Gidding v. Salama CA1/2 ( 2014 )

Filed 6/10/14 Gidding v. Salama CA1/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
JOHN GIDDING et al.,
Plaintiffs and Appellants,
A136071
v.
JOSEPH SALAMA et al., (San Francisco City and County
Super. Ct. No. CGC-11-507519)
Defendants and Respondents.
John Gidding, on behalf of himself and his company, Midshore Marketing, LP
(Midshore) (collectively plaintiffs), appeals after the trial court granted the motion for
reconsideration and enforcement of the parties’ settlement agreement brought by
defendants Joseph Salama, John Schilt, and Tenax Law Group PC (Tenax) (collectively
defendants), in this legal malpractice action. Gidding contends (1) because the settlement
agreement was ambiguous as to the need for the signatures of defendants’ counsel, it
must be interpreted in favor of his position that counsel’s failure to sign the agreement
before he repudiated it rendered it unenforceable; (2) substantial evidence does not
support the trial court’s conclusion, based on extrinsic evidence, that the agreement did
not have to be signed by defendants’ counsel to be enforceable; and (3) defendants’
counsel’s false promises and representations induced him to sign the agreement. We
shall affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Gidding is the sole managing partner of Midshore and the founder of Pivotal, Inc.,
a wine importing company. Pivotal imported wines from, inter alia, Glendonbrook
1
Wines Pty Ltd. (Glendonbrook), an Australian winery. Following a dispute over title to
$45,000 of Glendonbrook’s wines, Gidding, Midshore, and Pivotal filed a defamation
action against Glendonbrook, and Glendonbrook filed a cross-complaint. Salama helped
to research and draft the complaint and the answer to the cross-complaint. After Salama
moved to Tenax, at which Schilt was the “main attorney,” he resumed work on the case,
at Gidding’s request.
At the conclusion of a January 2010 trial, Glendonbrook obtained a $1,830,000
judgment against Gidding, Midshore, and Pivotal. The judgment included $1,150,000 in
punitive damages, which the court reduced by $704,000. Gidding and Midshore
subsequently dismissed an appeal under the terms of a partial settlement with
Glendonbrook, pursuant to which the judgment was reduced to $488,696.96. As of
October 28, 2011, the amount still owed was $389,665.71.
On January 21, 2011, Gidding filed a complaint against defendants for legal
malpractice and breach of fiduciary duty. In September 2011, George Ziser, an attorney
with the law firm Lewis, Brisbois, Bisgaard & Smith, who represented Schilt and Tenax,
engaged in settlement discussions with Gidding.1 The parties eventually agreed to settle
the case for $125,000, with $100,000 coming from Tenax’s malpractice insurance carrier
and $25,000 coming from Salama’s carrier. On August 18, 2011, Gidding wrote to Ziser
that the settlement agreement should, inter alia, “encompass all the defendants in the . . .
case, i.e., your clients, John Schilt and Tenax Law Group PC, and Jeffrey [sic]
Lawniczak’s client, Joseph Salama,” and should “definitely extinguish all claims, past,
present, and future, between plaintiffs John Gidding and Midshore Marketing, and
defendants John Schilt, Tenax Law Group PC, and Joseph Salama.”
Ziser and his associate, Kendall Layne, drafted a settlement agreement, which was
later revised to include Schilt’s insurer, American Guarantee & Liability Insurance
Company (American), as a specifically identified releasee. The first paragraph of the
settlement agreement states that the settling parties are Gidding, Midshore, Salama,
1
Stephen Lawniczak from the firm Gordon & Rees represented Salama.
2
Schilt, and Tenax. The agreement also contains three release paragraphs: in the first,
Gidding and Midshore release Salama, Schilt, Tenax, and American; in the second,
Salama releases Gidding, Midshore, Schilt, Tenax, and American; and in the third, Schilt
and Tenax release Gidding, Midshore, Salama, and American. Under the terms of the
agreement, within 30 days of receipt of counterpart originals of the agreement fully
executed by the parties, Schilt and Tenax agree to pay plaintiffs $100,000 and Salama
agrees to pay plaintiffs $25,000. The agreement contains an integration clause, and
further provides that the settling parties had the opportunity to consult with counsel
regarding the legal effect of the agreement and have freely entered into the agreement.
