ANTHONY LOVE v. FRANK PRICE

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Court of Appeal, Second District, California.

ANTHONY LOVE, Plaintiff and Appellant, v. FRANK T. PRICE et al., Defendants and Respondents.

B214474

Decided: November 23, 2010

Law Offices of David R. Denis and David R. Denis;  M. Michael Saint-George, for Plaintiff and Appellant. What followed was this action against defendants and Davis for damages for breach of the implied warranty of habitability, battery, discrimination, retaliatory eviction, negligence, intentional infliction of emotional distress, malicious prosecution, and negligent hiring.   Counsel for defendants does not represent Davis.   Plaintiff informs us that a default was entered against Davis, whose whereabouts are unknown and who is not a party to this appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Bradley & Gmelich, Jonathan A. Ross and Arnold S. Levine, for Frank T. Price and Contemporary Living Center, A Psychological Corporation, Defendants and Respondents.

INTRODUCTION

Plaintiff Anthony Love appeals from the order of the trial court dismissing his lawsuit against defendants Frank T. Price and Contemporary Living Center, A Psychological Corporation.   We hold that the dismissal order is appealable because it was entered pursuant to Code of Civil Procedure 1 section 581d, and that otherwise the trial court erred in dismissing the action.   Accordingly, we reverse the order.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff was a tenant at property owned by defendant Price.   Price also owned defendant Contemporary Living Center, A Psychological Corporation.   In 2005, defendants served plaintiff with a three-day notice to quit and a complaint for unlawful detainer.   Judgment was eventually entered in favor of defendants.

According to his ensuing complaint, prior to the court-ordered date to vacate the property, plaintiff was savagely attacked by Willie Davis, who plaintiff alleged was an employee or agent of defendants.   Defendants claim otherwise.   Plaintiff alleged that Davis had plaintiff arrested for the attack.   After plaintiff's release on bail, Davis called the police alleging that plaintiff attacked Davis again and threatened to kill him.   Plaintiff was rearrested and jailed for seven months on attempted murder charges.   The criminal case against plaintiff was eventually dismissed;  Price did not testify at the criminal trial.

Defendants moved for summary judgment.   The trial court granted the motion in part.   The four causes of action that were summarily adjudicated were those alleging discrimination on the basis of race and disability, intentional infliction of emotional distress, malicious prosecution, and negligent hiring.   The court also ruled that two of plaintiff's causes of action could not support a claim for punitive damages.   What remained were four causes of action:  breach of the implied warranty of habitability, battery, negligence, and retaliatory eviction.

Defendants then served on plaintiff a statutory offer to compromise his lawsuit for $25,000 pursuant to section 998.   The offer reads in pertinent part:  “1. Plaintiff, ANTHONY LOVE will file a Request for Dismissal with prejudice as to the complaint against Defendants, Frank T. Price and Contemporary Living Center, A Psychological Corporation;  [¶] 2. The execution and transmittal of a Settlement and General Release by Plaintiff, ANTHONY LOVE, including any and all of his agents, employees, servants or officers, to be prepared by counsel for Defendants, Frank T. Price and Contemporary Living Center, A Psychological Corporation.   The Settlement and General Release will include a confidentiality clause;  [¶] ․ [¶] Acceptance of this offer will serve to satisfy all claims, liens, damages, costs, expenses, attorney's fees, and interest claimed in this action.”

Counsel for plaintiff signed the section 998 offer.   On January 23, 2009, counsel for both parties filed a notice of settlement which states that plaintiff and defendants “have entered into a settlement in the above-entitled matter.   The parties request that the Court set an Order to Show Cause Re:  Dismissal in thirty (30) to forty-five (45) days.”  (Italics added.)   The settlement was not attached to the notice.

On January 29, 2009, six days later, the trial court signed an order dismissing the case, stating, “The court is informed that the case is settled.   The case is therefore ordered dismissed without prejudice;  however, the court retains jurisdiction over the executory provisions of the settlement.”

On January 30, 2009, defendants filed a motion to determine good faith settlement pursuant to section 877.6 seeking to avoid the possibility of liability for plaintiff's claims against defendant Willie Davis.   That was the first time the trial court was notified that the parties' settlement was reached pursuant to section 998.

On February 27, 2009, plaintiff filed his timely notice of appeal.

After plaintiff filed his appeal, on March 2, 2009, the trial court heard and granted defendants' motion to determine good faith settlement.

On March 12, 2009, defendants moved to enforce the settlement pursuant to section 998 and 664.6.   At the hearing on that motion, plaintiff's counsel argued that the section 998 offer settled only the causes of action that had not been summarily adjudicated.   The trial court disagreed and on April 6, 2009 ordered plaintiff to file a request for dismissal with prejudice as to the entire complaint and sign the release of claims pursuant to the settlement.

