Filed 10/26/18 Charles v. U.S. Bank, N.A. 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NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
(Nevada)
----
| STANLEY P. CHARLES III,
Plaintiff and Appellant,
v.
U.S. BANK, N.A. et al.,
Defendants and Respondents.
|
C082489
(Super. Ct. No. TCU125038C)
|
This appeal arises out of a nonjudicial foreclosure on a residence that commenced after appellant Stanley Peter Charles III (Charles) defaulted on his mortgage. During the litigation brought by Charles to prevent the foreclosure, he entered into a settlement agreement with respondents Caliber Home Loans, Inc., formerly known as Vericrest Financial Inc., U.S. Bank Trust, N.A., as Trustee for Vericrest Opportunity Loan Trust 2011-NPL2, LSF7 Bermuda NPL VI Trust, LSF7 NPL VI Bermuda Wells Trust, U.S. Bank Trust National Association, as Trustee for LSF7 Bermuda NPL VI Trust, Vericrest Participation Loan Trust 2011-NPL2, and Summit Management Company, LLC (collectively Respondents). The settlement agreement released Charles’s claims relating to the foreclosure in exchange for the opportunity for Charles to pay off his mortgage in a substantially reduced amount. Charles, however, did not obtain the financing required to pay off the reduced amount or dismiss the case as required by the settlement agreement. Respondents moved for summary judgment on grounds the settlement agreement barred Charles’s claims. The trial court granted the motion and entered a judgment of dismissal in favor of respondents.
On appeal, Charles contends (1) the trial court erred in granting summary judgment because the settlement agreement was unenforceable in that “it had not been finalized and certain [conditions precedent] had to be worked out and met,” (2) mutual mistake of the parties prevented contract formation of the settlement agreement, (3) the trial court erroneously denied his motion for new trial on the same grounds as the trial court relied upon in granting summary judgment, and (4) the trial court erred in sustaining respondents’ demurrer to his cause of action under Civil Code section 2923.5.
We conclude Charles entered into a binding and final settlement agreement in which he released all of his causes of action against the respondents. Because Charles no longer has any legal claim against respondents, the trial court properly entered a judgment of dismissal in favor of respondents. Accordingly, we affirm.
FACTUAL AND PROCEDURAL HISTORY
The Litigation
In February 2006, Charles took out a $472,500 loan from Community Lending, Inc. Charles pledged his residence at 15031 Glenshire Drive in Truckee as collateral and signed a deed of trust that allowed nonjudicial foreclosure in the event of his default on the loan. Between February 2011 and March 2012, Charles’s loan traveled a meandering route through assignments of the deed of trust and substitutions of trustees that eventually concluded with respondents assuming an ownership or servicing relationship to the mortgage. Charles defaulted on the loan, and the successor trustee commenced nonjudicial foreclosure proceedings in December 2011.
In May 2012, Charles filed a complaint for breach of contract, breach of implied covenant of good faith, failure to comply with mortgage statutes, promissory estoppel, and declaratory and injunctive relief. Respondents demurred to the complaint, which the trial court sustained in part and denied in part with leave to amend.[1]
In September 2013, Charles filed a first amended complaint. Respondents demurred again. In December 2013, the trial court sustained in part without leave to amend the respondents’ demurrer to the causes of action for breach of the foreclosure statutes.[2]
The Settlement Agreement
On September 26, 2014, the parties participated in a settlement conference with Judge Robert Tamietti of the Nevada County Superior Court. As a result, the parties entered into the settlement agreement that is partially typed and partially handwritten. In its recitals, the settlement agreement states the intention of the parties as follows: “The Parties understand and agree that all of the claims asserted between them in the Litigation are doubtful and in dispute. However, the Parties wish to settle their disputes and buy peace without admitting or conceding any matter. This agreement does not affect any claims Charles may have in the Litigation against CitiMortgage.” (Italics added.) To this end, the settlement agreement further states the parties “now desire to fully and finally settle their disputes and differences arising out of or related to the Litigation,” which was defined as the action filed by Charles in Nevada County Superior Court in this case. (Italics added.)
