Norlund v. Norlund CA2/7 ( 2023 )

Filed 2/9/23 Norlund v. Norlund CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
SANDRA NORLUND, B316527
Individually and as Trustee, etc.
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. 20STCV27665)
v.
RICHARD NORLUND,
Individually and as Trustee, etc.,
et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, David Sotelo, Judge. Reversed with directions.
Law Offices of Mark B. Plummer and Mark B. Plummer for
Plaintiff and Appellant.
Rick Edwards, Inc. and Rick Edwards for Defendants and
Respondents.
INTRODUCTION
Richard Norlund, his sister Nancy Hymas, and their sister-
in-law Sandra Norlund were cotrustees of a family trust and held
title to real property as cotrustees. They agreed to settle
litigation among them by having Richard essentially buy out
Sandra’s and Nancy’s interests in the property. Richard, as
trustee, transferred the property to himself, as an individual, in
exchange for a $1.47 million promissory note payable to himself,
as trustee. He then assigned the note to Sandra and Nancy.
After the transaction Richard began making payments on
the note to Sandra and Nancy. Each month, however, he
withheld three and one-third percent from the portion of the
payment attributable to principal (which amounted to
approximately $60). Richard contends California law requires
him to withhold that amount.
Sandra filed this action against Richard and his wife,
Sharon K. Bacon-Norlund, asserting at least two theories. First,
Sandra alleged Richard breached the promissory note by failing
to pay her the full payment due (i.e., by withholding the $60 each
month). Second, Sandra alleged Richard breached the settlement
agreement by failing to execute the deed of trust that was
supposed to secure the promissory note.
Richard and Sharon filed a motion for summary judgment,
which the trial court granted. In their motion, however, they
addressed only the first theory in Sandra’s complaint; they did
not address the second. You can’t do that: A party that does not
address all claims in the complaint is not entitled to summary
judgment. Therefore, we reverse.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Following Litigation and a Settlement, Sandra
Receives a Promissory Note
Richard, Nancy, and Sandra—the widow of Richard and
Nancy’s deceased brother—were cotrustees of the Norlund
Family Trust dated March 16, 1987 (the Trust). In their
capacities as cotrustees, they held title to commercial real estate
(the Property).1
In 2016 Richard initiated litigation relating to the Trust in
Butte County Superior Court, and in 2019 the parties reached a
settlement. Under the settlement agreement, Sandra and Nancy
agreed to resign as cotrustees, and Richard agreed (1) to become
the sole trustee of the relevant trusts; (2) to transfer the Property
from the Trust to himself; (3) to execute, in his individual
capacity, a $1.47 million promissory note in favor of himself as
trustee, secured by a deed of trust on the Property; and (4) to
assign, in his capacity as trustee, the promissory note and deed of
trust to Sandra and Nancy.2 The note required Richard to make
monthly payments of $7,668.22 “applied first toward unpaid
1 The Trust was divided into Trust A and Trust B. Richard
and Sandra were the cotrustees of Trust A, which held title to a
share of the Property. Richard and Nancy were the cotrustees of
Trust B, which held title to the remaining interest in the
Property.
2 Richard also obtained a share of the Property and executed
the promissory note in his capacity as trustee of his separate
trust.
3
interest and then to principal at 4.75% per annum interest rate
. . . .”
B. Sandra Sues Richard and Sharon
In April 2019 Sandra filed this action against Richard and
Sharon alleging in her amended complaint a cause of action titled
“judicial foreclosure.”3 Sandra alleged that Richard defaulted on
the promissory note by failing and refusing “to pay her the agreed
upon $7,668.22 per month required by” the note. Sandra also
alleged Richard breached the settlement agreement because,
after she approved the proposed form of the deed of trust for
Richard to record with the Los Angeles County Recorder’s Office,
Richard modified the terms of the deed of trust so that it did not
refer to the right promissory note. Specifically, Sandra claimed
that Richard changed the date of the promissory note appearing
on the deed of trust, which meant the date of the promissory note
on the deed of trust did not match the date of her promissory
note, and that he recorded the altered deed of trust without her
approval. Sandra further alleged Richard, by refusing “to provide
the valid Deed of Trust,” breached his agreement to provide
Sandra with “appropriate documentation to allow her to obtain a
3 Sandra filed the lawsuit in her individual capacity and as
Trustee of the Norlund Family Trust dated September 15, 2000.
She sued Richard as an individual and as successor trustee of
Trust A and Trust B, trustee of the Richard Norlund Separate
Property Trust dated December 11, 1997, and trustee of the
Norlund Family Trust dated May 13, 2019. She sued Sharon as
an individual and as trustee of the Norlund Family Trust dated
May 13, 2019. Sandra named Nancy as a nominal defendant;
Nancy is not a party to this appeal.
