Mt. Diablo Investment Group v. South Bay Real Estate Commerce Group CA1/4

Filed 10/19/22 Mt. Diablo Investment Group v. South Bay Real Estate Commerce Group CA1/4
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
MT. DIABLO INVESTMENT
GROUP, LLC, A162380
Plaintiff and Respondent,
(San Mateo County Super. Ct.
v. No. CIV536047)
SOUTH BAY REAL ESTATE
COMMERCE GROUP, LLP, et al.,
Defendants and Appellants.
Defendants South Bay Real Estate Commerce Group, LLP (South Bay)
and George Cresson (collectively, the South Bay defendants) appeal from the
trial court’s denial of their September 2020 motion under Code of Civil
Procedure1 section 664.6. Upon an allegation that plaintiff Mt. Diablo
Investment Group, LLC (MDIG) breached a settlement agreement calling for
the South Bay defendants to make a series of installment payments to MDIG,
the South Bay defendants moved to enforce the settlement agreement by
awarding Cresson damages and relieving them of any obligation to make
further settlement payments. They argue the trial court wrongly denied
Further undesignated statutory references are to the Code of Civil
1
Procedure.
1
their motion on the ground that it was procedurally improper. We disagree.
As the trial court indicated, their September 2020 motion was an improper
end-run around the expiration of their time to appeal the trial court’s
February 19, 2020 third amended judgment, which had become final when
they did not appeal from it. We affirm.
I. BACKGROUND
This case has a tangled procedural history spanning many years. We
begin with an explanation of that history as relevant to this appeal.
In a second amended complaint filed in 2016 in San Mateo County
Superior Court, MDIG brought direct claims for breach of contract and
accounting, as well as shareholder derivative claims on behalf of nominal
defendants Loanvest IX, L.P. and Loanvest XII, L.P. (collectively, Loanvest
entities) for negligence, breach of fiduciary duty, breach of contract and
accounting, all brought against the South Bay defendants regarding their
management of the Loanvest entities.
A. The Settlement Agreement and Addendum
In November 2016, MDIG and the South Bay defendants entered into a
written settlement agreement, mutual dismissal and mutual release
resolving their dispute (settlement agreement), and 10 days later, they
entered into an addendum.
Among other things, the settlement agreement and addendum require
the South Bay defendants to make installment payments over 24 months to
MDIG totaling $450,000. The settlement agreement states, “Within 5
business days of the first installment payment . . . , MDIG will prepare and
provide, via email to counsel for [the] South Bay [defendants], a Request for
Dismissal, which [the] South Bay [defendants] will execute and return within
2 business days. Thereafter, MDIG will file the Request for Dismissal within
two business days of execution by [the] South Bay [defendants].” The
2
addendum further states, “The action and cross-actions that are [the] subject
of the Settlement Agreement shall be dismissed with prejudice.” Also,
according to the settlement agreement, “All terms . . . shall be enforceable by
the San Mateo [County] Superior Court, pursuant to Code of Civil Procedure
[section] 664.6 and/or by an arbitrator.”
B. The Parties’ Initial Efforts To Dismiss the Action
In December 2016, attorneys for MDIG and the South Bay defendants
executed a Judicial Council form request for dismissal with prejudice of
MDIG’s “[e]ntire action of all parties and all causes of action,” although the
form states it is not to be used for the dismissal of any derivative action.
MDIG promptly filed the executed form request for dismissal with the trial
court and a court clerk entered the dismissal upon that request.
