Opinion
F085683
06-05-2024
VIRINDER GREWAL, Plaintiff, Cross-defendant and Appellant, v. NAVTEJ SINGH, Defendant, Cross-complainant and Appellant.
Law Offices of Mayol &Barringer, Law Offices of Bart Barringer, and Bart Barringer for Plaintiff, Cross-defendant, and Appellant. Law Offices of Nilesh Choudhary and Nilesh Choudhary for Defendant, Crosscomplainant, and Appellant.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Stanislaus County No. CV-20-003336 . Stacy P. Speiller, Judge.
Law Offices of Mayol &Barringer, Law Offices of Bart Barringer, and Bart Barringer for Plaintiff, Cross-defendant, and Appellant.
Law Offices of Nilesh Choudhary and Nilesh Choudhary for Defendant, Crosscomplainant, and Appellant.
OPINION
LEVY, Acting P. J.
Appellant and cross-defendant Virinder S. Grewal and appellant and crosscomplainant Navtej Singh each appeal from a judgment entered after a bench trial in the Stanislaus Superior Court. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I. The 2010 Agreement(s) Between Grewal and Singh
Grewal was the owner of real property located at 2820 McNeil Drive, Ceres, California ("subject property"). He lived in the subject property from 1989 through 2005. He subsequently sold the property and then repurchased it in 2009 for $90,000. To finance the purchase, he obtained a $90,000 loan from the Khatri Brothers ("Khatri loan"). The loan was secured by the subject property and had an annual interest rate of 12 percent.
In early 2010, Grewal reached out to Singh, a relative by marriage, and asked for his assistance in obtaining a lower interest rate loan to pay off the Khatri loan. Grewal testified he proposed Singh "finance the house [in] his name" because Singh had a better credit history than Grewal and Singh agreed to the proposal (the "2010 oral agreement"). Singh testified Grewal told him the subject property was his "ancestor property" and was "where his kids grew up," and then asked Singh if he "could help him save that property."
Grewal and Singh agreed Grewal would make all payments on the replacement loan and pay all taxes, insurance, maintenance, and repair costs associated with the subject property. Singh characterized their agreement as Grewal "using [his] credit." The parties agreed Grewal would repurchase the subject property from Singh at some point, but Grewal said a timeframe for repurchase was never discussed whereas Singh said he agreed to help Grewal for a year or two.
On January 28, 2010, in furtherance of the 2010 oral agreement, Grewal and Singh entered into a "California Residential Purchase Agreement and Joint Escrow Instructions" (unnecessary capitalization omitted) in which Singh agreed to "purchase" the subject property from Grewal for $199,000 (the "2010 purchase agreement"). On April 13, 2010, Grewal initialed "Sale Escrow Instructions" (unnecessary capitalization omitted) ("2010 escrow instructions") in which the purchase price had been lowered to $177,889.04.
The term "purchase" is placed in quotation marks because, as discussed herein, the parties did not intend Grewal to transfer beneficial ownership of the subject property to Singh.
Under the 2010 escrow instructions, the purchase price was to be financed with a loan in the amount of $140,800 ("Wells Fargo loan"), secured by a deed of trust in the first position. The remainder of the purchase price, $37,089.04, would be deposited into escrow by Singh. Upon close of escrow, Singh would take title to the subject property.
On April 28, 2010, escrow closed on the terms stated in the 2010 escrow instructions ("2010 sale") and the Khatri loan was paid in full. Title to the subject property was transferred to Singh because, according to Grewal, that was the only way financing could be obtained.
Grewal received $77,350.26 from the 2010 sale after all encumbrances and closing costs were paid. On May 17, 2010, Grewal repaid Singh the downpayment Singh put on the subject property. After the 2010 escrow closed, Grewal essentially made good on his promise to Singh to pay all costs associated with the subject property. Grewal continued to rent out the subject property, kept all rents, and provided Singh with information as to the rents received, which Singh then claimed on his taxes. Singh also took tax deductions associated with interest payments on the Wells Fargo loan.
Grewal paid Singh $37,688, approximately $600 more than Singh had paid into escrow.
Singh's spouse, Jagdip Singh, testified they were "pretty much" paid back for all the costs they incurred but there may be a difference of a couple hundred dollars.
Singh testified that, at first, he had no expectation of receiving money as a result of the 2010 oral agreement, but his expectation changed in the three to five years before trial commenced in 2022.
II. Negotiations for Return of the Subject Property to Grewal
Singh testified that sometime during the period 2011 through 2013, he made his first request to Grewal that Grewal repurchase the subject property from him. He testified he had similar talks with Grewal in 2016 or 2017 but to no avail.
In 2020, Singh's wife contacted Grewal's wife and told her the Singhs were planning to buy a home for their son, and they wanted to get their name off title to the subject property. Grewal understood from subsequent communications that Singh wanted money to deed the subject property back to him. Grewal testified he told Singh in an email that there was no agreement for Grewal to pay Singh money-rather, "it was a friendly use of his credit with no promise to pay him anything back."
To help resolve the dispute, the Singhs requested other family members participate in an Ikaph-which Grewal described in his testimony as a "gathering of families together" and "a common practice" in Indian culture. He testified, "[I]t's very casual and it's nonbinding." Grewal elaborated, "[I]f there's a disagreement, then, basically, you gather close families and-and, basically, then they hear both stories of both sides. And then they give their opinion, like, what they should do, how they should try to resolve it."
