Carter v. Mike Thompson Recreational Vehicles CA4/3 ( 2021 )

Filed 9/14/21 Carter v. Mike Thompson Recreational Vehicles CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
JAMES M. CARTER,
Plaintiff and Appellant, G058205
v. (Super. Ct. No. 30-2016-00876571)
MIKE THOMPSON RECREATIONAL OPINION
VEHICLES,
Defendant and Respondent.
Appeal from an order of the Superior Court of Orange County, Walter P.
Schwarm, Judge. Affirmed in part, reversed in part and remanded with instructions.
Law Offices of Jim O. Whitworth and Jim O. Whitworth for Plaintiff and
Appellant.
Sutton & Murphy and Thomas M. Murphy; Schlichter & Shonack, Kurt A.
Schlichter and Steven C. Shonack for Defendant and Respondent.
INTRODUCTION
Appellant James Carter was dissatisfied with a vehicle he purchased. After
bringing consumer warranty claims against two entity defendants – one of which
manufactured the vehicle, and the other of which sold him the vehicle – Carter and the
two defendants entered into a written, integrated settlement agreement.
Under the Song-Beverly Consumer Warranty Act (Civ. Code, §1790 et
seq.) (Song-Beverly Act), prevailing buyers must be permitted to recover attorney fees
and costs. (See Civ. Code, §1794, subd. (d).) However, by the explicit terms of the
parties’ settlement agreement, and due to an indemnity agreement between the
defendants, only one of the two defendants was responsible to pay said fees and costs. In
an unfortunate twist of fate, this defendant entered into receivership in its native Canada
shortly after Carter obtained a ruling fixing the amount of attorney fees it would need to
pay him. Now, Carter seeks to hold the other defendant responsible for those fees. We
hold he cannot do this and affirm the other defendant’s dismissal. But we reverse and
remand the trial court’s dismissal of the action as against the responsible defendant so the
attorney fee award against it may be reduced to judgment.
FACTS
In 2012, Carter purchased a Roadtrek recreational vehicle manufactured by
Edwin Hymer Group North America, Inc. (EHGNA) from respondent Mike Thompson
Recreational Vehicles, a dealer (Thompson). He experienced various issues with the
vehicle and in September 2016, he filed a complaint against EHGNA1 and Thompson,
amongst others, for violations of the Song-Beverly Act. The first cause of action for
breach of express warranty was against the manufacturers and the second cause of action
for breach of implied warranty was against all defendants, including Thompson.
1 Carter originally named Roadtrek Adventures, Inc. as a defendant in his complaint. However,
EHGNA accepted service of the summons on behalf of Roadtrek Adventures, Inc., claiming it was erroneously sued
in that name.
2
A notice of settlement was filed and the parties entered into a written
settlement agreement. In exchange for the return of the vehicle and a request for
dismissal with prejudice of the entire case against all defendants, appellant was to receive
from “defendants” a check for a specified sum as well as “[p]ayment of attorneys’ fees
and costs as determined by the Court pursuant to Section 5” of the agreement. Section 5
provided “[a]s further consideration for the settlement,” EHGNA would pay Carter and
his counsel “reasonably incurred attorneys’ fees and costs incurred in the prosecution of
this lawsuit as they are agreed to be the prevailing party.” Carter was to bring a motion
for attorney fees as a prevailing party in order to fix the amount of fees owed.
Once it was notified of the settlement, the trial court set an order to show
cause regarding dismissal which was continued a number of times, finally to August 31,
2018. The court advised the parties it would dismiss the entire action with prejudice if
there were no appearances at the order to show cause hearing. A few weeks prior to the
hearing, respondents and EHGNA, jointly represented throughout the proceedings,
substituted in new defense counsel. The court was concerned that dismissing the case
would cut off its jurisdiction to hear appellant’s fee motion, and so it scheduled a case
management conference for November 6, 2018, intending to hear the fee motion on the
same date.
