Cenzone Tech v. Wu CA4/1 ( 2023 )

Filed 5/23/23 Cenzone Tech v. Wu CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CENZONE TECH., INC., D079891
Plaintiff, Cross-defendant and
Appellant;
(Super. Ct. No. 37-2019-
JUNG FU WU, 00029703-CU-BC-NC)
Cross-defendant and Appellant,
v.
MARK KANE-BERMAN et al.,
Defendants, Cross-complainants
and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County,
Cynthia A. Freeland, Judge. Affirmed.
Niddrie Addams Fuller Singh and Rupa G. Singh for Plaintiff, Cross-
defendant, and Appellant Cenzone Tech., Inc., and Cross-defendant and
Appellant Jung Fu Wu.
Duckor Metzger & Wynne, Tony R. Skogen, Jr., and Cathleen G. Fitch
for Defendants, Cross-complainants and Respondents.
I
INTRODUCTION
Plaintiff and cross-defendant Cenzone Tech, Inc. (Cenzone) appeals an
order granting a motion for entry of judgment filed by defendant and cross-
complainant Mark Kane-Berman and cross-complainant Microbasics, LLC
(Microbasics) under Code of Civil Procedure section 664.6. The trial court
entered judgment after finding that the parties executed a valid settlement
agreement resolving all causes of action between them, known and unknown.
According to Cenzone, the settlement agreement was unenforceable because
Cenzone never intended to settle causes of action that were known to the
parties, but unasserted in their pleadings. Cenzone also argues the court
erred by denying its motion for leave to amend its complaint to assert several
new causes of action against Kane-Berman and Microbasics.
We conclude the trial court properly granted the motion for entry of
judgment pursuant to the parties’ settlement agreement, which clearly and
unambiguously released all claims between the parties, known and unknown.
Further, we conclude the court did not prejudicially err in denying Cenzone’s
motion for leave to amend its complaint. Therefore, we affirm the order
denying Cenzone’s motion for leave to amend its complaint and the order
entering judgment pursuant to the parties’ settlement agreement.
II
BACKGROUND
1. The Pleadings
Dr. Jung Fu Wu is the president and founder of Cenzone, a
manufacturer of livestock feed supplements. Mark Kane-Berman owns and
operates Microbasics, a company in the same line of business.
2
On June 7, 2019, Cenzone filed a complaint asserting four causes of
action against Kane-Berman and Kane-Berman dba Microbasics. In its first
cause of action, Cenzone alleged it loaned nearly $488,000 to Kane-Berman to
buy real property in Jerome, Idaho. Cenzone claimed Kane-Berman breached
a promissory note memorializing the loan by failing to repay about $255,000
in principal and not making required interest payments. In its second and
third causes of action, Cenzone averred that Kane-Berman agreed to buy
livestock feed products from Cenzone, but failed to pay for the products in
full. The fourth cause of action asserted that Cenzone provided livestock feed
products to Kane-Berman on an open book account and he owed a balance on
the account. Cenzone prayed for damages of about $446,000. Kane-Berman
answered by generally denying Cenzone’s allegations.
On February 14, 2020, Kane-Berman and Microbasics filed a cross-
complaint against Cenzone, Wu, and other cross-defendants. They asserted
crossclaims for defamation, misappropriation of trade secrets, and goods and
services rendered. Additionally, they requested declarations that they:
(1) never agreed to the promissory note memorializing the loan for the
acquisition of the Idaho property; (2) owed Cenzone no money under the
promissory note; and (3) had sole ownership of the Idaho property.
2. Cenzone’s Motion for Leave to Amend its Complaint
On October 21, 2020, Cenzone filed a motion for leave to amend its
complaint by adding seven new causes of action against Kane-Berman and
Microbasics. Cenzone requested leave to assert declaratory relief and
fraudulent concealment causes of action based on allegations that Kane-
Berman and Wu agreed to buy the Idaho property as equal partners, but
Kane-Berman forged Wu’s signature on documentation relating to the sale
and, through this deceit, acquired sole title to the property. Cenzone also
3
sought to pursue a cause of action for misappropriation of trade secrets.
Finally, Cenzone sought leave to assert civil theft, unfair business practices,
trade libel, and intentional interference with prospective economic advantage
causes of action based on allegations that Kane-Berman disparaged Cenzone
and its feed supplements to customers. The proposed amended complaint
prayed for damages exceeding $10,000,000.
