Opinion
NOT TO BE PUBLISHED
Napa County Super. Ct. No. 26-24908
Reardon, J.
Appellant Living Rivers Council (LRC) and respondents City of St. Helena and its city council settled a California Environmental Quality Act (CEQA) compliance action relating to a flood protection project approved by the city in 2004. When the city revised the project in 2006 to satisfy the terms of the 2005 settlement agreement, it also made other changes—the so-called “2006 refinements”—to the project. LRC challenged the city’s inclusion of the 2006 refinements in the project by means of a trial court motion to enforce the 2005 settlement agreement, without success. (See Pub. Resources Code, §§ 21000-21177.) LRC appeals from the trial court’s order denying its motion to enforce the settlement agreement, contending that the trial court erred (1) by finding that the city’s adoption of the 2006 refinements to the flood protection project did not violate the terms of the settlement agreement; and (2) by failing to consider and/or admit parol evidence it proffered to aid in the interpretation of a key aspect of that agreement. (See Code Civ. Proc., § 664.6.) We affirm the trial court’s order.
LRC filed a timely notice of appeal from the trial court’s order denying its motion to enforce the settlement agreement. This is appealable as an order after judgment and as an order refusing to grant an injunction. (See Code Civ. Proc., § 904.1, subd. (a)(2), (6).)
I. FACTS
Since 1862, more than 27 major floods have plagued the Napa Valley, resulting in a significant loss of life and damage to property. In 1986, flooding caused more than $140 million in damages and led to the evacuation of 7,000 residents. In 1995, a flood damaged more than 200 residences and businesses at a cost of more than $100 million. In the 1995 flood, Napa River waters exceeded then-existing flood control measures, damaging a mobile home park and an apartment complex in St. Helena. Flooding in 1995 and 1996 resulted in $50 million in flood damage in that community alone.
In 1997, the Napa County Flood Protection and Watershed Improvement Authority enacted a sales tax ordinance to generate funds for flood control projects. The ordinance recited that one of its goals was to balance the need for flood protection with the use of environmentally beneficial methods. It required that all approved projects built with tax proceeds be planned in accordance with the Living River Guidelines contained in the Community Coalition’s Flood Management Plan and the Napa River Watershed Owners Manual of the Napa County Resource Conservation District. It authorized respondent City of St. Helena to spend its part of the funds generated by the sales tax for flood management measures on the Napa River.
In January 2002, the city distributed a notice of preparation for its planned flood control project on the Napa River. In September 2002, a revised notice of preparation was issued. In January 2003, the city issued the draft environmental impact report (EIR) for the project. In the spring of 2003, public hearings were held to receive comments on the draft EIR. LRC—a group of individuals dedicated to environmental protection of the Napa River—were among those submitting comments that challenged the adequacy of the draft EIR. A revised draft EIR was released in August 2003. LRC also submitted comments on this revised draft EIR. Overall, it faulted the project for failing to offer a sustainable solution to the flooding problem and failing to comply with the Living River Guidelines.
In September 2003, the city’s planning commission directed its staff to prepare a final EIR on the project. On January 6, 2004, that final EIR was released by the city. Later that month, the planning commission recommended certification of the EIR for either of two proposed flood control projects, depending on funding issues.
On February 10, 2004, respondent City Council of the City of St. Helena selected one of those two versions of the project as its preferred flood protection and flood corridor restoration project measure. Again, LRC raised formal objections to the project, arguing inter alia that it was inconsistent with the Living River Guidelines mandated by the sales tax ordinance. Specifically, LRC asserted that the project did not attempt to solve the Napa River flooding issue in a manner which accounted for environmental considerations.
On February 24, 2004, the city council adopted resolutions approving the proposed flood control project and certifying the final EIR on this project. The resolutions acknowledged that some environmental effects of the project—aesthetic, cultural and transportation impacts—would be significant and unavoidable, despite the adoption of feasible mitigation measures. The city council concluded that various project alternatives were either not environmentally preferable, were infeasible, or failed to meet the city’s objectives. It adopted CEQA findings and a statement of overriding considerations to explain how the project’s benefits would justify its significant, unavoidable impacts. The resolutions’ findings and the EIR recited that the project incorporated and complied with Living River Guidelines. A formal notice of determination for this project was filed the following day.
