Lock v. Cunnyngham
Filed 4/25/13 Lock v. Cunnyngham CA4/1
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
HELEN LOCK, as Administrator,
etc.,
Plaintiff and Appellant,
v.
DAVID CUNNYNGHAM et al.,
Defendants and Respondents.
D062047
(Super. Ct.
No.
37-2010-00151262-PR-LS-CTL)
APPEAL from
a judgment of the Superior Court
of
County, Jay M. Bloom and Jeffrey S. Bostwick, Judges. Affirmed as modified.
Helen Lock,
administrator with will annexed of the estate of decedent Robert Clifford Reed,
appeals a judgment enforcing a settlement
agreement with claimants David Cunnyngham, Kristy Fyffe, Amy Austin, and
Mirna Cunnyngham (together Claimants).
On appeal, Lock primarily contends the evidence is insufficient to
support the judgment.
FACTUAL
AND PROCEDURAL BACKGROUND
On April 4, 2010, Reed died testate. Lock was appointed as administrator of his
estate. After Lock rejected Claimants'
claims against the estate, they filed a wrongful death action against the
estate based on Reed's murder of Mitch and Diane Cunnyngham. In December 2010, the parties entered into a
wrongful death action that required Lock to convey to Claimants all estate
assets after payment of court-approved administrative expenses. On March
2, 2011, a judgment was entered reflecting the terms of that
settlement agreement.
name="_ftnref1" title="">[1]
On June 2, 2011, Lock filed her first and
final account and report of administrator and petition for settlement, final
distribution of insolvent estate and reserve, and statutory compensation to
attorney and administrator (Final Account).
Lock alleged the estate was in a condition to be closed. She alleged "[t]here are no known taxes
due but unpaid, no known notes payable, no known judgment for which the estate
is liable, or any other material liability."
believe any public entity (other than the Director of Health Services) had any
basis for making a claim against the estate.
She alleged the estate currently had assets with a total value of
$1,126,352.37. She requested the probate
court order that the estate be closed, approve the Final Account, and authorize
her to distribute the estate's real property (valued at $365,000) to Claimants
and distribute its cash on hand (approximately $757,852.37) to her for
statutory administrator's fees ($25,197.89), her probate counsel ($25,197.89
for statutory attorney fees and $8,527.50 for extraordinary attorney fees), her
litigation counsel ($68,441.68), Arlette Reed ($1,585.00 for funeral expenses),
and Claimants' counsel for deposit in the client trust account ($623,902.41).
reserve of $5,000 for any additional expenses until the distributions of
property were complete and then any remaining funds would be distributed to
Claimants' counsel.
Claimants
objected to the Final Account. In
general, they asserted that the proposed payments to Lock, her probate counsel,
and her litigation counsel, as well as to certain other individuals, were
excessive and should be reduced.
Claimants asked the probate court to order the immediate distribution of
all estate assets, except for the amounts they contested.
On July 22, 2011, the probate court
issued an order approving the Final Account for the most part, ordering
distribution of real property to Claimants, cash to Claimants' counsel, and
$25,197.89 as statutory attorney fees for Lock's probate counsel, except for a
$155,000 reserve to be held back until the remaining issues were resolved. The probate court also ordered Lock,
Claimants, and their counsel to participate in a mandatory settlement
conference with San Diego County Superior Court Judge Jay M. Bloom. The court also set a date for a contested
hearing on the remaining issues.
On August 12, 2011, following
signed a settlement agreement and Judge Bloom read into the record the terms of
that settlement agreement. Judge Bloom
stated:
"I'll indicate I've met with the parties, and we've
reached a settlement. . . . [¶]
It is as follows: $63,500 is to be released from the estate reserve of
[$]155,000 for all attorney and administrative fees. The balance of the reserve, which is
[$]91,500, is to go to [C]laimants.
Claimants hereby agree to waive all objections. And Judge Bloom is to keep jurisdiction to
enforce the settlement."
Lock confirmed on the record that she understood the
settlement was binding and agreed to that settlement. Lock's probate and litigation counsel and
Claimants also individually confirmed their agreement to that settlement.
On August
29, the parties presented the settlement agreement to the probate court. The settlement agreement stated:
"The court will receive into the record the
settlement . . . embodied in the transcript [dated] August 12, 2011, regarding the sums
that were withheld from disbursement by prior court order for resolution of
issues as to the distribution of that money, which is a sum of $155,000.
