Opinion
A150008
01-02-2018
THOMAS DEE ENGINEERING CO., INC., Plaintiff and Appellant, v. WARREN KENT KHTIKIAN, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Marin County Super. Ct. No. CIV1404231)
Appellant Thomas Dee Engineering Company, Inc. appeals after the trial granted the motion of respondent Warren Kent Khtikian, to enforce a settlement between the parties, pursuant to Code of Civil Procedure section 664.6. On appeal, appellant contends the trial court erred when it granted the motion because (1) the settlement agreement was based on "an unenforceable agreement to agree" in that documents containing a release and reservation of jurisdiction, to which the agreement referred, had not yet been prepared, (2) the trial court lacked jurisdiction to force appellant to consent to release and reservation of jurisdiction documents prepared by respondent and modified by the court, and (3) the court improperly refused to delete language excluding Arrowood from the release agreement or add language requiring respondent to dismiss with prejudice his cross-complaint against Arrowood Indemnity Company (Arrowood). We shall affirm the judgment.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises from respondent's legal representation of appellant in the negotiation of seven insurance policy buybacks or settlement agreements with insurance carriers who had written policies in favor of appellant or appellant's predecessors in interest.
On November 7, 2014, appellant filed a complaint for damages and declaratory relief against respondent, essentially arguing that the contingency fee agreement between the parties, under which respondent would receive 15 percent of all monies collected, "contain[ed] a number of provisions which are so one-sided, self-dealing and/or unintelligible, as to be unconscionable on their face."
On December 2, 2014, respondent filed a cross-complaint, which included five causes of action against appellant and three causes of action against Arrowood. Respondent stated that appellant timely paid the 15 percent fee due under five of the seven buyback agreements, but paid only a portion of the amount due under the buyback agreement with Arrowood, and alleged that appellant still owed respondent the remaining fee amount of $2,478,750 plus interest. Respondent further alleged that appellant had replaced respondent with another attorney more than five years after respondent had begun negotiations with the seventh insurance carrier, and had refused to pay respondent the 15 percent fee after a buyback agreement was reached with that carrier.
Finally, in the causes of action against Arrowood for interference with contractual relations and inducing breach of contract, respondent alleged that Arrowood had interfered with the fee agreement between appellant and respondent by insisting that the buyback agreement with appellant contain a provision limiting the fees that appellant would pay respondent, as a result of which appellant had paid respondent only approximately 20 percent of the fee owed for the Arrowood buyback.
On February 16, 2015, following a mediation with retired Alameda County Superior Court Judge Bonnie Sabraw, the parties signed a stipulation for settlement (settlement agreement or agreement), in which appellant agreed to pay respondent a total of $1.5 million, plus interest, in four installments. The agreement further required the parties to thereafter execute both a mutual release and a stipulation requesting the trial court to retain jurisdiction to enforce the agreement. The agreement provided that it was intended to be binding and enforceable, effective as of the date of signing, and represented a final agreement between the parties to the dispute. The agreement also provided that the court would reserve jurisdiction to enforce the terms and conditions of the settlement, under section 664.6, and in the event of any dispute arising from preparation of the release, the parties would return to Judge Sabraw for further mediation.
On March 4, 2015, respondent's attorney sent an email to appellant's then attorney inquiring as to whether the proposed reservation of jurisdiction and release documents he had drafted and sent to her were "OK with [her]," to which she responded, "Yes I think everything is in final. Last I heard we were waiting for our clients to sign the stip[ulation] to retain jurisdiction and then we'll get it to the court."
On April 9, 2015, after appellant failed to make the first agreed upon installment payment, respondent filed a motion for entry of judgment pursuant to section 664.6.
In a June 16, 2015 tentative ruling granting the motion for entry of judgment, the court addressed appellant's arguments regarding why it believed the settlement agreement was unenforceable. The court explained: "[Appellant] did not show a lack of apparent authority by the person signing the agreement for [appellant]. It did not show that the agreement is 'unjust' and therefore unenforceable under . . . section 664.6. [Citations.] It did not show that the agreement is 'expressly conditional on a condition that has not, and cannot, occur.' [Citation.] It does not appear to be an agreement 'so fragile that it collapse[d] within moments of its signing. . . .' [Citation.]
"In particular, Dina Dee [a representative of appellant] knew that Daniel Dee [ appellant's president] remained behind at the mediation in order to strike a deal. Daniel Dee cannot explain why he signed the agreement or why he thought it contained the provisions he now says he thought it did. He also cannot explain, given the express language to the contrary, why he thought it was not enforceable. The 'conditions' remaining for the settlement to be complete can occur—the parties specified the terms of the releases [in the settlement agreement], describing them as 'full' and including a waiver of Section 1542. The parties are ordered into mediation with [Judge] Sabraw (Ret.) to finalize the terms of the releases, as provided by the settlement agreement."
