Deutsch v. Martin CA2/7 ( 2015 )

Filed 10/14/15 Deutsch v. Martin CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
WARREN C. DEUTSCH, as Trustee, etc., B259527
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC519557)
v.
IRIS MARTIN,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Richard E. Rico, Judge. Affirmed as modified.
Lewis R. Landau for Defendant and Appellant.
Graham • Vaage, Susan L. Vaage and Ann G. Lee for Plaintiff and Respondent.
________________________
Warren C. Deutsch, Trustee of the W. & E. Deutsch Family 1987 Trust dated
May 12, 1987, sued Iris Martin in August 2013 for, among other causes of action, breach
of contract for failure to repay a promissory note. The parties resolved their dispute
several months later and signed a written settlement agreement. Deutsch subsequently
moved to enforce the settlement agreement pursuant to Code of Civil Procedure
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section 664.6. Martin opposed the motion, principally arguing there was no enforceable
agreement due to a lack of mutual consent: She insisted the document presented to the
court by Deutsch was materially different from the settlement agreement she had signed
and the signature on that document was not genuine. The court granted the motion and
entered judgment in favor of Deutsch.
On appeal Martin contends the trial court erred in finding mutual consent and
acted in excess of its jurisdiction in granting the motion and entering a judgment that
retained jurisdiction over the parties until full performance of the terms of the agreement
pursuant to section 664.6. She also argues the court improperly awarded Deutsch his
attorney fees and costs. We agree with the last two contentions, strike the unauthorized
provisions and affirm the judgment as modified.
FACTUAL AND PROCEDURAL BACKGROUND
1. Deutsch’s Lawsuit and the Parties’ Settlement Agreement
In his original complaint, filed August 26, 2013, Deutsch sought recovery of the
balance due on a promissory note, as amended (either $250,000 or $275,000), accrued
interest, specific performance of the terms of an amendment to the note, which obligated
Martin to securitize the loan, and imposition of a constructive trust, claims totaling either
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$600,000 or $700,000. After filing his complaint Deutsch recorded a notice of
lis pendens on two properties owned by Martin, 31528 Broad Beach Road, Malibu, and
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Statutory references are to this code unless otherwise indicated.
2
The original complaint is not included in the record on appeal.
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27009 Sea Vista Drive, Malibu. The parties began settlement discussions shortly after
Martin was served with the summons and complaint.
The negotiations culminated in an agreement to settle the action in mid-November
2013. Both parties agree Martin was motivated to settle in part by her desire to have the
lis pendens on the Broad Beach Road property released or expunged so she could
complete a sale of the property. According to Deutsch, Martin agreed to, and signed, a
settlement agreement that required Martin to execute a new promissory note in the
principal amount of $600,000 and a deed of trust on the Sea Vista Drive property
securing the new note. Martin, on the other hand, insisted the parties’ agreement
provided for a promissory note of only $125,000, secured by the Sea Vista Drive deed of
trust.
2. The Motion To Enforce Settlement
When Martin refused to comply with the terms of the parties’ agreement as
understood by Deutsch and as reflected in the signed version of the settlement agreement
in his possession, Deutsch moved, pursuant to section 664.6, to enforce the settlement
and for entry of judgment in his still pending lawsuit. The motion was supported, in part,
by a declaration from Jo Anne Erro, senior escrow officer at North American Title
Company, which attached as an exhibit a copy of a settlement agreement containing the
signatures of Martin on one copy of page 8, Deutsch and his attorney, Susan L. Vaage,
under the notation approved and agreed to as to form on a second copy of page 8, and
Martin’s attorney, David L. Gernsbacher, on a third copy of page 8. (Paragraph 6(f) of
the settlement agreement provided the agreement could be executed in counterparts, that
signatures could be transmitted electronically or by facsimile in lieu of a hard copy “and
that such electronically transmitted or faxed signatures shall be deemed to be an original
signature.”) A promissory note for $600,000 and deed of trust signed by Martin were
also attached as exhibits to Erro’s declaration.
In her declaration Erro explained Martin had signed the settlement agreement,
promissory note and deed of trust at her office in Orange County on November 14, 2013.
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Martin’s signature on the deed of trust was notarized by Erin Tweedy, whose declaration
was also submitted in support of the motion. After Martin signed the three documents,
Erro scanned them and emailed copies to Deutsch’s attorney with a request that she
release the lis pendens on the Broad Beach Road property so its sale, which was also
being handled by Erro’s office, could be completed that day.
