Alkop Agriservices v. Gaimpoli

Filed 4/10/07 Alkop Agriservices v. Gaimpoli CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Butte)

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Plaintiffs Alkop Agriservices, Inc., Robert Allen, and Kathleen Martinelli sued Peter Giampaoli and his Individual Retirement Account (IRA) (the Giampaoli defendants) for interference with prospective business advantage and infliction of emotional distress after Giampaoli acquired property that Alkop Agriservices had formerly owned. Plaintiffs appeal from a judgment in favor of the Giampaoli defendants. They contend the trial court erred in sustaining the demurrer to the emotional distress claims on statute of limitations grounds because these claims related back to the original complaint and thus were timely. They also contend the trial court erred in granting summary judgment on the interference with prospective business advantage claim for both procedural and substantive reasons. Plaintiffs contend the trial court granted summary judgment on a basis as to which the Giampaoli defendants did not give notice. Further, they contend the trial court erred in excluding, under Evidence Code section 1119, a settlement agreement because the agreement was reached outside of mediation. We find the trial court ruled correctly on both the demurrer and the summary judgment motion and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In June 2002, plaintiffs brought suit against Anatom Investment Corporation, Atalanta Corporation, two title companies and the Giampaoli defendants for an unlawful trustees sale, intentional and negligent infliction of emotional distress, and declaratory relief. The subject of the action was 21.43 acres in Butte County. The complaint alleged as follows. In 1993, Alkop Agriservices granted a deed of trust on the property to secure a $800,000 promissory note to Calpine Containers. This deed of trust and note were assigned to Anatom. Alkop granted a deed of trust to secure a $150,000 note to Kathleen Martinelli, Allens ex-wife. Subsequently, Alkop granted a deed of trust on the property to Atalanta to secure a $647,306.77 promissory note executed by Alkop and Allen.

In 1998, Allen and Alkop filed for Chapter 11 bankruptcy protection. Later that year, Anatom recorded a notice of trustees sale. The bankruptcy court issued a preliminary injunction, enjoining Anatom from proceeding with the trustees sale of the property.

In June 1999, the bankruptcy court dismissed Alkops Chapter 11 petition. After some delays, the trustees sale of the property was held October 15, 1999, without proper notice to Allen or Alkop. The sole bid was by Anatom for $53,575, although the property had a fair market value of as much as $1,285,800; Anatom was deeded the property.

In February 2002, Allen informed defendant Peter Giampaoli that he and other plaintiffs were contesting the trustees sale and might reacquire the property. If so, Allen would be interested in selling the property together with adjoining lots for residential development. Giampaoli expressed interest and asked questions about what was owed to Anatom and Atalanta. On May 8, 2002, Anatom deeded the property to the Peter Giampaoli IRA.

The complaint alleged the trustees sale violated Civil Code section 2924h and damaged plaintiffs in the amount of $1,232,225. It further alleged that Allen and Martinelli suffered severe emotional distress due to defendants negligent or intentional conduct. Plaintiffs sought declaratory relief as to whether the trustees sale was legal and whether the Giampaoli IRA took title to the property as a bona fide

purchaser for value. The complaint sought general and punitive damages.

The claims for emotional distress were dismissed. By stipulation, the Giampaoli defendants were stricken from all but the declaratory relief action.

Plaintiffs filed a first amended complaint. To the cause of action alleging an unlawful trustees sale, the amended complaint added allegations that Allen had guaranteed $200,000 of the note held by Anatom and all of the note held by Atalanta. When only $53,575 was bid at the trustees sale, Allen was forced to pay more through his Chapter 11 payment plan to pay off the indebtedness.

The amended complaint also added a cause of action for interference with prospective business advantage against the Giampaoli defendants only. The amended complaint alleged Anatom and Atalanta claimed to be owed $1.25 million by Allen and Alkop, secured by a deed of trust on the 21.43 acres and deeds of trust on other properties. In July 2001, Allen and Alkop were negotiating settlement of their disputes with Anatom and Atalanta, including ownership of the 21.43 acres. The settlement discussions were aided by an attorney-mediator appointed by the United States Court of Appeals for the Ninth Circuit. Anatom and Atalanta made a written settlement offer to settle all disputes and deed the property to Allen or Alkop and release all other deeds of trust for the payment of $1.25 million. This offer was confirmed in October 2001.