Gidding signed the settlement agreement on September 19, 2011. Salama signed
the agreement on September 20, and his attorney, Stephen Lawniczak, signed it on
September 21, beneath Salama’s signature and directly under a caption that reads,
“Approved as to form.” On September 26, Schilt signed on behalf of himself and Tenax.
On September 26, 2011, Glendonbrook, as a judgment creditor, filed a notice of
lien on plaintiffs’ cause of action in the present lawsuit, in which it stated that the amount
required to satisfy the judgment was $488,696.96. Shortly thereafter, Gidding and Ziser
exchanged emails in which they discussed the effect of the lien on the malpractice
settlement. On October 1, Ziser wrote that he was unsure of the lien’s effect on the
settlement. On October 2, Gidding responded that “the settlement was negotiated in good
faith and settled, before the lien appeared.” Gidding sent another email on October 4, in
which he stated, inter alia, “As both parties signed the Settlement agreement on and
before September 21st, i.e., we have a deal. The lien, dated September 26th, came after
the deal. I think you must send me the checks, post haste.”
A few weeks later, on October 26, 2011, Gidding sent an email to Layne and
Ziser, in which he wrote that he was back in the United States, but had not received the
settlement money. He again asked that “the checks” be sent to him. On October 28,
Ziser responded that he had been contacted by Glendonbrook’s attorney, who had
advised Ziser that he would be filing an application for an assignment order, which would
require Ziser to send the settlement funds to Glendonbrook, in partial satisfaction of the
3
judgment against plaintiffs. Ziser further wrote that, if the application were denied, he
could send the check to Gidding but, if it were granted, he would have to send the
settlement money to Glendonbrook. Two days later, on October 30, Gidding sent an
email to Ziser, in which he wrote, “On September 21st, when you failed to return the
completed settlement agreements duly signed by all parties, as promised, . . . the
settlement died.” He explained that he had planned to use the settlement money to
bargain with Glendonbrook, rather than declare bankruptcy, but that he now planned to
declare bankruptcy. The following day, on October 31, Ziser signed the settlement
agreement beneath Schilt’s signatures and directly under the caption, “Approved as to
form.”
On November 4, 2011, Schilt and Tenax moved to enforce the settlement
agreement, pursuant to Code of Civil Procedure section 664.6.2
In a tentative decision, the trial court indicated that it intended to grant the motion
to enforce the settlement agreement because Gidding “has not shown that Mr. Ziser’s
execution of the agreement was required for it to be effective.” However, following the
parties’ argument at the December 16, 2011, hearing on the motion, the court changed its
ruling, explaining that, as a non-lawyer, “it might be reasonable for Mr. Gidding to think
that this agreement wouldn’t be effective until all signature lines had been signed,” and
that he might reasonably believe that the insurance company is a party since it was
providing the money for the settlement and “there’s nobody signing this who’s got any
connection with the insurance company, or at least who has claimed to have spoken for
them, except you, Mr. Ziser, and there’s a line for your signature, and you didn’t sign.”
The court continued, “From a self-represented litigant’s point of view, there’s ambiguity;
and ambiguity is to be construed against the drafter.” The court therefore denied the
motion to enforce the settlement agreement.
2
All further statutory references are to the Code of Civil Procedure unless
otherwise indicated.
4
On January 10, 2012, Schilt and Tenax filed a motion for reconsideration based on
new or different facts or law that the court had not considered at the hearing on the
original motion, “and that could not with diligence have been brought to the court’s
attention at [that] hearing, in that the tentative ruling was to grant the motion, and the
court’s denial of the motion was on a ground raised sua sponte by the court during the
hearing, not disclosed in the papers filed in support of or in opposition to the motion, and
not consistent with. . . [recent case authority regarding] whose signatures must appear on
a settlement agreement in order for it to be enforceable under . . . section 664.6.” The
allegation of new or different facts was based on Gidding’s October 4, 2011, email, in
which he wrote, “we have a deal,” since “both parties” had signed the settlement
agreement before Glendonbrook filed its lien.
On February 21, 2012, following a hearing, the trial court granted the motion for
reconsideration and ordered enforcement of the settlement agreement pursuant to section
664.6. The court explained its decision as follows: “The sole substantive issue on this
motion is a simple one of contract interpretation—i.e., whether the signature of either Mr.
Ziser or Mr. Layne was required to make the parties’ settlement contract enforceable.
While the issue is simple, its resolution is a close call.
“As an initial matter, I find, per well-settled California contract principles, that the
agreement is ambiguous and is reasonably susceptible to the interpretations proffered by
both Gidding and the Schilt defendants. Thus, I need to resort to extrinsic evidence.
