Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. Nos. RG06265029, RG06284250, RP06278396, RG06286307
Pollak, Acting P.J.
This appeal is the latest salvo in an internecine dispute between six siblings concerning the management of assets left to them by their deceased parents. The parents made appellant Jean Gerards, one of the siblings, sole trustee of a family trust. In 2003, the other five siblings (James Randono, Joanna Sentissi, John J. Randono, Jerald R. Randono, and Jayne Van Stone (collectively, the Randono siblings)) sued Gerards as an individual, in her capacity as trustee of the family trust that held, among other assets, partnership interests in a partnership the sole asset of which was a commercial warehouse, and as general partner of the partnership (Randono v. Gerards (Super. Ct. Alameda County, 2005, No. RG03081507) (Randono I).) That complaint alleged that Gerards and a business she primarily owned and operated (formerly the parents’ business that had been operated out of the warehouse) had failed to pay rent for occupancy of the warehouse, that Gerards had overcharged the trust for her services as trustee and had misappropriated funds from the trust. The Randono siblings ultimately dismissed Gerards in her capacity as trustee and the parties settled all claims concerning her management of the warehouse.
After the trial court denied motions by both parties to enforce the terms of the settlement agreement, another round of litigation followed. Four separate cases ultimately were filed between the parties, challenging both the parties’ respective compliance with the terms of the settlement in Randono I and, more germane to the present appeal, numerous claims against Gerards for breach of her duties as trustee of the family trust. These four cases were consolidated and are now designated as Randono II. Following a lengthy court trial, the trial court issued a comprehensive statement of decision largely, though not entirely, in the Randono siblings’ favor, holding Gerards liable to both the trust and the partnership for substantial sums and removing Gerards as trustee of the trust. Gerards appeals from the judgment that followed, arguing without reference to any specific ruling that the Randono siblings were precluded from asserting their claims related to mishandling of the trust and misappropriation of trust assets because those claims were included in the general release that was a part of the settlement of Randono I. The trial court ruled in denying various pretrial motions and in its statement of decision that the release did not apply to Gerards’ actions as trustee except as to her management of the warehouse and therefore did not preclude assertion of the claims against her in this litigation. We agree and therefore shall affirm.
Background
In 2003, the Randono siblings filed Randono I. The amended complaint was brought against Gerards individually, East 12th Street Partners (the partnership), and Gerards in her capacity as general partner of the partnership and as trustee of the Randono Family 1987 Revocable Trust (the family trust), for breach of contract, breach of fiduciary duty, fraud, rescission, and financial abuse under Welfare and Institutions Code section 15657. The amended complaint alleged, among other things, that as trustee Gerards breached her fiduciary duty “by engaging in self-dealing and leasing the warehouse to herself or her business, Diesel Parts Company (Diesel Parts), without making rental payments to the partnership,” that the Randono siblings had “received no benefit whatsoever from the rental value of the warehouse and have received no profits from the operation of any business in which the trust has an interest,” and that “[d]espite repeated requests by plaintiffs and a statutory duty imposed under [the] Probate Code..., Gerards repeatedly failed or refused to provide an accounting of trust assets and income.” The siblings sought “an amount equal to the value of trust assets and partnership assets that were appropriated by Gerards for her personal benefit. Plaintiffs are also entitled to consequential damages equal to the lost earning potential of said assets.” The siblings also sought other relief, including the removal of Gerards as trustee of the family trust.
On October 21, 2004, the Randono siblings filed a request for dismissal without prejudice of the amended complaint against Gerards “only in her capacity as trustee of the Randono Family 1987 Revocable Trust; and vs. all defendants on 4th cause of action (rescission for lack of capacity, etc.).” The dismissal was entered the same day. On October 25, the parties appeared before the trial court and placed on the record the terms of a settlement agreement pursuant to Code of Civil Procedure section 664.6. The settlement was never memorialized in writing, nor was a judgment entered embodying the terms of the settlement. The parties rely solely on the reporter’s transcript of the hearing as evidence of the terms of the settlement agreement.
