Tricoast Builders v. Frederick CA2/6 ( 2021 )

Filed 10/18/21 Tricoast Builders v. Frederick CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION SIX
TRICOAST BUILDERS, INC. 2d Civ. No. B307825
et al., (Super. Ct. No. 56-2017-
00496775-CU-BC-VTA)
Plaintiffs and Appellants, (Ventura County)
v.
KELLY A. FREDERICK et al.,
Defendants and Respondents.
The parties settled this construction defect case at a
mandatory settlement conference (MSC) and placed the
settlement terms on the record. The parties agreed on the record
that the settlement terms would be memorialized in a fully
executed agreement prior to payment of the settlement amounts.
Michael Connette, both individually and as a principal of Tricoast
Builders, Inc. (Tricoast), refused to sign the settlement
agreement. Kelly A. Frederick and Timothy Athens (collectively
“homeowners”) moved ex parte for an order to show cause why
the settlement agreement had not been signed and requested
monetary sanctions against Tricoast and Connette.
The trial court issued an order to show cause why the
settlement had not been completed and why sanctions should not
be imposed under Code of Civil Procedure section 128.5.1
Connette claimed he “had not been well for several months after
the MSC” and had advised Tricoast’s other counsel, Darren M.
Ebner, that he disagreed with the terms of the written settlement
agreement. No details were provided as to either claim.
The trial court sanctioned Tricoast and Connette in the
amount of $10,000 and ordered the court clerk to execute the
settlement agreement on their behalf. They argue on appeal that
both acts constituted an abuse of judicial discretion. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Homeowners hired Tricoast to rebuild their home after it
sustained significant fire damage. Following disagreements
regarding the construction quality, homeowners fired Tricoast,
which, in turn, recorded a mechanic’s lien and filed this action
against homeowners and others for money allegedly owed on the
project. Homeowners cross-complained against Tricoast and
Connette, for various damages related to the construction
failures. Tricoast and Connette filed a cross-complaint for
indemnity against several subcontractors.
In addition to being an officer of Tricoast, Connette
represented the company as its attorney in its affirmative claims
against homeowners. Ebner, who was retained by Tricoast’s
insurer, represented Tricoast and Connette in defending
homeowners’ claims and in pursuing indemnity against the
subcontractors.
1All statutory references are to the Code of Civil Procedure
unless otherwise stated.
2
The entire case settled at the MSC on February 3, 2020.
Ebner appeared as Tricoast’s attorney, and Connette appeared as
both Tricoast’s attorney and its corporate representative. The
settlement required Tricoast’s insurer to pay homeowners
$420,000. Homeowners would then pay $41,000 of that
insurance payment to Tricoast, with the subcontractors paying
an additional $9,000, so that Tricoast would receive $50,000.
Judge Kent M. Kellegrew served as the MSC settlement
officer. After approximately eight hours of negotiations, Ebner
placed the basic settlement terms on the record. He stated that
“all releases will include a [Civil Code section] 1542 waiver and
standard release language in a settlement agreement
forthcoming.” (Italics added.) Attorney Michael Bubman,
representing Pennymac Corporation, also confirmed that the
issue of the Civil Code section 1542 waiver “will be addressed in
the settlement agreement.” (Italics added.) Ebner further stated
that “[i]t was discussed among at least some of the parties that
the funding at least for [Tricoast’s insurer] will be made within
30 days of a fully executed settlement agreement,” and the money
to be paid back to Tricoast would be “45 days within the signing
of the agreement.” (Italics added.) Bubman agreed the initial
payment would be “30 days from the signing of the fully executed
settlement agreement.” (Italics added.)
Judge Kellegrew emphasized the need for a written
settlement agreement: “So with this many moving parts and that
much money, you are better served to have a written settlement
agreement that will be concurrent but must be consistent with
what we do here today. It takes time to get that done. And then
it takes time to have so many parties sign off on it. And that
event precedes the exchange of money which impacts when the
money gets delivered.” Judge Kellegrew confirmed that Ebner
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“will be carrying the laboring oar” in drafting the settlement
agreement and set an April 3, 2020 hearing date for compliance
and dismissal of the action.
