Filed 7/25/07; pub. order 8/17/07 (see end of opn.)
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JOHN A. TORRES et al.,
D049111
Plaintiffs and Respondents,
v.
(Super. Ct. No. GIC852293)
CITY OF SAN DIEGO,
Defendant and Appellant;
BRUCE HERRING,
Intervener and Respondent.
APPEAL from an order of the Superior Court of San Diego County, Linda B.
Quinn, Judge. Dismissed in part; affirmed in part.
Plaintiffs, John A. Torres, Ronald L. Saathoff, Cathy Lexin, Terri A. Webster,
Sharon K. Wilkinson and Mary Vattimo, and plaintiff-in-intervention, Bruce Herring, are
former members of the Board of Administration of the San Diego City Employees'
Retirement System (SDCERS).1 The board members sued the City of San Diego (City)
for specific performance and declaratory relief, alleging that under a City resolution and
Government Code section 995 the City was required to pay for their defense in a civil
action the San Diego City Attorney, Michael Aguirre, filed against them on behalf of the
People of California, and in another civil action in which he filed a cross-complaint
against them on behalf of the City. The board members obtained summary judgment
against the City. The City filed a late notice of appeal and we dismissed the matter.
Subsequently, the trial court issued an order awarding the board members attorney
fees incurred in this action, under the City's resolution. The City has timely appealed the
order, but also purports to raise issues pertaining to the summary judgment. We dismiss
the appeal to the extent it concerns the summary judgment ruling as we lack jurisdiction
to consider it. We affirm the order on the attorney fees incurred in this action.
FACTUAL AND PROCEDURAL BACKGROUND
In July 2005, Aguirre, on behalf of the People of the State of California, filed a
first amended complaint against the board members (with the exception of Vattimo) for
the recovery of economic benefits wrongly received and injunctive relief under the
Political Reform Act of 1974, as amended. (People v. Grissom (Super. Ct. San Diego
County, 2005, No. GIC850246).) The complaint alleged that in 1996, in connection with
their service with SDCERS, the board members violated conflict of interest laws by
1
For convenience we refer to the plaintiffs and the plaintiff-in-intervention as board
members.
2
voting to increase employee pension benefits without providing the required funding,
thereby creating an "unfunded liability . . . for which the City . . . was to be responsible
and for which revenues from future years would pay."
Also in July 2005, Aguirre, on behalf of the City, filed a cross-complaint against
the board members for declaratory relief, breach of trust, breach of fiduciary duty, fraud,
negligence and conspiracy. The underlying complaint was by SDCERS against Aguirre
and the City. The cross-complaint alleged the same misconduct as alleged in People v.
Grissom, and added that the board members violated Government Code section 1090,
which prohibited them from taking action on contracts in which they had a financial
interest. (SDCERS v. Aguirre, Super. Ct. San Diego County, 2005, No. GIC841845.)
The record contains no evidence the San Diego City Council (City Council) approved
Aguirre's filing of either of these civil actions.
In 2002 the City Council had unanimously adopted a resolution designated R297335. The resolution's preamble explains that SDCERS board members "may, from
time to time be subjected to claims and suits for actions taken in [that] capacity," and
"there is a need to protect and encourage individuals who volunteer their time and their
talent to serve in the public interest." The resolution provides that "the City shall defend,
indemnify and hold harmless all past, present and future members of the Retirement
Board against all expenses, judgments, settlements, liability and other amounts actually
and reasonably incurred by them in connection with any claim or lawsuit arising from
any act or omission in the scope of the performance of their duties as Board Members."
3
The board members tendered the defense of the two civil actions to the City based
on the resolution and Government Code section 995.2 That created an unusual situation,
of course, as Aguirre, the City Attorney, filed the actions and the provision of a defense
would require the City to pay both prosecution and defense costs.
The City Council sought legal advice on the matter from the law firm Procopio
Cory Hargreaves & Savitch, LLP (Procopio). In a July 2005 memorandum that was later
publicly released, Procopio concluded the City was obligated to provide the board
members a defense in the two civil actions, notwithstanding the City Attorney's role in
the lawsuits. The following month the City Council voted 4 to 2 to provide a defense, but
a vote of five was required to carry the matter. The board members thus retained their
own defense counsel.
In August 2005, the board members, excluding Herring, sued the City for specific
performance and declaratory relief, seeking a defense in the civil actions based on
Resolution R-297335 and Government Code section 995. Herring filed a complaint-inintervention against the City for the same relief.
