Fitzer v. Ernest ( 2022 )


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  • Filed 6/3/22 (unmodified opinion attached)
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION EIGHT
    BERT FILTZER,                                B308484
    Plaintiff and Appellant,              (Los Angeles County
    Super. Ct. No. BC592433)
    v.
    ORDER MODIFYING OPINION
    MARIO E. ERNST et al.,
    [No change in the judgment]
    Defendants and Respondents.
    IT IS ORDERED that the opinion filed in the above-
    captioned matter on June 3, 2022, be modified as follows:
    1. On page 6, line 12 of the paragraph that begins with
    “The Settlement Agreement”, the sentence is deleted
    and replaced with:
    “Therefore, when the parties executed the Forbearance
    Agreement on February 19, 2019, all debt was already past
    due.”
    This modification effects no change in the judgment.
    ____________________________________________________________
    STRATTON, P. J.           GRIMES, J.         HARUTUNIAN, J. *
    *     Judge of the San Diego Superior Court, assigned by the
    Chief Justice pursuant to article VI, section 6 of the California
    Constitution.
    Filed 6/3/22 (unmodified opinion)
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION EIGHT
    BERT FILTZER,                             B308484
    Plaintiff and Appellant,           (Los Angeles County
    Super. Ct. No. BC592433)
    v.
    MARIO E. ERNST et al.,
    Defendants and Respondents.
    APPEAL from an order of the Superior Court of Los
    Angeles County, Lia Martin, Judge. Affirmed.
    Levene, Neale, Bender, Yoo & Brill; Levene, Neale, Bender,
    Yoo & Golubchick, Kurt E. Ramlo and Todd M. Arnold for
    Plaintiff and Appellant.
    Neufeld Marks, Paul S. Marks, Yuriko M. Shikai and David
    M. Safvati for Defendants and Respondents.
    _________________________________
    Appellant Bert Filtzer appeals from a Minute Order and
    Order on Motion for Entry of Stipulated Judgment. Filtzer sued
    Respondents Mario E. Ernst, Teri L. Ernst, and Ricardo’s on the
    Beach (collectively Ernst) for breach of contract based upon
    Ernst’s failure to repay a promissory note. The parties then
    entered into a settlement agreement (Settlement Agreement),
    and subsequently into an agreement they both refer to as the
    “Forbearance Agreement.” The parties’ dispute centers on
    whether the Forbearance Agreement completely satisfied Ernst’s
    obligations under the Settlement Agreement. Filtzer contends
    that the trial court erred by (1) interpreting the Forbearance
    Agreement to be a full release of Ernst’s obligations under the
    Settlement Agreement; (2) interpreting the Forbearance
    Agreement to have a duration “in perpetuity” rather than in
    effect for a “reasonable” amount of time under California
    Supreme Court precedent; and (3) failing to apply judicial
    estoppel to bar Ernst from asserting that the Forbearance
    Agreement was anything other than a brief forbearance of the
    Settlement Agreement.
    The trial court’s ruling was proper. We affirm.
    BACKGROUND
    On August 25, 2015, Filtzer filed a complaint for breach of
    contract and money had and received against Ernst, based upon
    Ernst’s failure to repay a $250,000 promissory note. On
    October 23, 2015, the parties entered into the Settlement
    Agreement providing that Ernst owed Filtzer $288,720.67 in
    principal and interest, plus $36,217.00 in attorneys’ fees and
    costs. The Settlement Agreement detailed a schedule for Ernst to
    pay Filtzer monthly, starting November 1, 2015, and ending on
    November 1, 2018. It also provided for three “Settlement
    2
    Payment Forebearance[s],” and stated that “[u]se of any or all of
    the three (3) Payment Forbearance months shall not extend the
    November 1, 2018 due date for the Final Payment.” The parties
    further agreed that Filtzer would enter a stipulated judgment,
    attached to the Settlement Agreement, if:
    “Defendants fail to timely deliver any of the Settlement
    Payments, unless Defendants have validly utilized a Payment
    Forbearance pursuant to the terms of this Agreement . . .
    However, upon Defendants’ failure to timely deliver any of the
    Settlement Payments, unless Defendants have validly utilized a
    Payment Forbearance pursuant to the terms of this Agreement,
    Plaintiff shall be authorized to file the Stipulated Judgment via
    ex parte notice or noticed motion.” (Italics omitted.)
