Opinion
B161694.
10-1-2003
HSIN MING LIU, Plaintiff and Appellant, v. SO TANG, Defendant and Appellant.
Law Offices of Gary W. Kearney, Gary W. Kearney; Law Offices of Douglas J. Farrell and Robert Cipriano for Plaintiff and Appellant. Wasserman, Comden, Casselman & Pearson, Mark S. Gottlieb, Leonard J. Comden and Martin S. Rudoy for Defendant and Appellant.
Appellant Hsin Ming Liu (Wife) appeals from a judgment in favor of her former husband So Tang (Husband) enforcing a settlement agreement pursuant to Code of Civil Procedure section 664.6. The parties participated in a voluntary appellate court settlement program in connection with an appeal in their dissolution action. They entered into a global settlement of several pending actions, including the instant action. Husband filed a motion under section 664.6 to enforce the settlement in the dissolution action in the appellate court, which was denied. Husband filed a motion under section 664.6 to enforce the settlement in the instant action, and the trial court entered judgment enforcing the settlement agreement. Wife contends: (1) the appellate courts order denying Husbands motion to enter judgment pursuant to section 664.6 collaterally estopped Husband from relitigating the enforceability of the settlement agreement in the instant action; (2) the settlement could not be enforced using the summary procedures of section 664.6, because the settlement was made in the dissolution case, the dissolution case was no longer pending, and the instant case was a separate action; (3) the provisions of the judgment vary the terms of the settlement agreement; (4) failure by both parties to perform under the agreement discharged the parties from their duties to perform; (5) the trial court erred by finding that Husband did not breach the agreement; and (6) Husband breached the implied covenant of good faith and fair dealing. We affirm.
All further statutory reference are to the Code of Civil Procedure, unless otherwise stated.
Husband filed an appeal from the portion of the judgment setting forth the commencement and due dates for a promissory note. Husband contends the trial courts findings as to the dates are not supported by substantial evidence. We affirm.
FACTS AND PROCEDURAL BACKGROUND
Wife and Husband married on June 21, 1966. They have two adult children: George Tang (Son) and Sydney Tang (Daughter). During their marriage, Wife and Husband owned a residence in San Marino, an office building in Norwalk, and a vineyard in Santa Maria. Portions of the vineyard were leased to tenants who paid rent on an annual basis. In August 1996, Wife filed for dissolution of marriage in Los Angeles County. Prior to serving the dissolution papers, Wife and Husband gifted their interests in the residence and the office building to Son and Daughter. They also sold their interest in the vineyard to Son for approximately $1 million. Husband did not receive any rents or profits from the vineyard after August 1996.
In April 1997, Husband filed a civil action in Los Angeles County (GC018958) against Wife, Son, Daughter, and the vineyards manager, Keith Eng, for fraud. Husband alleged Wife continued to receive the benefits of the properties through the children. He sought to set aside the vineyard transfer. Husband filed notices of the pending action in Los Angeles and Santa Barbara counties. The dissolution action and the civil action were consolidated in the family law court (collectively referred to as the dissolution action).
In December 1998 and June 1999, Eng went to Detroit to hire a person to murder Husband. After a trial, Eng was found guilty of three counts of using interstate commerce facilities in the commission of a murder for hire and ordered to serve 10 years in federal prison. On February 14, 2000, Husband filed another civil action in Los Angeles County (GC024626) against Wife, Son, Eng, and Wifes corporation for assault and attempted murder of Husband, and fraud, rescission, restitution, and constructive trust concerning the ownership and operation of the vineyard. On August 15, 2000, Husband filed a third civil action in Los Angeles County (GC025690) against Wife, two of Wifes relatives, and a title company for declaratory and injunctive relief to prevent foreclosure on the residence as a result of deeds of trust held by Wifes relatives. The residence was ultimately lost to foreclosure.
On August 18, 2000, the family law court entered judgment in the dissolution action. The judgment ordered Son and Daughter to transfer title to the residence, the office building, and the vineyard to Wife and Husband as community property. The judgment also ordered Wife and Husband to list the residence and the office building for sale and divide the proceeds equally. The family law court reserved jurisdiction over Wife, Husband, the real property, and the proceeds to enforce the terms of the judgment. The judgment made an equal division of the vineyard property by awarding specific parcels to Wife or Husband as separate property. Husband filed a notice of appeal from the judgment.
On August 25, 2000, the company holding the note and deed of trust on the vineyard began foreclosure proceedings. On November 2, 2000, Wife paid $2,141,548 as payment in full on the note to avoid foreclosure. The deed of trust was reconveyed. On November 13, 2000, Wife filed the instant action in Santa Barbara County against several defendants, including Husband, for contribution, restitution, subrogation, equitable lien, and judicial foreclosure, based on her payment in full of the note secured by the deed of trust on the vineyard.