Appellant filed the fee motion on November 6 itself, and set it for hearing
on January 22, 2019. The notice of motion sought fees based on actual time expended
under Civil Code section 1794, subdivision (d) “and as agreed to by [EHGNA] and”
himself. However, appellant’s brief focused on the statute’s edict permitting a prevailing
plaintiff to recover actual fees; there was no discussion of who was required to pay
them.2
2 Appellant sought $160,798 in fees.
3
Both EHGNA and respondent filed a joint opposition to appellant’s fee
motion. They argued that, under Civil Code section 1794, subdivision (d), appellant was
only entitled to actual time expended to the extent the attorney fees were reasonably
incurred.
The trial court heard the fee motion on January 22, 2019. It awarded
appellant $112,698 pursuant to Civil Code section 1794, subdivision (d). Another order
to show cause hearing regarding dismissal was set for March 8, 2019, but it was
continued to March 15.
EHGNA’s counsel requested it issue the check to pay appellant’s fee
award, but in February 2019, EHGNA went into receivership in Canada. On March 15,
appellant had the court clerk issue a writ of execution against Thompson, seeking to
collect on the fee award. A few weeks later, Thompson filed an ex parte application to
recall and quash the writ of execution, arguing EHGNA, not it, was responsible under the
settlement agreement for paying appellant’s fees.
Relying on the collective definition of “defendants” in the settlement
agreement, appellant opposed the ex parte application on the ground that it constituted an
untimely and meritless application for the court to reconsider its ruling on the fee motion.
Respondent’s ex parte application was heard on March 29, 2019. The court granted the
application and quashed the writ of execution against Thompson, finding only EHGNA
was obligated to pay fees under the settlement agreement.
Because it owed no further amounts to appellant, respondent filed a motion
to enforce the parties’ settlement, seeking dismissal of the case as against it. In
opposition, appellant for the first time argued the settlement agreement was
unenforceable because it had not been signed by an authorized principal of Thompson,
and because it was void or voidable under the Song-Beverly Act. In reply, Thompson
pointed out EHGNA had agreed to defend and indemnify it against appellant’s claims,
and appellant had been paid the primary settlement already. Thompson also attached a
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declaration from its general manager, Mark Rosenbaum, who had signed the settlement
agreement, stating he had authority to do so.
The trial court granted the motion and also dismissed the entire action with
prejudice. Carter appeals the dismissal.
DISCUSSION
Carter contends the trial court erred in two respects. First, he claims the
settlement agreement was not enforceable under Code of Civil Procedure section 664.6,
for several reasons we shall take up below. Second, he contends the trial court
improperly reconsidered and modified its attorney fee ruling by quashing his writ of
execution against Thompson. Because we conclude Thompson was not responsible to
pay Carter’s attorney fees, we need not address the second issue.
I. Standard of Review
Our analysis of the first issue employs a mixed standard of review.
“‘The trial court’s factual findings on a motion to enforce a settlement pursuant to [Code
of Civil Procedure] section 664.6 “are subject to limited appellate review and will not be
disturbed if supported by substantial evidence.”’ (Osumi v. Sutton (2007) 151
Cal.App.4th 1355, 1360.) ‘Consistent with the venerable substantial evidence standard of
review, and with our policy favoring settlements, we resolve all evidentiary conflicts and
draw all reasonable inferences to support the trial court’s finding that these parties
entered into an enforceable settlement agreement and its order enforcing that agreement.’
(Ibid.)” (J.B.B. Investment Partners Ltd. v. Fair (2014) 232 Cal.App.4th 974, 984.)
However, in determining whether Thompson’s motion satisfied the statute’s
requirements, our review is de novo since the question is one of law. (Ibid.)
II. Enforceability of Settlement Agreement
Carter’s attack on the enforceability of the settlement agreement is
threefold. First, he argues Rosenbaum’s signature did not meet Code of Civil Procedure
section 664.6’s requirement that a “party” sign the settlement agreement. Second, he
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claims the agreement itself was uncertain on several material terms. Third, he contends
enforcement of the agreement, as a practical matter, resulted in an unlawful waiver of his
statutory right to attorney fees and costs as a prevailing plaintiff under the Song-Beverly
Act.
A. Signature of a Party
At all times relevant to this case,3 Code of Civil Procedure section 664.6
stated as follows: “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.”
