Mac Beam, Inc. v. Cadovimex USA GJ Trade Co.
Filed 12/13/13 Mac Beam, Inc. v. Cadovimex USA
GJ Trade Co. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FOURTH APPELLATE
DISTRICT
DIVISION THREE
MAC BEAM, INC.,
Defendant and
Appellant,
v.
CADOVIMEX
USA GJ TRADE CORPORATION,
Plaintiff and Respondent.
G047387
(Super. Ct.
No. 30-2010-00366982)
O P I N I O
N
Appeal from a judgment
of the Superior Court
of Orange
County, Andrew P. Banks, Judge. Reversed.
Phillip J. Sandoval for
Defendant and Appellant.
Garrett Skelly for
Plaintiff and Respondent.
Mac
Beam, Inc. (Mac Beam) appeals from a judgment entered in favor of Cadovimex USA
GJ Trade Corp. (Cadovimex) pursuant to Code of Civil Procedure section 644.6.[1] The trial court determined Mac Beam breached
the terms of its
2012 settlement agreement with Cadovimex, and
granted its motion for entry of judgment against Mac Beam in the amount of
$140,000. On appeal, Mac Beam raises
five issues challenging the court’s ruling, and we have determined one has
merit, rendering the rest moot. We
conclude the trial court lacked subject matter jurisdiction to enter judgment
pursuant to section 664.6. The judgment
is reversed.
I
Our
record does not contain documents describing the events that transpired before
the parties’ settlement. However,
because the parties do not dispute the facts occurring pre-settlement, we will
provide the facts agreed upon in the briefing.
In 2005, Cadovimex contracted with Mac Beam to purchase 10 MB laser
machines for $150,000, for use in the Socialist Republic of Vietnam. Nine units were shipped to Ho
Chi Minh City, Vietnam,
and one unit remained in Santa Ana, California.
Soon thereafter, Cadovimex complained
the nine machines delivered were not licensed for use in Vietnam
and, therefore, were seized by the Ho Chi Minh Police Department. In April 2010, Cadovimex filed suit against
Mac Beam seeking $210,000 in damages.
On
January 17, 2012, counsel
for the parties informed the trial court they reached a settlement and wished
to have it included on the record. The
agreement required (1) Mac Beam to pay $20,000 to Cadovimex within 30 days, (2)
Cadovimex to return the 10 machines to Mac Beam, and (3) Mac Beam to issue a
receipt confirming delivery and the condition of the units, and within 180 days
of taking possession of all 10 machines tender two payments of $30,000 to
Cadovimex. A “material representation”
to the settlement was that the machines be in 100 percent new condition complete
with all accessories and attachments. In
essence, Mac Beam was to repurchase the units it originally sold Cadovimex.
Under the terms of the settlement,
if Mac Beam defaulted and did not cure the default within 20 days of receiving
written notice, Cadovimex would be entitled to a $160,000 judgment less credits
for payments. On the other hand, if Mac
Beam determined any of the machines did not comply with the conditions
specified in the settlement, Cadovimex would retain possession of all the units
relieving Mac Beam of any payment obligations beyond the first $20,000
payment. The settlement agreement
provided Cadovimex and Mac Beam would dismiss with prejudice all claims
contained in their respective complaint and cross-complaint.
Counsel for both parties obtained consent
from their clients for the above settlement terms in the presence of the trial
court. First, Mac Beam’s counsel read
aloud all the terms of the settlement agreement. Second, counsel asked each representative of
their corporation, on the record, the following questions: (1) “Have you heard the terms of the
settlement”; (2) “Do you understand the terms”; (3) “You understand what you’re
supposed to do” (4) “Do you agree to the terms of the settlement” Bia Mac, chief executive officer for Mac Beam,
and Doug Nguyen, president of Cadovimex, both responded, “Yes” to these
questions.
Following
this exchange, the trial court confirmed with the attorneys the settlement
agreement provided the underlying complaint and cross-complaint would be
dismissed with prejudice. Counsel agreed
and it appears the court’s question prompted counsel for Cadovimex to orally
request for the first time that the trial court retain jurisdiction pursuant to
section 664.6, to enforce the terms of the settlement. The trial court then asked, “And that was
your understanding . . . ” Counsel for Mac
Beam, responded, “Yes, your honor.” Although
the corporate representatives were in attendance, they did not orally agree on
the record (or in writing) to the court’s retention of jurisdiction.
On February 27, 2012, a Mac Beam representative collected the
first nine units from the Ho Chi Minh City Police Department.[2] The Mac Beam representative inspected the
units, found they were not in “100 [percent] brand new condition,” and detailed
his findings in a letter to Mac Beam.
On
March 6, 2013, Cadovimex
provided Mac Beam with a 20-day written notice of default of the settlement
agreement, stating the first nine units were collected without objection, but
Mac Beam had not taken possession of the 10th unit in Santa
Ana. On March 9, 2013, Mac Beam responded by e-mail
to the notice of default, stating the following: (1) the units were non-compliant with the
settlement agreement; (2) the
90-day period for the first
$30,000 payment would not occur until all 10 units were received in perfect
condition and as that was “impossible in light of the condition of the first
nine units . . . .”; (3) “new arrangement[s] [would] need to be worked out”; and
(4) counsel would set up a time
for delivery and inspection of the 10th unit.
