Filed 2/17/21 Hale v. Lonestar Investments, LLC CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 FIVE

Lonestar Investments, LLC (Lonestar) appeals from an order and judgment enforcing a settlement agreement pursuant to Code of Civil Procedure section 664.6. Lonestar contends the judgment must be reversed to the extent it was entered against Lonestar, because Lonestar is not a party to the case and the trial court had no personal jurisdiction over it. We agree.

I. FACTS AND PROCEDURAL HISTORY

In June 2017, Pollard James Hale filed a complaint in Mendocino County Superior Court for damages arising from a pit bull attack in which he lost an arm and suffered other significant injuries. The complaint named as defendants the owner of the pit bulls, Miguel Angel Escareno Pinon, and the owners of the property on which the dogs were housed and the attack occurred: Michael Adams and Adams Investments, LLC (collectively, Adams); and Ross Mayfield, Jr. and his wife, Paula Mayfield.

In March 2018, Adams filed a cross-complaint against Ross Mayfield, Jr., Paula Jean Mayfield, and another purported property owner, Reese Mayfield, for indemnification, apportionment of fault, declaratory relief, and breach of contract in failing to procure liability insurance for the subject property.

A. Settlement Agreement

On July 11, 2019, a mediation was held among the parties to the litigation and a non-party—appellant Lonestar—who is identified in the record as Adams’s assignee with respect to five parcels of property that were ultimately involved in the settlement of the case. (Adams asserts that their ownership interests in the properties were assigned to Lonestar through Lonestar’s agent, Joseph Reiter, before the dog attack.)

As a result of the mediation, a settlement agreement entitled “Stipulation for Settlement [CCP § 664.6]” was signed by the parties to the litigation and by Joseph Reiter as agent for Lonestar. The settlement agreement included monetary terms (e.g., Pinon to pay Hale $7,200 in installments and Reese Mayfield to pay Hale an amount that “shall not exceed $150,000”), as well as provisions for the transfer among the parties of five parcels of property (including the properties where the pit bulls were housed and the attack on Hale occurred), with Hale and Reese Mayfield to receive one parcel each and Adams and Lonestar to collectively receive three parcels. As a further settlement term, Lonestar agreed to dismiss with prejudice its complaint in a separate lawsuit (Mendocino County Superior Court, SCUK-CVG-19-72396), which purportedly involved a dispute over ownership interests in one of the properties.

The settlement agreement also included the following language: “Any provisions of Evidence Code section 1152.5 notwithstanding, this agreement may be enforced by any party hereto by a motion under Code of Civil Procedure section 664.6 or by any other procedure permitted by law in the Superior Court of Mendocino County.” The settlement agreement did not, however, state that Lonestar submitted itself to the personal jurisdiction of the court.

B. Adams’ Motion to Enforce the Settlement Agreement

In September 2019, Adams filed a motion to enforce the settlement agreement pursuant to section 664.6. The motion is not in the record. On October 1, 2019, Adams filed an amended motion to enforce the settlement.

Adams’ amended motion asserted that the properties had not been transferred as set forth in the settlement agreement, the $150,000 payment from Reese to Hale had not been made, none of the other core settlement provisions had been satisfied, and each party was blaming the other. The motion asked the court to enter judgment, direct the parties over whom the court had jurisdiction to comply with the agreement, and set a compliance hearing. The motion noted, however, that “Adams’ assignee, Lonestar, . . . is a party to the Settlement Agreement but is not a party to this case,” the court lacked jurisdiction over Lonestar, and therefore “Adams cannot seek, and does not seek, entry of judgment against Lonestar or any other relief against Lonestar on this motion.” In its memorandum of points and authorities, Adams devoted an entire section to the proposition that the court lacked jurisdiction over Lonestar and judgment could not be entered against it.

Ross and Paula Mayfield filed an opposition to Adams’ amended motion, contending the court had jurisdiction over Lonestar because Lonestar was a signatory to the settlement agreement and agreed to be bound by it, and because the agreement states it is enforceable pursuant to Code of Civil Procedure section 664.6.

C. Mayfields’ Motion to Enforce Settlement Agreement

Meanwhile, on October 4, 2019, Ross and Paula Mayfield filed their own motion to enforce the settlement agreement. The motion was brought on “the grounds that the obligations enumerated in a signed Settlement Agreement involving the Mayfields are clear, Lonestar Investments, LLC, has stated that it will not perform its obligations under the Settlement Agreement in the near future, and enforcement is appropriate under California Code of Civil Procedure section 664.6.” The motion did not seek to add Lonestar as a party to the cross-complaint.