On October 6, 2015, at the conclusion of the hearing on respondent's motion for entry of judgment under section 664.6, the court granted the motion. In its ruling, the court answered "the question of whether the settlement can be reduced to a judgment. It can. It contains a payment term, which provides that if [appellant] misses any payments in the schedule, then the full amount (plus interest) 'shall be immediately due and payable and a judgment for that amount may be immediately entered by the court.' [Citation.]
"The parties then stated 'Further conditions of the settlement are as follows' and listed two 'conditions' which did not occur: (a) the execution of a 'stipulation and order for the court to retain jurisdiction for purposes of enforcement of this agreement under CCP section 664.6,' and (b) the execution of 'full and complete releases' with 'an express waiver of Civil Code 1542.' [Citation.]
"Relevant to this motion, the 'condition' related to the Section 664.6 stipulation and order states 'This settlement is conditioned upon the court signing said order.'
"Thus, the settlement relies on a condition that has not occurred—the court's signature of the stipulation and order providing that the court will retain jurisdiction. That signature, in turn, relies on the execution by the parties of the stipulation and order, which has not happened despite the parties' agreement to do so in the settlement agreement.
"A 'party who prevents fulfillment of a condition of his own obligation commits a breach of contract and cannot rely on such condition to defeat his liability.' [Citation.] Even where material terms remain in dispute, a court can take evidence and enter judgment pursuant to Section 664.6 in certain circumstances. [Citation]
"Here, no terms remain in dispute. The parties agreed to execute 'full and complete releases' and even agreed on the language of the releases through counsel. The parties also agreed to submit a stipulation and order to the court requesting the court retain jurisdiction. Accordingly, neither the conditional nature of the settlement nor the unfulfilled terms provide a barrier to entry of judgment. The settlement agreement only remains conditional because [appellant] refuses to do the ministerial acts required by the express settlement language.
"The court previously addressed the other arguments against enforcement [in its tentative decision]. [¶] . . . [¶]
"The parties shall execute the release contemplated by the settlement agreement, including a waiver of Civil Code [section] 1542. The parties shall also execute a request for the court to retain jurisdiction for purposes of enforcing the settlement agreement after dismissal. [Appellant] may offer alternative language to that proposed by [respondent]. However, if the parties cannot agree on language by October 20, 2015, they shall mediate with Judge Sabraw as provided in the settlement agreement. If the parties still cannot reach agreement, they may submit competing language to the court no later than January 12, 2016, and the court shall decide the language that shall govern and order execution of the documents based on that language. . . ."
On October 16, 2015, appellant filed a notice of appeal from the court's October 6 order. On January 29, 2016, a panel of this Division granted respondent's motion to dismiss the appeal because appellant had appealed from a non-appealable minute order. (Thomas Dee Engineering Co., Inc. v. Khtikian (Jan. 29, 2016, A146590) [nonpub. opn.], review denied April 13, 2016.)
In a May 10, 2016 minute order, the trial court ordered the parties to "execute the release contemplated by the settlement agreement, including a waiver of Civil Code [section] 1542. The parties shall also execute a request for the court to retain jurisdiction for purposes of enforcing the settlement agreement after dismissal. [Appellant] may offer alternative language to that proposed by [respondent]. . . . However, if the parties cannot agree on language by May 16, 2016, they shall mediate with Judge Sabraw as provided in the settlement agreement. If the parties still cannot reach agreement, they may submit competing language to the court no later than June 16, 2016, and the court shall decide the language that shall govern, order execution of the documents based on that language and enter judgment accordingly."
In a June 24, 2016 order, the court found that neither party had made adequate efforts to mediate or otherwise resolve the conflict, as discussed in its May 10 order. The court noted that "[t]he required mediation concerns just two documents—a release and a stipulation to the court's retained jurisdiction. These common documents tend to have boilerplate wording. [Appellant's] prior counsel agreed with [respondent's] proposed language or similar language. [Citation.]" The court ordered the parties to complete mediation by the end of September, and to then submit proposed language to the court.
In September 2016, the parties participated in an unsuccessful mediation with Judge Sabraw.
On October 21, 2016 the court again entered a written order granting respondent's motion for entry of judgment pursuant to the parties' settlement agreement. The court stated that before signing the judgment, it would make two changes to respondent's previously submitted version of the release document "to ensure consistency" between the release and the settlement agreement. The court further stated that the "refined and updated version of [the release] best reflects the court's intent to fill any gaps in the [settlement agreement] with standard language not exceeding the bounds of the parties agreement [citation]." The court rejected appellant's contention that the release should include Arrowood's dismissal with prejudice, explaining: "Nothing in the [settlement agreement] provides for such dismissal. . . . [¶] . . . [¶] Arrowood did not participate in the mediation. [Respondent] asserts claims against Arrowood [in his cross-complaint] that do not parallel his claims against [appellant]. The [settlement agreement] omits mention of Arrowood. Neither party suggests that Arrowood's dismissal with prejudice would be an 'immaterial' term. Under all the circumstances, the addition of this term would impermissibly re-make the parties' agreement."