In advance of trial, Singh had argued the Ikaph was a mediation subject to the mediation privilege and that all related testimony and evidence should be precluded. However, because the matter was being heard by the trial court sitting without a jury, the trial judge indicated he would hear the evidence and, if he determined the Ikaph was a mediation, he had the ability to strike the evidence and would not consider it.
Grewal testified that, prior to the Ikaph, the Singhs indicated they would not simply deed the subject property to Grewal. They wanted to structure the return of the property to Grewal as a purchase and sale.
On June 6, 2020, a dozen family members attended the Ikaph which number included the parties, their spouses, and Grewal's son, Harman Singh Grewal (hereafter, Harman). At its conclusion, Singh and Harman signed a California residential purchase agreement and joint escrow instructions ("2020 repurchase agreement") by which Harman agreed to purchase the subject property from Singh for $329,000 (the "2020 repurchase").
To avoid unnecessary confusion, we refer to nonparties by their first name because they often share the same surname. No disrespect is intended.
Grewal testified that the parties also reached an oral agreement (the "alleged 2020 oral agreement") at the Ikaph concerning the disposition of excess proceeds from the 2020 repurchase ("excess 2020 proceeds"), which totaled $199,615.89. Singh disputed the alleged 2020 oral agreement.
On June 22, 2020, escrow closed on the 2020 repurchase. Singh received the excess 2020 proceeds. On July 13, 2020, Singh paid $80,000 of those proceeds to Sukhchain Singh Gill (Sukhchain), one of the family members in attendance at the Ikaph, with the understanding that Sukhchain would forward that sum to Grewal. Sukhchain then paid Grewal the $80,000. Singh did not return any more of the excess 2020 proceeds to Grewal. However, Singh paid $70,000 of those proceeds to Tejinder Grewal (Tejinder)-a family member in attendance at the Ikaph-to settle a long-term dispute that existed between Tejinder and Grewal's father. Grewal testified he did not agree to the payment to Tejinder.
Singh testified he thought the $80,000 was a fair amount to return to Grewal because Grewal had pocketed approximately $77,000 in proceeds from the 2010 sale and had obtained an additional loan of $20,000 from Singh that Grewal used for two and a half years before Grewal repaid it.
III. Procedural Background
A. The Pleadings
On August 6, 2020, Grewal filed suit against Singh alleging four causes of action in connection with the alleged 2020 oral agreement for breach of contract, intentional misrepresentation, fraud, and conversion of a portion of the excess 2020 proceeds. In his complaint, Grewal alleged the terms of the alleged 2020 oral agreement were that Grewal would pay Singh $329,000 to repurchase the subject property and that "after the mortgage, escrow fees, taxes, liens and encumbrances on the [subject] [p]roperty were paid off, [Singh] would return to [Grewal] whatever funds he received from the escrow without deduction of any kind." He alleged Singh breached the 2020 oral agreement by returning only a portion of the excess 2020 proceeds (i.e., $80,000) to him rather than the entire amount.
On September 2, 2020, Singh answered the complaint and filed a cross-complaint in connection with the 2010 oral agreement. On August 9, 2021, Singh amended his cross-complaint. In it, Singh alleged a cause of action for breach of the 2010 oral agreement, restitution/unjust enrichment stemming from Grewal's receipt of rent from the subject property after the 2010 sale, intentional misrepresentations made in connection with the 2010 oral agreement, and fraud.
On the first day of trial, Grewal verbally requested leave of court to amend his complaint to plead unjust enrichment. The request was not opposed, and the court allowed oral amendment of the complaint.
Grewal's counsel stated, "Based on the motions in limine and the bringing up of the possibility of a mediation, I would move to amend my complaint to add a cause of action for unjust enrichment _." Singh's counsel responded, in part, "I don't take issue with the amendment as long as there's an understanding that it is defense counsel's position that, irrespective of the cause of action being breach of contract or unjust enrichment or otherwise, communication during mediation or in furtherance of mediation is privileged. [¶] . . . [¶] And in addition to the mediation privilege that's already been argued, these communications also raise protection under Evidence Code [s]ection 1152."
B. Pretrial, Trial, and Posttrial Proceedings
Singh moved in limine to exclude evidence of three substantively identical statements dated July 18, 2020 (the "July 18, 2020 statements"). The July 18, 2020 statements purported to memorialize the alleged 2020 oral agreement arrived at during the June 6, 2020 Ikaph. Each statement was signed by one of three participants at the Ikaph-Sukhchain, Sukhchain's wife, and Grewal's mother-in-law. Singh also moved in limine to exclude evidence of communications he contended were subject to the mediation privilege under Evidence Code section 1119 and communications he argued should be excluded as settlement negotiations under section 1152.
All further undesignated statutory references are to the Evidence Code unless otherwise noted.
The trial court asked for further briefing on the issues raised in Singh's motions in limine. In response, Singh submitted a brief in which he argued the Ikaph was a mediation subject to the mediation privilege under section 1119 and that mediation-related communications and writings (including the July 18, 2020 statements) should be excluded. Grewal filed a brief in opposition. Ultimately, the court determined testimony was needed to resolve those issues.
Trial commenced on March 15, 2022, and lasted three days. Testimony was received from Grewal, Singh, Sukhchain, and Jagdip Singh (Singh's spouse) (hereafter, Jagdip). During trial, the parties' counsel advised the court they would wait until the conclusion of the case to determine which exhibits the parties jointly agreed should be admitted, and which exhibits were subject to objection.
