Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Tulare County No. 04-21247, Lloyd L. Hicks, Judge.
James C. Oudin and Madelyn Oudin, in pro. per., for Plaintiffs and Appellants.
Williams, Jordan & Brodersen, LLP, and Thomas C. Brodersen for Defendants and Respondents.
OPINION
Poochigian, J.
INTRODUCTION
Appellants/plaintiffs James and Madelyn Oudin reached a settlement agreement with respondents/defendants Don Erwin, Jasper Land, Velma Morrow, and Dr. Dwight James as to the dismissal of a complaint and cross-complaint between the parties, and that defendants would return certain medical and business equipment owned by plaintiffs if the items were in defendants’ possession or control. Plaintiffs submitted a list of equipment to which they claimed ownership. Defendants reported they did not possess or control the equipment and plaintiffs never held legal title to the items.
Plaintiffs filed a motion to enforce the settlement agreement pursuant to Code of Civil Procedure section 664.6. The trial court denied plaintiffs’ motion to enforce and found defendants complied with the terms of the settlement agreement.
All further statutory citations are to the Code of Civil Procedure unless otherwise indicated.
On appeal, plaintiffs contend the court improperly denied their motion to enforce the settlement agreement and should have transformed the agreement into a money judgment for the fair market value of the equipment which defendants purportedly failed to return. We will review the tangled history of plaintiffs’ business practices and will affirm.
FACTS
In 2001, plaintiffs organized several business entities which provided management services to medical clinics in exchange for a percentage of the gross receipts. The entities included Powers Medical Network in Bakersfield, Diamond Medical & Leasing, LLC (Diamond) and Alpha Physical Therapy (Alpha) in Porterville. Nearly 50 people invested approximately $400,000 in these entities over a period of several months.
Diamond managed a medical clinic located in a rental property in Porterville. Alpha was located in the same facility. Diamond was organized so that it provided office space, support staff, and billing services to the medical clinic, and the clinic provided medical care only to non-Medi-Cal patients. Madelyn Oudin ran Diamond’s business office on a daily basis.
James Oudin organized and conducted meetings with potential investors, who were promised that they would receive a percentage of the medical clinic’s gross income. However, the investors were unaware that both plaintiffs were on probation from a criminal action prosecuted by the Attorney General’s office in Riverside County, and that one of the probation conditions was that they could not be involved in any clinic that billed Medi-Cal for services.
Defendants Don Erwin and Jasper Land were among the individuals who invested money in Diamond. According to their sworn declarations, plaintiffs enticed people to invest in Diamond by giving “bills of sale,” “promissory notes,” and “invoices” to investors, secured by specifically-described medical equipment used at Diamond’s medical clinic. These “bills” and “invoices” stated the equipment was owned by either Tri-Vista Medical, Alpha, or Diamond, and James Oudin signed the documents on behalf of the entities. The documents never stated that plaintiffs personally owned the medical equipment. The same equipment was used on multiple occasions to secure investments from different people, again on behalf of Diamond, Tri-Vista, or Alpha, with James Oudin signing on behalf of the entities.
Diamond never made a profit and the investors never received any income. At some point in 2004, Diamond started to have financial problems. In the spring of 2004, the investors learned about plaintiffs’ criminal convictions and started to look into Diamond’s business practices. In July 2004, the investors asked plaintiffs to “remove themselves” from managing Diamond. Defendants Land and Erwin determined that Diamond owed nearly $200,000 in payroll taxes, “[d]ozens of creditors were unpaid,” and Ms. Oudin allegedly “embezzled over $80,000 from the cash payments that were made by patients.” In addition, James Oudin had convinced the investors to personally guarantee credit cards that were supposed to be used for Diamond’s business expenses, but the investors discovered plaintiffs used the credit cards for their personal expenses.
Defendants Erwin and Land asserted Diamond was “a classic [P]onzi scheme,” where plaintiffs used “newly contributed capital invested by others to pay the pre-existing investors,” while plaintiffs “received substantial benefits from the company in the form of salaries, housing, expenses, etc.”
By late 2004, Diamond was no longer able to pay the rent on its business office and the medical clinic. The property was owned by a partnership which included defendant Land. In January 2005, Diamond’s offices reverted to the landlord’s possession. In February 2005, the landlord leased Diamond’s former office to Porterville Valley PromptCare (PVP), and PVP operated a medical clinic in the same location.
Defendant Land declared that Diamond left behind “literally dozens of creditors” and several thousands of dollars of unpaid bills and leases, but Diamond did not declare bankruptcy. The investors allegedly lost about $400,000. Many of the investors had personally guaranteed leases for Diamond’s medical and business equipment, including telephone and computer systems. When Diamond failed, the investors became personally liable for the large unpaid balances on the equipment leases, and defendants Erwin and Land “tried to stop the bleeding.”
Defendants Erwin and Land declared that the investors reached agreements with the equipment lessors, vendors, and Diamond’s other creditors, that if PVP “would pay off the lease, they could have the equipment.” The investors were able to discharge their personal liabilities by allowing PVP to acquire the medical and business equipment left behind in Diamond’s former offices, including the computers and telephone system, in exchange for “paying off the lease[s].” Land and Erwin declared they did not receive any income for the equipment under these agreements, and it was the only way they knew to discharge their personal liabilities on the leases which they had guaranteed on behalf of Diamond.