The court left language in the release agreement, which had been included from the outset, that provided that respondent would not release any claim he might have against Arrowood, including the cross claims in the cross-complaint.
As to the stipulation for the court to retain jurisdiction, which the parties were to draft and submit to the court, but regarding which they did not reach agreement, the court noted that "the agreement expressly states the court's reservation of jurisdiction. [Respondent's] newly submitted 'Stipulation and Order for Court to Retain Jurisdiction' conforms to the actual agreement of the parties. [Citation.]" However, "[i]n light of the parties' agreement [in the settlement agreement] that the court retain jurisdiction pursuant to [section] 664.6, the court does so in the judgment. The court sees no reason at this point to require the parties to re-agree to the retention of jurisdiction on which they have already agreed."
In the judgment, also entered on October 21, 2016, the court ordered appellant to pay respondent the principal amount of $1,500,000, with prejudgment interest, calculated from March 31, 2015, and further ordered the parties to sign the separate release document. The judgment also provided that the court would retain jurisdiction for purposes of further enforcement of the judgment and the settlement agreement.
On November 18, 2016, appellant filed a notice of appeal.
On December 19, 2016, appellant filed a petition for writ of supersedeas in this court, requesting that we restrain enforcement of the judgment. On January 30, 2017, we denied the petition.
DISCUSSION
I. Section 664.6 and the Applicable Standard of Review
"It is, of course, the strong public policy of this state to encourage the voluntary settlement of litigation." [Citations.]" (Osumi v. Sutton ( 151 Cal.App.4th 1355, 1359.)
Section 664.6 provides: "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."
" 'Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.' [Citations.] A trial court 'hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment.' [Citation.] The trial court may not 'create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.' [Citation.] Thus, a trial court cannot enforce a settlement under section 664.6 unless the trial court finds the parties expressly consented, in this case in writing, to the material terms of the settlement. [Citation.]" (Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4th 724, 732.)
"It is for the trial court to determine in the first instance whether the parties have entered into an enforceable settlement. [Citation.] In making that determination, 'the trial court acts as the trier of fact, determining whether the parties entered into a valid and binding settlement. [Citation.] . . . [Citation.]'. . . [Citation.] The trial court's factual findings on a motion to enforce a settlement pursuant to section 664.6 'are subject to limited appellate review and will not be disturbed if supported by substantial evidence.' [Citation.]" (Osumi v. Sutton, supra, 151 Cal.App.4th at p. 1360.) "In determining what the parties agreed upon and intended by their agreement we apply the well-settled rule that the interpretation of a written instrument generally presents a question of law for this court to determine anew. [Citations.] Even where extrinsic evidence was offered in the trial court, a reviewing court is not bound by the trial court's findings if the extrinsic evidence is not in conflict, is not substantial, or is inconsistent with the only interpretation to which the instrument is reasonably susceptible. [Citations.]" (Okun v. Morton (1988) 203 Cal.App.3d 805, 816 (Okun).)
The parties disagree on the standard of review applicable in the present case, with appellant arguing for de novo review and respondent claiming that the substantial evidence standard applies. We agree with appellant that de novo review is appropriate here because the issues involve what the parties objectively intended when they signed the settlement agreement and because the extrinsic evidence is not in conflict. (See Okun, supra, 203 Cal.App.3d at p. 816.)
II. Whether the Agreement was Merely an Agreement to Agree
Appellant contends the trial court erred when it granted respondent's section 664.6 motion because the settlement agreement was based on "an unenforceable agreement to agree" in that the release and reservation of jurisdiction documents to which the agreement referred had not yet been prepared.
" ' "Whether a writing constitutes a final agreement or merely an agreement to make an agreement depends primarily upon the intention of the parties. In the absence of ambiguity this must be determined by a construction of the instrument taken as a whole." ' [Citation.] 'The objective intent as evidenced by the words of the instrument, not the parties' subjective intent, governs our interpretation.' [Citation.]" (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307; accord, Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 (Weddington).) Moreover, " '[t]he defense of uncertainty has validity only when the uncertainty or incompleteness of the contract prevents the court from knowing what to enforce.' [Citation.]" (Okun, supra, 203 Cal.App.3d at p. 817.)
