California Cases August 10, 2022: Glass v. Whills, LLC

Case Description

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NOT TO BE PUBLISHED

APPEAL from orders of the Superior Court of Los Angeles County, No. BC615714, Huey P. Cotton, Judge. Affirmed in part, reversed in part.

Law Office of Marilyn M. Smith and Marilyn M. Smith; Ferguson Case Orr Paterson and Wendy C. Lascher, for Plaintiffs and Appellants.

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Lewis Brisbois Bisgaard &Smith, Jeffry A. Miller, Lann G. McIntyre, Ernest Slome, Kathleen M. Walker, and Kevin L. Eng, for Defendants and Appellants.

MANELLA, P.J.

INTRODUCTION

After a jury awarded $1,500,000 in damages to the estate of Milton Glass for breach of contract and negligence in connection with his care at a residential facility for the elderly, defendants, respondents, and cross-appellants Whills, LLC and Leisure Care, LLC moved the court for a partial new trial and a judgment notwithstanding the verdict. In ruling on the motions, the trial court found the jury's award comprised $500,197 in economic damages and $999,803 in emotional distress damages. Finding that Code of Civil Procedure section 377.34 precluded Milton's estate from recovering emotional distress damages sustained from a tort, and that such damages could not be awarded on the breach of contract cause of action, the court reduced the damages awarded to Milton's estate to $500,197. Separately, the court denied Renee's motion for attorney

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fees, finding the parties' contract did not permit them. Both Renee and respondents appealed the order addressing respondents' motion for partial new trial and motion for judgment notwithstanding the verdict; Renee also appealed the denial of her motion for attorney fees.

In her opening brief, Renee contended the court erred in concluding that emotional distress damages could not be awarded to Milton's estate under the breach of contract cause of action, and in reducing the damages without offering her a conditional new trial. She further contended the court erred in finding the contract did not permit attorney fees. Respondents' initial brief countered that section 377.34, which the court had found barred recovery of Milton's emotional distress damages on the negligence cause of action, also barred recovery of such damages in contract. It further argued that the court had correctly found no statutory or other basis authorized recovery of emotional distress damages for breach of contract. Finally, respondents argued that the court properly denied Renee's request for attorney fees.

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In her reply brief, Renee argued that an amendment to section 377.34 (which took effect five days before she filed her reply brief but applied retroactively) modified the bar on the recovery by a deceased plaintiff's estate of the decedent's emotional distress damages. As amended, section 377.34 eliminated the bar on the recovery of such damages if the decedent's cause of action was granted a trial preference before January 1, 2022. Renee contended Milton's claims met this requirement.

In a supplemental brief, respondents acknowledged the retroactivity of the amendment and its potential effect but contended it did not apply in the instant case, arguing that the court did not grant a preference for Milton's causes of action or, alternatively, that the court vacated the preference.

We conclude the amendment to section 377.34 applies because the entire action -- including Milton's causes of action -- was granted a preference prior to January 1, 2022. Accordingly, Milton's estate is no longer precluded from recovering emotional distress damages resulting from the negligence cause of action on which it prevailed. We further conclude the court did not err in denying Renee's motion for attorney fees, as the language of the contract did not provide for such fees following a trial. We therefore reverse the respondents contended that should we find the court denied the motion for judgment notwithstanding the verdict, this was error. In light of our resolution of the appeal, we need not resolve this ambiguity.

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portion of the court's order reducing the negligence damages from $1,500,000 to $500,197, and otherwise affirm.

STATEMENT OF RELEVANT FACTS

A. Milton and Renee File a Complaint Against Respondents

In April 2016, Milton and Renee filed a complaint against respondents for various causes of action arising out of their stay at a residential care facility for the elderly. In November 2017, Milton passed away and Renee substituted into the action as his successor in interest. The operative complaint (the third amended complaint) was filed in March 2018 and asserted causes of action for, inter alia, negligence and breach of contract. The complaint alleged that Milton and Renee had entered into a "Resident Agreement" with Whills that governed their stay at a facility owned by Whills and described the services respondents would provide for Milton and Renee. The agreement contained a "Mediation and Arbitration" clause providing that any disputes must be submitted first to mediation and, if unresolved, to binding arbitration. The clause provided that the mediation would be "governed by the rules and procedures of the American

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Arbitration Association, unless otherwise agreed" and that "[t]he non-prevailing party in any such mediation or arbitration, as determined by the mediator or arbitrator, shall pay the prevailing party's court costs and attorneys' fees." The complaint accused respondents of breaching the Resident Agreement and breaching their duty to use reasonable care in preventing harm to the Glasses and providing them with a safe and secure place to live.

