filed its third
appeal in October 2009. As Southcoast explained, the attorney fees were incurred in
responding to Jeld-Wen's third appeal as well as in responding to Jeld-Wen's recent
motion to reduce the judgment, and in attempting to obtain payment of the judgment
from Jeld-Wen through the motion to enforce liability on the appellate bond. Southcoast
sought fees in the amount of $129,760.50.
In opposition, Jeld-Wen advanced the same arguments it made in its motion to
reduce the judgment, contending again that it should not be required to make payment of
attorney fees incurred by Southcoast after the effective date of Jeld-Wen's voluntary
dismissal of the remaining cause of action for summary judgment on April 15, 2009.
Jeld-Wen also argued (1) that Southcoast should not be granted its attorney fees because
4 According to Southcoast, prior to Jeld-Wen's partial payment of $213,120.41, Jeld-Wen owed $228,050.21 on the judgment, including interest.
8 Jeld-Wen partially prevailed on appeal in the 2011 Opinion; and (2) Southcoast's attorney
fees were not reasonable or supported with sufficient detail.
The trial court granted Southcoast's attorney fee motion pursuant to section 1038.
It awarded $129,760.50 plus interest, citing the principle that defense costs under section
1038 include reasonable fees incurred on appeal. (Gonzales v. ABC Happy Realty (1997)
52 Cal.App.4th 391, 394) (Gonzales). With respect to Jeld-Wen's argument that the fees
should be reduced or denied because it partially prevailed in the 2011 Opinion, the trial
court stated that neither policy nor equity required a reduction in fees under the
circumstances, and that in any event, it would be "impracticable or impossible to separate
or apportion" the fees incurred by Southcoast to unsuccessfully defend the section 1717
fee award from the fees incurred by Southcoast to successfully defend the section 1038
fee award. As the trial court explained, "the same legal work would have been required
and the claims at issue overlap or are so intertwined."
The trial court entered judgment awarding Southcoast an additional $129,760.50
in attorney fees under section 1038. Jeld-Wen appeals from the award of attorney fees.
II
DISCUSSION
A. No Additional Summary Judgment Is Needed for Southcoast to Obtain Its Attorney Fees Incurred on Appeal and After Remittitur
Jeld-Wen's first argument is that the prerequisites for an award of attorney fees
under section 1038 are not present here because Southcoast did not obtain an additional
9 summary judgment or prevail on another dispositive motion identified in section 1038 to
support the latest award of attorney fees.
Section 1038 states that a defendant may seek an award of attorney fees in an
action for indemnity or contribution upon "the granting of any summary judgment,
motion for directed verdict, motion for judgment under Section 631.8, or any nonsuit
dismissing the moving party." (§ 1038, subd. (a).) As Jeld-Wen acknowledges, our 2011
Opinion determined that this prerequisite was established because the trial court granted
summary judgment in 2007 on the equitable contribution, equitable indemnity and
declaratory relief causes of action. Jeld-Wen argues, however, that because the trial court
had already made an award of attorney fees under section 1038 in the amount of
$178,976.91 based on the 2007 summary judgment ruling, Southcoast is precluded from
seeking an additional award unless it obtains a "new summary judgment award."
We reject Jeld-Wen's argument. It is well established that once the trial court
finds that a defendant is entitled to attorney fees under section 1038, the defendant is
entitled not only to the fees it has incurred during its successful defense of the action but
may also recover the fees that it subsequently incurs in defending its judgment on appeal.
(Gonzales, supra, 52 Cal.App.4th at p. 395; Bosetti v. United States Life Ins. Co. v. City
of New York (2009) 175 Cal.App.4th 1208, 1226 (Bosetti).) The trial court's award of
additional attorney fees to Southcoast is consistent with the principle that a defendant
entitled to a fee award under section 1038 is entitled to an award of fees incurred on
appeal. There is no need for Southcoast to have prevailed on an additional summary
judgment.
10 B. An Award Under Section 1038 of Attorney Fees Incurred on Appeal Does Not Require a Finding That the Appeal Was Brought in Bad Faith or Without Reasonable Cause
We next address Jeld-Wen's contention that because it purportedly brought its
appeal in good faith and with reasonable cause, the trial court improperly awarded
Southcoast its attorney fees incurred on appeal. As we will explain, Jeld-Wen's argument
fails because it incorrectly assumes an award of attorney fees incurred on appeal is
available under section 1038 only if the appeal is brought in bad faith or without
reasonable cause.
