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Court of Appeal, Second District, California.

CLASSIC EXCALIBUR HOLDINGS, L.L.P., Plaintiff and Appellant, v. PALM SPRINGS AUCTIONS, INC., Defendant and Respondent.


Decided: January 24, 2011

Westlake Law Group, David Blake Chatfield;  Benedon & Serlin, Gerald M. Serlin and Douglas G. Benedon for Plaintiff and Appellant. Law Offices of Jeffrey E. Fromberg, Jeffrey E. Fromberg and Jeffrey M. Yoss for Defendant and Respondent.


Plaintiff, Classic Excalibur Holdings, L.L.P., appeals from an order denying its attorney fee motion.   Plaintiff sued defendant, Palm Springs Auctions, Inc., and several other codefendants, for intentional and negligent misrepresentation and unfair business practices.   Plaintiff served a Code of Civil Procedure section 998 settlement offer which defendant accepted.   Plaintiff then filed an attorney fee motion which was denied.   We conclude the trial court did not abuse its discretion in denying plaintiff's attorney fee motion.

Plaintiff's complaint was filed on November 23, 2004.   The unverified first amended complaint, which contains standard agency and co-conspirator allegations, states defendant operated an automobile auction business.   On February 28, 1998, defendant offered for auction a car it identified as a 1965 Shelby Cobra SC Roadster.   An employee of defendant unequivocally described the automobile as an original 1965 Shelby Cobra.   A codefendant, James Mangione, told plaintiff the car:  was an original 1965 Shelby;  belonged to Carroll Shelby;  was worth at least $500,000;  and would most likely appreciate in value.   Eventually, plaintiff paid $341,275 for the car at the February 28, 1998 auction.   After the sale, an employee of defendant stated once again that the car was an original 1965 Shelby Cobra automobile.

Plaintiff entrusted the car with Mr. Mangione who agreed to market and sell it.   In October 1998, the car was moved to Las Vegas where plaintiff met with Mr. Shelby.   Mr. Shelby confirmed that the car was a 1965 original Shelby.   Over the next several years, Mr. Mangione represented he was taking the car to various automobile auctions and had rejected offers as high as $500,000 because he thought it would continue to appreciate in value.   In 2002, plaintiff instructed Mr. Mangione to take the car to a Monterey automobile auction.   Mr. Mangione said he was taking the car to smaller auction.   Later, Mr. Mangione told Mr. said no one was buying at the Monterey auction or smaller auctions.

Shortly after November 14, 2002, plaintiff spoke to RM Auctions, the promoters of the Monterey Auction.   Plaintiff was advised that there many buyers were present at the Monterey auction.   On November 29, 2002, plaintiff was advised by RM Auctions that the car was not a 1965 original Shelby.   Plaintiff was advised the automobile was a completion car built several decades later.   In July 2003, plaintiff wrote defendant and demanded a full refund.   The first amended complaint contains causes of action for fraud, negligent misrepresentation and unfair business practices.   The prayer for relief seeks damages, rescission, restitution and Code of Civil Procedure section 1021.5 public interest attorney fees.

Plaintiff served a Code of Civil Procedure section 998 settlement offer.   Plaintiff's statutory offer, which was served and filed on May 5 and 6, 2008, respectively states in part:  “Pursuant to [California Code of Civil Procedure, section] 998, plaintiff CLASSIC EXCALIBUR HOLDINGS, LLP offers to settle all damage claims against defendant PALMS SPRINGS AUCTIONS, INC. for $25,000.00.   If defendant accepts this offer, it is required to file the offer along with a notice of acceptance thereof in the above-entitled action within 30 days.   Otherwise, the offer will be deemed waived.”   On May 29, 2008, defendant filed an acceptance which states in part, “YOU ARE HEREBY NOTIFIED that defendant, PALM SPRINGS AUCTIONS, INC., accepts your offer to allow judgment to be taken against it for the sum of TWENTY-FIVE THOUSAND DOLLARS ․, in accordance with the terms and conditions stated in the offer.”   On January 23, 2009, judgment was entered in plaintiff's favor.

On April 6, 2009, plaintiff filed an attorney fee motion.   Attached to the attorney fee motion were a series of documents pertinent to the purchase of the car.   The documents were identified by one of plaintiff's attorneys.   A bidder registration form identified the buyer as Avalon Corporation.   The bidder registration form states it is to be delivered to Shelby America, Inc. in Las Vegas.   The bidder is also identified by the number 675.   Defendant provided purchasers with a hold harmless agreement which states in part:  “The undersigned participates ․ assumes the liability for and shall indemnify and hold harmless ․ [defendant] and their owners, officers, directors, employees, and invitees from and against and any liabilities arising from said events, holding them harmless ․ how so ever arising directly or indirectly out of or in connection with participation in said event.  [¶] No warranty is expressed or implied, including the implied warranty of merchantability by [defendants].”   The hold harmless agreement is executed by Stephen Gaggero, the president of Avalon Corp. The number 675 appears in the upper right hand corner of the hold harmless agreement.

