Opinion
B226056
10-25-2011
ZEEV COHEN, Plaintiff and Appellant, v. COLORADO ELECTRIC SUPPLY et al., Defendants and Respondents.
Rosen Saba, Joel L. Benavides and James R. Rosen for Plaintiff and Appellant. Baker, Keener & Nahra, Daniel Patrick Leonard, Phillip A. Baker and Derrick S. Lowe for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC393320)
APPEAL from a judgment of the Superior Court of Los Angeles County, William F. Fahey, Judge. Affirmed as Modified.
Rosen Saba, Joel L. Benavides and James R. Rosen for Plaintiff and Appellant.
Baker, Keener & Nahra, Daniel Patrick Leonard, Phillip A. Baker and Derrick S. Lowe for Defendants and Respondents.
Plaintiff and appellant Zeev Cohen brought an action against his former employer Colorado Electric Supply Limited (CES), Philip Sturgess, and Gerald Mackie (collectively respondents), alleging wrongful termination and other claims related to his termination from employment. The superior court granted summary judgment in favor of respondents after finding that the parties had entered into an oral settlement agreement. Appellant contends that the trial court erred in granting respondents' summary judgment motion because there was no agreement and that, even if summary judgment was proper, the court erred in denying his motion for costs and attorney fees. We conclude that one term of the settlement agreement is unenforceable under the statute of frauds, but that it is severable and that the remainder of the agreement is enforceable. We therefore affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Factual Background
CES is an international distributor of electrical products. Mackie is the son of the company's founder, and Sturgess was a general manager and appellant's supervisor when CES terminated his employment.
In 1989, appellant began working for Comptoir Electric Français, a French subsidiary of CES's parent company, CEF Holdings, Inc. Appellant worked with Comptoir Electric Français for over 15 years, working his way from a clerk to a branch manager.
Because of appellant's success in his work in France, CES decided to promote appellant to a group manager position in California. In March 2005, CES applied for a nonimmigrant worker visa for appellant in order for him to work as branch manager for 36 months.
After appellant moved to California, CES helped him buy a house in Los Angeles by loaning him half the $1.27 million purchase price. In September 2006, appellant and his brother Raphael paid a $135,000 down payment, assumed a $500,000 mortgage, and executed a declaration of trust for $635,000 in favor of Yorkridge Properties, an affiliate of CES. Title to the property was taken in appellant's and Raphael's names as joint tenants.
Raphael is not a party to this litigation.
In April 2007, Sturgess sought and received approval from Mackie to terminate appellant. In June 2007, Sturgess sent appellant a letter formally terminating his employment with CES.
Procedural Background
Appellant filed suit against respondents on June 25, 2008, through his former counsel, Novian & Novian, alleging wrongful termination and related claims. A First Amended Complaint was filed on March 17, 2009. A final status conference/mandatory settlement conference was scheduled for September 22, 2009, and trial was set for October 5, 2009.
On September 11, 2009, William Mosher of Novian & Novian wrote a letter to respondents' counsel, stating that appellant had received and rejected CES's settlement offer of August 24, 2009. Because the letter is crucial to the resolution of this case, we set forth its precise language: "This letter shall confirm our receipt of CES's settlement offer of August 24, 2009 ('Offer'). After reviewing the terms of the Offer with our Client, please be herein advised that our Client must reject the Offer. [¶] As you know, the Offer made by CES purported to require the resolution of all disputes between our Client and CES. This specifically included the administrative employment dispute currently underway in France between our Client and CES. Upon our office's review of the issue, however, it is our belief that such French claims cannot legally be resolved or released in connection with any California litigation. It is our understanding that even the attempt to obtain the release of such is procedurally inappropriate. [¶] Given that the trial date in this matter is now only approximately three (3) weeks away, our Client cannot continue to discuss the issue of settlement indefinitely. Our Client must immediately commence preparation for trial if no settlement is forthcoming. Please therefore find below our Client's last and final offer of settlement to Defendants: [¶] The details of our such offer are: (1) settlement of all claims against Defendants related to the Complaint, excluding any claims that may exist in France, (2) a mutual waiver and release executed by the parties named to the Complaint, (3) CES to keep the relevant property and assume all rights, responsibilities, and obligation thereto, and (4) Defendants to pay our Client the settlement sum of $280,000.00. This final offer shall remain open until 12:00 p.m. Pacific Standard Time on Monday, September 14, 2009. [¶] We look forward to receiving your clients' favorable response. Nothing contained in this letter is an admission of fact, or a waiver of any right by or on behalf of our Client. The foregoing has been stated without prejudice to any of our Client's claims, rights, and remedies, all of which are hereby expressly reserved." (Original italics omitted.)