In March 2017, MDIG moved for the entry of an amended dismissal
that would have dismissed its derivative claims for negligence, breach of
fiduciary duty and breach of contract with prejudice as to MDIG only. On
June 1, 2017, however, after conducting a conference with the parties, the
trial court (Judge Marie Weiner) filed an order striking the dismissal of the
lawsuit. Because of MDIG’s filing of derivative claims in its second amended
complaint, the court found, the case was provisionally complex under
California Rules of Court, rule 3.400(c)(3) but the parties did not adequately
identify it as such in their court filings. Judge Weiner determined it was
necessary to strike the dismissal because the dismissal of derivative actions
requires judicial approval. She directed MDIG to submit to the appropriate
court department a procedurally proper dismissal with a supporting
declaration by its counsel. Several days later, MDIG’s counsel filed a
declaration and a proposed amended dismissal of all of the direct and
derivative claims with prejudice, with Judge Weiner retaining jurisdiction
under section 664.6 to enforce the terms of the settlement.
3
On June 26, 2017, Judge Weiner filed a “judgment of dismissal
pursuant to settlement” (June 26, 2017 judgment). She ordered “[t]hat this
Entire Action is DISMISSED, including all claims, all causes of action, and
all parties. The Court will retain jurisdiction pursuant to Code of Civil
Procedure section 664.6 to enforce the Settlement Agreement.” She did not
indicate if the dismissal was with or without prejudice.
In October 2017, MDIG filed a motion under section 664.6 for entry of
an amended judgment that set forth background facts concerning the state of
the parties’ implementation of the settlement terms, including the South Bay
defendants’ installment payment obligations under the settlement agreement
and addendum. In its written opposition to the motion, South Bay
contended, among other things, that “[t]he parties are mired in the instant
dispute for one and only reason: MDIG willfully refused to honor its
contractual obligation to timely dismiss the Mixed Action with prejudice
pursuant to the express terms of the Settlement Agreement.” It contended
that MDIG’s “material breach excuses Defendants from making the monthly
payments that are the subject of the Enforcement Motion.” The record
indicates that Cresson, representing himself, also appeared at the hearing on
the motion.
On November 22, 2017, Judge Weiner filed an order granting MDIG’s
motion and an amended judgment of dismissal pursuant to the settlement
(November 22, 2017 amended judgment). Judge Weiner ruled, “Defendants’
monthly payments under paragraph 1(b) of the Settlement Agreement are
not excused. MDIG attempted to comply with the dismissal obligation by
preparing and transmitting a Judicial Council Form Request for Dismissal to
Defendants. Defendants signed and returned the form. Both parties were
unaware or disregarded the provision warning against use of the form for
derivative claims until a month after it was entered. . . . The dismissal
4
entered by [Judge Weiner] on June 26, 2017 dismisses ‘all claims, all causes
of action, and all parties.’ The Court’s dismissal either constitutes
performance or excuses [MDIG]’s obligation to file a Dismissal. Defendant’s
failure to make monthly payments is not excused.” Judge Weiner’s order
states in another section, “The June 26, 2017 Dismissal fulfilled the purpose
of MDIG’s obligation . . . .” It also incorporates into the judgment certain
paragraphs of the settlement agreement and states that the addendum “shall
be part of the judgment.”
Judge Weiner incorporated the June 26, 2017 judgment into the court’s
November 22, 2017 amended judgment. As in the June 26, 2017 judgment,
Judge Weiner ordered that the entire action was dismissed, “including all
claims, all causes of action and all parties,” and that the court would retain
jurisdiction under section 664.6 to enforce the settlement. She further
ordered that the South Bay defendants “shall” pay the installment payments
to MDIG called for under the settlement agreement. Her dismissal order also
incorporated numerous paragraphs of the agreement, which was attached as
an exhibit, including the paragraph obligating MDIG to promptly file a
request for dismissal executed by the South Bay defendants, “as though each
of those paragraphs were fully set forth in the body of this Amended
Judgment.” Judge Weiner made no mention of the addendum.
C. The Previous Appeal and Cross-appeals
An appeal and cross-appeals to this court followed. In June 2019, we
issued a memorandum opinion resolving these appellate proceedings . In
relevant part, we affirmed the November 22, 2017 amended judgment, except
that we ordered the trial court to attach to it the addendum and strike from it
a particular settlement agreement provision not relevant here, changes to
which the parties were agreeable. Accordingly, we conditionally vacated the
November 22, 2017 amended judgment and remanded the matter to the trial
5
court so that it could issue a further amended judgment with these two
changes only.