On February 9, 2001, the parties participated in a settlement conference under the auspices of a voluntary appellate court settlement program in connection with the appeal in the dissolution action. As a result of the settlement negotiations, Wife, Husband, their attorneys, and the settlement officer signed a handwritten document captioned "Agreement in Principle to Settle Multiple Lawsuits." Wifes attorney also signed for the attorney representing Son and Daughter. The document states: "(This is a binding agreement setting out major terms and not a letter of intent[.]) [¶] This settlement resolves all pending suits between [Husband, Wife, Son, Daughter, and Eng] with a full mutual release with each side to bear its own attorney[ fees] and costs. [¶] [W]ife is conveyed title to the full vineyard in Santa Maria in as is condition with environmental damage with [Husband indemnified] from environmental liability. [¶] [Wife] to pay $2.8 million minus [Husbands] 50% share of capital gains taxes (state and [federal]) on the [pending sale of a portion of the vineyard to one of the tenants] (whether it occurs or not) to be paid as follows: [¶] (1) If the [] sale occurs, the net proceeds (includes tax deduction) at the time it closes. [¶] (2) Any [deficiency], or the full amount if the [] sale does not occur, with 12 months payable with 7% interest secured by a deed of trust on sufficiently large portion of the vineyard to fully secure the note. [¶] The Norwalk medical office to be sold as soon as practical with the net proceeds applied first to pay off the Wells Fargo judgment, . . . and balance to be split between [Wife and Husband.] (If a [deficiency], then each responsible for half of [deficiency].) [& para;] [Attorneys for Wife and Husband] to prepare a formal written agreement with standard boiler plate. Appeal stayed 60 days to complete settlement." In addition, the attorneys for the parties and the settlement officer signed a stipulation "request[ing] the court to stay the appeal for 60 days pending successful compliance with a settlement agreement." A settlement conference update was prepared stating that the case had settled and the appeal was stayed 60 days to complete the settlement.
On March 6, 2001, Wifes attorney sent a proposed settlement agreement to Husbands attorney "in accordance with the settlement we recently reached at the appellate court settlement conference." Wifes attorney noted that for tax reasons, the proposed settlement provided that Sons deed was valid, and thus, it would be Sons obligation to pay Husband. The note would commence May 1, 2001, and be due on May 1, 2002. In addition, the tenant had cancelled the purchase of a portion of the vineyard. Therefore, Wifes attorney had written the proposed settlement agreement to provide that Husband would pay one-half of the capital gains tax as if the sale had been consummated. The proposed settlement agreement also provided that the office building would be transferred to Wife and sold, and the net sale proceeds would be applied to the loan on the building. Husband would pay half of any deficiency from the sale of the office building and half of the capital gains tax through a reduction of the amount due on the promissory note.
On March 14, 2001, Wife filed a notice of settlement in the instant action. The notice stated that "a written settlement has been reached by the parties in the above-referenced case. The settlement will be finalized after the execution of a formal settlement agreement. The formal settlement agreement has been prepared by [Wifes] counsel and is in the process of being served on the necessary parties for execution." Wife requested the trial court set a return hearing date after May 18, 2001, to review the status of the settlement. The trial court continued the status conference to May 21, 2001.
Husband requested a personal guarantee from Wife and additional information concerning the tax basis on the vineyard. On April 9, 2001, Wifes attorney sent another proposed settlement agreement to Husbands attorney. Wife agreed to provide a personal guarantee for the payment from Son. Wife stated that although the parties had purchased the vineyard for approximately $ 3.2 million in 1988, the parties had depreciated the property on their tax returns by approximately $2.3 million, so the basis for the one-third that had been subject to the sale was $270,000. The note continued to commence May 1, 2001.
On April 19, 2001, Wifes attorney sent a new proposed settlement agreement to Husband. Wife offered that Son would pay $2.4 million to Husband to be due 60 days from execution of the formal settlement agreement and payable within one year of that date. The note would commence on June 1, 2001, and become due on June 1, 2002. The payment would be secured by a deed of trust on the vineyard. Wife would assume all capital gains tax responsibilities for the vineyard and the residence. Husband would receive the office building, assume all capital gains tax associated with it, and hold Wife harmless from the loan obligation on the office building. Wife would receive all rents and profits from the vineyard. The letter provided Husband with one day to accept, because the cleanup of solid waste on the vineyard had become an urgent matter and if the case could not be resolved through settlement, Wife needed to resolve the case in other ways.
On May 14, 2001, the parties appeared before the trial court in the instant action. Wifes attorney stated that the settlement had been contingent on the sale of the vineyard to a third party that was not consummated. Husbands attorney represented that settlement drafts continued to be exchanged and they expected the case ultimately to be dismissed. Wifes attorney requested the hearing be continued for 90 days. Based on the parties representations that the case was tied to other cases and going to settle, the trial court continued the status conference to August 20, 2001. On August 20, 2001, Wifes attorney appeared at the status conference. There was no appearance by Husband. Wifes attorney stated that some terms of the settlement remained to be worked out, the parties had reached an impasse, and it did not appear the case was going to settle, so Wife would be filing a summary judgment motion within two weeks.