On September 14, 2009, Mosher sent a letter to respondents' counsel confirming respondents' acceptance of the settlement offer. Mosher wrote: "This letter shall confirm your clients' acceptance of the settlement offer made by our Client on September 11, 2009, as set forth in that letter from our office to your office of the same date. This letter will additionally confirm that your clients have agreed to prepare the first draft of the settlement agreement for the parties' review. This letter will finally confirm that the Final Status Conference/Settlement Conference in the instant matter shall remain on calendar until the parties have had the opportunity to review the draft settlement agreement being prepared by your clients. [¶] If you have any questions regarding any of the above, or if you believe the above does not accurately reflect the agreement of the parties, please immediately contact either Mr. Farhad Novian or myself. Otherwise, we thank you for your efforts to date in resolving the instant matter and look forward to immediately receiving a draft of the settlement agreement for our Client's review."
On September 18, 2009, Novian & Novian filed a Notice of Settlement with the trial court.
On September 25, 2009, Novian & Novian filed a motion to be relieved as counsel, an ex parte application for an order shortening the time on the motion, and a declaration by Farhad Novian in support of the motion. Novian stated in his declaration that the parties had been "exchanging consistent written settlement offers since approximately April 2009." He further stated that on August 20, 2009, appellant "authorized [Novian & Novian] in writing to make a certain settlement offer to Defendants. On or about September 11, 2009, [Novian & Novian] made such settlement offer to Defendants in writing." Novian further stated that respondents' counsel told him that respondents accepted the offer and would prepare the settlement agreement. Novian & Novian worked with respondents to prepare the settlement documents but, on September 23, 2009, appellant told Novian & Novian that he refused to proceed with the settlement.
The superior court granted Novian & Novian's ex parte application and scheduled a hearing on the motion for October 9, 2009. On October 7, 2009, Novian & Novian filed a request for entry of default against Mackie, but Mackie subsequently filed a motion for relief from default.
At the October 9 hearing, the court indicated its tentative inclination to deny the motion because it was the eve of trial, and it was merely a matter of disagreement about a settlement. Respondents' counsel argued that there was an enforceable settlement, even though it was not signed and was not put on the record before the court, and he indicated his intent to file a motion for summary judgment to enforce the settlement. After an in camera hearing, the court asked respondents to "keep the offer open for the next ten days," and if appellant decided to accept the offer, the case would be resolved. If appellant did not accept the offer, Novian & Novian's motion to be relieved would be granted, and appellant would be given time to hire new counsel.
On October 20, 2009, the court granted the motion to be relieved after Novian explained that appellant and his non-party brother rejected the settlement offer. The court scheduled a Trial Setting Conference for November 13, 2009. Rosen Saba LLP, appellant's current counsel, substituted in as counsel of record on November 13, 2009.
At the November 13 hearing, appellant's counsel indicated that the proposed settlement fell through because the amount of damages was too low and appellant's brother did not agree to surrender his rights in the real property. Appellant's counsel requested further discovery, explaining that appellant's former counsel did not take any depositions. The court set a new trial date and offered to help negotiate a settlement.
Respondents filed a motion to file a First Amended Answer, seeking to add the affirmative defense that the litigation had been settled. Appellant opposed the motion and moved to reopen discovery.