There is extrinsic evidence favoring each side. Ultimately, however, I find Gidding’s
October 4 email to be dispositive. In that email, at a time when Gidding did not know
and had not been told that either Ziser or Layne had signed the agreement, Gidding wrote
that ‘we have a deal.’ While Gidding claims that he wrote that email under the
assumption that Ziser or Layne had signed the agreement, nothing in the October 4 email
or in any of the other extrinsic evidence provided to me states or suggests that Ziser or
Layne had signed the agreement by October 4, and it is undisputed that neither had done
so. If, as Gidding later claimed, it was critical to the enforceability of the agreement that
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Ziser or Layne sign it, then it stands to reason that, before writing that ‘we have a deal,’
Gidding would have determined whether Ziser or Layne signed the agreement.
“The October 4 email is a new fact that warrants reconsideration of my prior
ruling denying the Schilt Defendants’ motion to enforce the settlement agreement.” The
court then vacated its prior order denying the motion to enforce the settlement agreement
and found that the agreement was enforceable pursuant to section 664.6,
“notwithstanding that neither Ziser nor Layne signed it until October 31, 2011, a day after
Gidding purported to cancel the agreement.”
Subsequently, on April 23, 2012, the trial court denied Gidding’s motion for
reconsideration of the order granting defendants’ motion to enforce the settlement
agreement, after finding that Gidding had not presented any new facts or law to support
such a motion and that the prior order enforcing the settlement agreement was properly
decided.
On May 25, 2012, the trial court granted defendants’ motion requesting that it
order them to pay the $125,000 in settlement funds to Glendonbrook once the court’s
judgment of dismissal became final, or to otherwise disburse the funds in accordance
with any direction from the Court of Appeal, if this court did not affirm the trial court’s
order enforcing the settlement agreement.
On June 5, 2012, the trial court entered a judgment of dismissal.
On July 23, 2012, Gidding filed a notice of appeal.
DISCUSSION
I. General Legal Principles and Standard of Review
Section 664.6 provides in relevant part: “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. . . .”
“It is for the trial court to determine in the first instance whether the parties have
entered into an enforceable settlement. [Citation.] In making that determination, ‘the
trial court acts as the trier of fact, determining whether the parties entered into a valid and
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binding settlement. [Citation.] . . .’ ” “The trial court’s factual findings on a motion to
enforce a settlement pursuant to section 664.6 ‘are subject to limited appellate review and
will not be disturbed if supported by substantial evidence.’ [Citation.]” (Osumi v. Sutton
(2007) 151 Cal.App.4th 1355, 1360.)
On questions of law, we review the trial court’s ruling on a section 664.6 motion
de novo. (Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002)
103 Cal.App.4th 30, 35.) The trial court’s threshold finding of ambiguity is such a
question of law, “subject to our independent review. The court’s ultimate construction of
ambiguous language is subject to our independent review if the extrinsic evidence is not
in conflict, even when the parties draw different inferences from the evidence. If the
extrinsic evidence conflicts, we uphold any reasonable construction supported by
substantial evidence. [Citation.]” (Bill Signs Trucking, LLC v. Signs Family Limited
Partnership (2007) 157 Cal.App.4th 1515, 1521 (Bill Signs Trucking).)
II. Enforceability of the Settlement Agreement
A.
Gidding contends that, because the settlement agreement was ambiguous as to the
need for the signatures of defendants’ counsel, it must be interpreted in favor of his
position that counsel’s failure to sign the agreement before he repudiated it rendered it
unenforceable. Defendants argue, on the contrary, that the agreement was not ambiguous
and therefore did not require the use of extrinsic evidence to interpret its meaning.
“The fundamental goal of contract interpretation is to give effect to the mutual
intention of the parties as it existed at the time they entered into the contract. ([See] Civ.
Code, § 1636.) That intent is interpreted according to objective, rather than subjective,
criteria. [Citation.] When the contract is clear and explicit, the parties’ intent is
determined solely by reference to the language of the agreement. (Civ. Code, §§ 1638
[‘language of a contract is to govern its interpretation, if the language is clear and
explicit, and does not involve an absurdity’], 1639 [‘[w]hen a contract is reduced to
writing, the intention of the parties is to be ascertained from the writing alone, if
7
possible’].) The words are to be understood ‘in their ordinary and popular sense.’ (Civ.