According to Erro, she had planned to send the original documents signed by
Martin to Deutsch the following day, November 15, 2013. However, after an extensive
search of her office, she was unable to locate the originals. Erro then called Martin to see
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if she had accidentally taken the documents with her the previous day; Martin said she
had not. Because original documents were needed to record the deed of trust on the Sea
Vista Drive property, Erro told Martin she would have to sign the documents again;
Martin agreed; and Erro told Martin she would send a notary public to her home in
Malibu to complete the documentation.
Erro also declared that, shortly after speaking to Martin, she received a telephone
call from Gernsbacher, who told her he would take care of having the three settlement
documents (the agreement, the note and the deed of trust) again signed by Martin and
would deliver the originals to Deutch’s attorney. Gernsbacher sent a confirming email,
which was attached to Erro’s declaration. Original signed documents were never
returned to Erro or to Vagge.
3 Erro’s declaration stated, when she last saw them, the originals of the settlement
documents were on her desk after Martin had signed them. Erro elaborated, “When
Martin came into my office on November 14th, she had brought with her a 2-foot high
stack of files and documents which she spread out across my desk while she was signing
documents in my office of the pending sale of the Broad Beach Property and the
documents pertaining to the settlement of this action. I thought that in collecting her
papers, Martin may have taken the original signed New Note, New DOT [(deed of trust)],
and Settlement Agreement from my desk by mistake when gathering up her documents,
as I was going back and forth from my office to our copy room to photocopy
documents.”
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3. Martin’s Opposition
In her opposition to the motion to enforce settlement, Martin insisted she had
agreed to, and signed, a very different version of the parties’ settlement agreement, as
well as a deed of trust for the Sea Vista Drive property securing a note of $125,000, at
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Erro’s office on November 14, 2013. Martin declared she left the originals with Erro;
unsigned copies of these two documents were attached to Martin’s declaration.
According to Martin, when Erro called the following day to say the originals were
missing, Erro identified “an absurd version of one of Deutsch[’s] ridiculous proposals
that added up to over 750K owed against a loan amount of 250K, ‘copies’ of my
signature pages attached by cut and paste and/or Photoshop.” Because of the material
differences between the two proffered forms of the settlement agreement, Martin argued
there had been no meeting of the minds and there was no enforceable settlement
agreement.
Martin objected to Erro’s declaration attaching the signed versions of the
settlement agreement, promissory note and deed of trust, asserting the documents were
inadmissible under Evidence Code section 1521, subdivision (a), which generally allows
proof of the content of a writing by otherwise admissible secondary evidence, but
authorizes the court to exclude such evidence if “(1) [a] genuine dispute exists
concerning material terms of the writing and justice requires the exclusion” or
“(2) [a]dmission of the secondary evidence would be unfair.” She also argued the
agreement as proffered by Deutsch should not be enforced because it constituted an
unenforceable penalty under Civil Code section 1671.
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According to the declaration filed by Deutsch’s counsel, during a meeting to
attempt to resolve the dispute, Martin initially denied she had signed any version of the
settlement agreement at Erro’s office.
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4. The Court’s Order Granting the Motion and Judgment in Favor of Deutsch
With his reply papers Deutsch objected to Martin’s declaration on the ground it
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was not executed under penalty of perjury as required by section 2015.5. Although
initially inclined to sustain that objection, the trial court ultimately continued the hearing
on Deutsch’s motion to permit Martin to file a corrected declaration. The court also
suggested Martin’s litigation counsel consider obtaining a declaration from Gernsbacher,
who had negotiated with Vaage on behalf of Martin and appeared to have signed the
version of the agreement Deutsch was seeking to enforce.
For the continued hearing Martin did not provide a declaration from Gernsbacher.
Moreover, her corrected declaration still omitted language required by section 2015.5:
Although now stating that her declaration had been “[r]e-executed under the penalty of
perjury,” with the date and place of execution indicated, Martin failed to recite that the
statements being made were true. Nonetheless, although sustaining the renewed
objection to Martin’s declaration as technically correct, the court indicated it had
considered the content of the declaration but found “it doesn’t work.”