The parties to the settlement agreement were recited to be the Randono siblings, the partnership, and “Jean Marie Gerards, in her individual capacity, and also in her capacity as general partner of the East 12th Street Partners and also in her capacity as trustee of the Randono Family 1987 Revocable Trust... [i]n its capacity as general partner of the East 12th Street Partners.” The settlement provided that November 17, 2004, would be the deadline for Gerards to produce “conceptual plans for the development of the upstairs” of the warehouse, and that Gerards and James Randono would each “designate a person entitled an ‘elector’ to jointly select a third party entitled the ‘neutral’ and the neutral will appoint a property manager to take over management of the building by November 3, of 2004. The neutral shall also monitor its development and negotiate any changes in the development of the plans. The neutral shall negotiate any lease with Jux Beck [a commercial tenant] on their behalf.” Rent was to be paid to the new property manager. The authority of the neutral and the property manager were delineated. “A unanimous vote is needed to sell the building before the completion of the upstairs construction, if the partnership agrees to develop the downstairs of the building. The partnership agrees that any vote to sell the building will require a unanimous vote by all parties to sell the building before Jux Beck completes construction on the downstairs. Thereafter, all action by the partnership will be on a majority vote. If Jux Beck does not complete the upstairs project, then the partnership can elect to sell the building upon majority vote.” Further, “Mr. Beck will have six months after the partnership approves of plans for the downstairs of the building to obtain permits from the City of Oakland. Thereafter, he must complete construction within two years of having received permits from the City of Oakland, after which time, the partnership may elect to sell the building based upon a majority vote.”
Gerards agreed to “cause Diesel Parts Company to vacate the downstairs by January 1, 2005, leaving the downstairs room clean, or satisfactory to the successor client. If Diesel Parts has not vacated the downstairs or has not been made ready for a successor tenant, then Gerards shall pay rent to the partnership from January 1, 2005, an amount equal to $6,000 per month for one year, that is, until January 1, 2006, and thereafter will be obliged to pay rent for the downstairs in an amount equal to whatever Jux Beck has done at the time to pay for his lease of the upstairs based upon the rent schedule that applies to the upstairs.” If Beck did not lease the downstairs, the neutral would have the ability to lease the downstairs.
It was also agreed that Gerards would execute a promissory note, secured by her interest in the warehouse, to the Randono siblings for $180,000, with a potential credit of $20,000 if that amount was recovered from James Floyd, who had acted as a notary and attorney for John Randono, Sr., Julia Randono and Gerards in connection with the disputed transfer of the general partnership interest in the partnership to Gerards. Gerards assigned any claims she had against Floyd for malpractice to the siblings as part of the settlement.
The parties agreed to waive the provisions of Civil Code section 1542 (hereafter section 1542). The trial court clarified, “So everyone understands this is a mutual release of any and all claims arising out of the management, rental or development of the property,” and again, “the parties are also mutually agreeing to release each other in regards to any and all claims arising out of the use and rental management development of the property known as 1900 East 12th Street in Oakland, California.” As the court then asked, “Are plaintiffs also agreeing to dismiss this action—” Gerards’ attorney interrupted and said, “No,” and the court finished its question, “with prejudice?” There was no response from counsel for the siblings. The court then continued, “Okay. So the court is not retaining jurisdiction, and any further action will have to be based on this settlement in a new action, okay?” Both attorneys replied, “Understood.” The hearing concluded with the court observing, “We will show this case as being dismissed pursuant to the settlement agreement.” The record before us contains no written order of dismissal.
On August 1, 2005, the Randono siblings settled with Floyd for the sum of $50,000.
The first of the four consolidated actions before us was filed on April 14, 2006, by Gerards and the partnership against the Randono siblings and their attorney, Benjamin Gale. (Gerards v. Randono (Super. Ct. Alameda County, 2008, No. RG06265029).) This complaint contained several causes of action based on allegations that the Randono siblings and Gale failed to comply with the terms of the settlement agreement in Randono I in numerous respects. One of the siblings, Joanna Sentissi, and the partnership cross-complainedagainst Gerards and her attorney Thomas Tagliarini, alleging their breach of the settlement agreement in numerous respects and other related causes of action. The cross-complaint alleged that under the terms of the settlement, Gerards did not have the authority to file suit on behalf of the partnership or to use partnership funds to pay more than $50,000 of her attorney fees incurred in the Randono I litigation, as she allegedly had done.
The next action was filed on August 15, 2006, by Gerards on behalf of the family trust against the partnership for breach of contract, alleging that the trust had loaned money to the partnership, that the partnership had “repaid some, but not all of the loaned money,” and that the partnership still owed the trust $131,222.41 in principal and interest. (Randono Family 1987 Revocable Trust v. East 12th Street Partners (Super. Ct. Alameda County, 2008, No. RG06284250).)