The statutory language does not clarify who qualifies as “the parties.”4 However, prior
to the passage of the recent amendments, the California Supreme Court held a settlement
agreement must be signed by a litigant, and not a litigant’s attorney, in order to be
enforceable under the statute. (Levy v. Superior Court (1995) 10 Cal.4th 578, 586
(Levy).)
Relying on Levy and Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110(Gauss), Carter urges that Rosenbaum’s signature on the settlement agreement was
insufficient, because he was an agent for Thompson. We believe Carter misapprehends
the holdings of these cases.
Gauss purported to foreclose use of the Code of Civil Procedure section
664.6 procedure to “enforce a settlement agreement signed only by a party’s agent.”
(Gauss, supra, 103 Cal.App.4th at p. 1121.) But, as we suggested in Provost v. Regents
of University of California (2011) 201 Cal.App.4th 1289 (Provost), Gauss does not
3 The Legislature passed amendments to Code of Civil Procedure section 664.6 which became
effective on January 1, 2021, long after the trial court made its ruling on Thompson’s motion to enforce settlement.
4 Amongst other things, the recent amendments added language permitting attorneys representing
parties and agents of insurers to sign as a “party.” (Code Civ. Proc., § 664.6, subd. (b).)
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require a corporate officer to sign the settlement agreement. (Provost, supra, 201
Cal.App.4th at p. 1296.) Rather, the Gauss court recognized the signature of an
“authorized corporate representative” would be adequate under Code of Civil Procedure
section 664.6. (Gauss, supra, 103 Cal.App.4th at p. 1120.) The signatory in Gauss was
not such a representative, but rather a completely separate nonprofit corporation
“established . . . to administer all aspects of . . . litigation of asbestos-related claims
brought against” it and other similarly situated companies. (Id. at p. 1113.)
We believe the present circumstance is more in line with Provost, in which
we held sufficient the signature of an attorney employed in the defendant’s office of the
general counsel. (Provost, supra, 201 Cal.App.4th at p. 1296.) The appellant in Provost
also relied on Gauss and Levy to argue the in-house attorney’s signature was lacking
because she was not a corporate officer, but rather an employee appointed as party
representative and authorized to sign the settlement agreement for the entity defendant.
(Id. at pp. 1293, 1296-1297.) We found the appellant’s litmus test too exacting, noting
“the well-established rule that a corporation acts through its agents and employees.” (Id.
at p. 1296.) Because the employee signatory was properly authorized by the company to
undertake settlement, she “was in as good or better a position as anyone to best protect
[the defendant’s] interests in the settlement,” which was a main concern for the California
Supreme Court in Levy.5 (Provost, supra, 201 Cal.App.4th at p. 1297.)
We further theorized in Provost that an authorized corporate representative
could lie anywhere in the corporate hierarchy between an employee and upper-echelon
management based on the facts of the case: “Our decision should not be extended to
apply to any employee of a corporation in any circumstance; obviously some would lack
5 We observed that Levy required a litigant’s signature because “‘[t]he litigants’ direct participation
tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the
parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of
the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. [Citations.] It
also protects parties from impairment of their substantial rights without their knowledge and consent. [Citation.]’”
(Provost, supra, 201 Cal.App.4th at p. 1297, quoting Levy, supra, 10 Cal.4th at p. 585, fn. omitted.)
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the appropriate qualifications. On the other hand holding that an officer, as opposed to
another designated and qualified employee, must sign a settlement for it to be enforceable
under [Code of Civil Procedure] section 664.6 makes no practical sense. One can hardly
expect an officer of Ford Motor Company or Wal-Mart Stores, Inc., to participate in
every settlement of every case . . . to be eligible to take advantage of the mechanism
provided by [Code of Civil Procedure] section 664.6.” (Provost, supra, 201 Cal.App.4th
at p. 1297.)
Here, Rosenbaum signed the agreement as “GM” of Thompson. He
submitted a declaration stating he was the General Manager of Thompson and had
express authority to sign the agreement on Thompson’s behalf. With this uncontroverted
evidence, the trial court reasonably concluded Rosenbaum was an appropriately
“designated and qualified employee[.]” (Provost, supra, 201 Cal.App.4th at p. 1297.)