On August 24, 2001, Wife filed a motion for summary judgment in the instant action for contribution of one-half of the amount of the loan she had paid on the vineyard. Husband opposed the motion on the grounds that: he did not hold title to the vineyard, because Son had not reconveyed title as ordered in the dissolution judgment; Wife was not entitled to contribution, because she had paid the mortgage on the vineyard with community property funds or funds obtained through fraud; and the trial court in the instant action had no jurisdiction, because the family law court in the dissolution action took jurisdiction first and reserved jurisdiction over the parties and the property in the judgment. Husband mentioned the pending appeal in the dissolution action. He also stated, "A global settlement was believed to have been reached in March, 2001[,] but it has broken down." Husband requested that the trial court stay the action or order it consolidated with the Los Angeles cases. Wife filed a reply. The trial court continued the hearing on the motion for summary judgment to November 20, 2001, to allow the parties to file supplemental declarations.
The County of Santa Barbara filed an action against Wife and Husband to compel the clean up of two solid waste dump sites on the vineyard property. Husband and Wife each paid $40,000 to abate solid waste on the property. On September 26, 2001, to avoid liability, Son executed a quitclaim deed to Husband and Wife. On November 2, 2001, the County stipulated to a judgment ordering Wife to pay an additional $51,750 in civil penalties and enjoining Husband and Wife from dumping, storing, continuing to maintain, or unlawfully disposing of solid waste on the vineyard property.
On November 12, 2001, Husband filed a motion to enforce the settlement agreement pursuant to section 664.6 in the appellate court in the dissolution action. Husband submitted declarations and other documents in support of the motion. Wife objected to Husbands motion on the sole ground that the appellate court did not have jurisdiction. Wife contended section 664.6 authorized trial courts to enforce settlement agreements and a trial court was the appropriate forum for a full evidentiary hearing on the enforceability of the agreement. In the event the appellate court found it had jurisdiction to consider the motion, Wife requested an extension of time to respond with citations to authority and evidence concerning the existence of an enforceable agreement. Son and Daughter also filed objections to the motion to enforce the settlement agreement on the same jurisdictional ground and requested leave to file an opposition if the objections were overruled.
On November 14, 2001, Husband filed a notice of settlement in the instant action. Husband notified the trial court that he had filed a motion to enforce the settlement with the appellate court in the dissolution action. He requested a 60-day stay pending the appellate court decision. Husband attached a copy of the handwritten settlement agreement. Wife filed an objection to the notice of settlement stating that the settlement had been abandoned and demanding withdrawal of the notice. On November 19, 2001, Husband filed a supplemental opposition to the motion for summary judgment based on the settlement agreement. On November 20, 2001, a hearing was held on the motion for summary judgment. Wifes attorney stated that although there had been a settlement agreement in principle, because the agreement contemplated a sale of the vineyard that had fallen through, as well as other matters that could not be agreed upon, the settlement had not been consummated. Moreover, he argued the parties actions were inconsistent with having reached a settlement. Wifes attorney represented that Husband had participated in two conferences in the instant case in which the trial court was informed a settlement had not been reached and had acquiesced to that representation. Wifes attorney also argued that the appellate court in which Husband had filed his motion to enforce the settlement under section 664.6 lacked jurisdiction to hear the motion. Husband argued that the settlement agreement was a valid defense, but requested that the trial court wait to rule on the motion for summary judgment until the appellate court had ruled on the motion to enforce the settlement. The trial court continued the hearing on the motion in order for the parties to file additional authorities and evidence as to whether the settlement agreement raised a triable issue of fact preventing summary judgment.
On November 21, 2001, this appellate court issued an order signed by only the presiding justice stating in pertinent part, "The motion to enforce the settlement agreement is denied. Appellants opening brief is due in 30 days." On November 26, 2001, Husband filed a supplemental opposition to the motion for summary judgment in the instant action. Wife filed a reply on the grounds that: the appellate courts denial of Husbands motion confirmed the settlement agreement was unenforceable; Husband was precluded from raising the settlement agreement because he had not amended his answer to plead the settlement agreement as a defense; the agreement had not been signed by Son or Daughter; the agreement was unenforceable because the terms were subject to dispute; and the agreement had been rescinded. On December 3, 2001, Husband filed a reply on the grounds that: the settlement agreement was enforceable and had not been rescinded; Husband had presented a triable issue of fact; and the appellate courts denial of the motion to enforce the settlement agreement had been solely based on lack of jurisdiction. A hearing was held on December 18, 2001. The trial court proposed to deem the summary judgment papers a motion to enforce the settlement agreement under section 664.6 or require Husband to file a formal motion. Wife expressed a preference for a formal motion. The trial court suspended ruling on the summary judgment motion to allow Husband to file a motion to enforce the settlement agreement under section 664.6.