The court granted the motion, adopting its earlier tentative ruling finding that the
executed version of the agreement submitted by Deutsch contained the material terms of
the settlement to which both parties had agreed and that Martin had signed the documents
submitted by Deutsch. The court also found that Martin had failed to show the settlement
amount had no reasonable relationship to the range of actual damages the parties could
have anticipated would flow from a breach and, therefore, was not an enforceable
penalty.
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Section 2015.5 authorizes the court to accept, in lieu of an affidavit, an unsworn
declaration or statement if the declarant “recites that it is certified or declared by him or
her to be true under penalty of perjury, is subscribed by him or her, and (1), if executed
within this state, states the date and place of execution, or (2), if executed at any place,
within or without this state, states the date of execution and that it is so certified or
declared under the laws of the State of California.”
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Judgment, in the form prepared by Deutsch’s counsel, was entered by the court on
August 20, 2014. In addition to directing Martin to deliver original signed copies of the
settlement agreement, promissory note and deed of trust as attached as exhibits to the
Erro declaration and to comply with all other terms of the settlement agreement, the
judgment provided the court would “retain jurisdiction over Plaintiff and Martin (the
‘Parties’) to enforce the terms of the Parties’ Settlement Agreement until performance in
full of the terms of the settlement.” The judgment also awarded Deutsch attorney fees
and costs.
DISCUSSION
1. The Trial Court Properly Entertained Deutsch’s Motion To Enforce Settlement
and for Entry of Judgment
Section 664.6 authorizes the court, upon motion, to enter judgment pursuant to the
terms of a settlement agreement: “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
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terms of the settlement.”
“Section 664.6 creates . . . a summary procedure for specifically enforcing certain
types of settlement agreements by converting them into judgments.” (Weddington
Productions, Inc. v. Flick (1998) 60 Cal. App. 4th 793, 797.) Prior to the enactment of
section 664.6, a party seeking to enforce a settlement made during the pendency of a
lawsuit had to either file a separate action for breach of contract or seek leave to file a
supplemental pleading to allege the settlement as a new claim or defense and then move
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As originally enacted former section 664.6 did not authorize the court to retain
jurisdiction to enforce the settlement upon request of the parties. (See Stats. 1981,
ch. 904, § 2, p. 3437.) The section was amended in 1993 to include that provision.
(Stats. 1993, ch. 768, § 1, p. 4260; see generally Wackeen v. Malis (2002) 97 Cal. App. 4th
429, 432, fn. 1.)
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for summary judgment. (Weddington, at p. 809; Viejo Bancorp, Inc. v. Wood (1989)
217 Cal. App. 3d 200, 208.) Summary judgment, however, would be denied if a triable
issue of material fact were shown, for example, regarding the terms of the agreement.
“Expeditious enforcement of a settlement agreement was therefore not always possible.”
(Weddington, at p. 809.)
The section 664.6 procedure empowers the trial court hearing the motion to
determine disputed factual issues regarding the settlement agreement. “Section 664.6
permits the trial court judge to enter judgment on a settlement agreement without the
need for a new lawsuit. [Citation.] 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 binding settlement. [Citation.] Trial judges may
consider oral testimony or may determine the motion upon declarations alone. . . .’”
(Osumi v. Sutton (2007) 151 Cal. App. 4th 1355, 1360; see Corkland v. Boscoe (1984)
156 Cal. App. 3d 989, 994 [“In acting upon a section 664.6 motion, the trial court must
determine whether the parties entered into a valid and binding settlement of all or part of
the case. In making this determination, trial judges, in the sound exercise of their
discretion, may receive oral testimony or may determine the motion upon declarations
alone.”].)
Deutsch’s motion to enforce the settlement was based on a written settlement
agreement signed by the parties, a copy of which was submitted with his motion. Thus,
Deutsch properly invoked the summary procedure set forth in section 664.6 to enforce the
settlement; and the trial court had jurisdiction to enter a judgment pursuant to its terms.
Noting that the settlement agreement provided Deutsch would immediately file a
request for dismissal of his lawsuit upon receipt of fully executed originals of the
settlement agreement, the new promissory note and the notarized deed of trust, Martin
argues Deutsch’s lawsuit should have been dismissed with no judgment entered. Martin
reasons, if her signatures on the exhibits attached to Erro’s declarations are found to be
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genuine, then she complied with her initial obligations because the settlement agreement
permitted the use of electronically transmitted signatures and deemed them “to be an
original signature.” Accordingly, she insists, she was entitled to a dismissal.