The board members filed a motion for summary judgment. After a January 2006
2
Government Code section 995 provides: "Except as otherwise provided in
Sections 995.2 and 995.4, upon request of an employee or former employee, a public
entity shall provide for the defense of any civil action or proceeding brought against him
[or her], in his [or her] official or individual capacity or both, on account of an act or
omission in the scope of his [or her] employment as an employee of the public entity. [¶]
For the purposes of this part, a cross-action, counterclaim or cross-complaint against an
employee or former employee shall be deemed to be a civil action or proceeding brought
against him [or her]."
4
hearing, the court confirmed its tentative ruling granting the motion on the grounds that
under resolution R-297335 and Government Code section 995 the board members are
entitled to recover from the City all attorney fees and costs incurred in the two civil
actions. Under Government Code section 995, the duty to defend is mandatory unless the
public entity finds any of the following: "(1) The act or omission was not within the
scope of his or her employment. [¶] (2) He or she acted or failed to act because of actual
fraud, corruption, or actual malice. [¶] The defense of the action . . . by the public entity
would create a specific conflict of interest between the public entity and the employee or
former employee." (Gov. Code, § 995.2, subd. (a).) Government Code section 995.2,
subdivision (c) "appears to have been intended to allow a public entity to withdraw from
the defense of an employee in conflict of interest situations because it is unreasonable to
require a public entity to finance litigation directed against it." (Stewart v. City of Pismo
Beach (1995) 35 Cal.App.4th 1600, 1606.) The board members submitted undisputed
evidence, however, that the City Council never made any finding under Government
Code section 995.2.
The court also determined that in a later noticed motion the board members could
request attorney fees incurred in this action. The judgment, entered on March 6, 2006,
contained blank spaces for the later entry of the amounts of fees and costs each board
member incurred in this action.
The following May 10, the City filed a notice of appeal of the judgment, Torres v.
City of San Diego, D048687. Torres filed a motion to dismiss and the City filed
opposition to the motion. We dismissed the appeal as untimely on June 1.
5
In June 2006 the City Attorney's Office served on the parties a request to dismiss
the board members from the cross-complaint in the SDCERS v. Aguirre action. In
October the City Attorney's Office filed a request to dismiss the complaint in People v.
Grissom, and a dismissal was entered. When that case was dismissed, the court was
considering a motion by board member Lexin to disqualify the City Attorney's Office
from representing the People based on conflicts of interest such as its provision of legal
advice to Lexin regarding the subject matter of the lawsuit.3
The board members then moved for attorney fees incurred in this action. The
motion was supported by declarations from the board members' attorneys attesting to the
amount of fees and costs incurred, and by detailed time entries.
The City opposed the motion on the ground attorney fees are not authorized by
contract, statute or law. The City argued that neither resolution R-297335 nor
Government Code section 995 provide for the recovery of fees by the prevailing party in
an action to obtain a defense or indemnity. The City did not contest the amount or
reasonableness of the fees requested.
In reply, the board members argued the plain language of the resolution entitles
them to attorney fees incurred in enforcing the City's duty under the resolution to provide
them with a defense in the underlying civil actions. The hearing was originally scheduled
for June 2, 2006, but the court continued it to June 23 to allow the City "to provide
3
We have taken judicial notice of these documents in the People v. Grissom
superior court file. (Evid. Code, §§ 452, subd. (d), 459, subd. (a).)
6
supplemental briefing on whether . . . Resolution R-297335 provides a legal basis for an
award of attorney's fees" to the board members. Originally, the board members sought
attorney fees under Government Code section 800 and Code of Civil Procedure section
128.5.
On June 23, the court issued an order that granted the motion for fees on the basis
of the resolution. The court awarded the board members various amounts for fees and
costs incurred in this action, totaling $182,342.50 and $6,176.16, respectively, and the
individual awards were added to the judgment. The City timely appealed the June 23
order.
DISCUSSION
I
Motion to Dismiss
A
The board members have moved to dismiss the City's appeal insofar as it purports
to raise issues pertaining to the summary judgment, which the City did not timely appeal.
The City counters that the court's June 23, 2006 order on attorney fees "substantially and
materially altered" the judgment, thus beginning anew the time within which to appeal.
The City asserts the board members were not entitled to summary judgment because they
did not plead or prove the essential elements of a claim for specific performance and
Government Code section 995 provides no basis for declaratory relief or specific
performance.
7
Unless otherwise provided by law, a notice of appeal must be filed on or before
the earliest of three dates: (1) 60 days after the court clerk serves a notice of entry of
judgment or a file-stamped copy of the judgment on the appealing party, (2) 60 days after
the appealing party serves or is served by the opposing party with a notice of entry of
judgment, or (3) 180 days after entry of judgment. (Cal. Rules of Court, rule 8.104(a).)