In March 2004, LRC petitioned the trial court for a writ of mandate to compel the city and the city council to set aside the resolutions approving the flood control project and certifying its final EIR. (See Cal. Const., art. VI, § 10; Code Civ. Proc., §§ 526, 1060, 1084, 1094.5; Pub. Resources Code, § 21168.5.) It alleged that both the approval of the project and the certification of the final EIR violated CEQA. (See Pub. Resources Code, § 21168.9.) In its May 2004 answer, the city and city council denied failing to comply with CEQA.
A court trial was conducted on the petition in December 2004. The trial court found that the EIR was inadequate in one respect—because it did not contain an adequate discussion of the cumulative impact analysis required by CEQA. In all other respects, it rejected LRC’s challenge to the EIR.
In January 2005, the trial court issued a judgment granting the petition for writ of mandate, ordering that the two challenged resolutions be set aside and enjoining any construction of the project without further court order. It retained jurisdiction over the matter to ensure the city’s compliance with its judgment and the peremptory writ of mandate. On February 16, 2005, a corrected judgment issued. A peremptory writ of mandate was filed in March 2005, formally requiring the city to set aside its two February 24, 2004 resolutions approving the flood control project and certifying the final EIR on it.
Meanwhile, in February 2005, the city and LRC filed notices of appeal and cross-appeal, respectively, from the January 2005 judgment. (Living Rivers Council v. City of St. Helena, No. A109388.) While those appeals were pending, in November 2005, LRC and the city entered into a settlement agreement. By its terms, recital H of this agreement required the city to modify certain aspects of the project as approved in 2004 in exchange for LRC’s agreement to dismiss the underlying action. It barred LRC from most further litigation on the EIR approved in 2004 for this project. In paragraph 11a(1), it provided that, with certain specified exceptions, “any other changes to the Project as modified by this Agreement are subject to enforcement by LRC pursuant to this Agreement.” The agreement also allowed for specific performance of its terms. On December 8, 2005, at the request of the city and LRC, we dismissed the pending appeal and cross-appeal. The trial court formally approved the settlement agreement in January 2006, retaining jurisdiction to enforce the agreement if needed. (See Code Civ. Proc., § 664.6.)
In January 2006, the Napa River threatened to flood again, forcing the evacuation of mobile home park residents. The river came within inches of topping the flood control measures in place near the mobile home park before the river crested. Still, the city suffered $4 million in property damage from this event. Early that year, the city learned that construction costs were on the rise and that it would not receive approximately $9 million in federal and state funds needed to build the project as it had anticipated that it would.
In June 2006, the city proposed modifications to the 2004 project, some to satisfy its obligations under the settlement agreement (“the 2005 plan”) and additional ones (“the 2006 refinements”) intended to reduce the overall cost of the project. LRC objected to the inclusion of the 2006 refinements in the project on environmental and legal grounds, including that the refinements violated the terms of its settlement agreement with the city. Despite these objections, the city council adopted a resolution adding the 2006 refinements to the project and approving the CEQA addendum to the 2006 plan for the project. The addendum stated that the 2006 plan would result in no new significant impact on the environment beyond those already identified in the 2004 plan and would not increase the severity of previously identified significant impacts. Thus, it concluded that no subsequent or supplemental EIR was required for the project as revised in the 2006 plan.
In August 2006, LRC returned to the trial court, filing a motion to enforce the settlement agreement. (See Code Civ. Proc., § 664.6.) It argued that it had entered into the settlement agreement—giving up its right to challenge the EIR and agreeing to dismiss the underlying lawsuit—in exchange for specific modifications that the city agreed to make to the plan. By adding changes beyond those required by the settlement agreement—that is, by adopting the 2006 refinements—LRC asserts that the city altered the balance of environmental risks and benefits of the project to a point that it became unacceptable to their group, effectively violating the terms of the settlement agreement. It sought specific performance of the terms of the settlement agreement, as well as injunctive and declaratory relief.