After the last witness testified, the parties' counsel agreed there were only four proffered exhibits subject to objection-i.e., the July 18, 2020 statements; a letter to family members requesting the Ikaph and discussing aspects of the dispute; email communications in June 2020 to Ikaph participants and family members concerning the parties' dispute; and email communications in July 2020 to Ikaph participants and family members concerning the dispute. The parties filed posttrial briefs and reply briefs in which they addressed whether the challenged evidence was admissible.
C. The Trial Court's Statement of Decision and Judgment
On October 21, 2022, the trial court issued its final statement of decision ("SOD"). In it, the trial court determined the Ikaph was a "mediation protected by the mediation privilege" and that, "[f]or purposes of [its] decision, it [would] not consider any evidence derived from communications in connection to the mediation." The court found that Grewal's four causes of action set forth in the complaint (prior to oral amendment) "are based on the same set of facts and occurrences arising out of an alleged agreement reached during the mediation"-i.e., the alleged 2020 oral agreement. The court concluded Grewal could not prove his causes of action because he did not "meet his burden to provide any admissible evidence to support any of the causes of action."
Conversely, the trial court determined Grewal's cause of action for unjust enrichment (made by oral amendment to the complaint at the commencement of trial) was not barred by the mediation privilege because it concerned facts and circumstances surrounding the 2010 oral agreement and the parties' performance (or lack thereof) of that agreement. As to that cause of action, the court concluded Singh's unclean hands defense was meritorious. The court found Grewal had "engaged in the deceptive practice of circumventing the law by placing the [subject] property in ... Singh's name and later claiming ownership and the right to proceeds . . .." The court stated Grewal's actions in this regard were "tantamount to fraud on the lender," and "violate[d] principles of property law regarding property recordation of legal title."
As for Singh's cross-complaint, the trial court determined that the statute of limitations on Singh's causes of action had expired, that "any claims concerning the 2010 sale must fail," and that any claims based on the alleged 2020 oral agreement would fail due to application of the mediation privilege. The trial court further determined that Singh's unjust enrichment claims were "wholly without merit and ultimately, nonsensical."
On December 19, 2022, the trial court entered judgment and determined that neither Grewal nor Singh shall take anything by way of their respective complaint and cross-complaint.
On February 2, 2023, Grewal timely filed a notice of appeal from the judgment. On February 10, 2023, Singh timely filed a notice of cross-appeal from the judgment.
DISCUSSION
On appeal, Grewal contends the trial court erred by concluding the Ikaph was a "mediation which barred the introduction of evidence related to the [alleged 2020 oral] agreement," and "allowed for an absurd outcome in this matter." He further contends the court "erred in applying the doctrine of unclean hands" to his claim for unjust enrichment and by allowing Singh to "perpetrate a fraud" upon him resulting in Singh's unjust enrichment.
Singh does not challenge the judgment but argues that, if this court determines the trial court erred in applying the unclean hands defense to bar claims related to the 2010 oral agreement, then he is entitled to restitution in the amount of the $80,000 he paid to Grewal less the amount by which the Wells Fargo loan was reduced. Because we conclude the court did not err in adjudicating the unclean hands defense as to the 2010 oral agreement, we need not address Singh's restitution claim.
I. The Trial Court Did Not Err in Concluding the Mediation Privilege Applied to Evidence in Support of the Alleged 2020 Oral Agreement
A. Standard of Review
"With respect to the application of a privilege, if '[a] privilege does not appear as a matter of law, the appellate court may not disturb the lower court's findings if there is any substantial evidence to support them." (Saeta v. Superior Court (2004) 117 Cal.App.4th 261, 266 (Saeta).) The trial court's determination that the Ikaph was a mediation as defined in section 1115, subdivision (a), is a factual finding that was determined on conflicting evidence. Consequently, we review the court's determination for substantial evidence.
"Evidence is 'substantial' for purposes of this standard of review if it is 'of "ponderable legal significance," "reasonable in nature, credible, and of solid value" ...." (Brewer v. Murphy (2008) 161 Cal.App.4th 928, 935-936.) The substantial evidence standard of review "is highly deferential." (Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 581 (Schmidt).) Under this standard, we "view the evidence in the light most favorable to the prevailing party, giving [that party] the benefit of every reasonable inference and resolving all conflicts in [that party's] favor." (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) In conducting a substantial evidence review, "First we accept all evidence supporting the trial court's order. Second, we completely disregard contrary evidence. Third, we draw all reasonable inferences to affirm the trial court." (Schmidt, at p. 581.) "We do not reweigh the evidence." (Ibid.)
B. Substantial Evidence Supports the Findings that the Ikaph Was a Mediation
1. Mediations, Generally
The Evidence Code and Code of Civil Procedure both define a "mediation" as "a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement." (§ 1115, subd. (a); Code Civ. Proc., § 1775.1, subd. (a).) A "mediator" is defined as "a neutral person who conducts a mediation." (§ 1115, subd. (b).) The Law Revision Commission Comments to section 1115 state, "To accommodate a wide range of mediation styles, the definition is broad, without specific limitations on format.... The definition focuses on the nature of a proceeding, not its label. A proceeding may be a 'mediation' for purposes of this chapter, even though it is denominated differently." (Cal. Law Revision Com. com., 29B West's Ann. Evid. Code (2009) foll. § 1115, p. 382.)