Plaintiff did not thereafter sign the release and so on September 2, 2009 the trial court found plaintiff and his attorney in contempt of court and ordered them to pay $1,000 each, plus $2,070 in attorney fees.

CONTENTIONS

Plaintiff contends the trial court (1) erred in dismissing the action on January 29, 2009;  (2) had no jurisdiction to hold hearings and issue orders following the dismissal and notice of appeal;  and (3) erred in granting defendants' motion for summary adjudication.

DISCUSSION

1. The January 29, 2009 order dismissing the action is appealable.

We address the threshold issue of the appealability of the trial court's order dismissing the case, as it is jurisdictional.  (Farwell v. Sunset Mesa Property Owners Assn., Inc. (2008) 163 Cal.App.4th 1545, 1550.)   Citing section 998 and case law concerning the statute, defendants contend that the trial court's order is not appealable.   Section 998, subdivision (b)(1) reads, “If the offer is accepted, the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly.”  (Italics added.)   Thus, defendants argue, where there is nothing to adjudicate, the entry of judgment is an automatic, ministerial task.  (Italics (Berg v. Darden (2004) 120 Cal.App.4th 721, 727.)   They cite Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, that when a judgment is entered automatically by the clerk and the court never considers contested issues related to the enforceability or validity of the underlying section 998 settlement agreement, the dismissal order is not appealable.  (Id. at pp. 665-668.)   Defendants are wrong.

A dismissal order is appealable as a final judgment when the order complies with section 581d, which provides in part that, “[a]ll dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action and those orders when so filed shall constitute judgments and be effective for all purposes ․”  (Italics added.)  “An involuntary dismissal effected by a minute order signed by the trial court is an appealable order.   [Citations.]”  (Cano v. Glover (2006) 143 Cal.App.4th 326, 328, fn. 1, citing § 581d.)   According to our Supreme Court, “ ‘an order of dismissal is to be treated as a judgment for the purposes of taking an appeal when it finally disposes of the particular action and prevents further proceedings as effectually as would any formal judgment.’  [Citations.]”  (Daar v. Yellow Cab. Co. (1967) 67 Cal.2d 695, 699.)

Also, a dismissal without prejudice has the effect of a final judgment in favor of the defendant because it terminates the action and concludes the rights of the parties in that particular action (except that the plaintiff may bring another action on the same cause before expiration of the statute of limitations).  (Gagnon Co., Inc. v. Nevada Desert Inn (1955) 45 Cal.2d 448, 455.)   The trial court's determination that the dismissal should be without prejudice here means that the court decided to retain jurisdiction to implement the provisions of the settlement.   Yet, where the court signed the order dismissing “the case,” the judgment finally disposed of the entire action.

Defendants contend that the judgment entered was voluntary, because plaintiff signed the notice of settlement, and a voluntary dismissal constitutes a non-appealable order.  (Cf. Gutkin v. University of Southern California (2002) 101 Cal.App.4th 967, 975 [voluntary dismissal under § 581 not appealable.] )   However, as more fully explained below, the dismissal was not voluntary.   Plaintiff did not anticipate that the entire lawsuit would be dismissed.   Rather, he believed that the settlement only encompassed the three unadjudicated causes of action.

Therefore, where the dismissal here was entered without prejudice, in the form of a written order signed by the trial court, was involuntary, and disposed of the entire lawsuit, it constituted a final judgment under section 581d, and therefore is appealable.

We turn to the merits of plaintiff's appeal.

2. The trial court erred in dismissing this case.

“A court must rest its involuntary dismissal of a complaint on some legal authority.”  (Levitz v. The Warlocks (2007) 148 Cal.App.4th 531, 534.)   The only authority the trial court cited here was that the parties had settled.   However, the court did not have a copy of the settlement before it at the time it dismissed the action, and so it was not informed of the basis for the settlement or even whether the settlement was conditional.   Nor did the court indicate whether it proceeded under the authority of section 998, or section 664.6, or California Rules of Court, rule 3.1385.

Section 998 could not have been the basis for the dismissal for two reasons.   First, section 998, subdivision (b)(1) requires that upon acceptance, “the offer with proof of acceptance shall be filed and the clerk or the judge shall enter judgment accordingly.”   Neither was filed until after the court dismissed this case.   Second, the trial court did not enter judgment as a ministerial matter;  it signed a written section 581d order.   Nor did the court likely rely on section 664.6.   Although the dismissal order purported to retain jurisdiction over the parties to enforce the settlement, no party requested the retention of trial court jurisdiction as required under that statute's procedures. (§ 664.6 [“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.”];  Wackeen v. Malis (2002) 97 Cal.App.4th 429, 439;  Hagan Engineering, Inc. v. Mills (2003) 115 Cal.App.4th 1004, 1010.)   Therefore, we conclude the trial court entered judgment under the authority of California Rules of Court, rule 3.1385 because the parties' notice of settlement requested an order to show cause in 30 to 45 days, implicating subdivision (b) of rule 3.1385.