4
Lender[’s] Policy of Title Insurance.” Sandra alleged Sharon
“conspired” with Richard to alter the deed of trust.
C. Richard and Sharon Move for Summary Judgment
Richard and Sharon filed a motion for summary judgment
that addressed Sandra’s allegations Richard failed to make the
monthly payments required under the promissory note. Richard
said in his supporting declaration he was paying Sandra and
Nancy $7,668.22 each month, minus three and one-third percent
of the principal owed on each payment. Richard stated he paid
the portion of the principal he withheld from Sandra and Nancy
to the Franchise Tax Board on their behalf, and he submitted
copies of the checks he had issued to Sandra, Nancy, and the
Franchise Tax Board. Richard and Sharon argued section 18662
of the Revenue and Taxation Code, and regulations promulgated
by the Franchise Tax Board, required Richard to withhold the
amounts he did.
Richard and Sharon asserted in their motion that Sandra’s
complaint was limited “to a single cause, judicial foreclosure, for
defaults under a promissory note.” Richard and Sharon’s only
argument regarding Sandra’s other allegations—namely, her
allegations Richard and Sharon breached the settlement
agreement by altering the deed of trust—was that these claims
were not defaults under the promissory note and that therefore
Richard and Sharon would “not take the bait to refute them.”
Richard and Sharon, however, did not argue how or explain why
Sandra’s allegations regarding Richard and Sharon’s breach of
the settlement agreement would not entitle Sandra to her
requested relief, including damages.
5
In opposition to the motion Sandra argued that Richard
could only withhold a portion of the principal owed to her under
the promissory note if the transfer of the Property qualified as an
“installment sale” under the Revenue and Taxation Code (see
Rev. & Tax. Code § 18662, subd. (e)(3)(E)(i); see also 26 U.S.C.
§ 453(b)) and that the transfer of the Property did not qualify.
Sandra also argued the court should deny the motion for
summary judgment because Richard and Sharon did “not address
. . . all of the other grounds upon which [Sandra] base[d] [her]
request for relief”; namely, her claims that Richard had altered
the deed of trust and that he had prevented her from obtaining a
title insurance policy.
In their reply Richard and Sharon argued that, because
“the Butte County Superior Court reserved jurisdiction over
performance of the settlement agreement,” the “alleged breaches
of settlement agreement claims belong in Butte”—an argument
they did not raise in their moving papers. At the hearing on the
motion, counsel for Richard and Sharon again argued that, “if
Sandra believes there are breaches of the settlement agreement,
she can take those to Butte County.”
D. The Trial Court Grants the Motion and Enters
Judgment Against Sandra
The trial court granted the motion for summary judgment.
The court ruled Richard and Sharon met their initial burden
based on the alleged default under the promissory note because
the Revenue and Taxation Code and the regulations prescribed
by the Franchise Tax Board required Richard to make the
monthly withholdings. The court, citing Code of Civil Procedure
section 664.6, ruled “[a]ny alleged breaches of the global
6
settlement agreement must be addressed in [a] County far north
of Los Angeles.” The court entered judgment against Sandra,
and Sandra timely appealed.
DISCUSSION
A. Applicable Law and Standard of Review
“A court may grant a motion for summary judgment ‘“only
when ‘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.’”’” (Fajardo v. Dailey (2022)
85 Cal.App.5th 221, 225; see Code Civ. Proc., § 437c,
subd. (c); Regents of University of California v. Superior
Court (2018) 4 Cal.5th 607, 618.) “A defendant moving for
summary judgment has the initial burden of presenting evidence
that a cause of action lacks merit because the plaintiff cannot
establish an element of the cause of action or there is a complete
defense.” (Sabetian v. Exxon Mobil Corp. (2020) 57 Cal.App.5th
1054, 1068; see Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) “‘Only after
the defendant carries that initial burden does the burden shift to
the plaintiff “to show that a triable issue of one or more material
facts exists as to the cause of action . . . .”’” (Fajardo, at p. 226;
see Luebke v. Automobile Club of Southern California (2020)
59 Cal.App.5th 694, 703.)
A defendant moving for summary judgment also has the
burden “to identify and respond to all theories of liability
reflected in the complaint, ‘even if not separately pleaded.’