Here, the language of the signed settlement agreement reflects the parties' objective intent to be bound by the agreement from the time it was executed at the conclusion of mediation with Judge Sabraw. (See Harris v. Rudin, Richman & Appel, supra, 74 Cal.App.4th at p. 307.) This language includes the first sentence of the agreement, which provides, "This case having come on this date for a mediation, it is hereby stipulated that this matter is deemed settled pursuant to the following terms and conditions . . . ." The agreement also provides, under the heading "Confidential," "The parties shall respond to all inquiries about the action in the following manner: 'The matter settled on terms acceptable to all parties.' " Finally, paragraph 9 of the agreement states, "This mediation settlement agreement is intended to be binding and enforceable and is effective this 16th day of February, 2015 and represents the final agreement between the parties to this dispute, and each of them, pursuant to Evidence Code Section 1123." The settlement agreement is dated February 16, 2015, and is signed by the appellant's president, respondent, both parties' attorneys, and Judge Sabraw.
Despite the specific language in the settlement agreement evincing a mutual intent to be bound, appellant argues that the agreement was not yet final because it anticipated that additional material terms had yet to be agreed to. In support of his claim that until the pending release and retention of jurisdiction documents were executed, the agreement was unenforceable, appellant relies on Weddington, supra, 60 Cal.App.4th 793. In Weddington, the parties signed a settlement memorandum, which included the amounts and schedule of the plaintiff's payments to the defendants and terms for the transfer of real property, but which also called for the subsequent creation of a copyright licensing agreement that was "of central material importance to both sides." (Id. at pp. 799-800.) Subsequently, disagreements arose over numerous material terms of the proposed licensing agreement. (Id. at p. 801.) During alternative dispute resolution proceedings before a private judge, the judge "regularly stated his belief that he was authorized to choose Licensing Agreement terms which, in his opinion, were either 'consistent with' or 'not inconsistent with' " the settlement memorandum. (Id. at p. 804.) The trial court ultimately entered a 35-page judgment based on both the original and the 1-page settlement memorandum and the licensing agreement that was written by the private judge. (Id. at pp. 808-809.) The Second District Court of Appeal reversed, finding that because the licensing agreement was "centrally material" and there had been no meeting of the minds on its terms, the settlement agreement was unenforceable. (Id. at pp. 813-814.)
Weddington relied on the reasoning of the appellate court in White Point Co. v. Herrington (1968) 268 Cal.App.2d 458, 465, 467 (White Point), which involved escrow instructions for a real estate sale contract and a related promissory note. The question "of whether contract formation had occurred was created by an ambiguous clause [in the settlement agreement] providing for piecemeal release of the real property from the deed of trust." (Weddington, supra, 60 Cal.App.4th at p. 816, citing White Point, at pp. 461-462.) The Second District Court of Appeal reversed the trial court's grant of the plaintiffs' motion to enforce the settlement agreement, explaining that release clauses "assume special significance under particular circumstances" and the release in that case "constitute[d] a material term of the contract, rather than merely a term requiring good faith elaboration of detail." (White Point, at p. 467.) Because parol evidence failed to remove the ambiguity regarding the intended content of the release provision, the trial court had improperly "constructed, on the basis of judicial notice taken of legal custom and usage, a new agreement between the parties." (Id. at p. 468.) The court explained that, if a release "provision constitutes a material term of the contract, rather than merely a term requiring good faith elaboration of detail, its patent uncertainty voids the entire agreement." (Id. at p. 465.)
The release clause at issue in White Point was a distinct type of release relating to the sale of land: " 'The partial release clause for inclusion first in the land sale agreement and finally in the purchase-price security instrument is often a matter of serious bargaining between the parties. The 'release plan' is a necessary element of the preliminary contract and is affected by considerations of certainty and specific performance not unlike those concerning subordination clauses.' [Citation.]" (White Point, supra, 268 Cal.App.2d at p. 466.)
Appellant also relies on Terry v. Conlan (2005) 131 Cal.App.4th 1445, 1459, in which the Sixth District Court of Appeal found an agreement unenforceable where "the parties agreed to the goals of the settlement, [but] they clearly did not agree to the means of achieving the goals. . . . [T]he means to achieving the goals were material to the settlement, because they had a significant financial impact on the parties." Consequently, because there was no meeting of the minds on material terms, the court concluded the parties never formed an enforceable contract. (Ibid.)
Appellant asserts that, as in Weddington, White Point, and Terry, the release and reservation of jurisdiction documents in this case were material terms of the settlement regarding which no meeting of the minds had taken place. Therefore, according to appellant, no enforceable agreement ever existed. We disagree. Indeed, the court in Weddington distinguished the circumstances of the case before it from "occasions in which 'minor matters' in elaborate contracts are left for future agreement. When this occurs, it does not necessarily mean that the entire contract is unenforceable. . . . 'Obviously, the question is one of degree; the question is whether the indefinite promise is so essential to the bargain that inability to enforce that promise strictly . . . makes it also unfair to enforce the remainder of the agreement. The more important the subject matter to be agreed upon, the more likely it is that the uncertainty will prevent or hinder enforcement. If the contract cannot be performed without settlement of the undetermined point . . . the entire contract may fail.' [Citation.]" (Weddington, supra, 60 Cal.App.4th at p. 813.) As noted, the Weddington court found that the undrafted licensing agreement was "centrally material, and not a 'minor matter.' " (Ibid.)
In this case, the settlement agreement contained the essential elements of the parties' agreement. (See Weddington, supra, 60 Cal.App.4th at p. 813.) The agreement made clear who the parties to the agreement were, i.e., appellant and respondent; that both parties were agreeing to a settlement of the dispute between them; and that appellant would pay respondent $1.5 million, which was less than the full amount respondent claimed appellant owed him for legal services rendered. (See Civ. Code, § 1550 ["It is essential to the existence of a contract that there should be: [¶] 1. Parties capable of contracting; [¶] 2. Their consent; [¶] 3. A lawful object; and, [¶] 4. A sufficient cause or consideration"].) The agreement thus "demonstrated each element of the contract. It identified the parties, facially evidenced mutual consent, had a lawful object of resolving litigation, and contained mutual promises (sufficient consideration)." (Stewart v. Preston Pipeline, Inc. (2005) 134 Cal.App.4th 1565, 1586 (Stewart).)
In Stewart, the settlement agreement between the parties included a provision that defense counsel " 'will prepare a Release of All Claims form and a Request for Dismissal of the entire action with prejudice' to be sent to plaintiff's attorney." (Stewart, supra, 134 Cal.App.4th at p. 1586, fn. 24.) Despite the fact that these documents had yet to be prepared, the court found the settlement enforceable, stating, "We see nothing vague about the settlement agreement, and we believe that it clearly and succinctly sets forth the terms of a settlement." (Ibid.) Here, as in Stewart, the settlement agreement "clearly and succinctly" set forth the essential terms of the parties' settlement. (Ibid.)
The language of the settlement agreement also provided the basic parameters of what was to be included in the release and reservation of jurisdiction documents. This was a relatively uncomplicated settlement of attorney fees-related litigation between only two parties, and the settlement agreement explicitly instructed that the release agreement, which was to be drafted by Khtikian's counsel, would include "an express waiver of Civil Code 1542" and would thereby release "the parties to this agreement" from "known and unknown claims." (Stipulation, ¶ 3.b., italics added.) There was thus little left unstated regarding what the release was to include. Indeed, shortly after the mediation, appellant's former attorney approved the proposed release agreement and reservation of jurisdiction document prepared by respondent's counsel, informing him that she would be submitting the retention of jurisdiction document to the court once appellant signed it. (See pt. III., post.) It was the parties' continuing gamesmanship and, particularly, appellant's apparent remorse at having entered into the settlement agreement that turned the drafting of a simple release agreement into a tortured exercise. (Cf. In re Marriage of Assemi (1994) 7 Cal.4th 896, 911-912 [correspondence between counsel during the several weeks after parties orally stipulated to a settlement "disclose[d] that wife's refusal to execute the written settlement agreement was not based upon a belief that the written agreement did not reflect accurately the terms of the settlement to which she previously had stipulated, but instead rested upon her belated misgivings about having entered into the stipulation"].)
In its October 21, 2016 order, the trial court observed that"[t]he record of this action shows [appellant's] unwavering opposition to enforcement of the settlement agreement."
In addition, the settlement agreement instructed the parties to execute a stipulation and order "for the court to retain jurisdiction for purposes of enforcement of this agreement under CCP section 664.6." (Settlement agreement, ¶ 3.a.) The agreed upon content of this document could not have been more straightforward. The settlement agreement already contained such a provision (see stipulation, ¶ 7 ["[t]he court reserves jurisdiction to enforce the terms and conditions of the settlement pursuant to [section] 664.6 upon noticed motion of any party"]), and the court ultimately determined that execution of another agreement to the court's retention of jurisdiction was therefore unnecessary. As the court stated in its October 21, 2016 order, there was "no reason at this point to require the parties to re-agree to the retention of jurisdiction on which they have already agreed."
We thus conclude, in the circumstances of this case, the release and the reservation of jurisdiction documents were not "so essential to the bargain" that uncertainty as to their exact contents undermined the parties' entire agreement and rendered it too uncertain to be enforced. (Weddington, supra, 60 Cal.App.4th at p. 813.) Given that the general terms of those documents were already set forth in the settlement agreement and appellant's counsel had found the proposed documents unobjectionable, their terms were plainly not so vague that the parties' expectations could not be discerned. (See Okun, supra, 203 Cal.App.3d at pp. 817-818 [contract provisions challenged as "fatally uncertain," were "either sufficiently certain on their face, or were made sufficiently certain by the introduction of extrinsic evidence at trial"]; cf. Facebook, Inc. v. Pacific Northwest Software, Inc. (2011) 640 F.3d 1034, 1037-1038 (Facebook), [even a contract that omits "an important term that affects the value of the bargain . . . is enforceable under California law, so long as the terms it does include are sufficiently definite for a court to determine whether a breach has occurred, order specific performance or award damages"].)