On April 16, 2012, Mac Beam sent a notice of rejection to Cadovimex
informing the company Mac Beam would not repurchase the units and arrangements should
be made to retake possession (hereafter, the April 16 e-mail). The following week, Cadovimex filed a motion
for entry of judgment on the terms of the settlement agreement pursuant to
section 664.6. Mac Beam filed an
opposition to the motion. In its
opposition, Mac Beam admitted the nine units were delivered on or about February 26, 2012, but the e-mailed
notice of rejection was not given to Cadovimex until April 16, 2012.
During the June 29, 2012 hearing, the court determined the
outcome was dependent on whether Mac Beam timely rejected the first nine
machines. Cadovimex argued the April 16
e-mail was the first time Mac Beam gave notice of the rejection. Mac Beam requested a continuance so as to investigate
whether evidence of an earlier rejection existed. The court denied the request and heard argument
on the remaining issues.
The
trial court determined five days was a reasonable period of time for Cadovimex
to inspect the machines in Vietnam
and accept or reject them, or in the alternative, to request more time. Cadovimex argued five days time was not
reasonable. The court responded that
while it determined five days reasonable, and another court might find 10 days
reasonable, however, “going from February 27[] to April 16[] is not a
reasonable time.” As the only evidence
of a rejection in the record was the April 16
e-mail, the court determined Mac
Beam did not timely reject the machines. In addition, the court concluded Mac Beam’s
failure to take delivery of the 10th unit breached the settlement agreement.
The
court granted Cadovimex’s motion for entry of judgment against Mac Beam in the
amount of $140,000. Mac Beam filed a
motion for a new trial, pursuant to section 657, on grounds of unfair surprise,
abuse of discretion, and denial of a fair hearing on the issue of timely
rejection, among others.
On August 24, 2012, the trial court
considered and rejected each argument raised in the new trial motion, noting
all issues were properly developed and addressed at the hearing; the trier of
fact weighed all evidence presented to reach its conclusion; and Mac Beam
failed to produce evidence to support its defense that a timely rejection was
made.
II
Matter Jurisdiction
Mac Beam argues the
trial court lacked subject matter jurisdiction to enter judgment in accordance
with the settlement agreement because the litigants did not personally consent (orally
or in writing) to the trial court’s retention of jurisdiction pursuant to
section 664.6. It points out counsel for
both corporations agreed on the record to jurisdiction, but their consent is
insufficient to confer jurisdiction. We
agree.
“When a court has
jurisdiction over the parties and subject matter of a suit, its jurisdiction
continues until a final judgment is entered. [Citation.] When there is a voluntary dismissal of an
entire action, the court’s jurisdiction over the parties and the subject matter
terminates.” (Wackeen v. Malis (2002) 97 Cal.App.4th 429,
437 (Wackeen).) Section 664.6, however, provides: “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.” Thus, “even though a settlement may call for a
case to be dismissed, or the plaintiff may dismiss the suit of its own accord,
the court may nevertheless retain jurisdiction to enforce the terms of the
settlement, until such time as all of its terms have been performed by the
parties, if the parties have requested
this specific retention of jurisdiction.” (Wackeen,
supra, 97 Cal.App.4th at p. 439, original italics.)
The parties’ “request
for retention of jurisdiction must conform to the same three requirements which
the Legislature and the courts have deemed necessary for section 664.6
enforcement of the settlement itself: the request must be made (1) during the
pendency of the case, not after the case has been dismissed in its entirety,
(2) by the parties themselves, and (3) either in a writing signed by the
parties or orally before the court.” (
440.) “Like the stipulated settlement
itself, a request that jurisdiction be retained until the settlement has been
fully performed must be made either in a writing signed by the parties
themselves, or orally before the court by the parties themselves, not by their
attorneys of record, their spouses, or other such agents.” (Ibid.)
“While a written or oral
request for retention of jurisdiction may, but need not be, a part of the
settlement agreement itself, that request must be express, not implied from
other language, and it must be clear and unambiguous. A court should not have to resolve doubts or
disputes as to whether an intention to retain jurisdiction is found in the
provisions of a writing or an oral statement.
These requirements for section 664.6 retention of jurisdiction preclude
an assertion . . . that a court should examine other actions of the parties to
determine whether the parties constructively ‘requested’ that there be
retention of jurisdiction to enforce the terms of the settlement.” (Wackeen,
supra, 97 Cal.App.4th at p. 440.) [3]
“Requiring these
formalities not only promotes judicial economy and the integrity of the summary
enforcement process provided by section 664.6, but also protects the
litigants. No litigant should be placed
in the position of relying on representations, from an adversary or an
attorney, that certain actions taken (or not taken), or certain language in a
settlement agreement, will suffice for retention of personal and subject matter
jurisdiction after a suit is dismissed, only to later discover, after the
settlement agreement is signed and the dismissal has been accomplished, that
someone has raised an issue regarding whether jurisdiction was actually
retained. It also protects the
reasonable expectation of settling parties that the dismissal of an action will
put an end to the litigation. While . .