Turning to California Rules of Court, rule 3.1385, it obligates a plaintiff (or any other party seeking relief) who has settled his case to notify the court immediately upon settlement.  (Rule 3.1385(a)(1).)   In addition, under subdivision (b), the party “must serve and file a request for dismissal ․ within 45 days” if the settlement is unconditional.  (Italics added, Rule 3.1385(b).)  “If the plaintiff or other party required to serve and file the request for dismissal does not do so, the court must dismiss the entire case 45 days after it receives notice of settlement unless good cause is shown why the case should not be dismissed.”  (Ibid., italics added.) 2

“Due process requires notice before a dismissal of a case may be entered.   [Citations.]”  (Lee v. Placer Title Co. (1994) 28 Cal.App.4th 503, 510.)   There is a distinction between “the authority of a court to dismiss a case because of the actions (or inactions) of its litigants and the procedural requirements that precede any such dismissal.   At a minimum, such [procedural] requirements include notice to the plaintiff of a motion or intent to dismiss and an opportunity for plaintiff to be heard.  [Citation.]”  (Reid v. Balter (1993) 14 Cal.App.4th 1186, 1193.)   This is a requirement of due process.

Here, the parties' notice of settlement “reques [ted ] that the Court set an Order to Show Cause Re:  Dismissal in thirty (30) to forty-five (45) days.”   Consequently, plaintiff understandably anticipated notice and an order to show cause.   Yet, the trial court never sent notice to any party ordering it to file a dismissal or else it would issue an order to show cause.  (Cf. Lee v. Placer Title Co., supra, 28 Cal.App.4th at p. 507.)   The court never issued notice and never provided an opportunity to make a showing of “good cause ․ why the case should not be dismissed” as provided in California Rules of Court, rule 3.1385(b).  Plaintiff was never notified of the court's intention to dismiss the case.   Accordingly, the order of dismissal deprived plaintiff of due process.

Defendants argue that California Rules of Court, rule 3.1385 is a housekeeping rule.   They quote from Irvine v. Regents of University of California (2007) 149 Cal.App.4th 994, 1001, that “the Judicial Council formulated California Rules of Court, rule 3.1385 as a case management tool for delay reduction, designed specifically to ‘assist courts in identifying inactive cases from the active cases that may require judicial attention.’   [Citation.]”  Regardless, it is well settled that dismissal requires notice and an opportunity to be heard.   Where the rule allows parties to oppose dismissal upon a showing of good cause, necessarily they must be afforded notice of this opportunity.   This is particularly so here because the parties specifically requested an order to show cause.

We are unpersuaded by defendants' argument that plaintiff “did not contest the settlement until after the trial court dismissed the lawsuit.”   Obviously, without an order to show cause, especially where both parties had requested one, plaintiff had no occasion to assert his view of the scope of the settlement or to contest the global dismissal of his case.

Equally unavailing is defendants' argument that plaintiff signed the notice of settlement and so he was aware of the eventual dismissal.   That notice of settlement requested “that the Court set an Order to Show Cause Re:  Dismissal in thirty (30) to forty-five (45) days.”  (Italics added.)   Rather than to set the hearing as requested and according to California Rules of Court, rule 3.1385(b) affording a period of 45 days to request dismissal, the trial court abruptly-without notice, and without having the terms of the settlement before it to determine whether the settlement was conditional-dismissed the entire lawsuit just six days after receiving notice of the settlement, i.e., 39 days before plaintiff had the opportunity to file anything.

For the foregoing reasons, the trial court deprived plaintiff of due process in dismissing this case without notifying him and affording him an opportunity to be heard.   The order of dismissal must be reversed.

3. Once plaintiff filed his notice of appeal, the trial court lost jurisdiction to take any further action.

“As a general rule, ‘the perfecting of an appeal stays [the] proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order ․‘ (§ 916, subd. (a), italics added.)   The purpose of the rule depriving the trial court of jurisdiction in a case during a pending appeal is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided.   The rule prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.  [Citation.]”  (Betz v. Pankow (1993) 16 Cal.App.4th 931, 938.) 3

Plaintiff filed his appeal on February 27, 2009.  (Cal. Rules of Court, rule 8.100(a)(1);  see also Eisenberg et al., Cal. Practice Guide:  Civil Appeals & Writs (The Rutter Group 2009) ¶¶ 3:1, p. 3-1 & 3:133, p. 3-58.)   Afterwards, the trial court held three hearings concerning enforcement of the settlement:  (1) defendants' motion for determination of good faith settlement, (2) defendants' motion to enforce the settlement, and (3) the contempt proceeding arising from plaintiff's refusal to sign the general release under the settlement.