On August 28, 2006, Gerards filed another complaint against the partnership and the Randono siblings for dissolution of the partnership, partition, accounting, and for declaratory relief. (Gerards v. East 12th Street Partners (Super. Ct. Alameda County, 2008, No. RG06286307).)
This complaint alleged that the Randono parents named Gerards as “the general partner of the family partnership” and that she “operated as the general partner from the date of its inception until October 25, 2004, when she voluntarily withdrew as the general partner.” The complaint alleged that the partnership agreement provided that the partnership would be dissolved if the general partner withdrew. Gerards further alleged that under the terms of the October 2004 settlement agreement the partnership was to be reorganized as a limited liability company or as a corporation. She also alleged that the Randono siblings had sold the warehouse and that she had not received the full 17.5 percent of the proceeds of the sale, to which she allegedly was entitled by reason of her sole ownership of the 1 percent general partnership interest.
On July 10, 2006, James Randono filed the fourth of the consolidated actions, a petition to surcharge and remove Gerards as trustee and appoint Joanna Sentissi as the new trustee. (In re The Amended and Restated Randono Family 1987 Revocable Trust (Super Ct. Alameda County, 2008, No. RP06278396).) The petition alleges that the trustee’s 2003 accounting failed to account for numerous assets of the trust and reflected many sizable improper trust expenditures.
On September 13, 2006, the trial court on its own motion consolidated the three complaints, the cross-complaint, and the petition.
After the court denied a series of Gerards’ motions challenging the siblings’ right to proceed on the claims against her, contending that all such claims had been released as part of the settlement agreement in Randono I, a court trial was held over 20 days. A referee was appointed to make recommendations with respect to numerous accounting issues, and his report and objections thereto were considered by the court. At the conclusion of the trial, the court issued a detailed statement of decision. The court ordered Gerards to pay $121,349.04 to the partnership, found due from the accounting that was requested in the cross-complaint in action No. RG06265029, and $34,289.19 to the family trust, also found due from the accounting, plus $136,217.67 to the family trust as a surcharge for excessive compensation she was paid by the trust. The trial court ordered Gerards removed as trustee and appointed Sentissi as successor trustee. The court also ordered the partnership dissolved. James Randono was ordered to pay the partnership $4,875.18 in travel expenses that he had charged to the partnership. The partnership was not found to owe any money to the trust. Finally, the court ordered the disputed 1 percent general partnership interest divided in six equal shares between the siblings.
The cross-complaint alleged that after the entry of the settlement agreement Gerards had used partnership funds to pay her attorney fees in Randono I, and failed to collect and pay rent to the partnership for Diesel Parts’ use of the warehouse. The trial court ordered Gerards to repay the partnership $76,949.04 that the partnership had paid for her attorney fees and to pay $44,400.00 in rent that accrued after the settlement.
Discussion
Gerards does not identify any specific ruling of the trial court with which she takes issue, nor does she state precisely what relief she requests this court to grant. Portions of the trial court’s judgment were in her favor, so we may safely assume she does not seek complete reversal of the judgment. The thrust of her argument, however, is that the claims against her, which are primarily for breach of her duties as trustee, were released as part of the settlement of Randono I and therefore could not properly be asserted in this litigation. She made this argument in various procedural postures in the trial court and makes essentially the same argument on appeal.
Gerards demurred to the Randono siblings’ cross-complaint in action No. RG06265029 “on the ground that the attorney’s fee issue as stated in that cause of action was already raised and resolved by a prior litigation between these parties in [Randono I]. That matter was previously settled [and] [t]he settlement agreement... included a Civil Code § 1542 waiver and it also required the plaintiffs in that action, including cross-complainant... to dismiss their action against Gerards, with prejudice. Therefore, cross-complainant is now barred from re-litigating this issue in a new lawsuit.” The same grounds of demurrer were addressed to the causes of action for breach of contract, breach of fiduciary duty, conversion, and for an accounting and, in a subsequent pleading, to the probate petition asserting Gerards’ breach of her duties as trustee. Gerards also made an oral “motion in limine to preclude a re-litigation of trustee issues previously settled by the parties.” Subsequently Gerards moved for a nonsuit on the petition to remove her as trustee with respect to “trustee issues previously settled by the parties.” This motion was “sought on the ground this issue was previously raised, litigated and settled in the previous litigation and, therefore, conclusively decided. There is, therefore, no evidence which would entitle the petitioner to re-litigate this settled issue.”
