Judge: Helen Zukin, Case: 20SMCV00147, Date: 2022-08-05 Tentative Ruling

Case Number: 20SMCV00147-01    Hearing Date: August 5, 2022    Dept: 207

Background

Plaintiff Annelee Smith-Winbush (“Plaintiff”) brings this action against Defendants Robert Johnson (“Johnson”), Lisa Johnson, Preston Walker (“Walker”) and Novus Content, LLC (“Novus”), alleging Defendants failed to repay a loan made by Plaintiff to Walker and Johnson intended to be used in the operation of their company, Novus. The operative complaint in this action is the First Amended Complaint (”FAC”), filed on January 12, 2021.

On November 2, 2021, Plaintiff reached a settlement with each of the Defendants with the exception of Walker. The settlement was conditioned on payment of $180,000 to Plaintiff, commencing with a $20,000 payment at the time of the settlement with the balance to be paid in subsequent monthly installments. At the time the settlement was reached, Walker had yet to appear as a party in this litigation.

On December 8, 2021, counsel for the settling Defendants sent an email to Plaintiff’s counsel stating the settling Defendants would not be going forward with the payments under the settlement agreement and instead wanted to try the instant case on the merits following the appearance of Walker in the litigation.

On January 7, 2022, Plaintiff filed a motion to enforce the settlement with the settling Defendants. Specifically, Plaintiff sought to enforce a provision of the agreement which provided for the entry of judgment against defendant Robert Johnson in the amount of $160,000 if the settling Defendants failed to make the payments required by the agreement. Plaintiff’s motion sought an order granting judgment against the settling Defendants for $160,000. The settling Defendants opposed, arguing the settlement should not be enforced and the provision of the agreement providing for the entry of a judgment for $160,000 was expressly limited to Robert Johnson only. Accordingly, the settling Defendants asked the Court to either dismiss Plaintiff’s case as to Lisa Johnson and Novus or let them both stay in the case to litigate Plaintiff’s claims on their merits.

On March 16, 2022, the Court entered an order granting Plaintiff’s motion to enforce the settlement with the Settling Defendants. The Court found Plaintiff was entitled to entry of judgment against Defendant Robert Johnson only. As to Defendants Lisa Johnson and Novus, the Court rejected their request, stating “the Court will not dismiss Defendant Lisa Johnson and Novus Distribution, LLC, nor grant Defendants Lisa Johnson and Novus Distribution, LLC’s, request to remain in the case and litigate Plaintiff’s claims.” The Court recognized the dismissal of the settling Defendants under the settlement agreement was conditioned on Plaintiff’s receipt of the settlement funds.

On April 12, 2022, judgment was entered against Johnson.

On May 17, 2022, Walker brought an ex parte application to dismiss the FAC, arguing Plaintiff released all of her claims against Walker in the settlement agreement reached with the other Defendants. The Court continued the hearing on Walker’s motion and ordered supplemental briefing from the parties. The parties have timely filed their supplemental briefing.

Objections to Evidence

Walker’s objections to paragraphs 12, 13, 18, 22, 24, 26, and 29 of the Declaration of Daniel Crumby are OVERRULED. Walker’s remaining objections to the Declaration of Daniel Crumby are SUSTAINED.

Legal Standard

Pursuant to CCP § 664.6, if parties to pending litigation stipulate, in a writing signed by the parties outside 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. The purpose of § 664.6 is to permit a court, via a summary proceeding, to finally dispose of an action when the existence of the agreement or the terms of the settlement are subject to reasonable dispute. (Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 994.) When ruling on a section 664.6 motion, the trial court acts as a trier of fact to determine whether a settlement has occurred, which is also an implicit authorization for the trial court to interpret the terms and conditions to settlement. (Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4th 884, 889.)

Analysis

Walker moves to enforce the settlement agreement reached between Plaintiff and the other Defendants, arguing the agreement releases all of Plaintiff’s claims against him. Walker’s argument is based on section 8.1 of the agreement, which states:

Conditioned on the satisfactory payment to be made, as set forth in Section 3, Plaintiff releases and discharges Defendants and each of Defendant’s respective past, present, and future principals, affiliated corporations and entities, owners, directors, officers, managers, members, employees, subsidiaries, agents, representatives, heirs, beneficiaries, shareholders, alter egos, attorneys, predecessors, successors, assigns, insurers, and underwriters and each of them, and all persons acting by, through, under or in concert with such persons, from any and all actual or potential claims, obligations, debts and causes of action of any kind or nature whatsoever, whether known or unknown, anticipated, suspected, fixed, conditional, or contingent based on, arising out of, in connection with, or relating in any way to any dealings between Plaintiff, on the one hand, and Defendants, on the other hand, prior to the effective date of this Agreement, including without limitation of the generality of the foregoing, the subject matter of the Action and/or Recitals hereinabove.

