Judge: David A. Rosen, Case: EC069213, Date: 2023-04-28 Tentative Ruling

Case Number: EC069213    Hearing Date: April 28, 2023    Dept: E

Case No: EC069213
Hearing Date:  04/28/2023 – 2:00pm

Trial Date: N/A

Case Name: AZAD STEEL, INC. v. 11015 NOHO, LLC, ET AL

TENTATIVE RULING ON MOTION TO ENFORCE SETTLEMENT

Moving Party: Defendants, 11015 Noho, LLC; Evolve Realty & Development Corp; Joseph Samuel dba J&G Construction

Joinder in Ex Parte Application: Plaintiff/Cross-Defendant, Azad Steel, joined in the Ex Parte Application by Defendants 11015 Noho LLC, Evolve Realty & Development Corp., and Joseph Samuel dba J&G Construction

Responding Party: Plaintiffs, Haray Ghazarian; Rafigh Shahmirzayan; and Garnik Savarani

(Oppo and Reply Submitted)

Proof of Service Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok

Moving Papers: Joinder by Azad Steel Inc. [Azad submitted a joinder notice on 3/27/2023 and on 3/30/2023.]

Moving Papers: Defendants’ Ex Parte application

Opposition: Opposition

Reply: Reply submitted by Defendants; reply submitted by Azad Steel

RELIEF REQUESTED
Noho asks the Court to intervene in one of the following ways, or in any other way deemed appropriate:

1.      Issue an order enforcing the settlement on the current draft of the agreement;

2.      Issue an order shortening time for hearing on a motion to enforce the settlement as set forth in the confirming email; or

3.      Order the parties to appear in person with the Azad Plaintiffs present for a settlement conference supervised by the Court.

PRELIMINARY MATTER
The instant motion appears to be the Defendants’ (11015 Noho; Evolve & Development Corp; and Joseph Samuel dba J&G Construction) Ex Parte application itself. On April 3, 2023, the Court issued a Minute Order stating that it only granted the Ex Parte application for an order shortening time to hear the motion to enforce the settlement. The Minute Order noted that the hearing on the motion to enforce the settlement was scheduled for 4/28/2023.

On 3/27/2023 and on 3/30/2023, Plaintiff, Azad Steel, Inc. joined in the Ex Parte application by Defendants, even though the Ex Parte was not filed until 03/28/2023.

BACKGROUND
The background was presented as follows in the moving Defendants’ Ex Parte application:

After extensive negotiations, taking nearly five months, the parties agreed to a global settlement… Plaintiffs ‘counsel [attorney for the three injure Azad employees] filed a Notice of Settlement on March 9, 2023 and the Court vacated pending dates, setting an Order to Show Cause Re Dismissal for June 1, 2023.

On presentation of a settlement agreement, an impasse occurred, as will be explained, prompting this ex parte procedure.

This case stems from a construction accident occurring on February 16, 2018, at the property located at 11011 West Otsego Street, North Hollywood, California (“Property”). Three employees of Plaintiff AZAD STEEL, INC. (“Azad”), Garnik Savarani, Haray Ghazarian, and Rafigh Shahmirzayan (collectively “Azad Employees”) allegedly sustained injuries. Azad filed a complaint against SCOTT BROOKS INSURANCE SERVICES (“Brooks”), Azad’s insurance broker, for failing to obtain necessary workers compensation insurance. Azad also sued 11015 NOHO, LLC (“Noho”), the owner of the project at the Property (“Project”), and EVOLVE REALTY & DEVELOPMENT, CORP. (“Evolve”), the developer of the Project (collectively “Noho”). Brooks filed a cross-complaint against Noho for indemnity-based claims. Noho filed a cross-complaint against Azad and others for indemnity-based claims. The Azad Employees also filed their own action against Noho seeking recovery for their alleged personal injuries. [Case No: 19STCV01825] The two actions have been consolidated.

The parties started the settlement process in the Fall of 2022; a mediation day with Judicate West’s Jeff Harper was held on November 14, 2022. Negotiations continued on and off over the last few months and culminated on March 8 2023; Noho’s counsel confirmed the settlement in an email that day and requested counsel for the Azad Employees to file a notice of settlement. The notice of settlement was filed the next day.