On December 8, 2009, the court granted Mackie's motion for relief from the default judgment. On December 21, 2009, the court granted in part appellant's motion to reopen discovery, in order to allow appellant to take depositions of Mackie and Sturgess.
In February 2010, respondents filed a motion for summary judgment. One of the exhibits respondents attached was a draft settlement agreement, including an agreement to transfer title of appellant's home to Yorkridge Properties; neither agreement was signed by any of the parties. On March 25, 2010, appellant filed an ex parte application and motion to compel Mackie's deposition and to deny respondents' summary judgment motion. On March 30, 2010, the parties entered into a joint stipulation, agreeing, inter alia, to allow appellant to take depositions of Sturgess and Mackie. In Sturgess' deposition, taken on April 21, 2010, Sturgess testified that he had not seen any document purporting to settle appellant's claims against him, had not agreed with appellant to settle any claims, and was not aware of any settlement with appellant.
The court held a hearing on the summary judgment motion on May 17, 2010. The court took particular note of paragraph 40 of appellant's declaration filed in opposition to summary judgment, in which appellant stated, "I have never agreed to be bound by any settlement agreement proposed in this case and, accordingly, I have never signed any such settlement agreement." The court acknowledged that appellant did not agree to the written agreement, which the court found went beyond the terms of the offer made in the September 11, 2009 letter. However, the court reasoned that appellant did not dispute that Mosher had authority to make an offer or that an offer was made in the September 11 letter.
Although the court agreed that the written agreement was not executed, the court found that the oral agreement was valid, rejecting appellant's counsel's argument that it could not be valid because it purported to release all interest in real property. Appellant's counsel argued that appellant, Sturgess, and Mackie did not know what their lawyers were negotiating, but the court responded, "[t]hat's a chance you take when you hire somebody as your agent or your lawyer. They have not only apparent authority, they have actual authority to settle a case." The court also rejected appellant's argument that Novian's declaration should not have been considered because it violated the attorney-client privilege. But in the alternative the court reasoned that it did not need to consider Novian's declaration because Mosher's two letters indicated "an oral settlement by authorized agents of this dispute."
The court thus entered judgment in favor of respondents pursuant to the terms set forth in Mosher's letter dated September 11, 2009: settlement of appellant's claims, excluding any claims in France; mutual waiver and release of the parties; CES to keep the home and assume all rights, responsibilities, and obligations; payment to appellant of $280,000. Appellant filed a timely notice of appeal.
Appellant moved to recover his costs and for attorney fees pursuant to Code of Civil Procedure section 1021 and the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12965, subd. (b)), arguing that he was the prevailing party because he received $280,000 and respondents assumed the debt on his home pursuant to the agreement. The court rejected his request for fees and granted respondents' motion to strike or tax costs. Appellant appealed from this ruling, and we consolidated the appeals for purposes of briefing, oral argument, and decision.
Any undesignated statutory references are to the Code of Civil Procedure.
DISCUSSION
Appellant contends that the trial court erred in granting summary judgment in favor of respondents and that the settlement agreement is unenforceable because it violates the statute of frauds. He also challenges the court's denial of his fees and costs.
I. Novian and Novian's Authority to Make the Settlement Offer
We review the trial court's grant of summary judgment de novo, "viewing the evidence in a light favorable to the plaintiff as the losing party, liberally construing the plaintiff's evidentiary submission while strictly scrutinizing the defendant's own showing, and resolving any evidentiary doubts or ambiguities in the plaintiff's favor. [Citation.]" (Weber v. John Crane, Inc. (2006) 143 Cal.App.4th 1433, 1438.) "The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. . . . [S]ummary judgment may not be granted by the court based on inferences reasonably deducible from the evidence, if contradicted by other inferences or evidence, which raise a triable issue as to any material fact." (§ 437c, subd. (c).)
