Judge Stephen Morgan, Case 22AVCV00127 2023-03-07 Tentative Ruling

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This is an action stemming from fraud. Plaintiff Jacqueline C. Howarth (“Plaintiff”) presents that Defendants Derek B. Howarth (“Derek”[1]) and Stephanie M. Howarth (“Stephanie” and collectively “Defendants”) are her adopted son and his wife, respectively. Plaintiff alleges that Derek and her late husband, Harold Howarth, Jr. (“Harold”[2]), verbally agreed to two things: (1) Derek was to invest Harold’s life insurance proceeds that Plaintiff was to receive upon his death for Plaintiff so she could be financially secure until her death and (2) Derek was to pay Bill Proster $42,000.00 for the real property located at 11043 Ambrosio, Desert Hot Springs, California 92240 (“Ambrosio Property”), transfer title to Plaintiff, and Plaintiff would receive $1,266.00 monthly payments from Jose and Maria Trejo who the home was financed to with an option to buy. Plaintiff states that she was present when both these agreements were made. Plaintiff alleges that, despite these agreements, Derek (1) purchased an investment property located at 44342 27th Street West, Lancaster, Los Angeles County, California 93536 (“Lancaster Property”) with the life insurance proceeds; (2) purchased an investment property at 39312 Dunbar Street, Palmdale, Los Angeles, California 93551 (“Palmdale Property”) with the life insurance proceeds; (3) sold the Palmdale Property Derek recorded Intra-Family Transfers of the Palmdale Property and used the proceeds to purchase their home at 6130 Firestone Drive, Fontana California 92336 (“Fontana Property”); (4) Derek recorded Intra-Family Transfers for the Palmdale and Fontana Properties to Stephanie; (5) convinced Plaintiff that she should not be on the title for her home located at 17349 N. Flowing Spring Drive, Surprise, Arizona 85347 (“Surprise Property”); (6) refinanced the Surprise Property on unfavorable terms; (7) informed Plaintiff that she should move forward on her own on June 12, 2021, and (8) refused to return Plaintiff’s money, property, assets, securities, and anything else that was purchased with her money. During the aforementioned course of events, Plaintiff also alleges that Derek informed her that he would pay her $825.00 a month, starting February 2012, to repay Plaintiff for money Derek borrowed on a loan. Plaintiff presents that Derek states that this was an agreement in exchange for the capital he gained from the life insurance proceeds.

On February 28, 2022, Plaintiff filed her Complaint alleging three (3) causes of action for: (1) Financial Exploitation of an Elder in Violation of A.R.S. § 46-471 against Defendants; (2) Fraud and Concealment against Derek; and (3) Conversion against Defendants.

On August 24, 2022, Plaintiff filed a Motion for Trial Preference, subsequently granted.

No Reply has been filed. “All. . .reply papers [shall be filed with the court and a copy served on each party] at least five court days before the hearing.” (Cal. Code Civ. Proc. § 1005(b).) “Section 1013, which extends the time within which a right may be exercised or an act may be done, does not apply to a notice of motion, papers opposing a motion, or reply papers governed by this section.” (Ibid.) The hearing on this matter is set for March 07, 2023. Accordingly, a Reply was due by February 28, 2023. Should a Reply be filed, it is now untimely.

Application – Plaintiff moves for sanctions as Derek withdrew $7,500.00 from Plaintiff’s bank account after the settlement agreement between the parties was signed.

Prior to this suit, Derek was added to Plaintiff’s bank account when he was in a position of trust to Plaintiff and her power of attorney.

· In 2021, Derek’s position as power of attorney was revoked when Plaintiff learned of the financial elder abuse that is the subject of this lawsuit.

· On December 14, 2022, the parties reached a settlement and executed a settlement agreement.

· On December 14, 2022, after the settlement agreement was signed, Derek withdrew $7,500.00 from Plaintiff’s bank account. (Pl.’s Exh. C.)

· On January 3, 2023, Plaintiff’s counsel, Stephanie Sherman (“Sherman”) contacted defense counsel, Christian Arrieta (“Arrieta”), via email advising him of the theft and asking him to instruct Derek to return Plaintiff’s money. (Pl.’s Exh. A.)

· On January 04, 2023, Sherman informed Arrieta that she would be filing a motion for sanctions against both Derek and Arrieta. (Pl.’s Exh. B.)

Plaintiff contends that the conduct of Derek and Arrieta violates the spirit and purpose of settlement and is meant only to harass and harm Plaintiff emotionally and financially in violation of Cal. Code Civ. Proc. § 128.5, cause unnecessary delay, and to increase the costs of litigation in a matter Derek agreed to settle.

Derek highlights that Defendants have denied, and to this day, still deny the allegations of the Complaint. Derek believes that he is entitled to the $7,500.00 as the $7,500 held in the Chase bank account represented the balance of funds deposited there by Derek at the rate of $825 per month, in furtherance of the arrangement that he had with his mother throughout the past ten years stemming from the rent collected by Defendants from their Lancaster rental. In other words, Derek believes the funds that are specifically released by Plaintiff in consideration for the total sum of $400,000.