[Citation.] Thus, ‘[w]hile a plaintiff . . . need sustain its burden of
proof only on one of the theories in order to prevail at trial,
7
a defendant who seeks a summary judgment must define all of
the theories alleged in the complaint and challenge each
factually.’” (Lopez v. Superior Court (1996) 45 Cal.App.4th 705,
714; see Johnson v. Chui (2011) 199 Cal.App.4th 775, 778
[“a defendant is entitled to summary judgment only when
all theories of liability have been negated”]; Farley v. El Tejon
Unified School Dist. (1990) 225 Cal.App.3d 371, 379 [“to prevail
on its motion for summary judgment, [the defendant] had the
burden of negating every alternative theory of liability presented
by the pleadings”].) Where a motion for summary judgment does
“‘not negate theories of [the defendant’s] liability, the trial court
should’” rule “‘[the defendant] failed to carry [its] initial burden
and stop[ ] there.’” (Hedayati v. Interinsurance Exchange of the
Automobile Club (2021) 67 Cal.App.5th 833, 846; see Hawkins v.
Wilton (2006) 144 Cal.App.4th 936, 945.)
“‘“‘“We review the trial court’s decision de novo, considering
all the evidence set forth in the moving and opposing papers
except that to which objections were made and sustained.”’
[Citation.] We liberally construe the evidence in support of the
party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.”’” (Hampton v. County of San
Diego (2015) 62 Cal.4th 340, 347; see Fajardo v. Dailey, supra,
85 Cal.App.5th at p. 711; Sabetian v. Exxon Mobel Corp., supra,
57 Cal.App.5th at pp. 1068-1069.)
B. Richard and Sharon Did Not Meet Their Initial
Burden To Show All of Sandra’s Theories of Liability
Lacked Merit
Sandra argued in the trial court and argues on appeal the
court erred in granting the motion for summary judgment
8
because Richard and Sharon, by failing to address each of the
theories of liability alleged in the complaint, did not meet their
initial burden. In particular, Sandra argues Richard and Sharon
did not address Sandra’s theory Richard and Sharon refused to
provide the deed of trust to secure the promissory note. To the
contrary, Sandra argues, Richard and Sharon “expressly state[d]
. . . they [were] declining to address all issues and only
address[ed] the single claim they want[ed] to . . . .”4
As stated, Richard and Sharon argued in their motion for
summary judgment that Sandra’s complaint had only one cause
of action, “judicial foreclosure for defaults under [the] promissory
note.” They asserted that, because Sandra’s other allegations—
including Richard’s alleged failure to record the correct deed of
trust—were not defaults under the promissory note, they would
not attempt in their motion to refute those allegations. Sandra’s
allegations, however, went beyond Richard and Sharon’s alleged
defaults under the promissory note. Richard and Sharon did not
explain why, or cite any applicable legal authority that, Sandra’s
allegations Richard breached the settlement agreement,
including by failing to record the correct deed of trust, would not
entitle her to relief, whether in the form of a judicial foreclosure
4 At our request both sides submitted supplemental briefs on
whether Richard and Sharon failed to meet their initial burden
on summary judgment by failing to address in their motion “all
theories asserted” in Sandra’s complaint and, in particular,
whether Richard and Sharon “failed to address Sandra’s request
for damages based on her allegations Richard and Sharon ‘failed
and refused to provide the valid deed of trust that they promised
as security for the Promissory Note’ and ‘failed and refused to
allow [Sandra] . . . to obtain the promised Lenders Policy of Title
Insurance. . . .’”
9
or damages. Nor did Richard and Sharon contend Sandra did not
possess and could not obtain evidence showing Richard failed to
record the correct deed of trust. (See Kahn v. East Side Union
High School Dist. (2003) 31 Cal.4th 990, 1003; Barber v. Southern
California Edison Co. (2022) 80 Cal.App.5th 227, 242.)