"The parties have reached an agreement with the
assistance of the court, Judge Bloom specifically, that of the $155,000, which
I'll call the reserve, $91,500 is to go to the Claimants. The balance of that reserve, that is the
difference between $91,500 and $155,000, will be disbursed to [Lock] for her
statutory fees, and [her litigation counsel].
Nevertheless, the court stated its preference that a written
order be drafted for its signature.
However, at
a subsequent hearing, Lock's counsel expressed his belief that under the
settlement agreement Claimants were not entitled to a sum certain of $91,500,
but only whatever amount was "left over" after payment of the
estate's administration costs and expenses.
Because of the parties' disagreement regarding the terms of the
settlement agreement, the probate court did not sign the draft written order.
Claimants
thereafter filed a motion to enforce the settlement agreement pursuant to Code
of Civil Procedure section 664.6.
name="_ftnref4" title="">[4] They argued the settlement agreement required
Reed's estate to pay them $91,500. Lock
opposed the motion. She argued that
because the parties did not know at the time of the settlement that the estate
had substantial income tax liabilities, the settlement should be interpreted as
allowing her to pay all administrative costs and expenses and income taxes
before any amounts would be paid to Claimants.
On March 2, 2012, after hearing counsel's
arguments, Judge Bloom granted Claimants' motion to enforce the settlement
agreement. On March 22, he entered a
judgment after settlement in Claimants' favor.
Lock timely filed a notice of appeal.
DISCUSSION
I
"Section
664.6 permits a court to enter judgment pursuant to the terms of a settlement
if the parties stipulate orally before the court or in writing to settle all or
part of a case." (
2 Cal.App.4th 884, 889 (Skulnick).) Section 664.6 provides in pertinent part:
"If parties to pending litigation stipulate . . . 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."
"A
trial court, when ruling on a section 664.6 motion, acts as a trier of
fact." (Skulnick, supra, 2
Cal.App.4th at p. 889.) The court
"must determine whether the parties entered into a valid and binding
settlement." (Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1533.) Section 664.6's "express authorization
for trial courts to determine whether a settlement has occurred is an implicit
authorization for the trial court to interpret the terms and conditions to
settlement." (Fiore v. Alvord (1985) 182 Cal.App.3d 561, 566.) "[I]n ruling upon a section 664.6 motion
for entry of judgment enforcing a settlement agreement, and in determining
whether the parties entered into a binding settlement of all or part of a case,
a trial court should consider whether (1) the material terms of the settlement
were explicitly defined, (2) the supervising judicial officer questioned the
parties regarding their understanding of those terms, and (3) the parties
expressly acknowledged their understanding of and agreement to be bound by
those terms. In making the foregoing
determination, the trial court may consider declarations of the parties and
their counsel, any transcript of the stipulation orally presented and recorded
by a certified reporter, and any additional oral testimony." (In re
Marriage of Assemi (1994) 7 Cal.4th 896, 911.) Furthermore, "[i]f the same judge
presides over both the settlement and the section 664.6 hearing, he may avail
himself of the benefit of his own recollection." (Kohn,
at p. 1533.)
On appeal,
an appellate court must determine whether there is substantial evidence to
support the trial court's section 664.6 determination. (In re
Marriage of Assemi, supra, 7
Cal.4th at p. 911; Kohn v. Jaymar-Ruby,
Inc., supra, 23 Cal.App.4th at p.
1533; Skulnick, supra, 2 Cal.App.4th at p. 889; Fiore
v. Alvord, supra, 182 Cal.App.3d
at p. 565.) When an appellant
asserts the evidence is insufficient to support a factual finding, we apply the
substantial evidence standard of review, requiring two steps. "First, one must resolve all explicit
conflicts in the evidence in favor of the respondent and presume in favor of
the judgment all reasonable
inferences. [Citation.] Second, one must determine whether the
evidence thus marshaled is substantial.
While it is commonly stated that our 'power' begins and ends with a
determination that there is substantial evidence [citation], this does not mean
we must blindly seize any evidence in support of the respondent in order to
affirm the judgment. . . .
[Citation.] '[I]f the word
"substantial" [is to mean] anything at all, it clearly implies that
such evidence must be of ponderable legal significance. Obviously the word cannot be deemed
synonymous with "any" evidence.
It must be reasonable . . . , credible, and of solid value
. . . .' [Citation.] The ultimate determination is whether a
found for the respondent based on the whole
record." (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627,
1632-1633, fns. omitted.) "[T]he
power of an appellate court begins
and ends with the determination as to
whether, on the entire record, there
is substantial evidence, contradicted or uncontradicted, which will support the
determination, and when two or more inferences can reasonably be deduced from
the facts, a reviewing court is without power to substitute its deductions for
those of the trial court.
of no consequence that the trial court believing other evidence, or drawing
other reasonable inferences, might have reached a contrary conclusion." (Bowers
v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)
II
664.6 Judgment
Lock
contends the evidence is insufficient to support the judgment enforcing the
settlement pursuant to section 664.6.