    Subsequently, on February 19, 2019, during mediation (and
    months after the final payment was due in 2018 under the
    Settlement Agreement), the parties executed the Forbearance
    Agreement, which states in relevant part:
    “Filtzer agrees to forbear from taking action to obtain entry
    of the stipulated judgment in the R. Filtzer v. Mario Ernst et al.
    action (Case No. BC592433) and/or to enforce the same, provided
    that, by no later than 5:00 p.m. Pacific Time on March 19, 2019,
    Mario Ernst delivers to counsel for [Filtzer] . . . (1) a certified
    check or a wire in the amount of one hundred and fifty thousand
    dollars ($150,000.00) . . . and (2) a list of Mario Ernst’s assets and
    liabilities stated under penalty of perjury. In the event Mario
    Ernst fails to timely provide the payment or list of assets and
    liabilities referenced herein, Bert Filtzer shall be immediately
    entitled to take any and all action to obtain entry of the
    stipulated judgment in the R. Filtzer v. Mario Ernst et al. action
    (Case No. BC592433) and/or to enforce the same.” Ernst met
    3
    these obligations by making a payment of $150,000 and providing
    the required documents on March 19, 2019 before 5:00 p.m.
    Pacific Time.
    Meanwhile on February 28, 2019, in a different case
    between the same parties, Filtzer filed an ex parte motion to
    attach the assets of Ernst. On March 1, 2019, Ernst argued in
    his opposition to that motion that, among other things, the
    motion should be denied because the parties had “reached a
    (brief) forbearance agreement.” That same day, after a hearing, a
    trial court denied Filtzer’s motion, writing that Filtzer failed to
    show “irreparable harm.”
    Finally, on February 21, 2020, a year after the payment
    was made under the Forbearance Agreement, Filtzer filed a
    Motion for Entry of Stipulated Judgment, claiming that Ernst
    still owed him $190,547.02. On August 27, 2020, after a hearing,
    the trial court denied Filtzer’s motion on the basis that the
    Forbearance Agreement was intended to be in “full satisfaction”
    and “release” of the balance due under the Settlement
    Agreement. Filtzer appealed.
    DISCUSSION
    On appeal, we apply a de novo standard of review to
    interpret a contract. (Hanna v. Mercedes-Benz USA, LLC (2019)
    
    36 Cal.App.5th 493
    , 507; City of Hope National Medical Center v.
    Genentech, Inc. (2008) 
    43 Cal.4th 375
    , 393–394.) This standard
    applies even where conflicting inferences may be drawn from
    undisputed extrinsic evidence, “unless the interpretation turns
    upon the credibility of extrinsic evidence.” (Parsons v. Bristol
    Development Company (1965) 
    62 Cal.2d 861
    , 865; accord, Garcia
    v. Truck Ins. Exchange (1984) 
    36 Cal.3d 426
    , 439.) Here, there is
    4
    no conflict in the credibility of extrinsic evidence, and we review
    the trial court’s interpretation of the contract de novo.
    On the issue of judicial estoppel, we independently review
    whether judicial estoppel is proper on the record evidence. “If the
    elements for judicial estoppel are present, whether to apply the
    doctrine is within the trial court’s discretion, which we review for
    an abuse of discretion.” (DotConnectAfrica Trust v. Internet Corp.
    for Assigned Names and Numbers (2021) 
    68 Cal.App.5th 1141
    ,
    1158.)
    I.     The Trial Court Did Not Err in Holding That the
    Parties Intended the Forbearance Agreement to Be
    in Full Satisfaction of Ernst’s Outstanding Debt in
    the Settlement Agreement
    We first examine Filtzer’s argument the trial court erred in
    its interpretation of the Forbearance Agreement when it held
    that it was intended by the parties to be in full satisfaction and
    release of the Settlement Agreement. Filtzer argues that the
    Forbearance Agreement was only meant to be a temporary
    forbearance of the Settlement Agreement, such that he still had a
    right to entry of the stipulated judgment under the Settlement
    Agreement.
    When a contract is written, “the intention of the parties is
    to be ascertained from the writing alone, if possible.” (Civ. Code,
    § 1639.) In construing a contract, we ascertain the objective
    intent of the contracting parties at the time of the agreement.