Son and Daughter are not parties to this appeal. Wife does not contend on appeal that the settlement was unenforceable as to her under section 664.6, because it had not been signed by Son and Daughter.
On January 8, 2002, Husband filed a motion to enforce the settlement agreement pursuant to section 664.6. He submitted declarations and evidence in support of the motion. On January 24, 2001, Wife filed an opposition to the motion on the grounds that: the settlement agreement was not enforceable without a formalized agreement; it did not contain material terms; the parties conduct demonstrated that the settlement agreement was not intended to be enforceable; and Husband had failed to timely raise the settlement agreement as an affirmative defense in an amended pleading. Wife submitted declarations and documentary evidence. Husband filed a reply on the grounds that: the settlement agreement had been binding at the time it had been signed and did not require additional formal documentation; Husbands conduct was consistent with the settlement agreement; the terms of the agreement were sufficiently certain; and the motion under section 664.6 was timely and proper. On January 29, 2002, Husband filed a request for dismissal of the appeal in the dissolution action with prejudice. The remittitur was issued on June 4, 2002.
On February 5, 2002, a hearing was held on the motion to enforce the settlement in the instant case. Wifes attorney expressly stated that Wife was not contesting the trial courts jurisdiction to decide the enforceability of the agreement. However, Wife argued inconsistent rulings could result in the different actions. Wife argued that the parties conduct demonstrated that they did not consider the settlement agreement enforceable. The trial court found the agreement was enforceable, but particular details of the agreement required additional information. Therefore, the trial court ordered the settlement enforceable and "tentatively ordered that the following conditions should be met: 1) [Wife] has 12 months to make the payment; 2) 7% interest runs from this date; 3) there must be a resolution of the amount of the capital gains tax credit due [Wife]; 4) there must be a deed of trust or equivalent financing instrument approved that references a security interest [with] the Subdivision Map Act; and 5) [Husband] must prepare dismissals in the associated actions." The trial court continued the hearing to March 5, 2002, for resolution of the tentatively ordered conditions.
On March 4, 2002, Wife filed a motion for new trial. Wifes stated grounds for new trial were: irregularity in the proceeding, accident, and surprise at trial which ordinary prudence could not have guarded against; the decision was against the law; and there was an error in law at trial. For the first time, Wife argued that Husband had breached the agreement by failing to perform his obligations within the time allowed by the agreement.
A hearing was held on March 5, 2002, to resolve the issues remaining on the motion to enforce the settlement agreement. The parties stated that they had been unable to resolve the capital gains tax issue. The trial court appointed an accountant. The parties had been unable to agree on the date from which the note should commence. The trial court found the parties conduct in arguing about the details and enforceability of the agreement justified use of the date of the judgment finding the agreement enforceable. Husband argued that it was unfair for Wife to have collected rents from the date the agreement was signed without being responsible for interest until more than a year later. The trial court found it was clear from the agreement that Wife was entitled to the rents. Husband requested that the deed transferring title to the vineyard to Wife be protected by holding it in escrow or subject to a protective order until the case became final. Wife agreed to find a method to protect the transfer of title. The trial court instructed the parties to choose a method, or the court would do it for them. Husband requested that the deed of trust encumber the entire vineyard, rather than a portion. The value of the vineyard had plummeted from the glut of grapes and certain parcels had been permitted to lay fallow. The trial court appointed an appraiser. The trial court instructed Husband to submit an order granting the motion to enforce the settlement and Wife to submit an order denying the motion for summary judgment. The trial court set a new hearing date of May 21, 2002.
A hearing was held on the motion for new trial on April 23, 2002. The trial court denied Wifes motion for new trial on the ground that no judgment had been entered and the motion was premature. The trial court ordered Wife to pay her share of the appraisers fee.
A hearing was held on June 25, 2002. The trial court entered an order denying the motion for summary judgment in the instant action because the settlement agreement was a defense to the causes of action and raised triable issues of material fact. After substantial argument concerning the disputed issues, the trial court concluded that an evidentiary hearing was required on the terms and conditions of the settlement agreement, including oral testimony. The parties agreed. The trial court ordered the parties to submit briefs and evidence concerning the issues that required evidentiary determinations. Husband filed a brief concerning the tax credit, security, and miscellaneous issues. He attached evidence in support and a proposed judgment. Wife filed a reply brief arguing that Husband was proposing severe modifications to the agreement, inclusion of new material terms and an erroneous interpretation of existing terms. She attached two declarations in support.