A
On August
12, 2011, following settlement negotiations, the trial court (Judge Bloom) read
into the record the parties' settlement agreement, stating: "$63,500 is to
be released from the estate reserve of [$]155,000 for all attorney and
administrative fees. The balance of the
reserve, which is [$]91,500, is to go to [C]laimants. Claimants hereby agree to waive all
objections." All of the parties,
including Lock, confirmed their agreement to that settlement.
In
subsequently moving to enforce that settlement agreement, Claimants argued the
settlement agreement required Reed's estate to pay them $91,500. Lock opposed that motion and argued that
because the parties did not know the estate had substantial income tax
liabilities, she should be able to pay $63,500 for her administrator's fees and
attorney fees, as well as all tax liabilities and other administrative costs
and expenses, before Claimants would be entitled to any part of the $91,500
stated amount. In so arguing, Lock cited
Probate Code section 11420, which provides for the order of payment of an
estate's debts. She argued Probate Code
section 11420 first required payment of state and federal taxes and then
payment of administrative costs and expenses before any general debts (e.g.,
Claimants' claims) are paid. She argued
that because the parties were mistaken as to the amount of taxes the estate
owed, the settlement agreement should be interpreted as allowing payment of all
taxes and $63,500 in administrative costs and expenses before Claimants would
be paid anything.
At the
March 2, 2012, hearing on Claimants' motion to enforce the settlement, Lock
argued the settlement was "silent as far as if any taxes were due or
payable." The trial court replied:
"I think we discussed this in chambers.
And didn't I say, as I usually do, that, you know, 'Taxes are up to
you. I make no representation on
taxes. And you bear the risk on
that'? Didn't we discuss that?" Lock's counsel conceded that they "might
have discussed that at the secondary" settlement negotiations, but not at
the time of the first settlement agreement.
The court stated:
"Well, I think I remember you mentioning, and I may
be wrong, that something -- you thought there might be [$]15,000 or something
like that. And I said, you know, 'I
can't be responsible for taxes. You bear
the risk.' And you sort of said,
'Understood.' Sort of something to that
effect."
Claimants' counsel agreed with the trial court's
recollection regarding the discussion of taxes at the time of the settlement
negotiations. He stated: "Because
it [taxes] came up in a follow-up, more detailed discussion at the second
hearing after going to Judge Bostwick [i.e., the probate judge]. And Judge Bostwick sent this back here. That was after [Lock's counsel] claims he
learned for the first time we may be talking about more than $5,000 -- the
amount that was put in the record on the verified [Final Account] by Ms.
Lock. She verified that they only wanted
a $5,000 reserve for all remaining issues, including taxes. And they used the term[] 'expenses' to
include taxes. And [Lock's counsel] said
on the record, 'I doubt there'd be any more.
If anything, a maximum [of] $5,000 in taxes.' " Lock's counsel disagreed that taxes were
discussed at the first settlement negotiations.
Claimants'
counsel argued that Claimants' waiver of objections to the administrative costs
and expenses pursuant to the settlement agreement "was conditioned upon
the payment of $91,500, a sum certain."
He argued the purpose of the settlement agreement "was to get
finality and certainty for the [C]laimants and everybody else
involved." He stated there was no
evidence presented to the court regarding the amount of taxes owed by the
estate. He argued the court should
reject Lock's attempt to modify the settlement agreement based on her unilateral
mistake regarding the amount of taxes owed by the estate.
The trial
court (Judge Bloom) issued a minute order granting Claimants' motion to enforce
the settlement agreement. The court
stated:
"The written and executed settlement instrument
(Exhibit A) states that the amount of $63,500 was to be used 'for all
remaining and requested [administrative] fees & costs; i.e.,
[C]laimants. (underscore in original)
(italics added).
"Here, [Lock] argues that because she was not
aware, at the time of entering into the settlement, that if the Estate would
incur additional tax liability when the assets of the Estate were liquidated,
the court should allow her, in essence, to deduct the additional tax liability
from the Estate before relinquishing the balance over to the moving parties,
the Claimants herein. This
interpretation of the settlement would result in a significant reduction in the
express settlement amount of $91,500.