Diamond also failed to pay the property taxes on the medical clinic and business office, and Tulare County placed a tax lien on the premises and all personal property inside. Defendant Land, one of the partners who owned the property, learned that Tulare County was going to sell the property at a tax lien sale. In order to prevent the tax sale, Land reached an agreement with Tulare County, whereby PVP paid Diamond’s tax obligations and removed the tax lien, and PVP received additional medical and business equipment formerly owned by Diamond and left on the premises. PVP purchased the medical equipment owned by Diamond and Tri-Vista, which plaintiffs repeatedly used as security for investments in Diamond, and PVP received title to the equipment “by paying off [Diamond’s] unpaid unsecured property tax lien.”
On February 1, 2005, defendant Land informed the Tulare County Tax Collector that Diamond was closed and “all equipment, furniture and fixtures were sold” to PVP “as consideration of their payment of the tax lien against said location.”
According to defendant Erwin, the Tulare County District Attorney’s Office filed criminal charges against plaintiffs arising out of the collapse of Diamond, plaintiffs pleaded no contest to several charges, and they were ordered to make restitution to the investors. The investors also obtained a civil judgment against James Oudin for fraud with damages of $70,000, but the money judgment was not satisfied.
This court’s records reflect that James Oudin filed an appeal after pleading guilty in Tulare County Superior Court to grand theft by false pretenses, money laundering, and conspiracy to defraud another of property and was sentenced to one year in jail. The appeal was dismissed upon his request. (People v. Oudin, F055778)
The complaint and cross-complaint
The instant legal action began at some point in 2004, when plaintiffs filed a complaint in the Superior Court of Tulare County against Diamond, and Erwin, Land, Velma Morrow, and Dr. Dwight James. Defendants Erwin, Land, Morrow, and James filed a cross-complaint against plaintiffs. The appellate record does not contain copies of the complaint or cross-complaint. On January 10, 2005, the court granted plaintiffs’ motion to enter a default judgment on their complaint only as to Diamond, which was now defunct.
The settlement agreement with Madelyn Oudin
On January 5, 2006, the court held a hearing as to the pending trial on the complaint and cross-complaint between plaintiffs and defendants. Plaintiff Madelyn Oudin was present with her attorney. Plaintiff James Oudin was in county jail and not present. Defendants Erwin, Land, and Morrow were present with their attorney; Dr. James was not present.
Mr. Brodersen, defendants’ attorney, stated the parties had reached a settlement agreement to dismiss the complaint and cross-complaint with prejudice and waive fees and costs. Mr. Brodersen further stated:
“The plaintiffs will provide a list to these defendants of equipment that James and Madelyn Oudin own. And if that equipment can be located, it will be returned to the Oudins.” (Italics added.)
Mr. Brodersen stated the court would retain jurisdiction to settle any disputes “over possession or returning of that equipment.”
In response to the court’s inquiries, plaintiff Madelyn Oudin and defendants Erwin, Land, and Morrow stated they agreed with Mr. Brodersen’s recitation of the terms of the settlement agreement. The court accepted the settlement as “a Court-enforceable supervised settlement.” Mr. Brodersen agreed to prepare mutual releases and dismissals, plaintiffs’ counsel concurred, and the court removed the matter from the trial calendar.
According to defendants, Madelyn Oudin refused to sign a settlement agreement after the court’s hearing, and defendants had to return to court to make a motion to enforce the settlement agreement.
On March 30, 2006, the court conducted a hearing on defendants’ motion to enforce the settlement agreement. Neither plaintiffs nor their attorney were present. Defendants Erwin, Land, Morrow, and James were present with Mr. Brodersen. The court granted defendants’ motion to enforce but entered the judgment only as between plaintiff Madelyn Oudin, and defendants Erwin, Land, and Morrow. The court found the settlement agreement could not be enforced as to plaintiff James Oudin and defendant Dwight James because they were not present when the terms were recited at the January 2006 hearing. The court further stated: “[T]here was no mention of anyone representing Defendant Diamond... and anyone on behalf of this defendant that could bind the LLC as to the agreement,” and Diamond “was never mentioned” as a party to the settlement agreement.
A written settlement agreement is not enforceable under section 664.6 unless it is signed or agreed to by all the parties in open court, not merely the parties against whom the agreement is sought to be enforced. It is not sufficient for the attorneys for the parties to agree or sign the agreement. (Wackeen v. Malis (2002) 97 Cal.App.4th 429, 440 (Wackeen); Sully-Miller Contracting Co. v. Gledson/Cashman Construction Inc. (2002) 103 Cal.App.4th 30, 37; Cortez v. Kenneally (1996) 44 Cal.App.4th 523, 525; Williams v. Saunders (1997) 55 Cal.App.4th 1158, 1163-1164 (Williams).)
The court stated the settlement agreement provided for the parties to dismiss the complaint and cross-complaint with prejudice. The court further stated:
“Madelyn Oudin agrees to provide a list to these Defendants of equipment that James and Madelyn Oudin own. And if that equipment can be located, it will be returned to Madelyn Oudin.” (Italics added.)
On April 17, 2006, the court filed the order for entry of judgment, which dismissed with prejudice the complaint and cross-complaint between plaintiff Madelyn Oudin and defendants Erwin, Morrow, and Land. The order further stated:
“That Plaintiff Madelyn Oudin shall provide a list to defendants of equipment that Plaintiffs James Oudin and Madelyn Oudin own pursuant to the terms of the settlement stipulated to by Defendants and Plaintiff. If that equipment can be located, it shall be returned to Plaintiff Madelyn Oudin.…” (Italics added.)
The court retained jurisdiction over the parties “to settle any disputes over possession or returning of the equipment, and to enforce the settlement until performance in full of its terms.”