D. Further Judgments Issued by the Trial Court
In August 2019, before we issued the remittitur, the parties submitted
to the trial court (Judge Jonathan Karesh), and on August 27, 2019, the trial
court entered, a second amended judgment of dismissal that was consistent
with our ruling. Because Judge Karesh issued this second amended
judgment before our issuance of the remittitur, the parties stipulated and
agreed, and he ordered, that it should be vacated and re-entered as a third
amended judgment of dismissal pursuant to the settlement, effective after
the issuance of the remittitur.
Accordingly, on February 19, 2020, Judge Karesh filed a third amended
judgment of dismissal pursuant to settlement (February 19, 2020 third
amended judgment). In this third amended judgment, the court again
incorporated the June 26, 2017 judgment; adjudged, ordered and decreed the
dismissal of the entire action, “including all claims, all causes of action and
all parties”; and retained jurisdiction under section 664.6 to enforce the
settlement agreement and addendum. The February 19, 2020 third amended
judgment did not refer to the settlement agreement provision, consistent with
our ruling that it be stricken and incorporated paragraphs 1 to 5 of the
addendum, which was attached as an exhibit.
E. The South Bay Defendants’ Motion To Enforce the
Settlement Agreement
In September 2020, the South Bay defendants filed a motion to enforce
the settlement agreement (September 2020 motion). They argued that MDIG
breached the settlement agreement and addendum by not obtaining a
dismissal with prejudice of its derivative claims. They contended that this
breach caused Cresson to pay $201,000 to an investor in one of the Loanvest
6
entities in order to avoid litigation of these same derivative claims, when the
claims should have been dismissed with prejudice under the settlement
agreement and addendum. They moved for the court to order them
discharged from further liability under the settlement agreement and
addendum and MDIG liable for $201,000 plus interest in damages to
Cresson.
MDIG opposed the South Bay defendants’ September 2020 motion on
the ground that the motion was only intended to delay and harass MDIG in
its effort to collect the amounts the South Bay defendants owed under the
settlement agreement and addendum, as incorporated into the February 19,
2020 third amended judgment. MDIG noted that the trial court, in its
November 22, 2017 order granting MDIG’s motion for an amended judgment,
rejected the same argument from the South Bay defendants that MDIG had
breached the settlement agreement by failing to seek a dismissal with
prejudice from the trial court. It argued that the South Bay defendants were
barred by the doctrine of collateral estoppel from relitigating this issue.
MDIG also noted that trial court’s November 22, 2017 rulings were not
disturbed on appeal.
The trial court (Judge Nancy Fineman) denied the South Bay
defendants’ September 2020 motion as “procedurally improper because the
[February 19, 2020] Third Amended Judgment of Dismissal has already been
entered, and the time to appeal has expired.” At the hearing on the motion,
the court explained that it was ruling on procedural grounds because “the
third amended judgment of dismissal has already been filed, so there’s
nothing for me to do. The collateral estoppel effect of it, I didn’t look at and I
don’t know.” Judge Fineman added, “What I did on this to be quite honest
was I got a research memo. I saw that Judge Weiner had something to do
with this, and I know she’s complex, so I tried to figure out whether she was
7
involved. I communicated with her, got some information with her and . . .
realized that this third amended judgment was in here that I could decide,
my first question was whether I could even decide this motion or it had to go
to another judge. And then once I saw the third amended judgment of
dismissal, to me that was, the rest of it was moot, so I went no further than
that. And I wouldn’t make any finding about collateral estoppel one way or
the other. It is what it is, I guess.”
The South Bay defendants filed a timely notice of appeal from Judge
Fineman’s order denying their September 2020 motion.