Thus, while Richard and Sharon stated in their motion that
Sandra’s complaint “alleges promissory note defaults which are
not defaults,” they did not argue why—even assuming the alleged
breaches of the settlement agreement were not “promissory note
defaults”—Sandra could not bring claims for relief in this action
based on breaches of the settlement agreement. (See Palm
Springs Villas II Homeowners Assn., Inc. v. Parth (2016)
248 Cal.App.4th 268, 288 [summary judgment was improper
where the moving party did “not explain how [legal] principles
would permit her to obtain summary judgment as to a portion of
a cause of action”]; Juge v. County of Sacramento (1993)
12 Cal.App.4th 59, 67 [party moving for summary judgment must
“set forth with specificity (1) the issues tendered by the complaint
. . . which are pertinent to the summary judgment motion and
(2) each of the grounds of law upon which the moving party is
relying in asserting that the action has no merit”]; see also
Teselle v. McLouhlin (2009) 173 Cal.App.4th 156, 161-162
[“summary judgment may not be granted when the moving party
has failed to ‘refute [a] tenable pleaded theor[y]’”].) In fact,
rather than arguing the settlement agreement was separate or
irrelevant to Sandra’s claims, Richard and Sharon, in arguing
Richard was “legally required” to withhold the amounts he did,
asserted that the settlement agreement was “incident to” the
promissory note and supported their position because its terms
“flagged tax law compliance.” Refusing to “take the bait” and
10
address all of Sandra’s allegations with admissible evidence and
legal authority may be a good strategy at trial, where Sandra has
the burden of proof on her claims. But at the summary judgment
stage, it was not. (See Y.K.A. Industries, Inc. v. Redevelopment
Agency of City of San Jose (2009) 174 Cal.App.4th 339, 353
[“a moving defendant who claims that the plaintiff cannot prove
all the elements of his case must present evidence in support of
this claim”; the defendant “cannot simply challenge the plaintiff
to prove his case by opposition”].)
To the extent the trial court ruled it did not have
jurisdiction or authority to hear Sandra’s claim Richard breached
the settlement agreement by recording a defective deed of trust
and preventing her from obtaining title insurance because the
superior court of Butte County (or some other county “far north”
of Los Angeles County) retained jurisdiction over the settlement
under Code of Civil Procedure section 664.6, the trial court erred.
Again, Richard and Sharon did not move for summary judgment
on this ground. (See San Diego Watercrafts, Inc. v. Wells Fargo
Bank, N.A. (2002) 102 Cal.App.4th 308, 316; Luebke v.
Automobile Club of Southern California, supra, 59 Cal.App.5th at
p. 705, fn. 6 [“‘[s]ection 437c requires the party seeking summary
judgment to state with specificity in its moving papers each of
the grounds of law upon which the moving party is relying in
contending the action has no merit’”]; Juge v. County of
Sacramento, supra, 12 Cal.App.4th at p. 68 [same].) They did
state in their reply brief that “alleged breaches of settlement
claims belong in Butte,” but that was too late. (See San Diego
Watercrafts, at p. 316 [“Where a remedy as drastic as summary
judgment is involved, due process requires a party be fully
advised of the issues to be addressed and be given adequate
11
notice of what facts it must rebut in order to prevail.”]; cf. Jay v.
Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538 [on summary
judgment “‘the inclusion of additional evidentiary matter with
the reply should only be allowed in the exceptional case’” because
“‘[p]oints raised for the first time in a reply brief will ordinarily
not be considered’”].)
But even if Richard and Sharon had timely and properly
raised this argument, the trial court, as counsel for Richard and
Sharon conceded at oral argument, erred in agreeing with it.
Code of Civil Procedure section 664.6 “provides a summary
procedure to enforce a settlement agreement by entering
judgment pursuant to the terms of the settlement.” (Hines v.
Lukes (2008) 167 Cal.App.4th 1174, 1182.) “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), “‘without requiring the
filing of a second lawsuit’” (Walton v. Mueller (2009)
180 Cal.App.4th 161, 168).5 That a court retains jurisdiction to
enforce a settlement under section 664.6 (assuming it does so
properly) does not, however, deprive another court of jurisdiction
to enforce a settlement agreement in a separate action. “‘“[T]he
statutory procedure for enforcing settlement agreements
under section 664.6 is not exclusive. It is merely an expeditious,
valid alternative statutorily created. [Citation.] Settlement
agreements may also be enforced by,” for example, “a separate
5 While the parties stipulated in the settlement agreement
the court would retain jurisdiction under Code of Civil Procedure
section 664.6, there is no evidence in the record the court in Butte
County entered judgment or retained jurisdiction under section
664.6 pursuant to the parties’ request.
12
suit in equity . . . .”’” (In re Marriage of Woolsey (2013)
220 Cal.App.4th 881, 898; see Levy v. Superior Court (1995)
10 Cal.4th 578, 586, fn. 5; Gauss v. GAF Corp. (2002)
103 Cal.App.4th 1110, 1122.) As the court explained in
MSY Trading Inc. v. Saleen Automotive, Inc. (2020)
51 Cal.App.5th 395, a court “retain[ing] jurisdiction over [a]
settlement agreement pursuant to Code of Civil Procedure
section 664.6 . . . only means the [court] could exercise
jurisdiction without requiring a separate action on the settlement
agreement. It does not mean it is the only court with jurisdiction
to adjudicate the settlement agreement,” at least where there is
no pending action or motion to enforce the settlement. (Id. at
pp. 404-405.)6 Section 664.6 does not prevent Sandra from
bringing claims for breach of the settlement agreement and
breach of the promissory note in Los Angeles County.7
6 The record reflects that, after the court granted Richard
and Sharon’s motion for summary judgment in this action,
Sandra filed a new action in Butte County Superior Court
alleging Richard and Sharon breached the settlement agreement.