In sum, the settlement agreement in the present case contained terms that were sufficiently definite for the court to determine whether the agreement had been breached and to order specific performance. (See Facebook, supra, 640 F.3d at pp. 1037-1038; see also Stewart, supra, 134 Cal.App.4th at p. 1586 & fn. 24.) Moreover, because the terms of the two pending documents were in large part already set forth in the settlement agreement, and plainly were not so essential to the agreement that any uncertainty as to their precise terms undermined the agreement as a whole, we conclude the trial court properly found that the settlement agreement was enforceable under section 664.6. (See Weddington, supra, 60 Cal.App.4th at p. 813; compare White Point, supra, 268 Cal.App.2d at p. 465 [if a release "provision constitutes a material term of the contract, rather than merely a term requiring good faith elaboration of detail, its patent uncertainty voids the entire agreement"].)
III. Whether the Court Lacked Jurisdiction to Impose the Terms
of the Release and Retention of Jurisdiction Documents
Appellant next contends the trial court lacked jurisdiction to force appellant to consent to the release and reservation of jurisdiction documents prepared by respondent's counsel and modified by the court.
As already noted, shortly after the parties signed the settlement agreement, respondent's attorney sent appellant's then attorney a proposed release document ("Exhibit 6") and stipulation to retain jurisdiction. He followed up on March 4, 2015, with an email in which he asked, "Are the latest version[s] of [the jurisdiction and release documents] I sent OK with you? Have you sent the stip[ulation] to retain jurisdiction on to the Marin court?" Appellant's attorney responded, "Yes, I think everything is in final. Last I heard we were waiting for our clients to sign the stip[ulation] to retain jurisdiction and then we'll get it to the court." Respondent's counsel then informed the court, "The parties negotiated and agreed to the terms of a release. On February 27, 2015, the final form of release was delivered to [appellant's] attorney."
In its October 21, 2016 order granting respondent's motion for entry of judgment, the court acknowledged that approval of the release document by appellant's former counsel could not bind appellant, but found that "acceptance of the language [of the release document] by [appellant's] former counsel supports the court's finding that the language is standard and typical of settlement agreements—i.e., 'boilerplate' . . . ." The court therefore rejected both appellant's claim that respondent's dismissal of Arrowood should be included in the release and respondent's claim that the release should be further narrowed, as inconsistent with the terms of the settlement agreement and the parties' intent at the time the agreement was signed. The court made two changes to the proposed release, which included deleting language to which appellant had objected regarding waiver of the mediation privilege for purposes of enforcing the settlement agreement, "to ensure consistency" between the release agreement and the settlement agreement. The court concluded that "[t]he refined and updated version of Exhibit 6 [the release document originally approved by counsel for both parties] best reflects the court's intent to fill any gaps in the [settlement agreement] with standard language not exceeding the bounds of the parties' agreement [citation]."
"Although a judge hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment [citations], 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, supra, 60 Cal.App.4th at p. 810; accord, Bowers v. Raymond J. Lucia Companies, Inc., supra, 206 Cal.App.4th at p. 732.) However, "[e]ven when the uncertainty of a written contract goes to ' "the precise act which is to be done" (Civ. Code, § 3390), extrinsic evidence is admissible to determine what the parties intended. [Citations.] It is only when the extrinsic evidence fails to remove the ambiguity that specific performance must be refused.' [Citations.]" (Okun, supra, 203 Cal.App.3d at p. 819; see also Facebook, supra, 640 F.3d at p. 1038 ["the court may fill in missing terms by reference to the rest of the contract, extrinsic evidence and industry practice"].)
In this case, after mediation failed to result in the parties' agreement on the contents of the release and reservation of jurisdiction documents, the court properly looked to both extrinsic evidence showing the parties' intent—appellant's then counsel's swift approval of the documents prepared by respondent's counsel—and standard terms, as reflected in paragraphs 3.a, 3.b, and 7 of the settlement agreement, to ensure that the documents the parties were ordered to execute reflected what they intended at the time they entered into the settlement agreement. As the appellate court stated in Okun: At bottom, " '[i]f the parties have concluded a transaction in which it appears that they intend to make a contract, the court should not frustrate their intention if it is possible to reach a fair and just result, even though this requires a choice among conflicting meanings and the filling of some gaps that the parties have left. . . .' [Citation.]" (Okun, supra, 203 Cal.App.3d at p. 817; accord, Facebook, supra, 640 F.3d at p. 1038; compare Weddingon, supra, 60 Cal.App.4th at p. 818 [material terms missing from settlement agreement were improperly created by a private judge and then specifically enforced by trial court, "just as if the parties had agreed to them"]; White Point, supra, 268 Cal.App.2d at p. 468 ["There appearing no external standards nor any reference to custom and usage by which the parties in the present case agreed to be bound, and insufficient parol evidence of what the release clause was intended to contain, there was no sound legal basis upon which to supply the missing terms"].)