On January 7, 2021, Kane-Berman opposed Cenzone’s motion for leave
to amend its complaint. He argued Cenzone should not be allowed to assert
the declaratory relief and fraudulent concealment causes of action because
the allegations underlying those causes of action—i.e., the allegations that
Kane-Berman forged Wu’s signature to take sole title to the Idaho property—
were fatally inconsistent with the original complaint’s allegations that Wu
loaned him money to buy the property.
On January 8, 2021, Cenzone filed a so-called amendment to its motion
for leave to amend its complaint. Through the amendment, Cenzone sought
to add two additional causes of action (for a total of nine new ones): (1) a
cause of action that Kane-Berman conspired to misappropriate Cenzone’s
trade secrets; and (2) a cause of action for violations of 15 U.S.C. § 1125,
based on Kane-Berman’s allegedly false statements to Cenzone’s customers.
On February 4, 2021, Kane-Berman opposed Cenzone’s amended
motion for leave to amend its complaint. He reiterated his contentions from
the previously filed opposition and further argued that the proposed
amendment would severely prejudice him. He argued he would suffer
prejudice because: (1) the new causes of action would substantially enlarge
the scope of the case; (2) the amendment would delay trial, set for July 16,
2021, because it would unsettle the pleadings and necessitate new discovery;
and (3) Cenzone unduly delayed seeking amendment. On the issue of undue
4
delay, Kane-Berman asserted Cenzone inexplicably waited fourteen months
to pursue its proposed amendment, even though it was aware of the
allegations underlying its new causes of action at the outset of the case.
On February 10, 2021, Cenzone filed a reply in support of its amended
motion for leave to amend its complaint. It asserted there was no
inconsistency between its claim that it loaned money to Kane-Berman to
finance the acquisition of the Idaho property, on the one hand, and its claim
that Wu and Kane-Berman agreed to take title to the property as equal
partners, on the other hand. Further, it argued its failure to seek
amendment earlier was “not due to a lack of diligence by Dr. Wu or Cenzone,”
but rather “due to concealment and malfeasance” by Kane-Berman.
On February 19, 2021, the court denied Cenzone’s amended motion for
leave to amend its complaint. The court found Cenzone was “partially
dilatory in seeking leave to amend” because it “ha[d] at all times known, or
should have known, of potential title issues” relating to the Idaho property.
It also found Kane-Berman “recorded a special warranty deed” in 2013
reflecting that he took sole title to the property, and Cenzone, at a minimum,
should have “discovered the title issue when it retained counsel in June
2019.”
Further, the court found amendment was unwarranted because it
would “undoubtedly” delay trial and severely prejudice Kane-Berman. The
court reasoned the new causes of action would “entirely change the case’s
complexion,” since they were “not even remotely related to the [initial]
[c]omplaint’s allegations.” It found amendment would “substantially increase
[Kane-Berman’s] preparation costs and discovery burden[s],” and require
“discovery from numerous third-party customers” and others. Additionally,
the court predicted that amendment would result in various “procedural and
5
dispositive motions” targeting the new causes of action. For all these
reasons, the court denied Cenzone’s motion to file an amended complaint.
3. The Mediation and Settlement Agreement
At the joint request of the parties, the court continued trial from
July 16, 2021, until September 17, 2021, to give the parties an opportunity to
mediate their dispute.
On June 23, 2021, the parties and their respective counsel participated
in a one-day mediation with a mutually selected mediator. At the end of the
mediation, the parties reached a settlement, which they memorialized in a
one-page agreement entitled, “Memorandum of Understanding” (MOU). Wu
executed the MOU on behalf of himself and Cenzone, while Kane-Berman
executed the MOU on behalf of himself and Microbasics.
The MOU states the parties “agreed to settle all claims between them,
known and unknown ....” Elsewhere, it provides that, “[e]ach party waives all
claims, known and unknown, against all other Parties to the lawsuit.” The
MOU obligates the parties “to draft a long form settlement agreement based
on” the MOU. However, it states that, “[i]n the event the parties are unable
to agree on the final terms in a settlement agreement, [the] MOU will be
enforceable and admissible in Court pursuant to Code of Civil Procedure
section 664.6.”
4. The Purported Cancellation of the Settlement Agreement
On August 10, 2021, Cenzone’s counsel, Stephen C. Hinze, sent a letter
to Kane-Berman’s counsel, Tony R. Skogen, which purportedly “cancell[ed]
the settlement,” on grounds that the parties never had a “meeting of the
minds.” Hinze stated that Cenzone never intended to release claims it knew
of, but had not asserted in its complaint—i.e., it did not intend to release the
claims that were the subject of its motion for leave to amend the complaint.