. the court’s lack of continuing jurisdiction to utilize section 664.6 does not
preclude a party’s enforcement of a settlement agreement by means of a separate
action, matters such as statutes of limitation and the ability to bring an
absent litigant back into court make enforcement of a settlement agreement
under section 664.6 preferable to a separate suit.” (Wackeen,
supra, 97 Cal.App.4th at p. 441.)
The settlement between
Mac Beam and Cadovimex was made orally in court by the parties. However, the “parties” did not authorize or
request the trial court to retain jurisdiction to enforce the settlement. Because the action was dismissed in its
entirety without the parties requesting retention of jurisdiction, the trial
court lacked jurisdiction to grant Cadovimex’s motion and enter a formal
judgment pursuant to the terms of the settlement. Accordingly, we reverse the trial court’s
judgment.[4]
Estoppel
Cadovimex takes issue
with the fact Mac Beam, on two occasions, informed the trial court that it
retained subject matter jurisdiction to enforce the settlement agreement but
now argues the trial court lacked jurisdiction. Cadovimex states it “would not have agreed to
the [d]ismissal with prejudice of the underlying lawsuit had the [t]rial
[c]ourt not retained jurisdiction of the [s]ettlement [a]greement.” We read Cadovimex’s statements to assert,
under an estoppel theory, Mac Beam’s prior representations to the court now
prevent it from arguing the court had no jurisdiction. This assertion is incongruous with
well-settled law on subject matter jurisdiction.
“[T]he
court lost subject matter jurisdiction when the parties filed a voluntary
dismissal of the entire cause.” (
217
Cal.App.3d 200, 207 (Viejo Bancorp).) Subject
matter jurisdiction must be determined at the time a court seeks to
act. (Hagan Engineering Inc. v. Mills (2003) 115 Cal.App.4th 1004, 1008.) Subject matter jurisdiction is only conferred
by constitutional or statutory law. (
Cal.App.4th 32, 42.) Unlike
personal jurisdiction, it cannot be consented to, waived, or subject to estoppel.
(Viejo Bancorp, supra, 217 Cal.App.3d at p. 207.)
The
law is clear—Mac Beam cannot be
estopped from challenging the court’s subject matter jurisdiction based on its prior statements.
(Viejo
Bancorp, supra,
217 Cal.App.3d at p. 207.) We are sympathetic to Cadovimex’s
argument it would not have agreed to a dismissal without having an expedient
remedy to enforce the settlement agreement, and we understand why it now feels
it was denied the benefit of the bargained for settlement. However, we note “no one forced [Cadovimex] to agree to a settlement which provided for
dismissal of the old action. As the
parties certainly recognized, not all settlements contemplate a dismissal of
the underlying action. [Cadovimex]
could have protected itself from [Mac Beam’s alleged breach of the agreement]
by refusing to agree to that provision [or making sure consent to continuing
jurisdiction was clearly and unambiguously part of the settlement terms
expressly agreed to by the authorized parties]. . . . No matter how toothless the
agreement may seem in retrospect, it is not the province of the trial court to
rewrite it and put in the teeth the complaining side now thinks it should have
had. [Citation.]” (Ibid.)
Waiver
Cadovimex
devotes two sentences to the argument Mac Beam waived its right to challenge the
trial court’s jurisdiction when it “failed to raise the issue . . . at the time
of filing of the [m]otion for [n]ew [t]rial.” Cadovimex provides no authority in support of
this argument. The issue is waived. (
67 Cal.App.4th 779, 784-785 [when appellant
raises an issue “but fails to support it with reasoned argument and citations
to authority, we treat the point as waived”].) It is well settled subject matter
jurisdiction may be challenged by any party at any time before or during trial
or on appeal. (Great Western Casinos, Inc. v. Morongo Band of Mission Indians
(1999) 74 Cal.App.4th 1407, 1418-1419.)
III
In the respondent’s
brief, Cadovimex asserts the appeal should be dismissed in light of evidence
Mac Beam’s corporate status was suspended.
We requested supplemental briefing on the issue. In a supplemental letter brief, Mac Beam
demonstrates it took the requisite actions to reinstate its corporate
status. On October 28, 2013, we informed
the parties of our intent to take judicial notice the California Secretary of
State’s electronic records of corporate status that indicate Mac Beam’s
corporate status is active. Having
received no objection, we take judicial notice and reject Cadovimex’s argument
the appeal must be dismissed. (Evid.
Code, § 452.)
IV
We
reverse the judgment. Mac Beam shall
recover its costs on appeal.
O’LEARY,
P. J.
WE CONCUR:
RYLAARSDAM,
J.
THOMPSON, J.
[1] All
further statutory references are to the Code of Civil Procedure, unless
otherwise indicated.
[2] We
note documents in the record differ on whether delivery of the Vietnam units
occurred on February 26 or February 27.
However, resolution of this factual issue is not necessary to decide the
appeal. Without deciding the issue, we
will use the later date, like the trial court, for purposes of this opinion.
