Miller v. Bush

Filed 8/24/09 Miller v. Bush CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(San Joaquin)

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Convinced he had a right to purchase certain real property owned by defendants Charles F. Bush, Sr. and Kathleen Bush for $1.2 million as part of a settlement agreement, plaintiff Ronald Miller filed a motion for entry of a judgment by stipulation pursuant to Code of Civil Procedure section 664.6 (section 664.6). The trial court disagreed with Millers interpretation of the settlement agreement and eventually entered a judgment dismissing the action. Miller appeals claiming error in the trial courts interpretation of the parties settlement agreement. Rejecting the Bushes claim that Millers appeal is improper and moot; we reach the merits and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

This action was filed as a result of a dispute over real property owned by the Bushes. In November 2004, the parties agreed to a settlement of the action. They recited the terms of their agreement orally and on the record before the trial court (McNatt, J.).

The terms of their agreement called for the Bushes to pay Miller $75,000 and for Miller in turn to release a mechanics lien recorded on the property. The action will be dismissed with prejudice. Counsel for Miller then indicated the Bushes were in the process of selling the subject property and that out of the net sales proceeds, the Bushes agreed to pay Miller 10 percent less the $75,000 they were already paying him. In addition, the [Bushes] shall grant to [Miller] a right of first refusal to purchase the property for the sum of $1,200,000 in the event the property does not sell to any other buyer for . . . a sales price . . . [] . . . [] that exceeds $1,200,000. (Italics added.) The terms of the right of first refusal would be all cash at the close of escrow. There would be no conditions and escrow would close 90 days from the date that the right of first refusal was exercised. Counsel for the Bushes clarified a couple of matters, including, as relevant here, that Miller would have 10 days to exercise his right of first refusal once the Bushes presented it to him. The parties agreed they would mutually release all claims and bear their own attorney fees and costs. The trial court accepted the parties settlement agreement and stated thats going to become the judgment of the court. Apparently, however, no written judgment was filed.

In December 2006, Miller substituted attorneys and filed a motion for judgment pursuant to stipulation under section 664.6,[1] seeking entry of a formal judgment. But before the motion could be heard, the Bushes signed and recorded a notice of lien and first right of refusal. Such notice provided Miller a right of first refusal in accordance with the terms and conditions set forth in their settlement agreement. A copy of the reporters transcript of the November 2004 hearing at which the parties stated the terms of their agreement on the record, as reflected ante, was attached as the parties settlement agreement. Miller asked for his motion to be taken off calendar.

In May 2007, Miller sent a letter to the Bushes that stated, in part, that he was going to exercise his right of first refusal to purchase the property for $1.2 million since the property was not sold to any other buyer. The Bushes made a counter offer to sell the property to Miller for $1,871,000. Miller did not accept the counter offer.

In June 2007, the Bushes entered into a purchase agreement for the sale of the property to a company called Tech Fast Development Services (Tech Fast) for the sum of $1,471,000. The Bushes presented the agreement to Miller as a second counter offer.

In July 2007, Miller filed a second motion for judgment pursuant to section 664.6, seeking an order compelling the Bushes to sell the property to him for $1.2 million. The Bushes opposed the motion, claiming they were under no obligation to sell the property to Miller for $1.2 million, that they offered the property to Miller at the price Tech Fast was willing to pay and Miller failed to exercise his right of first refusal within the 10-day period set forth in their settlement agreement.