6
Although the MOU released all claims between the parties, known and
unknown, Hinze stated the release was a “mistake.” According to Hinze, Wu
had scheduled an appointment for after the parties’ mediation, which he told
Kane-Berman and Skogen about at the start of the mediation. Hinze stated
Wu was “late to his appointment” by the time defense counsel’s office
prepared the MOU and, as a result, Wu only “quickly reviewed the [MOU]
and signed it ....” He stated the MOU “contained a mistake that Dr. Wu and
[Hinze] did not catch in the brief time [they] had to review it.” He reiterated
that Wu intended only to release unknown claims and known claims asserted
in the complaint—not known, unasserted claims.
On August 18, 2021, Skogen sent a letter to Hinze rejecting the
settlement cancellation. He stated, “there was clearly a meeting of the
minds,” as evidenced by the release of “all claims known and unknown” in the
one-page MOU. He stated Wu “should not have scheduled another
appointment inside the time [they] had agreed to mediate” and, “[i]f he felt
rushed, that [was] on him.” Further, he stated, “if [Wu] chose not to read the
agreement, that [was] on him” as well.
5. The Motion for Entry of Judgment
On September 1, 2021, Kane-Berman and Microbasics filed an ex parte
motion for entry of judgment under Code of Civil Procedure section 664.6. In
their motion, they argued the MOU was an enforceable settlement agreement
because it unambiguously released all claims between the parties, known and
unknown. They argued Wu’s alleged failure to read or understand the one-
page MOU was immaterial because the release of claims in the MOU was
“clear,” Wu was solely responsible for any time constraints he may have
experienced, and Wu was represented in the mediation by Hinze, who also
had the opportunity to read and review the MOU. Together with the motion,
7
Kane-Berman and Microbasics filed a declaration from their counsel, Skogen.
The MOU, the settlement cancellation letter, and the letter rejecting the
settlement cancellation were attached as exhibits to Skogen’s declaration.
On September 2, 2021, the day of the scheduled hearing on the ex parte
motion, Cenzone filed a declaration from Hinze purporting to summarize the
mediation. He averred that, before the mediation began, “Wu advised all
parties that he had to be at a meeting by 1:30 that afternoon.” According to
Hinze, the meeting “was with an attorney concerning the claims” Cenzone
had tried to amend into its complaint. Hinze further averred that, during the
mediation, Wu offered to release Cenzone’s known claims in return for
$95,000, payable in 60 days, but “with the express condition that the only
[known] claims to be dismissed were those asserted in the complaint.” He
alleged Kane-Berman made an oral counteroffer that modified only the
timing of the settlement payments, not the release of claims. He stated Wu
was running late for his meeting by the time Wu accepted Kane-Berman’s
counteroffer and defense counsel’s office prepared the MOU. He averred,
“Review of the memorandum of settlement was done in less than a minute
primarily to check that the payments agreed to were accurate.” He asserted
the MOU was “entered by mistake or inadvertence engendered by the stress
and agitation” caused by the timing of Wu’s scheduled meeting.
The court declined to decide the motion on an ex parte basis and “set[]
[the] matter for a noticed motion.” Thereafter, Kane-Berman and
Microbasics relied on their previously filed ex parte motion for entry of
judgment as the moving papers for their noticed motion.
On September 17, 2021, Cenzone filed its opposition to the now-noticed
motion for entry of judgment. Cenzone repeated its claim that the MOU was
invalid because there was no meeting of the minds. Additionally, it argued
8
the MOU was the result of an attorney mistake and, therefore, it was
unenforceable under Code of Civil Procedure section 473, subdivision (b).
In its opposition, Cenzone again purported to summarize the
mediation, claiming Wu offered to release only known claims that were
asserted in the complaint, Kane-Berman made a counteroffer changing only
the timing of the settlement payments, Wu accepted the counteroffer, and Wu
signed the MOU under time pressure. Together with its opposition, Cenzone
filed declarations from Wu and Hinze averring that, “[b]efore the mediation
commenced ... Wu advised all parties that he had to be at a meeting” that
afternoon. The declarations also purported to summarize various statements
and communications made by the mediation participants during the
mediation.