    (Gilkyson v. Disney Enterprises, Inc. (2021) 
    66 Cal.App.5th 900
    ,
    916.) If a contract’s language is clear and unambiguous, intent is
    determined solely by the language within the four corners of the
    contract. (Brown v. Goldstein (2019) 
    34 Cal.App.5th 418
    , 432.)
    “ ‘The court generally may not consider extrinsic evidence of any
    5
    prior agreement,’ ” but may do so when the contract is susceptible
    to more than one interpretation. (Ibid.) We must also assume
    that the parties did not intend any of the language in the contract
    to be surplus, redundant, or to give rise to an absurd outcome.
    (Eith v. Ketelhut (2018) 
    31 Cal.App.5th 1
    , 19 (Eith); Civ. Code,
    § 1641.) The Forbearance Agreement does not explicitly state
    whether it was intended to be in full satisfaction of the
    Settlement Agreement, and it is ambiguous as to this key
    question. Accordingly, we look to extrinsic evidence and apply
    the foregoing canons of construction to ascertain the parties’
    objective intent.
    The Settlement Agreement, when read together with the
    Forbearance Agreement, supports the trial court’s conclusion that
    the parties intended the Forbearance Agreement to be in full
    satisfaction of Ernst’s outstanding debt. The Settlement
    Agreement set forth a four-part monthly payment schedule with
    a deadline for all payments by November 1, 2018. It further
    allowed for three forbearance periods, but stated that the final
    payment deadline could not be extended: “Payment Forbearance
    months shall not extend the November 1, 2018 due date for the
    Final Payment.” There is no other provision in the Settlement
    Agreement, or any other record evidence, that provides for an
    extension of the November 1, 2018 deadline. Therefore, when the
    parties executed the Forbearance Agreement on February 19,
    2020, all debt was already past due. Filtzer could have
    immediately moved for entry of the stipulated judgment under
    the Settlement Agreement. Of course, doing so would have
    resulted in a judgment on paper, but not cash in hand. Instead,
    Filtzer agreed to the Forbearance Agreement. Nowhere does the
    Forbearance Agreement extend the November 1, 2018 deadline,
    6
    nor does it refer to any kind of payment beyond the single
    payment of $150,000.
    Reading the plain text of the Forbearance Agreement to
    avoid superfluous language and/or absurd outcomes, (see Eith,
    supra, 31 Cal.App.5th at p. 19; Civ. Code, § 1641), the clause
    providing that Filtzer can enter a stipulated judgment if “Ernst
    fails to timely provide the payment or list of assets and liabilities”
    by March 19, 2019 would be unnecessary and give rise to a
    redundant and absurd outcome if it was not intended to be in full
    satisfaction and release of the Settlement Agreement. Filtzer’s
    interpretation would mean that Ernst agreed to a contract that
    allowed Filtzer to enter the stipulated judgment if Ernst failed to
    timely meet his obligations under the Forbearance Agreement
    and also if he did timely meet them because if the balance due
    under the Settlement Agreement carried over after payment
    under the Forbearance Agreement, then Ernst remained in
    breach after payment of the $150,000. As the trial court
    recognized, under Filtzer’s reading, he could have filed the
    stipulated judgment on the same day Ernst met his obligations
    under the Forbearance Agreement. There would be no purpose in
    saying that the stipulated judgment entry was conditioned on
    Ernst failing to pay the $150,000 if Filtzer was entitled to enter
    the judgment whether or not Ernst paid the $150,000. Filtzer
    received $150,000 in cash, without the time, expense, and
    uncertainty of trying to collect on a money judgment. Ernst
    received a reduction in the debt, and avoidance of a recorded
    money judgment. The trial court’s interpretation of the contracts
    rendered the terms consistent with the contract language and
    normal motivations of creditors and debtors.
    7
    Filtzer claims use of the word “forbear” in the Forbearance
    Agreement means that the Forbearance Agreement itself was
    intended to be temporary. We reject this claim. The Forbearance
    Agreement provides for a month-long forbearance concerning a
    newly created obligation: the payment of $150,000 by March 19,
    2019. It was accurate and appropriate to describe Filtzer as
    forbearing from proceeding with entry of judgment for 30 days,
    since Ernst’s debt was not eliminated during that time. But
    since, as explained above, we read the intent of the Forbearance
    Agreement to resolve the debt that had become due under the
    Settlement Agreement, there was nothing left to “forbear” once
    the $150,000 was paid. Although we (and the parties) refer to it
    for consistency as the “Forbearance Agreement,” the parties
    simply titled the actual document “Agreement,” undermining
    Filtzer’s argument that temporary forbearance was the only
    purpose.