The court ultimately found it unnecessary for the parties to prepare a separate reservation of jurisdiction document, given that the settlement agreement already contained such a provision. (See settlement agreement, ¶ 7.)
We find unpersuasive appellant's assertion that, rather than ordering the parties back to mediation, the court should have denied respondent's section 664.6 motion "because of the uncertain nature of the mediation process itself." Paragraph 12 of the settlement agreement provided for the parties to return to mediation in the event they could not agree on the language of the release and reservation of jurisdiction. That additional mediation did not resolve the dispute does not mean that the court could not look to language in the settlement agreement and extrinsic evidence, as already discussed, to ensure that the release reflected the intent of the parties at the time they entered into the settlement agreement. (See Okun, supra, 203 Cal.App.3d at p. 819; Facebook, supra, 640 F.3d at p. 1038.)
This case is distinguishable from a case relied on by appellant for the proposition that the court could not resolve the dispute between the parties once further mediation failed. In Lindsay v. Lewandowski (2006) 139 Cal.App.4th 1618, 1620, following a mediation, the parties entered into a settlement agreement for payment of a certain some of money, " 'with cash, payment terms, security arrangements and stipulations regarding non-dischargeability in bankruptcy "reasonably" agreeable to both parties, but to be submitted to "binding" mediation' " if the parties could not reach a satisfactory agreement. (Ibid.) Some parties signed a version of the settlement agreement stating they agreed to resolve any disputes regarding the terms of the agreement through binding arbitration and some parties signed a version agreeing to return to mediation to resolve such disputes. Moreover, the agreement at times referred to "binding mediation," with the word "mediation" crossed out and replaced with the word "arbitration." (Ibid.) The appellate court found that "[s]ince there was no agreement on a recognized procedure to resolve the payment term dispute," the settlement agreement was uncertain regarding a material term and was therefore unenforceable. (Id. at p. 1623.) In the circumstances of this case, after nonbinding mediation failed to resolve the dispute between the parties, the court reasonably construed the terms of the release and reservation of jurisdiction, the essential terms of which had already been described in the settlement agreement.
IV. Terms in the Release Related to Arrowood
Appellant contends the court improperly failed to delete respondent's language specifically excluding Arrowood from the release agreement and improperly failed to add language requiring respondent to dismiss with prejudice his cross-complaint against Arrowood.
First, as to the express exclusion of Arrowood from the terms of the release, the court found that appellant had not shown the need to remove the following language: "Notwithstanding anything in this Release Agreement to the contrary, this Release Agreement shall not release any claim, including, but not limited to, those cross claims stated in the Cross-complaint, that [respondent] may have against Arrowood Indemnity Company." In finding that this language should remain in the final release agreement, the court cited evidence showing that appellant and Arrowood "do not have the typical insured-insurer relationship that the boilerplate provision pertaining to 'insurers' would cover. [Respondent's] cross-complaint against Arrowood asserts interference with a contractual relationship and fraud, among other claims. Arrowood did not participate in the mediation. The [settlement agreement] does not mention Arrowood. If the Release Agreement provided for release of Arrowood, the release would not be mutual. . . ." The court concluded: "Nothing in the evidence suggests that the agreement included [respondent's] release of any claims against Arrowood. The court presumes [appellant's] former attorney would have objected to Exhibit 6 [the original version of the release, drafted by respondent's counsel] if the parties had discussed and agreed to Arrowood's release. Given the unique circumstances, the court views the Arrowood-related provision to be a mere clarification of the Release Agreement's scope."
The court noted that in an August 28, 2015 declaration, Daniel Dee, appellant's president, had "suggested that the [settlement agreement] does not address the cross-claims against Arrowood. [Citation.]"
Appellant cites Ignacio v. Caracciolo (2016) 2 Cal.App.5th 81, 89, in which the appellate court found that a general release that waived the protections of Civil Code section 1542 "applie[d] not just to all claims arising out of the April 10, 2013 accident, but to 'any and all claims' the releasees may have against the releasors 'whether now known or unknown, suspected or unsuspected, that have existed or may have existed or which do exist, or which hereinafter can, shall or may exist . . . .' " was an unlimited release between the two parties that went beyond the scope of the current litigation.