Adams filed a partial opposition to Ross and Paula Mayfield’s motion, asserting that the court should enter judgment but not against Lonestar or its agent Reiter, because they were not parties and the court lacked jurisdiction over them. Ross and Paula Mayfield filed a reply brief repeating the arguments they had made in opposition to Adams’ motion.

D. The Court’s Order

Adams’ motion and Ross and Paula Mayfield’s motion were heard on November 1, 2019. There is no transcript of the hearing, because no court reporter was present and, unknown to the parties at the time, the court’s audio recording device was not in use.

On December 19, 2019, the court issued an order after hearing. As relevant here, the order noted that “[a]ttorney Dale Miller made a special appearance on behalf of Lonestar Investments, LLC” and ruled as follows: “The court finds that it has jurisdiction over [Lonestar] for purposes of enforcing the Stipulation for Settlement to which [Lonestar] is a signatory. Lonestar agreed to be bound by the Stipulation for Settlement even though it is a non-party to the instant case and further that it agreed to the enforcement provisions of C.C.P. § 664.6 . . . [j]udgment is hereby entered in accordance with the terms of the Stipulation for Settlement. [¶] The parties to the Stipulation for Settlement are ordered to comply with the terms of the Stipulation for Settlement.” The order set a compliance hearing for February 21, 2020. This appeal followed

II. DISCUSSION

A. Absence of Reporter’s Transcript

“t is appellant's burden to provide a reporter's transcript if ‘an appellant intends to raise any issue that requires consideration of the oral proceedings in the superior court . . .’ (Cal. Rules of Court, rule 8.120(b)) . . . .” ([i]Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1034, fn. 5.) Lonestar urges that its arguments in this appeal do not require consideration of what was said at the hearing, given the court’s subsequent written order after the hearing, the parties’ motion filings, and the copy of the settlement agreement in the record, urging that the appeal involves legal issues requiring de novo review. (Citing Chodos v. Cole (2012) 210 Cal.App.4th 692, 698–700 [transcript not necessary for de novo review].) There is no contention from respondent (who has not filed a brief in this appeal) that anything said at the hearing would affect our analysis of the issues. We proceed to the merits based on the record on appeal.

B. Trial Court’s Judgment as to Lonestar

Lonestar contends the judgment enforcing the settlement agreement must be reversed as to Lonestar. We agree.

The parties’ motions for entry of judgment, as well as the trial court’s order for judgment, were premised on Code of Civil Procedure section 664.6.[1] Section 664.6 states: “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.” (Italics added.) Section 664.6 was intended to provide parties to litigation a summary procedure for enforcing a settlement agreement without a need for them to file a new lawsuit. (See Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.) The statute cannot be used to enter judgment against a signatory to a settlement who was not made a party to the case. (Tokio Marine & Fire Ins. Corp. v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110, 119 (Tokio Marine); Canaan Taiwanese Christian Church v. All World Mission Ministries (2012) 211 Cal.App.4th 1115, 1125–1126 (CTCC).

Moreover, a judgment is valid only as to parties over whom the trial court has obtained personal jurisdiction. (In re Marriage of Nosbisch (1992) 5 Cal.App.4th 629, 633.) A court obtains personal jurisdiction over a party once the party is served with the summons or the party consents to jurisdiction by making a general appearance. (§ 410.50, subd. (a); Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 52 [general appearance operates as a consent to personal jurisdiction and dispenses with the service requirement].)

Here, Lonestar was not a named party in the complaint or the cross-complaint. It was not served with a summons. And it did not consent to jurisdiction by making a general appearance. (See Dial 800 v. Fesbinder, supra, 118 Cal.App.4th at p. 52 [general appearance occurs when defendant recognizes the court’s authority to proceed]; CTCC, supra, 211 Cal.App.4th at p. 1126 [party makes a general appearance and submits to the court's personal jurisdiction by seeking affirmative relief or opposing a motion on the merits].) To the contrary, Lonestar did not seek affirmative relief or file any papers in the litigation, and the trial court recognized in its written order that Lonestar had made only a special appearance.

Nor did Lonestar consent to personal jurisdiction by signing the settlement agreement. The settlement agreement did not include any recitation that Lonestar was submitting to the court’s jurisdiction over Lonestar personally. Instead, the settlement agreement stated: “Any provisions of Evidence Code section 1152.5 notwithstanding, this agreement may be enforced by any party hereto by a motion under Code of Civil Procedure section 664.6 or by any other procedure permitted by law in the Superior Court of Mendocino County.” (Italics added.) The settlement agreement thus provides that it can be enforced by any party to the settlement, not against every party to the settlement, including a party such as Lonestar that was not named or served in the lawsuit.

