Judge Stephen P. Pfahler, Case Number: BC430809, Date: 2024-07-08 Tentative Ruling

Judge: Stephen P. Pfahler, Case: BC430809, Date: 2024-07-08 Tentative Ruling

Case Number: BC430809 Hearing Date: July 8, 2024 Dept: 68

Dept. 68

Date: 7-8-24

Case #: BC430809

Trial Date: Not Set

OSC RE: DISMISSAL

MOVING PARTY: Plaintiff, Sylvester Stewart, et al.

RESPONDING PARTY: Defendants, Gerald Goldstein, et al.

RELIEF REQUESTED

OSC re: Dismissal pursuant to Code of Civil Procedure Section 664.6 or Setting of the Case for Trial

BACKGROUND

On January 28, 2010, Sylvester Stewart, and Ken Roberts filed a complaint for Damages For Breach Of Contract; Damages For Breach Of Implied Covenant Of Good Faith And Fair Dealing; Unjust Enrichment; Rescission, Restitution And Declaratory Relief; Accounting; Damages For Breach Of Fiduciary Duty; Damages For Fraud; Damages For Constructive Fraud; Damages For Breach of Contract; Damages for Breach of Fiduciary Duty; Damages For Fraud; Damages For Constructive Fraud; Conversion; Conversion; Money Had And Received; Fraudulent Transfer; Restitution For Unfair Business Practices In Violation Of California Business And Professions Code § 17200 Et Seq.; Imposition Of Constructive Trust; and Declaratory Relief.

As articulated in the briefs from Virginia Pope, the court summarizes the current state of the settlement agreement. Virginia Pope was deemed successor in interest to plaintiff Roberts. Two severed trials occurred as to Broadcast Music, Inc. (BMI) and the Even St. parties. Both cases were reversed and remanded for new trials. On October 13, 2017, the parties agreed to certain payments to Pope and dismissal of her claims in this action. The settlement relied on two conditions: 1) Approval of the Settlement in a bankruptcy case wherein Even St. was the Debtor; 2) Resolution of a case pending in the New York Surrogate Court resolving the claims as to the Estate of Ken Roberts. The petition to the New York Surrogate Court was filed and accepted.

RULING: Dismissed, Without Prejudice, Pursuant to Code of Civil Procedure section 664.6

At the March 20, 2024, status conference, the court set an OSC re: Dismissal pursuant to Code of Civil Procedure Section 664.6 or a Setting of the Case for Trial. The court presented five questions to the parties with an order for supplemental briefing to address those questions:

1. Whether the case can legally and should be dismissed pursuant to CCP section 664.6, without prejudice, with the Court to retain jurisdiction to enforce the terms of the settlement. Given the parties have all executed a signed settlement agreement and release, the parties are ordered to address why this Court can’t dismiss the case and then enforce whatever settlement terms need to be enforced, if necessary.

2. What happens to the settlement in this case if the New York Court does not sufficient approve the accounting, such that the “condition” in the settlement is not satisfied. Or, alternatively, is such a denial not a reasonable or realistic probability, because the New York Court will be issuing a decree of the subject account.

3.The status of the New Court proceedings (and all counsel is ordered to proactively obtain a detailed update from their respective New York counsel).

4. Whether the parties are willing to extend the three-year deadline under Code of Civil Procedure Section 583.320 re-trial but not set the case for trial based on the pending decision from the New York Court. If the parties are not willing to extend the deadline, the Court may be forced to set the matter for trial given the pending approval by the New York Court.

5. Any other legal or equitable issues, supported by legal authority, which will allow the Court to make a decision on how to proceed with this action.

Multiple parties submitted briefs with defendants requesting a dismissal pursuant to Code of Civil Procedure section 664.6, and with Plaintiffs counter proposing a reset of the trial date pending the New York Surrogate Court decision, or alternatively a potential extension of the three-year trial deadline.

The Goldstein Parties, Glenn Stone, Even St. Productions, LTD., and Majoken, Inc. (Goldstein) categorically maintain dismissal is required due to both the only remaining claim involving Pope, and reliance on the settlement agreement requiring enforcement by the Bankruptcy Court. The bankruptcy court became involved when both Even St. and Majoken filed Chapter 11 Bankruptcy petitions. The claims were settled in mediation and a settlement agreement before the Bankruptcy Court was signed in February 2018. The Goldstein parties acknowledge the pending NY Surrogate Court ruling on the Accounting, but again cites back to the terms of the settlement agreement executed before the Bankruptcy Court.

Defendant Broadcast Music, Inc. (BMI) also moves for dismissal under Code of Civil Procedure Section 664.6. Consistent with the Goldstein defendants and cites to the Bankruptcy settlement. BMI also submits a declaration from Marceline Tempesta. The declaration states that New York law requires the New York Surrogate Court to issue a ruling on the Accounting petition. According to BMI, the court has not issued an updated ruling as of June 24, 2024.

Finally, Pope and Majoken, Inc. (Pope) request the court set a trial before the December 3, 2024, which is the trial expiration date. Pope denies any enforceable settlement given the lack of any ability to enforce the terms without the New York Surrogate Court ruling. Pope acknowledges the Bankruptcy Court settlement, but challenges any means of enforcement given the pending accounting and required potential payment from Goldstein and Even St. According to Pope, BMI remains willing to extend the trial deadline, while Goldstein and Even St. oppose further extension.