The trial court (Holland, J.) denied Millers motion in a written ruling that stated: The settlement recited in open court on November 22, 2004, and which was later memorialized in the written Notice of Lien and First Right of Refusal, provides for a right of first refusal on specified terms and is not, as Plaintiff argues, an unqualified right to purchase anytime for a specified price. Plaintiffs right of refusal accrues in the event the property does not sell to any other buyer for a sales price . . . that exceeds $1,200,000 and must be exercised within 10 days after notice from Defendants that they have a buyer. It is important to note that the settlement agreement plainly contemplated that Defendants may sell the subject real property for a price in excess of $1,200,000; indeed, the agreement recites that Defendants will pay additional compensation to Plaintiff in such an event. It appears that Plaintiffs right of refusal comes into play only if a prospective buyer offers to purchase the subject property for less than $1,200,000. []  Defendants were under no obligation to accept Plaintiffs offer to purchase dated May 25, 2007, since the conditions under which plaintiffs right of refusal had not arisen. Further, inasmuch as the offer from Tech Fast recites a purchase price of $1,471,000, the conditions under which Plaintiff may exercise his right of refusal do not presently exist.

After the trial courts ruling, Miller offered to permit the sale of the property if he received $47,554 out of the escrow for the sale.[2] Millers offer was expressly stated to be without prejudice to his right to appeal the trial courts ruling. Miller filed a third motion for judgment pursuant to stipulation under section 664.6, seeking the entry of a judgment that he could appeal. The Bushes opposed the motion.

The trial court declined to enter either of Millers proposed judgments. It stated: The court cannot order judgment be entered on behalf of Plaintiff since Defendants have satisfied their obligations under the settlement agreement. Similarly, inasmuch as Plaintiff has satisfied his obligations under the settlement agreement--except for dismissal of the action--it would be inappropriate to order entry of judgment on behalf of Defendants. The court went on: The point of Plaintiffs motion seems to be this: Plaintiff contends that he is entitled to additional money pursuant to the parties settlement agreement. Plaintiff contends that the settlement agreement gave him a right to purchase the subject parcel for $1,200,000.00 even if another buyer offered to purchase for an amount in excess of this figure. Therefore, according to Plaintiff, he is entitled to receive the difference between the actual sale price and $1.2 million, less other sums that he has already been paid. []  The court has previously ruled against Plaintiffs interpretation of the settlement agreement. However, if the court is mistaken, and Plaintiffs interpretation of the settlement is correct, what is Plaintiffs remedy? It seems to the court that Plaintiffs remedy is an action for breach of contract--specifically, for breach of the settlement agreement. Alternatively, the court could order dismissal of the instant action--Defendants appear to be entitled to dismissal with prejudice as specified by the settlement agreement--and let Plaintiff appeal the courts decision. (Trial courts fn. omitted.) The trial court, on its own motion, ordered Miller to show cause on a specified date why the action should not be dismissed with prejudice as specified by the parties settlement agreement.

When neither party filed opposition, the trial court ordered the dismissal of the action with prejudice.

We dismissed Millers appeal from such order as premature because the order of dismissal was unsigned and so did not qualify as an appealable judgment of dismissal. (Code Civ. Proc.,  581d; Adohr Milk Farms, Inc. v. Love (1967) 255 Cal.App.2d 366.)

Miller applied for a signed order dismissing the case and the trial court signed and filed such an order.

Miller filed a timely notice of appeal.

DISCUSSION

I.

Millers Appeal Is Not Inappropriate Or Moot

The Bushes claim Millers appeal is fatally flawed as (1) Miller is appealing an order of dismissal that he moved the trial court to make, (2) Miller is trying to bootstrap an appeal in order to file another motion on the issue of the settlement terms, and (3) the issues are moot since (a) Miller released all interest he had in the property by quitclaim deed in exchange for the payment of $47,554 and (b) there is no relief that can be granted to Miller as the Bushes no longer own the property and so cannot be compelled to sell it to him. We disagree with these claims.

First, the procedural history of this case makes it clear that ever since the trial court ruled against his interpretation of his right of first refusal under the settlement agreement, Miller has been attempting to perfect his right to appeal such ruling by getting an appealable judgment entered. It was the trial court that suggested a judgment of dismissal was the appropriate vehicle to allow this appeal. Miller simply accepted the trial courts suggestion by failing to file any opposition to the order to show cause. Moreover, while it is true Miller had to subsequently request the court to enter a signed order of dismissal to meet the requirements of Code of Civil Procedure section 581d after we dismissed his first appeal as premature, we do not find this somehow waived his right to appeal the underlying ruling against him.