"Generally, mediation falls within two categories: traditional or classic mediation on the one hand, and voluntary settlement conferences on the other hand. In classic mediation, attorneys are generally not involved. The mediator meets directly with the parties to facilitate negotiation. [Citation.] The classic mediator is passive, expressing no judgment or opinion on the merits of either position. [Citations.] By contrast, in the latter form, attorneys are present; and the mediator takes a more active role, often expressing an opinion on the merits, but without authority to render a decision." (Saeta, supra, 117 Cal.App.4th at p. 269.)" '[A] mediator should not have authority to resolve or decide the mediated dispute, and should not have any function for the adjudicating tribunal with regard to the dispute, except as a non-decisionmaking neutral.'" (Id., at p. 270.)
The Legislature has deemed it fit to protect the confidentiality of statements made, and writings prepared, "for the purpose of, in the course of, or pursuant to a mediation." (§ 1119.) Except as otherwise provided in chapter 2 of division 9 of the Evidence Code (§ 1115 et seq.), such matters are generally inadmissible in a civil action and their disclosure may not be compelled. (§ 1119.)
2. Evidence Supporting the Trial Court's Determination
Grewal argues, "[T]he [t]rial [c]ourt's determination that the family meeting was a mediation is tenuous at best." He argues, without citation to the record, that "a mediator was not hired, a mediator was not paid, a mediator did not advise the parties with regard to the fact the settlement needed to be in writing, the mediator did not explain that nothing that was discussed at the family meeting could be introduced in [c]ourt at a later time and a mediator did not make a mediator's report and/or write up a [s]ettlement [a]greement."
Grewal does not cite to any case law or other legal authority that suggests a mediation cannot occur in the absence of the above attributes. It is not the duty of an appellate court to" 'make an independent, unassisted study of the record in search of error or grounds to support the judgment.... [E]very brief should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.'" (McComber v. Wells (1999) 72 Cal.App.4th 512, 522.)
Grewal also argues that "Sukhchain . testified he was not acting as mediator." However, Sukhchain did sign the July 18, 2020 statement in which he stated that he and other Ikaph participants were acting in the "capacity of mediators." In any event, our charge is not to review the record for evidence contrary to the trial court's findings. Rather, we disregard such evidence and, instead, "accept all evidence supporting" the court's findings, "draw[ing] all reasonable inferences" in their favor. (Schmidt, supra, 44 Cal.App.5th at p. 581.) Evidence in support of the trial court's determination that the Ikaph was a mediation is detailed below.
First, we observe that Grewal expressly referred to the Ikaph as a "mediation" in his discovery responses, in his deposition testimony, and in the July 18, 2020 statements, which he himself prepared and three Ikaph participants signed. Although Grewal argues on appeal that he used the term "mediation" as a layman would use it, lay usage of the term conveys a similar meaning as that provided in section 1115. For example, the Merriam-Webster dictionary defines "mediation" as "the act or process of mediating: such as [¶] a: intervention between conflicting parties to promote reconciliation, settlement, or compromise .. [S]pecifically: a means of resolving disputes outside of the judicial system by voluntary participation in negotiations structured by agreement of the parties and usually conducted under the guidance and supervision of a trained intermediary[.]" (Merriam-Webster Dict. Online <https://www.merriam-webster.com/dictionary/mediation> [as of May 23, 2024], archived at <https://perma.cc/R95E-BAMS>.) The Cambridge Dictionary defines "mediation" as "the process of talking to two separate people or groups involved in a disagreement to try to help them to agree or find a solution to their problems[.]" (Cambridge Dict. Online <https://dictionary.cambridge.org/dictionary/english/mediation> [as of May 23, 2024], archived at <https://perma.cc/3EZ5-82GQ>.)
Even Grewal's counsel, who is trained in the law, referred to the Ikaph as a mediation in his opening trial brief, stating, "the parties attended a family mediation" at which certain promises were made. The "mediation" term was later abandoned by Grewal's counsel in posttrial briefing but his posttrial description of the Ikaph -i.e., "a casual family gathering ... very common in the Indian culture where family members gather together in an attempt [to] give their opinions on how to resolve a dispute between family members"-closely tracks the statutory definition of a mediation. (§ 1115, subd. (a).)
In addition, Grewal testified at trial that an Ikaph "means, like, gather families together," that it is a "common practice," and that it is "very casual and ... nonbinding." When asked what an Ikaph is used for, Grewal testified, "[I]f there's a disagreement, then, basically, you gather close families and-and, basically, then they hear both stories of both sides. And then they give their opinion, like, what they should do, how they should try to resolve it." Grewal's description of the process closely follows the definition of a mediation in section 1115.
Sukhchain testified his house was a "neutral site for purposes of the meeting," each side presented their case, and the family members at the Ikaph gave their input. He testified the family members were of the opinion that Grewal and Singh should agree upon a resolution but clarified, "[T]hey're the ones who agreed upon everything" and that neither he nor other Ikaph attendees made them agree. Again, this description closely follows the statutory definition of a mediation. (§ 1115.)
