Internat. Marine Fuels v. Kim

Filed 3/15/07 Internat. Marine Fuels v. Kim CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

I. INTRODUCTION

After defendant Woojong Steve Jin breached a settlement agreement with plaintiff, International Marine Fuels Group (IMFG) (dba San Francisco Petroleum Co.), the trial court entered a judgment against Jin and Jins attorney, James Kim. We reverse the part of the judgment entered against Kim because he is not a party to this action.

II. STATEMENT OF FACTS

The facts which gave rise to this action are not disclosed by the appellate record or in the briefs filed in this court. Indeed, we cannot even determine the identities of all of the parties. However, there is no dispute that James Kim is not a party in this case.

The very sparse record before us contains a copy of the Register of Actions which reflects that IMFG initiated this action by filing a complaint for breach of contract on February 7, 2001. Pursuant to an October 23, 2003, settlement agreement, IMFG agreed to settle this entire action upon the payment of various amounts by some of the defendants in this case.

According to the settlement agreement, defendants Woojong Steve Jin, Chris E. Song and Matt Sadati each agreed to pay specific sums amounting to a total payment of $50,000 to San Francisco Petroleum Co. The payments were required to be made within 30 days of the execution of the settlement agreement.

Woojong Steve Jin also agreed to pay an additional $25,000 to IMFG, in monthly installments of $2,000 per month. Jins attorney, appellant James Kim, personally guaranteed these payments pursuant to the following provision of the settlement agreement: Upon default of the payments Mr. James Kim, attorney for Woojong Steve Jin, becomes personally liable for the remaining balance owing by Woojong Steve Jin. Mr. Kims obligation is on the same terms as Mr. Jin. Upon default of Mr. Kim and Mr. Jin, [IMFG] may have judgment entered upon declaration and notice to Mr. Kim at 785 Market Street, 15th Floor, San Francisco, CA 94103. Judgment may be against Mr. Kim and Mr. Jin. Judgment is immediately collectable and upon collection [IMFG] is entitled to attorney fees and costs of collection and entering judgment.

The settlement agreement was executed on behalf of IMFG by its president, Robert Falche, and by its attorney, Jeffrey Fettner. The agreement was also signed by Jin, Song, Sadati and each of their attorneys. Kim signed the agreement twice, once as attorney for Jin and a second time individually and as personal guarantor.

An amended settlement agreement was executed in January and February 2004. According to that document, Jin was unable to pay his share of the initial $50,000 payment in a timely manner. The amended settlement agreement modified the terms of the October 2003 agreement to give Jin more time to make that payment. According to the terms of the amended settlement agreement, if Jin made the payment within the new time frame agreed to by the parties, then the original settlement agreement would control the rights and obligations of the parties. However, if a timely payment was not made by Jin pursuant to the terms of the settlement modification, the amended settlement agreement provided that the Settlement Agreement of October 23, 2003 will be null and void, and the case will proceed to trial.

On November 28, 2005, IMFG filed a motion for entry of judgment against Jin and Kim. In his appellate brief, Kim contends that he never received notice of this motion and, therefore, did not appear to contest it because IMFGs notice of motion was mailed to three incorrect addresses.

IMFGs motion was made pursuant to section 664.6 of the Code of Civil Procedure (section 664.6), which states: If parties to pending litigation stipulate, in 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.

In a declaration filed in support of the motion, IMFG attorney Fettner stated that Jin breached the settlement agreement by failing to continue to make monthly payments to IMFG pursuant to the terms of the agreement and that Jin still owed IMFG $13,468.93.[1] IMFG president, Robert Falche, filed a declaration in which he confirmed that Jin stilled owed IMFG $13,468.93. Falche also represented that he had made numerous attempts to secure payment from Jin.

IMFG also submitted evidence to the trial court that it had provided Kim with notice of Jins default in a letter dated November 2, 2005. The letter was sent from Fettner to Kim at 785 Market Street in San Francisco, the address which was recorded in the settlement agreement. The body of Fettners letter states: Mr. Kim [sic] is not complying with the settlement agreement. He is behind in his payments. This is notice to cure. He owes $13,468.93. Please cure as per the settlement agreement. I remind you Judgment will be taken if the cure is not affected immediately. Remember you are personally liable and Judgment will be taken against you as well. To avoid Judgment please have the monies in my office by November 10, 2005.