To raise the money to settle the disputes, Allen and Alkop began soliciting offers from parties interested in acquiring

Allens Chico property that was adjacent to the 21.43 acres. Giampaoli contacted Allen about purchasing the Chico property. During discussions with Giampaoli, Allen disclosed his need to raise money to settle his disputes with Anatom and Atalanta. Giampaoli offered to lend Allen the money and then purchase the 21.43 acres for $1.2 million. Giampaoli demanded Allen and Alkop provide details of the negotiations with Anatom and Atalanta; Allen and Alkop provided privileged and confidential information, including what Anatom thought the 21.43 acres was worth. Anatom and Atalanta were valuing the 21.43 acres as agricultural land, not as residential subdivision property. Giampaoli then developed a plan to purchase the 21.43 acres directly from Anatom, for a price of less than one-fifth its value as residential property. The sale went through and Allen and Alkop were damaged in the amount of $933,000. Allen and Alkop were also damaged with respect to their other property on which Anatom and Atalanta held deeds of trust securing indebtedness of $1.6 million.

The Giampaoli defendants moved for summary judgment.

Plaintiffs dismissed the entire action as to plaintiff Alkop Agriservices, Inc.^[1]

Plaintiffs filed a second amended complaint. This complaint deleted the cause of action challenging the legality

of the trustees sale and the cause of action for declaratory relief. In addition to the cause of action against the Giampaoli defendants for interference with prospective business advantage, the second amended complaint sought specific performance of the alleged settlement agreement, settling all disputes and conveying the 21.43 acres to Allen and Alkop for payment of $1.25 million. It added a cause of action for interference with prospective business advantage against all defendants. This cause of action alleged Allen had a confirmed bankruptcy plan that required him to pay $130,000 in April and May each year to Anatom and Atalanta. Upon default, Anatom and Atalanta had the right to petition to convert Allens Chapter 11 bankruptcy into a Chapter 7 bankruptcy and liquidate all of his assets. Allen confided in the Giampaoli defendants the terms of his confirmed plan. Knowing that Allen was depending on the loan from the Giampaoli defendants to settle his disputes with or make the required payments to Anatom and Atalanta, defendants conspired to mislead Allen so he would depend on the loan, but when the loan was not forthcoming, Anatom and Atalanta would petition the bankruptcy court to convert the bankruptcy into a liquidating bankruptcy so they could obtain Allens other property at a discount. When Allen learned there would be no loan it caused him severe emotional upset until he was able to secure a loan from other sources.

The second amended complaint also added causes of action for intentional and negligent infliction of emotional distress based on the alleged conspiracy to cause Allen to default on his Chapter 11 payment.

Anatom and Atalanta demurred to the second amended complaint on the basis, inter alia, that the second cause of action for specific performance relied on a settlement offer that was inadmissible under Evidence Code section 1119 and the third, fourth and fifth causes of action for emotional distress were barred by the statute of limitations.

These demurrers were sustained with leave to amend.

Plaintiffs filed a third amended complaint, the operative complaint for this appeal. The third amended complaint deleted the references to the mediation, alleging instead that Anatom and Atalanta made a written settlement offer, that was confirmed October 21, 2001. Allens acceptance of the settlement offer was conveyed to Anatom and Atalanta. Allen also informed the Giampaoli defendants of his acceptance of the settlement offer. Anatom and Atalanta did nothing to revoke the offer upon hearing that Allen was raising the $1.25 million.

The third amended complaint added allegations that Allen learned of the conspiracy to interfere with his Chapter 11 plan payment and force him into liquidating bankruptcy during discovery in the spring of 2004.