Apparently, LRC did not file an action challenging the CEQA addendum.
All subsequent references to respondents City of St. Helena and its city council are made to “the city,” for convenience.
For its part, the city opposed the motion to enforce, arguing that its adoption of the 2006 plan did not breach a duty set out in the settlement agreement. It asserted that the 2006 refinements were not inconsistent with the intent of the agreement.
The trial court heard argument on the motion on October 4, 2006. LRC argued that the settlement agreement obligated the city to build the project as modified by that agreement. It reasoned that it did not get the benefit of the bargain it made when it entered into the settlement agreement. In essence, LRC asserted it entered into the settlement agreement in reliance on the 2005 plan version of the project and that 2006 refinements altered that project to the extent that the agreed-to project was no longer acceptable. The city argued inter alia that it did not breach the settlement agreement, because the 2006 refinements changed only features of the project that were outside the scope of that agreement.
On October 10, 2006, the trial court ruled in favor of the city, finding that the settlement agreement did not entitle LRC to challenge the 2006 refinements that were not part of the agreement. As LRC had not asserted any term of the settlement agreement with which the city had failed to comply, the trial court denied the motion to enforce the settlement agreement. On October 27, 2006, an order denying the motion to enforce that agreement was filed.
II. MOTION TO ENFORCE SETTLEMENT AGREEMENT
A. Interpretation of Settlement Agreement
1. Key Language and Trial Court Reasoning
In its appeal, LRC first contends that the trial court erred by finding that the city’s adoption of the 2006 plan—the 2005 plan as specified in the settlement agreement and the city’s 2006 refinements—for the project did not violate the settlement agreement. It asserts that the plain meaning of that agreement prohibits the city from making any changes to the project after the 2005 settlement agreement without its approval. LRC does not claim that the city failed to adopt the 2005 modifications required by the settlement agreement—it only challenges the 2006 refinements that the city adopted in addition to the 2005 modifications.
For its part, the city argues that the plain language of the settlement agreement supports the trial court’s finding that LRC is limited to enforcing those aspects of the project modifications that were set forth in the agreement. It reasons thus that its approval of the 2006 plan did not trigger LRC’s enforcement authority under the settlement agreement because the city complied with that agreement by retaining the changes to the project that were agreed to as part of the settlement agreement. It notes that the trial court found that the agreement did not include a promise that the city would refrain from making any changes to the project that were not addressed in the settlement agreement. It cites this finding in support of its reasoning that its adoption of the additional project modifications contained in the 2006 refinements did not violate the settlement agreement.
The key language in dispute is contained in paragraph 11a(1) of the settlement agreement: “The Parties agree that the following potential changes to the Project as modified by this Agreement, being beyond the scope of the Agreement, are not subject to enforcement by LRC pursuant to this Agreement (except to the limited extent that this agreement requires they be subject to a separate permitting process) and that LRC may initiate new litigation with respect to these changes: sediment removal from Element C, the use of heavy equipment for routine maintenance within Element C, and extending Adams Street past Paseo Grande Avenue. The Parties agree that any other changes to the Project as modified by this Agreement are subject to enforcement by LRC pursuant to this Agreement. The Parties agree that after construction of the Project as modified by this Agreement, any new flood control measures undertaken by the City (other than the continuing adaptive management measures that are part of this Project as modified by this Agreement) are not subject to enforcement by LRC pursuant to this Agreement and LRC retains its right to seek judicial review of any such actions.” (Italics added.)
The trial court considered the question of whether the language “any other changes to the Project as modified by this Agreement” in the second sentence of paragraph 11a(1) was intended to refer to any changes in general or to any changes to the project as addressed in the agreement. It reasoned that LRC was only entitled to enforce those changes to the project that the city had agreed to make when it entered into the settlement agreement. It concluded that the cited language permitted LRC to challenge only changes to the project that had been discussed as part of the agreement—that is, the 2005 plan—not more general changes that fell outside the scope of that agreement such as the 2006 refinements. Thus, the trial court found that the agreement did not include a promise that the city would refrain from making changes to components of the project that were not addressed in the settlement agreement. Accordingly, it denied LRC’s motion to enforce the settlement agreement.