(Emphasis added.)

Walker argues the FAC alleges he acted as Johnson’s business partner and agent, and thus Plaintiff released her claims against him by releasing her claims against Johnson’s agents in the agreement.

However, Walker has not provided the Court with any evidence demonstrating he was, in fact, Johnson’s agent. Walker relies solely on the allegations of the FAC to establish he should be deemed to be Johnson’s agent for purposes of the settlement agreement. But the allegations of the FAC are just that—allegations—not evidence. The Court notes Walker filed an Answer to the FAC on May 3, 2022, in which he expressly “denies each and every allegation and prayer for relief set forth in the Complaint.” (Answer at 2.) Walker has thus denied the allegation that he was acting as Johnson’s agent.

Walker claims he must be deemed an intended third-party beneficiary of the settlement agreement, citing Brinton v. Bankers Pension Servs. (1999) 76 Cal.App.4th 550. The Brinton Court held:

Civil Code section 1559 provides “[a] contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” Case law applying this statute has held “[t]he third party need not be identified by name. It is sufficient if the claimant belongs to a class of persons for whose benefit it was made. [Citation.] A third party may qualify as a contract beneficiary where the contracting parties must have intended to benefit that individual, an intent which must appear in the terms of the agreement. [Citation.]” (Principal Mutual Life Ins. Co. v. Vars, Pave, McCord & Freedman (1998) 65 Cal. App. 4th 1469, 1485-1486 [77 Cal. Rptr. 2d 479]; see also Harper v. Wausau Ins. Co. (1997) 56 Cal. App. 4th 1079, 1086-1087 [66 Cal. Rptr. 2d 64].)

(Id. at 558 [brackets in original].) To establish himself as an intended third-party beneficiary under Brinton, Walker has the burden of showing the parties intended to benefit him in signing the settlement agreement. Walker has not made such a showing. Again, he relies exclusively on the allegations of the FAC to show the parties intended to benefit him by referencing “agents” in section 8.

By contrast, Plaintiff has submitted evidence indicating Walker “was not mentioned during the settlement negotiations as someone who this action would dismiss.” (Crumby Decl. at ¶ 22.) Plaintiff also points to section 4 of the settlement agreement as contradicting Walker’s interpretation of section 8.1. Section 4 provides:

Upon the timely receipt and verification of the total settlement funds of $180,000.00 received by Plaintiff’s counsel’s bank in which the payment is deposited and confirmed as related to this Agreement, Plaintiff shall file within three (3) business days thereafter, a Request for Dismissal with Prejudice as to the Defendants identified herein. Plaintiff’s counsel will provide Defendants’ counsel with a conformed stamped and entered copy of the Request for Dismissal, once returned by the Court.

Plaintiff argues if the release in section 8.1 was intended to release Plaintiff’s claims against Walker, then section 4 would similarly provide for the dismissal of Plaintiff’s claims against Walker. However, the language of section 4 provides only that Plaintiff will dismiss the action against the settling Defendants. The Court agrees. Walker has not demonstrated he is an agent as the term is used in section 8.1 of the settlement agreement, and accordingly his motion to dismiss is DENIED.

The same result would follow even if the Court were to find Walker was Johnson’s agent for purposes of section 8.1. The release in section 8.1 is “Conditioned on the satisfactory payment to be made, as set forth in Section 3.” The payment contemplated in section 3 of the agreement is the payment of $180,000 from the settling Defendants to Plaintiff. Plaintiff represents no such payment has been made to date. (Crumby Decl. at ¶ 25.) Walker offers no evidence demonstrating otherwise. Accordingly, even if Walker could demonstrate he was an intended beneficiary of section 8.1, he would not be entitled to dismissal of the action against him as the settling Defendants have not made the required payment. This is a separate and independent basis compelling the denial of Walker’s motion.

Conclusion

Defendant Preston Walker’s motion to dismiss Plaintiff’s claims is DENIED.