Filed 9/11/18 Woodhaven, LLC v. Allen and Julia Larson Family Limited Partnership CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

This is a long-running dispute between neighbors. The parties participated in four days of judicially supervised settlement discussions. Finally, on August 22, 2016, in a settlement conference at which the parties were represented by counsel, the parties reached a settlement, which was placed on the record before the trial court, the Honorable Joseph C. Scott. Appellants Dr. Stanley Fischman and Linda Fischman, individually and as trustees of the Fischman Family Trust (the Fischmans),^[1] each affirmed on the record their understanding and willingness to be bound by the terms of the settlement, that they had authority to bind the parties to the agreed upon settlement, and that they were not entering into the settlement under duress. Thereafter, the Fischmans’ counsel drafted a written settlement agreement setting forth the terms of the agreed upon settlement agreement. However, the Fischmans refused to sign the agreement their own attorney had prepared, taking the position that they had only entered into the judicially supervised settlement agreement under duress. Respondents Allen and Julia Larson Family Limited Partnership and its individual partners (the Larsons) brought a motion pursuant to Code of Civil Procedure, section 664.6 to enforce the settlement and enter judgment pursuant to its terms, which the trial court granted, finding that the parties had entered into an enforceable settlement agreement.[2] The Fischmans appeal, contending that there was no meeting of the minds and thus no enforceable settlement, and that the trial judge erred by including certain provisions in the judgment which had not been included in the settlement agreement set forth on the record. We disagree, and will affirm the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

The parties own adjacent parcels on La Honda Road in unincorporated San Mateo County. The Fischmans own a 28-acre parcel of property with an address of 148 or 12565 La Honda Road (Fischman Property.) The Fischman property is improved with a single-family home, a caretaker’s cottage, and a garage. The cottage and garage are built up against the properties’ shared property line. The Larsons own 145 La Honda Road (Larson Property), a 10-acre parcel of undeveloped land to the north of the Fischman Property. The Fischman Property and Larson Property are separated by a firebreak which contains a septic tank system that services the Fischmans’ caretaker’s cottage. The Fischmans continuously repaired and maintained both the firebreak and the septic tank system since 1973, in the apparent belief that they were on their property.

A dilapidated barbed wire fence ran along the properties’ shared boundary line to the west of the garage. In 2010, the Larsons removed the barbed wire fence and fence posts over the Fischmans’ objection. In 2013, the Larsons built a second fence on their side of the property line starting at La Honda Road and continuing past the Fischmans’ garage. The Fischmans objected to the placement of the fence in the vicinity of the cottage and garage because of its proximity to the cottage and because it cut off immediate access to their septic system, as well as a related gray water line and culvert.

In the summer of 2010, the Larsons discovered that the septic tank system servicing the Fischmans’ caretaker cottage was encroaching on the Larson Property, and that the Fischmans had removed numerous trees and vegetation from the Larson Property and dumped them on the Larson Property. The Larsons demanded that the Fischmans remove the septic system and debris pile and logs from their property. Instead, in June 2013, the Fischmans filed an action seeking prescriptive easement rights in the Larson Property to maintain the septic system and for the right to remove vegetation for a firebreak. The complaint did not assert any fee ownership in the property burdened by the septic system or firebreak. That is because the parties’ surveyors agreed that the location of the property line, as defined by the parties’ grant deeds, ran just north of the cottage. Thus, the septic system, and the trees that had been removed by the Fischmans, sat on the Larson Property.

In response, the Larsons filed an amended cross-complaint seeking removal of the septic system, gray water line and culvert, and recovery of damages against Woodhaven and Linda Fischman.

On August 22, 2016, the Fischmans and the Larsons participated in a judicially supervised settlement conference before the Honorable Joseph C. Scott. This was the fourth day that the parties had participated in judicially supervised settlement discussions. The Fischmans were represented at the settlement conference by two attorneys, Matthew Zumstein and a second attorney (identified only as Mr. Allen). The Fischmans’ son, Seth Fischman, participated in the settlement negotiations in chambers on the Fischmans’ behalf together with both of their attorneys. The Larsons were represented by their current counsel, and participated in the discussions through Linda Larson.