The court cites to certain material terms of the settlement:

“a. By no later than ten business days after the full execution of this Agreement, the Pope Parties, the Even St. Parties and BMI shall take such action as may be necessary to advise all courts (including appellate courts) of the execution of this Agreement and the Parties’ conditional settlement of their disputes, and shall jointly request a stay of any and all actions among them and a suitable extension of any relevant briefing schedules. ...

“b. By no later than ten business days after the full execution of this Agreement by all Parties, Pope, as preliminary executor of the Roberts Estate, shall file in the Surrogate’s Court either a Petition for Voluntary Accounting in the Matter of the Judicial Settlement of the First Intermediate Accounting of the Preliminary Executor or a Petition to Resign and for Voluntary Accounting in 4 #4846-0382-3962v6 the Matter of the Judicial Settlement of the First and Final Accounting of the Preliminary Executor ...

“c. Entry of the Surrogate’s Court Accounting Decree.

“d. By no later than five business days after the entry of the Surrogate’s Court Accounting Decree, Even St. and Even St. Majoken shall have filed a motion with the Bankruptcy Court seeking approval of this Agreement; provided that any order approving this Agreement must be in form and substance reasonably acceptable to each of the Parties (the “Settlement Order”).

...

“3. Settlement Payments. Subject to the satisfaction of and in accordance with the conditions to effectiveness set forth in ¶ 2 above, Even St. and BMI will each wire the sum of $400,000, for payments totaling $800,000 in the aggregate (the “Settlement Payment”), to the Spillane Trial Group PLC Client Trust unless otherwise required by the Surrogate’s Court Accounting Decree. BMI shall not use any portion of any Performance Royalties to make the Settlement Payment required hereunder. ...

“6. Resolution and Satisfaction of BMI Claims. Upon approval by the Bankruptcy Court of the terms and conditions of this Agreement, and subject to the satisfaction of all of the conditions set forth in ¶¶ 2 and 3 above, (i) the BMI Claims shall be deemed fully and finally satisfied pursuant to the terms of this Agreement ...

“7. Specific Performance. The Parties agree that in the event of any breach of or dispute regarding this Agreement, each Party (i) consents to the exclusive jurisdiction of 7 #4846-0382-3962v6 the Bankruptcy Court to adjudicate such matter and (ii) is entitled to seek specific performance of this Agreement.”

In considering the first question, the court asked the parties to determine whether the court can dismiss the action under Code of Civil Procedure section 664.6. The section states: “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.)

“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.)

All parties agree to the existence of the agreement before the Bankruptcy Court. It also remains undisputed that all parties complied with all terms, and the outstanding issue—a decision from the New York Surrogate Court—remains the sole unresolved contingency for compliance. Pope specifically challenges the subject element as a basis for barring dismissal, due to the possibility of a denial by the New York Surrogate Court to approve the accounting.

Again, BMI categorically maintains an order must be issued by the New York Surrogate Court. The court accepts the cited law and declines to second guess the law or protocols of New York Surrogate Court albeit the four years and counting delays in the pending action. Thus, the court finds no basis for disregarding the (presumably) forthcoming New York Surrogate Court ruling.

The court also accepts the concern of Pope regarding a potential rejection of the accounting, but the argument somewhat disregards the plain language of the settlement agreement. The accounting ruling is material to the settlement. The possibility to a rejection of the accounting addresses a contingency beyond the scope of the agreement resolving all claims, and effectively disregards the policy favoring enforcement of settlement agreements.

Allowing the case to proceed to trial in December 2024 with the potential New York Surrogate Court ruling potentially still pending effectively eviscerates the entire settlement agreement. The court finds no support for this outcome given the voluntary, explicit, and executed agreement. Public policy favors adoption and enforcement of the settlement agreement rather than a potential rewriting of all the terms, even without considering the effect of the New York Surrogate Court ruling. The court therefore elects to dismiss the case, without prejudice, subject to the terms of the Bankruptcy Court settlement agreement pursuant to Code of Civil Procedure section 664.6.

The court however still acknowledges the possibility of a rejection from the New York Surrogate Court of the petition. A dismissal of the action under Code of Civil Procedure section 664.6 in no way precludes the court from determining new means and procedures for insuring compliance with the terms of the agreement. The court therefore in no way finds complete preclusion in case of a failure of one contingency. The court instead defers potential consideration of this contingency, as necessary. In the meantime, given the impending deadline and lack of agreement for an extension, the court finds a trial on the action constitutes a premature action in violation of settlement public policy.

On question two regarding the potential rejection of the accounting by the New York Surrogate Court, again, the court reserves the right to revisit the terms of the settlement agreement as necessary within the context of an enforcement hearing. Any discussion without an actual ruling constitutes speculation.

The court accepts the update from BMI regarding the New York Surrogate Court. Pope addressed the issue of extending the deadline. The parties are not in accord, and the court cannot enforce such an extension. The court therefore finds the issue moot given the intended dismissal under Code of Civil Procedure section 664.6. Finally, the court reiterates its right to address any equitable concerns in any potential enforcement hearing issues, if applicable.

The instant case is therefore hereby dismissed forthwith, without prejudice, pursuant to Code of Civil Procedure section 664.6 with the Court to retain jurisdiction to enforce the terms of the settlement agreement, if necessary.

Pope to give notice to all parties.