Opinion
H025185.
10-22-2003
SUNIL M. PATEL, Plaintiff and Appellant, v. JAGDISH M. PATEL et al., Defendants and Respondents.
Plaintiff Sunil M. Patel appeals from a judgment enforcing a settlement agreement with defendants Jagdish M. Patel and Sumitra Patel. We affirm.
STATEMENT OF THE CASE AND FACTS
The instant case arose out of a dispute among the parties regarding their respective interests in a partnership in a Salinas area motel. After filing the initial pleadings, the parties attempted to mediate their dispute in August 2001; however, they were unsuccessful. During a court scheduled settlement conference on May 31, 2002, the parties were able to reach an agreement. On the record, the court recited the settlement agreement reached between the parties as follows: that defendants will pay plaintiff $405,000, "which will represent full payment for his partnership interest in the motel and partnership in question." Further, the court stated: "That money will be paid in no more than 60 days. If it is not paid in 60 days, [plaintiff] would be entitled to obtain ex parte, meaning that he could come into court, come to me with a declaration indicating that he has not been paid, simply with giving notice to [defendants attorney] that hes coming in to do that, and obtain a judgment in the amount of 600,000 dollars, which he could then enforce by also obtaining an order for the sale of the partnership property in that context. [¶] So the consequences if you dont pay within 60 days is he is entitled to a greater judgment and entitled to an order that the property be sold to perfect that judgment."
There were additional requirements of the settlement agreement, including notification to all governmental entity creditors that plaintiff was no longer a partner, and removal of plaintiffs name from the SBA loan taken out by the partnership.
There was nothing stated on the record by the court, counsel for the parties, or the parties themselves about a condition of defendants payment obligation under the agreement being the execution of a written agreement.
The 60-day period set forth in the settlement agreement entered into the record ended on July 30, 2002. On July 18, 2002, defendants counsel, Lawrence Biegel, (hereinafter "Biegel") faxed a copy of a draft settlement agreement and release that was based on the settlement agreement recited in court on May 31, 2002, along with a copy of a certified check in the agreed upon amount of $405,000 to plaintiffs counsel, T. Bob Uemura (hereafter "Uemura"). Biegel did not receive a response from Uemura following his July 18, 2002 communication. On July 29, 2002, Biegel faxed a letter to Uemura, expressing concern over the delay. On July 30, 2002, both counsel discussed changes to the written agreement, as well as logistics for delivery of the settlement check. During the course of counsels discussions, Biegel delivered the settlement check to Uemuras office, along with a letter requesting the check not be cashed until the written settlement was signed by the parties. By mid-afternoon on July 30, 2002, the parties were still not in agreement on the final terms of the written agreement. Just before 5:00 p.m. on July 30, 2002, Biegel received a faxed letter from Uemura stating that there would be no additional discussions regarding the terms of the written settlement agreement until Biegels condition on cashing the settlement check was lifted.
Throughout the evening on July 30, 2002, both counsel exchanged faxed letters attempting to resolve the dispute. Uemura faxed an edited draft of the settlement agreement to Biegel. On July 31, 2002, Biegel sent a draft of the agreement to Uemura that incorporated some, but not all of the requested changes. At the end of the day on July 31, 2002, Uemura reiterated that the condition that the written agreement be signed before the check could be cashed should be withdrawn. Uemura asserted that because defendants had not paid the $405,000 unconditionally by the due date of July 30, 2002, they now owed the penalty amount of $600,000 pursuant to the oral settlement agreement of May 31, 2002.
On August 1, 2002, when plaintiffs had still not signed the written settlement agreement, Biegel sent his office manager to Uemuras office to retrieve the check. On August 2, 2002, the check was placed in an interest bearing trust account for the benefit of plaintiff awaiting judicial resolution of the dispute.
On August 6, 2002, defendants filed a motion to enforce settlement pursuant to Code of Civil Procedure section 664.6. The motion was heard on August 13, 2003. The court granted the motion, and ordered that the oral settlement agreement of May 31, 2002, be enforced in the amount of $405,000.
All further statutory references are to the Code of Civil Procedure unless otherwise stated.
Plaintiff filed a notice of appeal on October 9, 2002.