II. DISCUSSION
A. Legal Standards
Section 664.6 provides a summary procedure “for entry of judgment
enforcing a settlement agreement.” (In re Marriage of Assemi (1994)
7 Cal.4th 896, 911.) It provides: “If parties to pending litigation stipulate, in
a writing signed by the parties outside of the presence of the court or orally
before the court, for settlement of the case, or part thereof, the court, upon
motion, may enter judgment pursuant to the terms of the settlement. If
requested by the parties, the court may retain jurisdiction over the parties to
enforce the settlement until performance in full of the terms of the
settlement.” (§ 664.6.)
“ ‘A judgment is the final determination of the rights of the parties in
an action or proceeding.’ (Code Civ. Proc., § 577, italics added [by Sullivan].)
. . . ‘A judgment is final “when it terminates the litigation between the parties
on the merits of the case and leaves nothing to be done but to enforce by
execution what has been determined.” ’ ” (Sullivan v. Delta Air Lines, Inc.
(1997) 15 Cal.4th 288, 304.) A judgment entered in accordance with a
settlement agreement is as final as a judgment rendered after trial. (Citizens
for Open Access etc. Tide, Inc. v. Seadrift Assn. (1998) 60 Cal.App.4th 1053,
8
1065–1067.) A judgment issued upon the granting of a motion brought under
section 664.6 to enforce a settlement agreement is considered a final
judgment. (Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 205–206.)
“Factual determinations made by a trial court on a section 664.6 motion
to enforce a settlement must be affirmed if the trial court’s factual findings
are supported by substantial evidence. [Citations.] Other rulings are
reviewed de novo for errors of law. [Citation.]” (Weddington Productions,
Inc. v. Flick (1998) 60 Cal.App.4th 793, 815.)
The parties do not dispute the procedural facts upon which the trial
court denied the South Bay defendants’ September 2020 motion to enforce
the settlement agreement. We review this ruling de novo for errors of law.
B. Analysis
We agree with the trial court’s ground for denying the South Bay
defendants’ September 2020 motion. However the South Bay defendants
styled it, the motion in effect was a procedurally improper challenge to the
court’s February 19, 2020 third amended judgment, which had become final
when they did not timely appeal from it.
The South Bay defendants argued in their September 2020 motion that
MDIG breached the settlement agreement by not obtaining a dismissal with
prejudice of its derivative claims and, therefore, that they were excused from
further performing under the settlement agreement and Cresson was entitled
to damages. But the trial court had issued judgments repeatedly—
specifically, the November 22, 2017 amended judgment, the August 27, 2019
second amended judgment and the February 19, 2020 third amended
judgment—that were based on its November 22, 2017 order granting MDIG’s
motion for an amended judgment. In that order, the trial court expressly
ruled that the South Bay defendants were not excused from making their
installment payments to MDIG under the settlement agreement because
9
MDIG had attempted to comply with its dismissal obligation. The court
concluded that MDIG had done so by filing a form dismissal of all claims that
both parties did not understand was procedurally improper, and that the
court’s June 26, 2017 judgment constituted either performance by MDIG or
excused further performance. Based on this ruling, the trial court, in its
November 22, 2017 amended judgment, adjudged, ordered and decreed that
the South Bay defendants “shall” make their installment payments as
required under the settlement agreement. It also expressly incorporated the
June 26, 2017 judgment into the November 22, 2017 amended judgment.
These aspects of the November 22, 2017 amended judgment and the
basis for them were incorporated into the February 19, 2020 third amended
judgment. That is, in our resolution of the appeal and cross-appeals that
followed the November 22, 2017 amended judgment, this court affirmed that
amended judgment, except that we ordered the trial court to make two
changes that are not relevant here. In other words, we affirmed a judgment
that was based on the trial court’s rulings that MDIG had not failed to
perform its dismissal obligation and, therefore, the South Bay defendants, as
part of the judgment, were adjudged, ordered and decreed to perform their
installment payment obligations. By our affirmance, this aspect of the
November 22, 2017 amended judgment became final. (See, e.g., Gonzales v.