A court trial was held on July 22, 2002. The trial court permitted the parties to call witnesses. Based on the trial courts tentative rulings, the parties chose not to call witnesses. That day, the trial court entered judgment, ordering as follows: (1) the settlement agreement was valid and enforceable; (2) capital gains tax of $395,018 was to be deducted from Husbands settlement proceeds of $2.8 million, leaving a balance due to Husband of $2,404,982; (3) the entire vineyard property was to be encumbered by Wifes deed of trust to Husband; (4) in the event an appeal was filed, Husband was to file motions to stay all pending actions, other than the instant action and the dissolution action, and the dismissals of all pending actions, other than the instant action and the dissolution action, should not be filed until the judgment was final; (5) Husband was to deliver a quitclaim deed for his interest in the vineyard property to his counsel to be held pending the outcome of the appeal; (6) Wife was to indemnify Husband from any environmental liability of the property; (7) Wife was to deliver a note and deed of trust to Husband in the amount of $2,404,982 with interest at seven percent due on July 22, 2003; (8) the note and deed of trust securing repayment were to be delivered to Husbands counsel simultaneously with Husbands counsel delivering to Wifes counsel the quitclaim deed; (9) the deed of trust was to be prepared on a standard title company form and contain standard provisions for due on sale or financing and assignment of rents on default; (10) the parties were to sell the office building as soon as practicable, applying the net proceeds to pay an existing judgment held by Wells Fargo Bank and then dividing the balance equally between the parties, or if there were a deficiency, each party was to be responsible for one-half of the deficiency; (11) the parties were to each pay one half of accountant fees totaling $ 2,014; (12) Wife was not permitted to further encumber the vineyard until the debt to Husband was paid in full; (13) concurrently with the dismissal of all pending actions between the parties, Husband was to remove any lis pendens recorded against the property; and (14) each of the parties was ordered to perform all acts and deliver all deeds, notes, documents, and papers necessary or convenient to carry out the terms of the judgment forthwith upon being requested to do so, and if any party failed to do so forthwith upon request, the trial court could, upon ex parte application, order the county clerk to execute the same on his or her behalf. The trial court reserved jurisdiction over the parties and the property to make any orders reasonably necessary to carry out the terms of the judgment.
Wife filed a timely notice of appeal from the judgment. Husband filed a timely notice of appeal from the portion of the judgment stating the due date of the note and the date from which interest started to accrue. The trial court amended the judgment on November 25, 2002, to incorporate a legal description of the vineyard. Wife filed an amended notice of appeal.
DISCUSSION
I. Standard of Review
The trial courts factual findings on a section 664.6 motion to enforce a settlement must be affirmed if supported by substantial evidence. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 815.) Other rulings are reviewed de novo. (Ibid.)
II. Collateral Estoppel
Wife contends that Husband is collaterally estopped from relitigating the enforceability of the settlement agreement by the appellate courts order denying Husbands motion to enforce the settlement, Husbands dismissal of his appeal and the resulting finality of the judgment in the consolidated case. This is incorrect.
"The doctrine of res judicata has long been recognized to have a dual aspect. [Citations.] `In its primary aspect the doctrine of res judicata operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. [Citation.]" (Henn v. Henn (1980) 26 Cal.3d 323, 329-330.) In its other aspect, known as collateral estoppel, the first judgment operates as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action. (Barker v. Hull (1987) 191 Cal.App.3d 221, 225.) Collateral estoppel precludes a party from relitigating an issue decided at an earlier hearing if: (1) the issue was necessarily decided and identical to the one which is sought to be relitigated; (2) the previous proceeding resulted in a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior proceeding. (Betyar v. Pierce (1988) 205 Cal.App.3d 1250, 1254.)
"[I]n deciding whether to apply collateral estoppel, `. . . a court must balance the need to limit litigation against the right of a fair adversary proceeding in which a party may fully present his case. [Citation.] Thus, collateral estoppel should not be applied if there was no opportunity for a full presentation of the issue in the first proceeding. (Rohrbasser v. Lederer (1986) 179 Cal.App.3d 290, 298 [`. . . the test is whether the person attacking the judgment made a detailed presentation of the issues . . . or was given a full opportunity at the time of the hearing to develop the issues by oral testimony].)" (Wright v. Ripley (1998) 65 Cal.App.4th 1189, 1193.)
Ordinarily, collateral estoppel is not applied to motion proceedings in which the parties are limited to presenting affidavits or declarations of voluntary witnesses and are not permitted to produce oral testimony, compel witnesses to attend depositions, and cross-examine witnesses. (Groves v. Peterson (2002) 100 Cal.App.4th 659, 667-668; Rohrbasser v. Lederer, supra, 179 Cal.App.3d at pp. 296-297.) However, collateral estoppel will bar a subsequent proceeding if the prior motion proceeding actually afforded the parties a hearing that was the equivalent of a trial with oral testimony. (Darlington v. Basalt Rock Co. (1961) 188 Cal.App.2d 706, 709-710; Preston v. Wyoming Pac. Oil Co. (1961) 197 Cal.App.2d 517, 527; Sarten v. Pomatto (1961) 192 Cal.App.2d 288, 300-301.) Some cases have held that collateral estoppel will apply to prior motion proceedings heard strictly on the basis of affidavits or declarations, provided the evidence was not restricted and the parties were given an opportunity to obtain and present all available evidence. (Barker v. Hull, supra, 191 Cal.App.3d at p. 227.)