On September 24, 2021, Kane-Berman and Microbasics filed a reply
and evidentiary objections to the Wu and Hinze declarations. Of relevance
here, they argued the portions of the declarations purporting to summarize
the mediation were inadmissible under Evidence Code section 1119. That
statute renders inadmissible any “evidence of anything said or any admission
made for the purpose of, in the course of, or pursuant to, a mediation or a
mediation consultation,” and provides that “[a]ll communications,
negotiations, or settlement discussions by and between participants in the
course of a mediation or a mediation consultation shall remain confidential.”
(Evid. Code, § 1119, subds. (a), (c).)
On October 1, 2021, the court sustained the evidentiary objections to
the Wu and Hinze declarations and granted the motion for entry of judgment.
The court found the MOU was a “valid and enforceable settlement agreement
between the parties, and that judgment should be entered thereon under
CCP § 664.6(a).” It determined the language of the MOU, including the
9
release of claims, was “clear,” “explicit,” and “sufficiently certain.” And it
found the MOU was enforceable, notwithstanding the “attorney fault”
provision of Code of Civil Procedure section 473, subdivision (b), because that
provision “applies only to defaults, default judgments, or dismissals entered
as a result of an attorney’s mistake, inadvertence, surprise, or neglect.”
Cenzone appeals.1
III
DISCUSSION
1. The Trial Court Properly Granted the Motion for Entry of Judgment
Cenzone challenges the entry of judgment on grounds that the parties
did not mutually consent to the release of claims in the MOU. In particular,
Cenzone asserts its consent was lacking, and the trial court should have
refused entry of judgment, because Wu (Cenzone’s agent) and Hinze
(Cenzone’s legal counsel) labored under a unilateral mistake concerning the
scope of the MOU’s release of claims. Cenzone’s arguments are unavailing.
A. Legal Principles
“ ‘[Code of Civil Procedure] [s]ection 664.6 permits a court to enter
judgment pursuant to the terms of a settlement if the parties stipulate orally
before the court or in writing to settle all or part of a case. [Citation.]’
[Citation.] Section 664.6 provides in pertinent part: ‘If parties to pending
litigation stipulate ... orally before the court, for settlement of the case, or
part thereof, the court, upon motion, may enter judgment pursuant to the
1 We construe the order granting the motion for entry of judgment as a
final appealable judgment under Code of Civil Procedure section 904.1,
subdivision (a), because the trial court never entered a formal judgment after
granting the motion, and the order finally adjudicated all of the causes of
action at issue in the litigation. (Critzer v. Enos (2010) 187 Cal.App.4th 1242,
1250–1252; Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1183.)
10
terms of the settlement.’ ” (Leeman v. Adams Extract & Spice, LLC (2015)
236 Cal.App.4th 1367, 1373–1374, italics omitted (Leeman).)
“A settlement agreement is interpreted according to the same
principles as any other written agreement. [Citation.] It must be interpreted
to give effect to the mutual intent of the parties as it existed at the time,
insofar as that intent can be ascertained and is lawful. [Citations.] If the
language of the agreement is clear and explicit and does not involve an
absurdity, determination of the mutual intent of the parties and
interpretation of the contract is to be based on the language of the agreement
alone.” (Leeman, supra, 236 Cal.App.4th at p. 1374.)
“A trial court’s factual findings on a motion to enforce a settlement
pursuant to [Code of Civil Procedure] section 664.6 are subject to limited
appellate review and will not be disturbed if supported by substantial
evidence. [Citation.] ‘To the extent we engage in the proper interpretation of
section 664.6, however, we exercise our independent review.’ ” (Machado v.
Myers (2019) 39 Cal.App.5th 779, 790–791.)
B. The MOU Is Enforceable Notwithstanding Cenzone’s Claim That Wu
Was Mistaken About the Content of the MOU
According to Cenzone, the trial court erred in enforcing the MOU
because Cenzone did not consent to the MOU’s release of claims. Cenzone
states that Wu mistakenly believed the release of claims applied only to the
parties’ unknown claims and their known, asserted claims—not their known,
unasserted claims. Cenzone argues that Wu purportedly left the mediation
to meet with his legal counsel to discuss the prospect of filing a new lawsuit
involving the claims Cenzone tried, but was unable, to pursue against Kane-
Berman and Microbasics in the current case. Cenzone states, “Wu could not
have intended to release claims that he did, in fact, leave the mediation to
pursue[.]” As we will explain, Wu’s purportedly mistaken belief about the
11
content of the MOU did not entitle Cenzone to rescind or resist enforcement
of the MOU.