Under the settlement agreement, Caliber was required to “request that any credit agencies that Caliber has reported information to regarding Charles, remove any derogatory information regarding the Subject Loan reported to the credit agencies by Caliber.” Charles was given “90 days to secure preapproval for a refinance with net payment to Caliber Home Loans, Inc. of $350,000.” The settlement agreement provided, “[i]f Charles does not secure financing within 90 days of this agreement, Charles agrees to either (1) execute and provide to Caliber a Deed-in-Lieu of Foreclosure (‘DIL’) or (2) waive any objection to non-judicial foreclosure of the Property pursuant to the power of sale contained in the Deed of Trust; Caliber shall enjoy the right to select one of these options. If Charles does not secure the financing . . . , Charles must vacate the property within 60 days . . . .”
The settlement agreement further provided: “Settlement contingent upon Charles signing a Settlement Agreement and dismissing the Litigation in its entirety with prejudice as to all parties.” The agreement states that “Charles agrees that he, his agents, assignees, successors, or representatives will not appeal any order, decision or judgment entered in the Litigation, including, but not limited to, any order granting a part[y’s] demurrer, motion for summary judgment or summary adjudication.” The parties further agreed that the “Court will issue order releasing funds on deposit with the court to T M Pankopf LLC.”
After articulating the reciprocal obligations of the parties, the settlement agreement contains a paragraph titled, “Release” that states in relevant part: “Charles agrees and hereby fully, finally, and forever discharges, releases, and acquits Defendants [and their agents, assigns, etc.] who are or may be liable or responsible, whether wholly or partially . . . from all possible claims, liens, [and other theories of liability and obligation] connected to . . . or which may arise out of the incidents and issues related to or in connection with any and all claims against the Released Parties, the Subject Loan, the Subject Property, or the facts pled or which could have been pled in this Litigation . . . occurring before the effective date of this Agreement. This release includes all entities associated with the Released Parties . . . .”
Regarding release of known and unknown claims, the settlement agreement provides that “Charles expressly waives and relinquishes any rights or benefits available to him under provisions of law similar to which provides: ‘A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.’ ” Thus, the agreement quotes – but does not cite – Civil Code section 1542.
The settlement agreement contains an acknowledgement the parties were represented by their own by legal counsel and the agreement “is the result of negotiations between the Parties.” The agreement also contains an integration clause providing: “This Agreement contains the entire agreement between the Parties relating to the rights and obligations contained herein and any representations, negotiations or amendments between the Parties are merged into and superseded by this Agreement. No subsequent modification or amendment between or among the Parties, or any of them, shall be effective, unless in writing and signed by the Parties to this Agreement who are or may be affected by any such subsequent modification or amendment hereto.”
Immediately above the signature block and in bold print, the settlement agreement declares: “THE UNDERSIGNED HAVE READ THE FOREGOING AND FULLY UNDERSTAND AND AGREE TO IT WITHOUT RESERVATIONS.” The settlement agreement was signed on the day of the settlement conference by Charles, Charles’s attorney, legal counsel for respondents, and legal counsel for CitiMortgage, Inc. (CitiMortgage).[3]
DISCUSSION
I
Mootness
The respondents contend this appeal is moot because the residence has been foreclosed upon and Charles has been evicted. Thus, respondents argue we must dismiss due to the inability to grant any effective relief to Charles. We disagree that this appeal is moot.
“An appeal is moot when a decision of ‘the reviewing court “can have no practical impact or provide the parties effectual relief.” ’ (MHC Operating Limited Partnership v. City of San Jose (2003) 106 Cal.App.4th 204, 214.) We have the duty to avoid deciding a moot appeal. ‘ “ ‘[T]he duty of this court, as of every other judicial tribunal, is to decide actual controversies by a judgment which can be carried into effect, and not to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it.’ (California Redevelopment Assn. v. Matosantos (2013) 212 Cal.App.4th 1457, 1484.)” (Saltonstall v. City of Sacramento (2014) 231 Cal.App.4th 837, 848-849.) We are compelled to dismiss when it is impossible for this court to grant any effective relief. (Vernon v. State (2004) 116 Cal.App.4th 114, 120.)
