Judge Elaine W. Mandel, Case Number: 20SMCV01214, Date: 2023-11-30 Tentative Ruling

Judge: Elaine W. Mandel, Case: 20SMCV01214, Date: 2023-11-30 Tentative Ruling

Case Number: 20SMCV01214 Hearing Date: March 12, 2024 Dept: P

Tentative Ruling

Cohen, et al. v. Kaplan, et al., Case No. 20SMCV01214

Hearing Date March 12, 2024

Cohen Cross-Defendants’ Demurrer/Motion to Strike Portions of Third Amended Cross-Complaint

Kaplan Cross-Complainants’ Motion for Sanctions

The parties sued regarding property in Malibu. Kaplans’ Third Amended Cross-Complaint alleges the Cohens agreed to a settlement that included an easement, but later reneged on the agreement. The Cohens disagree that a settlement agreement was ever formed, as party Elaine Cohen failed to sign.

Cross-defendants Paul and Elaine Cohen demur to the third cause of action for breach of a settlement agreement and seventh cause of action for estoppel. They also move to strike portions of the cross-complaint. The Kaplans request sanctions against Paul Cohen and his former counsel Bloch for falsely representing that Elaine Cohen signed the settlement agreement.

Cohens’ Demurrer

Breach of Settlement

On demurrer, the contents of exhibits control over contradictory allegations in the complaint to which they are attached. Bank of New York Mellon v. Citibank, N.A. (2017) 8 Cal.App.5th 935, 943.

The Cohens argue the breach of contract cause of action fails because the settlement agreement (TACC, exh. A) states it shall take effect “immediately upon execution by the last signatory,” and Elaine Cohen never signed the agreement. See Demurrer, pg. 8; TACC ¶27, pg. 9.

It is undisputed that the settlement agreement does not contain Elaine Cohen’s signature. Paul Cohen’s signature appears over the lines reserved for both Cohens’ names. Since the TACC requires signatures from all parties before it can be enforced (see Exhibit A ¶27), the lack of a signature from Elaine Cohen would appear to defeat this cause of action.

In opposition, the Kaplans admit Elaine Cohen did not sign the settlement, but argue the breach of contract claim is based on allegations that Paul Cohen executed the agreement as his wife’s agent. This may be a valid basis for a breach of contract cause of action, and, if alleged, it must be treated as true on demurrer. However, this theory is not alleged in the TACC. SUSTAINED with ten days leave to amend.

Estoppel

The Cohens argue the estoppel claim fails because estoppel is not a stand-alone cause of action. Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1463.

The Kaplans correctly point out that “equitable estoppel ‘must be pleaded, either as a part of the cause of action or as a defense. [citation omitted]’” Blaser v. California State Teachers’ Retirement System (2022) 86 Cal.App.5th 507, 528. They concede it is not a separate cause of action but part of their claim for breach of the settlement agreement. Their separately pleaded cause of action for estoppel is subject to demurrer, as it must be alleged as part of the breach of contract cause of action. SUSTAINED with ten days leave to amend.

Cohens’ Motion to Strike

Mediation Allegations

“All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.” Cal. Evid. Code §1119. Any writing prepared in connection with a mediation is inadmissible, including unsigned drafts of settlement agreements. Rael v. Davis (2008) 166 Cal.App.4th 1608, 1619. A written settlement agreement is admissible if signed by the settling parties and containing language stating it is “enforceable or binding or words to that effect.” Cal. Evid. Code §1123. Mediation ends when there are no communications between mediator and parties for ten days. Cal. Evid. Code §1125.

The Cohens argue the settlement agreement, the easement agreement and all allegations related to the settlement negotiation are inadmissible. They argue that since the settlement and easement were not executed by Elaine Cohen, they should be treated as drafts, inadmissible under Rael.

The TACC, paras. 27-28, reveal communications made during mediation and by the mediator, so must be struck under Evid. Code §1119. Subsequent allegations, however, such as paras. 29-39, reference communications made more than ten days after communication between the mediator and the parties; these are not subject to the mediation privilege.