The expedited settlement procedures of section 664.6 do not apply here because there was neither a written stipulation outside the presence of the court nor an oral stipulation before the court. When section 664.6 is not available to enforce a settlement agreement, the agreement may be enforceable "by motion for summary judgment, by a separate suit in equity or by amendment of the pleadings to raise the settlement as an affirmative defense. Settlement agreements not enforceable under Code of Civil Procedure section 664.6 are governed by the legal principles applicable to contracts in general." (Nicholson v. Barab (1991) 233 Cal.App.3d 1671, 1681 (Nicholson); see also Kilpatrick v. Beebe (1990) 219 Cal.App.3d 1527, 1529-1530.)
Appellant contends that the trial court erred in holding that Novian & Novian had implicit authority to settle his claims without his express consent. Appellant's argument is based on the trial court's statement that an attorney has authority under agency principles to settle a case.
"'"[T]he law is well settled that an attorney must be specifically authorized to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise settlement of pending litigation. . . ."' [Citation.]" (Levy v. Superior Court (1995) 10 Cal.4th 578, 583.) However, it is also true that, "'[a]s a general proposition the attorney-client relationship, insofar as it concerns the authority of the attorney to bind his client by agreement or stipulation, is governed by the principles of agency. [Citation.] Hence, "the client as principal is bound by the acts of the attorney-agent within the scope of his [or her] actual authority (express or implied) . . . ." [Citations.]' [Citation.]" (CPI Builders, Inc. v. Impco Technologies, Inc. (2001) 94 Cal.App.4th 1167, 1174.)
The trial court granted summary judgment on the basis that appellant did not raise a triable issue of fact as to whether he authorized Novian & Novian to make the September 11, 2009 settlement offer. The question on appeal is not whether Novian & Novian had authority to enter into a settlement agreement without appellant's express consent but whether the firm was authorized by appellant to make the offer contained in the letter. If so, CES's acceptance of that offer created a binding settlement agreement.
We need not discuss whether the trial court properly considered the Novian declaration, because, like the trial court, we conclude that the September 11, 2009 letter is itself sufficient to meet CES's burden on summary judgment to show that Novian and Novian was authorized to make the settlement offer contained in that letter. The September 11, 2009 letter states that CES's August 24, 2009 settlement offer had been reviewed "with our Client," that "our Client must reject the offer," and that the offer set forth in the letter is "our Client's last and final offer of settlement." From this language, it may reasonably be inferred that appellant had reviewed CES's offer with his counsel, had rejected it, and had authorized his counsel to make the offer communicated in the letter. Thus, CES met its initial burden of showing on summary judgment that Novian and Novian had authority to tender the offer.
The only evidence appellant submitted to dispute this inference is the following statement in his declaration filed in opposition to summary judgment: "I have never agreed to be bound by any settlement agreement proposed in this case and, accordingly, I have never signed any such settlement agreement." But this statement does not dispute the clear inference that appellant gave his counsel authority to make the settlement offer in the September 11, 2009 letter. Indeed, appellant does not deny that he gave such authority. His declaration conveys merely that appellant did not "agree[] to be bound by any settlement agreement." Of course, because it may be inferred that he authorized his counsel to make the settlement offer, it does not matter that he later did not agree to be bound by the agreement formed when CES accepted the offer. By operation of law, he is bound by the agreement, because he authorized his counsel, acting as his agent, to make the offer that resulted in the agreement. Thus, appellant failed to raise a triable issue whether he authorized Novian and Novian to make the settlement offer.
II. Statute of Frauds
Appellant contends that, even if there was an unwritten settlement agreement, it is unenforceable because it violates the statute of frauds by purporting to release interests in real property held by appellant and his brother. The trial court found that one of the terms of the settlement was that CES was "to keep the relevant property and assume all rights, responsibilities and obligations thereto, namely the property located at 3754 Green Gable Drive, Tarzana, CA," which was the home purchased by appellant with his brother's and CES's help. We conclude that this term is unenforceable under the statute of frauds.
"Under the statute of frauds, contracts 'for the sale of real property, or of an interest therein' (Civ. Code, § 1624, subd. (a)(3)) 'are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent' (Civ. Code, § 1624, subd. (a))." (Lee v. Lee (2009) 175 Cal.App.4th 1553, 1556.) The statute of frauds applies to settlement agreements. (Nicholson, supra, 233 Cal.App.3d at p. 1683 [stating that "[i]n spite of the policy favoring pretrial settlements, . . . we can find no reason to exempt settlement agreements from the statute of frauds where the statute of frauds would otherwise be applicable"].)