"If a notice of appeal is filed late, the reviewing court must dismiss the appeal." (Id., rule
8.104(b).)
"The effect of an amended judgment on the appeal time period depends on
whether the amendment substantially changes the judgment or, instead, simply corrects a
clerical error." (Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter
Group 2006) ¶ 3:56, pp. 3-24 to 3-25.) "When the trial court amends a nonfinal judgment
in a manner amounting to a substantial modification of the judgment (e.g., on motion for
new trial or motion to vacate and enter different judgment), the amended judgment
supersedes the original and becomes the appealable judgment (there can only be one
'final judgment' in an action . . .). Therefore, a new appeal period starts to run from
notice of entry or entry of the amended judgment." (Id., ¶ 3:56.1, p. 3-25.) "For
example, an order amending a judgment to reflect the correct name of a party . . .
substantially changes the judgment and therefore starts a new appeal time period (for an
appeal from the amended judgment)." (Id., ¶ 3:56.1a, p. 3-25.) The City relies on CCCalifornia Plaza Assocs. v. Paller & Goldstein (1996) 51 Cal.App.4th 1042, 1049, in
which the court explained, "we cannot imagine a more substantial or material change in
the form of a judgment than in the identity of the losing party."
8
It is well settled, however, that "[w]here the judgment is modified merely to add
costs, attorney fees and interest, the original judgment is not substantially changed and
the time to appeal it is therefore not affected." (Eisenberg et al., Cal. Practice Guide:
Civil Appeals & Writs, supra, ¶ 3:56:3, p. 3-26; Amwest Sur. Ins. Co. v. Patriot Homes,
Inc. (2005) 135 Cal.App.4th 82, 84, fn. 1.) "When a party wishes to challenge both a
final judgment and a postjudgment costs/attorney fee order, the normal procedure is to
file two separate appeals: one from the final judgment, and a second from the
postjudgment order." (Eisenberg et al., supra, ¶ 2:156.1, p. 2-73.)
The June 23, 2006 order on attorney fees and costs did not amend the March 6,
2006 judgment in any substantive way. Rather, the judgment was merely modified to add
the fees and costs awards. Accordingly, we lack jurisdiction to consider any aspect of the
summary judgment ruling.
B
The City contends the modification of the March 6, 2006 judgment to add attorney
fees and costs was a "material and substantial" change, since the spaces left on the
judgment for the later entry of fees were supposed to be for fees the board members
incurred in defending the two underlying civil actions. The City complains that
"[i]nstead of moving to insert the attorney's fees and costs incurred in the other two
lawsuits . . . , [the board members] applied for an award of the fees and costs they
incurred in the current lawsuit," and that action "left them hoist[ed] on their own petard."
(Boldface omitted.) The City is incorrect, as the judgment stated the blank spaces were
for fees "incurred in this action." (Italics added.) As discussed, the addition to the
9
judgment of attorney fees and costs awarded in a postjudgment order does not constitute
a substantial change in the judgment for purposes of the notice of appeal deadline.
We also reject the City's argument the judgment was substantially changed
because the basis for attorney fees in this action was not "an undisputed statute or
contract," but resolution R-297335, which raised "new legal issues." The City points out
that in their complaint the board members prayed for attorney fees under Government
Code section 800 and Code of Civil Procedure section 128.5, rather than under the
resolution. The legal basis for a fee award, however, is reviewed in the appeal from the
order awarding fees; it does not resurrect a stale appeal of the judgment. The legal basis
for the award has nothing to do with the propriety of the underlying summary judgment.
Further, the City's cursory assertion the court denied it due process is unfounded.
In its opposition to the motion for attorney fees, the City raised the resolution, arguing it
does not provide a basis for an award of fees in this action. When the board members
claimed in their reply that the resolution does entitle them to fees, the court continued the
hearing for three weeks to give the City the opportunity for further briefing. The City
cites no authority for the notion it did not receive a fair hearing and opportunity to be
heard on the matter.
Lastly, the City's reliance on Stone v. Regents of University of California (1999)
77 Cal.App.4th 736 (Stone), is misplaced. In Stone, the Regents of the University of
California (Regents) appealed a judgment directing a writ of mandate issue to compel
them to provide a defense to a physician (Stone) in an underlying civil action against him.