On March 14, 2023, counsel for Noho circulated a draft settlement agreement, soliciting any additional terms or language and comments on typos. In the settlement, the Azad Plaintiffs are receiving money from Noho and Azad for their injury claims, based on negligence.² [Footnote 2 stated, “The Azad Plaintiffs did not due Azad directly, as their employer, but Azad contributed to the settlement to compromise Noho’s express indemnity claim.”] Azad is receiving money from its insurer Brooks, for monetary losses claimed because insurance was not properly placed. The settlement agreement sets forth the payment terms and payment instructions for the Azad Plaintiffs. The settlement agreement does not provide the amount and payment terms for the settlement of the Azad-Brooks deal.

Counsel for Azad provided changes to the settlement agreement on March 15, 2023. Counsel for Brooks provided changes on March 17, 2023. Counsel for the Azad Plaintiffs responded on March 21, 2023 taking the position that more detail was needed on the Azad-Brooks part of the settlement. Email communications ensued over the next few days with Azad and Brooks resisting the addition of detail of their deal and counsel for the Azad Plaintiffs insisting the opposite. Other than that issue, there has been no expressed problem with any other aspect of the proposed agreement.

The settlement cannot be concluded without a signed agreement. The reason why there can be no compromise between Azad/Brooks and the Azad Plaintiffs, about whether the amount of the Azad and Brooks deal should be typed into the agreement, has not been clearly explained but the prose has been strident, with counsel for the Azad Plaintiffs threatening to scuttle the settlement that has been so long coming over 15 months.

Noho has fought this case at great expense from the start but as the only insured party has agreed to pay the lion’s share of the settlement. Noho sought to buy its peace and is now stymied – ironically, from paying a substantial amount of money.

(Defs. Ex Parte Application p. 1-2.)

LEGAL STANDARD – MOTION TO ENFORCE SETTLEMENT

CCP 664.6 states as follows:

(a) If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

(b) For purposes of this section, a writing is signed by a party if it is signed by any of the following:

(1) The party.

(2) An attorney who represents the party.

(3) If the party is an insurer, an agent who is authorized in writing by the insurer to sign on the insurer’s behalf.

(CCP §664.6(a)-(b).)

ANALYSIS
Here, although not entirely clear, it does not appear that moving parties are attempting to argue that an oral settlement agreement was reached orally before the court. Further, even if moving parties are arguing that, sufficient evidence was not submitted to establish that an oral agreement was reached before the Court.

What moving parties appear to be arguing is that a written settlement agreement was reached that should be enforced. Moving parties state, “Rather, the Court is asked to determine that the email confirmation and notice of settlement response constitutes an enforceable writing and require the parties to sign the settlement agreement.” (Defs. Ex Parte p. 4.)

Moving parties submitted as evidence the declaration of Michael J. Larin and Exhibits A and B.

The Court does not find this evidence sufficient as proof of a signed written settlement agreement.

In relevant part as stated in Weddington:

Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit….

Although a judge hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment, (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial supra, at § 12:975 et seq.; Fiore v. Alvord (1985) 182 Cal.App.3d 561, 221 Cal.Rptr. 400 [court may interpret terms of settlement agreement] ) nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon…

