Judge Salvatore Sirna, Case KC069072 2023-01-03 Tentative Ruling

Judge: Salvatore Sirna, Case: KC069072, Date: 2023-01-03 Tentative Ruling

Case Number: KC069072 Hearing Date: January 3, 2023 Dept: G

Defendant West Hills Construction, Inc.’s Motion to Enforcement Settlement Agreement

Respondent: Plaintiffs McKinley Home Foundation and McKinley Children’s Center, Inc.

TENTATIVE RULING

Defendant West Hills Construction, Inc.’s Motion to Enforcement Settlement Agreement is DENIED.

BACKGROUND

This is a breach of contract and warranty action. On June 13, 2011, McKinley Home Foundation and McKinley Children’s Center, Inc. (collectively, Plaintiffs) entered into an agreement with Defendant West Hills Construction, Inc. in which Defendant agreed to install a solar power system manufactured and supplied by Green Volts, Inc. (Green Volts) in exchange for payment of $2,481,088.21. Defendant installed the system in May 2012 and in April 2015, a large number of components failed leading to the complete failure of the system.

On February 16, 2017, Plaintiffs filed their first complaint. On December 22, Plaintiffs filed a First Amended Complaint against Defendant and Does 1-30, alleging causes of action for (1) breach of warranty, (2) breach of contract, and (3) breach of contract - third party beneficiary. On July 24, 2017, Defendant filed a cross-complaint against Green Volts and Roes 1-20 for (1) equitable indemnity, (2) declaratory relief, (3) contribution, and (4) express indemnity.

On March 23, 2018, Defendant filed a motion for summary judgment on Plaintiffs’ claims. On July 11, the court granted Defendant’s motion. However, the Court of Appeals overturned the judgment on the grounds that the warranty was ambiguous and remanded. After trial was set for June 14, 2022, a notice of settlement was filed on June 2.

On November 16, 2022, Defendant filed the present motion. A hearing is set for January 3, 2023. An OSC Re: Dismissal (Settlement) is set for June 12, 2024.

ANALYSIS

Defendant seeks an entry of judgment enforcing the terms of a settlement agreement between Defendant and Plaintiffs. For the following reasons, the court DENIES this request.

Code of Civil Procedure section 664.6 provides a summary procedure that enables courts to enforce a settlement agreement by entering a judgment pursuant to the terms of the parties’ settlement. In relevant part, it provides as follows:

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. (Code Civ. Proc., § 664.6, subd. (a).)

A writing is considered signed if signed by the party or an attorney who represents the party. (Code Civ. Proc., § 664.6, subd. (b).)

In this case, there is not a signed settlement agreement between the parties. Instead, Defendant points to a series of agreements from email conversations, arguing Plaintiffs agreed that (1) Defendant would pay $550,000 to Plaintiffs through its insurer, (2) Plaintiffs would retain Defendant to retrofit the solar system at Plaintiffs’ facility with no costs for labor, and (3) Plaintiffs would file a request for dismissal of the case with prejudice. (Marcucci Decl., ¶ 2-3.)

On May 31, 2022, Defendant’s counsel sent Plaintiffs’ counsel an email stating as follows:

“Per our call, we have a tentative agreement to resolve this matter with a contribution of $550,000 from West Hills’ insurer and labor from West Hills itself, to retrofit the solar system at the McKinley facility. We generally discussed certain terms to include confidentiality and the actual retrofit contract to be independent from the settlement agreement but the actual terms of the settlement agreement to be determined.

At your earliest convenience, please inform the court, either by notice of settlement as mentioned in your e-mail and as we discussed (preferred) or by stipulation to continue trial while we finalize the terms.” (Marcucci Decl., Ex. 2.)

By its plain language, this is merely a memorialization of parties’ discussions and explicitly states the agreement is tentative while parties continue to finalize the terms. Plaintiff’s counsel responded the same day via email, stating Plaintiffs agreed to the general settlement terms but expressed concern about an independent construction contract, stating Plaintiffs would prefer to reply on the court’s continued jurisdiction. (Marcucci Decl., Ex. 3.) On June 1, Plaintiffs’ counsel emailed Defendant’s counsel with a draft notice of conditional settlement, noting that a deadline of 2024 should give Defendant sufficient time to complete the retrofit. (Marcucci Decl., Ex. 4.)

Defendant’s counsel claimed that Plaintiffs then began demanding additional items including a performance bond of $1,000,000 at an additional cost of tens of thousands of dollars, a stipulated judgment for cash, and additional funds to be paid if the original amount was insufficient to cover retrofit costs. (Marcucci Decl., ¶ 5.) On November 14, 2022, Defendant’s counsel claims Plaintiffs’ counsel provided formal notice that Plaintiffs did not intend to settle. (Marcucci Decl., ¶ 6.)

An agreement to agree on essential terms is not enforceable under California law. (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 213.) This is because “the failure to reach a meeting of the minds on all material points prevents the formation of a contract even though the parties have orally agreed upon some of the terms, or have taken some action related to the contract.” (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 359.) “When it is clear, both from a provision that the proposed written contract would become operative only when signed by the parties as well as from any other evidence presented by the parties that both parties contemplated that acceptance of the contract's terms would be signified by signing it, the failure to sign the agreement means no binding contract was created.” (Id., at p. 358.) “This is so even though the party later sought to be bound by the agreement indicated a willingness to sign the agreement.” (Ibid.)

Here, Code of Civil Procedure section 664.6, subdivision (a) requires settlement agreements not made in the presence of the court to be memorialized in a signed writing. Furthermore, the parties’ own communications establish their agreements were tentative. In the opening email provided to the court, Defendant’s counsel explicitly called the agreement “tentative” and requested a notice of settlement while parties “finalize the terms.” (Marcucci Decl., Ex. 2.) The response from Plaintiffs’ counsel also referred to “a reasonable solution as we flesh out the settlement details” when expressing a preference for keeping jurisdiction with the court. (Marcucci Decl., Ex. 3.) In the last email from Plaintiffs’ counsel that provided the draft notice of settlement, counsel “wanted to leave our options open with today’s filings” and mentioned future discussions of the timing for retrofit and filing dismissal. (Marcucci Decl., Ex. 4.)

Ultimately, the email chain provided to the court by Defendant merely demonstrates parties had come to a tentative agreement on Defendant covering the costs of retrofitting solar power systems for Plaintiffs and that they ultimately intended to come to a final agreement that would have been in writing or presented to the court orally. Thus, Defendant has not established the existence of an enforceable settlement agreement that the court could issue judgment on.

Accordingly, Defendant’s motion is DENIED.

CONCLUSION

Based on the foregoing, the court DENIES Defendant’s motion to enforce settlement agreement.