“A factual mistake by one party to a contract, or unilateral mistake,
affords a ground for rescission in some circumstances. … Civil Code
section 1577 states in relevant part: ‘Mistake of fact is a mistake, not caused
by the neglect of a legal duty on the part of the person making the mistake,
and consisting in: [¶] 1. An unconscious ignorance or forgetfulness of a fact
past or present, material to the contract ....’ ” (Donovan v. RRL Corp. (2001)
26 Cal.4th 261, 278 (Donovan); see Estate of Eskra (2022) 78 Cal.App.5th 209,
221–223 (Eskra) [a party’s mistaken belief about the content of an agreement
is a mistake of fact].)
“Where the [party seeking to enforce the contract] has no reason to
know of and does not cause the [mistaken party’s] unilateral mistake of fact,
the [mistaken party] must establish the following facts to obtain rescission of
the contract: (1) the [mistaken party] made a mistake regarding a basic
assumption upon which the [mistaken party] made the contract; (2) the
mistake has a material effect upon the agreed exchange of performances that
is adverse to the [mistaken party]; (3) the [mistaken party] does not bear the
risk of the mistake; and (4) the effect of the mistake is such that enforcement
of the contract would be unconscionable.” (Donovan, supra, 26 Cal.4th at
p. 282.) We will assume for purposes of this appeal that the first, second, and
fourth Donovan factors are satisfied. Even so, Cenzone has not established
that Wu’s purported unilateral mistake about the content of the MOU would
entitle Cenzone to rescind the MOU or halt its enforcement.
As an initial matter, Cenzone presented no admissible evidence
showing that Kane-Berman or Microbasics—the parties seeking to enforce
the MOU—knew of, or should have known of, Wu’s mistake. We will assume,
12
as Wu and Hinze averred in their declarations, that Wu told Kane-Berman
and Skogen that he had a meeting scheduled after the parties’ mediation.
However, nothing in these declarations, or any of Cenzone’s other evidence,
suggests that Wu contemporaneously told Kane-Berman or Skogen that his
post-mediation meeting was with his legal counsel. Nor did these
declarations, or any of Cenzone’s other evidence, state or imply that Wu told
Kane-Berman or Skogen that the purpose of his meeting was to discuss the
filing of a separate lawsuit against Kane-Berman and/or Microbasics. Thus,
even if Wu did tell Kane-Berman and Skogen about the meeting he had
scheduled after the mediation, that fact alone does not in any way suggest
that Kane-Berman, Microbasics, or Skogen were aware that Cenzone was
mistaken about the scope of the release of claims in the MOU.2
Because Kane-Berman and Microbasics did not know of, or have reason
to know of, the unilateral mistake, Cenzone would be entitled to rescind the
MOU based on its mistake only if it did not bear the risk of the mistake (in
addition to satisfying the other Donovan criteria). (Donovan, supra, 26
Cal.4th at p. 282.) “[T]he risk of a mistake must be allocated to a party
where the mistake results from that party’s neglect of a legal duty.” (Id. at p.
283.) Here, the risk of a mistake must be allocated to Cenzone—and Cenzone
alone—because Cenzone (through its agent, Wu) neglected its legal duty by
failing to fully read and understand the MOU before signing it.
2 Cenzone does not argue that Kane-Berman or Microbasics knew of the
alleged mistake, or should have known of the alleged mistake, for any reason
other than Wu’s pre-mediation statement that he had a meeting later that
day. In particular, Cenzone does not rely on any declarations purporting to
summarize the parties’ mediation communications. Nor could Cenzone rely
on such evidence, as the trial court sustained objections to all of Cenzone’s
evidence that ostensibly summarized the parties’ mediation communications.
Those rulings are not challenged on appeal.
13
The case of Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th
1565 (Stewart) is instructive. There, the parties to a personal injury case
mediated their dispute and executed a written settlement agreement to
resolve all of their claims, but the plaintiff later disavowed the settlement.
(Id. at pp. 1569–1570.) The trial court entered summary judgment for the
defendants based on the settlement agreement and the plaintiff appealed on
grounds that there was no mutual assent to the settlement agreement. (Id.
at p. 1570.) In particular, the plaintiff argued he did not consent to the
settlement agreement because he did not read it, he did not understand it,
and he only executed it at the behest of his legal counsel. (Id. at p. 1587.)