R. J. Novick Constr. Co. (1978) 20 Cal.3d 798, 804–805 [parts of a judgment
not appealed from are deemed final, “ ‘being a final judgment of the facts and
rights which they determine’ ”].) Our resolution required the trial court to
issue an amended judgment that, as did the November 22, 2017 amended
judgment, adjudged, ordered and decreed that the South Bay defendants
make the installment payments because MDIG had not breached the
agreement.
10
Accordingly, the trial court issued the February 19, 2020 third
amended judgment (after vacating a second amended judgment improperly
filed before we had issued a remittitur from the appeal and cross-appeals)
that was the same in substance to the November 22, 2017 amended
judgment, except for the two changes we ordered that are not relevant here.
In other words, the February 19, 2020 third amended judgment also was
based on the trial court’s November 22, 2017 rulings that MDIG had not
breached the settlement agreement and, therefore, the South Bay defendants
were adjudged, ordered and decreed to perform their installment payment
obligations. All that remained was for the court to enforce the settlement
agreement as necessary under section 664.6, making its February 19, 2020
third amended judgment a final judgment. (Sullivan v. Delta Air Lines, Inc.,
supra, 15 Cal.4th at p. 304; Citizens for Open Access etc. Tide, Inc. v. Seadrift
Assn., supra, 60 Cal.App.4th at pp. 1065–1067; Viejo Bancorp, Inc. v. Wood,
supra, 217 Cal.App.3d at pp. 205–206.) Indeed, the South Bay defendants
acknowledge this finality in their statement of appealability, in which they
cite the right to appeal from an order made after the issuance of a final
judgment under section 904.1, subdivision (a)(2).2
As a result of these procedural events, the South Bay defendants’ only
conceivable opportunity to argue that, as a result of MDIG’s supposed breach,
they were excused from further performance and Cresson was entitled to
damages was an appeal from the trial court’s February 19, 2020 third
amended judgment.3 The deadline for an appeal from the February 19, 2020
2South Bay actually cites to “Code of Civil Procedure section 904(a)(2),”
an obvious typographical error because no such statutory provision exists.
3 Such an appeal would have been of very questionable merit in light of
our affirmance of the relevant aspects of the November 22, 2017 amended
11
third amended judgment was at most 180 days after the trial court’s entry of
it. (Cal. Rules of Court, rule 8.104(a)(1).) This deadline passed without the
South Bay defendants filing a notice of appeal. As a result, the February 19,
2020 third amended judgment became final. (Kertesz v. Ostrovsky (2004)
115 Cal.App.4th 369, 373 [judgment becomes final when the time to appeal
from it has expired].) At that point, the South Bay defendants lost any right
to challenge the trial court’s judgment that they were to perform their
payment obligations under the settlement agreement because MDIG did not
breach the agreement. (People v. DeLouize (2004) 32 Cal.4th 1223, 1232
[“Orders and judgments are deemed final in the superior court, and not
subject to reconsideration by that court, to preserve confidence in the
integrity of judicial procedures and to avoid the delays and inefficiencies
associated with repeated examination and relitigation of the same facts and
issues”]; Sargon Enterprises, Inc. v. University of Southern California (2013)
215 Cal.App.4th 1495, 1508 [failure to pursue appeal from trial court ruling
excluding an approach to damages waived the issue, thereby precluding any
subsequent trial on the issue].)
For these reasons, the trial court properly ruled that the South Bay
defendants’ September 20, 2020 motion to enforce the settlement agreement
was procedurally improper. In light of our conclusion, we do not address the
parties’ arguments regarding the doctrines of collateral estoppel and law of
the case, or whether the trial court could award damages under its section
664.6 authority to enforce settlements.
judgment. Further, the record before us does not appear to indicate that
MDIG breached the settlement agreement regarding its dismissal obligation,
although we need not and do not determine this issue.
12
III. DISPOSITION
The order appealed from is affirmed. Respondent is awarded its costs
of appeal.
STREETER, J.
WE CONCUR:
POLLAK, P. J.
BROWN, J.
13