DISCUSSION
"When ruling on a section 664.6 motion, the court in effect acts as a trier of fact. . . . [Citations.] [¶] The proper standard of review, therefore, is whether the trial courts ruling was supported by substantial evidence." (Fiore v. Alvord (1985) 182 Cal.App.3d 561, 565; see also In re Marriage of Assemi (1994) 7 Cal.4th 896.) Of course, "[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.) Thus, a trial courts interpretation of a settlement agreement is a legal question that is reviewed de novo so long as it does not depend upon the credibility of extrinsic evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
The instant case does not present a dispute over interpretation of the terms of the settlement agreement. Indeed, both parties concur that the oral on-the-record settlement agreement of May 31, 2002, is valid and binding. Moreover, both parties are in accord that a final written agreement was not necessary for the oral agreement to be binding. Therefore, plaintiffs contention on appeal that the issue is whether the signing of a written agreement was a condition precedent to defendants obligation to pay the settlement amount is incorrect. By agreeing that the oral settlement, which contained no condition precedent, is binding without a writing, the parties are in accord that no condition precedent to defendants obligation to pay exists. What the parties disagree about, and what the trial court determined in ruling on the section 664.6 motion was whether defendants payment of $405,000, albeit with the instruction that the check not be cashed until the parties execution of a written settlement agreement, was sufficient performance under the oral agreement. We believe that it was.
In granting defendants section 664.6 motion, the court stated: "The court further finds that the defendants `tendered the settlement sum of $405,000 within the time limit set forth by the oral settlement agreement, but through a disagreement amongst counsel for the parties as to the form of an appropriate written settlement agreement, the settlement sum was held in trust for a short period of time until the dispute could be resolved in court; that pending this court hearing, counsel for the defendants placed the money in an interest bearing trust account for the benefit of the plaintiff."
In ruling on defendants motion, the court considered the actions of the parties from the date of the oral agreement (May 31, 2002), through the 60-day time limit (July 30, 2002), and placed significant importance on the fact that defendants took steps to secure the necessary funds to pay the settlement amount before it was due. Specifically, the court stated: "The money was there in time." The court reiterated: "But the money was there, and thats what the substance of the agreement called for."
In reviewing the record on appeal, we believe there was substantial evidence to support the courts conclusion. Specifically, defendants secured the funds to pay the settlement amount, and in fact obtained a cashiers check for the full amount by July 18, 2002, 12 days before the expiration of the 60 days pursuant to the agreement. Defendants sent a copy of the cashiers check, along with a draft written settlement agreement to plaintiffs counsels office on the same day. During the period between July 18, 2002, and July 29, 2002, Biegel attempted successfully on numerous occasions to communicate with Uemura regarding a finalization of the written agreement. Once Biegel was able to contact Uemura on July 29, 2002, the parties were still in disagreement over the content of the written settlement agreement. With little more than a day left before the expiration of 60 days, Biegel made numerous attempts to execute the written settlement agreement, and went so far as to actually deliver the settlement check to plaintiffs counsels office. Once it was clear that counsel would not agree on the necessity of a writing, Biegel deposited the check in an interest bearing trust account for the benefit of plaintiff, pending judicial resolution of the parties conflict.
The actual check, rather than a copy, was delivered with instructions that it not be cashed until the written agreement was signed by the parties.
Defendants made every effort to comply with the terms of the settlement agreement. Plaintiffs complaint that defendants payment of the check was "conditional" upon the execution of a written agreement is misplaced. Defendants were prepared to pay plaintiff the settlement amount, and in fact secured a check for $405,000 12 days before it was due. Had Uemura responded to Biegels July 18, 2002 letter and draft written agreement in a timely fashion, either to negotiate terms or to object to the necessity of the execution of a written agreement at all, his client would likely have had his settlement money in hand by the July 30, 2002 deadline, or at least a plan for court resolution of the dispute. Instead, Uemura waited until the "11th hour" of mid-afternoon on July 30, 2002, the day payment was due under the settlement agreement, to object for the first time to the execution of a written settlement agreement before plaintiff could negotiate the check. There was little if anything defendants could do at that time, other than to place the funds in an interest bearing trust account for the benefit of plaintiff until the dispute could be resolved by the court.
There was clearly substantial evidence to support the trial courts order in this case. Defendants performed under the agreement by securing the settlement funds, and when it became clear the parties would not agree on the necessity for a written agreement, placing the funds in trust until a judicial resolution of the dispute. The trial court was correct when it stated: "[T]he money was there, and thats what the substance of the agreement called for. Anything beyond that is exalted in form over substance."
DISPOSITION
The judgment is affirmed. Respondents are awarded costs on appeal.
WE CONCUR: Rushing, P.J., and Mihara, J.