Opinion
H050248
04-19-2024
KENMARK VENTURES, LLC Plaintiff and Respondent, v. ANTHONY THOMAS, Defendant and Appellant.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 2008-1-CV-130677)
Wilson, J.
Anthony Thomas appeals the trial court's denial of his motion to declare a settlement agreement and stipulated judgment void. Thomas claims he only consented to the agreement and judgment with plaintiff Kenmark Ventures, LLC (Kenmark) because his lawyers lied to him about the documents' content and his liability. Based on that extrinsic fraud and other internal inconsistencies, Thomas argues, the trial court erred by not declaring the settlement agreement and stipulated judgment facially void, and not exercising its equitable discretion to vacate them.
Finding no error, we affirm.
I. Factual and Procedural Background
A. Initial lawsuits
In December 2008, Kenmark sued Thomas, Electronic Plastics, LLC (Electronic), and Michael Gardner, the alleged founder and owner of Electronic, in Santa Clara County Superior Court. Kenmark filed a first amended complaint in March 2009 against the same defendants, alleging causes of action for money due on a promissory note, default under a security agreement and possession of collateral, common count for money lent, and fraud (complaint).
The complaint alleged that Thomas and Electronic had approached Kenmark in early 2000, seeking to borrow funds to pay for the development of a proprietary "biometric smartcard technology for authenticating identification for electronic transactions." Kenmark agreed to loan them up to $6,110,000 for that purpose, and subsequently did so via serial payments between June 2007 and May 2008 (loan). The loan agreement between the parties was initially verbal only.
According to the complaint, Thomas had agreed to provide security for the loan in the form of a valuable emerald which he claimed weighed over 21,000 carats and had an appraised value of over $500,000,000 (the emerald). In June 2007, Thomas delivered possession of the emerald to Kenmark by depositing it in a security deposit box at a bank in Nevada.
In October 2007, the parties memorialized their agreement in writing by signing a secured promissory note and security agreement, which designated the emerald as collateral for the loan. The note provided, among other things, that Thomas and Electronic would pay "on demand" all amounts owed to Kenmark and that if they failed to pay when demanded, "the amount due under the Note shall accrue interest at the rate of ten percent (10%) from the date when the demand was made until paid."
According to the complaint, the emerald was moved in 2008 to a vault in Florida at Thomas's request, to be shown to potential buyers.
In October 2008, Kenmark's attorney sent a letter to Thomas demanding immediate payment of the $6,110,000 owed under the note, and immediate return of the emerald because, "given the recent defection of all key engineers and other employees, [Electronic] is no longer viable." Counsel for Thomas replied by letter in November 2008, refusing to comply with the demands. The attorney stated that the note "was never intended by the parties as an enforceable contract for the loan of money. Rather, the money was provided for equity in the company. Nothing was secured by the emerald and it was released to [Thomas] months ago. [¶] Only now that [Electronic] is experiencing significant financial trouble, is this October of 2007 document being promoted as an enforceable contract; Tony Thomas will not be paying $6,000,000 or using his property as collateral."
Kenmark then filed the complaint, naming Thomas, Electronic, and Gardner as defendants. With respect to the fraud causes of action, it alleged that defendants' statements to Kenmark that the loan proceeds would be used to develop and market the smartcard technology were knowingly false, and the funds were in fact used for other purposes, including defendants' personal expenses. Further, it alleged defendants had orally represented to Kenmark that Electronic had an exclusive worldwide license for the use of the Smartcard technology, when in fact it did not have any legal claim to the technology and Electronic and Gardner were defendants in a lawsuit in federal court which alleged they had stolen the technology.
Thomas filed a cross-complaint, together with an entity called "A T Emerald, LLC" (AT Emerald), which they claimed was the sole owner of the emerald. The crosscomplaint alleged, among other things, that Thomas had been coerced into signing the note and security agreement after Ken Tersini, manager of Kenmark, falsely told him the documents must be signed before Kenmark would invest more money in Electronic. In addition, it alleged Tersini had falsely told Thomas that the note and security agreement "were just temporary in nature" and would be become an equity investment in Electronic.
The matter proceeded to trial.
