Horath v. Hess
225 Cal. App. 4th 456
| Cal. Ct. App. | 2014Background
- Elsie Horath and John Hess agreed in a written pre-arbitration stipulation that: Hess would pay the arbitrator's award or $44,000 whichever was greater; Horath would accept the arbitrator's award or $100,000 whichever was less (but not less than $44,000); costs awarded by the arbitrator were additional; the high-low terms were not to be disclosed to the arbitrator.
- The arbitrator awarded Horath $329,644.61 in damages and $36,882.61 in costs, totaling $366,527.22. Horath petitioned to confirm the award and obtain judgment.
- More than 100 days after the award, Hess moved to limit the judgment to $100,000 per the stipulation; the trial court denied the motion as untimely under arbitration challenge statutes and confirmed the full award, entering judgment for $366,527.22.
- Hess then served Horath with a demand and filed a postjudgment motion under Code Civ. Proc. § 724.050 seeking an acknowledgment (or court order) that tender/payment of $100,000 plus costs fully satisfied the judgment per the stipulation; Horath refused and the trial court denied the § 724.050 motion and awarded Horath $5,000 in fees under § 724.080.
- The Court of Appeal consolidated Hess’s appeals, affirmed the judgment itself as entered, but reversed the postjudgment order denying relief under § 724.050 and reversed the attorney-fee award to Horath.
Issues
| Issue | Plaintiff's Argument (Horath) | Defendant's Argument (Hess) | Held |
|---|---|---|---|
| Whether the pre-arbitration stipulation’s high-low term (Horath will accept $100,000 plus costs if award > $100,000) is enforceable after entry of judgment without Hess first timely moving to vacate/correct the award | Stipulation did not excuse Hess from the statutory requirement to timely move to vacate/correct an award; Horath could enforce the full arbitration award and was not bound to accept Hess’s tender after judgment | The stipulation is a binding contract: Horath agreed in advance to accept $100,000 plus costs if the award/judgment exceeded that amount, and Hess may invoke § 724.050 to enforce that agreement after judgment by tendering the agreed lesser sum | The stipulation unambiguously bound Horath to accept $100,000 plus costs as full satisfaction when the award/judgment exceeded that cap; Hess could pursue relief under § 724.050 without first timely moving to vacate or correct the award |
| Whether § 724.050 provides the exclusive procedure to obtain court acknowledgment of satisfaction of judgment based on an agreement to accept less than the judgment amount | Horath argued § 724.050 could not be used to collaterally attack the award or substitute for timely arbitration challenges | Hess argued § 724.050 is the exclusive statutory postjudgment procedure to compel a creditor to file an acknowledgment of satisfaction when the judgment debtor has tendered the agreed lesser sum | Court held § 724.050 is the proper and exclusive procedure to enforce an agreement to accept a lesser sum and to compel acknowledgment or court entry of satisfaction of judgment |
| Whether trial court properly denied Hess’s § 724.050 motion on grounds it would modify the arbitration award | Horath asserted enforcing the stipulation via § 724.050 would improperly modify the arbitrator’s award and was therefore impermissible | Hess maintained § 724.050 enforces the parties’ contract (stipulation) and does not modify or vacate the arbitration award; it recognizes the creditor’s prior agreement to accept less | Court held enforcing the stipulation under § 724.050 does not improperly modify the award; it enforces the parties’ contractual agreement and the trial court erred in denying the motion |
| Whether the trial court properly awarded Horath $5,000 under § 724.080 as prevailing party | Horath argued she prevailed in opposing the § 724.050 motion and thus was entitled to fees | Hess argued he prevailed on appeal and the trial court’s denial should be reversed; fees award was improper if the denial is reversed | Court reversed the fee award because the denial of Hess’s § 724.050 motion was reversed, making Horath not the prevailing party on that motion |
Key Cases Cited
- Bank of the West v. Superior Court, 2 Cal.4th 1254 (explains fundamental goal of contract interpretation and giving effect to parties’ mutual intent)
- WYDA Associates v. Merner, 42 Cal.App.4th 1702 (contract interpretation rules; intent from writing and extrinsic evidence)
- Southern Cal. Edison Co. v. Superior Court, 37 Cal.App.4th 839 (ambiguity/resolution framework; reasonably susceptible test)
- Winet v. Price, 4 Cal.App.4th 1159 (threshold ambiguity is a question of law reviewed independently)
- Walton v. Mueller, 180 Cal.App.4th 161 (§ 724.050 is the proper procedure to enforce an agreement to accept less than full judgment)
- Quintana v. Gibson, 113 Cal.App.4th 89 (§ 724.050 motions are appealable postjudgment orders)