The trial court overruled both demurrers on the ground that it could not judicially notice the truth of the contents of the settlement agreement nor the deposition testimony on which Gerards relied in support of the demurrer. The trial court clearly was correct that the matter could not be resolved on the pleadings since nothing on the face of the complaint indicated that the claims were legally insufficient and the court could not take judicial notice of the content of the settlement agreement. (See, e.g., Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)
The trial court observed that this motion appeared to be a motion for reconsideration of the ruling on the demurrer, and also that what Gerards really sought was a dismissal of the entire action. Gerards affirmed that this was correct. The court then stated, “that’s not a motion in limine,” and Gerards’s attorney agreed. He withdrew the motion in limine and stated that he would bring a motion for nonsuit at the proper time.
Gerards also filed a motion for “nonsuit to preclude litigation of a settled issue regarding the payment of attorney’s fees in the previous litigation.” This motion again argued that “this issue was previously raised, litigated and settled in the previous litigation and, therefore, evidence of such payments in this litigation are irrelevant to the current issues before this court....” Gerards does not take explicit issue with the denial of this motion in her appellate briefs.
The trial court denied all of these motions and in its ultimate decision on the merits expressly rejected Gerards’ argument that the claims against her had been released in the prior settlement. In its statement of decision, the trial court explained its ruling as follows: “[T]he Randono siblings are precluded from relitigating those claims in Randono I that were dismissed with prejudice as part of the settlement agreement, namely, the claims based on Gerards’ conduct in her individual capacity and in her capacity as general partner. They are not, however, prevented from litigating in the present case those claims in Randono I that were dismissed without prejudice, i.e., the claims brought against Gerards in her capacity as trustee. [¶] First, it is clear from the record that the trustee was not named as a party to the Randono I settlement agreement. At the beginning of the hearing, the parties to the settlement agreement were identified on the record as ‘Jean Marie Gerards, in her individual capacity, and also in her capacity as general partner of the East 12th Street Partners and also in her capacity as trustee of the Randono Family 1987 Revocable Trust in its capacity as general partner of the East 12th Street Partners.’... In other words, neither the trust nor Gerards as trustee, other than in the trustee’s role as general partner, was a party to the settlement agreement. This express qualification limited the release of claims against the trustee to those specifically arising out of the trustee’s role as general partner of the partnership.”
The court continued, “Secondly, the trial judge, having personally monitored the settlement negotiations for 2 1/2 days, made it clear for the record that ‘everyone understands this is a mutual release of any and all claims arising out of the management, rental or development of the property....’... Neither Gerards nor her attorney voiced any objection to this statement by the judge. Indeed, it is clear from the terms of the settlement agreement that its focus was to (1) devise a method by which the parties would transfer management and control of the partnership from Gerards to a neutral party, (2) require Diesel Parts to pay back rent and continue paying rent if it remained on the property, and (3) create a plan to either develop or sell the property. There was no mention at all in the settlement agreement of any claim involving the trust, as those claims had already been dismissed without prejudice and were no longer at issue. [¶] Thus, the Randono siblings are not precluded by the settlement agreement in Randono I from bringing their claims against Gerards in the present action for breach of her fiduciary duties as trustee. Nor are they precluded, as Gerards contends, from challenging the validity of the assignment of the 1% general partner interest to Gerards, since Gerards made that assignment in her capacity as trustee.”
The trial court concluded, “Finally, the court rejects Gerards’ argument that the mutual waiver of rights under Civil Code § 1542 in the Randono I settlement agreement reflects the parties’ intent to settle all claims, including claims by the Randono siblings against Gerards in her capacity as trustee and Gerards’ claim of entitlement to the 1% general partner interest. Section 1542 provides that a general release does not extend to material claims that were unknown or unsuspected at the time of the general release. The claims based on Gerards’ conduct as trustee were well known by the parties at the time they settled Randono I and were deliberately omitted from the release.”
Gerards argues that the dismissal of Randono I precludes relitigation of the trustee issues because these were dismissed in connection with the prior settlement agreement. She recites various parts of the complaint in Randono I that dealt with her actions as trustee. However, as the trial court noted, several days before the settlement was entered, Gerards, in her capacity as trustee of the family trust, was dismissed from the action without prejudice. Thus, assuming that the balance of the action was in fact dismissed following entry of the settlement agreement, the dismissal at that point was not a dismissal of any claims against her in her capacity as trustee.