When a defendant in an action for contribution or indemnity prevails on summary
judgment or another dispositive motion listed in the statute, "[t]o avoid an award of
defense costs and fees under . . . section 1038, the plaintiff must establish that the action
was pursued both with reasonable cause and in good faith." (Bosetti, supra, 175
Cal.App.4th at p. 1226.) However, once the trial court determines that the action was
either not pursued in good faith or with reasonable cause, "[a]wards of costs and attorney
fees under . . . section 1038 include costs and fees incurred defending the judgment on
appeal, even when the appeal was not frivolous." (Bosetti, at p. 1226, italics added; see
also Gonzales, supra, 52 Cal.App.4th at pp. 394-395 [affirming award of § 1038 attorney
fees incurred on appeal even though appeal was not frivolous, and rejecting the
appellant's contention that "if section 1038 is extended to appeals that do not qualify as
frivolous, . . . the right to pursue a potentially meritorious appeal may be severely
inhibited" (fn. omitted)].)
11 Here, it is undisputed that the trial court determined that Jeld-Wen did not
maintain the action with reasonable cause, and we affirmed that determination in the
2009 Opinion, specifically stating that Jeld-Wen lacked reasonable cause to pursue its
claims against Southcoast after September 7, 2006. Therefore, under section 1038
Southcoast is entitled to an award of the defense costs it incurred defending the judgment
on appeal, without a further finding that the appeal itself was brought in bad faith or
without reasonable cause.
C. The Award of Attorney Fees Was Reasonable
Presenting several interrelated arguments, Jeld-Wen contends that the award of
attorney fees was not reasonable. As we will explain, Jeld-Wen's contentions lack merit.
1. The Award of Attorney Fees Was Reasonable Even Though Jeld-Wen Partially Prevailed in the 2011 Opinion
Jeld-Wen contends that Southcoast should not have been awarded its attorney fees
incurred in the appeal decided in our 2011 Opinion — or those fees should have been
reduced — because Jeld-Wen partially prevailed on that appeal. Specifically, Jeld-Wen
points out that although the award of attorney fees under section 1038 was affirmed, it
did prevail in obtaining a reversal of the attorney fees awarded under section 1717.
Jeld-Wen argues that "equity dictates that Southcoast should . . . not be entitled to an
award of its attorneys' fees and costs from the prior appeal in which its Judgment was
partially reversed," and that the award of fees "effectively sanctions Jeld-Wen for
pursuing its ultimately successful prior appeal." (Capitalization omitted.)
12 The trial court rejected this argument based on its determination that it was not
possible to separate the fees incurred in addressing Jeld-Wen's challenge to the section
1717 award from the fees incurred in connection with the section 1038 award, as the legal
issues were intertwined. "[A]pportionment of fees . . . rests within the sound discretion
of the trial court." (Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 687.)
"[F]ees need not be apportioned when incurred for representation of an issue common to
both a cause of action for which fees are permitted and one for which they are not. . . .
When the liability issues are so interrelated that it would have been impossible to separate
them into claims for which attorney fees are properly awarded and claims for which they
are not, then allocation is not required." (Akins v. Enterprise Rent-A-Car Co. (2000) 79
Cal.App.4th 1127, 1133.) "Apportionment is not required when the claims for relief are
so intertwined that it would be impracticable, if not impossible, to separate the attorney's
time into compensable and noncompensable units." (Bell, at p. 687.)
Based on our in-depth exploration of the pertinent legal issues in the 2011
Opinion, we agree that the attorney fees incurred in defending the section 1717 fee award
and the section 1038 fee award were necessarily intertwined. Most notably, the defense
of both the section 1717 award and section 1038 award turned on the legal significance of
Jeld-Wen's attempt to voluntarily dismiss the remaining cause of action for breach of
contract. It was therefore proper for the trial court to determine that all of the fees
incurred in Jeld-Wen's prior appeal were reasonable attorney fees necessarily incurred in
defense of the action despite the fact that Jeld-Wen partially prevailed on the appeal with
respect to the section 1717 fee award.