Sukhchain's neutrality in connection with the parties' dispute may be properly inferred from the evidence. He is related to both parties by marriage. Grewal is married to his sister and Singh is married to his first cousin. He had no personal or financial interest in the transaction(s) at issue and had only learned of the parties' dispute shortly before the Ikaph. Both parties trusted Sukhchain enough to present their respective positions to him and the other family members. And, as mentioned, Sukhchain signed the July 18, 2020 statement in which he referred to himself and other Ikaph attendees as mediators.
Singh testified he asked to have an Ikaph to obtain advice on how to resolve his and Grewal's differences and that both sides presented their case at the Ikaph. When asked what was the purpose of having family members attend an Ikaph, Singh responded, "Essentially middleman to help sort out the-the situation. You can call it the mediators.... [¶] Whatever you want to call it, it was essentially a common party that will help [us] come to an understanding." When asked about Sukhchain's role at the Ikaph, Singh responded, "He was the common party. He's like, you know, a good listener. And that-I was hoping that he will understand the depth of the arguments that I was making in the document, and then he will help us come to a conclusion." He testified the Ikaph was not intended to be binding on either himself or Grewal, but his desire was that the family members could "intervene and get us to some resolution."
Jagdip testified she understood the Ikaph was to be a family mediation. She stated, "[T]hat's what we gathered for, to come to a conclusion, what's fair." She considered Sukhchain to be a mediator at the Ikaph.
Substantial evidence supports the trial court's determination that the Ikaph was a mediation.
C. Application of the Mediation Privilege Did Not Result in an Absurd Outcome
Grewal next contends application of the mediation privilege "creates an absurd outcome," resulted in Singh obtaining an "unjust windfall," and "allowed for fraud to be perpetrated by one party." In support of his argument, Grewal relies on Lappe v. Superior Court (2014) 232 Cal.App.4th 774, wherein the court wrote, "Our Supreme Court has broadly applied the mediation confidentiality statutes and all but categorically prohibited judicially crafted exceptions, even in situations where justice seems to call for a different result. [Citation.] 'To carry out the purpose of encouraging mediation by ensuring confidentiality, the statutory scheme ... unqualifiedly bars disclosure of communications [and writings] made during mediation absent an express statutory exception.' [Citations.] 'Judicial construction, and judicially crafted exceptions, are permitted only where due process is implicated, or where literal construction would produce absurd results, thus clearly violating the Legislature's presumed intent. Otherwise, the mediation confidentiality statutes must be applied in strict accordance with their plain terms. Where competing policy concerns are present, it is for the Legislature to resolve them.'" (Id. at p. 783, italics added.)
Grewal has not made a due process argument on appeal. He does, however, contend application of the mediation privilege in this case has allowed for an absurd result because Singh has been allowed to perpetrate a fraud upon him. For reasons discussed herein, we disagree.
"The [California] Supreme Court has repeatedly resisted attempts to narrow the scope of mediation confidentiality. The court has refused to judicially create exceptions to the statutory scheme, even in situations where justice seems to call for a different result. Rather, the Supreme Court has broadly applied the mediation confidentiality statutes and has severely curtailed courts' ability to formulate exceptions." (Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137, 152, italics added.)
Case law recognizes that privileges, when applied, often "prevent the admission of relevant and otherwise admissible evidence." (People v. McGraw (1983) 141 Cal.App.3d 618, 622.)" '[A]ll privileges, in general, . . ., are inept and clumsy devices to promote the policies they profess to serve, but are extremely effective as stumbling blocks to obstruct the attainment of justice.'" (Ibid., quoting with approval, McCormick, Evidence (1962) § 78, p. 165.) Thus, a privilege may "impede the correct determination of issues." (See Saeta, supra, 117 Cal.App.4th at p. 272.) This, however, is not a ground to disregard the privilege. Rather, it is a known and legislatively accepted consequence of the mediation privilege, as discussed in more detail below.
In Ryan v. Garcia (1994) 27 Cal.App.4th 1006, 1012-1013, the Third District Court of Appeal held the trial court erred in admitting evidence of an oral agreement arrived at during mediation. The court explained that oral agreements achieved at mediation are inadmissible "if the parties do not properly consent in writing to subsequent admissibility of the agreement." (Id. at pp. 1012-1013.) The alternative would "permit[] full-blown trials to determine, in each mediation case, if there was an oral agreement and, if so, on what terms." (Id. at p. 1013.) The Ryan court concluded the Legislature never intended such a result. (Ibid.)
Two years later, in Regents of the University of California v. Sumner (1996) 42 Cal.App.4th 1209 (Regents), superseded by statute as stated in Simmons v. Ghaderi (2008) 44 Cal.4th 570, 583-584 (Simmons), Division 5 of the First District Court of Appeal declined to adhere to the holding in Ryan. (Regents, at p. 1213.) It agreed with the dissent in Ryan wherein it was stated," 'Once a compromise is reached the mediation process is over. An oral agreement cannot be crafted until after compromise has been reached. Therefore an oral statement of the terms of the agreement does not fall within [former] [section] 1152.5.'" (Regents, at p. 1213, first brackets added.)
"[Former] [s]ection 1152.5 provide[d], in pertinent part: '(a) When persons agree to conduct and participate in a mediation for the purpose of compromising, settling, or resolving a dispute in whole or in part: [¶] (1) Except as otherwise provided in this section, evidence of anything said or of any admission made in the course of the mediation is not admissible in evidence ....' (Italics added.)" (Regents, supra, 42 Cal.App.4th at p. 1212, fn. 5.)