Ms. Oudin’s Demand Letter and the Inventory List
On September 22, 2006, plaintiff Madelyn Oudin sent a letter to defendant Dwight James and demanded to pick up all the equipment on an inventory list no later than October 10, 2006. She also demanded a date for her attorneys to “go through the facility,” presumably referring to PVP, which had taken over the facility previously used by Diamond. Ms. Oudin stated she would be forced to file a motion to cancel the settlement agreement if Dr. James failed to respond to her request.
Mrs. Oudin’s demand letter was accompanied by a two-page inventory list of medical and business equipment. The list was prepared by one of the plaintiffs and not by the defendants. Plaintiffs claimed ownership and demanded possession of the equipment on the list pursuant to the terms of the settlement agreement. The list included an EKG, alcohol Breathalyzer, Universal X-ray machine, X-ray processor and assorted X-ray equipment, wall-mounted blood-pressure cuffs, examination and physical therapy tables, chairs, desks, filing cabinets, lamps and stools, refrigerators, a Toshiba telephone system, cases of surgical gloves, glass jars, gauze, syringes, fire extinguishers, an autoclave, and the Oudins’ personal belongings. The inventory list stated the total value of all items was over $91,000.
On October 9, 2006, Mr. Brodersen, defendants’ attorney, sent a letter to plaintiffs’ attorney, in response to Ms. Oudin’s demand letter of September 22, 2006, and stated:
“None of the equipment listed in Madelyn’s letter is in the possession, custody, or control of Don Erwin, Jasper Land, Velma Morrow or Dwight James. Further, much of the equipment requested by her letter was originally purchased by the clinic and not by Madelyn or her husband as claimed. If she seriously disputes this notion, records can be assembled showing that neither Madelyn nor Jim contributed towards the purchase of such equipment.” (Italics added.)
Defendants also rejected Ms. Oudin’s demand for her attorneys to “‘go through the facility’” in the absence of a court order.
Plaintiffs never responded to defendants’ letter or challenged the assertions that defendants did not possess or control the equipment or plaintiffs never owned the items.
The settlement agreement with James Oudin
As explained ante, plaintiff James Oudin and defendant Dwight James were not in the courtroom when the initial settlement agreement was recited in January 2006, and the trial court declined to enforce the agreement against them when it entered the judgment in April 2006. As a result, the complaint and cross-complaint were replaced on the trial calendar as between Mr. Oudin and the defendants.
On November 9, 2006, the court conducted a hearing as to reaching a separate settlement agreement between plaintiff James Oudin and defendants Erwin, Morrow, Land, and James. As in the prior settlement with Madelyn Oudin, the parties orally agreed to resolve the matter by dismissing the complaint and cross-complaint without prejudice, and defendants would return any equipment owned by plaintiffs in their possession, custody, or control.
On December 11, 2006, the judgment pursuant to the settlement agreement was filed as between plaintiff James Oudin and defendants Erwin, Land, Morrow, and James, dismissing the complaint and cross-complaint with prejudice. The judgment further stated:
“Any equipment identified in Attachment A, attached hereto, that is owned by Plaintiffs and that is in the possession, custody or control of any Defendant shall be returned to Plaintiff Madelyn Oudin....” (Italics added.)
The court retained jurisdiction to settle any disputes “over the rightful possession of or the process of returning the equipment identified in Attachment A, and to enforce the settlement until performance in full of its terms,” and all equipment “shall be returned” no later than December 12, 2006. The judgment was “approved as to form” and signed by James Oudin.
The “Attachment A” described in the judgment was “the very same” two-page list of medical and business equipment previously submitted by Madelyn Oudin with her demand letter of September 22, 2006. As explained ante, defendants had already sent a letter to plaintiffs’ attorney in October 2006, and stated they did not have possession or control of any of the equipment and plaintiffs never owned the items.
Defendants’ response to plaintiffs’ demand
The record implies plaintiffs sent a demand letter to defendants after the judgment was entered in December 2006 as to the return of the equipment listed in “Attachment A.” On February 1, 2007, Mr. Brodersen, defendants’ attorney, sent a letter to plaintiffs stating that their demand for equipment had been reviewed in detail, but defendants were unable to “make any equipment available to you at the present time.”
“The equipment you listed is either not in existence, belongs to a third party (and always did belong to such third party), was sold or is unidentifiable. We are informed that some of the equipment may also have been repossessed because lease or purchase payments were not timely made.”
Mr. Brodersen explained the surgical gloves, gauze, and syringes on the inventory list had either been consumed, never existed, or could not be located. Mr. Brodersen further stated specific items could not be located or identified, or were not in the possession of defendants Erwin, Morrow, Land, or James, including the EKG, Breathalyzer, X-ray machine, and all the clinic and office equipment on plaintiffs’ list.
Mr. Brodersen’s letter continued:
“If any more information can be provided that would help identify any piece of equipment on your list, we would be happy to pass such information along to the corporation that currently operates the clinic with the request that the corporation respond. More importantly, if you have any documentation concerning any piece of equipment (bill of sale, lease, title document of any kind, receipt) showing that you own any piece of equipment on your list, please provide it as we are quite sure that it will be of interest to the corporation.
“Of course, the corporation is not a party to the lawsuit filed by you and therefore is not subject to the court’s jurisdiction. Furthermore, we do not represent the corporation and cannot therefore make any commitments on its behalf. However, what we can do to help resolve your claim for these pieces of equipment, we will do.” (Italics added.)