We reject the respondents’ mootness argument because Charles’s arguments – if meritorious – would result in the setting aside of the settlement agreement between the parties and reversing the trial court’s sustaining of the demurrer to the cause of action predicated on Civil Code section 2923.5. This would effectively resuscitate Charles’s first amended complaint, including causes of action for breach of contract and breach of the foreclosure statutes. A cause of action for breach of contract requires proof of damages and if proven supports the award of damages. (Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 921.)
Although Civil Code section 2923.5 supports a private right of action, that right of action is limited to postponement of the foreclosure. (Skov v. U.S. Bank Nat. Assn. (2012) 207 Cal.App.4th 690, 697.) Even so, Charles alleges he can amend his complaint to allege damages “due to Respondents’ breach of the modification and their intentional foreclosure of his residence.” In essence, Charles appears to assert he can amend to state a cause of action for wrongful foreclosure. “A wrongful foreclosure is a common law tort claim. It is an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper.” (Sciarratta v. U.S. Bank National Association (2016) 247 Cal.App.4th 552, 561.) Thus, if Charles’s contentions on appeal were meritorious, relief could be possible in the form of damages.
Consequently, the appeal is not moot because a reversal would allow Charles to seek relief in the form of damages.[4]
II
Final Settlement Agreement
Charles contends the trial court erred in granting summary judgment in favor of defendants on grounds the action has been resolved by a settlement agreement. He argues there was no final settlement agreement between the parties but only a “discussion draft.” Charles further argues three conditions precedent were never fulfilled so that there was no contract formation. We are not persuaded.
A.
Principles of Review
At the outset, we note summary judgment is an appropriate procedural vehicle to enforce a settlement agreement in pending litigation. (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1585, fn. 23 (Stewart); Murphy v. Padilla (1996) 42 Cal.App.4th 707, 716.) Defendants who move for summary judgment on grounds of a settlement agreement bear the burden of demonstrating the validity of the agreement and that it constitutes a complete defense to the action. (Stewart, at p. 1585.) Thus, defendants must show the parties had capacity to enter the agreement, a lawful object, and valuable consideration. (Id. at pp. 1585-1586.)
And, as this court has previously explained, “ ‘nder long-standing contract law, a “contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.)’ ” (Iqbal v. Ziadeh (2017) 10 Cal.App.5th 1, 7 (Iqbal).) “ ‘California recognizes the objective theory of contracts (Berman v. Bromberg (1997) 56 Cal.App.4th 936, 948), under which “[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation” (Titan Group, Inc. v. Sonoma Valley County Sanitation Dist. (1985) 164 Cal.App.3d 1122, 1127). The parties’ undisclosed intent or understanding is irrelevant to contract interpretation.’ ” (Iqbal, at p. 8 [collecting authority].)
In construing the settlement agreement, we read the document as a whole “ ‘so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.’ (Civ. Code, § 1641.)” (McCaskey v. California State Auto. Assn. (2010) 189 Cal.App.4th 947, 970.) Thus, “ ‘ “[T]he character of a contract is not to be determined by isolating any single clause or group of clauses. . . .” ’ ” (Iqbal, supra, 10 Cal.App.5th at pp. 10–11, quoting Transportation Guarantee Co. v. Jellins (1946) 29 Cal.2d 242, 247-248.)
“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.)
B.