In order to be enforceable pursuant to the summary procedures of section 664.6, a settlement agreement must either be entered into orally before a court (a possibility not involved here) or must be in writing and signed by the parties. The reason for the party-signature requirement is that “settlement is such a serious step that it requires the client's knowledge and express consent. (1 Witkin, Cal. Procedure (3d ed. 1985) Attorneys, § 194, pp. 221–222.)” (Levy v. Superior Court (1995) 10 Cal.4th 578, 583, 41 Cal.Rptr.2d 878, 896 P.2d 171.) “... in 1981 ... the Legislature enacted section 664.6, which created a summary, expedited procedure to enforce settlement agreements when certain requirements that decrease the likelihood of misunderstandings are met. Thus the statute requires the ‘parties' to stipulate in writing or orally before the court that they have settled the case. The litigants' direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. (See In re Marriage of Assemi, [1994], 7 Cal.4th at p. 905 [30 Cal.Rptr.2d 265, 872 P.2d 1190]; City of Fresno v. Maroot, [1987], 189 Cal.App.3d [755] at p. 762 [234 Cal.Rptr. 353]; Datatronic Systems Corp. v. Speron, Inc., [1986] 176 Cal.App.3d [1168] at p. 1174 [222 Cal.Rptr. 658].) It also protects parties from impairment of their substantial rights without their knowledge and consent. (See Blanton v. Womancare, Inc., supra, 38 Cal.3d [396] at p. 404 [212 Cal.Rptr. 151, 696 P.2d 645].) [Fn. omitted.]” (Levy, supra, 10 Cal.4th at pp. 585–586, 41 Cal.Rptr.2d 878, 896 P.2d 171.)

(Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809-810.)

The Court notes that section 664.6 was amended in 2020 to allow attorneys of record to bind their clients by signing the agreement.  Exhibit B is the settlement agreement that moving parties want the Court to both require the parties to sign and to enforce. This settlement agreement is not signed by a single party or attorney.

Exhibit A is a chain of emails that moving parties argue comprises the signed settlement agreement when viewed in combination with the notice of settlement submitted to the Court on 3/9/2023. Moving parties’ argument is unavailing.

Weddington expands on the concept of mutual assent/consent in contract formation as follows:

A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. (See, e.g., Gorman *811 v. Holte (1985) 164 Cal.App.3d 984, 988, 211 Cal.Rptr. 34 [“Compromise settlements are governed by **277 the legal principles applicable to contracts generally”].) An essential element of any contract is “consent.” (Civ.Code § 1550; 1 Witkin, Summary of Cal. Law (9th ed., 1987) Contracts, § 6, p. 44.) The “consent” must be “mutual.” (Civ.Code § 1565; 1 Witkin, Summary of Cal. Law (9th ed., 1987) Contracts, § 119, p. 144 [“Every contract requires mutual assent or consent.”]; Meyer v. Benko (1976) 55 Cal.App.3d 937, 127 Cal.Rptr. 846.) “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.” (Civ.Code § 1580; see also Civ.Code § 1636 [contracts must be enforced according to the “mutual intention of the parties as it existed at the time of contracting.”] )

“The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.” (Meyer v. Benko, supra, 55 Cal.App.3d 937, 943, 127 Cal.Rptr. 846.) Outward manifestations thus govern the finding of mutual consent required by Civil Code sections 1550, 1565 and 1580 for contract formation. (See also 1 Witkin, Summary of Cal. Law (9th ed., 1987) Contracts, § 119, p. 144 [“... the outward manifestation or expression of assent is controlling. Mutual assent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding.”] ) The parties' outward manifestations must show that the parties all agreed “upon the same thing in the same sense.” (Civ.Code § 1580.) If there is no evidence establishing a manifestation of assent to the “same thing” by both parties, then there is no mutual consent to contract and no contract formation. (Civ.Code §§ 1550, 1565 and 1580.)

(Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.)

Here, the emails attached in Exhibit A do not show the existence of mutual assent. The first email on March 8, 2023 in Exhibit A, states:

Per the information I just received from Jeff Harper, this will confirm the case is settled. The total settlement is $2,250,000 paid to Pacific Attorney Group’s clients, to be split according to their internal preference. The payment will be made in part on behalf of 11015 Noho, J&G, and Evolve, and in part by Azad. This is global, meaning the plaintiffs are waiving their workers compensation claim against Azad, Azad is waiving any pleaded claim against 11015 Noho, J&G and Evolve, and Brooks is waiving any pleaded claim against 11015 Noho and Evolve. Azad and Brooks have their own deal.

That said, all this will have to be incorporated into a settlement agreement. I will take the first shot at a draft and anticipate it will be met by many red pen changes. I will need to know how the checks are to be made out and I will need PAG’s tax ID asap.

