Opinion
B159713.
7-30-2003
SHARI EUBANKS, Plaintiff and Appellant, v. CHARLES T. MATHEWS, Defendant and Respondent.
Bistline & Cohoon, Gregory D. Bistline and Ted H. Luymes for Plaintiff and Appellant. Mathews & Rager, Jeffrey A. Rager; Law Offices of Roxanne Huddleston and Roxanne Huddleston for Defendant and Respondent.
In the course of orally stipulating in open court to the terms of a settlement of an underlying case, plaintiff and appellant Shari Eubanks admitted her awareness that the settlement agreement contained a certain term. In the underlying case, Eubanks had been represented by defendant and respondent Attorney Charles T. Mathews. Eubanks later brought the instant action against Attorney Mathews for legal malpractice
for failing to disclose to her the same settlement agreement term. We affirm the summary judgment entered in favor of Attorney Mathews based on Eubankss admission in the Code of Civil Procedure section 664.6 proceeding; Eubanks cannot defeat summary judgment with a declaration that she was actually unaware of the settlement agreement term.
FACTS AND PROCEDURAL BACKGROUND
Attorney Mathews represented Eubanks in an underlying action against 26 East Colorado, her former commercial landlord ("landlord"). Eubanks had been evicted by landlord. The case proceeded to jury trial and, on April 30, 1998, the jury returned a verdict in Eubankss favor for compensatory damages in the amount of $ 599,808. The jury also found Eubanks had proven fraud by clear and convincing evidence. The trial court therefore set the case for a trial on punitive damages the next day.
That night, the parties negotiated a settlement. Pursuant to the agreement, Eubanks waived her right to punitive damages. In exchange for that waiver, the landlord was to immediately pay Eubanks $ 600,000. In addition, Eubanks was to receive a new five-year commercial lease with an option to renew for five years, on extremely favorable terms, with the right to sublet. There was a tenant currently in the premises ("current tenant"). The current tenant had entered into a five-year lease in 1995, with two 5-year options. Eubanks was to receive a new lease from landlord commencing "on the 30th day after the current lease on those premises expires or within 30 days after the current tenant vacates the premises."
On May 1, 1998, Eubanks and landlord entered into the settlement agreement in open court, pursuant to Code of Civil Procedure section 664.6. Attorney Mathews read the terms from the draft written settlement agreement into the record. Landlords counsel added "there is an existing lease with two [5-]year options," which meant that Eubanks "may not be able to take the premises" for up to 12 years. Attorney Mathews and Eubanks both agreed at that time that this fact had been disclosed to them, and Eubanks stated she was satisfied with the terms of the settlement. Apparently Eubanks was not disturbed by the current tenants options because, due to the extremely favorable terms of her promised lease, she could sublet the premises to the current tenant on much more favorable terms than the terms of the options, and still make a significant profit.
Pursuant to the settlement agreement, Eubanks would pay no rent at all for the first two years of her lease, and no more than $ 5,000 per month for the next three years. In contrast, the current tenant was then paying $ 8,450 per month, plus common area maintenance expenses, plus a percentage of its gross sales in excess of a certain amount.
The parties signed the written settlement agreement that did not expressly set forth the date the current tenants lease was set to expire, or the existence of the current tenants options. The jury was dismissed, and landlord paid Eubanks $ 600,000.
In October 1998, landlord gave Eubanks a copy of the current tenants lease. As disclosed at the Code of Civil Procedure section 664.6 proceeding, the lease had an initial term expiring in 2000, and two 5-year options. If both options were exercised, Eubanks would not get her new lease on the premises until 2010. After receiving the current tenants lease, Eubanks and Attorney Mathews did nothing to indicate to landlord that the current tenants options had been unknown to them.
In September 2000, as the initial term of the current tenants lease was coming to a close, Attorney Mathews, on behalf of Eubanks, wrote the current tenant and offered to sublet the premises to the current tenant on more favorable terms than the options in the current tenants lease. The current tenant refused for reasons that are not clear from the record.
Attorney Mathews, on behalf of Eubanks, then filed a motion in the underlying action to enforce or set aside the settlement agreement. In support of the motion, Attorney Mathews and Eubanks both filed declarations stating they had not known about the current tenants options at the time of the settlement agreement and had instead been led to believe the current tenants lease expired in 2000. Landlord vehemently disagreed, stating that the current tenants options had been disclosed, and the settlement had been entered into with the understanding that Eubanks might not get possession of the premises until 2010. Neither party obtained a copy of the transcript of the proceeding in which the settlement terms were placed on the record. Instead, they utilized declarations based on their recollection of events.