The Court of Appeal rejected the plaintiff’s lack of consent argument,
determined the settlement agreement was enforceable, and affirmed the
summary judgment order in favor of the defendants. (Stewart, supra, 134
Cal.App.4th at pp. 1585–1589.) The court reasoned, “We need look no further
than the third Donovan factor to conclude that plaintiff raised no triable
issue of material fact concerning possible rescission of the settlement
agreement.[] ‘It is well established, in the absence of fraud, overreaching or
excusable neglect, that one who signs an instrument may not avoid the
impact of its terms on the ground that he failed to read the instrument before
signing it.’ [Citations.] [¶] Plaintiff has cited no California cases (and we are
aware of none) that stand for the extreme proposition that a party who fails
to read a contract but nonetheless objectively manifests his assent by signing
it—absent fraud or knowledge by the other contracting party of the alleged
mistake—may later rescind the agreement on the basis that he did not agree
to its terms. To the contrary, California authorities demonstrate that a
contracting party is not entitled to relief from his or her alleged unilateral
mistake under such circumstances.” (Id. at pp. 1588–1589, fn. omitted.)
14
In Eskra, supra, 78 Cal.App.5th 209, the Court of Appeal reached a
similar conclusion under analogous circumstances. In that case, a wife filed a
probate petition seeking to be appointed the personal representative of her
late husband’s estate, even though she and her husband had executed a
premarital agreement terminating the wife’s rights to the husband’s estate in
the event the couple divorced or the husband predeceased the wife. (Id. at
pp. 215–216.) The wife introduced extrinsic evidence that she and her
husband both told their respective attorneys that the agreement should apply
only in the case of divorce, not death; however, the agreement was never
amended as the couple requested. (Id. at pp. 217–218.) Contrary evidence
was also admitted showing that the husband in fact intended for the
agreement to apply either in the event of divorce or his death. (Id. at
pp. 218–219.) Ultimately, the couple signed the agreement without
reviewing it during a meeting with the husband’s attorney that lasted for less
than five minutes. (Id. at p. 219.) The trial court denied the wife’s petition
for appointment as personal representative and found she was not entitled to
rescind the agreement on grounds of unilateral mistake. (Id. at pp. 220–221.)
The Court of Appeal affirmed. (Eskra, supra, 78 Cal.App.5th 209.) It
reasoned that, “[e]ven if [the husband] was aware of [the wife’s] mistake, she
[was] not entitled to relief if she bore the risk of the mistake due to neglect of
a legal duty.” (Id. at p. 225.) The court concluded the wife bore the risk of
mistake due to a neglect of a legal duty based on her failure to read the
agreement or meet separately with her legal counsel. (Id. at p. 229.) As the
court stated, “the failure to read a contract generally constitutes neglect of a
legal duty under [Civil Code] section 1577.” (Ibid.; see also id. at p. 229[wife’s “failure to read the Agreement and consult with [her attorney] means
that she did bear the risk of her mistake”]; Casey v. Proctor (1963) 59 Cal.2d
1597, 104–105 [plaintiff’s failure to read release of claims or, if he did read it, to
understand the release of claims, constituted a neglect of legal duty
precluding rescission]; Rest. 2d Contracts, § 157, com. b, p. 417 [“Generally,
one who assents to a writing is presumed to know its contents and cannot
escape being bound by its terms merely by contending that he did not read
them; his assent is deemed to cover unknown as well as known terms.”].)
Based on these authorities, we conclude the trial court properly
rejected Cenzone’s claim that the unilateral mistake of its representative
(Wu) permitted it to rescind the MOU or otherwise stop its enforcement.
There was no admissible evidence showing that Kane-Berman, Microbasics,
or Skogen placed time constraints or pressure on Wu to review or execute the
MOU quickly; rather, any time constraints Wu experienced were self-
imposed. Cenzone also does not argue that Kane-Berman, Microbasics, or
Skogen perpetrated fraud or placed Wu in duress during the negotiation of
the settlement or the preparation of the MOU. Nonetheless, Wu apparently
did not read the MOU closely or, to the extent he read it at all, he did not
review or understand the release of claims contained therein. If Wu did not
read or understand the one-page MOU, Cenzone (Wu’s principal) neglected
its legal duty and must be allocated the risk of Wu’s mistake.