Stone moved to dismiss the appeal as untimely. The trial court had ruled the Regents
10
acted arbitrarily in refusing to defend Stone, and granted a petition requiring them to
provide him a defense from May 25, 1995. Judgment was initially entered on March 25,
1996. The Regents successfully moved for reconsideration, and on May 15, 1996, a new
judgment was entered, identical to the first but directing them to pay for Stone's defense
from March 25, 1996. Stone then moved for reconsideration, and the trial court modified
the judgment to require the Regents to pay his defense from June 12, 1995. On July 26,
1996, notice of entry was served on the Regents, and they filed a notice of appeal on
August 9 from the judgment as modified. (Id. at p. 743.)
The appellate court held the appeal was timely, explaining the "July 22, 1996,
amendment was undeniably one of substance . . . . The modification required the
Regents to pay Stone's legal expenses for an additional nine months. That materially
affected their rights. While the Regents would have been prudent to file a timely notice
of appeal from the original judgment, just in case, Stone's partial victory on his motion
for reconsideration saved the day for them." (Stone, supra, 77 Cal.App.4th at p. 744.)
Stone is not "practically on all fours with this case," as the City asserts, as it does
not concern a postjudgment award of attorney fees incurred in bringing that action.
Rather, that case concerns a change in the terms of the judgment requiring the Regents to
defend Stone in an underlying action. Here, in contrast, the court's June 23, 2006 order
did not alter the terms of the summary judgment. Stone is inapplicable.
11
II
Attorney Fees Under Resolution R-297335
Attorney fees are allowed as costs to the prevailing party when authorized by any
of the following: contract, statute or law. (Code Civ. Proc., §§ 1032, subds. (a)(4) & (b),
1033.5, subd. (a)(10); Civ. Code, § 1717.) "Except as attorney's fees are specifically
provided for by statute [e.g., Code Civ. Proc., § 1033.5, subd. (a)(10)], the measure and
mode of compensation of attorneys . . . is left to the agreement . . . of the parties." (Code
Civ. Proc., § 1021.) The legal basis for an award of attorney fees is a question of law we
review independently. (Leamon v Krajkiewcz (2003) 107 Cal.App.4th 424, 431.)
The City contends that because R-297335 does not expressly state fees shall be
awarded the "prevailing party" in any action to enforce the resolution, the fee award here
is improper. The City relies on Hillman v. Leland E. Burns, Inc. (1989) 209 Cal.App.3d
860 (Hillman), and Otis Elevator Co. v. Toda Const. of California (1994) 27 Cal.App.4th
559 (Otis), which are in a line of cases holding attorney fees are not available in the
prosecution of an indemnity action absent clear language in the indemnity agreement
stating the parties contemplated an award of fees for enforcing the agreement. (Otis, at p.
566.)
In Otis, supra, 27 Cal.App.4th 559, the court, following the reasoning of Hillman
and related cases, held that "[b]ecause the indemnity agreement at issue here did not
explicitly provide for attorney fees incurred in pursuing an indemnity claim against [the
indemnitor], [the indemnitee] was not entitled to them. The attorney fee award must
therefore be amended to reflect only those fees incurred in the [underlying third party]
12
personal injury action." (Id. at p. 566.) The pertinent question under the Hillman line of
cases is whether the indemnity provision contains language "which reasonably can be
interpreted as addressing the issue of an action between the parties on the contract."
(Building Maintenance Service Co. v. AIL Systems, Inc. (1997) 55 Cal.App.4th 1014,
1030; Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53
Cal.App.4th 500, 509.)
In Otis, supra, 27 Cal.App.4th at page 564, the subcontract between the parties
provided indemnity for " 'all liability, charges, penalties, fines, costs, fees, losses,
damages, expenses, causes of action, claims, suits, settlements, awards and judgments
(including reasonable attorney's fees) resulting from injury or death sustained by any
person . . . which injury, death or damage arises out of, or is in any way connected with,
or incidental to the performance of the work under this Subcontract.' " (Italics added.)
The court rejected the notion the clause covered attorney fees incurred in litigating the
indemnity claim, as the "subcontract permits recovery of expenses, including attorney
fees, incurred in defense of any third party claims arising out of Otis's [indemnitor]
performance of the work promised in the subcontract. . . . The provision does not
specifically state . . . that Toda [indemnitee] would be entitled to such fees in an action to
enforce the indemnity provision of the subcontract." (Otis, supra, at p. 564.) The
indemnity clause in Hillman was similar to that in Otis. (Hillman, supra, 209 Cal.App.3d
at p. 866.)