Second, Miller is not trying to bootstrap an appeal in order to file another motion on the issue of the settlement terms. Miller is directly challenging the trial courts interpretation of those settlement terms.

The Bushes have previously raised the claim that this appeal is moot through a motion to dismiss this appeal. We denied such motion. This appeal is not moot because of the quitclaim deed. Instead, the record reflects an agreement by Miller to allow the Bushes to proceed with their proposed sale of the property by releasing his interest in the property through the quitclaim deed in exchange for the sum of $47,454 (apparently the additional compensation owed him under other terms of the settlement agreement if the property is sold to a third party), but under an express reservation of his right to appeal the trial courts interpretation of the settlement agreement. With such an express reservation, there is no reasonable way to conclude the agreement and quitclaim deed were intended as a new settlement of the parties dispute over the terms of their 2004 settlement agreement. Miller did not receive and accept the benefits of the judgment inconsistent with his right to appeal. (Epstein v. DeDomenico (1990) 224 Cal.App.3d 1243, 1246 [clear, unmistakable, and unconditional acceptance of advantages from a judgment to which he or she would not be entitled in the event of a reversal precludes appeal].)

Nor is this appeal moot for lack of available relief in the event of reversal. If this court were to agree with Miller, we could reverse the dismissal and direct the entry of a judgment reflecting Millers right to purchase the property for $1.2 million. Miller could then seek damages for the breach of the settlement agreement as reflected by that judgment. The damages would be measured by the difference between $1.2 million and the sale price received by the Bushes, with an offset for the $47,554 Miller has already received. Miller would be entitled to retain the $47,554, either as additional compensation if the trial courts interpretation of the settlement agreement is upheld or as part of the breach of contract damages if Millers interpretation is accepted and the dismissal reversed. (Schubert v. Reich (1950) 36 Cal.2d 298, 300 [rule that acceptance of the fruits of the judgment waives the right to appeal is not applicable where the benefits accepted are such that appellant is admittedly entitled to them or would not be affected or put in jeopardy by the appeal].)

Finally, we note the Bushes cite no authority for their assertion that the quitclaim deed bars any monetary recovery. The quitclaim deed, by its stated language, released Millers interest in the subject property, not his claims (including breach of contract) arising under the settlement agreement. We turn to consideration of the merits of the appeal.

II.

The Trial Court Did Not Err In Its Interpretation Of The Settlement Agreement

When parties to pending litigation enter into a settlement agreement, either may ask the trial court to enter judgment under section 664.6 based upon the terms of the agreement. Strong public policy favoring settlement of civil cases gives the trial court, which approves the settlement, the power to enforce it. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1357.) Section 664.6s express authorization for trial courts to determine whether a settlement has occurred is an implicit authorization to interpret the terms and conditions of the settlement. (Fiore v. Alvord (1985) 182 Cal.App.3d 561, 566 (Fiore).) If the trial court rules on disputed factual issues, our role on appeal is limited to determining whether the factual findings are supported by substantial evidence. (Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 544; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 815 (Weddington); Fiore, supra, at pp. 565-566.) Otherwise, we review the trial courts rulings de novo for errors of law. (Weddington, supra, at p. 815.)

A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. (Weddington, supra, 60 Cal.App.4th at pp. 810-811; citing Gorman v. Holte (1985) 164 Cal.App.3d 984, 988 [Compromise settlements are governed by the legal principles applicable to contracts generally].) Unless interpretation of a contract turns upon the credibility of extrinsic evidence, interpretation is purely a judicial function to be exercised according to the generally accepted canons of interpretation. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865866; Hartzheim v. Valley Land & Cattle Co. (2007) 153 Cal.App.4th 383, 389 (Hartzheim).) Here the parties presented no extrinsic evidence to the trial court regarding the meaning of the contract language. Therefore, we interpret the contract terms as orally stated by the parties before the court by applying settled rules.