Further, insofar as Wu labored under a mistaken belief about the
contents of the MOU, Cenzone produced no admissible evidence tending to
show that Kane-Berman or Microbasics were aware of this mistake. Indeed,
Cenzone’s evidence establishes, at most, that Wu simply announced he had a
meeting scheduled after the mediation. Wu’s statement, even if he made it,
16
did not convey to Kane-Berman or Microbasics that Wu was mistaken about
the content of the MOU or the release of claims in particular.3
Under these circumstances, the trial court properly rejected Cenzone’s
claim that there was no meeting of the minds and correctly found that the
parties mutually consented to the MOU, including the MOU’s unambiguous
release of all claims between the parties, known and unknown.4
C. The MOU Is Enforceable Despite Cenzone’s Claim that Hinze Was
Mistaken About the Content of the MOU
Next, Cenzone contends the court erred when it enforced the MOU
because Cenzone’s legal counsel, Hinze, shared Wu’s mistaken belief about
the release of claims. In light of Hinze’s mistake, Cenzone argues the court
should have exercised its discretionary authority under Code of Civil
3 Cenzone requests judicial notice of a complaint it filed against Kane-
Berman and Microbasics on June 6, 2022, in which Cenzone asserts the
claims it unsuccessfully tried to amend into the current litigation. We deny
the request, as the complaint is irrelevant to the current proceeding.
4 At times in its briefs, Cenzone states the release of claims is reasonably
susceptible to the meaning Wu attributed to it, which could be interpreted to
mean the parties mutually assented to a limited release encompassing only
unknown claims and known, unasserted claims. However, we do not
construe Cenzone as arguing that the parties mutually assented to such a
release. Cenzone repeatedly argues there was “a misunderstanding or lack of
meeting of the minds between the parties,” describes the MOU as “defective,”
and refers to the release as a “mistake.” As these characterizations make
clear, Cenzone does not maintain that the parties mutually intended to
execute a limited release of claims. Even if we did construe Cenzone as
making such an argument, the argument would fail. Neither the plain text of
the release of claims nor Cenzone’s evidence suggests that Kane-Berman or
Microbasics intended for the release to apply only to unknown claims and
known, unasserted claims.
17
Procedure section 473, subdivision (b), to relieve Cenzone from entry of
judgment under Code of Civil Procedure section 664.6.
Code of Civil Procedure section 473, subdivision (b), “provides for two
distinct types of relief—commonly differentiated as ‘discretionary’ and
‘mandatory’—from certain prior actions or proceedings in the trial court.
‘Under the discretionary relief provision, on a showing of “mistake,
inadvertence, surprise, or excusable neglect,” the court has discretion to allow
relief from a “judgment, dismissal, order, or other proceeding taken against”
a party or his or her attorney. Under the mandatory relief provision, on the
other hand, upon a showing by attorney declaration of “mistake,
inadvertence, surprise, or neglect,” the court shall vacate any “resulting
default judgment or dismissal entered.” ’ ” (Luri v. Greenwald (2003) 107
Cal.App.4th 1119, 1126 (Luri).)
As noted, Cenzone claims the trial court erred in declining to exercise
its authority under the discretionary relief provision of Code of Civil
Procedure section 473, subdivision (b), to relieve Cenzone from entry of
judgment due to Hinze’s mistake or excusable neglect. However, this
argument fails because Cenzone never asked the court to exercise its
discretionary authority in this manner. In its opposition to the motion for
entry of judgment, Cenzone quoted the mandatory relief provision, in full,
and then asked the court to relieve it from entry of judgment. But it omitted
any quotation or reference to the discretionary relief provision.5
Additionally, Cenzone never argued that Hinze committed excusable neglect,
5 In its appellate reply brief, Cenzone states the opposition brief it filed
in the trial court quoted Code of Civil Procedure section 473, subdivision (b),
“in full, including language recognized to encompass the statute’s mandatory
and discretionary relief provisions.” Cenzone is mistaken. It did not quote or
in any other way reference the discretionary relief provision.
18
which is a basis for relief that is available exclusively under the discretionary
relief provision.
“ ‘Appellate courts are loath to reverse a judgment on grounds that the
opposing party did not have an opportunity to argue and the trial court did
not have an opportunity to consider. [Citation.] In our adversarial system,
each party has the obligation to raise any issue or infirmity that might
subject the ensuing judgment to attack. [Citation.]’ [Citation.] ‘ “The
purpose of this rule is to encourage parties to bring errors to the attention of
the trial court, so that they may be corrected.” [Citation.]’ [Citation.] [¶]
Issues presented on appeal must actually be litigated in the trial court—not
simply mentioned in passing. ‘ “[W]e ignore arguments, authority, and facts
not presented and litigated in the trial court.” ’ ” (Natkin v. Cal.