Gerards next argues that the waiver of section 1542 acted as a general release of all claims between the parties, both known and unknown. She compares this case to Chen v. Interinsurance Exchange of the Automobile Club (2008) 164 Cal.App.4th 117. In that case a settlement offer under Code of Civil Procedure section 998 provided that “if the plaintiffs reject a defendant’s offer to compromise and then fail to win a more favorable judgment, the plaintiffs cannot recover their postoffer costs and must pay the costs the defendant incurred after the offer.” (Id. at p. 121.) The plaintiffs rejected a settlement offer and prevailed at trial but did not win a more favorable judgment, and were thus held liable for the defendant insurer’s postoffer costs, which exceeded their recovery. Plaintiffs argued that they had rejected the settlement offer because they believed it encompassed another unrelated lawsuit they had filed against their insurance company. The Court of Appeal reversed the cost order, holding that the insurance company’s demand for a “general release of all claims” in its section 998 offer was ambiguous, reasoning that if plaintiffs had accepted the offer, the insurance company might have then argued in the separate pending litigation that plaintiffs had agreed to release “all claims” against the company. The court reasoned that the company’s argument would not be frivolous because “section 1542 provides that a general release does not affect unknown claims; by implication, a general release thus covers all known claims.” (Id. at p. 122.)
Section 1542 provides that “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” The parties expressly waived this provision as part of the settlement in Randono I.
Gerards also compares the situation here to that in Winet v. Price (1992) 4 Cal.App.4th 1159. In that case Winet engaged Price to perform legal work. Among other work, Price drafted a partnership agreement for an entity in which Winet was a general partner. Price later sued Winet for unpaid fees and the parties settled. The settlement “provided for a release of ‘any and all... claims,... damages and causes of action whatsoever, of whatever kind or nature, whether known or unknown, or suspected or unsuspected... against any other Party....” (Id. at pp. 1162-1163, italics omitted.) The release went on to specify that it applied to any claims “ ‘Arising out of or in any manner connected with the performance of legal services by [Price or his law firms] for [Winet or his entities], or any act or omission by any Party in connection with said legal services or any request for the performance of legal services.’ ” (Id. at p. 1163.) Finally, the release specified that there was a chance that one of the parties would suffer further damages from the transactions covered by the release and that the parties assumed that risk and waived any such further liability. (Ibid.) Fifteen years later, the limited partners sued Winet seeking, among other things, “declaratory relief and reformation because certain ambiguous language in the... partnership agreement did not accurately reflect the agreement or conform to the representations upon which the limited partners relied when they purchased their interests.” (Id. at p. 1164.) Winet sought indemnity from Price and the trial court granted Price’s motion for summary judgment on the ground that the release covered the current claim. The appellate court affirmed. (Id. at pp. 1164-1165.)
This case is distinguishable from both Chen and Winet. In Chen, the court’s broad statement concerning section 1542 applied only to claims that might exist between the parties to a settlement agreement. Since Gerards in her capacity as trustee of the family trust was no longer a party to the litigation and was a party to the settlement agreement only in the capacity of general partner of the partnership, the release and waiver of section 1542 did not apply to her in her capacity as trustee. In Winet the court noted that “In no fewer than three distinct places the parties declared their intention to release each other from all claims, known or unknown, suspected or unsuspected, arising from either the facts described in the collection lawsuit (which included drafting the partnership agreement Winet now claims was inadequately documented) or any act or omission in connection with the legal services Price rendered to Winet.” (Winet v. Price, supra, 4 Cal.App.4th at pp. 1166-1167.) Here, by dismissing without prejudice Gerards in her capacity as trustee, the siblings made clear that they intended to reserve their claims against her for her actions as trustee. As the trial court noted in its statement of decision, the parties were aware of the trustee issues and intentionally excluded them from the scope of the release.
More instructive is the decision in Butler v. Vons Companies, Inc. (2006) 140 Cal.App.4th 943. Butler, an employee of Vons, was involved in an altercation with his manager, Furman. Butler was suspended as a result and his union filed a grievance on his behalf. As part of the resolution of the grievance, Butler and the union signed a release that included a waiver of section 1542. When Butler filed a complaint for racial discrimination and harassment a short time later, Vons moved for summary judgment on the ground that the complaint was barred by the release and waiver. The trial court granted the motion but the appellate court reversed, holding that the release was ambiguous. The court stated that “it is reasonable to conclude that the union and the employer resolved only the labor dispute. Thus, the circumstances that the principal parties to the Release Agreement were the union and Vons, and that Butler is referred to throughout in the agreement as the grievant, reasonably suggest that the intent of these parties was nothing more or less than to resolve the Furman grievance, as well as unanticipated claims that could arise from that grievance.” (Id. at pp. 948-949.)