On December 23, 2005, the trial court signed a judgment that had been prepared by Fettner which states: Proper service being performed, upon motion to this Court pursuant to CCP Section 664.6, Judgment is hereby entered as per the settlement agreement in this case, as follows: [] Judgment is hereby entered in favor of International Marine Fuels Group, Inc. dba San Francisco Petroleum Co. and against James Kim and Woojong Steve Jin, jointly and severally, in the amount of $13,468.93, costs in the amount of $36.30, attorney fees in the amount of $1,575.00. Interest is to accrue on the judgment at the legal rate of 10% per annum from November 14, 2005. []  Further International Marine Fuels Group Inc. is entitled to costs and attorney fees for collection of this judgment.

IMFG also obtained an order granting its motion for entry of judgment. That order and the judgment were filed on January 11, 2006. Fettner executed a proof of service which reflects that copies of the order and judgment were mailed to Kim at an address in Oakland on January 19, 2006. Kim, who acknowledges he received Fettners notice of entry of judgment, filed his notice of appeal on March 13, 2006.

III. DISCUSSION

Initially, we observe that Woojong Steve Jin, the defendant in this action against whom judgment was entered, has not filed a notice of appeal. The sole issue before us is whether judgment was properly entered against Jins attorney, James Kim. We hold that the trial court did not have authority to enter judgment against Kim because he was not a party to this action.

For over 50 years California has recognized that a judgment may not be entered either for or against one who is not a party to an action or proceeding. [Citations.] [Citation.] Rendering a judgment for or against a nonparty to a lawsuit may constitute denial of due process under the United States and California Constitutions. [Citations.] Due process is denied because the nonjoined party has not been given notice of the proceedings or an opportunity to be heard. [Citation.] Notice and a chance to be heard are essential components to the trial courts jurisdiction and for due process. Without jurisdiction over the parties, an in personam judgment is invalid. [Citation.] [Citation.] (Tokio Marine & Fire Ins. Corp. (1999) 75 Cal.App.4th 110, 121 (Tokio Marine); see also Bronco Wine Co. v. Logoluso Farms (1989) 214 Cal.App.3d 699, 717-719.)

IMFG does not invoke any of the limited exceptions to this rule. Instead, IMFG maintains that the judgment was properly entered against Kim because he is a party to the stipulation which provided that a judgment would be entered against him if Jin defaulted on the loan payment. This fact, IMFG contends, gave the trial court authority to impose judgment against Kim pursuant to section 664.6. IMFG is mistaken.

By its express terms, section 664.6 permits parties to pending litigation to stipulate to the entry of a judgment binding as between them. Section 664.6 provides a summary procedure by which a trial court may specifically enforce an agreement settling pending litigation without requiring the filing of a second lawsuit. [Citation.] (Kirby v. Southern Cal. Edison Co. (2000) 78 Cal.App.4th 840, 843.) This procedure does not apply to the enforcement of a settlement agreement made at a time when no litigation was pending. (Id. at p. 844.) Nor can a section 664.6 motion be made in a separate action to enter judgment pursuant to the terms of a settlement in a prior action. (Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 208.) By the same token, this statute cannot be used to enforce the contractual obligation of an individual who was never a party in any litigation with the obligee, either before, during or after the contract was signed. (Tokio Marine, supra, 75 Cal.App.4th at pp. 118-119.)

Tokio Marine was a dispute between a general contractor and roofing contractor regarding responsibility for damages caused by a fire at a construction site. (75 Cal.App.4th 110.) The contractors insurers paid for the damages subject to an agreement that their financial contributions would be reallocated once liability was determined. While litigation between the general contractor and the roofing contractor was pending, the parties and their insurers entered into another agreement which provided that amounts previously contributed by the insurers would be reallocated according to factual rulings by the jury and legal findings by the judge and that the reallocation would be incorporated into the judgment. The jury found that the roofing contractor was not responsible for the fire damage and the court entered judgment in favor of the roofing contractor against the general contractor. After a lengthy delay caused by a collateral coverage dispute, the roofing contractor filed a motion to modify the judgment to add the general contractors insurers (separately identified as the Underwriters) as an additional judgment debtor. The trial court granted the motion but the Court of Appeal reversed.

