Opinion
NOT TO BE PUBLISHED
Sonoma County Super. Ct. No. SCV 238217
Ruvolo, P. J.
The parties to this real property litigation settled their dispute orally on the record before the trial court. Appellants then declined to sign a written agreement memorializing the oral settlement. The trial court rejected appellants’ objections to the written agreement, granted respondent’s motion to enforce the settlement, and entered a judgment declaring the written agreement to be binding. We affirm.
Facts and Procedural Background
Appellants comprise most of the members of a group of persons and entities (the Landowners) who collectively own a 15-acre unimproved parcel (the Property) in Sonoma County. The Landowners acquired the Property in 1999 with the intention of selling it to an entity entitled MPWC, LLC (the Winery Investors), which was formed to develop the Property as a winery. The contemplated sale of the Property to the Winery Investors never occurred, however. Instead, a dispute arose, and in 2002, the Winery Investors sued two of the Landowners, including appellant Bruce Halvax, in Orange County Superior Court.
Our statement of the background facts underlying this litigation is taken primarily from the recitals in the settlement agreement drafted by respondent’s counsel. Although appellants declined to sign this document, they do not dispute the accuracy of its factual recitals, which are consistent with the statement of facts in their opening brief on appeal.
In 2003, the Winery Investors and all of the Landowners entered into a written agreement (the MOU) to settle the Orange County lawsuit. In the MOU, the parties agreed that the Landowners would grant an option to buy the Property to Robert Wyndelts (the Optionee), who is the respondent in the appeal now before us. The MOU anticipated that the Optionee would receive a four-year option to purchase the Property at a stated price, in return for which the Optionee would make cash payments to the Landowners and assume the obligation to make payments on three loans secured by the Property.
The MOU contemplated the need for a written option agreement and a formal settlement agreement to effectuate its provisions. Unfortunately, the parties were unable to agree on the specifics of those documents. As a result, in 2005, the Winery Investors instituted an arbitration proceeding against Halvax and Mobius Painter LLC, an entity controlled by Halvax that is also one of the Landowners, under the arbitration clause contained in the MOU. The remaining Landowners were not parties to the arbitration. As part of the arbitration award, the arbitrator presented the parties with a formal written option agreement (the Arbitrator’s Final Option Agreement), and ordered Halvax to sign it. The arbitration award was confirmed by the Orange County Superior Court on March 10, 2006.
The parties’ briefs, and some of the documents in the record, use the term Final Option Agreement to refer both to the Arbitrator’s Final Option Agreement and to a later revision of that document. Where it is helpful to distinguish between the two versions, we will use the terms Arbitrator’s Final Option Agreement and Revised Final Option Agreement.
The Landowners, most of whom were not bound by the arbitration award, declined to sign the Arbitrator’s Final Option Agreement. In February 2006, the Optionee filed an action in Sonoma County Superior Court (the Sonoma County action) against all of the Landowners, seeking an order directing the Landowners to sign the Arbitrator’s Final Option Agreement. While the Sonoma County action was pending, the Winery Investors assigned their interests under the arbitration award to the Optionee.
On January 24, 2007, a court-mandated settlement conference in the Sonoma County action resulted in a settlement (the Oral Settlement) between the Optionee and all but one of the Landowners. The terms of the Oral Settlement were recited on the record in open court, and all of the settling parties consented to it.
The one Landowner who did not agree to the settlement at the time of the settlement conference was MKG Limited Partnership (MKG). MKG did agree to the settlement later on, after modifications were made to address MKG’s concerns. MKG has signed the settlement agreement, and is not a party to this appeal. However, as discussed post, the modifications made at MKG’s request are contested by the appellant Landowners.
Some of the settling parties were represented at the settlement conference by persons holding powers of attorney to act on their behalf. The authority of those persons to consent to the settlement on behalf of their principals has never been disputed by any of the parties, and is not an issue on this appeal.
The Oral Settlement provided that the settling parties would sign the Arbitrator’s Final Option Agreement, with certain modifications. The modifications provided that the term of the option would be reduced to one year from the date the Optionee recorded a memorandum of option. During that one year, the Optionee would attempt to find a third party (the Substitute Optionee) to purchase the option. If the Optionee sold the option within one year, the option sale would have to close within 180 days of the execution of the contract to sell the option; the Substitute Optionee would have to exercise the option within 30 days after purchasing it; and then the Substitute Optionee would have to close escrow on the purchase of the Property within 30 days after that.