The Giampaoli defendants demurred to the third, fourth and fifth causes of action, those alleging emotional distress causing physical symptoms, on the basis that they were barred by the two year statute of limitations of Code of Civil Procedure section 335.1.

The trial court sustained the Giampaoli defendants demurrer without leave to amend.

The Giampaoli defendants then moved for summary judgment on the remaining two causes of action and the claim for punitive damages. They asserted that plaintiffs could not prove any of the elements of interference with prospective business advantage; there was no economic relationship between plaintiffs and Anatom and Atalanta that would have resulted in plaintiffs acquiring the 21.43 acres. To defeat the second cause of action for specific performance of the alleged settlement agreement, the Giampaoli defendants incorporated by reference the arguments of Anatom and Atalanta set forth in their moving papers for summary judgment.^[2]

In their separate statement in support of summary judgment, Anatom and Atalanta set forth the following undisputed facts. Anatom and Atalanta had secured claims against the bankrupt debtor Allen and objected to the repayment plan confirmed by the bankruptcy court. They challenged the confirmed plan. The court of appeals ordered the parties to mediate their dispute and appointed an attorney-mediator. The mediation lasted from May 2001 through October 2001. During the mediation the parties exchanged settlement offers. On September 24 and again on October 21, 2001, Anatom and Atalanta conveyed a joint settlement offer to Allen under which they would accept $1.25 million in settlement of their claim, provided payment was made by May 30, 2002; in exchange they would release their liens on Allens property. Allen responded with a counter-offer to the September proposal and did not respond to the October proposal. The mediator set a deadline of October 22, 2001, for opening briefs. The appeal of the dispute proceeded, ending in a published opinion by the Ninth Circuit Court of Appeals, affirming the confirmed bankruptcy plan. Allen was in the process of raising money when Anatom conveyed the property to the Giampaoli IRA.

In support of their motion for summary judgment, Anatom and Atalanta offered excerpts from Allens deposition in which he admitted he did not respond to the settlement offer and the appeal went forward. They also provided a declaration from their attorney, William Robinson, outlining the mediation process and the appeal, with copies of the settlement offers. The second letter of October 21, 2001, rejects the counter-offer of $900,000. It continues: Our offer stands as specified to you in our letter on the 24th of September. We would be willing to accept payment from you of $1.25 million to be paid in full May 1, 2001 [sic - 2002]. This is a discount to what is owed, as well as a discount to the value of the property in Chico. We would then surrender any of our claims to you and the property, and would look forward to your cooperation in the Dumag case.^[3]

A declaration of Thomas Gellert, the vice president of Anatom and of Atalanta, stated that when he made the settlement offer in October 2001, he did not intend to leave it open until the following May. Given the pending briefing deadlines, he believed it called for a prompt response. (The letter ended with, We look forward to hearing from you.) Allen did not respond, but instead filed briefs and litigated the appeal. Anatom and Atalanta construed Allens silence and actions as an unambiguous rejection.

In opposition to Anatom and Atalantas motion for summary judgment, plaintiffs argued the settlement offer was not made during a mediation session; it was made by Gellert directly to Allen, without the involvement of the mediator or even the parties attorneys. Plaintiffs argued the bar of Evidence Code section 1119 and rule 33 of the Federal Rules of Appellate Practice did not bar admission of the settlement letter. Plaintiffs asserted neither Anatom nor Atalanta revoked the offer and Allen did not reject it. In their separate statement in opposition to the summary judgment motion, plaintiffs disputed that Allen did not accept the settlement offer. They argue Allen did not have to accept the offer rather he simply had to perform.

In their reply to plaintiffs opposition to their summary judgment motion, the Giampaoli defendants directly addressed the mediation issue, rather than simply relying on the arguments of Anatom and Atalanta. The Giampaoli defendants argued there was no admissible evidence that plaintiffs had an opportunity to acquire the 21.43 acres because the settlement letters were written during mediation and inadmissible as a matter of law. They also argued the alleged settlement did not include reconveyance of the 21.43 acres and other elements of interference with prospective business advantage could not be proved.