B. 2011 settlement agreement
On the third day of trial in October 2011, the parties reached a settlement agreement (settlement agreement). Rather than execute a written agreement, the parties elected to have the agreement orally recited on the record before the trial court and subject to enforcement under Code of Civil Procedure section 664.6. Thomas, Tersini, Gardner, and their respective attorneys were present in court.
Code of Civil Procedure, section 664.6, subdivision (a), provides: "If parties to pending litigation stipulate, in a writing signed by the parties outside of 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."
Prior to having the agreement read into the record, the court confirmed with counsel and the parties that they were authorized to enter into the agreement and that they had had ample opportunity to confer with counsel. Thomas also confirmed that he spoke personally on behalf of AT Emerald.
The settlement agreement provided that defendants would pay Kenmark a total of $5,000,000 in five separate payments by dates certain between January 1, 2013, and January 1, 2017, and that defendants' liability for those payments would be joint and several. Failure to make the required payment within the designated grace period would constitute default and Kenmark would be entitled to apply ex parte for an entry of judgment "in the amount of all sums remaining unpaid under this agreement," and in Kenmark's favor on the fraud causes of action in the complaint. The defendants' liability on that judgment would be joint and several as well.
As part of the settlement agreement, Kenmark agreed to dismiss its Florida replevin action and make the emerald accessible to Thomas with no liens or encumbrances, while Thomas and AT Emerald agreed to dismiss the cross-complaint.
The parties also agreed to a mutual general release of all claims, while defendants agreed to "waive and relinquish any right of appeal, modification or collateral attack on the judgment." The settlement agreement expressly provided that it was "designed to resolve disputed claims by the parties and does not constitute an admission of any wrongdoing by any party."
After the terms were read, the trial court stated: "I approved the agreement, direct the parties to comply with the terms of the agreement. I find that this agreement was entered knowingly, intelligently, without duress, coercion, each party being in full capacity and knowledgeable."
C. Failure to pay and subsequent judgments
Thomas and Gardner made the first $500,000 payment in early 2013. However, they failed to make the subsequent required $500,000 payment that was due by January 6, 2014. The parties then entered into an unfiled "stipulated judgment" on January 9, 2014, through which Thomas agreed to pay $575,000 toward the previous unpaid amount, in exchange for an extension of the due date to January 30, 2014, and Kenmark's agreement not to file the stipulated judgment before January 31, 2014. After Kenmark provided a further extension to February 4, 2014, Thomas and Gardner again failed to make the required payment.
Thomas initially failed to make the first payment by the due date. Kenmark moved for entry of judgment pursuant to the terms of the settlement agreement, which the court granted, entering judgment on January 9, 2013. However, the court subsequently vacated that judgment on January 18, 2013, on the condition that Thomas make the first $500,000 payment by January 22, 2013; failing such payment, the court would enter a new judgment in Kenmark's favor on January 23, 2013. Thomas then made the first $500,000 payment and no such subsequent judgment was entered.
Accordingly, in March 2014, Kenmark applied ex parte for judgment in its favor for $4,500,000, pursuant to the terms of the settlement agreement. Because Thomas had filed for bankruptcy in February 2014 in the United States Bankruptcy Court for the District of Nevada (Case No. BK-N-14-50333-BTB), Kenmark requested judgment solely against Gardner. The trial court granted the application and entered judgment on March 7, 2014, against Gardner only. It stated that the judgment was ordered "for Kenmark and against Defendant Gardner for failure to make the payments required by the Settlement Agreement in the [principal] amount of $ 4,500,000.00 together with interest on the judgment as thereafter provided by law and the unpaid settlement amounts shall be deemed to be under Kenmark's Fourth and Fifth Causes of Action in Kenmark's First Amended Complaint."
In October 2015, the "stipulated judgment" between Thomas and Kenmark which they had signed in January 2014 was filed and entered (2015 stipulated judgment). It provided that judgment was entered in favor of Kenmark against Thomas, "jointly and severally," on the fourth and fifth causes of action in the complaint, "in the principal sum of $4,500,000," with interest to accrue at 10 percent per year from the date of entry of the stipulated judgment.