Unemployment Ins. Appeals Bd. (2013) 219 Cal.App.4th 997, 1011.)
Further, a “trial court is not required to consider the availability of
relief under the discretionary or mandatory provisions of [Code of Civil
Procedure section] section 473 in the absence of any request for relief under
those grounds.” (Luri, supra, 107 Cal.App.4th at p. 1126.) For example, in
Luri, our colleagues in Division 5 of the Second District determined that a
trial court did not err in declining to grant relief under the mandatory relief
provision of section 473, subdivision (b), where the appellant requested relief
only under the statute’s discretionary relief provision. (Id. at pp. 1124–1128;
see Pacifica First National, Inc. v. Abekasis (2020) 50 Cal.App.5th 654, 658
(Pacifica) [“To the extent [defendant] is arguing he was entitled to mandatory
relief from default under section 473 of the Code of Civil Procedure, this
argument is incorrect. [Defendant’s] motion referenced only discretionary
relief under this provision; it does not discuss mandatory relief.”].)
19
Because Cenzone never asked the trial court for relief under the
discretionary relief provision of Code of Civil Procedure section 473,
subdivision (b), Cenzone “cannot now complain such relief was not awarded.”
(Pacifica, supra, 50 Cal.App.5th at p. 658.) And, in the context of this case,
Cenzone’s failure to request relief under the discretionary relief provision
precludes it from obtaining reversal of the entry of judgment.6
2. The Trial Court Did Not Commit Reversible Error in Denying Cenzone’s
Amended Motion for Leave to Amend the Complaint
In addition to challenging the entry of judgment, Cenzone argues the
trial court abused its discretion in denying Cenzone’s request to amend its
complaint to assert nine new causes of action against Kane-Berman and
Microbasics. Cenzone asserts amendment was warranted because it
discovered the facts giving rise to the new causes of action after filing the
complaint and amendment would only require a “short trial continuance.”
We will assume arguendo that the court erred in denying Cenzone’s
amended motion for leave to amend its complaint. Even so, we will not
reverse the denial order because the alleged error was harmless. The
California Constitution “generally ‘prohibits a reviewing court from setting
aside a judgment due to trial court error unless it finds the error
prejudicial.’ ” (F.P. v. Monier (2017) 3 Cal.5th 1099, 1108, citing Cal. Const.
art. VI, § 13.) It requires us “ ‘to affirm the judgment, notwithstanding error,
if error has not resulted “in a miscarriage of justice.” ’ ” (F.P., at p. 1108; see
also Code Civ. Proc., § 475 [“No judgment, decision, or decree shall be
reversed or affected by reason of any error, ruling, instruction, or defect,
unless it shall appear from the record that such error, ruling, instruction, or
6 Cenzone does not assert that the trial court erred in denying its request
for relief under the statute’s mandatory relief provision.
20
defect was prejudicial”].) “ ‘[A] “miscarriage of justice” should be declared
only when the court, “after an examination of the entire cause, including the
evidence,” is of the “opinion” that it is reasonably probable that a result more
favorable to the appealing party would have been reached in the absence of
the error.’ ” (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.)
Here, it is not reasonably probable Cenzone would have obtained a
more favorable outcome but-for the order denying amendment because the
causes of action Cenzone sought to amend into the case fall squarely within
the MOU’s release of claims, which broadly applies to all claims between the
parties, whether or not those claims are asserted in the present case. Thus,
the proposed causes of action would have been subject to the entry of
judgment under the MOU, even if the court had allowed Cenzone to amend
them into the case. (See Levy v. Skywalker Sound (2003) 108 Cal.App.4th
753, 771 [purported error denying amendment to complaint was harmless
because “granting leave to amend would merely have delayed the
inevitable”].) Because Cenzone’s proposed causes of action would have been
subject to the entry of judgment, whether they were amended into the case or
not, Cenzone suffered no prejudice from the allegedly erroneous denial of its
motion for leave to amend its complaint.
21
IV
DISPOSITION
The judgment is affirmed. Respondents are entitled to their costs on
appeal.
McCONNELL, P. J.
WE CONCUR:
HUFFMAN, J.
IRION, J.
22