The Purchaser's Deposit Receipt indicates bidder No. 675 submitted a high bid of $325,000 and was obligated to pay an additional five percent “Buy Fee.” The deposit receipt is executed on behalf of Avalon Corporation.   A receipt, stamped “paid” states that the total amount paid by bidder No. 675 was $341,275 which included:  a purchase price of $325,000;  a five percent commission of $16,250;  and a $25 document fee.

The deposit receipt then states:  “I have placed the above described deposit in accord with the terms of sale outlined in the buyer registration card issued prior to the commencement of the auction.   I have inspected all equipment I shall purchase and accept it ‘As is And Where Is' without any warranty or representation whatsoever as to condition, year model, manufacturer's model number, value․  I shall pay [defendant] all monies due [defendant] which include but are not limited to buyer's fee, sales commission and any monies refunded to seller by [defendant] due to my failure to complete transaction, the sum equal to eighteen ․ percent per annum interest on all amounts owing by me together with all attorney's fee incurred by [defendant] in enforcing collection․”

Attached to the deposit receipt is a document entitled “TERMS OF SALE” which states in part, “All articles of merchandise are offered ‘As Is and Where IS' in units of measure as announced at the time of sale․  Auctioneer may state the year of manufacture of certain equipment however it is the responsibility of the buyer to ascertain, by his own means, the correctness of year model prior to bidding.”   The sale terms document has an attorney fee clause which states, “In the event auctioneer is required to employ an attorney to enforce any term of this agreement, purchaser agrees to pay reasonable attorney fees.”   None of the documents have the signature of any employees of plaintiff.

At the hearing on the attorney fee motion, the trial court began by asking plaintiff's counsel:  “The problem is that you did not sue in contract on this case because you were time barred under the statute of limitations.   You only sued in tort.   You sued only on essentially tort causes of action where you could claim tolling.  [¶] Why do you think now having deliberately eschewed the contract cause of action to avoid the statute of limitations you should be entitled to attorney fees on the contract?”   Later, the trial court stated after plaintiff's counsel explained the complaint sought both equitable and legal relief:  “Let's assume that is correct.   You still sued in tort.   You deliberately didn't sue in contract․  [¶]․  [W]e had this discussion way back at the beginning of the case and I was affirmatively told at that time, no, this isn't barred by the three-year statute-or the four-year statute of limitation for a contract in writing, it is a three-year statute of limitations based on fraud, and we are not suing in contract.   We are suing on the tort.”   Later, in discussing the case, the trial court:  “When we had the discussion on the demurrers, you people-you-your office-you people were very specific about this.   It was expressly-it was expressly represented, no, this isn't a contract action, it is a tort action․  [¶] It is a little bit late to change that after the settlement and suddenly say, no, our entire-- the theory of this has changed.   We are entitled to attorney fees based on contract.”   The trial court noted that the first time the contract claim was raised was when the attorney fee motion was filed.

Finally, the trial court noted that there was no signed contract between the parties.   Defense counsel argued:  “That is not a signed agreement by anybody.   On the back of the bidder's from there is no attorney fee provision.”   Plaintiff's counsel was unable to identify any document that was executed by an employee of plaintiff.

We review the attorney fee order for an abuse of discretion except as to issues of statutory construction and questions of law.  (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175;  PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.)   We conclude the trial court did not abuse its discretion in impliedly concluding there are no documents to which plaintiff is a signatory which contain an attorney fee clause.   The issue was expressly raised by defense counsel at the attorney fee motion hearing.   At the hearing, plaintiff's counsel was unable to identify any documents that evidenced an agreement by his client to pay attorney fees in the event litigation resulted.   The only entity identified on or signatory to any of the documents containing an attorney fee clause is Avalon Corporation or Steve Gaggero who are not parties to this litigation.   The trial court could reasonably find there was insufficient evidence plaintiff was a signatory to any agreement which contained an attorney fee clause.   Under these circumstances, defendant is not subject to the attorney fee clauses.  (Canal-Randolph Anaheim, Inc. v. Wilkoski (1978) 78 Cal.App.3d 477, 486, 496;  see Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 545-547.)   We need not address the other contentions raised by the parties.

The judgment is affirmed.   Defendant, Palm Springs Auctions, Inc., shall recover its costs incurred on appeal from plaintiff, Classic Excalibur Holdings, L.L.P.


We concur: