Filed 3/21/14; pub. order 4/8/14 (see end of opn.)




              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FIRST APPELLATE DISTRICT

                                                DIVISION ONE


STEPHANIE ROSEN,
         Plaintiff and Appellant,
                                                         A136985
v.
LEGACYQUEST et al.,                                      (San Mateo County
                                                         Super. Ct. No. CIV440930)
         Defendants and Respondents.

         Plaintiff and appellant Stephanie Rosen (Stephanie), along with her husband
Michael Rosen (who is not a party to this appeal), obtained a significant judgment against
defendants Christopher Cook (Cook) and LegacyQuest for breach of contract. Cook and
LegacyQuest appealed and obtained a stay of execution by posting an undertaking by
personal sureties. After this court dismissed Cook and LegacyQuest’s appeal at their
request, Cook and LegacyQuest, and then their sureties, failed to pay the judgment.
Upon motion by Stephanie to enforce the undertaking, the trial court entered judgment
against the sureties. The sureties appealed, and this court affirmed. Stephanie then filed
a motion for costs and attorney fees incurred in enforcing the judgment against the
sureties. The trial court awarded costs, but denied fees. Stephanie appeals the denial of
attorney fees. We reverse and remand with directions to award reasonable fees.
                                               I. BACKGROUND
         This is yet another of the numerous appeals arising from the morass of litigation
between the parties that has now spanned nearly a decade. We set forth the history of this
litigation in our opinion in consolidated appeals in related cases. (See Rosen v. Cook


                                                     1
(Jan. 11, 2011, A123548, A123558) [nonpub. opn.].) We do not repeat that history here,
but set forth only those facts necessary to the resolution of the present appeal which were
recited in large part in our opinion affirming the judgment against the sureties (Rosen v.
LegacyQuest (Jan. 26, 2012, A129172) [nonpub. opn.]) and from which we quote.
       “In July 2004, the Rosens filed suit for breach of contract against Cook and
LegacyQuest.[1] The case went to trial in February 2006, and the jury returned a verdict
in favor of the Rosens, and against Cook and LegacyQuest, for $434,743.36. Judgment
was entered on March 24, 2006.
       “After unsuccessful posttrial motions, Cook and LegacyQuest appealed from the
judgment in April 2006 (case No. A114176). Shortly thereafter, Cook and LegacyQuest
filed undertakings by personal sureties to stay execution, and filed an amended
undertaking more than a year later, in November 2007. The amended undertaking states
the sureties ‘obligate themselves, jointly and severally for double the amount of the
judgment of $434,743.36, to the plaintiffs Mike and Stephanie Rosen.’
       “After Cook and LegacyQuest sought and received a 90-day stay of their appeal
on the ground settlement efforts were under way, and then sought and were granted
numerous extensions of time to file their opening brief on appeal on other grounds, this
court ordered counsel to personally appear on August 7, 2008, to show cause why the
appeal should not be dismissed. At that hearing, Cook and LegacyQuest orally requested
dismissal of their appeal.[2] This court granted their request and issued an order on
August 11, 2008, dismissing the appeal. Remittitur issued on October 14, 2008, and was
filed with the trial court two days later.
       “On December 10, 2008, Stephanie demanded payment of the March 2006
judgment from the sureties. The sureties did not comply.

       1
           The lawsuit also involved other claims that are not pertinent to the instant
appeal.
       2
          The two, nonconsecutive pages of transcription of the hearing which Cook and
LegacyQuest submitted in opposition to Stephanie’s motion, do no more than show Cook
and LegacyQuest asked that their appeal be dismissed. The two pages are otherwise too
cryptic to understand the substance of what was discussed at the hearing.