This action does not concern an indemnity contract between the parties, but a
public agency resolution. "A decision is authority only for the point actually passed on
13
by the court and directly involved in the case. General expressions in opinions that go
beyond the facts of the case will not necessarily control the outcome in a subsequent suit
involving different facts." (Gomes v. County of Mendocino (1995) 37 Cal.App.4th 977,
985; Chevron U.S.A., Inc. v. Workers' Comp. Appeals Bd. (1999) 19 Cal.4th 1182, 1195.)
The construction of a municipal resolution is governed by the rules that govern
construction of statutes. (Atchley v. City of Fresno (1984) 151 Cal.App.3d 635, 647.)
The "primal principle of statutory construction requires the ascertainment of the intent of
the legislative body [citations] . . . . When . . . there is no direct evidence of the
legislative intent, the court turns first to the words of the enactment for the answer and
may also rely upon extrinsic aids [citations], including recitals and findings in the
enactment." (County of Madera v. Superior Court (1974) 39 Cal.App.3d 665, 668-669,
italics added.)
Resolution R-297335 requires that the City "defend, indemnify and hold harmless
all past, present and future members of the Retirement Board against all expenses,
judgments, settlements, liability and other amounts actually and reasonably incurred by
them in connection with any claim or lawsuit arising from any act or omission in the
scope of the performance of their duties as Board Members." (Italics added.) To any
extent that language, standing alone, could be construed to cover only attorney fees
incurred in underlying third party suits, such a construction is belied by the City Council's
declared intent in passing the resolution: it did not want any of the 13 members of the
SDCERS Board of Administration to incur attorney fees associated with any litigation
pertaining to the discharge of their duties. Again, the resolution's preamble explains
14
"there is a need to protect and encourage individuals who volunteer their time and their
talent to serve in the public interest." (Italics added.) Board members would obviously
not be protected or encouraged to serve if they were required to incur substantial attorney
fees and costs to enforce the City's duty of defense under the resolution.
We acknowledge that the situation here is unusual since the defense obligation
arose in conflict of interest actions filed by the City Attorney's Office, and in passing
resolution R-297335 the City Council likely did not foresee this situation. The City
Council, however, never made any finding of wrongdoing on the board members' part
that may have excused the City from its defense obligation. (See Gov. Code, § 995.2;
Stewart v. City of Pismo Beach, supra, 35 Cal.App.4th at p. 1606.) Contrary to Aguirre's
position in this appeal, his filing of the underlying civil actions is not tantamount to the
City Council making a finding of wrongdoing, particularly since there is no evidence the
City Council even approved of his filing of the actions. Further, Aguirre dismissed the
civil actions against the board members before any findings on the merits were made, and
thus there was no showing of any actual conflict of interest. Under all the circumstances,
we agree with the trial court's assessment that resolution R-297335 entitles the board
members to attorney fees and costs incurred in this action.
15
DISPOSITION
The appeal is dismissed to the extent it purports to appeal issues pertaining to the
summary judgment. In all other respects, the June 23, 2006 order awarding attorney fees
and costs is affirmed.
MCCONNELL, P. J.
WE CONCUR:
BENKE, J.
MCINTYRE, J.
16
Filed 8/17/07
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JOHN A. TORRES et al.,
D049111
Plaintiffs and Respondents,
v.
(Super. Ct. No. GIC852293)
CITY OF SAN DIEGO,
Defendant and Appellant;
ORDER CERTIFYING OPINION
FOR PUBLICATION
BRUCE HERRING,
Intervener and Respondent.
THE COURT:
The opinion filed July 25, 2007, is ordered certified for publication.
The attorneys of record are:
Michael J. Aguirre, City Attorney, and Joe Cordileone, Deputy City Attorney, for
Defendant and Appellant.
Sheppard, Mullin, Richter & Hampton, Robert D. Rose and Frank J. Polek for
Plaintiff and Respondent John A. Torres.
Coughlan, Semmer & Lipman, R.J. Coughlan, Jr., and Cathleen G. Fitch for
Plaintiff and Respondent Ronald L. Saathoff.
Law Office of Frank T. Vecchione and Frank T. Vecchione for Plaintiff and
Respondent Teresa A. Webster.
Damiani Law Group and Lisa J. Damiani for Plaintiff and Respondent Sharon K.
Wilkinson.
Gibson, Dunn & Crutcher and Nicola T. Hanna for Plaintiff and Respondent Cathy
Lexin.
Hahn & Adema and David Hahn for Plaintiff and Respondent Mary Vattimo.
Schwartz, Semerdjian, Haile Ballard & Cauley and Kristen T. Dalessio for
Intervener and Respondent.
MCCONNELL, P. J.
Copies to: All parties
18