Plaintiffs’ motion to enforce the settlement agreement
On June 11, 2008, plaintiffs filed a motion pursuant to section 664.6 to enforce the settlement agreement as stated in the court’s order of December 11, 2006, which is the matter currently before this court. Plaintiffs asserted defendants and their attorney committed “fraud and mistruths” and entered into the settlement agreement without any intent to return plaintiffs’ equipment. Plaintiffs acknowledged that Mr. Brodersen, defendants’ attorney, notified them by letter that the equipment was unavailable, but argued Mr. Brodersen intentionally made false representations when they agreed to the settlement agreement as to whether defendants had the equipment and intended to return the items. Plaintiffs requested the court order defendants to return the equipment on the inventory list or pay them for the value of the missing equipment.
Plaintiffs also filed a motion for relief from the court’s prior orders, which dismissed their complaint against defendants with prejudice, and argued defendants and their attorney committed fraud when they entered into the settlement agreement because they never intended to return the equipment. James Oudin filed a declaration in support of the motion and asserted the disputed equipment was “still there in the premises of the defendants.”
On June 24, 2008, defendants filed opposition to plaintiffs’ motions and asserted the matter had been entirely resolved by the entry of judgment on December 11, 2006, that defendants would return any property owned by plaintiffs in defendants’ possession or control. Defendants further asserted they complied with the settlement agreement, provided a written response to plaintiffs’ inventory list, and explained none of the items could be turned over either because the property did not exist or it was not in their possession or control. Defendants argued there was no basis for the court to further enforce the settlement agreement.
On July 24, 2008, the court directed plaintiffs to provide a transcript of the hearing in which the settlement agreement was reached.
On August 20, 2008, plaintiff James Oudin filed a supplemental declaration in support of his motion to enforce and asserted that defendants used the equipment on the inventory list for the last four years and created a profitable business from such use. Mr. Oudin further asserted that Diamond was originally a defendant in the civil lawsuit, it defaulted, and as a result of Diamond’s default, “[a]ll assets of Diamond … should be transferred to the Oudin’s.” Mr. Oudin asserted that it was “obvious” defendants would not return the property, and requested the court modify the judgment to a “money judgment” for $100,000 plus interest, representing the fair market value of the missing equipment.
The court’s tentative ruling
On August 28, 2008, the court conducted a hearing on plaintiffs’ motion to enforce the judgment. The Oudins were present and represented themselves; Mr. Brodersen represented defendants. The court issued a tentative ruling in plaintiffs’ favor and found the combination of what happened at the separate settlement conferences raised the presumption that defendants entered into the settlement agreements in bad faith and without the intent to perform.
Mr. Brodersen argued the court’s tentative ruling was “a travesty” because the parties never agreed that plaintiffs owned the equipment when they entered into the settlement agreement. Instead, the settlement agreement provided for defendants to return the equipment only if the items could be located, but plaintiffs submitted a list which contained equipment owned by Diamond, and Diamond was not a party to the settlement agreement.
Mr. Brodersen further argued that after the judgment was filed as to Ms. Oudin’s settlement, defendants received the inventory list, defendants informed plaintiffs they did not have the equipment, and both plaintiffs received this information in October 2006, two months before Mr. Oudin’s settlement conference. Mr. Brodersen continued:
“So then we come to [Mr. Oudin’s] settlement conference in December of ‘06. And we said, again, the very same thing we said three times previous. They will provide a list. Any equipment that’s in the possession, custody, or control of the defendants shall be returned, if it’s in their possession, custody or control. [¶ ] We never agreed that—and we never represented that we owned this equipment. That’s never been the case. Diamond has never been a party to this case.”
Mr. Brodersen insisted the equipment on plaintiffs’ inventory list was owned by Diamond and not the defendants, but “we offered to try to find some of it. And if we could find it, we would return it.” Defendants looked for the equipment more than once, and defendants did not have anything.
The court asked what happened to the equipment. Mr. Oudin replied the equipment was still on the premises formerly used by Diamond and currently being used by another medical clinic, presumably PVP. Mr. Brodersen said that if the equipment was still on the premises, defendants did not have the authority to enter the new clinic and take the equipment because “[w]e are not Diamond.” Mr. Brodersen explained Diamond owned the equipment, Diamond was defunct, and the equipment was now owned by Diamond’s creditors, who were owed about $500,000.
The court asked plaintiffs what the equipment was realistically worth. Mr. Oudin said $120,000. The court replied, “[c]ome on,” and asked for a realistic figure. Mr. Oudin said the equipment was appraised at $280,000. The court asked for “fire sale values,” and Mr. Oudin changed his estimate to about $50,000. Mr. Brodersen said, “I think it’s junk.” The court replied, “That would be my inclination to think too.”
Mr. Oudin asked the court to send the sheriff into the clinic that now occupied Diamond’s former office so they could examine and remove all the equipment. Mr. Brodersen objected because “that presumes that they actually owned the stuff in the first place.”
The court said it appeared that “the left hand was hiding what the right hand had” when defendants entered into the settlement agreement. Mr. Brodersen replied the equipment belonged to an entity, defendants did not have the equipment, and plaintiffs did not have any right to the items “unless all the creditors get paid.”
The court took the matter under submission and intended to review the transcripts of the prior hearings in the case.
Defendants’ further opposition
On September 3, 2008, defendants filed a series of declarations in further support of their opposition to plaintiffs’ motions and to respond to the trial court’s concerns about the ownership and status of the equipment on the inventory list. Mr. Brodersen, defendants’ attorney, filed his own declaration and addressed plaintiffs’ assertions that defendants allegedly possessed the equipment. Mr. Brodersen pointed out the initial settlement agreement between Ms. Oudin and defendants was reached prior to plaintiffs’ production of any inventory list, and the parties never agreed that plaintiffs owned any equipment when they entered into the settlement agreement. Mr. Brodersen further noted that in September 2006, Ms. Oudin sent a demand letter for delivery of the equipment in her inventory list. Mr. Brodersen replied to both plaintiffs in October 2006 and plaintiffs were specifically informed that defendants did not possess any of the equipment. Plaintiffs were invited to submit proof of their ownership, and they never responded to the letter.