The Tokio Marine court summarily rejected the roofing contractors argument that the Underwriters were properly added as a judgment debtor pursuant to section 664.6. (75 Cal.App.4th at p. 119.) It reasoned that, because the Underwriters were not parties to the litigation, section 664.6 did not apply. (Id. at p. 119.) The court also rejected the notion that the Underwriters could be treated as a party to the litigation because they were a party to the stipulations in that case. As the court explained: The Underwriters entered into the stipulation--a contract--as a result of which it can be argued that the Underwriters may have agreed to abide by the results of this litigation in certain respects. But by becoming parties to such a contract, the Underwriters did not thereby automatically become parties to this litigation. This litigation was an action to determine fault for the fire as between the general contractor and the roofing contractor. The Underwriters themselves did not assert any claim in this action, and no litigant sued the Underwriters in this litigation to determine any issue whatsoever. (Id. at p. 119.)

In the present case, Kims connection to the underlying litigation is even more tenuous than that of the Underwriters in Tokio Marine. Not only is Kim a non-party in this litigation, there is absolutely no indication of any basis upon which he might conceivably have been named as a party in the underlying action. In any event, Tokio Marine confirms that the fact that Kim is not a named party in this case cannot be ignored simply because Kim signed the settlement agreement. That agreement may or may not be enforceable or give rise to a claim for breach of contract in a separate action. However that potential lawsuit has absolutely no bearing on the present case and does not alter the fact that Kim is not a party in this action.

IMFG contends the trial court obtained personal jurisdiction over Kim notwithstanding that he was never served with a summons and complaint because Kim made a general appearance in this action by appearing at the settlement conference on his own behalf and executing the settlement agreement. As a factual matter, we find nothing in this record or the respondents brief to support or explain IMFGs assertion that Kim appeared at the conference on his own behalf. In any event, IMFGs argument fails as a matter of law.

Section 410.50 of the Code of Civil Procedure, upon which IMFG relies, states that the court in which an action is pending has jurisdiction over a party from the time summons is served on him as provided by Chapter 4 (commencing with Section 413.10.) A general appearance by a party is equivalent to personal service of summons on such party. (Code Civ. Proc.,  410.50, subd. (a), italics added.)

Case law cited to us by IMFG also provides that [a] general appearance occurs where a party, either directly or through counsel, participates in an action in some manner which recognizes the authority of the court to proceed. It does not require any formal or technical act. [Citations.] If the defendant raises any other question, or asks for any relief which can only be granted upon the hypothesis that the court has jurisdiction of his person, his appearance is general . . . . [Citation.] [Citation.] (Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, 1756-1757, italics added; see also Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 52-53.)

The language of section 410.50 and IMFGs case authority confirm what we have already stated--the crucial dispositive fact in this case is that Kim is not a party in this action. A summons was never served on him for the simple reason that he was not named as a defendant in IMFGs complaint. Indeed, no claims were asserted by or against Kim in this case. Therefore, to the extent Kim participated in the lower court proceedings, he participated as a nonparty and his actions simply did not constitute a general appearance.

By signing the settlement agreement, Kim did not settle any claims asserted against him. Nor did he agree to become a party defendant in this case or admit liability for IMFGs alleged damages. Indeed, Kims potential liability to IMFG arises solely from the alleged fact that he breached a term in an agreement which also contained terms settling IMFGs claims against Jin and the other defendants in this action. Section 664.6s summary procedure for enforcing a settlement between litigants may apply with respect to IMFGs settlement with the defendants, but it has no application to the new cause of action which IMFG potentially has against Kim.

IV. DISPOSITION

The part of the judgment entered against James Kim is reversed. Each side is to bear its own costs on appeal.

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Haerle, Acting P.J.

We concur:

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Lambden, J.

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Richman, J.

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Analysis and review provided by Santee Property line attorney.

[1] In his declaration, Fettner represented that Jin complied with the provisions of the amended settlement agreement requiring him to pay $18,917 to San Francisco Petroleum Company. On appeal, Kim and IMFG disagree as to whether this representation was true. This is one of many factual disagreements that simply is not properly presented to us.