Here, there is no written contract regarding the transfer of the real property. However, "[t]he statute of frauds does not require a written contract; a 'note or memorandum . . . subscribed by the party to be charged' is adequate. [Citation.]" (Sterling v. Taylor (2007) 40 Cal.4th 757, 765 (Sterling).) Thus, the question is whether there is a "note or memorandum" subscribed by appellant or his agent regarding the real property, sufficient to satisfy the statute of frauds. "[I]t is a question of law whether a memorandum, considered in light of the circumstances surrounding its making, complies with the statute of frauds." (Id. at p. 772.)
Respondents contend that the letters exchanged by the parties satisfy the statute. However, the September 11, 2009 letter is the only writing that references the real property, and this letter is not sufficient to comply with the statute of frauds. "A memorandum of a contract for the sale of real property must identify the buyer, the seller, the price, and the property. [Citation.]" (Sterling, supra, 40 Cal.4th at p. 772.) The memorandum at issue in Sterling was entitled "Contract for the Sale of Real Property," identified three properties by street address, and based their price on a formula using gross rental income. The question was whether the appellate court properly considered extrinsic evidence to establish essential contract terms such as price, the contracting parties, and the properties. The California Supreme Court held that the memorandum did not satisfy the statute of frauds because the price terms, even considered in light of extrinsic evidence of the parties' understanding, were too uncertain. (Id. at pp. 774-776.)
The writing here is much less specific than that at issue in Sterling. The offer in the September 11, 2009 letter merely states, "CES to keep the relevant property and assume all rights, responsibilities, and obligation thereto." Even if we were to consider extrinsic evidence to establish that the "relevant property" refers to the house purchased by appellant, and even if we were to find the letter complies with the statute of frauds as against appellant, the offer makes no reference to the interest held by appellant's brother. The letter accordingly is not sufficient to satisfy the statute of frauds, because it fails to adequately identify appellant's brother as one of the sellers and is not subscribed by him or his agent.
Respondents' reliance on Santa Monica Unified Sch. Dist. v. Persh (1970) 5 Cal.App.3d 945, and Quan Shew Yung v. Woods (1963) 218 Cal.App.2d 506 is unavailing. Both cases addressed specific performance of contracts to sell real property, and the parties involved and the material terms of the contracts in those cases were set forth in sufficient detail, unlike here.
Respondents contend that the provision regarding the house can be excised from the settlement agreement and the remainder of the agreement enforced. We agree.
"Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest." (Civ. Code, § 1599.) "'"Whether a contract is entire or separable depends upon its language and subject matter, and this question is one of construction to be determined by the court according to the intention of the parties. If the contract is divisible, the first part may stand, although the latter is illegal. [Citation.]" [Citations.]'" (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 122.)
In White Lighting Co. v. Wolfson (1968) 68 Cal.2d 336 (White Lighting Co.), an oral termination of employment agreement provided for the repurchase of company shares for $15,000, moving expenses of $1,200, one month's severance pay, and the employee's share of gross receipts during his employment. The California Supreme Court held that the trial court erred in relying on the statute of frauds to sustain a general demurrer to an entire count based on the oral agreement. (Id. at p. 345.) The court explained that "[i]f a claimant alleges two or more promises of performance 'that can easily be distinguished and separated by the court by reference to the agreement itself' [citation], only that promise of performance which falls clearly within the statute of frauds cannot be enforced. [Citations.]" (Id. at p. 345.) Because "the 'repurchase' promise can be clearly distinguished and separated from the promises to pay one month's salary, traveling expenses, and [the employee's] share of the gross receipts accrued during his period of employment," the court held that the general demurrer to the entire count was erroneously granted. (Id. at p. 346.)