"The settlement, however, is clear that 'no further
admin expenses' were to be factored in the settlement equation. (emphasis added) Therefore, if a mistake was made in the
amount of the administration expenses incurred by the Estate (which includes
tax liabilities), there is no basis upon which to shift the burden of the added
expense to Claimants. Indeed, as [Lock]
was in a position to ascertain what the administration expenses and taxes would
be in light of the nature of the assets in the Estate and thus, any mistake
made respecting that amount appears to have been a unilateral mistake on her
part. As such, it cannot, as a matter of
law, be relied upon to modify the terms of the settlement.
"[Lock] argues that administrative fees technically
do not include taxes. Thus, the
agreement did not include taxes.
However, the essence of the agreement was that [C]laimants were to get
$91,500.00 and the estate could do [whatever] it wanted with the balance. In addition, the spirit of the agreement was
that whatever money was left with the administrator would cover all remaining
debts of the estate administrative fees, taxes, etc.
"Finally, it must be noted that Lock has not
provided the Court with any actual evidence as to the amount of taxes
owed."
Accordingly, the court granted Claimants' section 664.6
motion.
On March
22, 2012, the court (Judge Bloom) entered a judgment after settlement for
Claimants, stating:
"Of the $155,000 reserve set aside by the Estate
pursuant to the Order Approving First and Final Account signed by [the probate
judge] and filed on July 22, 2011, $63,500 shall be used by the Estate for all
remaining and requested administrative fees and costs. The amount of $91,500 shall be paid to
Claimants, in exchange for Claimants' waiver of any and all objections to the
[Final Account] filed by the Estate."
B
Lock
asserts the evidence is insufficient to support the judgment enforcing the
settlement agreement because the circumstances show that only administrative
expenses, and not taxes, were the subject of settlement negotiations. She argues the parties' negotiations involved
Claimants' objections to the Final Account, which objections involved only
administrative expenses (i.e., the proposed fees to be paid to her and her
probate and litigation counsel) and not the estate's tax liabilities. Because the settlement agreement did not
involve the estate's tax liabilities, she argues the agreement should be
interpreted as allowing her to pay the estate's taxes and $63,500 in
administrative expenses before Claimants are paid any part of the stated
$91,500 amount.
We conclude
there is substantial evidence to support the judgment enforcing the settlement
agreement. The trial court (Judge Bloom)
conducted the settlement negotiations and presumably witnessed what it and the
parties stated during those negotiations.
At the hearing on Claimants' motion to enforce the settlement agreement,
the court expressed its recollection that the estate's tax liabilities were, in
fact, discussed during the settlement negotiations. Claimants' counsel agreed with the court's
recollection and stated Lock had used the term "expenses" to include
taxes. Accordingly, there is substantial
evidence to support the court's implicit finding that taxes were discussed
during settlement negotiations and that, in particular, the term
"expenses," as used in the settlement agreement, included the
estate's tax liabilities.
name="_ftnref5" title="">[5]
Lock argues
there is evidence that would support a contrary finding (i.e., that taxes were
not included in the administrative expenses that were the subject of the
settlement agreement). She argues that
because the probate judge ordered the parties to participate in a mandatory
settlement conference regarding Claimants' objections to the Final Account,
which objections concerned payment of her fees, the fees of her probate and
litigation counsel, and other administrative expenses, it must be inferred that
the settlement negotiations involved only administrative expenses and not the
estate's tax liabilities. She further
argues that because the settlement agreement signed by the parties did not
mention taxes, it is clear the settlement could not have provided Claimants
were to be paid $91,500 before the estate paid its taxes. Lock also notes that after the trial court read
the settlement agreement into the record, her probate counsel stated it was his
understanding that the $63,500 amount for the estate's administrative expenses
provided for in the settlement agreement was to go to the payment of Lock's
fees, his fees, and the fees of her litigation counsel. She notes Claimants' counsel replied,
"[t]hey can do whatever they want with that money." Based on that evidence, Lock asserts the
parties understood that the term "administrative expenses" did not
include the estate's tax liabilities.
In so
arguing, Lock misconstrues and/or misapplies the substantial evidence standard
of review. Assuming arguendo there may
have been evidence in the record to support a finding by the trial court that
the parties did not intend to include taxes within the term
"administrative expenses," the substantial evidence standard of
review requires us instead to review the record for evidence to support the
court's finding and, in so doing, make all reasonable inferences from the evidence
favorable to that finding. It is not our
function to reweigh the evidence or to make inferences contrary to those made
by the trial court. Because that is what
Lock, in effect, asks us to do, she has not carried her burden on appeal to
show the evidence is insufficient to support the judgment. (Kuhn
v. Department of General Services, supra,
22 Cal.App.4th at pp. 1632-1633; Bowers
v. Bernards, supra, 150
Cal.App.3d at pp. 873-874.)