The trial courts tentative ruling was to deny the motion, and the parties agreed to mediate their dispute. Ultimately, landlord and Eubanks, who was represented by new counsel, reached a second settlement, by which Eubankss lease rights under the first settlement agreement were waived in consideration of a further payment of $ 200,000.
Eubanks then brought the present action against Attorney Mathews for professional negligence, fraud, and breach of contract. Eubanks alleged Attorney Mathews knew or should have known of the current tenants options at the time of the first settlement agreement, but instead falsely represented to Eubanks that she would get possession of the property in 2000, thereby inducing her to enter into the first settlement agreement and waive her right to punitive damages.
Eubanks also alleged Attorney Mathews breached their retainer agreement by overcharging her, an argument not pursued on appeal. Attorney Mathews filed a cross-complaint to recover his share of the additional $ 200,000 paid by landlord; he subsequently voluntarily dismissed his cross-complaint.
Attorney Mathews moved for summary judgment, on the basis that he did not violate the standard of care as he had not known about the options at the time of the first settlement agreement. This motion was denied, on the ground Eubanks had raised a triable issue of fact by relying on landlords counsels declarations that the options had been disclosed.
Thereafter, in April 2002, Attorney Mathews obtained a transcript of the May 1, 1998 proceeding in which the terms of the first settlement had been placed on the record. Attorney Mathews realized that his recollection of events had been mistaken. The options had been disclosed on the record, and both Attorney Mathews and Eubanks had agreed to the first settlement after the disclosure. Based on this transcript, Attorney Mathews renewed his summary judgment motion, on the basis that the options had been fully disclosed. Eubanks opposed the renewed motion with a declaration that she had not heard the disclosure in open court. The trial court concluded Eubankss on-the-record agreement to the terms of the fully-disclosed settlement was dispositive and granted summary judgment. Eubanks filed a timely notice of appeal.
DISCUSSION
Standard of Review
"A defendant is entitled to summary judgment if the record establishes as a matter of law that none of the plaintiffs asserted causes of action can prevail. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107, 252 Cal. Rptr. 122, 762 P.2d 46, citations omitted.) The pleadings define the issues to be considered on a motion for summary judgment. (Sadlier v. Superior Court (1986) 184 Cal. App. 3d 1050, 1055, 229 Cal. Rptr. 374.) As to each claim as framed by the complaint, the defendant must present facts to negate an essential element or to establish a defense. Only then will the burden shift to the plaintiff to demonstrate the existence of a triable, material issue of fact. (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal. App. 3d 1061, 1064-1065, 225 Cal. Rptr. 203.)" (Ferrari v . Grand Canyon Dories (1995) 32 Cal.App.4th 248, 252.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) We review orders granting or denying a summary judgment motion de novo. (FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69, 72; Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 579.) We exercise "an independent assessment of the correctness of the trial courts ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law." (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222.)
Admission During Code of Civil Procedure section 664.6 Proceeding
Because of the pivotal effect of the transcript of the May 1, 1998 hearing, we set forth the pertinent parts at length. Initially, the reported hearing commenced ex parte in the trial courts chambers, so Attorney Mathews could place the terms of his compensation on the record. During the chambers proceedings, Attorney Mathews offered Eubanks the opportunity to raise any questions regarding the terms of the agreement. Eubanks stated, "The only question I had, and I think I wanted to and I think were going to get it is a copy of [— Someones] in my space right now, and I wanted to see their lease and when it should be up. Because its not up until 2000 something. Because it was my fear that what they might do behind my back was renew their lease at a lesser rate to keep them in and keep me out, which they could do without me knowing."
After further discussion, the proceedings continued in open court in the presence of Eubanks, Attorney Mathews, landlord, and landlords counsel, for the purpose of putting the terms of the first settlement agreement on the record. Attorney Mathews then read the written settlement agreement into the record. When finished, the court asked whether each side was to bear its own expenses; Attorney Mathews agreed. The following colloquy then occurred:
"[Landlords Counsel]: One brief comment, your honor.
"The Court: Yes.
"[Landlords Counsel]: I just want it to be clear for the record that there is an existing lease with two [5-]year options.
"[Attorney] Mathews: Yes.
"[Landlords Counsel]: And that has been described to the plaintiff and so that would be the terms under which the current lease exists.
"[Attorney] Mathews: Thats been disclosed.
"The Court: So in other words, the plaintiff may not be able to take the premises for 10 years from now.
"[Landlords Counsel]: Even longer, your honor.
"The Court: Could be up to 12 years. Plaintiff is well aware of that?
