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Wade v. Stark

California Court of Appeals, Third District, Placer
Dec 4, 2007
No. C053232 (Cal. Ct. App. Dec. 4, 2007)

Opinion


EVELYN WADE et al., Plaintiffs and Appellants, v. GAIL STARK et al., Defendants and Respondents. C053232 California Court of Appeal, Third District, Placer December 4, 2007

NOT TO BE PUBLISHED

Super. Ct. No. SCV17640

BUTZ, J.

These are consolidated appeals from an order enforcing a settlement agreement pursuant to Code of Civil Procedure section 664.6 (case No. C053232) and the resulting judgment (case No. C054415).

Undesignated statutory references are to the Code of Civil Procedure.

The two appeals have been consolidated for all purposes.

Plaintiffs Evelyn Wade and her husband Kendall Wade (the Wades) filed suit against their granddaughter Gail Stark and her husband Gregory Stark (the Starks), alleging fraud, breach of fiduciary duty and elder abuse in connection with a transfer from the Wades to the Starks of real property located in Lincoln “for a price less than market value.”

At a 2005 settlement conference, the parties reached a settlement and executed a written settlement agreement. When Wade repudiated the agreement, the Starks filed a statutory motion to enforce the settlement. The court, finding that Wade’s repudiation was arbitrary, granted the motion and ordered enforcement. We shall now affirm the order and judgment.

During the events described, Evelyn Wade made all decisions and executed all documents on behalf of herself and her husband Kendall, who was adjudicated incompetent in 2005, and who died on February 3, 2007. Hence, all further references to “Wade” are to Evelyn Wade.

FACTUAL AND PROCEDURAL BACKGROUND

For many years, the Wades owned a 20-acre parcel of land in Lincoln, on which they had built a residence. The property is divisible into two 10-acre parcels. The Starks reached an agreement with Wade, under which the Starks would purchase the entire 20-acre parcel from the Wades and a 10-acre parcel would, in turn, be sold to the Wades’ longtime neighbors, Jeffery and Vivian Graham (the Grahams). In October 2002, Wade executed a handwritten note stating her “offer” to sell the property to the Starks for $400,000 and understanding that her daughter and granddaughter would “manage our health care--when and if needed.” In November 2002, Wade executed a grant deed to the entire parcel to the Starks. The Starks in turn executed a $400,000 promissory note to the Wades, payable no later than December 1, 2012, but without provision for interest or monthly payments. Wade signed and recorded a corrected deed to the Starks in March 2003. The Starks moved onto the property in 2001 or thereafter and continue to reside on the property.

Having received title to the 20-acre parcel, the Starks entered into an agreement to sell 10 acres to the Grahams for $250,000. Escrow instructions were drawn up in June 2003 in contemplation of the transfer of 10 acres from the Starks to the Grahams.

All of this was brought to a screeching halt in September 2004, when the Wades sued the Starks, their daughter, Nancy Moose, and the Grahams, seeking damages for fraud, breach of fiduciary duty, infliction of emotional distress, and elder abuse. The complaint also sought to impose an equitable lien and constructive trust on the Lincoln property. A first amended complaint was filed in August 2005. The Grahams cross-complained for specific performance of their agreement and the Starks filed their own cross-complaint against the Wades for equitable indemnity.

A settlement conference was held on November 18, 2005, by which time Wade had been appointed guardian ad litem for 90-year-old Kendall, who was suffering from dementia and Alzheimer’s disease and resided in a full-time care facility.

During the conference, held before Referee David Bills, the parties reached an agreement for settlement. The terms of the settlement included placing the 20-acre property on the market for sale, paying all expenses and capital gains taxes from the proceeds, and dividing the profit 70 percent to the Wades and 30 percent to the Starks. By separate agreement the Grahams agreed to accept $25,000, payable upon sale with 8 percent interest, in exchange for their relinquishment of all claims to the property.

