Judge Teresa A. Beaudet, Case BC708790 2023-02-16 Tentative Ruling

SARAH E. BIRCH, Plaintiff, vs. JAMES M. EDWARDS, JR., et al. Defendants.	Case No.:	BC708790
	Hearing Date:	February 16, 2023
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: CROSS-DEFENDANT SARAH E. BIRCH’S MOTION FOR SUMMARY JUDGMENT
AND RELATED CROSS-ACTION

On June 5, 2018, Plaintiff Sarah E. Birch (“Birch”) filed this action against Defendants James M. Edwards, Jr. and Xceed Financial Credit Union (“Xceed”). The Complaint asserts one cause of action for the partition and sale of real property.

In the Complaint, Birch alleges that she and James M. Edwards, Jr. are each the owners of a fifty percent interest in certain real property located at 837 Crescent Drive, Monrovia, California (the “Subject Property”). (Compl., ¶ 7.) Plaintiff alleges that Xceed is the holder of certain liens on the Subject Property. (Compl., ¶¶ 8-9.) In the Complaint, Plaintiff seeks, inter alia, a partition by sale of the Subject Property. (Compl., p. 3:18.)

On February 22, 2022, James M. Edwards (“Edwards”) filed a Cross-Complaint against Birch, asserting causes of action for (1) breach of written contract, and (2) specific performance.

Birch now moves for summary judgment as to Edwards’s Cross-Complaint. Edwards opposes.

Objection No. 1: sustained as to “and that she would proceed with the same,” overruled as to the remainder

Objection No. 2: sustained as to the last sentence, overruled as to the remainder

Objection No. 11: sustained as to the third sentence – there is no entry for 9/21/21 in Ex. 13; overruled as to the remainder

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” ((Code Civ. Proc., § 437c, subd. (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. ((Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. ((Ibid. .) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” ((Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

When a defendant seeks summary judgment, he/she must show either (1) that one or more elements of the cause of action cannot be established; or (2) that there is a complete defense to that cause of action. ((Code Civ. Proc., § 437c, subd. (p)(2).)

In support of the first cause of action for breach of written contract in the Cross-Complaint, Edwards alleges that on or about August 25, 2021, Edwards and Birch entered into a written agreement whereby Edwards agreed to pay Birch the sum of $100,000 for the purchase of Birch’s one-half interest in the Subject Property upon Edwards’s financing of the Subject Property. (Cross-Compl., ¶ 8.) Birch further agreed to cooperate with the refinancing process and to dismiss the Complaint filed against Edwards upon receipt of the $100,000. (Cross-Compl., ¶ 8.) Edwards alleges that on or about August 27, 2021 and continuing thereafter, Birch breached the agreement by failing and refusing to cooperate with the refinancing of the Subject Property, by failing and refusing to accept the sum of $100,000 in exchange for her interest in the Subject Property, and by refusing to dismiss her Complaint in this action. (Cross-Compl., ¶ 11.)

In the motion, Birch argues that summary judgment is appropriate because “no valid written contract existed between Birch and Edwards, and thus no such contract could have been breached by Birch.” (Mot. at p. 3:10-12.) Birch appears to assert that there was no valid settlement agreement because there was no delivery between the parties of the settlement documents. Birch notes that pursuant to Civil Code section 1626, “[a] contract in writing takes effect upon its delivery to the party in whose favor it is made, or to his agent.” ((See also Helperin v. Guzzardi (1951) 108 Cal.App.2d 125, 128, “[a] contract in writing, signed by the parties, takes effect only upon delivery.” Birch also asserts that all of the settlement documents were not executed by both parties.

Birch provides evidence that on July 19, 2021, settlement discussions were initiated between counsel for the parties, and on July 20, 2021, an oral agreement in principle was reached whereby Edwards would buy out Birch’s interest in the Subject Property for the sum of $100,000. (Klein Decl., ¶ 5.) Edwards’s counsel then sent to Plaintiff’s counsel a “Settlement Agreement and Mutual General Release” and a “Stipulation re Settlement.” (Klein Decl., ¶ 6.) Birch indicates that “[a]s a result of [her] inadvertence, she did not execute and return to [her counsel], or anyone else, the Settlement Agreement and Mutual General Release, which [she] did not realize until October, 2022 had not been executed and returned to [her counsel].” (Birch Decl., ¶ 5.) Birch also did not deliver to Edwards a copy of the Stipulation re Settlement signed by her. (Klein Decl., ¶¶ 17-18, Exs. I-J [Request for Admission No. 12].) In addition, a copy of the Stipulation re Settlement signed by Edwards was never provided to Birch or her counsel. (Klein Decl., ¶¶ 17-18, Exs. I-J [Request for Admissions No. 10].)

Edwards counters that Birch delivered a grant deed and escrow instructions to Design Escrow, and that “her giving the deed to the escrow holder satisfies [Civil Code section 1626].” (Opp’n at p. 14:18-19.) Edwards notes that “[i]t is well settled law in California that the holder of an escrow is agent for all parties up to the time that the escrow is closed.” ((Oldenburg v. Brody (1956) 139 Cal.App.2d 543, 555.) However, as set forth above, the Court sustains Birch’s evidentiary objection to Edwards’s counsel’s statement that “[o]n September 16, 2021, Mr. Klein finally sent the claim deed and a Notice of Withdrawal of Lis Pendens, payoff demand and wiring instructions to the escrow holder, Design Escrow.” (Gentile Decl., ¶ 21, see Birch’s Evid. Objection No. 15.)[1] Further, Edwards does not appear to assert that all of the settlement agreement documents were delivered to the escrow holder for the benefit of Edwards.