In this case, the issue of whether the settlement agreement was enforceable was not one that was necessarily decided by the appellate court. The appellate court may have found it lacked jurisdiction to hear the motion and never reached the merits of the motion. In addition, the parties did not have a full and fair opportunity to develop the issue through oral testimony. Finally, the order denying the motion was signed by a single appellate justice without oral argument and, thus, had no binding effect. (Kowis v. Howard (1992) 3 Cal.4th 888, 894-895.) Therefore, collateral estoppel does not apply in this case.
III. Section 664.6
Wife contends the settlement agreement could not be enforced in the instant action using the summary procedures of section 664.6, because the settlement was made in the dissolution case, the dissolution case was no longer pending, and the instant case was a separate action. We disagree.
"Section 664.6 provides a summary procedure by which a trial court may specifically enforce an agreement settling pending litigation without requiring the filing of a second lawsuit. [Citation.] That section provides in relevant part: `If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement." (Kirby v. Southern Cal. Edison Co. (2000) 78 Cal.App.4th 840, 843.)
If parties enter into a settlement agreement prior to filing any litigation, the settlement agreement may not be enforced in a subsequently filed lawsuit by a motion pursuant to section 664.6, because the litigation was not pending at the time the agreement was executed. (Kirby v. Southern Cal. Edison Co., supra, 78 Cal.App.4th at p. 846.) If an action is pending, the parties agree to a settlement, and the action is dismissed, the settlement may not be enforced by a motion under section 664.6 in a separate action that was not pending at the time of the settlement, because the settlement was not made in the second action while it was pending in order to resolve the second action. (Id. at p. 844.) However, when a settlement agreement settles more than one pending action, a motion to enter judgment pursuant to the settlement under section 664.6 may be filed in any of the pending actions. (Cf.Casa de Valley View Owners Assn. v. Stevenson (1985) 167 Cal.App.3d 1182, 1185-1186 [settlement agreement settled claims in two cases and motion for entry of judgment pursuant to section 664.6 was made in one of them].)
In this case, the instant action was pending at the time the parties entered into their global settlement of all pending actions, including the instant action. Husband filed his motion to enforce the settlement in the instant action. Husband was entitled to enforce the settlement of the instant action in the instant action under the provisions of section 664.6.
IV. Terms of the Settlement Agreement
Several of Wifes contentions on appeal concern whether the judgment properly reflects the terms of the settlement agreement. We conclude the trial courts findings as to the terms of the agreement are supported by substantial evidence.
A. Applicable Law
A trial court hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment. (Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 810.) Section 664.6 expressly authorizes trial courts to determine whether a settlement has occurred and implicitly authorizes the trial court to interpret the terms and conditions to settlement. (Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4th 884, 889.)
"A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts." (Weddington Productions, Inc. v. Flick , supra, 60 Cal.App.4th at p. 810.) "We interpret the intent and scope of the agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made." (Lloyds Underwriters v. Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197-1198.) "A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties." (Civ. Code, § 1643.) "Moreover, where one construction would make a contract unusual and extraordinary and another construction, equally consistent with the language employed, would make it reasonable, fair, and just, the latter construction must prevail." (Sayble v. Feinman (1978) 76 Cal.App.3d 509, 513.) "The court must avoid an interpretation which will make a contract extraordinary, harsh, unjust, or inequitable." (Strong v. Theis (1986) 187 Cal.App.3d 913, 920.) "In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist." (Civ. Code, § 1654.)
The trial court is not authorized to create the material terms of a settlement agreement. (Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 810.) A contract will be enforced if it is sufficiently definite for the court to ascertain the parties obligations and to determine whether those obligations have been performed or breached. (Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623.) "There are occasions in which `minor matters in elaborate contracts are left for future agreement. When this occurs, it does not necessarily mean that the entire contract is unenforceable." (Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 813.) "Stated otherwise, the contract will be enforced if it is possible to reach a fair and just result even if, in the process, the court is required to fill in some gaps." (Ersa Grae Corp. v. Fluor Corp., supra, 1 Cal.App.4th at p. 623.)
B. Time of Performance
Wife contends Husband was required to deliver a title document for the vineyard to Wife and dismiss all pending litigation immediately upon execution of the settlement agreement, or alternatively, within 60 days. Therefore, she contends the trial courts order directing Husband to deliver a quitclaim deed and file dismissals promptly upon the finality of the judgment impermissibly varied the time of performance agreed to by the parties. We disagree.
Civil Code section 1657 provides: "If no time is specified for the performance of an act required to be performed, a reasonable time is allowed. If the act is in its nature capable of being done instantly—as, for example, if it consists in the payment of money only—it must be performed immediately upon the thing to be done being exactly ascertained."