B. Renee Requests a Trial Preference

In March 2019, Renee, "individually and as successorin-interest to Plaintiff Milton Glass (Deceased)," brought a "Petition for Trial Preference" under section 36. The court heard the petition in April 2019. While the minute order from the hearing does not explicitly state the petition was granted, the court set trial for June 2019, and Renee's notice of ruling from the hearing noted that "Plaintiff's Ex Parte Petition for Preference was granted." Nothing in the record indicates respondents contested that representation.

At the May 2019 final status conference, the court informed the parties that due to the unexpected number of witnesses and other scheduled trials also granted preferences, it would have to vacate the trial date and reset it for October. After Renee's counsel expressed concern that "in view of the court's ruling on the [section] 36(a) motion," "the 120 days goes until August," the court offered to transfer the case to another department for an earlier trial

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date. After speaking with her client, Renee's counsel asked whether there was "any way" the court could set a trial date before October. Respondents expressed a preference for an October trial before the sitting judge, who was familiar with the case, noting that even if transferred to another court, the case would likely be continued. The court set trial for October and instructed counsel to inform the court if Renee desired a transfer. There is no indication Renee subsequently requested a transfer.

C. Trial and Entry of Judgment

A 13-day jury trial began in October 2019. Rather than ask the jury to find a separate amount of damages for each cause of action, the verdict form for each cause of action directed the jury to "proceed to Special Verdict re Damages" if it found respondents liable for that cause of action. After finding against respondents on both the breach of contract and negligence causes of action, the jury found that Milton's estate had sustained $1,500,000 in damages, and Renee had sustained $500,000 in damages. In November 2019, the court entered judgment to that effect.

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D. Post-Judgment Filings

1. Respondents' Motions for Partial New Trial and Judgment Notwithstanding the Verdict

In December 2019, respondents moved the court both for a partial new trial and/or remittitur of damages, and for a judgment notwithstanding the verdict. Renee opposed both motions.

Following a hearing, the court issued a single order addressing both motions, stating "Remittitur GRANTED as to Milton Glass; Motions otherwise DENIED." The court found that of the $1,500,000 awarded to Milton's estate, economic damages accounted for $500,197, and emotional distress damages accounted for the remainder ($999,803). The court found that section 377.34 precluded Milton from recovering "general damages in tort" (the negligence cause of action) and additionally rejected Renee's argument that

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Milton's estate could recover emotional distress damages based on respondents' breach of contract. The court concluded that "Damages awarded to the Estate of Milton Glass are in the reduced amount of $500,197.00." It did not specify whether the reduction was in response to the motion for partial new trial or the motion for judgment notwithstanding the verdict.

2. Renee's Motion for Attorney Fees

In January 2020, Renee moved for attorney fees based on the Mediation and Arbitration clause of the Resident Agreement. The court denied the motion, finding the clause permitted an award of fees to the prevailing party only in a mediation or arbitration, and that here, "mediations did not result in any resolution of the case so that there was a prevailing party," and the parties did not participate in arbitration. Though it agreed with Renee's contention that respondents never sought to compel arbitration and accepted her claim that she was required to file a lawsuit before the

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statute of limitations expired, the court found "[t]he plaintiffs fail to explain why, for example, they did not file the suit to preserve [the] statute of limitations and thereafter move for a stay and to compel arbitration. The plaintiffs opted to avail themselves of the advantages of a civil trial with rights to a jury and cannot demand the court read rights into the contract that do not exist."

3. Notices of Appeal

In March 2020, Renee appealed "the post-judgment order denying the motion for new trial, but granting the remittitur." In April 2020, respondents appealed the "Order denying Defendants' Motion for Judgment Notwithstanding the Verdict," and Renee appealed the denial of her motion for attorney fees. In November 2020, we consolidated all three appeals.

DISCUSSION

A. Milton's Estate Is Entitled to the Emotional Distress Damages Awarded for Respondents' Negligence

After finding respondents liable to Milton's estate for both breach of contract and negligence, the jury awarded the estate $1,500,000 in damages. The trial court found, and the

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parties do not dispute, that this amount comprised $500,197 in economic damages and $999,803 in emotional distress damages. In ruling on respondents' motions for partial new trial and judgment notwithstanding the verdict, the court reduced the award to $500,197, finding that section 377.34 precluded the estate from recovering emotional distress damages for respondents' negligence, and that such damages were also unavailable for the breach of contract claim.

In Renee's opening brief, filed in May 2021, she acknowledged that the then current section 377.34 "preclude[d] a decedent's estate from recovering general damages that a decedent suffers before death, so Milton's estate could not recover the $999,803 as damages for negligence," but argued the estate could recover the emotional distress damages for respondents' breach of contract. In their initial brief, filed in October 2021, respondents contended both that section 377.34 barred Milton's recovery of emotional distress damages even if awarded on a contract theory, and that in any case, emotional distress damages were not recoverable for breaching the Resident Agreement.