The Oral Settlement further modified the Arbitrator’s Final Option Agreement to provide that after the initial year following the recording of the memorandum of option, the option would expire. In that event, the Optionee and the Landowners would both have the right to try to market the Property, and the Optionee would have a right of first refusal at the price specified in any bona fide offer obtained by the Landowners.
The Oral Settlement contemplated the preparation of a formal written settlement agreement (the Written Settlement) and a written version of the Revised Final Option Agreement. Accordingly, shortly after the settlement conference, the Optionee’s counsel circulated a draft of those documents. After the Optionee’s counsel made changes to the documents requested by MKG, the Optionee and MKG signed the Written Settlement, which incorporated the Revised Final Option Agreement by reference. Halvax, however, objected to various aspects of the documents, and he and the other remaining Landowners declined to sign them.
After learning of Halvax’s objections to the Written Settlement and Revised Final Option Agreement, the Optionee filed a motion to enforce the settlement and enter judgment under Code of Civil Procedure section 664.6 (section 664.6). Halvax and the other non-signing Landowners opposed the motion. After a hearing, at which no testimony was taken, the trial court granted the motion, and entered judgment accordingly on March 12, 2007. This timely appeal ensued.
Halvax filed one notice of appeal individually, and all of the non-signing Landowners, including Halvax, filed another. On July 11, 2007, we granted appellants’ unopposed motion to consolidate the two resulting appeals.
Discussion
A. Standard of Review
When parties to pending litigation enter into a settlement agreement, a party may move the trial court to enter judgment under section 664.6 based upon the terms of that settlement agreement. The trial court resolves any factual issues related to the enforcement of the settlement agreement. (See, e.g., In re Marriage of Assemi (1994) 7 Cal.4th 896, 911.) If the trial court rules on factual issues, our role on appeal is limited to determining whether the factual findings are supported by substantial evidence. (Ibid.; Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 544; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 815 (Weddington); Fiore v. Alvord (1985) 182 Cal.App.3d 561, 565-566.)
In the present case, however, the trial court did not resolve any disputed factual issues in the course of ruling on the motion under section 664.6. In a case such as this one, where the construction of a settlement agreement does not turn on the credibility of extrinsic evidence, but conflicting inferences can be drawn from that evidence about the meaning of the agreement, the interpretation of the agreement is subject to our independent review on appeal. (See Schaefer’s Ambulance Service v. County of San Bernardino (1998) 68 Cal.App.4th 581, 586; Delucchi v. County of Santa Cruz (1986) 179 Cal.App.3d 814, 820-821.)
B. Asserted Inconsistencies Between Oral and Written Settlements
As appellants point out in their briefs, an oral settlement agreement is unenforceable if its material terms are not sufficiently complete and definite to permit the court to determine what the parties’ obligations are, and what would constitute a breach. (See, e.g., Lindsay v. Lewandowski (2006) 139 Cal.App.4th 1618, 1622-1623; Terry v. Conlan (2005) 131 Cal.App.4th 1445, 1458-1460; Weddington, supra, 60 Cal.App.4th 809-813; Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623 (Ersa Grae).) In the present case, however, as appellants acknowledged at oral argument in this court, they do not contend that the Oral Settlement was unenforceable for that reason. Rather, the substance of their argument is based on the principle that a written settlement agreement drafted to effectuate an oral settlement agreement cannot be enforced if its terms are materially inconsistent with the terms of the oral settlement agreement. (See, e.g., Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1431 (Elyaoudayan) [“Having orally agreed to settlement terms before the court, parties may not escape their obligations by refusing to sign a written agreement that conforms to the oral terms.” (Italics added.)]; Weddington, supra, 60 Cal.App.4th at pp. 813-814 [minor matters in contracts may be left for future agreement without rendering the contract unenforceable, but a settlement agreement incorporating other documents can only be enforced under section 664.6 if there was a “meeting of the minds regarding the terms of the incorporated documents”]; Ersa Grae, supra, 1 Cal.App.4th at pp. 623-624 & fn. 3 [contract will be enforced, when material terms are sufficiently definite, even if court is “required to fill in some gaps”; fact that an agreement contemplates subsequent documentation does not invalidate agreement, if parties have agreed to existing terms; parties are obligated to complete documentation in good faith].)