Moreover, the language of this provision is couched in terms of (former) Evidence Code section 1152.5, which had governed the confidentiality of communications made during mediation. The ostensible purpose of the stipulation, therefore, was not to confer personal jurisdiction on a signatory, or to allow judgments to be entered against signatories who were not parties to the litigation, but to allow for the admissibility of a settlement agreement executed during mediation in an enforcement proceeding notwithstanding the general rule of privilege or confidentiality applicable to mediations. (Stats. 1996, ch. 174, § 1; see Evid. Code, § 1123.) Whatever inference might be drawn from the fact that the signatories here agreed to a provision referencing a statute that has not been in existence since 1998, the settlement agreement cannot be construed to contain a consent to personal jurisdiction by Lonestar. (See Stats. 1997, ch. 772, § 5.)

Thus, for each of these two independent reasons—the scope of section 664.6 and the requirements of personal jurisdiction—judgment was erroneously entered against Lonestar.

Instructive in this regard is Tokio Marine, 75 Cal.App.4th 110, a case cited by Adams in the trial court. There, the parties to the litigation (a general contractor and a roofing contractor) and their respective insurers entered into a stipulated judgment that allowed for interim allocations of liability pending trial. Like the settlement agreement here, the stipulation in Tokio Marine did not provide that the general contractor’s insurer, a

non-party to the litigation, had submitted to jurisdiction, would be added as a party, or agreed to be named as a judgment debtor. (Id. at p. 114.) After the roofing contractor received a favorable judgment at trial against the general contractor, it filed a motion to add the general contractor’s insurer as an additional judgment debtor. The trial court granted the motion. (Id. at

p. 115.) The court of appeal reversed. The general contractor’s insurer could not be added to the judgment under section 187, because the insurer was not an alter ego of the general contractor. It could not be added to the judgment under section 473, because its omission from the judgment was not due to inadvertence. (Id. at pp. 117–118.) And section 664.6 did not apply, because the insurer was not a party to the litigation. (Id. at p. 119.) Moreover, the addition of the insurer as a judgment debtor violated due process, because the trial court lacked personal jurisdiction over the insurer. As the court explained, the insurer had not automatically become a party to the litigation by becoming a party to the stipulation, and its entry into the stipulation was not tantamount to an intervention in the case or confession of judgment because the statutory requisites for those procedures had not been met. (Id. at pp. 119–121.) The court concluded: “ ‘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.] . . . Without jurisdiction over the parties, an in personam judgment is invalid.’ ” (Id. at p. 121.)

The only authority offered by Ross and Paula Mayfield in the trial court was Facebook, Inc. v. ConnectU, Inc. (N.D. Cal. Jun. 25, 2008, No. C 07-01389 JW) 2008 U.S. Dist. Lexis 123593. There, Facebook and Mark Zuckerburg had sued ConnectU, Pacific Northwest Software, Inc., Winton Williams, and Wayne Chang for misappropriation of trade secrets and other claims. (Id. at *4.) Mediation produced a settlement agreement by which the parties resolved all claims on specified terms, provided mutual releases, and “stipulate[d] that the San Jose Federal Court shall have jurisdiction to enforce this agreement.” The agreement was signed by Zuckerberg, individually and on behalf of Facebook, by Cameron Winklevoss, individually and on behalf of ConnectU, and by Tyler Winklevoss and Divya Narendra, who were “principals of their respective companies.” (Id. at *9.) Facebook later filed a motion to enforce the settlement agreement. (Ibid.) As relevant here, the court found that it could exercise personal jurisdiction over the principals who signed the agreement: the individuals subjected themselves to the court’s jurisdiction because the agreement contained terms including the parties’ stipulation that the court “shall have jurisdiction to enforce” the agreement. (Id. at *8, 11–12.)

Facebook is of no moment here. First, the ruling of a federal district judge is not binding on this court. Second, the ruling contains no analysis of California law and does not consider the precedent of Tokio Marine. Third, the case is distinguishable on its facts: in Facebook, the signatories to the settlement agreement stipulated that the court had “jurisdiction to enforce” the agreement, while here the signatories did not stipulate to jurisdiction, but merely stated that they “may” enforce the agreement pursuant to section 664.6 or “by any other procedure permitted by law in the Superior Court of Mendocino County.” (Italics added.) In any event, to the extent Facebook differs with the analysis in Tokio Marine, we conclude Tokio Marine is correct. The judgment as to Lonestar must be reversed.

III. DISPOSITION

The judgment is reversed as to Lonestar. In all other respects, the judgment is affirmed. Each party to bear their own costs on appeal.

NEEDHAM, J.

We concur.

SIMONS, Acting P. J.

BURNS, J.

Hale v. Lonestar Investments / A159553

[1] Except where otherwise indicated, all statutory references hereafter are to the Code of Civil Procedure.