Ebner drafted the settlement agreement, which all parties
but Tricoast, Connette and JAT Construction (JAT) signed by
May 12, 2020. The April 3, 2020 hearing was taken off calendar
due to COVID-19 restrictions. Between April 2020, when the
settlement agreement was first circulated, and June 19, 2020,
homeowners’ counsel, Vida Tarassoly, “made many attempts to
contact [Tricoast] and its attorneys Michael Connette and Darren
Ebner, through email and phone” and stated “[t]hey have failed
to sign the settlement agreement to this day.”
To break the apparent impasse, homeowners filed an ex
parte application for an order to show cause why the settlement
agreement had not been signed. The trial court set a hearing for
July 20, 2020. Homeowners also filed a motion for monetary
sanctions against Tricoast and Connette based on their failure to
execute the agreement. They requested that Tricoast and
Connette pay the $16,750 in expenses incurred in attempting to
obtain their signatures on the settlement agreement.
Connette claimed he “had not been well for several months
after the MSC” and that he disagreed with the way Tricoast was
defined in the settlement agreement, even though it was drafted
by Tricoast’s other counsel. The trial court deferred its ruling at
the order to show cause hearing, but expunged Tricoast’s
mechanics lien on homeowners’ property and gave them
additional time to file a reply brief in support of the sanctions
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motion.2 The reply sought an additional $8,877.51 in attorney
fees incurred in attempts to finalize the settlement agreement.
At the continued hearing on August 10, 2020, the trial
court awarded sanctions in the amount of $10,000 against
Tricoast and Connette, jointly and severally, pursuant to section
128.5. It explained: “The record is clear that Judge Kellegrew
gave the parties until April 3, 2020 to execute a written
settlement agreement memorializing the MSC settlement arrived
at on February 3, 2020. The record is clear that the parties to the
settlement agreement – with the exception of Mr. Connette and
Tricoast – executed the agreement. [Homeowners’] counsel . . .
declares that she made multiple efforts to contact Mr. Connette
and Tricoast to get them to sign the agreement but they were not
responsive.”
The trial court instructed the court clerk to execute the
settlement agreement on behalf of Connette and Tricoast and
ordered that the sanctions be paid from the $41,000 settlement
payment due to Tricoast. Tricoast filed a notice of appeal.3
2Judge Vincent O’Neill heard both the order to show cause
and the sanctions motion.
3 As homeowners point out, Connette is listed on the notice
of appeal as Tricoast’s counsel but not as an appellant. Given
that Connette signed the notice and is jointly and severally liable
for the sanctions award, we liberally construe the notice of appeal
to include him as an appellant. (K.J. v. Los Angeles Unified
School Dist. (2020) 8 Cal.5th 875, 885-887 [“[A] reviewing court
must construe a notice of appeal from a sanctions order to include
an omitted attorney when it is reasonably clear that the attorney
intended to join in the appeal, and [the] respondent was not
misled or prejudiced by the omission”].)
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DISCUSSION
Standard of Review
We review an award of section 128.5 sanctions for abuse of
discretion. (Wallis v. PHL Associates, Inc. (2008) 168 Cal.App.4th
882, 893.) “‘Discretion is abused whenever, in its exercise, the
[trial] court exceeds the bounds of reason, all of the circumstances
before it being considered. . . .’” (Denham v. Superior Court
(1970) 2 Cal.3d 557, 566 (Denham).) We do not independently
determine whether the challenged conduct was frivolous or in bad
faith, and we may not substitute our judgment for that of the
trial court. (Sabek, Inc. v. Engelhard Corp. (1998) 65 Cal.App.4th
992, 1001.) Unless the complaining party shows a clear case of
abuse and that there has been a miscarriage of justice, we will
not disturb the trial court's exercise of discretion. (Denham, at
p. 566.)
The Trial Court Did Not Abuse Its Discretion by
Sanctioning Tricoast and Connette
Section 128.5, subdivision (a) gives the trial court discretion
to award “reasonable expenses, including attorney’s fees,
incurred by another party as a result of actions or tactics, made
in bad faith, that are frivolous or solely intended to cause
unnecessary delay.” Tricoast and Connette contend the trial
court abused its discretion by sanctioning them for not signing
the settlement agreement. They argue that the court lacked
jurisdiction to enforce the settlement agreement because Judge
Kellegrew did not retain jurisdiction under section 664.6, and
that the oral settlement agreement made in open court was not
contingent upon the preparation of a subsequent written
agreement. We reject both arguments.