Specifically, appellants contend that the Written Settlement and the written version of the Revised Final Option Agreement are inconsistent with the Oral Settlement, or go beyond the terms of the Oral Settlement, in six separate respects. We will examine each of the claimed inconsistencies and added terms separately. In so doing, we apply familiar principles of contract law. (Lindsay v. Lewandowski, supra, 139 Cal.App.4th at p. 1623; Weddington, supra, 60 Cal.App.4th at pp. 810-812.)
1. Exception to Mutual General Release
The MOU originally agreed upon in the Orange County litigation addressed not only the pending disputes between the Winery Investors and the Landowners, but also certain internal disputes among the Landowners. (The nature of the Landowners’ internal disputes is not clear from our record, but does not appear to be material to the issues on appeal.) As part of the Oral Settlement, the parties agreed that the MOU would be abrogated as between the Optionee (to whom the Winery Investors had assigned their rights) and the Landowners, but that it would remain in effect as among the Landowners, to the extent that it addressed their internal disputes.
As already noted, MKG initially declined to agree to the Oral Settlement. The reason for this was that a dispute had arisen between MKG and Halvax regarding the MOU. Accordingly, when MKG’s counsel received a draft of the Written Settlement from the Optionee’s counsel, MKG’s counsel requested changes that were intended to reserve MKG’s rights in regard to its dispute with Halvax and other parties.
Appellants now contend that the Written Settlement’s release provisions are inconsistent with the provision of the Oral Settlement in which the Optionee, on the one hand, and the Landowners, on the other hand, agreed to grant one another mutual general releases. Specifically, appellants contend that the following language, reproduced here as quoted in their opening brief, is inconsistent with that agreement: “ ‘[T]he parties . . . agree that all rights with respect to the validity o[r] lack thereof of the Notes and other[] debts referenced [in the Final Option Agreement] and/or in the MOU shall be completely preserved.’ ” (Capitalization in original.)
When interpreting a settlement agreement, as with any other contract, our key task is to ascertain the intent of the parties. In so doing, we must interpret the language of any portion of the agreement in the context of the document as a whole, rather than using a disjointed approach. (Ticor Title Ins. Co. v. Rancho Santa Fe Assn. (1986) 177 Cal.App.3d 726, 730.)
In its original context, it is clear that the language quoted by appellants in their brief does not diminish the scope of the mutual releases that are granted under the Written Settlement between the Optionee, on the one hand, and the Landowners, on the other hand. In full, without the ellipsis interpolated in appellants’ brief, the quoted language reads as follows: “[T]he parties acknowledge and agree that by signing the Final Option Agreement defendants [i.e., the Landowners] are not waiving or releasing any claims they have with respect to any of the defendants, Lenders or other persons or alleged indebtedness referenced therein [i.e., in the Final Option Agreement] and/or in the MOU, and that all rights with respect to the validity or lack thereof of the Notes and other debts referenced therein and/or in the MOU shall be completely preserved.”
When this language is read together with the mutual general release language contained in another paragraph of the Written Settlement, it is clear that the Written Settlement provides the Landowners, including appellants, with a full release from any claims against them by the Optionee. This is what was agreed to in the Oral Settlement. We agree with the trial court’s implied conclusion that there is no inconsistency between the Oral Settlement and the Written Settlement in this regard.
This provision reads, in pertinent part, as follows: “Subject to full performance of the terms and conditions of this Agreement [i.e., the Written Settlement], plaintiff [i.e., the Optionee] hereby releases defendants [i.e., the Landowners], and defendants hereby release plaintiff, from any and all claims, demands, causes of action, obligations and liability . . . of any kind or nature, known or unknown, arising, accruing or existing on or before the [e]ffective [d]ate of this Agreement. . . . This release shall operate as between plaintiff and defendants only, and shall not extend to any claims, demands or causes of action which some or all of the defendants have or may have against some or all of the remaining defendants and/or Lenders or persons (other than plaintiff) referenced in the [Revised] Final Option Agreement or MOU.” (Capitalization in original; italics added.)
2. Provision Regarding Loan Defaults
The Written Settlement contains a provision stipulating that “[t]he Lenders shall not assert or claim a default on any indebtedness secured by the Property so long as the [O]ptionee is performing the terms of the Final Option Agreement.” The parties do not dispute that the “Lenders” referred to in this clause are those who hold security interests in the Property who are identified in the Final Option Agreement, two of whom are Landowners.
