Filtzer v. Ernest

Filed 6/3/22
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