Mr. Brodersen declared that when Mr. Oudin entered into his settlement agreement with all the defendants in December 2006, Mr. Oudin submitted the same two-page inventory list of equipment previously submitted by Ms. Oudin, even though “the status of that equipment was known to EVERYONE even prior to the settlement conference with James Oudin.” (Emphasis in original.)
In further support of defendants’ opposition, defendants Erwin and Land submitted sworn declarations, as summarized ante, about the investors in Diamond, Mr. Oudin’s regular practice of repeatedly using the same medical equipment as security for promissory notes and investments, that the medical and office equipment was owned by Diamond, Alpha, and/or Tri-Vista and not by the Oudins, and the investors’ efforts to discharge their personal liability for Diamond’s debts. The declarations by defendants Erwin and Land were further supported by copies of the relevant checks, invoices, and receipts as to the matters described in the declarations. Defendants Erwin and Land declared they did not have any of the equipment claimed by plaintiffs, and they believed all the equipment had been owned by Diamond, Alpha, vendors, or lessors.
Defendants also submitted a declaration from Bobbie Schonert, the former bookkeeper for Diamond and present bookkeeper for PVP, who reviewed documents from both entities and explained the status of every piece of equipment in plaintiffs’ two-page inventory list, with relevant supporting documents which traced the ownership and whereabouts of the equipment which plaintiffs claimed they owned.
Ms. Schonert described the tangled history of the EKG on plaintiffs’ inventory list, which was owned by a physician who previously occupied the building later used by Diamond. “Tri-Vista” sold the EKG to an investor as security for an investment, but PVP later purchased the EKG from the physician who still owned it. Ms. Schonert went through every item of medical equipment and office furniture on the list and declared the items were owned by Diamond and left behind in the office, and the items were purchased by PVP “by paying off the unpaid unsecured property tax lien.”
Ms. Schonert declared the physical therapy equipment on plaintiffs’ inventory list had been leased from a medical equipment vendor by Alpha, another entity associated with Diamond. PVP acquired the equipment “by paying off the lease.” The computers, printers, and telephone system on the inventory list, which plaintiffs claimed to own, had been leased by Diamond from various vendors, and PVP again purchased the equipment by paying off the leases. Ms. Schonert declared she did not have any information about surgical gloves, syringes, gauze, and plaintiffs’ personal property on the inventory list.
The trial court’s initial ruling
On September 8, 2008, the court denied plaintiffs’ motion to enforce the judgment and for relief from judgment, based on its review of the parties’ arguments at the previous hearing and the additional declarations submitted by defendants. The court found:
“At the time the Settlements at issue in Plaintiffs’ motions were entered, Plaintiffs knew or should have known that any claim they might assert to equipment itemized by Plaintiffs after the settlements was lost by reason of prior sale or encumbrance of Plaintiffs’ interest. Further, as a result of prior sale and/or encumbrances, Plaintiffs knew or should have known that it was unlikely that Defendants had possession of or had authority over the itemized equipment.”
Plaintiffs’ objections to the court’s ruling
On September 15, 2008, plaintiffs filed objections to the court’s ruling of September 8, 2008, and argued defendants improperly introduced evidence after the court took the matter under submission at the August 2008 hearing. Plaintiffs objected to the declarations from Erwin, Land, and Ms. Schonert, and the supporting documentary exhibits, and argued the court improperly considered this evidence when it denied plaintiffs’ motion. Plaintiffs again argued the settlement agreement provided for defendants to return plaintiffs’ equipment without any exceptions or conditions, the equipment was missing, and the only remedy was to “convert the judgment into a money judgment” for $97,000 plus interest.
On October 7, 2008, plaintiffs filed a motion to vacate the court’s ruling of September 8, 2008, and argued the court violated their due process rights by considering the declarations filed by defendants after the court took the matter under submission, and not giving plaintiffs the opportunity to respond to the evidence. Plaintiffs argued the declarations lacked foundation and contained inadmissible hearsay.
Plaintiffs requested the court vacate its ruling of September 8, 2008, and set an evidentiary hearing for plaintiffs to present evidence to contradict the declarations submitted by defendants as to ownership of the equipment. Plaintiffs again requested the court “convert the judgment to a money judgment” for $99,880 plus interest, since defendants refused to turn over the equipment.
The court’s vacation of the initial ruling
On October 23, 2008, the court partially granted plaintiffs’ motion and vacated its prior ruling of September 8, 2008, because plaintiffs did not have the opportunity to respond to defendants’ evidence after the matter was taken under submission. The court granted plaintiffs leave to file “any supplemental evidence and/or declarations” in support of their motion to enforce the settlement agreement, “limited to the single issue” of whether or not any of the equipment in the inventory list “was in the possession or control” of defendants “at any time from and after the date of the Settlement Agreement.”
On November 12, 2008, plaintiffs filed additional evidence in response to the court’s order, consisting of a declaration from James Oudin’s son, that he personally moved the medical equipment on the inventory list from St. Luke’s Medical Center in El Centro to a storage facility in Bakersfield, the equipment was in the storage facility from 2000 to 2001, and he moved the equipment to the Porterville, Tulare, and Delano clinics with Mr. Oudin’s help. Plaintiffs did not submit any additional evidence to show they owned the equipment in the inventory list.