Lock
alternatively argues the trial court erred in interpreting the settlement
agreement because the Probate Code defines an estate's "administrative
expenses" as excluding taxes and requires payment of taxes and
administrative expenses before payment of other claims against the estate. Probate Code section 11401 defines a
"debt" of an estate as including: (a) a claim payable in the course
of administration; (b) an expense of administration; and (c) a charge against
the estate, including, but not limited to, taxes. Although, as Lock asserts, Probate Code
section 11401 does not include taxes as part of an estate's administrative
expenses, the trial court could nevertheless reasonably infer the parties to
the settlement agreement intended to include taxes and other debts of the
estate within the term "administrative expenses" when they negotiated
the settlement agreement. Lock does not
cite any case or other authority showing the parties could not define or use
that term between themselves in a manner different from its statutory
definition.
Likewise,
Probate Code section 11420 provides for payment of an estate's debts in a
certain order of priority among classes of debts, stating in pertinent part:
"(a) Debts
shall be paid in the following order of priority among classes of debts, except
that debts owed to the United States or to this state that have preference
under the laws of the United States or of this state shall be given the
preference required by such laws:
"(1)
Expenses of administration. . . .
[¶] . . . [¶]
"(3) Funeral
expenses. [¶] . . . [¶]
"(7) General
debts, including judgments not secured by a lien and all other debts not
included in a prior class.
"(b)
. . . No debt of any class may be paid until all those of
prior classes are paid in full."
Assuming arguendo Probate Code section 11420 precludes the
probate court from ordering the $91,500 amount to be distributed to Claimants
pursuant to the settlement agreement before the estate's income tax liabilities
are paid, there is no admissible evidence (e.g., affidavit) in the record
showing either the amount of the estate's tax liabilities or that there are
insufficient estate assets to pay both those tax liabilities and Claimants'
$91,500 amount. Lock has not carried her
burden on appeal to show the trial court erred in interpreting the settlement
agreement as requiring the payment of $91,500 to Claimants.
III
Lock
requests that, in the event the judgment is affirmed, we modify it to provide
that the $91,500 amount be paid to Claimants "in the course of
administration" as required by Probate Code section 9301. Claimants apparently do not oppose that
request.
Probate
Code section 9300 generally provides that a money judgment against a decedent
or his or her personal representative or estate shall be paid in the course of
administration of the estate and is not directly enforceable against the
estate's property. Probate Code section
9301 provides that a money judgment against a personal representative
"shall provide that it is payable out of property in the decedent's estate
in the course of administration."
Because the judgment enforcing the settlement agreement in this case
omitted that required language, it must be modified to comply with Probate Code
section 9301's mandate. (
491, 495-496; Fogarty v. McGuire
(1959) 170 Cal.App.2d 405, 412; Harris v.
Security Trust & Sav. Bank (1954) 122 Cal.App.2d 512, 515;
214, 218-219; Clark v. Smith (1933)
217 Cal. 749, 753; Nathan v. Dierssen
(1913) 164 Cal. 607, 612; Moore v.
Russell (1901) 133 Cal. 297, 301.)
IV
Claimants
request that we award them their attorney fees and costs as a sanction against
Lock for filing a frivolous appeal. We
decline to impose sanctions against Lock in the circumstances of this
appeal. Nevertheless, because we believe
Claimants should recover their costs on appeal, we award them those costs.
DISPOSITION
The second
sentence on the second page of the judgment is modified to read as follows:
"The amount of $91,500 shall be paid to Claimants, in exchange for
Claimants' waiver of any and all objections to the First and Final Accounting
filed by the Estate, which amount shall be payable out of property in the
decedent's estate in the course of administration." As so modified, the judgment is
affirmed. Claimants shall recover their
costs on appeal.
McDONALD,
J.
WE CONCUR:
HALLER,
Acting P. J.
O'ROURKE,
J.
name="_ftn1" title="">[1] That judgment provided in pertinent part: "[Lock] shall
convey to [Claimants] the entirety of the Estate of Robert Clifford Reed, less
only those amounts approved by the Probate Court for the administration of the
Estate of Robert Clifford Reed and the defense of this action. This judgment is payable out of property in
the Estate of Robert Clifford Reed in the course of administration."
name="_ftn2" title="">[2] She further alleged: "No income taxes are due or
payable by the Estate at this time."