Martin’s argument ignores the serious dispute that existed as to the validity of the
settlement agreement itself and also overlooks her express obligation under
paragraph 6(m) “to execute any documents and to cooperate in any reasonable manner to
effectuate the terms of this Agreement,” an obligation triggered by Government Code
section 27201, subdivision (b)(1)’s requirement of a hard copy original signature to
record the deed of trust. Moreover, whether or not Martin had breached her obligations
under the settlement agreement, Deutsch was entitled to move to enforce it under
section 664.6: “The statutory language makes it clear . . . that a party moving for the
entry of judgment pursuant to a settlement under Code of Civil Procedure section 664.6
need not establish a breach of contract to support relief under the statute.” (Hines v.
Lukes (2008) 167 Cal. App. 4th 1174, 1185.)
2. The Motion To Enforce the Settlement Was Properly Granted
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. (J.B.B. Investment Partners, Ltd. v. Fair (2014)
232 Cal. App. 4th 974, 984; Osumi v. Sutton, supra, 151 Cal.App.4th at p. 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.’” (J.B.B. Investment
Partners, Ltd., at p. 984.)
Erro’s declaration attached a copy of the settlement agreement she testified she
saw Martin sign at her office and explained she had scanned the document immediately
after it was executed, thus permitting her to produce a copy of the signed agreement even
though the original agreement could not be located. Nothing more was necessary to
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support the trial court’s findings that the parties had mutually consented to the material
terms of the settlement as reflected in the executed version of the agreement submitted
with Deutsch’s motion. (See Feresi v. The Livery, LLC (2014) 232 Cal. App. 4th 419, 424
[testimony of a single witness is sufficient to constitute substantial evidence]; Citizens
Business Bank v. Gevorgian (2013) 218 Cal. App. 4th 602, 613 [same]; Kolender v. San
Diego County Civil Service Com. (2005) 132 Cal. App. 4th 1150, 1155 [“‘[N]either
conflicts in the evidence nor “‘testimony which is subject to justifiable suspicion . . .
justif[ies] the reversal of a judgment, for it is the exclusive province of the [trier of fact]
to determine the credibility of a witness and the truth or falsity of the facts upon which a
determination depends.’” [Citations.] Testimony may be rejected only when it is
inherently improbable or incredible, i.e., ‘“unbelievable per se,”’ physically impossible
or ‘“wholly unacceptable to reasonable minds”’”].)
Martin disputes this conclusion on two grounds. First, she argues the trial court
should have excluded the copy of the settlement agreement attached to the Erro
declaration pursuant to Evidence Code section 1521, subdivision (a). As discussed, that
Evidence Code section generally permits the use of secondary evidence, including a
copy, to prove the content of a writing. (See Kahn v. Lasorda’s Dugout, Inc. (2003)
109 Cal. App. 4th 1118, 1123; Greenspan v. LADT LLC (2010) 191 Cal. App. 4th 486, 523;
see also Evid. Code, §§ 1550 [nonerasable optical image reproduction or other
photographic copy or reproduction of a writing is as admissible as the writing itself if the
copy or reproduction was made and preserved as a part of the records of a business];
1553 [printed representation of images stored on a video or digital medium presumed to
be an accurate representation of the image it purports to represent].) However, it also
authorizes the trial court to exclude secondary evidence if there is a genuine dispute
concerning the material terms of the writing and “justice requires the exclusion” or
admission of the secondary evidence would be “unfair.” (Evid. Code, § 1521,
subd. (a)(1) & (2).) There was no suggestion Deutsch, the proponent of the evidence,
was in any way responsible for the loss of the original (cf. former Evid. Code, § 1501,
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Stats. 1965, ch. 299, § 2; People v Morris (1991) 53 Cal. 3d 152, 205, disapproved on
another ground in People v. Stansbury (1995) 9 Cal. 4th 824, 830, fn. 1), or that Deutsch
used the writing in a manner that could not reasonably have been anticipated. (See Cal.
Law Revision Com. com., 29B pt. 4 West’s Ann. Evid. Code (2015 ed.) foll. § 1251,
pp. 448-449.) Indeed, other than invoking the words “justice” and “unfair,” Martin does
not provide any basis for us to find the trial court’s consideration of the Erro exhibits was
an abuse of its broad discretion. (See Mora v. Big Lots Stores, Inc. (2011)
194 Cal. App. 4th 496, 513; Zhou v. Unisource Worldwide (2007) 157 Cal. App. 4th 1471,
1476.)