Edwards also cites to Civil Code section 1059, which provides that “[t]hough a grant be not actually delivered into the possession of the grantee, it is yet to be deemed constructively delivered in the following cases: 1. Where the instrument is, by the agreement of the parties at the time of execution, understood to be delivered, and under such circumstances that the grantee is entitled to immediate delivery; or, 2. Where it is delivered to a stranger for the benefit of the grantee, and his assent is shown, or may be presumed.” Edwards asserts that here, “there very clearly was an agreement and the parties confirmed that agreement with numerous writings including the actual deed and the escrow instructions.” (Mot. at p. 15:21-22.) However, Edwards does not appear to cite to evidence demonstrating that the settlement agreement was “by the agreement of the parties at the time of execution, understood to be delivered, and under such circumstances that the grantee is entitled to immediate delivery…” (Civ. Code, § 1059.)

Edwards also asserts that “Birch’s conduct in performing the agreement (although later breaching it) is clear evidence of her agreement to accept the sum of $100,000 upon refinancing of the loan.” (Opp’n at p. 15:25-28.) Edwards notes that “[a]n agreement may be established by the acts and conduct of the parties and all of the circumstances of the case.” ((Penn Sec. Life Ins. Co. v. Rising (1976) 62 Cal.App.3d 302, 308.) Edwards also notes that “[w]hen the parties to a contract perform under it and demonstrate by their conduct that they knew what they were talking about the courts should enforce that intent.” ((Employers Reinsurance Co. v. Superior Court (2008) 161 Cal.App.4th 906, 921.)

Edwards provides evidence that the parties reached a settlement which provided for Birch to be paid the sum of $100,000 in exchange for a deed conveying her interest in the Subject Property, and Edwards was to obtain the funds for said payment by refinancing the existing loans recorded against the Subject Property. (Gentile Decl., ¶ 3.) Edwards indicates that on August 25, 2021, after the settlement agreement was provided to Birch’s counsel, Birch’s counsel requested that he be provided with the escrow documents “quickly” as Birch was leaving town. (Gentile Decl., ¶ 14, Ex. 9.) Thereafter, on September 1, 2021, Birch’s counsel advised that he would “hopefully” have the notarized deed the next week. (Gentile Decl., ¶ 17, Ex. 13.) On September 9, 2021, Birch’s counsel advised Edwards’s counsel, “DEED DELIVERED TODAY.” (Gentile Decl., ¶ 19, Ex. 15.) In addition, in a September 23, 2021 email, Birch’s counsel stated that, “we agreed that my client would receive 100k by September 30th. Otherwise, trial and my client is guaranteed an amount even if she does not prevail.” (Gentile Decl., ¶ 24, Ex. 19.) Ultimately, on October 13, 2021, Birch’s counsel informed Edwards’s counsel that in order to close the escrow Birch demanded payment of $150,000 rather than $100,000, and that they “had no choice but to discontinue efforts to close the escrow.” (Gentile Decl., ¶ 26.)

The Court notes that Birch does not respond to Edwards’s argument in the opposition that Birch’s conduct in performing under the settlement agreement is evidence of her agreement to accept the sum of $100,000 upon refinancing of the loan.

In addition, Edwards asserts that “Birch is also precluded from claiming there was no agreement through principals of estoppel as her words and actions which are evidenced through emails, escrow instructions and the delivery of the deed clearly reflect that she understood there was an agreement and acted in accordance with said agreement.” (Opp’n at p. 16:15-19.) “The doctrine of equitable estoppel is founded on notions of equity and fair dealing and provides that a person may not deny the existence of a state of facts if that person has intentionally led others to believe a particular circumstance to be true and to rely upon such belief to their detriment.”
(Moreno v. State Teachers' Retirement System (2020) 52 Cal.App.5th 547, 553.) Birch also does not respond to Edwards’s argument that the settlement agreement is enforceable based upon the principles of estoppel.

Based on the foregoing, the Court finds that Edwards has raised a triable issue of fact as to whether there was a valid and enforceable settlement agreement between the parties.

Birch also asserts that “by refusing to exchange settlement documents, Edwards revoked the agreement to settle previously agreed upon.” (Mot. at p. 7:6-8.)[2] However, in support of this assertion, Birch cites to Civil Code section 1585, which provides that “[a]n acceptance must be absolute and unqualified, or must include in itself an acceptance of that character which the proposer can separate from the rest, and which will conclude the person accepting. A qualified acceptance is a new proposal.” (Civ. Code, § 1585.) Civil Code section 1585 does not concern the revocation of an agreement. The Court does not find that Birch has met her burden of demonstrating that the settlement agreement has been revoked.

Lastly, Birch asserts that Edwards’s second cause of action for specific performance rests on the outcome of the first cause of action for breach of contract. As set forth above, the Court finds that Edwards has raised a triable issue of fact as to whether there was a valid and enforceable settlement agreement between the parties. Thus, the Court denies Birch’s motion for summary judgment.

[1]The Court agrees with Plaintiff that such statements (and the attached Exhibit 17) lack foundation.

[2]Birch provides evidence that on July 27, 2021, Edwards refused to exchange settlement documents with Birch. (Klein Decl., ¶¶ 17-18, Exs. I-J [Request for Admission No. 14].)

Superior Court of California

County of Los Angeles

Department 50