Here, appellant's promise in the settlement agreement to transfer the house to CES can easily be distinguished and separated from the promises that the parties will settle all claims except any that may exist in France, that CES will pay appellant $280,000, and that appellant and CES will execute a mutual waiver and release. Indeed, appellant is not harmed by severance. CES concedes that, if the promise to transfer the house cannot be enforced, it may be severed. Appellant thus retains the house, receives $280,000, and receives a waiver and release. We therefore conclude that the contract is divisible, and the promise regarding the house can be stricken without affecting the rest of the agreement. We order that term stricken and otherwise affirm the judgment enforcing the settlement agreement.
At oral argument, appellant contended that he would be prejudiced if we find the provision severable because he would remain "tied" to CES by retaining the house. Prejudice must be evaluated in light of the fact that we have already found the agreement to be enforceable. Appellant's claim of prejudice relates to whether the entire agreement is enforceable. However, if we were to find the entire agreement unenforceable, appellant would retain the house anyway and thus remain "tied" to CES.
III. Fees and Costs
Appellant contends that the trial court order denying his fees and costs must be reversed. The trial court granted respondents' motion to strike or tax costs and denied appellant's motion for attorney fees on the basis that appellant was not the prevailing party. "Generally, a trial court's determination that a litigant is a prevailing party, along with its award of fees and costs, is reviewed for abuse of discretion. [Citations.]" (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332 (Goodman).) Where the issue involves the interpretation of a statute, it is a question of law reviewed de novo. (Ibid.)
"Unless otherwise provided by statute, a 'prevailing party' is entitled to recover costs in any action or proceeding 'as a matter of right.' (§ 1032, subd. (b); see § 1033.5, subd. (a)(10)(A)-(C) [allowable costs under § 1032 include attorney fees authorized by contract, statute, or law].)" (Goodman, supra, 47 Cal.4th at p. 1333.) Section 1032 provides that, "unless the context clearly requires otherwise . . . . [¶] 'Prevailing party' includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant." (§ 1032, subd. (a)(4).)
In Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175 (Chinn), the plaintiff accepted an offer to compromise pursuant to section 998, agreeing to dismiss her tort action in exchange for a monetary payment. She contended that the trial court properly awarded her costs as the prevailing party under section 1032 because, pursuant to the section 998 compromise agreement, she was the party with the net monetary recovery. On appeal, the court reviewed the legislative history of section 1032 and concluded that "the Legislature did not intend to include settlement proceeds received by the plaintiff in exchange for a dismissal in favor of the defendant. The definition of 'prevailing party' provided in section 1032 requires the court to award costs as a matter of right in specified situations. By precluding consideration of settlement proceeds as a 'net monetary recovery' when a dismissal is entered in favor of the defendant, only one party qualifies for a mandatory award of costs, consistent with the prior law." (Id. at p. 188.)
Although the instant case did not involve an agreement under section 998, the reasoning of Chinn regarding section 1032 indicates that appellant was not the prevailing party for purposes of receiving an award of costs. Appellant was to receive $280,000 pursuant to the settlement agreement, but the trial court awarded summary judgment in respondents' favor. The definition of "prevailing party" in section 1032 is subject to the qualifying phrase, "unless the context clearly requires otherwise." Here, the context clearly requires a finding that appellant was not the prevailing party.
In light of our conclusion, we need not address the parties' arguments regarding whether appellant waived his right to costs and fees.
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Furthermore, appellant was not the prevailing party for FEHA purposes because his claims did not "'contribute[] substantially to remedying the conditions' at which the claims or lawsuit were directed. [Citations.]" (Morrison v. Vineyard Creek L.P. (2011) 193 Cal.App.4th 1254, 1264.) There is no indication that respondents' acceptance of the September 11, 2009 offer was in response to appellant's FEHA claims or contributed to remedying any conditions related to his FEHA claims.
The trial court did not err in denying appellant's fees and costs.
DISPOSITION
The term in the settlement requiring the transfer of the property located at 3754 Green Gable Drive, Tarzana, California, to CES is ordered stricken. In all other respects the judgment is affirmed. Respondents shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.