In Simmons, the California Supreme Court recognized that, after Ryan and Regents were decided, the Legislature "revised the mediation confidentiality statutes," and "creat[ed] an extensive statutory scheme governing mediation confidentiality and its exceptions" (Simmons, supra, 44 Cal.4th at p. 578), thereby rejecting the rule announced in Regents, and largely codifying the rule announced in Ryan (Simmons, at p. 580). Our high court further recognized that "by creating fixed procedures that allow only certain evidence produced at mediation to be admitted in later civil proceedings, the Legislature was undeniably aware that some agreements made during mediation would not be enforceable. The statutes thus reflect a policy judgment made by the Legislature when weighing the value of confidentiality. Creating exceptions to admit evidence that does not meet statutory requirements would run contrary to legislative intent." (Simmons, supra, 44 Cal.4th at pp. 583-584, italics added.)
In Simmons, the plaintiffs "sought to enforce an oral settlement agreement allegedly formed during mediation." (Simmons, supra, 44 Cal.4th at p. 574.) "During pretrial proceedings, the [defendant] stipulated to, and submitted evidence of, events which had occurred during mediation, arguing that no enforceable contract was formed during mediation." (Ibid.) However, at trial, the defendant "invoked the mediation confidentiality statutes" and sought to bar the introduction of mediation-related evidence. (Ibid.) The trial court ruled the evidence admissible and the Court of Appeal affirmed the ruling on grounds the defendant was estopped from arguing the inadmissibility of the evidence because "she 'placed before the trial court the facts of the mediation and sought a legal determination as to their effect.'" (Ibid.) The California Supreme Court reversed. (Id. at p. 589.) It wrote, "Except in cases of express waiver or where due process is implicated, we have held that mediation confidentiality is to be strictly enforced." (Id. at p. 582, italics added.) "[T]he clear language of the statutory scheme and other indications of legislative intent reflect that disallowing an implied waiver would not produce absurd consequences, but was rather an intended consequence." (Id. at p. 587, italics added.)
The fact that an oral agreement may have been reached at a mediation is not a ground to overcome the mediation privilege. (Simmons, supra, 44 Cal.4th at p. 574; Ryan, supra, 27 Cal.App.4th at p. 1013.) The potential that evidence of an oral agreement arrived at during mediation would be excluded was a consequence intended by the Legislature and, therefore, not an absurd consequence. (Simmons, at p. 587.)
D. Statutory Conditions to Admissibility of Mediation-Related Evidence
Absent proper application of a statutory exception to the mediation privilege, oral statements made, and writings prepared, "for the purpose of, in the course of, or pursuant to a mediation" are inadmissible in a court of law. (§ 1119, subds. (a), (b).) Our state high court has "repeatedly said that these confidentiality provisions are clear and absolute. Except in rare circumstances, they must be strictly applied and do not permit judicially crafted exceptions or limitations, even where competing public policies may be affected." (Cassel v. Superior Court (2011) 51 Cal.4th 113, 118.) The Legislature has mandated that, "unless the confidentiality of a particular communication is expressly waived, under statutory procedures, by all mediation 'participants,' or at least by all those 'participants' by or for whom it was prepared [citation], things said or written 'for the purpose of' and 'pursuant to' a mediation shall be inadmissible in 'any ... civil action.'" (Id. at p. 119.) A discussion of the relevant statutory exceptions follows.
Section 1122 provides, in relevant part, "[a] communication or a writing, as defined in Section 250, that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if any of the following conditions are satisfied: [¶] (1) All persons who conduct or otherwise participate in the mediation expressly agree in writing, or orally in accordance with Section 1118 , to disclosure of the communication, document, or writing. [¶] (2) The communication, document, or writing was prepared by or on behalf of fewer than all the mediation participants, those participants expressly agree in writing, or orally in accordance with Section 1118 , to its disclosure, and the communication, document, or writing does not disclose anything said or done or any admission made in the course of the mediation...." (§ 1122, subd. (a)(1), (2), italics added.)
Similarly, section 1124 provides, "An oral agreement made in the course of, or pursuant to, a mediation is not made inadmissible, or protected from disclosure, by the provisions of this chapter if any of the following conditions are satisfied: [¶] (a) The agreement is in accordance with Section 1118 . [¶] (b) The agreement is in accordance with subdivisions (a), (b), and (d) of Section 1118 , and all parties to the agreement expressly agree, in writing or orally in accordance with Section 1118 , to disclosure of the agreement. [¶] (c) The agreement is in accordance with subdivisions (a), (b), and (d) of Section 1118 , and the agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute." (§ 1124, italics added.)
Here, there is no evidence the parties expressly agreed in writing to the admissibility of the mediation-related communications or writings that were subject to objection. Thus, the admissibility of the alleged 2020 oral agreement was contingent on the parties proceeding "in accordance with Section 1118" or specified subdivisions of section 1118. (§§ 1122, subd. (a)(1), 1124.)
Section 1118 provides: "An oral agreement 'in accordance with Section 1118' means an oral agreement that satisfies all of the following conditions: [¶] (a) The oral agreement is recorded by a court reporter or reliable means of audio recording. [¶] (b) The terms of the oral agreement are recited on the record in the presence of the parties and the mediator, and the parties express on the record that they agree to the terms recited. [¶] (c) The parties to the oral agreement expressly state on the record that the agreement is enforceable or binding, or words to that effect. [¶] (d) The recording is reduced to writing and the writing is signed by the parties within 72 hours after it is recorded." (§ 1118, italics added.)