When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is reasonably susceptible to the interpretation urged by the party. If it is not, the case is over. [Citation.] If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean? (Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1448 (Oceanside); accord Hartzheim, supra, 153 Cal.App.4th at pp. 389-390.)

Accordingly, we start with the language of the settlement agreement here. After setting forth several initial terms, counsel for Miller indicated the Bushes were in the process of selling the subject property and that out of the net sales proceeds, the Bushes agreed to pay Miller 10 percent less the $75,000 they were already paying him. In addition, the [Bushes] shall grant to [Miller] a right of first refusal to purchase the property for the sum of $1,200,000 in the event the property does not sell to any other buyer for . . . a sales price . . . [] . . . [] that exceeds $1,200,000. (Italics added.)

The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity. (Civ. Code, 1638.) The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other. (Civ. Code, 1641.)

Here the parties expressed their agreement as a right of first refusal. A right of first refusal is the conditional right to acquire . . . property, depending on the [owners] willingness to sell. [Citation.] The holder of the right merely has the preference to purchase the property over other purchasers if the owner of the property elects to sell the property. [Citation.] The right does not become an option to purchase until the owner of the property voluntarily decides to sell the property and receives a bona fide offer to purchase it from a third party. [Citations.] (Campbell v. Alger (1999) 71 Cal.App.4th 200, 206-207; see also 1 Miller & Starr, Cal. Real Estate (3d ed. 2000) 2:10, p. 39; Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2008)  8:200-8:206, pp. 8-40 to 8-41.) The contract terms dictate the particular circumstances that will trigger the right. (Hartzheim, supra, 153 Cal.App.4th at p. 389.)

Thus, when the settlement agreement provided Miller a right of first refusal, he acquired a preemptive right in the event the Bushes decided to sell (Hartzheim, supra, 153 Cal.App.4th at p. 389), he did not acquire an option to purchase. That is, as a holder of a right of first refusal, Miller could not require the Bushes to sell to him just because the property remained unsold.

Further, the agreement specified Millers right of first refusal was to purchase the property for the sum of $1,200,000 in the event the property does not sell to any other buyer for . . . a sales price . . . [] . . . [] that exceeds $1,200,000. Miller would have 10 days to exercise his right of first refusal once the Bushes presented it to him. Clearly, this language did not give Miller an unconditional right to purchase the property for the specified sum. Miller only had a right to purchase the property for $1.2 million in the event the Bushes did not sell it for more to any other buyer. If the Bushes sold the property for more, other terms of the settlement agreement provided Miller with additional compensation from that sale. Taking the agreement as a whole and giving meaning to each phrase of the parties expression of the right of first refusal, the agreement is not reasonably susceptible to the interpretation urged by Miller. (Oceanside, supra, 56 Cal.App.4th at p. 1448.) The settlement agreement did not give him a right to purchase the property for $1.2 million when the sale pending in 2004 did not result in an actual sale. The trial court did not err in its interpretation of the settlement agreement. It correctly concluded the conditions under which Plaintiff may exercise his right of refusal do not . . . exist.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondents. (Cal. Rules of Court, rule 8.278(a)(1).)

CANTIL-SAKAUYE , J.

We concur:

SCOTLAND , P. J.

BLEASE , J.

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[1] Section 664.6 provides as follows: 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.

[2] We granted the Bushes motion for judicial notice on appeal of, inter alia, a quitclaim deed executed by Miller in September 2007 for the purpose of releasing any interest he may have acquired in the property by the notice of lien and first right of refusal recorded in January 2007. The Bushes contend, and Miller does not dispute, such quitclaim deed was given in exchange for their payment of the $47,554 to Miller.