    Filtzer also urges us to look to evidence that mediation was
    ongoing, asserting that the parties did not intend the
    Forbearance Agreement to satisfy all obligations under the
    Settlement Agreement, but was meant only as a temporary
    forbearance, because mediation was not over. The record does
    provide for a subsequent mediation date of March 29, 2019.
    Ernst argues, however, that the mediation involved multiple
    lawsuits between the parties. Filtzer does not argue otherwise in
    his reply brief, and the record does establish that there were
    multiple cases between the parties that were part of the ongoing
    mediation. We do not find that the existence of a single,
    subsequent mediation date, possibly in regard to a different case,
    changes our interpretation of the Forbearance Agreement in light
    8
    of the plain text and absurd consequences noted above if the
    Settlement Agreement was still in effect.
    We acknowledge that the Forbearance Agreement is
    lacking in typical “settlement in full” language. But it is also
    lacking in contrary language about there being any payments due
    in the future. It is this ambiguity that necessitates examining
    the contract language and surrounding circumstances, and which
    causes us to agree with the trial court’s interpretation of what
    the parties intended.
    We conclude that the parties intended the Forbearance
    Agreement to be in full satisfaction of Ernst’s debt if Ernst
    complied by March 19, 2019.
    II.    The Forbearance Agreement Did Not “Forbear” the
    Settlement Agreement for a “Reasonable,” Limited
    Period of Time
    Filtzer further argues that because the Forbearance
    Agreement is silent as to the period it “forbears” the Settlement
    Agreement, it should be construed as lasting for only a
    “reasonable,” and not permanent, length of time under Supreme
    Court precedent in Consolidated Theaters, Inc. v. Theatrical
    Stage Employees Union (1968) 
    69 Cal. 2d 713
    , 718 (Consolidated
    Theaters). For the reasons in part I. above we disagree, and
    Filtzer’s cited case law following this precedent does not change
    this conclusion.
    Consolidated Theaters held that “[i]n construing contracts
    which call for . . . forbearance, but which contain no express term
    of duration, it is first necessary to determine whether the
    intention of the parties as to duration can be implied from the
    nature of the contract and the circumstances surrounding it.”
    (Consolidated Theaters, supra, 69 Cal.2d at p. 725.) Only if
    9
    “the nature of the contract and the totality of surrounding
    circumstances give no suggestion as to any ascertainable term,”
    does “the law usually impl[y] that the term of duration shall be at
    least a reasonable time . . . .” (Id. at p. 727.)
    Unlike in Consolidated Theaters, the Forbearance
    Agreement does provide a definite period of forbearance, between
    the date of execution up until March 19, 2019. It is, however,
    silent, in general, as to its relation to the Settlement Agreement.
    Even if the Forbearance Agreement could be construed as
    forbearing the Settlement Agreement for some unspecified
    amount of time, under Consolidated Theaters we would look to
    the nature of the contract and to extrinsic evidence to ascertain
    intention, as we did in concluding that the Forbearance
    Agreement was intended to resolve the balance due under the
    Settlement Agreement. For these reasons, the trial court did not
    err in failing to interpret the Forbearance Agreement as lasting
    only a “reasonable” period.
    III. The Trial Court Did Not Abuse Its Discretion in
    Failing to Apply the Doctrine of Judicial Estoppel
    Filtzer also argues that Ernst’s reference to a “brief
    forbearance agreement,” in its briefing in a separate case
    between the parties means that Ernst is judicially estopped from
    arguing that the Forbearance Agreement was anything but brief
    or is a “release or full settlement agreement.” Before the trial
    court, Ernst argued that his reference to a “brief” forbearance in
    his opposition to Filtzer’s motion to attach was to the length of
    the half-page Forbearance Agreement itself, but also could be
    read as referring to the month-long period between the execution
    of the agreement and the March 19, 2019 deadline. The trial
    court did not address Filtzer’s judicial estoppel argument.