"[Attorney] Mathews: Yes.
"The Court: Ms. Eubanks, you have been in court. You have heard the terms of the settlement agreement. I presume you have talked to your lawyer prior to this morning about the terms of the settlement, have you not?
"Ms. Eubanks: Yes.
"The Court: And the record will reflect that you did have an in camera proceeding[] with the court in regard to this settlement. [P] Maam, are you satisfied with the terms of the settlement?
"Ms. Eubanks: Yes, sir.
"The Court: All right. And do you think that you understand and believe that you know the terms of the settlement?
"Ms. Eubanks: Yes, sir."
Eubanks and landlord then agreed to the terms of the settlement.
If Eubanks was aware of the current tenants lease options at the time of the first settlement agreement, her malpractice action against Attorney Mathews is unsupported. Attorney Mathews submitted a transcript in which Eubanks admitted knowing the options existed, because, in open court, she acknowledged her understanding of the terms of the first settlement agreement, only seconds after the options had been disclosed on the record.
Therefore, based on the transcript alone, Attorney Mathews met his burden as movant on summary judgment, and the burden was shifted to Eubanks to raise a triable issue of material fact. Eubanks attempted to raise a triable issue of fact with a declaration that, although she was at the hearing and spoke as reported in the transcript, she had not heard the options disclosed and was simply agreeing to the courts questions on Attorney Mathewss advice. This raises the question whether Eubanks may defeat summary judgment by challenging a clear admission at a Code of Civil Procedure section 664.6 hearing with a contradictory declaration.
Triable Issue of Material Fact
"The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.) The purpose of a summary judgment motion is to determine whether there is a triable issue of material fact. (Id . at p. 845.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Id. at p. 850.)
Where a defendant moves for summary judgment and presents evidence that one or more element of the plaintiffs cause of action cannot be established by the plaintiff, the plaintiff must submit evidence demonstrating a genuine issue of material fact. That is, the plaintiff must submit "substantial evidence" of the existence of a material fact. (Mikialian v. City of Los Angeles (1978) 79 Cal. App. 3d 150, 161, 144 Cal. Rptr. 794.)
"Substantial evidence is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.] Substantial evidence . . . is not synonymous with "any" evidence. Instead, it is "substantial proof of the essentials which the law requires." [Citations.]" (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.)
All evidence is not substantial evidence. (Roddenberry v. Roddenberry, supra, 44 Cal.App.4th at p. 652.) In the summary judgment context, a declaration that simply contradicts a prior admission or concession is generally not acceptable as substantial evidence. (Ibid.) Admissions and concessions have "a very high credibility value." (DAmico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22, 112 Cal. Rptr. 786, 520 P.2d 10.) "This is especially true when . . . the admission is obtained not in the normal course of human activities and affairs but in the context of an established pretrial procedure whose purpose is to elicit facts." (Ibid.) Declarations contradicting clear admissions or concessions may be disregarded as "irrelevant, inadmissible or evasive." (Gray v. Reeves (1977) 76 Cal. App. 3d 567, 573, 142 Cal. Rptr. 716.) A party may not "rely on contradictions in his own testimony to create a triable issue of fact and thereby defeat a summary judgment motion." (Rivera v. Southern Pacific Transportation Co. (1990) 217 Cal. App. 3d 294, 299, 266 Cal. Rptr. 11.)
Admissions elicited in the context of a pretrial judicial procedure may be referred to as conclusive judicial admissions. Frequently, conclusive judicial admissions are found in prior deposition testimony. (E.g., DAmico v. Board of Medical Examiners, supra, 11 Cal.3d at pp. 21-22; TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 453-454; Mikialian v. City of Los Angeles, supra, 79 Cal. App. 3d at pp. 159-163; Leasman v. Beech Aircraft Corp. (1975) 48 Cal. App. 3d 376, 382, 121 Cal. Rptr. 768.) However, the rule is not limited to prior deposition testimony. Conclusive judicial admissions may be found in prior declarations, prior representations to the court, admissions in pleadings, and a long history of litigation conduct. (Roddenberry v. Roddenberry, supra, 44 Cal.App.4th at p. 654.) "Whatever the nature of the evidence, truth is an ascendant value in litigation. Not every bald assertion rises to the dignity of substantial evidence. Transparent prevarication is not an acceptable basis for decision." (Ibid.)
Code of Civil Procedure section 664.6 provides a procedure for enforcement of settlements when stipulated by the parties in writing or orally before the court. The procedure is designed to allow summary enforcement of settlement agreements when requirements "that decrease the likelihood of misunderstandings are met. Thus the statute requires the "parties" to stipulate in writing or orally before the court that they have settled the case. The litigants direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. [Citations.] It also protects parties from impairment of their substantial rights without their knowledge and consent. " (Johnson v. Department of Corrections (1995) 38 Cal.App.4th 1700, 1707.)