The court’s final ruling
On December 2, 2008, the court filed an order denying plaintiffs’ motion to enforce the judgment and settlement agreement and the motion for relief from default. The court noted that it heard argument on the motions and took the matter under submission on August 29, 2008, defendants filed supplemental declarations on September 5, 2008, plaintiffs requested additional time to respond, and plaintiffs filed a response on November 12, 2008. The court found:
“[Plaintiffs’] arguments to the contrary notwithstanding, there is nothing in the underlying settlement agreement which indicates that the individual Defendants acknowledged or affirmatively asserted that they had possession of the equipment sought by [plaintiffs]. Defendants’ counsel may have equivocated as to whether or not Defendants had the equipment, but he never represented to Plaintiffs that the equipment was in the possession of these Defendants. At the time the Settlements at issue in Plaintiffs’ motions were entered, Plaintiffs should have known that any claim they might assert to equipment itemized by Plaintiffs after the settlements was lost by reason of prior sale or encumbrances of Plaintiffs’ interest. Further, as a result of prior sale and/or encumbrance, Plaintiffs should have known that it was unlikely that these Defendants had possession of or had authority over the itemized equipment. While Plaintiffs may have had an expectation under the settlement agreement that these Defendants would take steps to recover possession of the equipment from third parties, there is no provision in the agreement requiring Defendants to take such action. There is nothing in the agreement providing for any additional recovery to Plaintiffs in the event the equipment is not in the possession of these Defendants. The relief sought by Plaintiffs is not provided for under the agreement.
“Defendants have filed declarations under oath that they do not have possession of or control over the equipment sought by Plaintiffs. Plaintiffs have provided no evidence to suggest that the Defendants’ contentions are untruthful.” (Italics added.)
DISCUSSION
THE COURT PROPERLY DENIED PLAINTIFFS’ MOTION TO ENFORCE
Plaintiffs contend the court should have granted their motion to enforce the settlement agreement because defendants refused to return the equipment on the two-page inventory list, and the court should have transformed the settlement agreement into a money judgment against defendants for $91,880, based on plaintiffs’ estimate of the value of the equipment.
Plaintiffs’ motion to enforce the settlement agreement was brought pursuant to section 664.6, which provides parties with a summary procedure to enforce settlement agreements made between them. (Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110, 1117.) The trial court determines in the first instance whether the parties entered into an enforceable settlement. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360 (Osumi).) A settlement is enforceable under section 664.6 only if the parties agreed to all material settlement terms. (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1182.) A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811 (Weddington Productions).) “An essential element of any contract is ‘consent.’ [Citations.] The ‘consent’ must be ‘mutual.’ [Citations.] ‘Consent is not mutual, unless the parties all agree upon the same thing in the same sense.’ [Citations.]” (Weddington Productions, supra, 60 Cal.App.4th at p. 811.)
Section 664.6 states: “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. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.”
In ruling on a section 664.6 motion to enforce, the trial court may consider evidence beyond the settlement agreement and determine disputed facts based on declarations or oral testimony, but only to determine the terms the parties previously agreed upon. (Gauss v. GAF Corp., supra, 103 Cal.App.4th at p. 1123; Wackeen, supra, 97 Cal.App.4th at p. 432, fn. 1; Weddington Productions, supra, 60 Cal.App.4th at p. 810; Osumi, supra, 51 Cal.App.4th at p. 1360.) While the court may receive evidence as to the terms of the settlement, “nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.” (Weddington Productions, supra, 60 Cal.App.4th at p. 810, italics in original.)
On appeal, the trial court’s factual findings must be affirmed if supported by substantial evidence, and we resolve all evidentiary conflicts and draw all reasonable inferences to support the court’s findings. The court’s rulings upon questions of law are subject to independent review. (Gauss v. GAF Corp., supra, 103 Cal.App.4th 1110, 1116; Williams, supra, 55 Cal.App.4th 1158, 1162; Osumi, supra, 151 Cal.App.4th 1355, 1360.)
The trial court properly denied plaintiffs’ motion to enforce the settlement agreement, and the court’s factual determinations that defendants fully complied with the terms of the agreement are supported by substantial evidence. The settlement agreement provided for defendants to return equipment to plaintiffs only if defendants had possession or control of those items. The parties never agreed that plaintiffs owned particular equipment, or that defendants actually possessed or controlled any of the items, which plaintiffs claimed they owned. Defendants fully performed their duties under the terms of the settlement agreement because they exhaustively reviewed the list which plaintiffs subsequently provided, traced the location and status of each item on the list, and demonstrated that they did not have possession or control of any of the items.
The entirety of the record showed that plaintiffs never presented evidence of legal title to the equipment on the two-page inventory list they submitted to defendants, the equipment had been leased from independent vendors or owned by Diamond, Alpha, Tri-Vista, or other entities, and the equipment had been lost through prior sales or encumbrances. More importantly, the evidence showed that plaintiffs knew or should have known about the legal status of the equipment when the judgments and settlement agreements were entered as to Madelyn Oudin in April 2006, and James Oudin in December 2006.
Plaintiffs contend defendants conceded plaintiffs owned the equipment on the two-page inventory list because the court issued an order as to the terms of the settlement agreement in March 2006, the judgment was entered in December 2006, that judgment included the two-page inventory list as “Attachment A,” and the judgment stated the items listed in the attachment would be returned no later than December 12, 2006. Plaintiffs argue that defendants thus agreed plaintiffs owned the equipment listed in the attachment, defendants agreed they possessed the items, and defendants agreed to return them by a certain date.