Effective January 1, 2022, section 377.34 was amended to modify the bar on the recovery of a decedent's emotional distress damages. The former language of section 377.34 became subdivision (a); the amendment added subdivision (b):

"Notwithstanding subdivision (a), in an action or proceeding by a decedent's

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personal representative or successor in interest on the decedent's cause of action, the damages recoverable may include damages for pain, suffering, or disfigurement if the action or proceeding was granted a preference pursuant to Section 36 before January 1, 2022 , or was filed on or after January 1, 2022, and before January 1, 2026." (§ 377.34, subd. (b), boldface added.)

In her reply brief, filed five days after the amended section 377.34 took effect, Renee argued that the amendment applied retroactively and "irrefutably defeat[ed]" respondents' argument that section 377.34 barred Milton's recovery of emotional distress damages.

In their supplemental brief, respondents agreed both that the amended section 377.34 applied retroactively, and that the amendment permitted recovery of emotional distress damages "if the action on the decedent's cause of action 'was granted a preference pursuant to Section 36

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before January 1, 2022.'" Nevertheless, respondents argued that the amendment did not apply because: (1) it was unclear the court granted Renee's request for a preference but, if it did, it "was granted only on Renee's cause of action," not Milton's; and (2) any preference granted was impliedly vacated when the court set trial outside the 120-day limit mandated by the preference. We reject both arguments.

1. The Court Granted a Preference to Milton's Causes of Action

Respondents contend that "Renee petitioned for trial preference on her cause of action , not on Milton's cause of action" and that "the record is unclear as to whether Renee was even granted a trial preference." We reject both contentions. Renee brought her petition "individually and as successor-in-interest to Plaintiff Milton Glass (Deceased)," and nothing indicated she was requesting a preference only for her causes of action. Additionally, Renee's notice of ruling that the petition had been granted is uncontradicted. Indeed, the court set trial within the period applicable to cases given preference. At no time did respondents contest that a preference had been granted.

At the May 2019 final status conference, the court informed the parties that due to the number of witnesses and other cases, trial would be continued to October. When Renee expressed concern that the trial date was being set after the 120-day period mandated by the court's granting of the preference request, neither respondents nor the court

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contested that the request had been granted. On the contrary, the court disclosed it had already set trial dates for other cases that had also been granted preferences. On this record, there is no doubt the court granted Renee's request for a preference for the entire action, including Milton's causes of action.

2. The Court Did Not Vacate the Preference

Respondents contend that even if the court granted a preference, we must infer it vacated the preference by setting the trial date beyond the 120-day limit imposed by section 36. We conclude such an inference is unwarranted in fact or law. Moreover, by the plain language of the statute, the amendment to section 377.34 permits recovery of emotional distress damages on behalf of a deceased plaintiff "if the action or proceeding was granted a preference pursuant to Section 36 before January 1, 2022." (§ 377.34, subd. (b).) As discussed, the record demonstrates that the entire action -- including Milton's causes of action -- was granted a preference pursuant to section 36 before January 1, 2022. By its plain terms, the amendment applies.

The only basis the court gave to reduce the negligence damages awarded to Milton's estate was that section 377.34 precluded the recovery of emotional distress damages under a tort theory (a conclusion Renee concedes was correct when made). As recently amended, section 377.34 no longer precludes this recovery, and respondents have proffered no

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other reason to justify the reduction. We therefore reverse the court's reduction of the negligence damages awarded to Milton's estate.

B. The Court Did Not Err in Denying Renee's Motion for Attorney Fees

The Resident Agreement contained a "Mediation and Arbitration" clause providing that any disputes must be submitted first to mediation and, if unresolved, to binding arbitration, and that "[t]he non-prevailing party in any such mediation or arbitration, as determined by the mediator or arbitrator, shall pay the prevailing party's court costs and attorneys' fees." The court denied Renee's motion for attorney fees, finding the mediations in which the parties participated failed to result in a resolution or determination of a prevailing party, and the parties did not thereafter pursue arbitration.

On appeal, Renee contends the court erred in finding the attorney fees portion of the Mediation and Arbitration

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clause inapplicable because: (1) the clause's alleged ambiguity required the court to construe it in Renee's favor; (2) the general intent of the clause was to award attorney fees to the prevailing party in litigation; and (3) arbitration was not a condition precedent to recover attorney fees but in any case, Renee satisfied any condition precedent. We disagree.