Terms of the Settlement Agreement
Here, the settlement agreement comported with Civil Code section 1550’s provisions that, for a valid contract, “there should be: [¶] 1. Parties capable of contracting; [¶] 2. Their consent; [¶] 3. A lawful object; and, [¶] 4. A sufficient cause or consideration.” There is no dispute the parties to the settlement agreement were competent and entered the agreement upon the advice of their own attorneys. Charles personally signed the settlement agreement underneath acknowledgment that he had read it and agreed to it without reservations. Thus, Charles assumed the obligations and rights as stated in the settlement agreement. At the end of the signature block, a line was included by hand. On that line, legal counsel for Charles attached his own signature. The signature of his attorney on the same date confirms Charles entered the agreement knowingly and voluntarily. (Cf. Facebook, Inc. v. Pacific Northwest Software, Inc. (9th Cir. 2011) 640 F.3d 1034, 1039, 1042 [legal representation during negotiation weighs in favor of validity of settlement agreement].)
The agreement had a lawful end, namely the resolution of civil litigation. (Stewart, supra, 134 Cal.App.4th at p. 1586; Osumi v. Sutton (2011) 155 Cal.App.4th 1355, 1359 [“It is, of course, the strong public policy of this state to encourage the voluntary settlement of litigation”].) And the agreement contained valuable consideration in that each party assumed obligations. All parties relinquished their claims against each other, respondents agreed to take enumerated steps to make requests to credit reporting agencies, and CitiMortgage agree to pay $30,000 to Charles. The parties’ settlement agreement constitutes a binding contract.
Here, the settlement agreement several times demonstrates the parties had a present intent to settle their legal conflict when they signed the document.[5] The recitals declare the parties “wish to settle their disputes and buy peace” without any indication of ongoing litigation. The beginning of the section imposing reciprocal duties on the parties announces the parties “now desire to fully and finally settle their disputes and differences . . . .” (Italics added.) The release itself states that “Charles agrees and hereby fully, finally, and forever discharges, releases, and acquits Defendants . . . from all possible claims . . . which may arise out of the incidents and issues related to” the legal claims between parties. (Italics added.) In short, the settlement agreement confirms it is a final agreement between the parties and reflects a present intent to settle.
Based on the redundant language in the settlement agreement indicating it to be a final and binding agreement, we reject Charles’s attempt to portray the agreement as nothing more than a “discussion draft” of terms to be resolved by the parties. The phrase “discussion draft” does not appear in the agreement. Indeed, the settlement agreement bears no indicia that it was preliminary or nonbinding. For example, the agreement does not state it is subject to further negotiations or merely preliminary to a final agreement. The agreement also does not mention any issues or contentions between the parties that might remain unresolved. Instead, the settlement agreement contains all of the necessary terms that are consistent with its intended purpose to “fully, finally, and forever” resolve Charles’s claims against respondents.
We also reject Charles’s argument that no settlement agreement was formed because three conditions precedent were never met: (1) he never entered a settlement agreement, (2) he did not dismiss his action prior to entering a settlement agreement, and (3) he was unable to receive a satisfactory rate to refinance his loan.
In his argument as to the first two purported conditions precedent, Charles focuses on paragraph 1.e of the settlement agreement that provides: “Settlement contingent upon Charles executing a Settlement Agreement and dismissing the Litigation in its entirety with prejudice as to all parties.” In context, this paragraph occurs amid the other reciprocal obligations assumed by the parties – such as the respondents’ duties to make requests to credit agencies and CitiMortgage’s obligation to pay money to Charles.
The context indicates paragraph 1.e imposes a reciprocal duty on Charles to sign the settlement agreement and dismiss the lawsuit. “The rule is that provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction. [Citations.] Instead, whenever possible the courts will construe promises in a bilateral contract as mutually dependent and concurrent.” (Rubin v. Fuchs (1969) 1 Cal.3d 50, 53-54.) The agreement imposes a duty on Charles to dismiss in the same way that the same section imposes duties on the respondents. This construction of paragraph 1.e also comports with the requirement that contract formation requires consideration, i.e., that all parties give something of value. (Civ. Code, § 1550, subd. (4).) Finally, we note that even if the first requirement were read as a condition precedent, it would be fulfilled in this case because Charles personally signed the document labeled, “release and settlement agreement.”