Plaintiffs’ argument ignores the procedural history of this case as to the existence of the separate settlement agreements between plaintiffs and defendants. As set forth ante, the court initially entered a judgment on the settlement agreement in April 2006 only between Madelyn Oudin and three defendants because James Oudin was in jail and did not appear in court when the parties recited the terms of the settlement agreement. The April 2006 judgment stated that Madelyn Oudin “shall provide a list to defendants of equipment that Plaintiffs James Oudin and Madelyn Oudin own pursuant to the terms of the settlement stipulated to by Defendants and Plaintiff. If that equipment can be located, it shall be returned to Plaintiff Madelyn Oudin.…” There is no evidence that such a list was before the court or considered by the parties when the settlement agreement was reached or the judgment was entered.
The April 2006 judgment contained conditional language, that Madelyn Oudin “shall” provide such a list of equipment that plaintiffs “own[ed],” and defendants would return the items “[i]f” the equipment could be located. Madelyn Oudin submitted the demand letter and two-page inventory list to defendants in September 2006. Defendants advised both plaintiffs in October 2006 that the equipment was not in their control or possession and plaintiffs never owned the equipment. Defendants thus discharged their duties under the conditional provisions of the April 2006 judgment when they advised plaintiffs that they did not have the equipment and plaintiffs never owned the items.
The judgment that was entered in December 2006 was based on the settlement agreement between James Oudin and the defendants, which finally disposed of the complaint and cross-complaint between all the parties. More importantly, however, the judgment stated that “[a]ny equipment identified in Attachment A, attached hereto, that is owned by Plaintiffs and that is in the possession, custody or control of any Defendant shall be returned to Plaintiff Madelyn Oudin.…” Attachment A was the same two-page inventory list Madelyn Oudin submitted to defendants in September 2006. The specific terms of the settlement provided for defendant to return equipment on that list that was “owned” by plaintiffs and in defendants’ “possession, custody or control.”
At the time of the December 2006 judgment, however, both plaintiffs had already been advised that defendants did not have possession or control of the items on the two-page inventory list, and there was no evidence that plaintiffs owned the items. The December 2006 settlement agreement and judgment did not state that defendants admitted their possession or control, or plaintiffs had valid ownership claims of any of the equipment listed in Attachment A. Instead, the judgment again contained conditional language that defendants would return equipment if it was owned by plaintiffs, and if it was in defendants’ possession. In February 2007, defendants again advised plaintiffs they did not possess or control any of the equipment, plaintiffs never owned the items, and the equipment was possessed or owned by third parties, repossessed for nonpayment of lease agreements, or sold after Diamond’s financial collapse.
The entirety of the record thus establishes that the parties never agreed plaintiffs owned certain equipment, or that defendants possessed or controlled the items, as part of the settlement agreement. The terms were clearly conditional and provided for defendants to return equipment only if the items were owned by plaintiffs and were within defendants’ possession or control. The inclusion of the two-page inventory list as “Attachment A” to the December 2008 judgment did not act as an admission of these issues, but instead provided plaintiffs with yet another opportunity to produce competent evidence as to whether they legally owned the equipment, aside from their bald declarations that they personally owned the items. Plaintiffs failed to do so and never refuted defendants’ documentary evidence that the equipment on the two-page inventory list was owned by other vendors, lessors, or Diamond, and that the same equipment was used on multiple occasions to secure investments on behalf of Diamond and Alpha.
Plaintiffs contend the court improperly denied their motion based on evidence filed by defendants after the court took the matter under submission in August 2008. This evidence consisted of the declarations from Ms. Schonert, the bookkeeper, and defendants Erwin and Land, and as to the legal status and whereabouts of the equipment on the two-page inventory list, supported by extensive documentary exhibits. Plaintiffs assert that once the court entered the judgment on the settlement agreement in December 2006, it was bound by the specific terms of the agreement, it was foreclosed from considering “evidentiary material as to facts on which the judgment is based,” and defendants could not introduce evidence to “question the terms of the settlement.” Plaintiffs contend the court could not “go back and reexamine the facts” and it was limited to “enforcing the intent and purpose of the settlement made into a judgment.”
Plaintiffs’ assertions misstate the law as to the trial court’s resolution of a motion to enforce a settlement agreement under section 664.6. As explained ante, the trial court may consider evidence beyond the settlement agreement and determine disputed facts based on declarations or oral testimony, but only to determine the terms the parties previously agreed upon. (Gauss v. GAF Corp., supra, 103 Cal.App.4th at p. 1123; Wackeen, supra, 97 Cal.App.4th at p. 432, fn. 1; Weddington Productions, supra, 60 Cal.App.4th at p. 810; Osumi, supra, 51 Cal.App.4th at p. 1360.) The court properly considered defendants’ evidence on the nature and terms of the settlement and the status of the equipment when it denied plaintiffs’ motion to enforce. Moreover, the court vacated its initial denial of plaintiffs’ motion and granted them the opportunity to produce evidence to refute defendants’ declarations and exhibits, particularly as to whether plaintiffs had legal title to any of the equipment on the inventory list. Plaintiffs only submitted a declaration from James Oudin’s son, that he personally moved the medical equipment to Diamond’s offices. Aside from their unilateral and self-serving declarations of ownership, plaintiffs failed to present any competent evidence to establish their legal title to the equipment or rebut defendants’ documentary evidence as to the equipment’s legal status before and after Diamond’s demise.