In this case, it is clear that the settlement agreement did not require Husband to immediately deliver a title document and dismiss all pending litigation. The agreement states that the vineyard is conveyed to Wife. It is silent as to Husbands obligation to deliver an instrument evidencing title. The agreement specifically states that the parties will execute a formal document including non-material "boilerplate" provisions. Considering the agreement as a whole, it is reasonable to conclude that the parties intended the time of performance of these obligations to commence once the formal document had been executed containing more specific calculations and the non-material details of performance. The agreement to stay the appeal in the dissolution case for 60 days also did not require Husband to perform his obligations within 60 days. The agreement anticipated the stay of the appeal in order to prepare and complete a formal written settlement; it did not state that the settlement would become unenforceable if not formalized within 60 days. The only potential consequence of failing to complete the settlement within 60 days was the lifting of the stay of the appeal. We note that the parties expressly described the time of performance in other provisions of the agreement when they intended the time of performance to be immediate. The sale of the Norwalk building was to be completed "as soon as practical." No similar directive was stated concerning Husbands delivery of a title document or dismissal of pending litigation.
Our conclusion that Husbands performance was not required immediately or within 60 days is supported by the parties post-settlement conduct. The parties did not conduct themselves as if the settlement agreement required performance within 60 days. The parties continued to prepare, exchange and review formal documents beyond 60 days. The proposed drafts contained different performance dates for various obligations. The parties represented to the trial court in the instant action on May 14, 2001, that they had reached a settlement and requested an additional 90 days to complete a formal agreement. The parties post-settlement conduct supports the conclusion that they did not intend Husband to perform immediately, within 60 days of executing the agreement, or at any time prior to formalization of the agreement.
Because the handwritten settlement agreement did not specify a particular time for performance of the parties obligations, the trial court was authorized by Civil Code section 1657 to allow a reasonable time for performance. The parties intended Husband to perform certain obligations once the parties had executed a formalized agreement that contained boilerplate terms specifying the non-material aspects of the parties obligations. The judgment in this case ascertains the parties obligations. Therefore, the trial court properly ordered Husbands performance promptly upon the finality of the judgment in this case.
C. Due-on-Sale Clause in Deed of Trust
Wife contends the provision of the judgment requiring Wifes deed of trust to include a due-on-sale cause was a material change to the parties settlement agreement. This is incorrect. The settlement agreement clearly requires Wife to execute a promissory note and a deed of trust as security for the note. The settlement agreement states that the formal agreement contemplated by the parties should include standard boilerplate language. The standard boilerplate language of a deed of trust includes a due-on-sale clause. (See 1 Cal. Real Estate Finance Practice: Strategies and Forms (Cont.Ed.Bar 2003) § 4.85, pp. 286-287.) The trial court properly carried out the intention of the parties by interpreting the agreement to include a due-on-sale clause in the deed of trust.
We note also that the handwritten settlement agreement signed by the parties provided that the note was due upon the anticipated sale of the vineyard to the tenants.
D. Method of Exchange
Wife contends the provision of the judgment requiring a simultaneous exchange of Husbands quitclaim deed and Wifes note and deed of trust was a material change to the terms of the settlement agreement. We disagree. The dissolution judgment divided the vineyard equally between the parties. As part of the settlement agreement, Husband agreed to convey Wife title to the entire vineyard and Wife agreed to provide a promissory note secured by a deed of trust on the vineyard. These types of real estate documents are commonly exchanged simultaneously through escrow. (See 4 Matthew Bender, Cal. Real Estate Law and Practice (2003) § 90.161, p. 90-70 ["Escrow is a method of closing a real estate transaction by which there is a concurrent exchange of money and documents resulting in the transfer of title to the property from the seller to the buyer."]) It was reasonable to find that the parties intended a simultaneous exchange of these documents as a boilerplate provision of the agreement. The provision for the simultaneous exchange of documents was not a material term and was a reasonable method to carry out the intent of the parties.
E. Encumbrances
Wife contends the judgment adds terms permitting Husband to encumber the vineyard with the lis pendens that had been filed in connection with the dissolution action until the pending actions were dismissed and restricting Wife from encumbering the vineyard until the debt to Husband was paid. Wife contends these terms were not part of the settlement agreement and by making them provisions of the judgment, the trial court remade the parties agreement. However, the trial court did not order a lis pendens, but only provided for its removal. These terms are not inconsistent with the settlement agreement and merely preserve the status quo pending the appeal.
V. Discharge of Obligations
Wife contends the settlement agreement made time of the essence and both parties failed to perform their obligations, in that Wife did not give Husband a deed of trust to secure a note and Husband did not dismiss pending actions or give Wife a quitclaim deed. Therefore, Wife contends, the mutual failure to perform under the agreement discharged the parties obligations. We disagree.