Thus, admissions made in the course of oral, on the record, in open court Code of Civil Procedure section 664.6 proceedings should be as conclusive as other judicial admissions. The purpose of the Code of Civil Procedure section 664.6 proceeding is to impress upon the parties the seriousness and finality of their decision to settle and to minimize the possibility of conflicting interpretations of the terms of the settlement agreement. The proceedings are transcribed by the court reporter in order to foreclose future disagreement. Although, such an admission is not made under oath, the circumstances under which such an admission is elicited are of such seriousness and finality that it is appropriate to treat the admission as conclusive.
The doctrine of conclusive judicial admissions is akin to the equitable doctrine of judicial estoppel, precluding a party from taking inconsistent positions in legal proceedings. (Law Offices of Ian Herzog v. Law Offices of Joseph M. Fredrics (1998) 61 Cal.App.4th 672, 678; Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181; Prilliman v. United Airlines, Inc. (1997) 53 Cal.App.4th 935, 957.)
In this case, during the course of oral, on the record, in open court, and before the trial court settlement proceedings pursuant to Code of Civil Procedure section 664.6, Eubanks admitted that she was aware of the two 5-year lease options. She attempts to contradict that judicial admission by a declaration that she did not know of the existence of the options. However, Eubankss transcribed admission during the court proceedings is conclusive. She concedes it would be conclusive as to landlord. We discern no reason why it should not also be conclusive in derivative attorney malpractice proceedings. The transcript conclusively establishes that she knew of the existence of the options. Thus, her declaration does not constitute substantial evidence that she was unaware of the options and her declaration does not create a triable issue of material fact defeating Attorney Mathewss motion for summary judgment.
We are aware that in other proceedings Attorney Mathews also declared under oath that he was unaware of the options. We are troubled by this declaration of Attorney Mathews, since the representation must have been at best negligent or intentionally false. However, the truth of the knowledge of both Attorney Mathews and Eubanks as to the existence of the options appears in the transcript of the settlement proceedings. As we noted previously, truth is an ascendant value in litigation.
Other uncontradicted evidence buttresses the May 1, 1998 conclusive judicial admission that Eubanks knew of the existence of the options. During in camera proceedings just prior to the settlement, Eubanks told the judge that the current tenants lease was "not up until 2000 something." Had she not been informed of the options, she would have believed the lease expired in exactly 2000, not sometime thereafter. During the same in camera proceedings, Eubanks told the judge she feared landlord would "renew [the current tenants] lease at a lesser rate to keep them in and keep me out." This statement implied Eubankss knowledge of the current tenants options to renew. If there were no options, the lease would simply expire in 2000 and landlord would be unable to renew the lease with the current tenant under the terms of the first settlement agreement. Subsequently, Eubanks was in the courtroom when Attorney Mathews expressly admitted that Eubanks knew she might not obtain possession of the property for 12 years. It is highly improbable that Attorney Mathews would make such a representation to the court with Eubanks standing next to him if Eubanks had in fact not been told of the options. Further, in a letter of the same date sent by Attorney Mathews to Eubanks and countersigned by her, the terms of the first settlement were set forth. Eubanks was to receive an immediate substantial cash payment. The letter continued, "The remainder of the award is totally contingent on what the [current] tenant does in the future. It is certainly unknown when or if we will collect any additional sums." This letter clearly contemplates the current tenants option to renew the lease and the uncertainty of any further financial benefits under the first settlement agreement in light of that option to renew.
In summary, the existence of the current tenants options to renew the lease were disclosed by landlord in open court, on the record and before the trial court. Immediately following the disclosure, the trial court asked Eubanks whether she understood the terms of the first settlement agreement. Eubanks answered in the affirmative. Eubanks admitted she was aware of the existence of the options. If there were any doubt about the admission, the balance of the uncontradicted evidence confirms the judicial admission. The only evidence proffered to contradict the admission is the self-serving declaration of Eubanks that she was nevertheless not aware of the options. As we have discussed, this declaration does not constitute substantial evidence and does not create a triable issue of fact. Since Eubanks was unquestionably aware of the existence of the options, Attorney Mathews could not have committed malpractice by failing to advise her of the options.
DISPOSITION
The judgment is affirmed. In the interest of justice, the parties are to bear their own costs on appeal.
We concur: ARMSTRONG, J., MOSK, J.