In the course of their motion to enforce, plaintiffs asserted that the court should transfer to them all assets which formerly belonged to Diamond, since Diamond was originally a defendant in the underlying lawsuit and it defaulted. While Diamond was named in the initial complaint, however, it was not a party to either of the two settlement agreements or judgments in this case, and the settlement agreements never provided for plaintiffs to receive possession of any equipment previously owned by Diamond. The mere fact of Diamond’s default did not make it a party to the settlement agreement. As explained ante, a written settlement agreement is not enforceable under section 664.6 unless it is signed or agreed to by all the parties in open court, not merely the parties against whom the agreement is sought to be enforced. It is not sufficient for the attorneys for the parties to agree or sign the agreement. (Wackeen, supra, 97 Cal.App.4th at p. 440; Sully-Miller Contracting Co. v. Gledson/Cashman Construction Inc., supra, 103 Cal.App.4th 30, 37; Cortez v. Kenneally, supra, 44 Cal.App.4th 523, 525; Williams, supra, 55 Cal.App.4th 1158, 1163-1164.) As the trial court herein noted at the hearing on the settlement agreement: “[T]here was no mention of anyone representing Defendant Diamond... and anyone on behalf of this defendant that could bind the LLC as to the agreement,” and Diamond “was never mentioned” as a party to the settlement agreement.
Plaintiffs contend the court should have converted the settlement agreement and judgment into a money judgment against defendants for the fair market value of the missing equipment since the court retained jurisdiction to resolve disputes over the settlement agreement. This argument is also meritless. “A settlement agreement is simply a contract. [Citation.] The retention of the trial court's jurisdiction to enforce the settlement agreement is no different than allowing a person with a contract [with a party] to sue it for breach. The court is powerless to impose on the parties more restrictive or less restrictive or different terms than those contained in their settlement agreement.… The court simply has reserved the power to enforce, according to its terms, the contract they negotiated amongst themselves.” (Hernandez v. Board of Educ. of Stockton Unified School Dist. (2004) 126 Cal.App.4th 1161, 1176.)
The settlement agreement never provided for a money judgment to be imposed if defendants failed to comply with the terms of the settlement agreement, or if plaintiffs did not recover the equipment on their list. There is no evidence the parties contemplated such a provision, and the trial court lacked jurisdiction to alter the material terms of the agreement to impose such an obligation. Plaintiffs’ requested relief would have resulted in a complete revision of the terms of the settlement because “nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.” (Weddington Productions, supra, 60 Cal.App.4th at p. 810, italics in original.)
Plaintiffs assert “[t]he parties all agreed” that the value of the equipment on the inventory list was $91,880, and plaintiffs were “entitled to a monetary judgment” in that amount “[s]ince the equipment has now disappeared.” As with their unsupported ownership claims, plaintiffs’ assertions as to the value of the equipment are also refuted by the record. As we have explained, Madelyn Oudin and three defendants reached the initial settlement in this case in January, March, and April 2006, without reviewing any inventory list of equipment. In September 2006, Madelyn Oudin submitted the two-page inventory list, prepared by one or both plaintiffs, which purportedly listed equipment the Oudins personally owned. That same list contained plaintiffs’ own vague valuations of each piece of equipment and stated the total value of all the items was $91,880. While the same two-page inventory list was attached to the December 2006 judgment, the judgment never stated that the parties agreed about the valuations on that list and there is no evidence that the settlement agreement contained any provisions about the value of the equipment.
Plaintiffs’ assertion that the parties agreed about the value of the equipment is further refuted by the court’s exchange with the parties at the August 2008 hearing on plaintiffs’ motion to enforce. The court asked plaintiffs what the equipment was realistically worth. Mr. Oudin said $120,000. The court replied: “Come on” and asked for a realistic figure. Mr. Oudin said the equipment was appraised at $280,000. The court asked for “fire sale values,” and Mr. Oudin changed his estimate to about $50,000. Mr. Brodersen, defendants’ attorney, said, “I think it’s junk,” and the court replied, “That would be my inclination to think too.”
As the trial court noted at the initial hearing on plaintiffs’ motion to enforce, the record suggested defendants may have entered into a second settlement agreement, which incorporated Ms. Oudin’s equipment list, without any intent to perform. Defendants agreed to return any equipment on the list that was owned by the Oudins, yet defendants had already declared the Ourdins had no legal right to any of the items on that list. The trial court was understandably concerned about the possible implications from this scenario and tentatively granted plaintiffs’ motion because the matter “didn’t pass the sniff test,” “the appearance was that the left hand was hiding what the right hand had,” and the court was “trying to bend over backwards to make sure this was fair” for parties who were acting in pro. per.
However, the trial court took several steps to ensure the settlement was properly entered into and enforced. It tentatively granted plaintiffs’ motion, then ruled in defendants’ favor, and subsequently vacated that ruling and reopened the matter so plaintiffs could file additional evidence to establish their ownership interests in the equipment. Despite having numerous opportunities to introduce evidence on these issues, plaintiffs failed to introduce any evidence as to the underlying issue in the case whether defendants were in possession of any items on the equipment list which were personally owned by plaintiffs. Plaintiffs failed to present any evidence to refute defendants’ extensive documentary exhibits, which showed that the items on the equipment list were either owned by Diamond as a separate legal entity, leased from various vendors, or the legal title could not be established.
We thus conclude the trial court properly denied plaintiffs’ motion to enforce the settlement agreement, and the court’s factual findings as to defendants’ compliance with the agreement are supported by substantial evidence. Moreover, the settlement agreements and judgments never provided for the court to transform the terms of the settlement agreement into a money judgment under any circumstances, and particularly not based on plaintiffs’ unilateral and unsupported valuations of property they claimed to own. While the court retained jurisdiction over the matter, such jurisdiction was limited to enforcing the terms of the settlement agreement as reduced to judgment.
DISPOSITION
The judgment is affirmed.
WE CONCUR: Vartabedian, Acting P.J.Gomes, J.