2. Standard of Review
When parties to pending litigation enter into a settlement agreement, a party may move for the trial court to enter judgment based upon the terms of that settlement agreement. If the parties requested it, the trial court retains jurisdiction over the parties to enforce the settlement agreement. (Code Civ. Proc., § 664.6.) In the case before us, the parties anticipated the possibility of enforcement of the settlement agreement by this process.
The trial court resolves any factual issues related to the enforcement of the settlement agreement. (See, e.g., In re Marriage of Assemi (1994) 7 Cal.4th 896, 911.) If the trial court rules on factual issues, our role on appeal is limited to a determination of whether those factual findings are supported by substantial evidence. (Ibid.; Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 544; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 815; Williams v. Saunders (1997) 55 Cal.App.4th 1158, 1162.)
However, many other issues in such cases present questions of law for our independent review on appeal. (See Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 815.) For example, unless the construction of a settlement agreement turns on the credibility of extrinsic evidence, the interpretation of that instrument is subject to our independent review on appeal. (See Delucchi v. County of Santa Cruz (1986) 179 Cal.App.3d 814, 820-821, cert. den. (1986) 479 U.S. 803 (Delucchi); see also Gribaldo, Jacobs, Jones & Associates v. Agrippina Versicherunges A.G. (1970) 3 Cal.3d 434, 445; see also Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.) Likewise, if conflicting inferences can be drawn from uncontroverted evidence, we make an independent review of the written instrument. (Delucchi, supra, 179 Cal.App.3d at p. 820; see Schaefer’s Ambulance Service v. County of San Bernardino (1998) 68 Cal.App.4th 581, 586.) As we analyze the issues before us, we will apply the standard of review appropriate to each question.
3. Discussion
On appeal, LRC contends that the trial court erred as a matter of law in its interpretation of the settlement agreement. It invites us to apply our independent judgment on appeal to determine the meaning of the disputed terms of the settlement agreement. As the issue of the interpretation of the term of the settlement agreement requires us to determine the meaning of that instrument, we agree that it presents an issue of law for us to determine de novo on appeal. (See, e.g., Delucchi, supra, 179 Cal.App.3d at p. 820; see also Gribaldo, Jacobs, Jones & Associates v. Agrippina Versicherunges A.G., supra, 3 Cal.3d at p. 445.)
When interpreting a written instrument, our key task is to ascertain the intent of the parties. Usually, the language of the instrument itself governs this interpretation that language is clear and explicit. We must view the language of the instrument as a whole, rather than using a disjointed approach. (Ticor Title Ins. Co. v. Rancho Santa Fe Assn. (1986) 177 Cal.App.3d 726, 730 (Ticor).) The key language of the settlement agreement is the second sentence of paragraph 11a(1): “The Parties agree that any other changes to the Project as modified by this Agreement are subject to enforcement by LRC pursuant to this Agreement.” LRC’s expansive view of its enforcement authority focuses on the meaning of the term “the Project” while the city’s interpretation relies on the somewhat broader phrase “changes to the Project.”
We make an analytical approach that places these cited terms in the context of the sentence in which they appear and which avoids an absurd result. (See Ticor, supra, 177 Cal.App.3d at p. 730.) When we consider the entire phrase—“changes to the Project as modified in the Agreement”—the absurdity of LRC’s interpretation of its enforcement authority becomes apparent. It argues that paragraph 11a(1) authorizes it to challenge changes to the project that go beyond those required by the settlement agreement.