Appellants now contend that they did not agree to this provision, and that in any event, one of the Lenders was not a party to the litigation or the Oral Settlement and therefore cannot be bound by the provisions of the Written Settlement. As the Optionee points out, however, essentially the same provision was already contained in the Arbitrator’s Final Option Agreement, which the parties to the Oral Settlement agreed to sign, as modified by the Oral Settlement. Deletion of this provision was not among the modifications provided for in the Oral Settlement. Thus, inclusion of this provision in the Written Settlement was not inconsistent with the Oral Settlement.
Moreover, any problem raised by the fact that one of the Lenders is a non-party already existed in the Arbitrator’s Final Option Agreement, and therefore, by implication, in the Oral Settlement. Having failed to raise this issue when they entered into the Oral Settlement, the Landowners cannot now contend that the Written Settlement is inconsistent with the Oral Settlement for this reason.
3. Multiple Assignments of Option
Appellants’ next issue with the Written Settlement is that it grants the Optionee the right to assign the option multiple times. Appellants contend that the Oral Settlement only permitted the Optionee to assign the option once.
The Oral Settlement expressly permits the Optionee to assign his rights under the contemplated Revised Final Option Agreement “in the [O]ptionee’s sole discretion.” This was a modification to the Arbitrator’s Final Option Agreement, which gave the Landowners the right to approve or disapprove any proposed assignee of the option. Accordingly, the evidence demonstrates that the parties’ intent, when they agreed to the Oral Settlement, was to remove restrictions on the Optionee’s discretion in assigning the option.
The Written Settlement provides that the option “shall be assignable in the sole discretion of the Optionee.” The Revised Final Option Agreement provides that the “Optionee may, on one or more occasions, assign [the Revised Final Option] Agreement, and the rights and obligations contained in it, within [the] Optionee’s sole and unfettered discretion.” We do not view this as inconsistent with the Oral Settlement. In agreeing to modify the Arbitrator’s Final Option Agreement so as to give the Optionee sole discretion to assign the option, the Landowners implicitly accepted and agreed to the possibility that the option might have to be assigned more than once if the first assignment were rescinded. Indeed, appellants’ counsel conceded as much at oral argument.
Moreover, practical considerations, including the limited term of the Revised Final Option Agreement as provided in the Written Settlement, make it unlikely that the option will be assigned repeatedly. Consistent with this reality, the Written Settlement provides that it is the Optionee’s “intention to sell the [o]ption by assigning the Final Option Agreement to a [singular]willing buyer . . . .” (Italics added.) In addition, the duty of good faith and fair dealing imposed on the Optionee as a party to the Written Settlement and Revised Final Option Agreement constrain the Optionee only to enter into multiple assignments in good faith, and consistent with the overall goals of the parties’ agreement. (See Elyaoudayan, supra, 104 Cal.App.4th at p. 1431 [an “oral settlement, like any agreement, ‘imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.’ ”]) Thus, even if the potential for multiple assignments were at variance with the Oral Settlement, it would not be a material difference. For all of the foregoing reasons, we concur with the trial court’s implicit conclusion that the challenged provision of the Written Settlement is not materially inconsistent with the Oral Settlement.
4. Property Entry Without Notice
The Arbitrator’s Final Option Agreement provided that the Optionee would have the right to enter the Property to conduct tests and take samples. The Oral Settlement expressly extended this right to potential buyers of the option, and required the Landowners to “permit and cooperate with those due diligence investigations.” The Written Settlement provides that such inspections may be conducted without notice to the Landowners. Appellants contend that this provision goes beyond the terms of the Oral Settlement, and is particularly burdensome on them in light of the Optionee’s right to assign the option more than once.
At oral argument, appellants’ counsel also noted that the absence of a notice provision could create a practical problem if the option is not exercised within the first year, and, as a result, the Landowners gain the right to attempt to sell the property concurrently with the Optionee. This issue was not raised in appellants’ briefs, and thus has been waived. In any event, it does not change our analysis.
The provision for inspection without notice is not inconsistent with the Oral Settlement. Rather, it “fills in a gap” in the terms of the Oral Settlement, which is silent on the subject of notice. In enforcing a written settlement agreement based on an oral settlement under section 664.6, a trial court may not add material terms that were not agreed to by the parties, but may supplement the provisions of the oral settlement in ways that are not material. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360-1361; Elyaoudayan, supra, 104 Cal.App.4th at pp. 1429-1432; Ersa Grae, supra, 1 Cal.App.4th at p. 623.)