Although the parties refer to Referee Bills as a “commissioner,” the stipulation and order by which Bills was designated a temporary judge for purposes of conducting the settlement conference, indicate he is a referee.

The terms of the settlement were set forth in two separate written agreements, dated November 18, 2005. The Wade-Stark agreement, which was signed by the parties, their attorneys and Referee Bills, provided that the case would be dismissed in its entirety with prejudice, with the added handwritten notation, “Subject to court approval CCP 372.” Wade’s attorney Theodore Phillips inserted the notation because he knew that any compromise on behalf of Kendall would need court approval.

Section 372 describes the powers of a court-appointed guardian ad litem. In relevant part, the statute provides that the “guardian ad litem so appearing for any minor, incompetent person, or person for whom a conservator has been appointed shall have power, with the approval of the court in which the action or proceeding is pending, to compromise the same, to agree to the order or judgment to be entered therein for or against the ward or conservatee, and to satisfy any judgment or order in favor of the ward or conservatee or release or discharge any claim of the ward or conservatee pursuant to that compromise.” (§ 372, subd. (a), italics added.)

Rather than carry out the settlement, Wade repudiated it and refused to file a motion to approve the compromise on behalf of Kendall. The Starks therefore filed a motion to enforce the settlement under section 664.6.

In opposition, Wade filed a declaration announcing her repudiation of the Stark agreement and requesting that it be cancelled. Her reasons included that the agreement was “unfair” to her husband’s interests and to her, that it failed to account for outstanding issues between the parties, and that she had not “had the opportunity to consider tax implications of the settlement and resulting sale of the subject property.”

Wade’s declaration stated that she declined to repudiate the Graham settlement agreement “at this time.”

Wade also claimed that she had injured her back and “was in severe pain” on the day of the settlement conference; that she was taking pain and antidepressant medication that “slowed [her] down mentally and physically”; and that Referee Bills was “very aggressive about [her] settling right then.” According to Wade, the referee “waved a document right in [her] face,” and intimated that he knew of facts that she did not. Wade felt “intimidated” by Bills and “was so worn down by the end of the day [she] could not think straight.” Having rested and recovered, Wade declared that she now believed the settlement was not in her best interests or those of her husband.

After a hearing, the court found that Wade was not acting in her husband’s best interests and that her repudiation of the settlement reached before Referee Bills was “arbitrary.” The court thus granted the motion pursuant to section 664.6, approved the compromise as to Kendall, and ordered Wade to execute any documents necessary to carry out the settlement.

Wade appeals from both the order enforcing the settlement and the ensuing judgment.

DISCUSSION

I. Section 664.6--General Principles

Wade contends the trial court committed error of law and/or abused its discretion in granting a motion to enforce a settlement agreement that was reduced to writing and signed by all parties.

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.” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809 (Weddington).) “Under the statute . . . the trial court may enter judgment pursuant to a stipulated settlement if the stipulation is made in one of two ways: either in a writing signed by the parties outside the presence of the court, or orally on the record before the court. These requirements minimize the possibility of conflicting interpretations of the stipulation or its effect.” (In re Marriage of Assemi (1994) 7 Cal.4th 896, 905.) “[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.” (Weddington, supra, 60 Cal.App.4th at p. 810.) Factual determinations made by a trial court on a section 664.6 motion to enforce a settlement must be upheld if supported by substantial evidence. (Id. at p. 815.)

II. Rescission on Grounds of Duress

Wade contends that the settlement agreement was “subject to the law of rescission” and asserts that her declaration provided “plenty of evidence” that she had the right to rescind the agreement on grounds of duress, since she was “worn down,” under the influence of heavy medication and too emotionally distraught to give her free and voluntary consent.

The repeated statements in Wade’s opening brief that she was recovering from back surgery on the day of the settlement conference are blatant misrepresentations of the record. Her own declaration states that “[w]ithin a few days after I signed the [settlement agreement], I fell and fractured my lumbar vertebrae, requiring emergency hospitalization and surgery, which increased my pain.” (Italics added.)