The fact that the release in the present case, like that in Ignacio was intended to be a broad, general release of all possible claims between the two parties to the agreement—and the other general categories of people or entities related to each party (i.e., "predecessors, successors, insurers, assigns, attorneys, directors trustees, officers, past or present agents, employees, and past and present partners, employers, shareholders, corporations, parent and subsidiary corporations, joint venturers, estates, beneficiaries, representatives, executors, administrators, and each of them"—does not support appellant's claim that the release was also intended to release all claims against Arrowood. Arrowood was appellant's former insurer, which had previously bought back the policies under which it had insured appellant. Respondent's cross-complaint, moreover, contained claims against Arrowood that were distinct from those alleged against, and settled with, appellant. Arrowood thus was not a party to the settlement agreement, was not included in paragraph 3.b. of the agreement as a party to be released in the pending release document, and was not one of the standard related entities included in the release of each party in the proposed release agreement.
Accordingly, the court's inclusion of the sentence excluding Arrowood from the release between the two parties to the settlement agreement merely stated the obvious and was, at worst, unnecessary surplusage, given that the language of the settlement agreement and the extrinsic evidence reflected the parties' intent for only appellant and respondent to be bound by the terms of the settlement agreement and the accompanying mutual release. (See Okun, supra, 203 Cal.App.3d at pp. 818-819.) As the court stated, the provision excluding Arrowood from the release was "a mere clarification" of the scope of the release agreement.
Second, appellant claims the court wrongly rejected its claim that the release should contain language requiring that respondent dismiss his cross-complaint against Arrowood because "[a]llowing [respondent] to either continue prosecuting the cross-complaint against Arrowood or to dismiss that cross-complaint without prejudice only to re-file another action against Arrowood would have left [appellant] exposed to Arrowood on claims that . . . would have doubled the amount that [appellant] agreed to pay to [respondent] [Citation.]."
In rejecting this claim, the court found that "[n]othing in the [settlement agreement] provides for such dismissal. The 'final' documents exchanged by [respondent's counsel] and [appellant's] former counsel do not provide for a dismissal with prejudice. [¶] . . . [¶] Arrowood did not participate in the mediation. [Respondent] asserts claims against Arrowood that do not parallel his claims against [appellant]. The [settlement agreement] omits mention of Arrowood. Neither party suggests that Arrowood's dismissal, with prejudice, would be an 'immaterial' term. Under all the circumstances, the addition of this term would impermissibly re-make the parties' agreement."
Again, the settlement agreement was between appellant and respondent alone, and paragraph 3.b of the agreement expressly provides that the broad release covers only "the parties to this agreement from known and unknown claims." Arrowood was not involved in the mediation that led to the drafting of the settlement agreement and is not mentioned anywhere in that agreement. Nor did appellant's former counsel object that a provision for dismissal of Arrowood with prejudice was missing from the release document she approved. That the settlement agreement and the release document provided for a broad release of all claims that appellant and respondent might have against each other and their listed, related entities (see Ignacio v. Caracciolo, supra, 2 Cal.App.5th at p. 89) plainly does not mean that the release also implicitly required the release of a third party not included in the settlement agreement. In the totality of the circumstances, the court correctly found that the parties' agreement did not contemplate a dismissal of Arrowood. The court therefore rightly refused to "re-make the parties' agreement" by adding such a term to the release. (See A.B.C. Distributing Co. v. Distillers Distributing Corp. (1957) 154 Cal.App.2d 175, 185 ["Matters which were intentionally omitted from a contract may not be added under the guise of interpretation"].) Although appellant may have subsequently wished it had insisted on dismissal of respondent's cross-complaint against Arrowood as a term of the settlement agreement, Arrowood's dismissal was simply not part of the settlement to which appellant agreed.
Appellant also argues that several changes respondent made to the proposed release document after appellant refused to sign the original proposed release that had been approved by his then-counsel demonstrate that there was no meeting of the minds on crucial elements of the settlement agreement. The court rejected respondent's proposed changes, explaining that section 664.6 was intended to provide a summary procedure for enforcing a settlement agreement " 'without the need for a new lawsuit.' [Citation.] It is not a means for a party to alter the terms of a settlement agreement in its favor." The court stated that respondent's repeated revisions also undermined the purpose of the section 664.6 procedure—to benefit both the parties and the justice system—"by making the hearing process more time-consuming and cumbersome." For the reasons discussed in the text, ante, we do not agree with appellant that respondent's belated attempts to tinker with the language of the release document demonstrate that there was no meeting of the minds on the contents of the release agreement.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondent.
/s/_________
Kline, P.J. We concur: /s/_________
Richman, J. /s/_________
Miller, J.