Judge: Stephen P. Pfahler, Case: 19CHCV00319, Date: 2022-10-27 Tentative Ruling

Case Number: 19CHCV00319    Hearing Date: October 27, 2022    Dept: F49

Dept. F-49

Date: 10-27-22

Case # 19CHCV00319

Trial Date: N/A

ENFORCE SETTLEMENT

MOVING PARTY: Defendants/Cross-Complainants, Robert Milman, et al.

RESPONDING PARTY: Plaintiff/Cross-Defendant, Spencer & Mulally, APC, et al.

RELIEF REQUESTED

Motion to Enforce the Settlement Agreement

SUMMARY OF ACTION

Plaintiff, Spencer & Mulally, APC alleges it provided legal services to Defendants Robert Milman and The Check Connection, Inc. for a total value of $88,034.39 and $141,955.24.

On April 12, 2019, Plaintiff, pro se, filed a complaint for Open Book Account and Services Rendered. On October 8, 2019, Plaintiff filed its first amended complaint for Open Book Account and Services Rendered. On October 10, 2019, a peremptory challenge was filed in Department 47.

The parties also participated in non-binding arbitration. The award was rejected by Defendants.

On January 28, 2020, the court sustained the demurer to the first amended complaint in part, and without leave to amend in part. On February 4, 2020, Plaintiff filed a second amended complaint for open book account (The Check Connection) and quantum meruit/services rendered (Millman).

On March 6, 2020, Defendants answered and filed a cross-complaint for professional negligence. On June 12, 2020, Defendants filed their first amended cross-complaint for professional negligence (two causes of action). On June 30, 2020, Defendants filed their first amended answer to the second amended complaint.

On October 29, 2020, the court overruled the demurrer of Plaintiff to the first amended answer to the second amended complaint, and denied the motion to strike as well. On the same date, the court sustained the demurrer of Cross-Defendants, Spencer & Mulally, APC, et al. to the first amended cross-complaint for professional negligence without leave to amend, but granted leave to file a second amended cross-complaint in order to allege a claim challenging the reasonableness of the attorney fees at issue. On November 25, 2020, Cross-Defendants filed their second amended cross-complaint for Declaratory Relief. On May 20, 2021, the court overruled the demurrer to the second amended cross-complaint. Cross-Defendants answered on June 1, 2021.

On April 18, 2022, the parties presented a stipulated settlement to the court.

RULING: Denied.

Defendants/Cross-Complainants Robert Milman and The Check Connection, Inc. move for enforcement of the parties April 18, 2022 settlement agreement. Specifically, moving parties request an order “barring Plaintiff Spencer & Mullaly, APC from taking any action to seek collection of attorneys’ fees from services rendered in the case of The Check Connection Inc. v. Kevin Anderson etc.” (“Anderson,” case number SC072250). Plaintiff in opposition contends any such request is extrinsic to the settlement agreement, and therefore not enforceable. Plaintiff additionally challenges the lack of any legal authority or factual support for arguments regarding equitable estoppel. Defendants/Cross-Complainants in reply reiterates the words in the agreement regarding the release of “any other contested matters.”

The court summarizes the settlement. Defendants Robert Milman and The Check Connection agreed to a $32,500 judgment with a waiver of fees and costs, including the “release of all other parties of any other contested matter,” with entry of judgment stayed contingent on compliance with a payment plan. The payment plan requires $10,000 payable within 10 days of the stipulation, with $1,500 payable per month for 15 consecutive months beginning on May 15, 2022. Plaintiff agrees to dismiss the action within 20 business days of receipt of the last payment. The agreement was signed and entered by the court on April 18, 2022.

On July 21, 2022, the court granted Defendants’ ex parte application in part. The court specially set the subject hearing (continued from October 6, 2022). Pending the hearing, the court ordered any payments due under the stipulated payment plan, deposited into a third party trust account on the agreed upon dates. On September 21, 2022, the court granted Plaintiff’s unopposed ex parte motion for entry of the stipulated judgment. On September 27, 2022, the court granted Defendants’ ex parte motion to revoke the September 21, 2022 order for entry of stipulated judgment.

The motion comes to the court as the result of Plaintiff refusal to sign a mutual release of all claims, “as required under Paragraph 4 of the Stipulation re Judgment.” Defendants/Cross-Complainants also contend Plaintiff is equitably estopped from asserting any right to seek additional attorney fees. Defendants/Cross-Complainants requested relief seeking to bar collection of attorney fees on the prior Anderson action relies on the language of the settlement agreement which states: “All parties waive fees and costs and release all other parties of any other contested matter.”

Code of Civil Procedure section 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.

(Code Civ. Proc., § 664.6.)

Strict compliance with the statutory requirements is necessary before a court can enforce a settlement agreement under this statute. (Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30, 37.) Accordingly, “parties” under section 664.6 means the litigants themselves, not their attorneys. (Levy v. Superior Court (1995) 10 Cal.4th 578, 586 (holding “we conclude that the term ‘parties’ as used in section 664.6 means the litigants themselves, and does not include their attorneys of record.”).) Additionally, the settlement must include the signatures of the parties seeking to enforce the agreement, and against whom enforcement is sought. (J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 985.)

“Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” (Weddington Prods., Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.) 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. (Id.) The court may not “create the material terms of a settlement,” and must instead decide on what terms the parties agreed upon. (Id.; Terry v. Conlan (2005) 131 Cal.App.4th 1445, 1460; Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360; Fiore v. Alvord (1985) 182 Cal.App.3d 561, 565-566.) “In acting upon a section 664.6 motion, the trial court must determine whether the parties entered into a valid and binding settlement of all or part of the case. In making this determination, trial judges, in the sound exercise of their discretion, may receive oral testimony or may determine the motion upon declarations alone.” (Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 994.)

Defendant/Cross-Complainant Milman presents an understanding of the settlement agreement via declaration. According to Milman a judgment was entered on the subject action in November 2002. A payoff demand was received from an escrow company on the judgment, thereby prompting a communication from attorney Spencer to Milman in February 2020 regarding collection on the judgment. According to Milman, Spencer & Mullaly were terminated prior to this communication and collection on the judgment was turned over to attorney Stanard. Notwithstanding the concession to awareness of the attorney lien on the Anderson judgment from Spencer, Milan maintains that the settlement in the instant action was expressly premised on no further interaction or billing associated with Spencer & Mullaly on any items, including Anderson. Attorney Stanard also confirms the understanding of the agreement between the parties regarding the waiver of any fees associated with the Anderson judgment.

Defendants/Cross-Complainants further reply on the standard language of the settlement form which states that “Plaintiff agrees to accept said sum as full payment … known or unknown, arising from the events described in the complaint with the knowledge that … will be barred from proceeding against Defendant(s) in the future regardless of what might happen.”

Plaintiff challenges the interpretations of Milman and Stanard regarding the understsanding of the agreement. Attorney Spencer categorically denies any agreement regarding collection on the Anderson judgment, and maintains the Anderson action is completely unrelated. [Declaration of Eric Spencer.]

As addressed above, the court cannot create new terms, but may consider the pleadings, terms of the agreement, and declarations. For context, the operative second amended complaint only alleged causes of action for common counts and quantum meruit recovery for services rendered on unspecified work involving defendants. The operative second amended cross-complaint only sought declaratory in reference to the “Morrissey Litigation,” identified as case number BC595796. The court finds no reference or presentation of any controversy before the court regarding Anderson in any way. The court therefore declines to enforce the standard language of the stipulation form regarding “arising from the events described in the complaint” as any basis of interpreting the settlement agreement in regards to Anderson.

Notwithstanding the lack of reference, as provided in the standard above, the court, in its discretion, can interpret the terms of the single sentence within the context of the agreement. Milman admits that the Anderson matter was not a point of consideration until February 2020. The instant matter was first filed on April 12, 2019, which well predates the notice from escrow regarding a payoff demand. Nevertheless, the cross-complaint was filed on March 6, 2020, with the second amended cross-complaint ultimately filed on November 25, 2020. Nothing prevented Milman from adding in the Anderson matter to the action, or at least seeking leave from the court.

The circumstances therefore lack any contextual support, which only leaves conflicting attorney and party declarations. The court declines to consider the potential mindset of the parties at the time of the negotiations or the possibility of retroactive realization. Given the court may not add terms to a settlement agreement, under the circumstances with no pleading reference and conflicting declarations, the court declines to interpret the single sentence regarding “any other contested matter” as a provision subsuming the Anderson attorney lien within the terms of the settlement. (Weddington Prods., Inc. v. Flick, supra, 60 Cal.App.4th at p. 809.) Moving parties fail to meet the burden establishing a basis for enforcement of the terms as requested. The court rejects the argument in reply regarding the requirement of Plaintiff to explain any claimed ambiguity of the agreement in contract. Said argument improperly seeks to shift the burden on motions to enforce settlement agreements, and lacks sufficient address of the standards for interpreting the terms. (See Civ. Code, § 1654.)

The court also addresses equitable estoppel argument. Plaintiff notes the lack of any legal citation in support of the argument, and the reply lacks any citation to the law as well. The court provides the standard:

“The elements of equitable estoppel are ‘(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. [Citation.]’ [Citation.] The detrimental reliance must be reasonable. [Citations.] [¶].”

(Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1261.)

For the same reasons discussed above, the court declines to interpret the terms of the agreement as requested by Defendants/Cross-Complainants. The conflict in the understanding of the terms, bars the court from finding a basis of equitable estoppel. Nothing in the motion supports a finding that waiver of Anderson was understood and intended by all parties. The court otherwise finds no basis of detrimental reliance by Defendants/Cross-Complainants. Milman admits to the assumption the Anderson judgment remained uncollectible, yet later collected from the prior work of Spencer & Mulally through the final work of attorney Stanard.

The court therefore denies the motion as requested.

Moving parties to give notice.