After settlement negotiations and discussions in chambers, a settlement was reached and placed on the record.

Pursuant to the terms of the settlement agreement, the Fischmans were to remove the septic system, culvert and gray water line that encroached upon the Larson Property as well as the debris pile and felled logs, and pay the Larsons $75,000. Subject to necessary permits, the Fischmans were to strive to complete the work before the 2016–2017 rainy season. As part of the settlement, both parties agreed to waive any and all claims they might have against each other and waived the benefits of Civil Code section 1542. The Larsons further agreed that they would allow the Fischmans access to the Larson Property to do the agreed upon work, that they would leave the fence in its current location as it ran by the cottage and garage, and that they would not put up any signs along the fence. The court retained jurisdiction to enforce and interpret the settlement agreement.

After the terms of the settlement were placed on the record, counsel and the court conducted voir dire of the parties to ensure that they understood and agreed to the terms of the settlement and had entered into the settlement of their own free will. All party representatives, including Stanley and Linda Fischman individually and on behalf of Woodhaven, confirmed their understanding and willingness to be bound by the terms of the settlement, that they had authority to bind the parties to the litigation to the agreed upon settlement, and that they were not entering into the settlement under duress. The Fischmans further confirmed that they had been given the opportunity to ask their counsel any questions they might have about the settlement and to have their questions answered.

After the hearing, the Fischmans’ counsel prepared a written settlement agreement, which was circulated for review and comment. On September 6, 2016, after various changes were made, the Larsons signed what they understood to be the final version of the settlement agreement and returned it to the Fischmans’ counsel. The settlement agreement prepared by the Fischmans’ counsel, entitled “Settlement Agreement and Mutual General Release,” included a mutual general release of all claims between the parties “arising out of or in any way related to or based upon the circumstances and disputes alleged in the Action.” It also included a mutual waiver of Civil Code section 1542.

After the settlement conference, the Fischmans removed the debris pile, but refused to sign the settlement agreement or perform the remaining terms, including paying the Larsons $75,000 or removing the septic system, gray water line, and culvert.

On November 15, 2016, the Larsons filed a motion to enforce the settlement agreement and enter judgment pursuant to section 664.6. In the motion, the Larsons also asked the court to interpret the agreement to clarify several of the agreed upon terms: (1) as requiring the Fischmans to remove tree stumps from the Larson Property as part of the debris removal; (2) as precluding the Larsons from moving the fence only as it ran along the cottage and garage, and not from moving the fence to the boundary line between the properties as it approaches La Honda Road; and (3) as requiring the Fischmans to be responsible for the cost of removing and replacing the fence to accomplish the removal of the encroachments which was part of the settlement agreement.

On November 21, 2016, after the Larsons filed their motion, the Fischmans retained new counsel and filed a substitution of attorney.^[3] They then opposed the motion and requested the trial court to set a new settlement conference. In their opposition, the Fischmans contended that at the time of the settlement conference, they were “confused” and had acted under “duress.” In a declaration, they asserted that although they had affirmed the agreement in response to the trial court’s questions, they were “wondering if this was the full agreement or if there was still an opportunity to discuss other related and necessary issues.” They also listed a number of “immediate concerns” that they claimed had not been addressed at the settlement conference.