Code, § 1644.)” (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1385.)
In the present case, we agree with defendants that the settlement agreement
unambiguously demonstrates the parties’ intention that only the signatures of the settling
parties were required for the agreement to be enforceable. The agreement defines the
settling parties as Gidding, Midshore, Salama, Schilt, and Tenax. The agreement
contains three release clauses, which state that Gidding, Midshore, Salama, Schilt, and
Tenax each agrees to release each other and American from liability. The agreement
further provides that Schilt and Tenax will pay plaintiffs $100,000 and that Salama will
pay plaintiffs $25,000. Although there are signature lines beneath the defendants’
signature lines, under the caption, “Approved as to form,” the attorneys for the settling
defendants are not mentioned in the body of the agreement.
The California Supreme Court, in Levy v. Superior Court (1995) 10 Cal.4th 578,
585-586 (Levy), concluded that, under section 664.6, it is the litigants’—not their
attorneys’—signatures that are necessary to make a settlement agreement enforceable.
As the court explained: In enacting section 664.6, the Legislature “created a summary,
expedited procedure to enforce settlement agreements when certain requirements that
decrease the likelihood of misunderstandings are met. Thus the statute requires the
‘parties’ to stipulate in writing or orally before the court that they have settled the case.
The litigants’ direct participation tends to ensure that the settlement is the result of their
mature reflection and deliberate assent.” (Levy, at p. 585.) The court therefore found that
the term “parties,” as used in section 664.6, “means the litigants themselves, and does not
include their attorneys of record,” and held that a settlement agreement signed by the
complainant’s attorney, but not by the complainant, was not enforceable under section
664.6. (Levy, at p. 586, fn. omitted.)3
3
In dictum, the appellate court in Robertson v. Chen (1996) 44 Cal.App.4th 1290,
1294 distinguished Levy from a situation involving an insurance-funded settlement, in
which a settlement by an insurance carrier within policy limits does not prejudice the
substantial rights of the insured. The appellate court did observe, however, that the
8
Here, because all of the parties to the litigation had signed the settlement
agreement before Gidding repudiated it, the trial court properly ordered its enforcement.
(See Levy, supra, 10 Cal.4th at pp. 585-586; § 664.6.)
In Freedman v. Brutzkus (2010) 182 Cal.App.4th 1065, 1067 (Freedman), the
appellate court addressed whether an attorney’s signature in a signature block of a
contract, under the caption, “approved as to form and content,” amounted to an actionable
representation to the opposing party’s attorney. The court held that the recital, “approved
as to form and content,” “indicates that an attorney has advised or is advising his or her
own client of the attorney’s approval of the document’s form and content, and does not,
by itself, operate as a representation to an opposing party’s attorney that can provide a
basis for tort liability.” (Id. at p. 1067; cf. In re Marriage of Hasso (1991) 229
Cal.App.3d 1174, 1181 (Hasso) [attorney’s approval as to form was not a condition
precedent to enforceability of agreement].)
Likewise, in the present case, the signature of Layne or Ziser under the caption,
“Approved as to form,” would not have constituted an “actionable representation,” but
merely would have indicated that counsel had advised Schilt and Tenax of his approval of
the document’s form. (See Freedman, supra, 182 Cal.App.4th at p. 1067.)
The fact that Gidding is self-represented does not change this conclusion or
somehow render the “approved as to form” signature line ambiguous. As our Supreme
Court explained in Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984-985: “[M]ere self-
representation is not a ground for exceptionally lenient treatment. Except when a
particular rule provides otherwise, the rules of civil procedure must apply equally to
parties represented by counsel and those who forgo attorney representation. . . . A
doctrine generally requiring or permitting exceptional treatment of parties who represent
themselves would lead to a quagmire in the trial courts, and would be unfair to the other
parties to litigation.”
“rationale of Levy would apply to protect the insured in the professional liability context
where the insured’s consent is specifically required for settlement.” (Robertson, at pp.
1294-1295, fn. 3.)
9
We conclude, as a matter of law, that the signatures of the parties were all that was
necessary to make the settlement agreement enforceable. (See Levy, supra, 10 Cal.4th at
pp. 585-586; Freedman, supra, 182 Cal.App.4th at p. 1070.)4
B.