In March 2018, Kenmark moved to enforce the settlement agreement and amend the stipulated judgment to include Gardner, upon learning that he had returned to California after being out of the country for many years. No opposition was filed, and the trial court's minute order reflects that the motion was granted, although the record does not include any amended or new judgment.
D. Bankruptcy proceedings
After Thomas filed for bankruptcy in March 2014, Kenmark filed an adversary complaint in the bankruptcy court, pursuant to Federal Rule of Bankruptcy Procedure 7001, against Thomas and his wife, to establish that Thomas's debt was not dischargeable because it had been obtained via fraud. The bankruptcy court found, among other things, that Thomas had paid $20,000 for the emerald and it had originally been appraised at only $400,000. Further, it found Thomas had admitted he settled Kenmark's lawsuit for $5,000,000, made the first payment, and failed to make any further payments as required by the settlement agreement. He also admitted that the transcript of the settlement agreement was accurate and that he owed Kenmark $4,500,000, together with interest and attorneys' fees. Accordingly, the court ruled in Kenmark's favor, determining the debt was nondischargeable because Thomas had obtained the loan through fraud, so he personally owed Tersini and Kenmark $4,500,000, together with accruing interest and attorneys' fees. Thomas appealed, and the Ninth Circuit Court of Appeals affirmed.
E. Motion to declare settlement agreement and 2015 stipulated judgment void
In March 2022, Thomas filed a "motion to declare the settlement agreement and judgment void," on the grounds of "attorney betrayal and extrinsic fraud" (motion). In short, Thomas argued that his two attorneys had lied to him to obtain his agreement to the settlement agreement and his signature on the 2015 stipulated judgment.
Specifically, he claimed his attorney, Michael T. Morrissey, lied to him to fraudulently obtain his consent to settle because Morrissey was subject to ongoing state bar discipline proceedings that precluded his ability to take Thomas's case to trial. According to Thomas, Morrissey had told him that only Gardner would be responsible for the settlement, while Thomas and AT Emerald would pay nothing. Morrissey allegedly "repeatedly assured Thomas neither he nor [AT Emerald] would have any liability, when in truth Morrissey was ensuring they would be liable for $5,000,000." Thomas argued that he had not wanted to settle, in part because a settlement mediator had told him he had a 75 percent chance of winning the case.
In addition, Thomas claimed he was not involved in the settlement negotiations or drafting of the agreement and never saw a printed copy before it was finalized. He argued that Morrissey had instructed him to answer "yes" to all the judge's questions when the agreement was read in open court, and that in doing so he relied on Morrissey's false statements that Thomas and AT Emerald would not have to pay anything. Thomas claimed he did not learn that he owed Kenmark $5,000,000 pursuant to the settlement agreement until January 2013 when he was told he needed to make a payment.
Thomas claimed he was also lied to throughout the proceedings by his other attorney on the matter, Robert A. Machado, including for the purpose of obtaining Thomas's signature on the 2015 stipulated judgment. According to Thomas, Machado presented him with only the signature page, and told him he needed his signature on the document to file bankruptcy. He did not allow Thomas to see any other pages of the document; in addition, Machado knew that Thomas suffered from dyslexia and depended on Machado to explain the contents of documents. Thomas claimed Machado had committed this fraud "because he was trying to protect both himself and Morrissey from civil liability, criminal liability and State Bar discipline."
Thomas also submitted a declaration from Machado in support of the motion. Machado claimed that he had indeed lied to Thomas as explained in the motion, and only now decided to "come clean" to "help right the wrong he committed."
Based on those facts, Thomas made two legal arguments. First, he argued the settlement agreement is void on its face because it is internally inconsistent in that it contains an "exculpatory clause" stating that there was no admission of wrongdoing, with a "contradictory condemning clause" stating that "judgment shall be entered under the fourth and fifth causes of action," in the event Thomas failed to make timely payments. The 2015 stipulated judgment is also void on its face, Thomas argued, because it conflicts with the settlement agreement by not including the exculpatory clause and instead inserting the word "fraud," which was not included in the settlement agreement.
Second, Thomas argued that his attorneys' lies and misconduct constituted extrinsic fraud that warranted the trial court using its equitable powers to set aside the settlement agreement and the 2015 stipulated judgment.