                                               2
       “Eight months later, on August 18, 2009, Stephanie served Cook, LegacyQuest,
and the sureties with a motion under Code of Civil Procedure section 996.440[3] for entry
of judgment against the sureties in the amount of $573,148.96 (the original judgment as
modified by later court orders, credits, costs, and interest).[4] Stephanie filed her motion
one week later, on August 25, 2009, and noticed a hearing for September 25, 2009. Cook
and LegacyQuest filed opposition, but the sureties did not; nor did the sureties join in
Cook and LegacyQuest’s opposing papers. Six months later, on March 11, 2010, the trial
court granted Stephanie’s motion. Judgment was entered against the sureties two months
later, on May 11, 2010, in the amount of $592,558.74 (reflecting additional postjudgment
interest).
       “Cook, LegacyQuest, and the sureties all moved to vacate the judgment and for a
new trial under sections 663 and 657. The trial court denied the motions on June 28,
2010. Cook, LegacyQuest, and the sureties then filed a timely notice of appeal from the
May 11, 2010, judgment against the sureties and the June 28, 2010, order denying their
posttrial motions.” (Rosen v. LegacyQuest, supra, A129172 [nonpub. opn.].) As
indicated, we affirmed the judgment and order in a nonpublished opinion filed
January 26, 2012 (case No. A129172).
       One month later, on February 23, 2012, Stephanie moved for costs and attorney
fees incurred in enforcing the judgment against the sureties. She sought $47,407.79 in
costs, and $147,175 in fees, which included fees incurred in defending against the
sureties’ appeal of the judgment against them, fees incurred in trying to collect the
underlying judgment directly from Cook, fees incurred in defending judgment liens in
Cook’s bankruptcy, and fees incurred in prosecuting a fraudulent conveyance action.
Stephanie noted in her moving papers that shortly after she obtained the judgment against
the sureties, she recovered $34,825 in attorney fees against them incurred in making
demand for payment and seeking the judgment against them.

       3
        All further statutory references are to the Code of Civil Procedure [unless
otherwise indicated].
      4
        For reasons not relevant here, Michael did not join in this motion.


                                              3
       The sureties opposed Stephanie’s motion for costs and fees on several grounds.
Because the motion was filed while their petition for review of this court’s opinion
affirming the judgment against them was pending, they maintained the trial court lacked
jurisdiction to hear the motion for costs and fees. Observing Stephanie’s notice of
motion referenced only sections 996.480 and 917.1, they next claimed section 996.480
only provided for fees incurred in obtaining a judgment against a surety and did not
provide for postjudgment fees incurred in enforcing a judgment. Acknowledging
Stephanie’s memorandum of points and authorities specifically sought fees pursuant to
section 685.040 (which does, indeed, authorize an award of fees incurred in enforcing a
judgment), they argued that statute only authorizes fees in contract cases (i.e., cases in
which prejudgment fees were awarded to the judgment creditor pursuant to a contractual
fee provision). The sureties further asserted the amount of fees Stephanie sought was
“outrageous” and not supported.
       On May 14, 2012, the trial court filed an order entitled, “Order Denying Motion
for Attorney’s Fees Against Sureties Filed By Plaintiff Stephanie Rosen.” The court
denied fees on the ground the last sentence of section 685.040 limits the statute to
contract cases. The following month, by letter dated June 25, counsel for Stephanie
advised the court its order did not address costs. The court responded by letter dated
July 13, indicating it could not recall why costs had not been addressed and allowed the
parties to submit briefs on the issue. Stephanie recapped her request for costs, and asked
the court to issue an amended order addressing both costs and fees. The sureties argued
the court had, in fact, denied costs and Stephanie’s inquiry about a ruling was a violation
of section 1008. They also argued Stephanie had not identified any proper basis for
costs, and her request was, in any event, excessive. On September 6, the trial court
issued an order entitled, “Amended Order Denying Plaintiff Stephanie Rosen’s Motion
for Attorney’s Fees and Granting Motion for Costs Against the Sureties,” reiterating its
denial of fees but awarding $47,407.79 in costs. Stephanie filed a notice of appeal on
October 30, 2012.