The trial court granted both motions for summary judgment. The court found the only communications offered to prove a prospective business advantage and the contract alleged in the cause of action for specific performance were made in the course of a mediation and were inadmissible under Evidence Code section 1119 and rule 33 of the Federal Rules of Appellate Procedure. Without these communications plaintiffs could not prove a prospective business advantage or a contract to be specifically enforced.

DISCUSSION

I. Demurrer

Plaintiffs contend the trial court erred in sustaining the Giampaoli defendants demurrer to the third, fourth, and fifth causes of action on the basis that the statute of limitations had run. Plaintiffs contend these claims for emotional distress relate back to the emotional distress claims in the original complaint so there is no statute of limitations problem.

The modern rule with respect to actions involving parties designated by their true names in the original complaint is that, where an amendment is sought after the statute of limitations has run, the amended complaint will be deemed filed as of the date of the original complaint provided recovery is sought in both pleadings on the same general set of facts. [Citations.] (Austin v. Massachusetts Bonding & Insurance Co. (1961) 56 Cal.2d 596, 600.) Two pleadings seek recovery based on the same general set of facts when the complaint and the amendment allege the same accident and the same injury. [Citations.] (Espinosa v. Superior Court (1988) 202 Cal.App.3d 409, 414.) Courts also focus on whether the same accident and the same offending instrumentality are involved. (Coronet Manufacturing Co. v. Superior Court (1979) 90 Cal.App.3d 342, 345.)

In Coronet Manufacturing Co. v. Superior Court, supra, 90 Cal.App.3d 342, the initial complaint alleged plaintiffs daughter was electrocuted while using a defective hair dryer. The complaint was amended to name a component parts manufacturer as one of the Doe defendants and to allege Coronet manufactured component parts of the hair dryer and a table lamp. (Id. at p. 344.) Although there was a single electrocution, the two pleadings referred to different accidents and instrumentalities. The first pleaded the instrumentality was a hair dryer and the accident was use of the hair dryer; the amended complaint alleged the instrumentality was a lamp and the accident was the use of the lamp. (Id. at p. 347.) Unless plaintiffs could plead the hair dryer was connected to the lamp and its switch, the amendment would not relate back to the original complaint. (Id. at pp. 347-348.)

In Espinosa v. Superior Court, supra, 202 Cal.App.3d 409, the original complaint alleged that on May 7 plaintiff was beaten, arrested and jailed, and exculpatory evidence destroyed; the injury was assault, false arrest and false imprisonment. The amendment alleged three days later, on May 10, an agent of the City intimidated a witness, resulting in an unjust conviction. The court found the amendment did not relate back to the original complaint because the amendment alleged a different accident and a different injury. (Id. at p. 415.)

In Barrington v. A. H. Robins Co. (1985) 39 Cal.3d 146, both the original complaint and the amendment alleged the same injury, sterility. The two complaints, however, alleged different accidents, ingestion of a drug and use of an intrauterine device, so the relation back doctrine did not apply. (Id. at p. 152.)

In Wiener v. Superior Court (1976) 58 Cal.App.3d 525, the original complaint alleged defendants caused a libelous statement to be published in the Los Angeles Times on April 23. The amendment added the allegation of a second defamatory statement published in the Huntington Beach Independent on April 25. The amendment did not relate back to the original complaint because it described a different utterance, made at a different time and with a different defamatory meaning, and published in a different newspaper. The April 25 events were a distinct set of facts. (Id. at p. 529.)

Here, the two pleadings allege two different accidents causing two distinct injuries, although of the same type. The original complaint alleged the accident was the holding of a trustees sale without notice in October 1999. The injury was severe emotional distress. The second amended complaint, the first pleading in which the emotional distress claims at issue here made an appearance, alleged a conspiracy to mislead Allen as to the intent to lend money, followed by not lending that money so he would default on his bankruptcy plan payment and his creditors could convert his chapter 7 bankruptcy to a chapter 11 bankruptcy so they could obtain Allens other property. This conspiracy occurred in May 2002. The injury was severe emotional upset, anxiety, nausea, and insomnia.