F. Trial court ruling and appeal
The trial court denied Thomas's motion in an order entered on June 1, 2022 (order). First, it rejected his extrinsic fraud argument, holding that, even if his attorneys had lied to him and he did not have a chance to read the settlement agreement, he heard its terms read out loud by the judge. Further, the court explained, Thomas had admitted in the bankruptcy proceeding that he owed the debt to Kenmark pursuant to the settlement agreement. Finally, the court found that Thomas had not been diligent in asserting his claims of fraud. On the contrary, Thomas had been aware of the alleged fraud as far back as 2018, when he unsuccessfully sought to admit it a similar Machado declaration in the bankruptcy court proceedings. The trial court explained that Thomas "could have sought relief in this Court many years ago, but did not do so."
Second, the trial court rejected Thomas's arguments that the stipulated judgment was void on its face due to internal inconsistencies. As the court explained, the settlement agreement provided that if Thomas made the payments on time, there would be no finding of wrongdoing, but that if he did not, there would be such a finding in a subsequent judgment. Thomas did not pay, so a finding of wrongdoing was deemed made pursuant to the settlement agreement and then carried over to the 2015 stipulated judgment. The trial court stated that "[t]his is not a prohibited penalty and does not create any inconsistency."
Thomas timely appealed.
II. Discussion
A. Appealability
We begin with an appealability issue the parties did not address in their briefs. As noted above, the settlement agreement provided that, "[i]n the event a judgment is entered hereunder, Defendants waive and relinquish any right of appeal, modification or collateral attack on the judgment."
The 2015 stipulated judgment was a judgment entered pursuant to the settlement agreement. Accordingly, on its face, this language appears to constitute a waiver by Thomas of the right to appeal, modify or collaterally attack the 2015 stipulated judgment.
It is well-settled that a party may expressly waive the right to appeal from any judgment. (Pratt v. Gursey, Schneider &Co. (2000) 80 Cal.App.4th 1105, 1108, citing Elliott &Ten Eyck Partnership v. City of Long Beach (1997) 57 Cal.App.4th 495, 504; McConnell v. Merrill Lynch, Pierce, Fenner &Smith, Inc. (1985) 176 Cal.App.3d 480, 488 (McConnell).) This general rule is subject to limited conditions: "1. The attorney must have the authority to waive a party's right to appeal. 2. The waiver must be express and not implied. 3. The waiver must not have been improperly coerced by the trial judge." (McConnell, supra, 176 Cal.App.3d at p. 488.) On our review of the record, those conditions appear to have been satisfied here.
However, Kenmark did not argue in the trial court, or in its brief in this court, that Thomas waived the right to take this appeal. In response to questioning at oral argument, counsel for Kenmark asserted that Thomas did waive that right. Because, as explained below, we conclude that Thomas's arguments on appeal have no merit, we assume without deciding for purposes of this appeal that Thomas did not waive that right. (Benach v. County of Los Angeles (2008) 149 Cal.App.4th 836, 845, fn. 5 [appellate courts generally will not address issues whose resolution is unnecessary to disposition of the appeal]; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1019, fn. 6.)
We express no opinion on whether Thomas waived the right to appeal or collaterally attack the 2015 stipulated judgment, including how that question may apply to any subsequent proceedings or disputes between the parties.
B. Standards of review
We independently review the trial court's determination of whether the 2015 stipulated judgment is void. (Kremerman v. White (2021) 71 Cal.App.5th 358, 369; Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009, 1020.)
We separately review a trial court's order denying equitable relief for an abuse of discretion. (Hudson v. Foster (2021) 68 Cal.App.5th 640, 661 (Hudson), citing County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1230 (Gorham).)" 'In doing so, we determine whether the trial court's factual findings are supported by substantial evidence [citation] and independently review its statutory interpretations and legal conclusions [citations].'" (Hudson, supra, at p. 661, quoting Gorham, supra, at p. 1230.)" 'In assessing whether any substantial evidence exists, we view the record in the light most favorable to respondents, giving them the benefit of every reasonable inference and resolving all conflicts in their favor.' [Citation.]" (Kramer v. Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13, 28 (Kramer).)