Moreover, even assuming the settlement agreement were ambiguous, as Gidding
asserts, we agree with the trial court that the extrinsic evidence demonstrates the parties’
intent that the agreement did not have to be signed by defendants’ counsel to be
enforceable. (See Bill Signs Trucking, supra, 157 Cal.App.4th at p. 1521.)
In Hasso, supra, 229 Cal.App.3d at pages 1177-1178, a panel of this Division
addressed an issue similar to the one presented here. In Hasso, the husband appealed
from a judgment enforcing the terms of a marital settlement agreement that was signed
only by himself and his wife, although both were represented by counsel. The agreement
contained signature lines at the bottom for each of the parties’ attorneys under the
caption, “ ‘Approved as to Form.’ ” (Id. at p. 1178.) On appeal, the husband argued that
“approval of the parties’ respective attorneys was intended to be a precondition to
enforceability of the . . . agreement.” (Id. at p. 1180.)
We held that there was substantial evidence, both in the language of the document
and the surrounding circumstances, to support the trial court’s finding that attorney
approval was not a condition precedent to enforceability of the agreement. (Hasso,
supra, 229 Cal.App.3d at p. 1182.) As we explained, although the agreement had
signature lines for “Approval As To Form” for each party’s attorney, it nowhere stated
that it was subject to review or content approval by the attorneys. Rather, it contained
4
Although the trial court found the settlement agreement ambiguous, “ ‘[w]e may
affirm a trial court judgment on any [correct] basis presented by the record whether or not
relied upon by the trial court. [Citation.]’ [Citation.] ‘No rule of decision is better or
more firmly established by authority, nor one resting upon a sounder basis of reason and
propriety, than that a ruling or decision, itself correct in law, will not be disturbed on
appeal merely because given for a wrong reason. If right upon any theory of the law
applicable to the case, it must be sustained regardless of the considerations which may
have moved the trial court to its conclusion.’ [Citation.]” (ASP Properties Group, L.P. v.
Fard, Inc. (2005) 133 Cal.App.4th 1257, 1268.)
10
“acknowledgements by both parties that they had access to retained counsel prior to
signing and were ‘fully and completely informed as to the facts relating to the subject
matter of this Agreement, and as to [their] rights and liabilities. . . .” (Id. at p. 1181.) We
further stated that “[c]onditions precedent are not favored and contractual provisions will
not be so construed in the absence of language plainly requiring such a construction.
[Citation.] There is no basis for such a construction here—the agreement contains no
language that it is ‘subject to’ or ‘conditioned on’ attorney approval, and indeed has
several paragraphs indicating an intent by the parties to enter into a binding accord
regardless of their attorneys’ advice.” (Ibid.)
We therefore found that the language of the agreement did “not impose attorney
approval as a condition precedent; at best, it raised an ambiguity on the issue which the
trial court was entitled to resolve by considering not only the words used in the
document, but the circumstances surrounding its execution. [Citations.]” (Hasso, supra,
229 Cal.App.3d at p. 1181.)
We then found that the extrinsic evidence negated an inference that attorney
approval was a condition precedent to the enforceability of the agreement. (Hasso,
supra, 229 Cal.App.3d at p. 1181.) First, the parties had previously negotiated
agreements without the assistance of attorneys and, second, after signing the agreement,
“the parties immediately began to perform the agreement, without waiting for attorney
approval.” (Ibid.)
We also observed that there was evidence that lack of attorney approval was a
“smoke screen to conceal [the husband’s] true motive for repudiating the agreement,”
which involved the refusal of his daughters to consent to his “secret plan” regarding some
of the property. (Hasso, supra, 229 Cal.App.3d at pp. 1181-1182.) Finally, we rejected
the husband’s argument that public policy concerns require courts to refrain from
enforcing agreements entered into by parties without the consent of their retained
counsel. (Id. at p. 1182.) We observed that the law favors settlements and could glean
“no policy reason why Husband should be permitted to repudiate the agreement merely
because his attorney’s signature was not affixed.” (Id. at p. 1185.)
11
In this case too, the agreement did not provide that it was subject to review or
content approval by counsel. It also contains a provision stating that the settling parties
had the opportunity to consult with counsel about the legal effect of the agreement and
had freely entered into the agreement. The “Approved as to form” language thus does
not impose attorney approval as a condition precedent. (See Hasso, supra, 229
Cal.App.3d at p. 1181.)