“A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. [Citation.] An essential element of any contract is ‘consent.’” (Weddington, supra, 60 Cal.App.4th at pp. 810-811.)

Where a party’s consent to a contract is obtained by duress, the contract is voidable and may be rescinded. (Civ. Code, § 1689.) The Restatement of Contracts defines “duress” broadly under the heading of economic compulsion. (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian (1990) 218 Cal.App.3d 1058, 1077, citing Rest.2d Contracts, § 176, pp. 481-482.) “‘[T]he doctrine . . . may come into play upon the doing of a wrongful act which is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the perpetrator’s pressure.’” (Philippine Export, supra, at p. 1077.) By enforcing the agreement and finding Wade’s repudiation of it to be “arbitrary,” the trial court impliedly found that Wade did not sign the agreement under duress. The only question is whether this finding is supported by substantial evidence in the record.

As the sole judge of credibility, the trial court had the power to believe or disbelieve the factual averments in Wade’s declaration in whole or in part. “‘“We have no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.”’” (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622-623.)

The trial court was entitled to reject Wade’s assertion that she agreed to settle her case only under compulsion, a claim almost exclusively based on her own self-serving statements. In particular, Wade’s claim that the pain medication she was taking “slowed me down mentally and physically” was highly suspect, especially since it was unaccompanied by competent evidence from a medical professional and contradicted by the declaration of her own lawyer, who stated that she was “in full possession of her faculties.”

Even if true, Wade’s claim that Referee Bills put pressure on her to settle the case is of little consequence considering the fact that she was accompanied by her sister and represented by two attorneys at the conference. Thus, Wade received not only the emotional support of a family member, but also the guidance of counsel, who were there to give her legal advice and protect her legal interests.

We also note that the written settlement agreement was drawn up at a nearby restaurant after the court had closed and was not executed until 6:00 p.m. Hence, Wade was afforded ample time to reflect on her decision and was not acting in the heat of the moment by the time she affixed her signature to the agreement.

Contrary to Wade’s argument, the fact that Wade was not specifically asked by Referee Bills whether she understood and wished to affirm the settlement agreement, is irrelevant. The presence or absence of such questioning becomes a factor only where the settlement is made in open court and the issue is whether the parties agreed to a settlement at all. (See Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 544-545; Casa De Valley View Owner’s Assn. v. Stevenson (1985) 167 Cal.App.3d 1182, 1189-1190.) Here, because the agreement was reduced to writing, the fact of the settlement is not open to dispute.

In sum, the record overwhelmingly demonstrates that Wade simply experienced a change of heart after agreeing to the settlement. This is not a valid ground for avoiding a contract. The court’s implied finding that Wade’s consent was not obtained by duress is supported by substantial evidence.

Our conclusion makes it unnecessary to consider the Starks’ argument that Wade forfeited her rescission claim by failing properly to raise it in the trial court or by not following the procedural requirements for contractual rescission.

III. Wade’s Repudiation on Behalf of Kendall

As mentioned, the settlement agreement provided that the case would be dismissed on behalf of both plaintiffs, “subject to court approval” pursuant to section 372. Instead of seeking court approval to settle Kendall’s claim, Wade repudiated the agreement as contrary to his best interest. Citing Scruton v. Korean Air Lines Co. (1995) 39 Cal.App.4th 1596 (Scruton), Wade contends that the trial court erred in not granting “huge deference” to her decision to repudiate the agreement on behalf of her incompetent husband. She also suggests that section 372 gave her the absolute right to reject the settlement on behalf of Kendall prior to court approval.

The Starks reply that we need not reach these issues, because they have been mooted by the death of Kendall during the pendency of this appeal. We agree.

Normally a reviewing court will not consider matters occurring after judgment. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2006) ¶ 8:176, p. 8-118.) One exception to this rule is that appellate courts will consider postjudgment events that cause issues or the entire appeal to become moot. (Id., ¶ 8:181, p. 8-118; Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 813.)