C. Analysis
1. The settlement agreement and 2015 stipulated judgment are not void
Thomas's chief argument on appeal is that the settlement agreement and 2015 stipulated judgment are void because they contain contradictory and logically inconsistent terms. He claims the settlement agreement contains "two contradictory and logically inconsistent terms; specifically, an exculpatory clause stating the [settlement agreement] 'does not constitute an admission of any wrongdoing' and a contradictory, condemning clause stating that judgment 'shall be taken under the fourth and fifth causes of action of Kenmark's First Amended Complaint.'" Based on that alleged inconsistency, Thomas argues the settlement agreement is "void on its face" under contract law because there was no mutual consent or meeting of the minds between the parties. He cites authority holding that settlement agreements are contracts and that mutual consent is required for proper formation.
However, Thomas fails to demonstrate, or even explain, how the cited terms are inconsistent or contradictory in the first place. In our view, they are not. The first term provides that the parties "agree that this settlement agreement is designed to resolve disputed claims by the parties and does not constitute an admission of any wrongdoing by any party." The second term provides that "[i]n the event Defendants fail to make timely payments set forth as in paragraph three or within the grace period provided, Kenmark Ventures, LLC may apply, ex parte, for an entry of judgment in the amount of all sums remaining unpaid under this agreement. [¶] Judgment shall be entered under the [fourth] and fifth causes of action of Kenmark's First Amended Complaint."
The settlement agreement itself does not constitute an admission of wrongdoing by any party. Notwithstanding that, it also requires that Thomas and other defendants make payments as specified and, in the event they fail to do so, Kenmark may apply for judgment, which shall then be entered under the fourth and fifth causes of action of the complaint. By entering judgment in Kenmark's favor on those causes of action, the 2015 stipulated judgment included the finding of wrongdoing, not the settlement agreement. We can discern nothing internally inconsistent or contradictory about the settlement agreement and Thomas has not offered anything to the contrary.
Thomas also argues that the trial court "erred as a matter of law when it ignored the contradictory inconsistencies to focus on the obligation to pay the settlement amount." In denying Thomas's motion, the trial court stated that "[t]he supposed inconsistencies in the Settlement Agreement and Stipulated Judgment identified by Defendant are separate from Defendant's obligation to pay money under the Settlement Agreement and Stipulated Judgment." However, as Thomas recognizes, our review here is independent; it is immaterial whether the trial court relied on an improper ground. Exercising that independent review, we have determined that the settlement agreement is not inconsistent as urged by Thomas.
Thomas argues separately that the 2015 stipulated judgment is void because the settlement agreement allowed judgment to be entered ex parte, "which is illegal and against public policy." Thomas cites no authority for that proposition, though, which in fact has been expressly rejected by other courts. In Starpoint Properties, LLC v. Namvar (2011) 201 Cal.App.4th 1101, for instance, the appellants argued that the trial court had erred entering judgment pursuant to section 664.6 on an ex parte basis. (Id. at p. 1109.) The court held the argument was "meritless because appellants expressly waived their right to receive notice in the Settlement Agreement, and such waivers are valid under California law." (Ibid., citing Rooney v. Vermont Investment Corp. (1973) 10 Cal.3d 351, 370 [within trial court's discretion to enter judgment on ex parte basis, provided agreement waiving notice set forth all the terms of a judgment agreed upon by the parties and waiver was expressly stated].)
Here, the settlement agreement contained such an express waiver when it provided that, "[i]n the event Defendants fail to make timely payments set forth as in paragraph three or within the grace period provided, Kenmark Ventures, LLC may apply, ex parte, for an entry of judgment in the amount of all sums remaining unpaid under this agreement [and] Judgment shall be entered under the fourth and fifth causes of action of Kenmark's First Amended Complaint."
Thomas cites various cases which hold, for example, that "section 664.6 does not allow a court to endorse or enforce a provision in a settlement agreement or stipulation which is illegal, contrary to public policy, or unjust." (Timney v. Lin (2003) 106 Cal.App.4th 1121, 1127-1128; California State Automobile Association Inter-Insurance Bureau v. Superior Court (1990) 50 Cal.3d 658, 664 [court may reject provisions of a settlement as unjust or against public policy].) That general proposition is true- however, Thomas has not established that any provision of the settlement agreement here is unjust or against public policy.