Furthermore, as in Hasso, the extrinsic evidence negates any inference that
attorney approval was a condition precedent to the enforceability of the agreement. (See
Hasso, supra, 229 Cal.App.3d at p. 1181.) The evidence included Gidding’s responses to
Ziser’s notification regarding Goldenbrook’s lien. After Ziser wrote, in an October 1,
2011 email, that he was uncertain about the effect the lien would have on the settlement,
Gidding responded on October 2, that “the settlement was negotiated in good faith and
settled, before the lien appeared.” Then, on October 4, Gidding wrote in a follow-up
email: “As both parties signed the Settlement agreement on and before September 21st,
i.e., we have a deal. The lien, dated September 26th, came after the deal. I think you
must send me the checks, post haste.”
In its order granting defendants’ motion for reconsideration, the trial court found
that, at the time Gidding wrote in his October 4, email, “we have a deal,” he “did not
know and had not been told” that either Ziser or Layne had signed the agreement.
Although Gidding claimed that he wrote the email “under the assumption” that Ziser or
Layne had signed the agreement, no extrinsic evidence stated or even suggested that they
had done so. The court therefore concluded: “If, as Gidding later claimed, it was critical
to enforceability of the agreement that Ziser or Layne sign it, then it stands to reason that,
before writing that ‘we have a deal,’ Gidding would have determined whether Ziser or
Layne signed the agreement.”
We reject Gidding’s argument that his subjective intent—that everyone listed on
the signature page of the agreement was required to sign it—should prevail. The trial
court’s interpretation of this evidence was reasonable and its conclusion that Gidding did
not manifest an intent that the attorneys’ signatures were necessary to the agreement’s
12
enforceability finds support in the evidence. (See Bill Signs Trucking, supra, 157
Cal.App.4th at p. 1521; cf. Provost v. Regents of University of California (2011) 201
Cal.App.4th 1289, 1300 [it is the parties’ “ ‘objective and outward manifestations’ ” of
mutual assent that control]; accord, Klein v. Chevron U.S.A., Inc., supra, 202 Cal.App.4th
at p. 1385.)
In addition, as in Hasso, there was some evidence that the lack of attorney
approval was a “smoke screen” (Hasso, supra, 229 Cal.App.3d at p. 1181), and that
Gidding’s true motive for repudiating the agreement was quite different. As Gidding
wrote in his opening brief, “[w]hen Gidding accepted to [sic] settle his malpractice claim
cheaply and quickly, his intention was to buy himself a settlement with Glendonbrook,
and then return to the United States to live and work without a judgment hanging over his
head” and without having to declare bankruptcy. This motive was also reflected in the
October 30, 2011 email in which he purported to repudiate the settlement agreement, and
in which he wrote that he had intended to “use the settlement money to bargain with
[Glendonbrook] rather than declare bankruptcy.”
We likewise reject Gidding’s assertion that, because any ambiguity regarding the
agreement’s meaning should be interpreted against the drafting party, his understanding
of which signatures were required to make the agreement enforceable should prevail. He
relies on Civil Code section 1654, which provides: “ ‘In cases of uncertainty not
removed by the preceding rules, the language of a contract should be interpreted most
strongly against the party who caused the uncertainty to exist.’ The rule contained in
section 1654 ‘is to be used only when there is no extrinsic evidence available to aid in the
interpretation of the contract or where the uncertainty cannot be remedied by other rules
of interpretation. [Citations.] The rule does not stand for the proposition that, in every
case where one of the parties to a contract points out a possible ambiguity, the
interpretation favored by the nondrafting party will prevail. The rule remains that the
trier of fact will consider any available extrinsic evidence to determine what the parties
actually intended the words of their contract to mean. [Citation.] Only in those instances
where the extrinsic evidence is either lacking or is insufficient to resolve what the parties
13
intended the terms of the contract to mean will the rule that ambiguities are resolved
against the drafter of the contract be applied. [Citation.]’ [Citation.]” (Steller v. Sears,
Roebuck and Co. (2010) 189 Cal.App.4th 175, 183-184; see also County of San Joaquin
v. Workers’ Comp. Appeals Bd. (2004) 117 Cal.App.4th 1180, 1186 [“a contract is not
automatically construed against a drafter where, as here, the contract is the result of
negotiations”]; compare Mayhew v. Benninghoff (1997) 53 Cal.App.4th 1365, 1370
[where agreement in question is between attorney and his or her client, “doctrine of
contra proferentem (construing ambiguous agreements against the drafter) applies with
even greater force when the person who prepared the writing is a lawyer”].)