1. Ambiguity

Renee claims the Mediation and Arbitration clause is ambiguous for three reasons: (a) it discusses prevailing parties in the context of mediation, and no party prevails in mediation; (b) it provides that the prevailing party will be determined by "the mediator or arbitrator," and a mediator cannot determine a prevailing party; and (c) it provides for the recovery of the "prevailing party's court costs and attorneys' fees" but there would be minimal, if any, court costs should a case be resolved through mediation or arbitration. We discern no ambiguity.

While mediation typically means "a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement" (Evid. Code, § 1115, subd. (a)), "the parties may agree to empower the mediator to render a binding decision if the mediation reaches an impasse." (Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2021) ¶ 3:7; see also Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4 724, 736

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[enforcing agreement for binding mediation].) Here, the parties provided that any mediation would be "governed by the rules and procedures of the American Arbitration Association, unless otherwise agreed." In other words, the Resident Agreement permitted binding mediation if the parties agreed; nothing suggests a mediator could not determine a prevailing party, and indeed, the language of the agreement expressly authorized the mediator to do so. Additionally, we discern no ambiguity in awarding court costs to participants in mediation or arbitration. As Renee acknowledged in her brief, "there might be court costs incurred in compelling arbitration or entering an arbitration award as a judgment." A party might also incur court costs if required to file a lawsuit to preserve a claim before the statute of limitations expired.

Even were we to find ambiguity as Renee urges, "[a] party attacking a meaning succeeds only if the attacker can propose an alternative, plausible, candidate of meaning." ( Estate of Dye (2001) 92 Cal.App.4th 966, 976.) A provision that "[t]he non-prevailing party in any such mediation or arbitration, as determined by the mediator or arbitrator" must pay the prevailing party's court costs and attorney fees cannot plausibly mean that "the non-prevailing party in any such mediation or arbitration or court proceeding , as determined by the mediator or arbitrator or court " must pay those costs and fees. We reject Renee's argument that "[t]he mention of court costs in the same sentence as attorney fees indicates an intent to award attorney fees even if a case is

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resolved in court rather than through mediation or arbitration"; as discussed above, participants in alternative dispute resolution also may incur court costs.

2. General Intent

Renee contends "[t]he unmistakable general intent of [the Mediation and Arbitration clause] is to award prevailing party attorney fees. Conversely, there is no language in [the Mediation and Arbitration clause] precluding attorney fees incurred in litigation." Again, we disagree. Renee points to nothing in the contract that supports her interpretation. Had the parties intended to provide for an award of attorney fees to the prevailing party in all forums, they could have accomplished this easily, either by omitting the references to mediation and arbitration, or by inserting references to courts and court proceedings. By instead stating fees would be awarded to the prevailing party in a mediation or arbitration, the clause necessarily excluded the prevailing party in other forms of dispute resolution, such as a lawsuit filed in court. (See White v. Western Title Ins. Co. (1985) 40 Cal.3d 870, 881, fn. 4, superseded by statute on other grounds as stated in Lee v. Fidelity National Title Ins. Co. (2010) 188 Cal.App.4th 583, 596 ["'"Under the familiar maxim of expressio unius est exclusio alterius it is well settled that, when a statute expresses certain exceptions to a general rule, other exceptions are necessarily excluded."' [Citations.] This canon, based on common patterns of usage

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and drafting, is equally applicable to the construction of contracts"].)

3. Condition Precedent

Finally, Renee argues that neither mediation nor arbitration was a "condition precedent" to the recovery of attorney fees and, in any case, she satisfied any such condition through her failed attempts to resolve the conflicts without filing suit. A "condition precedent" is "[a]n act or event, other than a lapse of time, that must exist or occur before a duty to perform something promised arises." (Black's Law Dict. (11th ed. 2019).) To the extent Renee contends that a mediator's or arbitrator's determination of a prevailing party was not a condition precedent to an award of attorney fees and court costs, the plain language of the clause provides otherwise.

Renee's efforts to resolve the conflict without filing suit are irrelevant to the analysis. She argues that she had no choice but to file the lawsuit (given the expiring statute of limitations) and complains that respondents never attempted to enforce the Mediation and Arbitration clause. But as the trial court noted: "The plaintiffs fail to explain why, for example, they did not file the suit to preserve [the] statute of limitations and thereafter move for a stay and to compel arbitration. The plaintiffs opted to avail themselves of the advantages of a civil trial with rights to a jury and cannot demand the court read rights into the contract that do not exist." We agree.

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DISPOSITION

The portion of the court's order reducing the negligence damages awarded to the Estate of Milton Glass from $1,500,000 to $500,197 is reversed. In all other respects, the court's orders are affirmed. The parties shall bear their own costs on appeal.

We concur: WILLHITE, J., CURREY, J.