Finally, Thomas argues that the 2015 stipulated judgment is void "because it does not mirror" the settlement agreement. That is, the 2015 stipulated judgment excludes the "exculpatory clause" which the settlement agreement included, stating that it "does not constitute an admission of any wrongdoing." According to Thomas, a judgment entered pursuant to a settlement agreement that "states some of the settlement terms, but omits others, fails to accurately reflect the parties' agreement, and therefore fails to comply with [Code of Civil Procedure, section 664.6]." He cites authority for the proposition that omitting material terms of the settlement "fails to accurately reflect the parties' agreement and therefore fails to comply with Code of Civil Procedure section 664.6." (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1185.)
Once again, while that general proposition is true, Thomas has not demonstrated that it applies here. In fact, the 2015 stipulated judgment accurately reflects the parties' agreement. The settlement agreement provided that, if defendants failed to make timely payments, judgment would be entered in Kenmark's favor in the unpaid amount, under the fourth and fifth causes of action-and that is exactly what the 2015 stipulated judgment provided. The 2015 stipulated judgment did not include the "exculpatory clause" from the settlement agreement because the settlement agreement provided that the subsequent judgment would be in Kenmark's favor.
2. The trial court did not abuse its discretion denying equitable relief
Thomas argues the trial court abused its discretion by not setting aside the settlement agreement and 2015 stipulated judgment based on extrinsic fraud. According to Thomas, the "extrinsic fraud" consisted of his attorneys telling him he would have no liability under the settlement agreement, contrary to its actual terms.
As explained above, the trial court determined that, even if his attorneys had lied to him, Thomas heard the settlement agreement terms recited in open court and accepted them, and there was no evidence to suggest he could not understand them. Further, Thomas admitted in the bankruptcy proceeding that he owed the debt to Kenmark pursuant to the settlement agreement. Finally, the court found that Thomas had not been diligent in asserting his claims of fraud because he had the evidence in the Machado declaration as far back as 2018, when he unsuccessfully sought to admit it in the bankruptcy court proceedings. Thus, the trial court determined, Thomas "could have sought relief in this Court many years ago, but did not do so."
a. Applicable law
" 'Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding. [Citation.]'" (Department of Industrial Relations v. Davis Moreno Construction, Inc. (2011) 193 Cal.App.4th 560, 570 (Davis Moreno), quoting City and County of San Francisco v. Cartagena (1995) 35 Cal.App.4th 1061, 1067.) "Extrinsic fraud only arises when one party has in some way fraudulently been prevented from presenting his or her claim or defense." (Davis Moreno, supra, 193 Cal.App.4th at p. 570, citing In re Marriage of Modnick (1983) 33 Cal.3d 897, 905.) "A motion to vacate a judgment for extrinsic fraud is not governed by any statutory time limit," but instead stems from a court's inherent equitable authority to grant relief. (Davis Moreno, supra, 193 Cal.App.4th at p. 570, citing Moghaddam v. Bone (2006) 142 Cal.App.4th 283, 290.)
To set aside a judgment on the ground of extrinsic fraud or mistake, a party must satisfy three elements: "(1) a meritorious defense; (2) a satisfactory excuse for not presenting a defense in the first place; and (3) diligence in seeking to set aside the [judgment] once discovered." (Pittman v. Beck Park Apartments, Ltd. (2018) 20 Cal.App.5th 1009, 1025 (Pittman), quoting Rodriguez v. Cho (2015) 236 Cal.App.4th 742, 750.)
b. Thomas's arguments
Thomas first argues that the trial court abused its discretion when it held that he was not diligent in asserting his claims of fraud. According to Thomas, he was not aware of his attorneys' malfeasance until 2021, when Machado confessed to him and prepared the declaration submitted in support of Thomas's motion. In addition, Thomas did exercise diligence, he argues, by contacting dozens of attorneys to represent him before finally obtaining counsel in 2021.