Here, there was extrinsic evidence to aid in the interpretation of this agreement
(see Steller v. Sears, Roebuck and Co., supra, 189 Cal.App.4th at pp. 183-184), which
was negotiated by both parties. (See County of San Joaquin v. Workers’ Comp. Appeals
Bd., supra, 117 Cal.App.4th at p. 1186.) Nor does this matter involve a contract between
an attorney and his or her client. (Compare Mayhew v. Benninghoff, supra, 53
Cal.App.4th at p. 1370.) Accordingly, it is not appropriate to interpret any ambiguity in
the agreement against defendants.
In sum, the applicable law, the terms of the settlement agreement, and the extrinsic
evidence all support the trial court’s conclusion that attorney approval was not a
condition for enforceability of the agreement. (See Hasso, supra, 229 Cal.App.3d at p.
1182.)
III. Alleged Fraud in the Inducement
Gidding contends Layne and Ziser made false promises and representations that
induced him to sign the agreement.
Specifically, Gidding argues that he was induced to sign the settlement agreement
by the false representations in a September 14, 2011 email he received from Layne, in
which Layne wrote, inter alia: “Attached please find a Confidential Settlement and
Mutual General Release, plus a completed Request for Dismissal. My preference is
always to have multiple wet ink originals of the settlement agreement, so everyone has an
original signature by everyone else, but the agreement is drafted to correspond to the deal
14
made, i.e., faxed signatures = original.” After directing Gidding to sign and date the
agreement and return it to him, he further directed Gidding to “date and sign the request
for dismissal and mail to me with your original signature; I will countersign and have
[Salama’s attorney] countersign (clerk will not dismiss case on the ‘each side to bear their
own costs and fees’ terms unless all parties/counsel sign) and then hold the original
without filing it until you have received both settlement checks and then I will file and
serve Notice of Entry of Dismissal with endorsed filed copies to you and to [Salama’s
attorney].” (Bold omitted.)
According to Gidding, Layne and Ziser “breached their promises and
representations in three distinct ways: (1) they did not sign the Agreement, (2) they did
not send a copy of their signature page—whether unsigned, partially signed or signed—to
Gidding, and (3) they concealed these facts from Gidding.”
Defendants assert that Gidding first raised this argument in his motion for
reconsideration in the trial court, and has therefore forfeited it by failing to raise it in his
opposition to the motion to enforce the settlement agreement.
Even assuming the fraud argument is not forfeited, we find, nonetheless, that
Gidding has not shown evidence of either a false promise or fraud in the inducement on
the part of Layne or Ziser.
Fraud in the inducement “occurs when ‘ “the promisor knows what he is signing
but his consent is induced by fraud, mutual assent is present and a contract is formed,
which, by reason of the fraud, is voidable.” ’ ” (Rosenthal v. Great Western Fin.
Securities Corp. (1996) 14 Cal.4th 394, 415; see also Civ. Code, §§ 1567, 1572.)
Here, Gidding apparently misunderstood Layne’s September 14, 2011 email, in
which he wrote that defendants’ counsel would sign the request for dismissal, not the
settlement agreement. Moreover, Layne’s statement regarding his preference for
“multiple wet ink originals of the settlement agreement, so everyone has an original
signature by everyone else,” does not demonstrate a false representation by Layne that
defendants’ counsel would necessarily sign the agreement. Instead, this comment simply
describes the method for obtaining the parties’ signatures.
15
Accordingly, Gidding’s claim that Layne and Ziser committed fraud in the
inducement by failing “to honor their representations and promises, implicit and
explicit,” upon which he justifiably relied, is without merit.5
DISPOSITION
The judgment of dismissal is affirmed. Costs on appeal are awarded to
defendants.
_________________________
Kline, P.J.
We concur:
_________________________
Richman, J.
_________________________
Brick, J.*
* Judge of the Alameda County Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
5
The present case is distinguishable from Shafer v. Berger, Kahn, Shafton, Moss,
Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 74-75, cited by Gidding, in which
the plaintiffs claimed that an attorney for the defendant’s insurance company initially told
them that the defendant’s insurance policy covered willful acts, but later claimed that
willful acts were excluded. The appellate court held that the plaintiffs’ complaint
adequately pleaded that the attorney had made a fraudulent statement about their
insurance coverage. (Id. at p. 75.) Here, as we have already discussed, there is no
evidence that defendants’ counsel made any false promise of material fact to Gidding.
16