13 We rejected a similar argument in the 2011 Opinion, where we determined that
even though Jeld-Wen partially prevailed in prior appeals, the award of the total amount
of fees incurred in those appeals was proper because the outcome of the appeals assisted
Southcoast and the other defendants in obtaining a successful outcome. The same is true
here, and our previous reasoning applies. Southcoast's efforts, as reflected in the 2011
Opinion, led to the affirmance of a judgment in favor of Southcoast, even though some of
the issues were resolved in Jeld-Wen's favor. Accordingly, the attorney fees incurred in
defending Jeld-Wen's latest appeal were reasonable and properly awarded under section
1038.
Jeld-Wen attempts to portray itself as having been faced with the "Hobson's
choice" of deciding whether to forego a meritorious appeal or risk incurring an additional
judgment against it for attorney fees. Jeld-Wen also complains that it is effectively being
sanctioned for pursuing an appeal. We are not sympathetic to Jeld-Wen's pleas to equity.
Although Jeld-Wen prevailed on its challenge to the section 1717 fee award, it
significantly and unnecessarily increased the cost of the litigation for Southcoast with
respect to the section 1038 fee award. Specifically, much of Jeld-Wen's appeal of the
section 1038 fee award was frivolous because it simply repeated arguments that we had
already rejected in previous appeals. Under those circumstances, the trial court
reasonably concluded that equity did not support a reduction in the fee award.
14 2. The Fees Incurred After Remittitur Were Reasonably Incurred Defense Costs
Although Jeld-Wen does not clearly develop the argument, it appears to contend
that the trial court improperly awarded Southcoast the fees it incurred after remittitur in
bringing its motion to enforce liability on the appellate bond. Jeld-Wen states that in
filing that motion, Southcoast "unnecessarily incur[ed] additional fees and costs" and that
Southcoast's claim for attorney fees was "simply a self-inflicted wound."
We disagree. Jeld-Wen ignores the fact that Southcoast prevailed in its motion to
enforce liability on the appellate bond. Indeed, in granting Southcoast's motion to
enforce liability on the appellate bond and in simultaneously denying Jeld-Wen's motion
to reduce the judgment, the trial court determined that Jeld-Wen had no reasonable basis
for refusing to pay the judgment that Southcoast obtained and we affirmed. Southcoast's
post-remittitur attorney fees were thus a reasonable and necessary response to Jeld-Wen's
legally unfounded efforts against Southcoast in this action rather than a "self-inflicted
wound."
To the extent that Jeld-Wen takes the position that Southcoast's attorney fees
incurred in the motion to enforce liability on the appellate bond are not "defense costs" as
defined in section 1038, we reject that argument. Under section 1038, a defendant may
recover its "defense costs," which the statute defines as including "reasonable attorneys'
fees . . . where reasonably and necessarily incurred in defending the proceeding."
(§ 1038, subd. (b).) In the 2011 opinion we rejected Jeld-Wen's limited view of "defense
costs" as that term is used in section 1038, explaining that it is not limited to attorney fees
15 incurred in bringing a dispositive motion, but includes all aspects of defending an action,
including defending an appeal and bringing an attorney fee motion. Although no case
law specifically addresses whether fees incurred in enforcing a judgment are recoverable
under section 1038, our Supreme Court has resolved that issue in the analogous situation
of attorney fees incurred by a successful defendant in a strategic lawsuit against public
participation (SLAPP). (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141.) Ketchum
established that under the mandatory fee provision in the anti-SLAPP statute (§ 425.16,
subd. (c)), "an award of fees may include not only the fees incurred with respect to the
underlying claim, but also the fees incurred in enforcing the right to mandatory fees" and
that the defendant may recover "an award of 'collection' fees" for "successfully enforcing
a judgment." (Ketchum, at p. 1141 & fn. 6.) The same principle applies here.
Southcoast is entitled to recover all of its reasonable attorney fees, including those
incurred in enforcing the judgment that Jeld-Wen refused to pay.
In light of Jeld-Wen's seemingly endless capacity for litigating issues that have
already been resolved by our prior opinions, Southcoast requests that we award
Southcoast its attorney fees incurred in this appeal. Under the authority we have
discussed above, Southcoast is entitled to recover its attorney fees incurred in this appeal.
We remand to the trial court to determine the appropriate amount of those fees.
DISPOSITION
The judgment awarding Southcoast $129,760.50, plus interest, in attorney fees
pursuant to section 1038 is affirmed. Southcoast is entitled to an award of attorney fees
16 incurred in this appeal, and the matter is remanded for the trial court to determine the
appropriate amount of those fees.
IRION, J.
WE CONCUR:
HUFFMAN, Acting P. J.
NARES, J.