    10
    We apply the doctrine of judicial estoppel when “ ‘ “(1) the
    same party has taken two positions; (2) the positions were taken
    in judicial or quasi-judicial administrative proceedings; (3) the
    party was successful in asserting the first position (i.e., the
    tribunal adopted the position or accepted it as true); (4) the two
    positions are totally inconsistent; and (5) the first position was
    not taken as a result of ignorance, fraud, or mistake.” ’ ”
    (CytoDyn of New Mexico, Inc. v. Amerimmune Pharmaceuticals,
    Inc. (2008) 
    160 Cal.App.4th 288
    , 299, fn. 9; The Swahn Group,
    Inc. v. Segal (2010) 
    183 Cal.App.4th 831
    , 842.)
    Ernst argues that the third element of the judicial estoppel
    doctrine is not met because the trial court that ruled on the
    Ex Parte Motion to Attach did not accept as true his reference to
    the word “brief” in describing the Forbearance Agreement, and
    instead held that the motion should be denied due to a lack of
    “irreparable harm.” We agree. There is no record evidence that
    either the trial court immediately below or the one that
    considered the Ex Parte Motion to Attach Assets ever relied in
    any way on Ernst’s reference to the Forbearance Agreement as
    “brief.” (See generally Levin v. Ligon (2006) 
    140 Cal.App.4th 1456
    , 1477 [“The pivotal issue is whether it can be established
    that the party succeeded in the first position or that the position
    was a basis or important to the [decision]”.)
    Regardless, this is not the kind of egregious case where
    judicial estoppel should be applied. Judicial estoppel is an
    “equitable doctrine,” so its application, even where all elements of
    the doctrine are met, is “discretionary.” (MW Erectors, Inc. v.
    Niederhauser Ornamental & Metal Works Co., Inc. (2005)
    
    36 Cal.4th 412
    , 422.) The doctrine must be “applied with
    caution” and is “limited to egregious circumstances.” (Jogani v.
    11
    Jogani (2006) 
    141 Cal.App.4th 158
    , 170, 175, 177.) It is an
    “ ‘ “extraordinary remedy to be invoked when a party’s
    inconsistent behavior will otherwise result in a miscarriage of
    justice.” [Citation.]’ ” (Daar & Newman v. VRL International
    (2005) 
    129 Cal.App.4th 482
    , 491.)
    We see no miscarriage of justice resulting from Ernst
    arguing on March 1, 2019 that the Ex Parte Motion to Attach
    should be denied for various reasons, including that the parties
    had agreed to a “brief” forbearance, and then also arguing, after
    the March 19, 2019 deadline in the Forbearance Agreement, that
    it was a full settlement and satisfaction of debt under the
    Settlement Agreement after the brief forbearance. “ ‘ “The
    doctrine of judicial estoppel . . . is invoked to prevent a party from
    changing its position over the course of judicial proceedings when
    such positional changes have an adverse impact on the judicial
    process. . . . Judicial estoppel is ‘intended to protect against a
    litigant playing “fast and loose with the courts.” ’ ” ’ ” (Jackson v.
    County of Los Angeles (1997) 
    60 Cal.App.4th 171
    , 181.) Such
    circumstances do not exist here.
    Moreover, Filtzer has not met his burden in showing that
    collateral estoppel should be applied “ ‘ “ ‘to prevent a party from
    changing its position over the course of judicial proceedings when
    such positional changes have an adverse impact on the judicial
    process. . . .’ ” ’ ” (Minish v. Hanuman Fellowship (2013)
    
    214 Cal.App.4th 437
    , 449; see also Ayala v. Dawson (2017)
    
    13 Cal.App.5th 1319
    , 1326 [holding that the burden is on party
    asserting doctrine].) There is no evidence of adverse impact on
    Filtzer or on the judicial process, nor does Filtzer even try to
    argue one.
    12
    In sum, the trial court did not abuse its discretion in failing
    to invoke the equitable doctrine of judicial estoppel.
    DISPOSITION
    The order is affirmed. Respondents shall recover their
    costs on appeal.
    CERTIFIED FOR PUBLICATION
    HARUTUNIAN, J. *
    We concur:
    STRATTON, P. J.
    GRIMES, J.
    *     Judge of the San Diego Superior Court, assigned by the
    Chief Justice pursuant to article VI, section 6 of the California
    Constitution.
    13