As in Butler, the language of the settlement agreement recited on the record makes clear that the parties did not intend to resolve issues relating to Gerards’ actions as trustee, except her actions concerning management of the warehouse. As all parties understood, Gerards had previously been dismissed from the case in her role as trustee, as had the claim that the parents’ actions making Gerards the general partner and trustee were the result of undue influence. When the judge in Randono I stated that the settlement was being reached with defendants “East 12th Street Partners..., Jean Marie Gerards in her individual capacity and also in her capacity as general partner of the East 12th Street Partners and also in her capacity as trustee of the Randono Family 1987 Revocable Trust,” the attorney for the Randono siblings interrupted, “in its capacity as general partner of the East 12th Street Partners,” and Gerards’ attorney agreed, “That’s correct. In its capacity as, exactly.” In other words, the trustee was a party to the settlement agreement only insofar as the trust was a partner of East 12th Street Partners.
The terms of the settlement in Randono I dealt only with the management of the warehouse—how the parties would proceed with plans to remodel it, when and how the warehouse could be sold, and the obligation of Gerards and Diesel Parts to pay rent for occupancy of the building. The trial court’s statements that “everyone understands this is a mutual release of any and all claims arising out of the management, rental or development of the property,” and that “the parties are also mutually agreeing to release each other in regards to any and all claims arising out of the use and rental management development of the property known as 1900 East 12th Street in Oakland, California,” leave no doubt that the settlement of Randono I was intended to resolve only issues relating to the management of the warehouse. The fact that only a few days before this settlement was entered, the Randono siblings dismissed the claims against Gerards in her capacity as trustee without prejudice also indicates that the parties intended to limit the scope of the settlement to those issues so that they could move forward with renting or selling the warehouse, without resolving other issues involving the performance of Gerards’ duties as trustee of the family trust.
To the extent that Gerards is also challenging the siblings’ right to pursue their claims against her as general partner of the family partnership, it is true that the settlement agreement did apply to her in that capacity. However, the claims against her on which the trial court granted relief for her misuse of partnership funds were based on misconduct that occurred after entry of the settlement agreement. (See fn. 2, ante) The general release did not extend to claims based on future conduct. (FASA Corp. v. Playmates Toys, Inc. (N.D.Ill. 1995) 892 F.Supp. 1061, 1067.)
Gerards also argues that the siblings’ claim attacking the assignment to her of the one percent general partner interest was litigated and dismissed as part of the settlement of Randono I. However, the claim that Gerards had fraudulently acquired her ownership of the general partner interest was included in the fourth cause of action of the complaint in Randono I that was dismissed prior to the settlement. As the trial court’s statement of decision recites, “since Gerards made that assignment in her capacity as trustee” (italics in original), the siblings were not precluded by the settlement agreement from challenging the assignment. The factual questions raised by this contention are equally beyond the scope of the warehouse management issues resolved as part of the settlement agreement.
Gerards asserts that “In an attempt to limit the scope of the dismissal in Randono I, the Randono siblings contend the allegations in the Randono I complaint only concerned allegations of misconduct for a one month [period] from June 18, 1998 to July 15, 1998.” The record citation to support this assertion is the siblings’ opposition to a demurrer, in which they noted that the complaint in Randono I originally included a cause of action against Gerards in her capacity as trustee only for this time period. The opposition goes on to state, however, that the complaint was amended and that Gerards in her role as trustee was then dismissed.
Gerards further argues that the assignment as part of the settlement agreement of her claims against her former attorney, Floyd, was consideration for the siblings’ release of any claim regarding the assignment of the general partner interest. However, as the trial court stated, “[t]here is absolutely nothing in the settlement agreement to support this argument.” The settlement agreement recited into the record makes no mention of the disposition of the general partner interest. The most likely explanation for the assignment of Gerards’ claims against Floyd is simply that it provided a potential means of reducing her $180,000 debt to the siblings and thus reaching a compromise resolution of the claim against her for back rent of the warehouse. In all events there is no evidence to support Gerards’ contention that the assignment was made in exchange for the siblings’ release of their claim of entitlement to proportional ownership of the general partner interest. Moreover, the issue was raised in Randono II by Gerards in her complaint seeking to dissolve the partnership. To the extent that the issue was “relitigated,” it was at Gerards’ request.