On December 5, 2016, the Fischmans filed a motion to vacate and set aside the settlement agreement. The motion sought to void the settlement agreement on the ground that the Fischmans were acting under “duress” because they were purportedly “pressured and directed not to participate in the Chambers conference (by their counsel)” and “were pressured to answer the questions of the Judge to affirm the Settlement but were wondering as they answered if this was the full agreement or if there was still an opportunity to discuss other related and necessary issues.” In a supplemental brief, they raised the further argument that “there was no meeting of the minds between the parties, making the settlement agreement unenforceable.” Among other things, the Fischmans argued that the settlement agreement omitted material terms because the agreement did not address “what would happen if San Mateo County will not issue the permits needed to carry out the terms of the agreement” and “[t]here are no terms indicating how the contract will be enforced, nor for remedies if the agreement is not followed . . . .”[4]

On December 9, 2016, an initial hearing on the Larsons’ motion was held before the settlement judge. At the hearing, the Fischmans’ counsel represented that the debris pile and logs had been removed in full. While the hearing was ultimately continued so that both related motions could be addressed at the same time, the court made certain preliminary observations. First, it stated, “I’ll tell you this, Ms. Bedford. I don’t recall the Fischmans appearing to be under any form of duress at the time that they were voir dired by their then representative.” Second, it stated, “My recollection was that one of the primary goals of both sides in terms of reaching this settlement was to resolve all issues between the two sides.”

At a second hearing, the Fischmans’ new counsel raised a number of purportedly unresolved issues, including whether the fence would become the new boundary line between the properties; the possible impact on the cottage of a County setback requirement; whether tree stumps must be removed; the accuracy of the surveys performed by the parties’ surveyors; the regulatory requirements to move or fill in the septic system; etc. In response to counsel’s argument that the Fischmans were not present when the discussions took place in chambers and purportedly had no knowledge of certain of those issues, the court observed,

“[The Court:] Your clients were represented by two attorneys and their sons— and one of their sons during all of the discussions.

“[Ms. Bedford:] Yes, Your Honor.

“[The Court:] I reviewed the transcript more than once. Your clients were voir dired by their attorneys and put it on the record that they clearly understood the settlement agreement and were entering the agreement freely and voluntarily without any sort of threat or coercion. [¶] So, the fact that—and that is often the case that the individual parties do not participate in discussions. All of the discussions occur—or many times, the discussions occur between the Court and the attorneys regarding settlement. And the attorneys are expected to relay those discussions to their clients. I’m sure you would agree, Ms. Bedford, that—

“[Ms. Bedford:] Yes, I am—

“[The Court:] —that’s how it works.”

The court further observed, “I want to make it very clear, Ms. Bedford, and to the Fischmans as well, that I’m satisfied that they clearly understood the terms and ramifications of the settlement as it was entered on the record back in August. If something wasn’t contained within it – and I’m further satisfied that they were properly represented. And point of fact, it was their attorney who put the settlement – who put basically all of the essential settlement terms on the record.” Directing his remarks to the Larsons’ counsel, the trial court stated, “I’m not going to add anything to the settlement that was entered into on the record in terms of your motion. I think the settlement that was entered into on the record was clear as to what the parties had agreed to.”

After further discussion, all matters were continued until January 27, 2017, when the parties once again appeared before Judge Scott. The court opened the hearing by denying the Fischmans’ motion to set aside the settlement agreement. The court explained the basis for its ruling as follows:

“I’ve been through the transcript of the hearing that was conducted after the settlement was reached. I’ve been through this transcript more than once. I find no basis to set it aside.

“The Fischmans and the Woodhaven LLC, limited liability company, were represented not only by one, but by two attorneys. In addition, the Fischmans’ interests were represented back in chambers by their son, that was part of the discussions and negotiation.

“If the Fischmans had any reservations whatsoever about any aspect of the settlement, the time to have raised those reservations was at the hearing. In fact, it was their attorney who put all of the—who recited the terms and conditions of the settlement agreement on the record.

“Your predecessor, Ms. Bedford.

“The Fischmans were sworn, placed on the record that they understood all aspects of the settlement and agreed to it.”