Lastly, if this is not global, or if I have in some way set out the settlement incorrectly, please advise immediately. Otherwise, Mike, please let the court know the case is settled. This will further confirm all depositions are canceled and all deadlines are moot.

(Ex. A. 3/8/2023 email.)

The Court calls attention to the following portion of the March 8, 2023 email, “I will take the first shot at a draft and anticipate it will be met by many red pen changes.” This statement indicates that Michael Larin didn’t even intend for this email to be the final signed written settlement agreement.

The next email on March 8, 2023 is written by Michael Hollomon, Jr., attorney for Haray Ghazarian, Rafigh Shahmirzayan, and Garnik Savarani, stated, “It should be a single draft/check payable to: "Haray Ghazarian; Rafigh Shahmirzayan; Garnik Savarani and Pacific Attorney Group" W9 form attached.” (Ex. A)

However, this statement does not demonstrate that Garnik, Rafigh, or Haray’s attorney consented to the settlement agreement.

Further, in the remainder of the emails it is very clear that the parties viewed the draft of the settlement agreement as simply a draft because several parties referred to it as a draft and would reference their red lines. Eventually, the email chain results in Hollomon stating the additional points he wants in the settlement agreement that the other parties refused to put into the agreement.

Therefore, not only does the lack of signatures on the settlement agreement demonstrate lack of mutual assent, but the emails themselves in Exhibit A indicate a lack of mutual assent between all parties.

Further, although a notice of settlement was filed on March 9, 2023 by Plaintiffs’ counsel Hollomon, there is no reason to believe that the parties believed this to be the signed settlement agreement as this is not the agreement itself and in Exhibit A there are several emails that occurred after March 9, 2023 wherein the parties were still trying to come to mutually agreeable terms in the draft of the settlement agreement.

Moving parties also argue as follows in their motion, ““Once the parties have reached a settlement,…they ‘may not escape their obligations by refusing to sign a written agreement that conforms to the oral terms.’”. Osumi v. Sutton, 151 Cal.App.4th 1355 (2007) [citing Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1431.]” (Defs. Ex Parte Application p. 4.)

Defendants argument is misplaced and unavailing. First in Osumi, the parties reached a settlement which they placed on the record during a hearing and memorialized in a written stipulation for resolution and dismissal filed the same day. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355,, 1357-1358.) Here, the parties did not reach an oral agreement in court that was placed on the record during a hearing. Further Defendants’ citation to Osumi relies on Elyaoudayan which also is inapplicable to the instant facts. In Elyaoudayan, the settlement was read into the record by counsel and after the settlement was placed on the record, each party who was present stated orally and individually that he agreed with the terms. (Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1425.) Here, the same cannot be said.

In the Azad Reply, Azad argues that “[t]he Ghazaryan Plaintiffs’ position is not supported by fact or law. For conditional settlements, the party giving notice must specify the date by which a dismissal is to be filed. If a dismissal is not filed "within 45 days after the dismissal date specified in the notice . . ., the court must dismiss the entire case unless good cause is shown why the case should not be dismissed (Rule 3.1385(c).) A penchant to renegotiate is not good cause. As explained in detail in Noho/Evolve’s Reply, the case relied on by the Ghazayan Plaintiffs, Weddington Productions Inc. v. Flick (1998) 60 CA4th 793 is inapposite. Here, the Ghazaryan Plaintiffs agreed to the terms of the global settlement, knowing full well that they are waiving their worker’s compensation claims, and that any settlement between Azad Steel and Brooks Defendants was a separate “deal.””

As noted hereinabove, however, while there may be evidence of an agreement, it is insufficient to support the grant of this motion per CCP sec. 664.6.

TENTATIVE RULING
Defendants’ motion to enforce settlement is DENIED without prejudice to evidentiary-based remedies that movant and joining parties still have. There was no signed settlement agreement by the parties and there was no oral settlement agreement before the Court.

The Court will hear argument as to the third item of relief requested, “Order the parties to appear in person with the Azad Plaintiffs present for a settlement conference supervised by the Court.” Further, the Court will consider setting this matter for Trial.