The alleged 2020 oral agreement meets none of the requirements of section 1118, let alone all of those requirements. Grewal has not identified any statutory exception that would have permitted the trial court to admit evidence of the alleged 2020 oral agreement and we have found none.
E. Grewal's Claim of Fraud in Connection with the Alleged 2020 Oral Agreement Is Insufficient to Overcome the Mediation Privilege
We also reject Grewal's argument that recognition of the mediation privilege creates an injustice because it allowed only the partial completion of an alleged part oral/part written agreement (i.e., the alleged 2020 oral agreement and the 2020 repurchase agreement) and allowed Singh to perpetrate a fraud upon him. This contention is insufficient to create an exception to the mediation privilege under the mediation statutes. Section 1124 speaks directly to this issue and provides, in relevant part, "[a]n oral agreement made in the course of, or pursuant to, a mediation is not made inadmissible or protected from disclosure by the provisions of this chapter if ... [¶] ... [¶] (c) The agreement is in accordance with subdivisions (a), (b), and (d) of Section 1118, and the agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute." (§ 1124, subd. (c), italics added.) Thus, even where a party is claiming fraud in connection with an oral agreement made during mediation, the oral agreement may only be admissible if it also satisfies subdivisions (a), (b), and (d) of section 1118, which we have already determined were not met.
Moreover, we conclude, in part II, post, that the alleged 2020 oral agreement, if true as alleged, was merely an agreement on the means of enforcing the 2010 oral agreement. Because we conclude in part II that the trial court did not err in determining the defense of unclean hands would bar recovery under the 2010 oral agreement, it follows the defense would likewise bar recovery under the alleged 2020 oral agreement.
F. Any Error Associated With the Trial Court's Admission of the 2020 Repurchase Agreement Was Both Invited and Harmless
Grewal also argues the trial court's application of the mediation privilege is "troubling in that it allow[ed] the . [c]ourt to consider some evidence from the mediation while barring the consideration of other evidence." The evidence Grewal is referring to is the 2020 repurchase agreement, which was admitted at trial upon the parties' stipulation. Grewal's contention lacks merit.
Here, the trial court only considered mediation-related evidence for the purpose of determining whether the mediation privilege applied. It did so without objection after notifying the parties that it would so proceed. In fact, when Singh's attorney expressed concern that he might be held to waive the mediation privilege by agreeing to such a procedure, Grewal's counsel stated, "I think it'll make it go a lot faster if we understand that there's a standing objection on [Singh's] part, other than having to object to each and every question that might-might come under that privilege."
Grewal does not provide any cogent argument or authority that the trial court could not proceed in the foregoing manner." 'In order to demonstrate error, an appellant must supply the reviewing court with some cogent argument supported by legal analysis and citation to the record.'" (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 146.) Moreover, because no objections were raised, any potential defect in the court's process was waived. (Platzer v. Mammoth Mountain Ski Area (2002) 104 Cal.App.4th 1253, 1260-1261.)
In fact, Grewal's counsel stipulated to admission of the 2020 repurchase agreement into evidence. Thus, any error in the trial court admitting the agreement into evidence was invited by Grewal." 'Where a party by his conduct induces the commission of error, he is estopped from asserting it as a ground for reversal' on appeal." (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.)
In addition, Grewal has an affirmative burden to demonstrate prejudicial error. (Scheenstra v. California Dairies, Inc. (2013) 213 Cal.App.4th 370, 403.) Our state Constitution provides, "No judgment shall be set aside, or new trial granted, in any cause, on the ground of misdirection of the jury, or of the improper admission or rejection of evidence, . . ., unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13.)"' "[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." '" (Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1069.)
Grewal has not demonstrated prejudicial error as a result of the trial court admitting evidence pursuant to the parties' stipulation. The trial court's SOD and judgment in this matter were in no way influenced by, or dependent upon, the 2020 repurchase agreement.
II. The Trial Court Did Not Err in Determining Claims Directly Related to the 2010 Oral Agreement Were Barred By the Unclean Hands Defense
"The doctrine of unclean hands rests on the maxim that' "he who comes into equity must come with clean hands." [Citation.]' [Citation.] '" 'It ... closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.'" [Citation.]' [Citation.] The decision whether to apply the unclean hands defense is a matter within the trial court's discretion. [Citation.] In exercising this discretion, the court 'must consider the material facts affecting the equities between the parties ...." (Farahani v. San Diego Community College Dist. (2009) 175 Cal.App.4th 1486, 1495-1496.) However, there must be substantial evidence to support application of the unclean hands defense. (Fibreboard Paper Products Corp. v. East Bay Union of Machinists, Local 1304, United Steelworkers of America, AFL-CIO (1964) 227 Cal.App.2d 675, 727 (Fibreboard Paper Products).)
The defense of unclean hands may be applied to both equitable and legal actions so long as "[t]he misconduct which brings the clean hands doctrine into operation . relate[s] directly to the transaction concerning which the complaint is made, i.e., it . pertain[s] to the very subject matter involved and affect[s] the equitable relations between the litigants." (Fibreboard Paper Products, supra, 227 Cal.App.2d at p. 728.)