The court then granted the Larsons’ motion to enforce the settlement agreement “on the terms and conditions outlined in the transcript.” During the hearing, the court also clarified the terms and conditions regarding the removal of the fence. First, the court made it clear that if the Larsons are “going to remove the fence to get their equipment on the property, they have to put the same fence back in the same place as it was before. If they break it, they have to fix it.” “And a replacement fence, if it cannot be replaced, would be expected. [¶] But the property was to be restored to as near as possible the condition it was in before. That was the intent of the parties.” In response to the Larsons’ counsel’s observation that the parties agreement regarding “not moving the fence only applied to the area around the cottage,” the court explained that “[t]he only fence removal envisioned was to deal with the septic area. No other fence removal was envisioned, to my recollection.” However, it said, “I’m not making any findings with regard to fence lines and property lines in connection with your motion to enforce.”

At the conclusion of the hearing, the court directed the Larsons’ counsel to prepare a new order based on its rulings, and to meet and confer with the Fischmans’ counsel in an effort to reach agreement as to the form of order to be entered. Predictably, no such agreement was reached.

The court granted the Larsons’ motion to enforce the settlement agreement and enter judgment pursuant to section 664.6. This timely appeal followed.

II. DISCUSSION

The Fischmans contend that the judgment is not enforceable because there was no meeting of the minds as to the terms of the settlement. They also argue that the trial court erred by adding two material terms to the judgment that were not part of the parties’ settlement agreement. We disagree.

Section 664.6 provides, “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” (§ 664.6.)

“Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.) “It is for the trial court to determine in the first instance whether the parties have entered into an enforceable settlement. [Citation.] In making that determination, ‘the trial court acts as the trier of fact, determining whether the parties entered into a valid and binding settlement. [Citation.] Trial judges may consider oral testimony or may determine the motion upon declarations alone. [Citation.] When the same judge hears the settlement and the motion to enter judgment on the settlement, he or she may consult his [or her] memory. [Citation.]’ [Citation.] The trial court’s factual findings on a motion to enforce a settlement pursuant to section 664.6 ‘are subject to limited appellate review and will not be disturbed if supported by substantial evidence.’ ” (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) However, where a trial court’s ruling on a motion to enforce a settlement agreement presents issues of law, the court must conduct an independent or de novo review. (J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 984.)

At the outset, the Fischmans’ argument that the trial court’s judgment is not enforceable because there was no “meeting of the minds” verges on the frivolous.[5] To the contrary, in its order, the trial court expressly found that the parties “entered into a settlement agreement which was placed on the record before the Honorable Judge Joseph C. Scott,” a finding that is supported by substantial—indeed, undisputed—evidence.[6] At the August 22, 2016 settlement conference, the court stated, “I’m pleased to state that a settlement of this matter has been reached,” and the Fischmans’ counsel then proceeded to recite the terms of that agreement. Each of the Fischmans expressly agreed on the record that they had heard and understood the terms and conditions of the proposed settlement agreement; had no questions about it; had the opportunity to discuss those terms and conditions with their counsel; asked questions of their counsel and had those questions answered to their satisfaction; and were “entering into this settlement agreement today freely, voluntarily and intelligently without reservation.” Each of them also expressly agreed to abide by the terms of the settlement agreement. The court thereupon accepted the settlement and confirmed that “the case has been fully resolved.” In view of that undisputed record, the Fischmans cannot be heard to dispute that an enforceable agreement was reached.[7]

The Fischmans’ central argument is that the judgment is not enforceable because it contains two material terms to which they did not agree. Not so. “When parties intend that an agreement be binding, the fact that a more formal agreement must be prepared and executed does not alter the validity of the agreement.” (Blix Street Records, Inc v. Cassidy (2010) 191 Cal.App.4th 39, 48.) Moreover, whether the documents as drafted “were ‘inconsistent’ with the terms of the settlement agreement” does not make a settlement agreement unenforceable if there was a meeting of the minds as to the material terms. (Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 992.) That is true even where the written agreement includes terms that were not part of the oral agreement, so long as the two agreements share the same material terms and the parties intended the oral argument to be binding. (Elyaoudayan, supra, 104 Cal.App.4th at p. 1429–1430.)