7 The record does not include a complete copy of the
settlement agreement and the exhibits. One provision of the
portion of the settlement agreement that is in the record stated:
“This Agreement may be enforced by any Party hereto by a
motion under Code of Civil Procedure section 664.6 or by any
other procedure permitted by law in the Superior Court of
California, County of Butte.” This provision did not require the
parties to bring all actions to enforce the settlement agreement in
Butte County, or prohibit them from bringing actions in other
jurisdictions. (Cf. Animal Film, LLC v. D.E.J. Productions, Inc.
(2011) 193 Cal.App.4th 466, 471 [where a forum selection clause
13
Richard and Sharon contend that, even if they breached the
settlement agreement, the breach does not entitle Sandra to
bring an action for judicial foreclosure. They do not, however,
cite any applicable authority governing when a party may obtain
a judicial foreclosure (nor did they do so in the trial court).
Moreover, while Sandra may have labeled her cause of action as
one for “judicial foreclosure,” the relief she requested was not
limited to a court order directing the sale of the Property; she
also sought damages for Richard’s alleged breach of the
settlement agreement. (See City of Glendale v. Marcus Cable
Associates, LLC (2014) 231 Cal.App.4th 1359, 1378 [when an
appellate court reviews an order granting summary judgment,
“the label attached to a complaint or a cause of action does not
control”].) In particular, Sandra alleged Richard’s alteration of
the deed of trust “rendered [it] unenforceable and worthless as
the security instrument that it was promised,” and she sought
monetary damages according to proof.8
“‘merely provides for submission to jurisdiction and does not
expressly mandate litigation exclusively in a particular forum,
then the traditional forum non conveniens analysis applies’”].)
8 In their separate statement of undisputed material facts
filed in support of their motion for summary judgment, Richard
and Sharon listed as an undisputed fact that Sandra’s complaint
was “confined to judicial foreclosure,” which Sandra did not
dispute. By not disputing that “fact,” however, Sandra was not
abandoning all requested relief based on Richard and Sharon’s
breaches of the settlement agreement, which she pleaded within
her cause of action labeled “judicial foreclosure.” (See Pultz v.
Holgerson (1986) 184 Cal.App.3d 1110, 1116 [“[i]n resolving
a pleading issue in a summary judgment proceeding “‘a liberal
14
Richard and Sharon also contend Sandra represented in a
brief filed in opposition to a motion they filed to change the venue
of this action to Butte County (a motion the court denied) that
she was only pursuing a judicial foreclosure claim.9 In her
original complaint, Sandra asserted causes of action for fraud and
intentional interference with prospective economic advantage, as
well as a cause of action for judicial foreclosure. In her opposition
to the motion to change venue, Sandra stated “an election of
remedies was made . . . whereby [she] decided to proceed by way
of a judicial foreclosure to the exclusion of tort claims for
damages, which are now moot.” All that Sandra stated in the
passage Richard and Sharon cite, however, was that she was no
longer pursuing her tort claims. She did not state she was
abandoning all claims for relief based on breach of the settlement
agreement or that she was not seeking to hold Richard and
Sharon personally liable. Indeed, in response to Sandra’s
argument, Richard and Sharon conceded: “‘This is a Breach of
Contract case where Judicial Foreclosure is an available
remedy.’” Because breach of the settlement agreement was one of
the theories Sandra alleged, Richard and Sharon had to address
it in their motion for summary judgment. They did not. Sandra’s
complaint may not have been the most artfully drafted pleading,
construction must be given to the pleadings . . . of the party
against whom the motion is made’”].)
9 Richard and Sharon’s motion to augment the record on
appeal to include this document is granted. (See Cal. Rules of
Court, rule 8.155(a).)
15
but that did not relieve Richard and Sharon of their initial
moving burden on summary judgment.10
DISPOSITION
The judgment is reversed. The trial court is directed to
vacate its order granting Richard and Sharon’s motion for
summary judgment and to enter a new order denying the motion.
Sandra is entitled to recover her costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
10 We do not reach, and express no opinion on, the merits of
the trial court’s ruling there was no default under the promissory
note because the Revenue and Taxation Code and related
regulations required Richard to make the monthly withholdings.
16