                                              4
       In the interim, pursuant to the directive in the January 26, 2012, opinion affirming
the judgment against the sureties that Stephanie was entitled to reasonable fees incurred
on appeal, Stephanie filed a motion for fees incurred on appeal. The trial court granted
this motion on October 16, 2012, awarding her $22,330. Stephanie acknowledges this
award commensurately reduces the amount fees she seeks to recover in connection with
enforcing the judgment against the sureties.
                                       II. DISCUSSION
Appealability
       The sureties assert Stephanie’s appeal is untimely, claiming the operative order
was that filed May 14, 2012, entitled, “Order Denying Motion for Attorney’s Fees
Against Sureties Filed By Plaintiff Stephanie Rosen.” The order was served on the
parties by the court clerk, and as the sureties point out, Stephanie did not file a notice of
appeal until October 30—well beyond the 60-day period set forth in California Rules of
Court, rule 8.104(a)(1)(A).
       However, the May 14 order did not fully dispose of Stephanie’s motion, which
was a motion for both costs and attorney fees. The order was, thus, akin to a partial
judgment that does not fully dispose of the issues between the parties and, thus, is not a
final, appealable judgment. Not until the court issued its September 6 order entitled,
“Amended Order Denying Plaintiff Stephanie Rosen’s Motion for Attorney’s Fees and
Granting Motion for Costs Against the Sureties,” was Stephanie’s motion fully resolved,
leaving no further issues between the parties. Only at that juncture was there a final,
appealable order on her motion, and her notice of appeal was timely filed within 60 days
of notice of entry of the September 6 amended order.
       Further, even if the May 14 order could be characterized as final and appealable,
the September 6 amended order effectuated a material change in the disposition of the
motion, triggering anew the time to appeal. (See Sanchez v. Strickland (2011)
200 Cal.App.4th 758, 767.) As noted, Stephanie’s notice of appeal was timely filed
within 60 days of the notice of entry of the September 6 amended order.



                                               5
Fees Incurred in Enforcing the Judgment Against the Sureties
       Stephanie sought fees incurred in enforcing the judgment against the sureties
pursuant to section 685.040.5 This statute provides: “The judgment creditor is entitled to
the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in
enforcing a judgment are not included in costs collectible under this title unless otherwise
provided by law. Attorney’s fees incurred in enforcing a judgment are included as costs
collectible under this title if the underlying judgment includes an award of attorney’s fees
to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision
(a) of Section 1033.5.” (§ 685.040.)
Section 685.040 Is Not Limited to Contractual Fees
       Focusing exclusively on the last sentence of the statute, the sureties argued in the
trial court that, because section 1033.5, subdivision (a)(10)(A) permits fees authorized by
“[c]ontract” to be included as an item of costs, section 685.040 authorizes only judgment
creditors in contract cases to recover attorney fees incurred in enforcing a judgment.
Since Stephanie recovered attorney fees in connection with the judgment against the
sureties pursuant to statute (§ 996.480, subd. (a)(2)), the sureties maintained she fell
within the class of judgment creditors who purportedly have no ability to recover fees
incurred in enforcing a judgment. The trial court agreed with the sureties and
accordingly denied Stephanie’s motion to the extent it sought fees. The sureties and the
trial court have misread section 685.040.
       While it is clear the last sentence of section 685.040 focuses on fee awards
authorized by contract, the sentence was not included in the statute as amended in 1992,
in order to limit fees incurred in enforcing a judgment to contract cases. Rather, the
sentence was included in the wake of a Court of Appeal opinion (Chelios v. Kaye (1990)

       5
          While the sureties complain, as they did in the trial court, that Stephanie’s notice
of motion referenced sections 996.480 and 917.1, and not section 685.040, her
memorandum of points and authorities expressly referenced section 685.040, as did the
trial court’s order. Sureties do not, and cannot, make any claim they were prejudiced by
the fact Stephanie invoked section 685.040 in her supporting memorandum and not in her
notice of motion.


                                              6
219 Cal.App.3d 75, 80 (Chelios)) holding judgment creditors in contract cases could not
recover fees under the statute because the underlying judgment “extinguished” the
contract, leaving no surviving contractual basis for fees incurred after the judgment.6
(See Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 934–935; Berti v. Santa Barbara Beach
Properties (2006) 145 Cal.App.4th 70, 77 (Berti).) The third sentence addresses the
contractual “extinguishment” problem and provides a statutory path around it. (See Berti,
supra, at p. 77.)
       The second sentence of section 685.040 applies to non-contract cases. It states
attorney fees incurred in enforcing a judgment are not recoverable “unless otherwise
provided by law.” (§ 685.040.) When attorney fees are authorized by statute, they have
been “otherwise provided by law” and thus may be recovered as costs if expended to
enforce a judgment. (Berti, supra, 145 Cal.App.4th at p. 77; see also Lucky United
Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125, 140, fn. 9 [noting “fact
that the [prejudgment] fees were not awarded pursuant to a contract is apparently
immaterial”].)
       Berti ably explained the scope of section 685.040 in rejecting the same constricted
view of the statute the sureties espoused and the trial court adopted:
       “Because the last sentence of Code of Civil Procedure section 685.040
       allows only fees authorized by subparagraph (A), ‘Contract,’ [respondent]
       concludes that statutory fees incurred in enforcing a judgment are not
       allowed.