Plaintiffs contend these two sets of fact are based on the same representations and the same transactions. We find, however, they are distinct sets of facts. The original complaint centered on a unlawful trustees sale designed to permit defendants to obtain the 21.43 acre property. The amended complaint alleged a more complex conspiracy, three years later, that was intended to obtain other property Allen owned. Because the amendment is not based on the same general set of facts (Austin v. Massachusetts Bonding & Insurance Co., supra, 56 Cal.2d 596, 600), the amendment does not relate back, for statute of limitations purposes, to the original complaint.

Although the relation back doctrine does not apply, there is still the question of whether the emotional distress claims are barred by the statute of limitations. The second amended complaint alleged the injury from the alleged conspiracy occurred in May 2002. The statute of limitations for personal injury actions is two years. (Code Civ. Proc., 335.1.) Thus, the statute of limitations on these claims ran in May 2004.

The second amended complaint was filed August 9, 2004. An action is commenced when the complaint is filed. (Code Civ. Proc., 350.) Since the second amended complaint was filed more than two years after the alleged injury, the statute of limitations had run. There is authority, however, for using an earlier date for statute of limitations purposes.

In Wiener v. Superior Court, supra, 58 Cal.App.3d 525, the applicable statute of limitations was one year. On February 6, 1975, plaintiffs filed a complaint alleging a libelous statement was made April 23, 1974. On April 24, 1975, they filed a motion for leave to file an amendment alleging a second libelous statement made on April 25, 1974. (Id. at p. 527.) The motion was granted on May 19, 1975, and the amended complaint was deemed filed that day. (Id. at p. 528.) The trial court sustained a demurrer based on the one-year statute of limitations. (Ibid.) The appellate court issued a peremptory writ of mandate requiring the trial court to overrule the demurrer. (Id. at p. 531.) The court held a new cause of action is commenced when a motion to amend, with the proposed amended complaint attached, is filed, not when the motion is granted and the amended complaint filed. (Id. at pp. 530-531.) The court reasoned the amended complaint was filed by attaching it to the motion for leave to amend. No purpose would be served by requiring plaintiff to file a separate complaint and then move to consolidate, especially since plaintiff had no control over when the court ruled on the motion and defendant had notice of the new allegations. (Id. at p. 530.) Since the motion for leave to file the amended complaint was made within one year of the new factual allegations, it was error to sustain the demurrer to these causes of action. (Id. at p. 531.)

Here, the motion for leave to file the second amended complaint, with a copy of the amended complaint attached, was filed on May 27, 2004, before the statute of limitations on the new claims had run. We requested supplemental briefing from the parties on the effect of the Wiener decision on this case. Predictably, the parties differ on whether we should follow Wiener v. Superior Court, supra, 58 Cal.App.3d 525.

Plaintiffs urge us to follow Wiener v. Superior Court finding its reasoning persuasive. Under Wiener, the emotional distress claims are timely and the judgment of dismissal must be reversed. (Wiener, supra, 58 Cal.App.3d 525.)

The Giampaoli defendants, on the other hand, argue Wiener was wrongly decided and is contrary to logic. They assert an amended complaint is not filed by simply attaching it to a motion for leave to amend. They ask what happens if, pursuant to its discretion under Code of Civil Procedure section 473, subdivision (a)(1), the trial court denies the motion: Is the amended complaint still filed?

We find the Giampaoli defendants have the better argument. We respectfully disagree with the Wiener court that a complaint is filed by simply attaching a copy to a motion for leave to amend. The provisions for amending complaints and determining the effective date of an amendment are clearly set forth in statutes. It is axiomatic that in the interpretation of a statute where the language is clear, its plain meaning should be followed. [Citation.] (Great Lakes Properties, Inc. v. City of El Segundo (1977) 19 Cal.3d 152, 155.) An action is commenced when the complaint is filed. (Code Civ. Proc., 350.) When a complaint is amended, the amendments or the amended complaint must be filed. (Code Civ. Proc., 471.5, subd. (a).) The original document, not a copy, must be filed. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, 14, p. 74.) The clerk of the superior court shall endorse on each paper filed with the court the day, month, and year it is filed. (Gov. Code, 6946.5.) The original of the second amended complaint was presented for filing and endorsed on August 9, 2004. That is the date it was filed and the statute of limitations had run on the emotional distress claims.