The second requirement cannot reasonably be construed as a condition precedent. Crediting Charles’s argument would mean he would have had to dismiss the lawsuit before entering the settlement agreement. This would require Charles to surrender all of his claims and rights without any corresponding duties of respondents to pay, surrender their cross-claims, or request that credit agencies remove derogatory information. Charles’s untenable interpretation would allow respondents to refuse any settlement obligations after Charles gave up all of his claims. The inclusion of the signature of Charles’s legal counsel strongly suggests this interpretation must be rejected because it would be poor advice to make a client surrender claims and rights with the effect of encouraging opposing parties to avoid any reciprocal obligations. Reading the settlement agreement as a whole, we determine the only plausible construction of paragraph 1.e is to ensure that one of Charles’s duties assumed in settling the case with respondents is the duty to dismiss.
As to the third purported condition precedent, Charles asserts a condition precedent was his “prequalifying for a loan at the current market rates to finance the $350,000.00 amount Caliber agreed to accept.” This interpretation is refuted by the multiple statements in the settlement agreement’s recitals, section on reciprocal duties, and signature block to the effect that the parties intended to fully settle the case at the time they affixed their signatures. Moreover, this interpretation conflicts with the express language of the agreement where it provided: “If Charles does not secure financing with 90 days of this agreement,” he waived the right to object to the non-judicial foreclosure. (Italics added.) This provision would be irrelevant and unnecessary if Charles’s securing a refinancing loan were a condition precedent. Based on the express language of the settlement agreement, we reject Charles’s contention his securing a refinancing loan constituted a condition precedent.
Charles relies on various e-mails sent by his attorney after the settlement was signed. Specifically, he references e-mails indicating there was a continuance of the settlement conference, a dispute about the scope of respondents’ obligations with regard to the credit agencies, and Charles’s deposition testimony that he was only able to secure a refinancing loan at a very high interest rate. These e-mails do not undermine the facts Charles personally signed the settlement agreement, the settlement agreement declared it was final and forever resolved the legal action, or the agreement expressly accounted for the possibility (which came to fruition) that Charles would not secure a refinancing loan.
The objective language of the settlement agreement redundantly and abundantly demonstrates the parties had a present intent to fully and finally settle the case in the settlement agreement Charles personally signed. There were no unfulfilled conditions precedent. Accordingly, the trial court properly granted summary judgment based on a valid settlement agreement that encompassed all of Charles’s claims against respondents.
III
Contingencies Regarding Respondents’ Responsibilities Vis-a-Vis Credit Agencies
Charles makes two interrelated arguments regarding respondents’ obligations under the settlement agreement with respect to credit reporting agencies. He argues that (1) he was not able to secure a refinanced loan because respondents did not promptly remove his derogatory credit information, and (2) the parties labored under mutual mistake of fact in that they “assumed that [respondents and CitiMortgage] would be able to clear Charles’s credit record and provide the letter.” Neither argument establishes that the trial court erred in granting summary judgment.
As to the first part of the argument, Charles asserts that “(i) settlement was contingent on removal of derogatory credit information, providing the letter [addressed ‘to whom it may concern’ and dealing with the derogatory credit information], and executing a settlement agreement; (ii) [respondents] failed to remove such negative information or provide the letter; and (iii) thus, Charles could not qualify for any loan on any reasonable terms.” Properly understood, what Charles characterizes as a condition precedent really constitutes an allegation of a breach of contract. Charles is not arguing the respondents had to request the derogatory information be deleted and issue the letter before contract formation. Instead, he attempts to excuse his failure to refinance the loan based on a breach of the agreement by the respondents. A breach of contract cause of action presupposes a valid contract. (Bailard v. Marden (1951) 36 Cal.2d 703, 708.) Here, the validity of the settlement agreement compelled the granting of summary judgment in favor of respondents and is not undermined by an assertion of breach.[6]
As to mutual mistake of fact, respondents point out Charles did not tender this argument in the trial court. The record supports respondents’ assertion. Accordingly, Charles’s contention has not been preserved for appeal. (Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1323 [litigant may not change its position by asserting a new theory on appeal].) While “a new theory raising a pure question of law on undisputed facts can be raised for the first time on appeal” (Fort Bragg Unified School Dist. v. Colonial American Casualty & Surety Co. (2011) 194 Cal.App.4th 891, 907), Charles’s mutual mistake of fact theory is a factual one to which the respondents did not have the opportunity to respond or present evidence below.