       “[Respondent’s] argument ignores that the penultimate sentence of Code of
       Civil Procedure section 685.040 authorizes postjudgment fees ‘provided by
       law.’ Fees awarded under [former Corporations Code] section 15634,
       subdivision (g), [in an action to inspect partnership records] are provided by

       6
          At the time Chelios was decided, section 685.040 provided: “ ‘The judgment
creditor is entitled to the reasonable and necessary costs of enforcing a judgment.
Attorney’s fees incurred in enforcing a judgment are not included in costs collectible
under this title [Enforcement of Judgments] unless otherwise provided by law.’ ”
(Chelios, supra, 219 Cal.App.3d at p. 79, italics added.) Chelios held reliance on Civil
Code section 1717 to secure an award of contractual attorney fees did not transform the
contractual fees into fees “otherwise provided by law.” (Chelios, at pp. 79–80.)


                                             7
       law. Nothing in section 15634 limits an award of fees to those incurred
       prior to the judgment. The final sentence of Code of Civil Procedure
       section 685.040, on which [respondent] relies, is intended to solve a
       problem unique to a claim for postjudgment fees in actions based on
       contract. A judgment extinguishes all further contractual rights, including
       the contractual attorney fees clause. (Chelios v. Kaye[, supra,]
       219 Cal.App.3d 75, 80 . . . .) Thus in the absence of express statutory
       authorization, such as that contained in the final sentence of Code of Civil
       Procedure section 685.040, postjudgment attorney fees cannot be
       recovered. Fees authorized by statute do not present the same problem. A
       judgment does not act as a merger and a bar to statutory fees. (Folsom v.
       Butte County Assn. of Governments [(1982)] 32 Cal.3d [668,] 677–678
       . . . .) Such fees are incident to the judgment. (Ibid.) Thus there was no
       need to include statutory fees in the final sentence of Code of Civil
       Procedure section 685.040. The section does not bar an award of fees for
       Berti’s motions to enforce the judgment.”
       (Berti, supra, 145 Cal.App.4th at p. 77.)

       Ketchum v. Moses (2001) 24 Cal.4th 1122 (Ketchum) is also illustrative. In that
case, the Supreme Court held that section 425.16 (authorizing a defendant to recover fees
and costs incurred in bringing a successful SLAPP motion) includes “the fees incurred in
enforcing the right to mandatory fees under . . . section 425.16.” (Ketchum, at p. 1141.)
The high court rejected the plaintiff’s argument that “section 685.040 preclude[d] [such]
an award of ‘collection’ fees.” (Id. at p. 1141, fn. 6.) The court explained: “The statute
[section 685.040] provides that attorney fees incurred in enforcement efforts ‘are not
included in costs collectible under this title unless otherwise provided by law.’ Under its
provisions, a litigant entitled to costs for successfully enforcing a judgment is entitled to
costs, but not attorney fees unless there is some other legal basis for such an award.
Because . . . section 425.16, subdivision (c) provides a legal right to attorney fees, they
are a permissible item of costs.” (Ibid.)
       Likewise, here, there is “some other legal basis” for the award of fees incurred in
enforcing the judgment against the sureties, namely, section 996.480, subdivision (a)(2),
on which basis Stephanie was awarded attorney fees incurred in connection with
obtaining the judgment against the sureties. (See Ketchum, supra, 24 Cal.4th at p. 1141,
fn. 6; Berti, supra, 145 Cal.App.4th at p. 77.) Accordingly, Stephanie was entitled to an