The Landowners expressly agreed in the Oral Settlement to permit and cooperate with the inspections. Significantly, they did not demand at that time that a right to advance notice be added to the terms of the Arbitrator’s Final Option Agreement, as modified by the Oral Settlement. The Property is an undeveloped parcel of land, which the Landowners purchased as an investment, and none of the Landowners lives there. These facts provide ample support for the conclusion that the provision for inspections without notice is not a material term of the parties’ agreement. Accordingly, the trial court acted within its discretion in deciding to enforce the Written Settlement with this provision included.
5. Timing of Due Diligence and Exercise of Option
Both the Oral Settlement and the Written Settlement grant a Substitute Optionee only 30 days from the closing of the latter’s purchase of the option to exercise the option, and another 30 days to close escrow on the purchase of the Property itself. The Revised Final Option Agreement, on the other hand, allows the optionee 90 days from the execution of the Revised Final Option Agreement to conduct due diligence investigations of the Property. In addition, the Revised Final Option Agreement allows the option to be exercised at any time within the 4-year term of the option, whereas both the Oral Settlement and the Written Settlement Agreement provide that the option must be exercised within 30 days after its assignment to a Substitute Optionee. Appellants argue that these provisions are inconsistent.
As the Optionee’s brief points out, however, the Written Settlement provides that a sale of the option “shall automatically trigger a modification of the Final Option Agreement . . ., such that the [S]ubstitute Optionee shall have no more than 30 (thirty) days from the effective date of the assignment of the Final Option Agreement to exercise the [o]ption . . . .” Thus, even though the Revised Final Option Agreement does not expressly incorporate the 30-day time limit for exercise of the option by a Substitute Optionee, the settlement documents as a whole are consistent with this provision. And, of course, depending on when the sale of the option occurred, the 90-day period for due diligence provided for in the Revised Final Option Agreement, which runs from the execution date of the Revised Final Option Agreement, would not necessarily extend past the 30-day time limit to exercise the option, which runs from the close of the sale of the option. In the event that it did, we interpret the documents to provide, consistent with the clear intent of the parties, that the time limits for exercising the option and for closing the purchase of the Property would intervene and cut off the 90-day due diligence period.
In their reply brief, appellants argue for the first time that the automatic modification clause contained in the Written Settlement does not solve the problem, because the Written Settlement would not be binding on the Substitute Optionee. Arguably, this argument was waived by appellants’ failure to raise it in their opening brief, but in any event, it does not convince us. The existence of the Written Settlement is expressly acknowledged in the Revised Final Option Agreement. As a practical matter, therefore—as appellants’ counsel conceded at oral argument—the Optionee could not assign the Revised Final Option Agreement without informing the Substitute Optionee of the time limits set forth in the Written Settlement. Such conduct would constitute a breach of the duty of good faith and fair dealing which (as noted ante) the Optionee owes to the Landowners under the Written Settlement, and could also give rise to a cause of action for misrepresentation against the Optionee by the Substitute Optionee.
See, e.g., Schuster v. Gardner (2005) 127 Cal.App.4th 305, 318, fn. 1 [“An appellant . . . abandons an issue by failing to raise it in his or her opening brief”]; H.N. & Frances C. Berger Foundation v. City of Escondido (2005) 127 Cal.App.4th 1, 15 [same].
To decline to enforce the settlement, based solely on the speculative possibility that the Optionee might engage in such a course of conduct, would open the door to the repudiation of almost any settlement by any party that could find a basis to speculate about possible future misconduct by another party. We cannot countenance such a result, given the “strong public policy of this state to encourage the voluntary settlement of litigation” (Osumi v. Sutton, supra, 151 Cal.App.4th at p. 1359), which section 664.6 is intended to facilitate.
C. Conclusion
As the above discussion demonstrates, appellants have not established that the Written Settlement and Revised Final Option Agreement differ in their material terms from the Oral Settlement. Accordingly, the trial judge did not err in enforcing the settlement under section 664.6 by treating the documents in question as binding on the parties.
Disposition
The judgment is affirmed. Respondent is awarded his costs on appeal.
We concur:
Reardon, J., Rivera, J.
As already noted, one of the Landowners, MKG, has signed the Written Settlement and is not a party to this appeal. Two of the other Landowners, William and Esther Grimsley, originally joined in the notice of appeal, but later moved to dismiss the appeal as to them. We granted the motion on October 12, 2007, along with a motion to augment the record with a copy of the supplemental complaint filed by the Optionee in the trial court.