While the pendency of an appeal divests the trial court of jurisdiction over the subject matter (Betz v. Pankow, supra, 16 Cal.App.4th at p. 938), it does not divest “the court of jurisdiction to determine ancillary or collateral matters which do not affect the judgment on appeal.  [Citation.]  Whether a matter is ‘embraced’ in or ‘affected’ by a judgment within the meaning of section 916 depends upon whether postjudgment trial court proceedings on the particular matter would have any impact on the ‘effectiveness' of the appeal.   If so, the proceedings are stayed;  if not, the proceedings are permitted.   [Citation.]”  (Ibid.) For instance, Betz held that vacating an amended judgment would affect enforcement of that very judgment, with the result it was not a collateral matter over which the trial court could retain jurisdiction.   (Ibid.)

Similarly here, the perfection of plaintiff's appeal on February 27, 2009 divested the trial court of jurisdiction.   The three post-appeal proceedings involve the enforcement of the very same settlement that is the basis for the dismissal.   Plaintiff challenges the scope of the settlement as encompassing some but not all of his causes of action.   This in turn affects the scope of the dismissal, i.e., should the entire lawsuit or only some of it be dismissed.   Stated otherwise, the post-appeal proceedings to enforce the settlement are “embraced in” or “affected by” the judgment and are not ancillary or collateral matters.   Therefore, the trial court had no jurisdiction to make its orders in those post-appeal proceedings, and so the orders are void.

As the result of our holding reversing the January 29, 2009 order of dismissal, we may not address the remainder of plaintiff's appeal concerning the trial court's pre-appeal rulings granting summary adjudication of four of his seven causes of action and the punitive damages allegations.   An order granting partial summary judgment is not appealable.  (City of Oakland v. Superior Court (1996) 45 Cal.App.4th 740, 750.)   Upon reversal of the dismissal of his case, plaintiff's challenge to that ruling becomes premature.

Likewise, the section 998 settlement was signed by both parties.   Therefore, upon remand, the trial court must also address the scope of that settlement.

4. The sanctions motion is denied.

Defendants have twice moved for sanctions against plaintiff for filing a frivolous appeal.  (Cal. Rules of Court, rule 8.276.)   We deny the motion.   We obviously reject the assertion that no reasonable attorney would agree that the appeal has merit.  (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649-655.)

DISPOSITION

The order dismissing this case entered on January 29, 2009, is reversed.   The matter is remanded to the trial court to (1) set aside and vacate the orders entered on March 2, 2009, April 6, 2009, and September 2, 2009, as these orders are void for lack of jurisdiction, and (2) to address the scope of the signed settlement under Code of Civil Procedure section 998.   The stay is lifted.   Appellant to recover costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. All further statutory references are to the Code of Civil Procedure, unless otherwise noted..  FN1. All further statutory references are to the Code of Civil Procedure, unless otherwise noted.

FN2. California Rules of Court, rule 3.1385 reads in relevant part, “If an entire case is settled or otherwise disposed of, each plaintiff or other party seeking affirmative relief must immediately file written notice of the settlement or other disposition with the court and serve the notice on all parties․  [¶] ․ [¶] Except as provided in (c) [conditional settlements] or (d) [compromise of claims of a minor or disabled person], each plaintiff or other party seeking affirmative relief must serve and file a request for dismissal of the entire case within 45 days after the date of settlement of the case.   If the plaintiff or other party required to serve and file the request for dismissal does not do so, the court must dismiss the entire case 45 days after it receives notice of settlement unless good cause is shown why the case should not be dismissed.”.  FN2. California Rules of Court, rule 3.1385 reads in relevant part, “If an entire case is settled or otherwise disposed of, each plaintiff or other party seeking affirmative relief must immediately file written notice of the settlement or other disposition with the court and serve the notice on all parties․  [¶] ․ [¶] Except as provided in (c) [conditional settlements] or (d) [compromise of claims of a minor or disabled person], each plaintiff or other party seeking affirmative relief must serve and file a request for dismissal of the entire case within 45 days after the date of settlement of the case.   If the plaintiff or other party required to serve and file the request for dismissal does not do so, the court must dismiss the entire case 45 days after it receives notice of settlement unless good cause is shown why the case should not be dismissed.”

FN3. Section 916 reads:  “ ․ the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (§ 916, subd. (a).).  FN3. Section 916 reads:  “ ․ the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (§ 916, subd. (a).)

CROSKEY, Acting P. J. KITCHING, J.