Accordingly, we reject Charles’s arguments regarding respondents’ obligations under the settlement agreement regarding removal of derogatory credit information.
IV
New Trial Motion
Charles contends the denial of his motion for a new trial must be set aside for the same reasons as those articulated in his challenge to the granting of summary judgment. Having found no error in the granting of summary judgment, we reject Charles’s contention regarding his new trial motion on the same grounds.
V
Demurrer
Charles contends the trial court erred in sustaining the respondents’ demurrer to his causes of action for breach of the foreclosures statutes. The demurrer, however, relates to the same action resolved in the settlement agreement. “The Supreme Court has explained that a settlement operates as a merger and ban as to all preexisting claims and those alleged in the lawsuit that have been resolved.” (Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th 1174, 1179.) Accordingly, we reject the contention.
DISPOSITION
The judgment is affirmed. Respondents, Caliber Home Loans, Inc., formerly known as Vericrest Financial Inc., U.S. Bank Trust, N.A., as Trustee for Vericrest Opportunity Loan Trust 2011-NPL2, LSF7 Bermuda NPL VI Trust, LSF7 NPL VI Bermuda Wells Trust, U.S. Bank Trust National Association, as Trustee for LSF7 Bermuda NPL VI Trust, Vericrest Participation Loan Trust 2011-NPL2, and Summit Management Company, LLC, shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
[u] /s/
HOCH, J.
We concur:
/s/
ROBIE, Acting P. J.
/s/
DUARTE, J.
[1] Although the parties agree on this point, the record does not contain the demurrer or the trial court’s ruling on the demurrer.
[2] The record on appeal also does not contain the trial court’s order sustaining the demurrer to the first amended complaint. Charles asserts that after the ruling on the second demurrer, only his “causes of action for breach of the HAMP agreement, implied covenant of good faith and fair dealing, and promissory estoppel remained.” We are unable to verify this procedural representation based on the appellate record.
[3] CitiMortgage was a party to the settlement agreement and agreed to pay $30,000 to the client trust account of Charles’s legal counsel even though the agreement “does not affect any claims Charles may [have had] in the Litigation against CitiMortgage.” However, CitiMortgage is not a party to this appeal. In his opening brief, Charles states he subsequently entered into another confidential settlement agreement with CitiMortgage on March 30, 2015. The record does not contain this subsequent settlement agreement between Charles and CitiMortgage.
[4] We deny Charles’s request for judicial notice filed on October 31, 2017, and U.S. Bank’s request for judicial notice filed on August 16, 2017, as unnecessary to the disposition of this appeal.
[5] Mediated settlement agreements must satisfy Evidence Code section 1123 by indicating a present intent of the parties to resolve their claims. (In re Marriage of Woolsey (2013) 220 Cal.App.4th 881, 898.) Because the declarations of a present intent to settle in this case clearly suffices to satisfy Evidence Code section 1123, we do not decide whether the trial judge in this case served as a mediator within the meaning of section 1123.
[6] We express no opinion on the factual issue of whether any party to the settlement agreement breached its terms. (Ash v. North American Title Company (2014) 223 Cal.App.4th 1258, 1268 [“The determinations of whether there was a breach of contract and whether the contract damages are foreseeable are questions of fact . . .”].)