It is true that "[t]he failure of both parties to perform concurrent conditions during the time for performance results in a discharge of both parties duty to perform. Thus, where the parties have made time the essence of the contract, at the expiration of time without tender by either party, both parties are discharged." (Pittman v. Canham (1992) 2 Cal.App.4th 556, 559-560.) However, "[t]he general rule in equity is that time is not of the essence unless it has been made so by its express terms or is necessarily so from the nature of the contract. . . . [T]he intent to make a particular date, or time, `the essence of the contract must be clearly, unequivocally and unmistakably shown by an express declaration." (Fowler v. Ross (1983) 142 Cal.App.3d 472, 479.)
The handwritten settlement agreement did not contain any provision stating that time was of the essence. In fact, as discussed above, the agreement did not require any particular time for performance. The trial court allowed a reasonable time for performance as set forth in the judgment. The parties obligations were not discharged by mutual failure to perform.
VI. Breach of the Settlement Agreement
Wife argued for the first time in her motion for new trial that the evidence submitted to the trial court in relation to the motion to enforce the settlement showed that Husband had breached the agreement by failing to perform his obligations. On appeal, Wife makes similar contentions concerning breach of the settlement agreement. Wife also contends the trial court improperly made findings of fact concerning breach of the agreement. However, the motion for new trial was properly denied on procedural grounds and none of Wifes contentions concerning breach have merit.
A. Denial of Motion for New Trial
The trial court properly denied Wifes motion for new trial on procedural grounds, because Wife filed the motion for new trial before the trial court had rendered a decision on the motion to enforce the settlement agreement. "Under section 657 . . . a `verdict may be vacated and any other decision may be modified or vacated upon application for a new trial made by any `party aggrieved. Until there has been a decision there is no aggrieved party. [Citation.] Accordingly, a notice of intention to move for a new trial is premature if given before there is a decision in the case. [Citation.] The decision is the rendition of judgment by the verdict of the jury or the signed and filed findings of fact . . . and conclusions of law of the court. [Citations.]" (Ruiz v. Ruiz (1980) 104 Cal.App.3d 374, 378.) "The timely filing of [a notice of intention to move for a new trial] is essential to the courts jurisdiction to entertain a motion for new trial. [Citations.] Proceedings for a new trial taken prematurely are ineffective for any purpose, and it is not within the power of the litigants to invest the court with jurisdiction to hear and determine the motion by consent, waiver, agreement or acquiescence. [Citations.]" (Id . at p. 379.) In this case, Wife filed her motion for new trial prior to the trial courts decision on the motion to enforce the settlement and the trial court properly found it had no jurisdiction to entertain the motion.
B. Evidence of Breach
As stated above, Wife contends that under the settlement agreement, Husband was required to dismiss all pending litigation, tender a full release, and deliver a title document immediately. Based on this assertion, she further contends that the undisputed evidence is that Husband has not performed these acts, and therefore, is in breach of the settlement agreement. However, as discussed above, the settlement agreement did not require immediate performance of these acts. The judgment sets forth a reasonable time for performance in accordance with the parties intentions upon the finality of the judgment. There is no other undisputed evidence of breach.
VII. Breach of the Implied Covenant of Good Faith and Fair Dealing
On appeal, Wife contends for the first time that Husband breached the implied covenant of good faith and fair dealing. Arguments not raised in the trial court may not be raised for the first time on appeal. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1138.) Breach of the implied covenant is an issue that requires factual determinations and cannot be raised for the first time on appeal.
VIII. Interest
The judgment ordered Wife to deliver a note to Husband in the amount of $2,404,982 commencing on July 22, 2002, and due on July 22, 2003. In his appeal, Husband contends that this provision of the judgment is not supported by substantial evidence and the obligation should have commenced on an earlier date. We disagree.
The settlement agreement provided that if the pending sale of the vineyard was cancelled, Wife was required to pay $2.8 million minus Husbands share of the capital gains taxes within 12 months. The settlement agreement did not specify the commencement date of the payment obligation under those circumstances. However, in order for Wife to pay Husband, the total amount of the payment obligation had to be ascertained. The parties clearly intended that the amount of the capital gains taxes would be calculated prior to the commencement of Wifes payment obligation. As stated above, in the absence of a specified date for performance, a reasonable time for performance is allowed. The only reasonable interpretation of the agreement is that the parties intended Wifes obligation to commence after the various details were completed, including the calculation of the total amount of the capital gains taxes and the total amount of Wifes payment obligation. The capital gains amounts were not ascertained until the trial court appointed an accountant and made the final determination incorporated in the judgment. We conclude that the parties intended Wifes obligation to pay to commence as of the date the amount of the payment was definitively determined, which was the date of the July 22, 2002 judgment.
DISPOSITION
The judgment is affirmed. The parties are to bear their own costs on appeal.
We concur: ARMSTRONG, J. MOSK, J.