Section 664.6, subdivision (a) provides: “If parties to
pending litigation stipulate, in a writing signed by the parties
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outside of 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.”
While it is true that Judge Kellegrew did not retain jurisdiction
under section 664.6 because the principal of Rob’s Plumbing was
not present at the MSC, an oral settlement agreement is
enforceable against a party who was not present if that party
subsequently agrees in writing. (Elyaoudayan v. Hoffman (2003)
104 Cal.App.4th 1421, 1424, 1431-1432 [“‘[M]ix and match’
approach to the manner of agreement” is permissible “as long as
all parties agree to the same material terms”].) The record
reflects that Rob’s Plumbing signed the written settlement
agreement on May 12, 2020.
As to the motion’s merits, homeowners concede the trial
court did not expressly “order” the parties to execute a written
settlement agreement, but it is apparent from the record that the
parties agreed that one would be prepared and that the deadlines
for making the settlement payments would be governed by the
fully executed agreement. Ebner represented that “[i]t was
discussed among at least some of the parties that the funding at
least for [Tricoast’s insurer] will be made within 30 days of a fully
executed settlement agreement,” and the money to be paid back to
Tricoast would be “45 days within the signing of the agreement.”
(Italics added.) Bubman also confirmed that the initial payment
would be “30 days from the signing of the fully executed settlement
agreement.” (Italics added.) Thus, as reflected in the record, no
settlement payments would be due by any party until there was a
fully executed settlement agreement. Judge Kellegrew
acknowledged that “it takes time to get [a settlement agreement]
done. And then it takes time to have so many parties sign off on
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it. And that event precedes the exchange of money which impacts
when the money gets delivered.” (Italics added.)
In addition, execution of a written settlement agreement
had a practical purpose. The oral settlement agreement required
Rob’s Plumbing to pay $1,500 to Tricoast but that party’s
principal was not present at the MSC. Consequently, as Judge
Kellegrew explained, the oral settlement agreement was
unenforceable under section 664.6 because Rob’s Plumbing could
still repudiate it. It was only when its principal signed the
written settlement agreement that Rob’s Plumbing became bound
by the settlement terms. (See Elyaoudayan v. Hoffman, supra,
104 Cal.App.4th at p. 1431.)
The record also confirms that the written settlement
agreement is consistent with the oral agreement’s terms. The
written agreement provided that “[w]ithin thirty (30) days of
receipt of signatures to the Agreement,” Tricoast’s insurer shall
forward $420,000 to homeowners’ counsel, Vida Tarassoly.
Further settlement payments also were conditioned upon “receipt
of signatures to the Agreement.”
Tricoast’s insurer made the $420,000 payment to Tarassoly
before the payment was required. In a May 28, 2020 response to
an email from Tarassoly regarding the status of the written
settlement agreement, Connette inquired: “Was your client not
paid pursuant to an agreement? [¶] And, has your client paid
[Tricoast] pursuant to an agreement?” Tarassoly responded:
“The money is sitting in my trust account. I have been prohibited
from distributing it to my clients or Tricoast unless there is an
executed agreement signed by all involved parties. Your client,
Tricoast, is the only party not having signed the agreement, and
you have continually failed to respond in a meaningful way to my
inquiries as to the reasons why your client has refused to do so.”
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Tarassoly further stated she had filed a complaint with the state
bar and was filing the motion for sanctions.
The record reflects that the other parties signed the
settlement agreement between April 6 and May 12, 2020.4 In his
opposition to the sanctions motion, Connette declared that he
informed Ebner’s firm, Springle and Fink, “that he was not well
and . . . did not agree with the draft of the settlement agreement.”
Connette did not specify when that occurred or whether he
specifically informed Ebner of these facts. Connette further
declared that he sent a copy of the agreement to Tricoast’s
president but was unable to contact him “for several months.”
Once again, no specifics were provided.
The first date mentioned in Connette’s declaration is June
4, 2020, when he “requested that Defendants provide an
agreement that was agreed to on the court record.” He did not
identify to whom this request was made and whether it was by
phone, email or letter. Connette’s other claimed communications
with Tarassoly, which he did document with emails, occurred
after the sanctions motion was filed on June 23, 2020.