To the extent the Kaplans quote the settlement agreement – which all parties admit was not signed by Elaine Cohen – it is inadmissible as a draft. In opposition, the Kaplans argue the references to the settlement agreement should not be struck because Elaine signed the agreement through her husband as her agent, and the settlement creates “enforceable or binding” language. However, the TACC does not allege an agency theory (see above). It is improper to cite the agreement unless the Kaplans can allege it was fully executed or signed on behalf of Elaine Cohen by her husband. SUSTAINED without leave to amend as to paragraphs 27 and 28. OVERRULED as to the other challenged portions of the TACC.

Causes of Action for Fraud, Conspiracy and Negligent Misrepresentation

The Cohens argue these claims should be struck under the litigation privilege and because cross-complainants agreed to strike them. On February 9, 2024 the Kaplans filed a request for dismissal of the fraud, conspiracy and negligent misrepresentation causes of action. See 2/9/2024 request for dismissal. When the fourth amended cross-complaint is filed pursuant to the leave to amend granted above, those causes of action will be struck, as will requests for punitive damages derived from those causes of action. GRANTED.

Causes of Action for Breach of Settlement and Estoppel

The motion to strike these causes of action is derivative of the demurrer to those causes of action, so the motion to strike is MOOT.

Kaplans’ Motion for Sanctions

Under Cal. Code of Civ. Proc. §128.5(b)(2), “a trial court may order a party, the party’s attorney, or both to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics made in bad faith that are frivolous or solely intended to cause unnecessary delay.” “A misrepresentation of material fact is subject to sanction under §128.5.” Levine v. Berschneider (2020) 56 Cal.App.5th 916, 922. Sanctions cannot be awarded under §128.5 absent a showing of subjective bad faith. Levy v. Blum (2001) 92 Cal.App. 4th 635-636.

The Kaplans argue the Cohens’ prior counsel Bloch twice misrepresented that both Paul and Elaine Cohen signed the settlement agreement, when Elaine had not signed. They argue one of those misrepresentations was made before the court on July 5, 2023. In reliance on that (mis)representation, the court dismissed the case.

Bloch states when he told the court the settlement was signed by both Cohens, he failed to notice the duplication of Paul Cohen’s signature on both blocks. Bloch decl. ¶¶4-5. The evidence suggests at least carelessness. However, Bloch fails to explain why he did not inform the court or opposing counsel of his July 6, 2023 discovery that the Cohens had not actually signed the settlement until five months later. Bloch decl. ¶7. His invocation of attorney-client privilege is misplaced. Bloch decl. ¶5. That Elaine Cohen did not sign the agreement is not an attorney-client communication. This is a fact – either she signed or did not. This fact is not subject to attorney-client privilege and does not become attorney-client privilege protected simply because the alleged signature belonged to Bloch’s client.

The Cohens and Bloch waited months, from July until October 2023, knowing the Kaplans were under the misapprehension that Mrs. Cohen signed the agreement and the parties reached a binding agreement. They failed to respond to communications regarding the status of the settlement or to correct the Kaplans’ understanding. They allowed the Kaplans to file a motion to enforce the settlement agreement in reliance on the (mis)understanding that both Cohens signed, knowing the agreement was not signed by Elaine Cohen.

The Cohens and Bloch acted in bad faith by failing to alert the Kaplans after the July 5, 2023 OSC hearing that Elaine Cohen did not sign the agreement. The Kaplans filed a motion in reliance on the misapprehension that Elaine Cohen signed, when the Cohens and Bloch knew she had not.

Sanctions pursuant to CCP 128.5 are appropriate. However, the Zuidema declaration in support of the motion and additional fees sought in the reply are vague as to the tasks performed. The court cannot assess whether the hours requested are reasonable, as there are no time sheets attached, nor a detailed description of tasks performed.

The requested hourly rate of $450 is not unreasonable. However, 27.2 hours, plus 9.7 hours (Zuidema decl., para. 10), plus another 14.7 hours responding to the oppositions (Zuidema reply decl., para. 6) plus 2 hours for the hearing is not reasonable. The court will allow counsel to provide additional information regarding the hours sought prior to issuing a sanctions award. The court will issue sanctions for the time to draft the motion, review oppositions and reply. The court will also issue sanctions for time subsequent to Cohens’ counsel’s admission that he learned the settlement had not been signed and he failed to tell Kaplans’ counsel the document was never signed by Elaine Cohen.