This argument defies logic. A motion to enforce a settlement agreement can only be used to compel the city to do what it agreed to do when it entered into the agreement. Nothing in that agreement prohibited the city from making other modifications to the project that did not touch on the topics that formed the impetus for the settlement agreement. LRC’s interpretation of paragraph 11a(1) would allow the group to do much more than compel the city to keep its promises to make specific changes to the project in order to accommodate the group’s concerns. It would also entitle LRC to prevent the city from making other changes to aspects of the project that were not the subject of the settlement agreement—changes that went beyond the scope of that agreement—under the guise of enforcing that settlement agreement. Such a result would be absurd and hence, is an unreasonable interpretation of paragraph 11a(1). (See Ticor, supra, 177 Cal.App.3d at p. 730.)
Our reading of paragraph 11a(1) does not allow LRC to enforce a duty that was not within the scope of the settlement agreement. When we view the phrase “changes to the Project as modified by this Agreement” in the second sentence in the context of the remainder of that sentence and the rest of that paragraph, we find that the only reasonable meaning of the cited language is to changes to those project modifications that were the subject of the settlement agreement, not changes that went beyond the scope of that agreement.
This result does not leave LRC without a remedy. It was free to challenge the additional modifications under CEQA if, as LRC forcefully argues, the new refinements would seriously exacerbate the adverse environmental effects of the project.
The language in recital H of the settlement agreement bolsters this conclusion. That provision states that—in exchange for the termination of litigation on the project—the city agreed to modify the project to reflect LRC’s suggestions and to pay reasonable attorney fees. Reading recital H sets out the two duties that the settlement agreement imposed on the city—to modify the project to incorporate the 2005 modifications and to pay attorney fees. LRC does not contend that the city failed to meet either of these contractual obligations. Significantly, LRC can point to no specific language in the settlement agreement requiring the city to obtain its approval for any additional, future changes to the project that went beyond the scope of those specifically mentioned in the agreement.
LRC also criticizes the trial court for ruling against it based on an argument that the city did not raise—that the agreement did not include a promise that the city would refrain from changing project components that were not addressed in the agreement. As we interpret the agreement anew on appeal, the trial court’s interpretation of it assumes less importance than it would if we applied a different standard of review. Even so, we disagree with LRC’s criticism and find the trial court’s logic to be sound. As we read the trial court’s ruling, its interpretation of the key aspect of the settlement agreement is bolstered by the fact that no specific provision of the agreement contradicts that interpretation. This is not the resolution of an issue that the city did not raise, but the application of logic by the trial court that considered the meaning of paragraph 11a(1) in the context of the entire agreement.
When interpreting one part of the settlement agreement, we must do so in context, considering the language of the instrument as a whole in a manner. (See Ticor, supra, 177 Cal.App.3d at p. 730.) Construing the language of paragraph 11a(1) in the manner that LRC suggests—allowing it to prevent the adoption of the 2006 refinements as well as to enforce the 2005 modifications that the city agreed to adopt—would be inconsistent with recital H’s enumeration of the city’s obligations under the settlement agreement.
We conclude that the settlement agreement does not authorize LRC to challenge the 2006 refinements that the city made to the project, as these changes to the project were beyond the scope of the agreement because they did not change the 2005 plan modifications implemented pursuant to the settlement. As we find that the city’s 2006 refinements were beyond the scope of the 2005 settlement agreement and that thus, the city had not violated any term of that agreement by adopting the additional refinement, the trial court properly denied LRC’s motion to enforce the settlement agreement.
B. Parol Evidence
1. Legal Standard
Alternatively, LRC argues that the trial court erred by failing to consider parol evidence on the question of what the parties intended the key contract language to mean at the time that they entered into the settlement agreement. In support of its motion to enforce the settlement agreement in the trial court, LRC offered a one-page declaration from its principal coordinator reciting the group’s legal interpretation of the meaning of the settlement agreement. At the hearing on the motion to enforce, it also cited to aspects of the administrative record that it claimed would bolster its interpretation of the disputed language of the agreement. This is the parol evidence that LRC now contends that the trial court failed to consider when it interpreted the meaning of the settlement agreement.