1.1 In Consideration for Plaintiff’s full release of all of Plaintiff’s claims related to or arising out of [all of the claims, causes of action, allegations and relief requested by the Complaint, and Defendants’ responses thereto, are incorporated herein by the reference, and collectively referred to herein as the “Disputed Matters”], including without limitation, claims related to rental income and ownership of the real property commonly known as 44342 27^th Street West, Lancaster, Los Angeles County, California 93536 and all payments made to date by Defendants to Plaintiff, Defendants shall pay Plaintiff the total sum of Four Hundred Thousand Dollars ($400,000.00) (the “Settlement Amount”), in installments bearing no interest as follows:

a. Twenty Thousand Dollars ($20,000) due and payable to Sherman Law, P.C. (with memorandum reference to Jacqueline Howarth) within seven (7) business days after the Execution Date;

b. Twenty Thousand Dollars ($20,000) due and payable to Sherman Law, P.C. (with memorandum reference to Jacqueline Howarth) within one hundred and twenty (120) business days after the Execution Date; and

c. Three Hundred and Sixty Thousand Dollars ($360,000) due and payable to Sherman Law, P.C. (with memorandum reference to Jacqueline Howarth) within two hundred ten (210) business days after the Execution Date.

1.2 In consideration for the Settlement Amount, Plaintiff waives any right, title, or interest in the real property commonly known as 44342 27^th Street West, Lancaster, Los Angeles County, California 93536, including without limitation, any right to income from said property.

1.3 Within seven (7) business days after the Execution Date, Plaintiff shall file a Notice of Settlement of Entire Case;

1.4 Within seven (7) business days after the Execution Date, Plaintiff’s counsel shall remove or cause to be removed all references to Disputed Matters and all references to Defendants from any publication, including without limitation, from counsel’s website(s);

1.5 Immediately payment in full of the Settlement Amount, Plaintiff shall file a Request for Dismissal of the entire action with prejudice, and counsel for Plaintiff and Defendants shall stipulate to have the entire record of the case sealed by the Court.

2. Except for the obligations set forth in this Agreement and subject to the condition precedent of court approval, each of the Parties, for self, successors and assigns hereby fully releases, cancels, waives, withdraws and discharges any and all rights, actions, causes of actions, petitions, objections or demands, known or unknown, which he/she/it ever had, has now, or hereafter may have against all of the other Parties and, as the case may be, his/her/its/their officers, directors, shareholders, partners, managers, members, attorneys, employees, successors, assigns, insurers and agents which are the subject of, relate to, arise out of, or in any manner are connected with Disputed Matters.

Derek believes that ¶ 1.1 of the settlement agreement gives him the ability to withdraw $7,500 from Plaintiff’s account.

Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract's terms. (Cal. Civ. Code § 1639 ["[w]hen a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible ... "]; Cal. Civ. Code, § 1638. [the "language of a contract is to govern its interpretation ... "].) Extrinsic evidence is admissible, however, to interpret an agreement when a material term is ambiguous. (Code Civ. Proc., § 1856, subd. (g); Pacific Gas & Electric Co v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 3 7 [if extrinsic evidence reveals that apparently clear language in the contract is, in fact, susceptible to more than one reasonable interpretation, then extrinsic evidence may be used to 'determine the contracting parties' objective intent]; Los Angeles City Employees Union v. City of El Monte (1985) l77 Cal.App.3d 615, 622.)

Here, the Court need not look at intrinsic evidence. The Settlement Agreement is silent as to Plaintiff’s bank account. Derek seeks to include the bank account because he has placed money in it that is claimed to have derived from the property that is mentioned in the Settlement Agreement, 44342 27^th Street West, Lancaster, Los Angeles County, California 93536.

"Without mutual assent, there is no [agreement]." (Merced County Sheriffs Employees' Ass'n v. County of Merced (1987) 188 Cal.App.3d 662, 670.) "There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and [para.] (a) neither party knows or has reason to know the meaning attached by the other; or [para. ] (b) each party knows or each party has reason to know the meaning attached by the other. Under these rules no contract is formed if neither party is at fault or if both parties are equally at fault." (Ibid. [citations omitted].) That is, if there is no meeting of the minds as to essential terms of an agreement which can be “traced to ambiguity for which neither party is to blame” then there is no enforceable agreement. (Tex-Cal Land Management, Inc. v. Agricultural Labor Relations Bd. (1982) 135 Cal.App.3d 906, 916.)

Here, the settlement agreement does not contemplate the money in Plaintiff’s Bank Account. As such, the Motion for Sanctions under Cal. Code Civ. Proc. § 125.8 is not the appropriate mechanism and is, accordingly, DENIED.

[1] As Defendants share the same surname, the Court addresses each individually by their first name for the purpose of clarity. No disrespect is meant.

[2] Plaintiff’s late husband, Harold Howarth, Jr., also shares the same surname as Defendants. The Court addresses Plaintiff’s late husband by his first name for the purpose of clarity. No disrespect is meant.