Grewal contends the trial court erred in ruling the unclean hands defense barred his claim for unjust enrichment. He contends the court's ruling, which addressed the defense only as it pertained to the 2010 oral agreement, was therefore inapplicable to Grewal's unjust enrichment claims which are premised upon the alleged 2020 oral agreement. Because we have determined there is no admissible evidence to support the alleged 2020 oral agreement, this challenge will not aid Grewal on appeal.
Moreover, the alleged 2020 oral agreement, if true as alleged, was nothing more than an agreement upon means to enforce the 2010 oral agreement which the trial court found to be the product of misconduct "tantamount to fraud on the lender" and which "violate[d] principles of property law regarding proper recordation of legal title" by creating a false public record of ownership in the subject property. That determination was not in error.
A scheme to obtain a loan on real property based on false representations of true ownership is prohibited by law. For example, Penal Code section 532f states, in part: "A person commits mortgage fraud if, with the intent to defraud, the person does any of the following: [¶] (1) Deliberately makes any misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it be relied on by a mortgage lender, . . ., or any other party to the mortgage lending process. [¶] (2) Deliberately uses or facilitates the use of any misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process. [¶] (3) Receives any proceeds or any other funds in connection with a mortgage loan closing that the person knew resulted from a violation of paragraph (1) or (2) of this subdivision. [¶] (4) Files or causes to be filed with the recorder of any county in connection with a mortgage loan transaction any document the person knows to contain a deliberate misstatement, misrepresentation, or omission." (Pen. Code, § 532f, subd. (a); see also 18 U.S.C.A. § 1344 [bank fraud].)
The trial court was correct in its conclusion that the 2010 oral agreement was tantamount to fraud on the lender (Pen. Code, § 532f, subds. (a)(1)-(a)(3)) and that it violated principles of property law regarding proper recordation of legal title (id., § 532f, subd. (a)(4)).
Grewal cites to Shaw v. Shaw (1964) 227 Cal.App.2d 159 for the proposition that the unclean hands defense is only applicable where the misconduct in question directly relates to the parties' claims. (Id. at p. 166.) The case does not involve application of the mediation privilege. And, as mentioned, we have concluded the alleged 2020 oral agreement, if true as alleged, was directly related to the 2010 oral agreement which the trial court determined was barred by the unclean hands defense.
Grewal also cites to Shefronick v. Shefronick (1961) 191 Cal.App.2d 740, Holt v. Ravani (1963) 221 Cal.App.2d 213, and Braden v. Lewis (1953) 119 Cal.App.2d 84, for the proposition that one cannot accept the benefits of a transaction without also accepting its burdens. However, none of those cases involved agreements that were subject to the mediation privilege nor conduct that gave rise to an unclean hands defense. They do not aid Grewal's position.
Grewal cites to Corrie v. Soloway (2013) 216 Cal.App.4th 436, Kyablue v. Watkins (2012) 210 Cal.App.4th 1288, and Arya Group Inc. v. Cher (2000) 77 Cal.App.4th 610 for the proposition that "courts have enforced illegal contracts in order to avoid unjust enrichment and a disproportionately harsh penalty to the plaintiff." These cases are factually and meaningfully distinguishable from the case before us. However, it is unnecessary to elaborate further since, again, none of the cases involved situations where a court was asked to create a judicial exception to the mediation privilege in order to enforce an illegal contract. Consequently, they do not aid Grewal's appeal.
Finally, Grewal cites to Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 Cal.2d 199 in support of his argument that illegal contracts may be enforced to prevent unjust enrichment.
There, the court stated," 'The rule that the courts will not lend their aid to the enforcement of an illegal agreement or one against public policy is fundamentally sound. The rule was conceived for the purposes of protecting the public and the courts from imposition. It is a rule predicated upon sound public policy. But the courts should not be so enamored with the Latin phrase "in pari delicto" that they blindly extend the rule to every case where illegality appears somewhere in the transaction. The fundamental purpose of the rule must always be kept in mind, and the realities of the situation must be considered. Where, by applying the rule, the public cannot be protected because the transaction has been completed, where no serious moral turpitude is involved, where the defendant is the one guilty of the greatest moral fault, and where to apply the rule will be to permit the defendant to be unjustly enriched at the expense of the plaintiff, the rule should not be applied.'" (Id. at pp. 218-219.)
Grewal's reliance on Tri-Q is misplaced. As with the other cases Grewal cited, Tri-Q did not involve application of the mediation privilege or considerations for overcoming the privilege. Moreover, the considerations for enforcement of an illegal contract as stated in Tri-Q have not been met. Specifically, the alleged 2020 oral agreement is directly tied to the 2010 oral agreement-neither of which were completed; fraud is recognized as a crime of moral turpitude (People v. Chavez (2000) 84 Cal.App.4th 25, 29); and Singh cannot be said to be at greater fault than Grewal in connection with the 2010 oral agreement for it was Grewal who proposed the agreement and reaped the benefits of the agreement by obtaining a lower interest rate and, arguably, by avoiding or evading taxes on rental income he himself earned.
Substantial evidence supports the unclean hands defense, and the trial court did not abuse its discretion in concluding the defense barred claims related to the 2010 oral agreement. We do not find that the circumstances warrant creating a judicial exception to the mediation privilege as applied to the alleged 2020 oral agreement.
DISPOSITION
The judgment is affirmed. In the interests of justice, each party shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
WE CONCUR: DETJEN, J. SMITH, J.