When, pending an appeal from the judgment of a lower court, an event occurs that renders it impossible for this court, if it should decide the case in favor of the plaintiff, to grant any effectual relief whatever, the court will not proceed to a formal judgment, but will dismiss the appeal. (Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10.) Individual issues, as well as entire appeals, may be mooted by events that occur after judgment. (E.g., Estate of Henry (1960) 181 Cal.App.2d 173, 176 [death of party abated nonsurvivable cause of action].)

Kendall’s death renders moot the issue of whether the court could enforce the settlement over Wade’s objection in her capacity as Kendall’s guardian ad litem. Because Wade’s guardian ad litem status has been extinguished, no appellate relief can be granted and all issues surrounding it are moot.

In any event, Scruton would not warrant reversal of the order. Scruton held that a guardian ad litem may repudiate a tentative compromise of a minor’s claim before the trial court endorses it, and that such repudiation is entitled to “some deference.” (Scruton, supra, 39 Cal.App.4th at p. 1608.) However, Scruton also held that the trial court may unilaterally enforce the compromise if it finds the guardian’s repudiation is contrary to the minor’s best interests. (Id. at pp. 1602-1603, 1608.)

The trial court was not required to follow Wade’s repudiation blindly, only to give it “some deference.” Here, the court expressly found that Wade’s repudiation of the settlement was not in Kendall’s best interest. Therefore, the section 664.6 enforcement order did not run afoul of either section 372 or Scruton.

IV. Failure to Use Judicial Council Form

Wade finally contends that the order approving Wade’s compromise of Kendall’s claim was invalid because the Starks did not use the proper Judicial Council form for a section 372 compromise, form MC-350. She claims use of the form was “mandatory,” citing a Rutter Group treatise on civil procedure before trial.

The word “mandatory” means only that the form must be accepted for filing by all trial courts. (Cal. Rules of Court, rule 1.31(a).) Moreover, rule 1.31(g) provides that “[a]n otherwise legally sufficient court order for which there is a mandatory Judicial Council form is not invalid or unenforceable because the order is not prepared on a Judicial Council form or the correct Judicial Council form.”

Further rule references are to the California Rules of Court.

All information necessary for court approval was contained in the Starks’ motion to enforce the settlement. Wade has failed to show prejudice from the fact that the compromise was approved without use of the Judicial Council form. (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475.)

V. Attorney Fees

The Starks seek to recover attorney fees on appeal, based on the attorney fee clause in the settlement agreement. (Civ. Code, § 1717.) Because the agreement provides for attorney fees to be awarded to the prevailing party, an award of fees on appeal is appropriate. (Shadoan v. World Savings & Loan Assn. (1990) 219 Cal.App.3d 97, 109.) However, the amount of fees is best left to the discretion of the trial court. (Ibid.; Del Cerro Mobile Estates v. Proffer (2001) 87 Cal.App.4th 943, 951-952.)

DISPOSITION

The order enforcing the settlement and the judgment are affirmed. The matter is remanded to the superior court for a determination of the amount of attorney fees to be awarded respondents, the Starks, in defending these appeals. (Rule 8.276(c)(2).) The Starks shall also recover their costs on these consolidated appeals. (Rule 8.276(a)(1), (3).)

We concur: SCOTLAND, P.J., MORRISON, J.


Summaries of

Wade v. Stark

California Court of Appeals, Third District, Placer
Dec 4, 2007
No. C053232 (Cal. Ct. App. Dec. 4, 2007)
Case details for

Wade v. Stark

Case Details

Full title:EVELYN WADE et al., Plaintiffs and Appellants, v. GAIL STARK et al.…

Court:California Court of Appeals, Third District, Placer

Date published: Dec 4, 2007

Citations

No. C053232 (Cal. Ct. App. Dec. 4, 2007)

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