Second, Martin contends the trial court erred in sustaining Deutsch’s objection to
her corrected declaration on the ground it failed to comply with section 2015.5. She
argues her statement the declaration had been “[r]e-executed under the penalty of
perjury,” without more, substantially complied with the requirements of that provision.
In any event, she insists, paragraph 14 of her declaration expressly stated that “[a] true
and correct copy of the settlement agreement to which I agreed and which I signed in
Erro’s office is attached hereto as Exhibit 1.” Accordingly, the court should have
admitted at least that portion of her declaration and weighed the conflicting evidence
regarding mutual consent. But that is effectively what the trial court did. Although its
written order sustained Deutsch’s renewed objection under section 2015.5, the court
expressly stated it had considered the content of Martin’s declaration and found “it
doesn’t work.” If there was any error here, it was plainly harmless.
3. The Trial Court Was Not Authorized To Retain Jurisdiction To Enforce the
Terms of the Settlement or To Award Attorney Fees and Costs
Section 664.6 authorizes the court to retain jurisdiction to enforce the settlement
until full performance of its terms if requested by the parties. But there must be an
express agreement to request the retention of jurisdiction that conforms to the
requirements of section 664.6—that is, it must be made by the parties themselves either
in a writing they have signed or orally before the court. (Wackeen v. Malis (2002)
97 Cal. App. 4th 429, 440 [“the second sentence of section 664.6 must be read to have
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equal dignity with the first sentence”; “a request that jurisdiction be retained until the
settlement has been fully performed must be made either in a writing signed by the
parties themselves, or orally before the court by the parties themselves”]; see Hagan
Engineering, Inc. v. Mills (2003) 115 Cal. App. 4th 1004, 1011 [“[b]ecause the court was
not presented with any request to retain jurisdiction, jurisdiction was not retained”].)
The settlement agreement enforced in this case included no request for the trial
court to retain jurisdiction to ensure performance of its terms. Accordingly, it was error
for the court to include any such provisions in its judgment. Paragraphs 1(d) and 3 must
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be stricken from the judgment.
We also strike paragraph 1(g) of the judgment, which awards Deutsch attorney
fees of $11,900 and costs of $60 “incurred . . . in bringing its Motion to Enforce
Settlement and for Entry of Judgment.” Paragraph 2(f) of the settlement agreement
expressly provides that Deutsch and Martin will bear their own costs and fees in
connection with Deutsch’s original action and the ensuing settlement of the lawsuit:
“Each Party shall bear its/her own costs and attorneys’ fees in connection with the Civil
Action and this Settlement Agreement.” Just as the court could not retain jurisdiction
over the parties absent their express agreement and request, so too it was not authorized
to disregard the parties’ express agreement concerning attorney fees and costs. (See
Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 810 [“nothing in
section 664.6 authorizes a judge to create the material terms of a settlement, as opposed
to deciding what terms the parties themselves have previously agreed upon”]; see also
Hernandez v. Board of Education (2004) 126 Cal. App. 4th 1161, 1176 [“[t]he court is
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Paragraph 1(d) provides, “This Court shall retain jurisdiction over the Plaintiff and
Martin (the ‘Parties’) to enforce the terms of the Parties’ Settlement Agreement until
performance in full of the terms of the settlement.” Paragraph 3 provides, “This Court
shall retain jurisdiction of this matter, and shall resolve any disputes relating thereto, until
all terms and conditions of the Settlement Agreement have been satisfied and
completed.”
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powerless to impose on the parties more restrictive or less restrictive or different terms
than those contained in their settlement agreement”].)
Deutsch’s attempt to justify the court’s award of attorney fees by referring to the
provision in the new promissory note executed by Martin requiring Martin to pay legal
expenses incurred to collect the note is disingenuous. The proceedings before the trial
court were to enforce the settlement agreement, which included requiring Martin to sign
(or sign again) the note, as reflected in the judgment ultimately entered. It was not an
action to collect on the note itself.
DISPOSITION
The judgment is modified by striking paragraphs 1(d), 1(g), and 3. The judgment
is affirmed as modified. The parties are to bear their own costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
BECKLOFF, J.*
* Judge of the Los Angeles County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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