                                              8
award of reasonable fees under section 685.040 incurred in enforcing the judgment
against the sureties.
       The sureties’ reliance on Chinese Yellow Pages Co. v. Chinese Overseas
Marketing Service Corp. (2008) 170 Cal.App.4th 868, is unavailing. That was a breach
of contract case (breach of a settlement agreement) in which contractual fees were
awarded to the judgment creditor pursuant to Civil Code section 1717. The judgment
debtor claimed postjudgment fees incurred to enforce the judgment were not recoverable
under Code of Civil Procedure section 685.040. (Chinese Yellow Pages, at p. 887.) The
Court of Appeal explained that they were, by virtue of the third sentence of the statute.
(Id. at pp. 887–888.) Accordingly, the fact the court stated—“an essential element
specified in section 685.040 . . . is that the underlying judgment must include an award of
attorney’s fees pursuant to section 1033.5, subdivision (a)(10)(A)”—makes sense, since
the court was dealing with a contract case, to which the third sentence of the statute
applied. (Id. at p. 888.) The instant case, in contrast, is not a contract case, and as we
have discussed, the second sentence, not the third sentence, of Code of Civil Procedure
section 685.040 applies.
Fees Recoverable Under Section 996.480 Include Fees Incurred in Enforcing a
Judgment Imposed Under the Statute
       At oral argument, counsel for the sureties emphasized a different argument—that
section 996.480, subdivision (a)(2), states in relevant part that a non-paying surety “is
liable for costs incurred in obtaining a judgment against the surety, including a
reasonable attorney’s fee, and interest on the judgment from the date of the claim.”
(§ 996.480, subd. (a)(2), italics added.) The sureties contend the italicized language
limits fees to those incurred in “obtaining” a judgment under the statute, thereby
excluding any other fees, including those incurred in enforcing such judgment and,
presumably, those incurred in defending such judgment on appeal.
       This argument overlooks the fundamental purpose of section 685.040, which is set
forth in the first sentence of the statute—namely, to provide for the recovery of costs and
fees incurred by a judgment creditor in enforcing a judgment. Accordingly,


                                              9
section 685.040, itself, provides the fee authorization the sureties contend is lacking in
section 996.480. Moreover, the California Law Revision Commission Recommendations
to the Governor and Legislature had stated in this regard that the changes to the bond and
surety statutes resulting in section 996.480 were proposed, inter alia, to ensure, if a surety
does not pay, the beneficiary “may recover costs (including reasonable attorney’s fees) of
enforcement. This will encourage prompt voluntary payment where liability is clear.”
(Recommendation Relating to Statutory Bonds and Undertakings (Nov. 1981) 16 Cal.
Law Revision Com. Rep (1981) p. 508, fn. 8.) It would be contrary to this stated purpose
to read section 996.480 as providing for fees incurred in securing a judgment against
sureties but excluding fees incurred in defending such a judgment on appeal or in finally
securing payment by a surety. Indeed, it has long been established that statutory fee
provisions, including Section 996.480, include fees on appeal unless the statute expressly
states otherwise. (Grade-Way Construction Co. v. Golden Eagle Ins. Co. (1993)
13 Cal.App.4th 826, 837–838.)
       Given the contentious nature of this litigation, we are also choosing to exercise our
discretion to order that Stephanie is entitled to reasonable fees incurred in connection
with this appeal. It is well established that a fee award properly includes the reasonable
fees incurred in seeking the fees. Here, Stephanie was required to pursue this appeal in
order to secure the reasonable fees to which she is entitled under section 685.040.
                                     III. CONCLUSION
       The order denying Stephanie Rosen’s motion for costs and fees, to the extent it
denied attorney fees incurred in enforcing the judgment against the sureties is reversed.
The matter is remanded for an award of reasonable fees pursuant to section 685.040,
including the reasonable fees she has incurred in this appeal. Costs on appeal are also
awarded to appellant.




                                             10
                                 _________________________
                                 Banke, J.


We concur:


_________________________
Margulies, Acting P. J.


_________________________
Dondero, J.




                            11
Filed 4/8/14
                            CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FIRST APPELLATE DISTRICT

                                      DIVISION ONE


STEPHANIE ROSEN,
         Plaintiff and Appellant,
                                                   A136985
v.
LEGACYQUEST et al.,                                (San Mateo County
                                                   Super. Ct. No. CIV440930)
         Defendants and Respondents.
                                                   ORDER CERTIFYING OPINION FOR
                                                   PUBLICATION

                                                      [NO CHANGE IN JUDGMENT]



THE COURT:
         The opinion in the above-entitled matter filed on March 21, 2014, was not
certified for publication in the Official Reports. After the court’s review of requests
under California Rules of Court, rule 8.1120, and good cause established under
rule 8.1105, it is hereby ordered that the opinion should be published in the Official
Reports.




Dated:

                                                  ___________________________
                                                  Margulies, J.




                                             12
Trial Judge:                            Honorable Joseph E. Bergeron

Trial Court:                            San Mateo County Superior Court


Office of Lawrence D. Miller and Lawrence D. Miller for Plaintiff.

Kass and Kass Law Offices and Bradley Kass for Respondent.
James Kenneth Menasco, in pro. per., for Defendant and Respondent.




                                           13