B. Uncertainty or Missing Material Terms
Carter next argues there was no enforceable contract because the settlement
agreement was uncertain as to the amount of attorney fees to be paid; and because there
was no meeting of the minds on who was liable to pay them. We start with the former
issue.
1. Uncertainty
While the amount of attorney fees was not explicitly fixed in the settlement
agreement, the document clearly contemplated court involvement in “facilitat[ing]”
payment of the fees by way of a motion for prevailing party attorney fees and costs. As a
practical matter, then, there was no need to fix the amount of fees in the agreement itself
in order for the parties to be assured Carter would be awarded a just amount. Whether he
proceeded through trial and obtained attorney fees pursuant to posttrial motion, or simply
filed a motion by the terms of the settlement agreement, the trial court’s judgment as to
the appropriate amount of fees was going to ultimately be dispositive. As such, the
amount of fees was not essential to form the contract.
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Carter relies on Weddington Productions, Inc. v. Flick (1998) 60
Cal.App.4th 793 (Weddington) to argue a settlement agreement may not be enforced
under Code of Civil Procedure section 664.6 if its terms are uncertain. But Weddington
was a very different case. There was no fully integrated, executed settlement agreement
between the parties as there was here. Rather, the parties had reached the point of a
“Deal Point Memorandum” which the mediator in an alternative dispute resolution forum
forcibly imposed. (Id. at p. 799.) The court in Weddington observed that a contract was
certain enough for enforcement if it provided “a basis for determining what obligations
the parties have agreed to” so that a breach of those obligations could be ascertained. (Id.
at p. 811.) And it would be uncertain if “‘an essential element is reserved for the future
agreement of both parties’ . . . . [Citation.]” (Id. at p. 812.)
Here, there was a basis for determining if defendants had breached the
settlement agreement – one could simply look at the trial court’s ruling on the motion for
attorney fees and see the amount owed. The amount was not reserved for the parties’
future agreement – it was reserved for the court’s resolution. Thus, we hold the lack of
an explicit amount of attorney fees did not render the agreement uncertain.
2. Party Responsible for Fees
Carter fares no better on the second issue. He says his understanding was
always for both EHGNA and Thompson to be liable. For this, he points to the preamble
of the agreement, which defines EHGNA and Thompson collectively as “defendants,”
and goes on to state: “Hereinafter, plaintiff and defendants may be referred to collectively
as the ‘parties’ or individually as a ‘party.’” He further claims defense counsel assured
him either defendant would be liable for the fees, even though EHGNA had agreed to
indemnify Thompson in the litigation. He points to an email from the defendants’ former
counsel stating both defendants had “bought their peace” through the litigation.
These arguments are unavailing because the attorney fee provision of the
agreement was crystal clear. It required “defendant [EHGNA] . . . to pay plaintiff and his
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counsel” their fees. It specifically identified EHGNA as the defendant responsible for
them. Thompson was not among the parties designated to pay fees, nor was the
collective term “defendants” from the preamble used. Where the contractual language is
clear and explicit and does not involve an absurdity, it governs interpretation of the
contract. (See Civ. Code, § 1638.) The contract clearly required EHGNA, not
Thompson, to pay Carter’s attorney fees.
C. Waiver of Rights under the Song-Beverly Act
Carter’s third argument against enforceability is based on the following
provision in the Song-Beverly Act: “Any waiver by the buyer of consumer goods of the
provisions of this chapter, except as expressly provided in this chapter, shall be deemed
contrary to public policy and shall be unenforceable and void.” (Civ. Code, § 1790.1.)
The law contains an attorney fee provision favoring prevailing consumers: “If the buyer
prevails in an action under this section, the buyer shall be allowed by the court to recover
as part of the judgment a sum equal to the aggregate amount of costs and expenses,
including attorney’s fees based on actual time expended, determined by the court to have
been reasonably incurred by the buyer in connection with the commencement and
prosecution of such action.” (Civ. Code, § 1794, subd. (d).) Because prevailing buyers
are entitled to reasonable attorney fees, Carter believes it would be unlawful to allow
Thompson to escape liability for fees despite the settlement agreement’s language.