A trial court’s threshold determination of whether the admission of parol evidence is admissible is always a question of law subject to our independent review on appeal. (Fischer v. First Internat. Bank (2003) 109 Cal.App.4th 1433, 1443; City of Chino v. Jackson (2002) 97 Cal.App.4th 377, 383; Appleton v. Waessil (1994) 27 Cal.App.4th 551, 554-555; EPA Real Estate Partnership v. Kang (1992) 12 Cal.App.4th 171, 176.) The law on the admission of parol evidence to interpret a written instrument is well settled. The meaning of a writing can only be found by interpreting it in the light of all the circumstances revealing the sense in which the writer used the words. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 38-39; Valdez v. Federal Mut. Ins. Co. (1969) 272 Cal.App.2d 223, 232-233.) Thus, even if the meaning of a written instrument appears to be plain and unambiguous on its face, extrinsic evidence is admissible to explain the meaning of the instrument if the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. (Delucchi, supra, 179 Cal.App.3d at p. 821; see Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 22; Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, 69 Cal.2d at pp. 39-40.)
In order to make this determination, the trial court engages in a two-step process. (Appleton v. Waessil, supra, 27 Cal.App.4th at p. 554.) First, it should provisionally consider all credible evidence concerning the intention of the parties so that the court can place itself in the same situation that the parties found themselves in at the time that they entered into the agreement. (See Delucchi, supra, 179 Cal.App.3d at p. 821; see also Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, 69 Cal.2d at pp. 39-40.) Second, if the trial court determines that the contract is reasonably susceptible to the offered interpretation, then it may admit the extrinsic evidence to interpret the contract. (Appleton v. Waessil, supra, 27 Cal.App.4th at p. 554; Delucchi, supra, 179 Cal.App.3d at p. 821.)
2. Application
On appeal, LRC contends that the trial court failed to engage in the required two-part process for evaluating the relevance of parol evidence. The trial court’s ruling is silent on whether it considered the proffered parol evidence or not. However, even if we assume arguendo that the trial court failed to meet its first-step duty to make a provisional consideration of the proffered evidence to determine whether the contractual language was reasonably susceptible to LRC’s interpretation of paragraph 11a(1), no reversal would be required on the basis of this error. As we must undertake a de novo review of the issues of whether the proffered parol evidence should have been considered and/or admitted, any trial court error stemming from its failure to consider the admissibility of this evidence is now moot. (See, e.g., Fischer v. First Internat. Bank, supra, 109 Cal.App.4th at p. 1443; City of Chino v. Jackson, supra, 97 Cal.App.4th at p. 383.)
The threshold legal issue for our evaluation of whether parol evidence should be considered when interpreting the settlement agreement is whether the key language of the settlement agreement is reasonably susceptible to LRC’s interpretation of it. If the contract is not reasonably susceptible to the offered interpretation, then any parol evidence offered in support of this interpretation is irrelevant and inadmissible. (Tahoe National Bank v. Phillips, supra, 4 Cal.3d at pp. 22-23; Delucchi, supra, 179 Cal.App.3d at p. 821; see In re Marriage of Dawley (1976) 17 Cal.3d 342, 353, fn. 7.) If the evidence would not persuade a reasonable person that the writing meant anything other than the ordinary meaning of its words, then the evidence is useless. (Estate of Russell (1968) 69 Cal.2d 200, 211; Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, 69 Cal.2d at pp. 40-41.)
We have found that the settlement agreement is not reasonably susceptible to LRC’s interpretation of paragraph 11a(1) as encompassing changes to the project beyond the scope of the 2005 modifications required by that agreement. (See pt. II.A.3., ante.) Thus, the proffered parol evidence was necessarily irrelevant and inadmissible. As such, the trial court did not err if, in fact, it failed to admit this evidence. (See, e.g., Tahoe National Bank v. Phillips, supra, 4 Cal.3d at pp. 22-23; Delucchi, supra, 179 Cal.App.3d at p. 821; see also In re Marriage of Dawley, supra, 17 Cal.3d at p. 353, fn. 7.)
In light of this ruling, we need not consider other issues on appeal pertaining to other defenses to the enforcement of the settlement agreement.
The order is affirmed.
We concur: Ruvolo, P.J., Rivera, J.