The record reflects that Connette first advised Tarassoly in
July 2020 of his concerns regarding how he and Tricoast were
defined in the settlement agreement. Tarassoly responded that
“rather than making a general statement that the agreement is
4 The copy of the settlement agreement in the record does
not include a signature for JAT. Homeowners requested
sanctions against JAT for its failure to execute the settlement
agreement, but the trial court denied the request, finding they
had failed to “explain in their papers how JAT had engaged in
delay.” Regardless, the issue of whether or not JAT signed the
written agreement is not before us.
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completely inaccurate, it would be better that [he] be more
specific about [his] alleged inaccuracies.”
On July 14, 2020, Connette sent Tarassoly a copy of the
settlement agreement with his proposed changes. At that point,
all other parties had signed the agreement. Connette’s proposed
changes not only revised the definition of Connette and Tricoast,
as he had suggested, but it also deleted 20 paragraphs of mostly
standard settlement language. Homeowners rejected the
proposed changes as untimely and inappropriate.
Connette does not dispute that he was present at the MSC
and agreed to the settlement terms which, according to the
record, included execution of a settlement agreement before any
payments would be due. Judge Kellegrew gave the parties two
months to finalize the settlement and dismiss the case. COVID-
19 disrupted that plan, but a draft settlement agreement was
circulated by Ebner and signed by the other parties by mid-May
2020. There is no evidence that Connette made any effort in
April or May to explain to Tarassoly or the other parties’ counsel
why he would not sign the agreement. He claims he was unwell
but does not state he was unable to communicate during that
period. It also is unclear whether, on June 4, 2020, he requested
“that Defendants provide an agreement that was agreed to on the
court record.” Connette provided no evidence of any
communications with opposing counsel prior to the filing of the
sanctions motion.
We conclude Tricoast and Connette have not demonstrated
that the trial court’s $10,000 sanctions award exceeded the
bounds of reason or constituted a miscarriage of justice.
(Denham, supra, 2 Cal.3d at p. 566.) To the contrary, the MSC
was held on February 3, 2020, and Judge Kellegrew
contemplated dismissal of the action by April 3, 2020. Tricoast
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and Connette’s refusal to sign the settlement agreement or to
explain their reasons for that refusal delayed finalization of the
settlement until August 10, 2020, when the court ordered the
clerk to execute the agreement on their behalf. As a direct result
of Tricoast and Connette’s unreasonable delay, homeowners had
to incur the expense of applying for an order to show cause and
obtaining a court order authorizing release of the $420,000 in
settlement funds. Under these circumstances, imposition of
sanctions was well within the court’s discretion.
Motion for Sanctions on Appeal
Homeowners seek $5,313 in sanctions against Tricoast and
Connette for filing and pursuing a frivolous appeal. (§ 907; Cal.
Rules of Ct., rule 8.276.) They claim that Tricoast and Connette
“ignor[ed] the facts that led the trial court to reach its findings”
and that “[a] fair analysis of the record shows that [they] did this
[appeal] for the primary purpose of causing [homeowners] stress
and costing them money.”
Our Supreme Court has instructed that “an appeal should
be held to be frivolous only when it is prosecuted for an improper
motive – to harass the respondent or delay the effect of an
adverse judgment – or when it indisputedly has no merit – when
any reasonable attorney would agree that the appeal is totally
and completely without merit. [Citation.] [¶] . . . [T]he
punishment should be used most sparingly to deter only the most
egregious conduct.” (In re Marriage of Flaherty (1982) 31 Cal.3d
637, 650-651.) Although Tricoast and Connette’s arguments are
not supported by our reading of the record, we conclude the
appeal is not “so totally and completely without all arguable
merit as to justify an award of sanctions under those demanding
requirements.” (McCluskey v. Henry (2020) 56 Cal.App.5th 1197,
1208.)
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DISPOSITION
The trial court’s order awarding sanctions against Tricoast
and Connette is affirmed. The motion for sanctions on appeal is
denied. Respondent homeowners shall recover their costs on
appeal.
NOT TO BE PUBLISHED.
PERREN, J.
We concur:
GILBERT, P. J.
YEGAN, J.
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Vincent O’Neill, Judge
Superior Court County of Ventura
______________________________
Connette Law Office, Michael Connette, on behalf of
Plaintiffs and Appellants.
Law Office of Daniel M. O’Leary, Daniel M. O’Leary, for
Defendants and Respondents.
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