We need not address these arguments, however, because the trial court also determined that Thomas failed to satisfy another of the required elements. Specifically, it found that Thomas had heard and accepted the settlement terms himself and did not have a satisfactory excuse for failing to present his defense in the first place, which is an independent element required to set aside a judgment based on extrinsic fraud. (Pittman, supra, 20 Cal.App.5th at p. 1025.) Thomas has not demonstrated that the trial court abused its discretion in making that determination. For that reason, it is immaterial whether the trial court's finding regarding Thomas's diligence is supported by substantial evidence.
Thomas next argues that the trial court abused its discretion by improperly "[finding that] his motion was based on duress." He points to a portion of the trial court's order that analogized to a recent case, Fettig v. Hilton Garden Inns Management LLC, (2022) 78 Cal.App.5th 264 (Fettig). In Fettig, the plaintiff tried to escape a settlement she had put on the record by claiming her attorney forced her to take the deal. The court held that "duress by a third person cannot void a contract when the other contracting party did not know about the duress and relied in good faith." (Id. at pp. 265-266.) Because the defendants had been unaware of the alleged duress, the plaintiff's accusations against her attorney did not enable her to rescind a contract "with others innocent of the charge." (Id. at p. 266.)
The trial court here held that there was no evidence Kenmark knew Thomas's attorneys had lied to him to make him settle the case. Analogizing to Fettig, the court found that Thomas "cannot now attempt to rescind or invalidate the Settlement Agreement with an innocent party like [Kenmark]."
Thomas argues the trial court's finding is unsupported by any evidence because he did not challenge the settlement agreement or 2015 stipulated judgment on the grounds of "duress." For that reason, he argues, Fettig is inapplicable.
Thomas misunderstands the trial court's ruling. The court did not determine that his motion was based on duress. Instead, it analogized to Fettig, a case which happened to deal with duress, while Thomas's motion was predicated on a similar claim of fraud. The common thread, though, is that the third party to the contract-here, Kenmark-was not aware of the alleged malfeasance. Thomas has not argued to the contrary. Instead, he claims Kenmark knew that Morrissey was practicing law without a license. Even if that were true, though, it does not follow that Kenmark knew Thomas had been lied to by his attorneys about the terms of the settlement agreement, which were read in open court and which Thomas said he understood and accepted.
Thomas also argues that he can rescind the settlement agreement because his consent was given by mistake. He cites authority for the general proposition that rescission is proper "when based on the unilateral mistake of one party in relying on the advice of a trusted third party when signing a contract." Thomas claims that maxim applies here because "the undisputed evidence is that [he] relied on the advice of his trusted attorney when he agreed to the settlement."
On the contrary, though, the trial court expressly found that Thomas did not rely on his attorneys' alleged lies: "the Court does not find that Defendant relied upon the supposed lies of his attorneys when accepting the settlement." Substantial evidence supports that factual finding by the trial court as well. (Hudson, supra, 68 Cal.App.5th at p. 661.) Thomas recited in open court that he understood and accepted the terms of the settlement agreement, and he admitted in the bankruptcy proceeding that he owed money to Kenmark pursuant to that agreement. We must view this evidence in the light most favorable to Kenmark, giving it the benefit of every reasonable inference. (Kramer, supra, 56 Cal.App.5th at p. 28.)
Thomas also challenges the trial court's factual finding regarding his alleged admissions in the bankruptcy proceedings. We need not address those arguments because we determine there was substantial evidence in the record supporting the trial court's finding that Thomas did not rely on his attorneys' alleged lies, even aside from the bankruptcy proceedings-specifically, the fact that the settlement agreement terms were read in open court, where Thomas expressly acknowledged that he understood and accepted them.
Thomas argues this does not constitute substantial evidence that his reliance on his attorney's misrepresentations was unreasonable. Thomas misconstrues the trial court's ruling. It did not determine that Thomas unreasonably relied on his attorneys' lies-it found that Thomas did not rely on them at all.
Thomas has failed to demonstrate that substantial evidence does not support the trial court's finding.
III. Disposition The order is affirmed. Kenmark may recover its costs on appeal.
WE CONCUR: Greenwood, P.J., Danner, J.