Here, the Fischmans object to two terms in the judgment to which they contend they did not agree: “1) An order stating that Respondents retain all rights to any portion of the Larson Property which sits on the Fischman’s [sic] side of the existing fence line; and 2) Paragraph 11 in its entirety, and particularly as to said waiver having been general and mutual instead of unilateral.” Neither objection has any merit.

First, the trial court did not err in ordering that “the Larsons shall retain all rights in any portion of the Larson Property which sits on the Fischmans’ side of the existing fence line.” As the Fischmans admit in their brief, they “accepted the survey commissioned by Respondents as a true representation of the legal boundary between the two parcels.” Further, the trial court expressly declined to “mak[e] any findings with regard to fence lines and property lines in connection with [the Larsons’] motion to enforce.” Rather, as the Larsons established without contradiction in their moving papers, the provisions of the settlement agreement relating to the fence between the properties extended only to the area of the fence in the area of the cottage and garage. Indeed, the Fischmans do not object to the provision of the trial court’s judgment stating that except as to that portion of the fence, “the Larsons shall be free to relocate the fence to any location on their side of the shared property line, including along the actual property line.” Nothing in the parties’ settlement agreement purported to restrict the Larsons’ rights on their own property. Thus, in reserving those rights, the trial court did not add any material term to that agreement.[8]

Second, the Fischmans object to the inclusion in the judgment of mutual general waivers and a reference to Civil Code section 1542, asserting that they agreed only to a unilateral waiver of claims by the Larsons to bring new litigation against the Fischmans, not a mutual waiver and release by both parties. Again, the objection lacks merit. The trial court’s order recites that the settlement and judgment “shall constitute a complete and final general mutual release of all claims existing between the parties as of August 22, 2016 arising out of or in any way related to or based on the circumstances and disputes alleged in this Action,” and expressly “finds that the Parties have waived the benefits of California Civil Code section 1542 . . . .” That recital and finding unquestionably is supported by substantial evidence in the record. A judge hearing a motion to enforce a settlement agreement under section 664.6 is empowered to “ ‘determine whether the parties entered into a valid and binding settlement of all or part of the case. In making this determination, trial judges, in the sound exercise of their discretion, may receive oral testimony or may determine the motion upon declarations alone.’ ” (Fiore v. Alvord (1985) 182 Cal.App.3d 561, 565, italics omitted.) Here, the judge conducted the settlement negotiations in chambers with party representatives and counsel representing both parties. Following the successful conclusion of those negotiations, the Fischmans’ counsel stated on the record that “Plaintiffs’ attorney will draft a settlement agreement . . . which will include the standard 1542 language.” As the Fischmans concede in their opening brief, “Section 1542 is routinely waived” as a condition of settlement agreements in this state. Moreover, critically, the draft settlement agreement that the Fischmans’ own counsel prepared was entitled “Settlement Agreement and Mutual General Release,” and contained a mutual general release and a waiver of section 1542. That plainly reflected the understanding of the Fischmans’ counsel, who had negotiated the agreement, of its terms.[9] “In the absence of evidence to the contrary, we presume that counsel explained to [her client] ‘the import of the release in general and of the waiver of section 1542 in particular.’ ” (Salehi v. Surfside III Condominium Owners Assn. (2011) 200 Cal.App.4th 1146, 1160.) Moreover, given that the parties had each filed pleadings asserting claims against the other, and had been locked for years in numerous disputes, any competent attorney would have insisted upon mutual general releases to resolve the litigation. We reject as unpersuasive the Fischmans’ various arguments to the contrary.

III. DISPOSITION

The trial court’s February 15, 2017 order and judgment is affirmed. Respondents’ motion to dismiss the appeal and award sanctions against appellants is denied, as is respondents’ request for judicial notice.

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Schulman, J.*

We concur:

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Streeter, Acting P.J.

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Reardon, J.