Again, we must disagree. Civil Code section 1794, subdivision (d) only
requires the court to “allow” him to recover attorney fees as part of the judgment. It does
not require all defendants to be liable for such fees. And it does not preclude one
defendant from indemnifying another for payment of them. Here, the settlement
agreement required EHGNA to pay fees and the trial court entered an attorney fee award
against EHGNA. Carter was never forced to waive his right to fees under the Song-
Beverly Act.
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Carter claims EHGNA’s receivership necessarily means he will not recover
his attorney fees. First and foremost, he has not tried. When the trial court suggested he
could file a claim as a creditor against EHGNA in the Canadian proceedings, his counsel
flippantly dismissed the notion: “We don’t have to . . . . We are right here in California
with rights in California . . . . [¶] We don’t know what is going on in Canada.” We
suggest counsel find out. In any case, EHGNA’s bankruptcy does not allow us or the
trial court to modify the parties’ agreement to make Thompson responsible for attorney
fees in EHGNA’s stead.6
Carter also argues upholding Thompson’s dismissal would allow it to
escape liability without having paid any consideration, because Thompson has paid
nothing out of its own pocket. But were dismissals contingent on each defendant paying
sums out of pocket, the concept of indemnity would be effectively eviscerated. From a
settling plaintiff’s point of view, it does not matter who pays, so long as the plaintiff is
paid. In this case, Carter agreed the defendants (plural) would be responsible to pay the
settlement check and EHGNA would be responsible to pay the attorney fees. If he had
not received the settlement check, he could have pursued both EHGNA and Thompson
for same. But he received it. Thompson’s role in the settlement was complete at that
point.
On one point, however, Carter is correct: the dismissal of the entire case at
this juncture cuts against the Song-Beverly Act’s fee statute. The trial court must “allow”
the prevailing buyer to recover his attorney fees. The settlement agreement stated Carter
would file a request for dismissal with prejudice in exchange for both the check and
“[p]ayment of attorneys’ fees and costs as determined by the Court[.]” Thus, Carter is
6 Because we hold Thompson was not liable for the attorney fees, it follows that Carter was not
entitled to a writ of execution to recover those fees from Thompson, thus rendering Carter’s second argument on
appeal moot.
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not obligated to dismiss the case until the attorney fees are paid by EHGNA. They have
not been paid.
The trial court’s rationale in dismissing the entire case was based on
California Rules of Court, rule 3.1385, which requires it to “dismiss the entire case 45
days after it receives notice of settlement unless good cause is shown why the case should
not be dismissed.” (Id., subd. (b).) Granted, Carter had filed his notice of settlement on
March 12, 2018. He had not filed a request to obtain more time to complete the
settlement, as he could have done under subdivision (e) of the rule. The trial court was
understandably perplexed as to why the case remained in its inventory well into 2019.
But by the time it heard Thompson’s motion to quash the writ of execution,
the trial court had become aware the attorney fee piece of the settlement had not been
consummated. Nor had Carter’s attorney fee award against EHGNA been reduced to a
judgment which he could then take to the Canadian court to file a creditor’s claim.
Indeed, in its order granting the motion to quash writ of execution, the trial court opined
that the attorney fee ruling in Carter’s favor was not an enforceable money judgment.
Thus, it had been shown good cause why it should not dismiss the entire case yet. Such a
dismissal would leave Carter holding the bag with no recourse against EHGNA for
payment of his prevailing buyer fees. This result violated the Song-Beverly Act fee
statute.
DISPOSITION
The court’s dismissal of Thompson is affirmed. Its dismissal of the entire
action as it pertains to EHGNA is reversed and remanded with instructions to enter
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judgment against EHGNA for $112,698, representing attorney fees owed to appellant.
Thompson is to recover its costs on appeal.
BEDSWORTH, J.
WE CONCUR:
O’LEARY, P. J.
GOETHALS, J.
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