Gerards also disputes the finding in the statement of decision that the $50,000 settlement that the siblings subsequently reached with Floyd was not based upon the rights assigned to them by Gerards. Gerards is correct that the settlement documents with Floyd do state that the siblings release all of the assigned claims. However, the trial court explained that the siblings also had claims against Floyd in their own right. “The Randono siblings alleged that because of Mr. Floyd’s actions, they were required to bring the Randono I lawsuit in order to regain control of the partnership.... The Randono siblings sought damages for lost profits to the partnership arising from the assignment, including uncollected rent from Diesel Parts. They also sought damages for the attorneys’ fees and costs that they incurred in bringing Randono I and for fees that Gerards paid, using partnership funds, for the defense of Randono I.” The trial court concluded that the $20,000 offset given to Gerards after the settlement with Floyd “was intended by the parties to compensate Gerards for her loss of the general partner equity interest that Floyd had unsuccessfully attempted to obtain for her. Thus, Gerards’ assertion that she received “no part” of the $50,000 settlement with Mr. Floyd is unquestionably wrong, since she received forgiveness of $20,000 of her indebtedness to the siblings as agreed in the Randono I settlement.
Finally, Gerards argues that the various complaints in Randono II violated the rules against splitting causes of action. She points to nothing in the record, and we find no evidence in the appellant’s appendix, that this argument was ever made to the trial court. “It is a firmly entrenched principle of appellate practice that litigants must adhere to the theory on which a case was tried. Stated otherwise, a litigant may not change his or her position on appeal and assert a new theory. To permit this change in strategy would be unfair to the trial court and the opposing litigant.” (Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316.) Moreover, as Gerards recognizes, this argument is in effect that Randono II was barred by the doctrine of res judicata. “[A]n objection based on the doctrine of res judicata must be specially pleaded or it is waived.” (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1158, citing 7 Witkin, Cal. Procedure (3d ed. 1985) Judgment, § 198, pp. 636-637.) Gerards did not plead claim preclusion in her answer and may not do so for the first time on appeal.
Sanctions
Respondents have made an unopposed motion to this court for the imposition of sanctions on Gerards for pursuing a frivolous appeal. We deferred consideration of this motion to our consideration of the merits of the appeal.
Code of Civil Procedure section 907 provides, “When it appears to the reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just.” (See also Cal. Rules of Court, rule 8.276(a)(1) [“a Court of Appeal may impose sanctions... on a party or an attorney for: [¶]... [t]aking a frivolous appeal or appealing solely to cause delay”].) “An appeal may be found frivolous and sanctions imposed when the appeal (1) ‘is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment,’ or (2) ‘indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit.’ [Citation.] [¶] Counsel and their clients have a right to present issues that are arguably correct. An unsuccessful appeal should not be penalized as frivolous if it ‘ “ ‘presents a unique issue which is not “indisputably” without merit’..., involves facts which are ‘not amenable to easy analysis in terms of existing law’..., or makes a reasoned ‘argument for the extension, modification, or reversal of existing law.’ ” ’ ” (Westphal v. Wal-Mart Stores, Inc. (1998) 68 Cal.App.4th 1071, 1081.)
Gerards assigned error to no specific ruling of the trial court, increasing the difficulty of evaluating the merits of her appeal. When the substance of her argument is culled from the record and her briefs, it is clear that her argument that the second litigation was precluded by the settlement of the first is without merit. Under the circumstances, the request for sanctions is not unreasonable, and further attempts to establish her position might well justify such relief. However, “because of the disciplinary flavor of the proceedings and the punitive nature of any decision to award sanctions, we view it as well advised to require proof of an intent to delay by clear and convincing evidence, well beyond a mere preponderance and approaching the criminal standard of beyond a reasonable doubt.” (San Bernardino Community Hospital v. Meeks (1986) 187 Cal.App.3d 457, 470, italics omitted.) Applying this standard, the imposition of sanctions at this point cannot be justified.
Disposition
The judgment is affirmed. The motion for sanctions is denied. Respondents shall recover their costs on appeal.
We concur: Siggins, J., Jenkins, J.