The trial court did not err in sustaining the demurrer to the third, fourth, and fifth causes of action. Because we resolve the issue on this ground, we need not consider the argument that the emotional distress claims are a sham pleading.

II. Summary Judgment

A. Procedural Claim of Error

Plaintiffs contend the trial court erred in granting the Giampaoli defendants summary judgment on a basis not advanced in their moving papers. The trial court ruled plaintiffs could not prove a prospective business advantage due to the mediation privilege of Evidence Code section 1119. Plaintiffs contend the court could consider this argument only if the Giampaoli defendants properly joined in the arguments of Anatom and Atalanta in their moving papers and the Giampaoli defendants did not.

Filing a notice of joinder alone is insufficient to join another partys motion for summary judgment; a party must file a summary judgment motion and a separate statement. (Village Nurseries v. Greenbaum (2002) 101 Cal.App.4th 26, 46-47; Frazee v. Seely (2002) 95 Cal.App.4th 627, 636.) A party seeking summary judgment must comply with the procedural requirements of Code of Civil Procedure section 437c, which include a motion, a separate statement, and supporting evidence. (Code Civ. Proc., 437c, subds. (a)-(b).)

In Sierra Craft, Inc. v. Magnum Enterprises, Inc. (1998) 64 Cal.App.4th 1252, the court invalidated a local rule of Orange County that permitted a trial court to grant summary judgment to the party opposing the motion without that party actually moving for summary judgment. The court found the local rule conflicted with Code of Civil Procedure section 437c. (Id. at p. 1255.) Summary judgment, although a very useful tool in litigation, is also a drastic remedy. Because of this, it is important that all of the procedural requirements for the granting of such a motion be satisfied before the trial court grants the remedy. (Id. at p. 1256.)

Here, the Giampaoli defendants filed a motion for summary judgment, a separate statement, and supporting evidence. Rather than repeat the arguments made by Anatom and Atalanta made in their motion for summary judgment regarding the mediation privilege, the Giampaoli defendants incorporated those arguments by reference and requested that the trial court take judicial notice of Anatom and Atalantas moving papers. This procedure followed the practice pointer of a leading practice guide. (Weil et al., Cal. Practice Guide (The Rutter Group 2006) Civil Procedure Before Trial, 9:27.1, p. 9(1)-17.) More importantly, the Giampaoli defendants fulfilled the procedural requirements of Code of Civil Procedure section 437c so the issue of the mediation privilege was properly raised in the Giampaoli defendants motion for summary judgment.

The trial court did not err in considering the issue of the mediation privilege in the Giampaoli defendants motion for summary judgment.

B. Substantive Claim of Error

Plaintiffs contend the trial court erred in determining the settlement letters should be excluded under Evidence Code section 1119. Without the letters, plaintiffs could not show a prospective business advantage. Plaintiffs contend the letters do not fall within the ambit of Evidence Code section 1119 because they were not sent in the course of mediation. They further contend the use they intend to make of the letters militates in favor of admissibility; the letters are not to be used against the Giampaoli defendants to establish their liability or to obtain judicial enforcement of a settlement agreement.

Evidence Code section 1119 provides: Except as otherwise provided in this chapter:

(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

The California Supreme Court has declared the language of this statute clear and unambiguous, with no need for judicial construction. Section 1119 prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation. (Foxgate Homeowners Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 13.) The purpose of the confidentiality provisions is to promote a candid and frank exchange; confidentiality is essential to effective mediation, a form of alternative dispute resolution encouraged and, in some cases required by, the Legislature. (Id. at p. 14.) There is no good cause exception to the confidentiality provisions; the only exceptions are those expressly established by the Legislature. (Rojas v. Superior Court (2004) 33 Cal.4th 407, 424.)

Plaintiffs contend the letters were not in the course of mediation because they were not presented in front of the mediator or during a mediation session. Rather, they were directly exchanged between principals, without the involvement of the mediator or the parties attorneys.

The appeal challenging the bankruptcy confirmation plan was selected for inclusion in the Ninth Circuit mediation program. In September 2001, the mediator ordered Anatom and Atalanta to respond by September 28, 2001, to the settlement offer made by Allen, modified the briefing schedule so the opening appellate briefs were due October 22, 2001, and set a mediation conference for October 2, 2001. The September 24, 2001 letter from Tom Gellert to Allen, expressing dissatisfaction with Allens settlement proposal and offering to settle all disputes for a payment of $1.25 million, was in response to this order from the mediator. Counsel for Anatom and Atalanta sent a copy of the letter to the mediator. A further mediation conference was held October 11, 2001. Shortly thereafter, Allen offered $900,000 in settlement; on October 21, 2001, Gellert rejected that offer and repeated the offer to settle for $1.25 million. This October letter was also sent to the mediator.

These facts indicate the two letters of September 24 and October 21, 2001, that plaintiffs seek to use to establish a prospective business advantage, were exchanged as part of the mediation process. Indeed, the first letter was sent in response to a direct order from the mediator to respond to Allens settlement offer. In his deposition, offered in Anatom and Atalantas reply to plaintiffs opposition to the summary judgment motion, Allen testified he informed the mediator of the October 24, 2001 settlement letter. He wanted to make sure she was informed because this was the conclusion of our negotiations, and that I had an offer and I thought she did a pretty good job.

Plaintiffs contend the letters establish a settlement agreement. The Evidence Code permits admission of a settlement agreement prepared in the course of or pursuant to a mediation if the agreement is signed by the settling parties and one of several conditions is satisfied. (Evid. Code, 1123.) Here the alleged agreement was not signed by the parties, so it does not meet the conditions for admission under Evidence Code section 1123. As the California Supreme Court noted in Rojas v. Superior Court, the statutory mediation privilege applies absent an express statutory exception. (Rojas v. Superior Court, supra, 33 Cal.4th at p. 424.)

Plaintiffs argue the mediation privilege does not shield everything produced during the mediation process. Evidence Code section 1120, subdivision (a) provides: Evidence otherwise admissible or subject to discovery outside of a mediation or a mediation consultation shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation or a mediation consultation. The Supreme Court has explained this provision: Read together, sections 1119 and 1120 establish that a writing-which qualifies as [e]vidence ( 140)-is not protected solely by reason of its introduction or use in a mediation ( 1120, subd. (a)), but is protected only if it was prepared for the purpose of, in the course of, or pursuant to, a mediation. ( 1119, subd. (b).) (Rojas v. Superior Court, supra, 33 Cal.4th at p. 417.) Section 1120 serves as a limit on the scope of section 1119 to prevent parties from using mediation as a pretext to shield materials from disclosure. (Ibid.)

The letters at issue had no existence independent of the mediation; they were prepared in response to settlement offers made by Allen during mediation and, at least as to the first letter, made in response to an order by the mediator. In these circumstances the letters qualify for the mediation privilege as they were made in the course of, or pursuant to, a mediation. (Evid. Code, 1119, subds. (a) & (b).)

The trial court did not err in ruling the letters were inadmissible and therefore granting the Giampaoli defendants summary judgment.

DISPOSITION

The judgment is affirmed.

MORRISON , J.

We concur:

SCOTLAND, P.J.

BLEASE , J.

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^[1] Alkops corporate status was suspended for failure to pay taxes from March 1, 2000, to October 16, 2002.

^[2] Anatom and Atalantas motion for summary judgment and supporting memorandum of points and authorities was designated as part of the record on appeal, but does not appear in the record.

^[3] The September 24, 2001 letter offered the same, except the payment was to be received by May 30, 2002.