GENERAL ELECTRIC CAPITAL CORPORATION, Plaintiff and Appellant, v. STANLEY H. SHURE, Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
General Electric Capital Corporation (GECC) purports to appeal from the superior court's order denying its motion to enforce a settlement agreement under Code of Civil Procedure section 664.6 against defendants Stanley Shure and Thomas Walsh.1 We conclude that the order is not appealable and, even if it were, the superior court did not err.
In July 2004, GECC sued defendants Shure and Walsh (along with a third defendant, Stuart Green) in Los Angeles Superior Court for breach of guarantees they executed on lease obligations of West Coast Transportation, Inc. The complaint sought damages of $1,417,646.59, plus interest. Earlier, the lessee, West Coast Transportation, had filed for Chapter 11 reorganization in the United States Bankruptcy Court. Ultimately, in the reorganization plan, West Coast Transportation agreed to make certain payments to GECC, including payments on an unsecured debt of $450,000 and an administrative claim of approximately $139,000.
On August 26, 2005, at the final status conference before trial in GECC's case against Shure, Green, and Walsh, the judge in Department 31 (where the case was set for trial), Judge Andria Richey, transferred the case to the judge in another department, Department 44, for a mandatory settlement conference. Later that day, the case returned to the original department. The reporter's transcript of the proceeding reflects the presence of the following: the attorney for GECC, the attorney representing defendants Walsh and Green, Walsh and Green themselves, and defendant Shure (himself an attorney) who was in pro per. It does not reflect the presence of a representative of GECC who had authority to settle the case on GECC's behalf.
Judge Richey (who had not conducted the settlement conference) announced that the clerk had informed the court that the parties had settled. The judge was presented with a handwritten document containing notes purporting to summarize the terms of the settlement. She was unable to read the document, so the attorney for defendants Walsh and Green took it and began to summarize the terms. The attorney stated the following: “Number 1, all defendants enter into a stipulated judgment for $590,000 to be held in custody by GE, but not filed or recorded unless the underlying debtor, West Coast Transportation, misses a payment [apparently referring to the Chapter 11 reorganization] or defendant Green or defendant Shure obtain financing that materially exceeds their respective cap rates discussed below.
“Number 2, the court shall dismiss this action and retain residual jurisdiction pursuant to CCP, section 664.6.
“Number 3, defendants Green and Shure shall execute deeds of trust in favor of GECC each in the amount of $75,000. The liens held by GE ․ on those deeds of trust will not be recorded until January 31 of 2006[and] payment[s] shall not [be] credit[ed] [against] the liens until after the first $50,000 is received.
“[N]umber 4, defendants agree to pay GECC $200,000 as follows: $50,000 in the first six months, on or before March 31, ; $50,000 in the next 12 months, on or before ․ September 30th, ; and $100,000 in the next 24 months, on or before March 31, .
“Upon timely payment of the $200,000, GE will forgive [$]325,000 of the underlying [$]450,000 in unsecured debt [for] West Coast Transportation in the underlying bankruptcy.
“GE will release the deeds of trust and the guaranties, as well as the stipulated judgments, and redeliver those stipulated judgments to the named defendants. And the remaining $125,000 in unsecured debt in the bankruptcy will be amortized according to the bankruptcy plan.”
GECC's attorney added that “[i]n the Chapter 11 bankruptcy case, General Electric has an administrative claim of approximately 139,000. And these payments are not being credited against the administrative claim.”
“Number 5, the cap rates are as follows: for [defendant] Shure, $800,000. For [defendant] Green, $275,000. Stacy Shure's lien [2 ] against the Shure household is to be subordinate to GE's lien․ And the parties [are] to sign mutual releases upon payment of the first $200,000.”
In a colloquy with defendant Shure, GECC's attorney clarified certain additional terms, namely, that a default by West Coast Transportation on payments of its unsecured debt to GECC in the Chapter 11 reorganization would permit GECC to record the stipulated judgment against the defendants, and that every payment made to GECC by any of the defendants or by West Coast Transportation would be applied against the stipulated judgment. Green and Walsh's attorney clarified that although the first $50,000 paid would not be credited against GECC's liens on the $75,000 deeds of trust executed by defendants Green and Shure, thereafter GECC would allocate the credit as instructed by the defendants. The attorney for GECC clarified for defendant Shure that defendants' obligation to pay $200,000 to GECC could be satisfied by payments from any source.
The judge then asked, “Everybody is happy with that?” Shure and GECC's attorney answered in the affirmative. The judge asked, “So does anybody have any questions, additions?” Defendant Shure responded, “I think we have it.” On inquiry by the judge, defendant Shure affirmed that he agreed to and accepted the terms of the settlement, and agreed to the court dismissing the case but reserving jurisdiction to enforce the terms. The judge then had the attorney for Green and Walsh inquire of his clients, who both affirmed that they understood the terms were “negotiated between the parties with counsel.”
The judge then announced that she would dismiss the case and retain jurisdiction under section 664.6 “unless there's ․ something else we need to do.” Defendant Shure asked to go off the record.
Thereafter, an off-the-record discussion occurred. The judge then announced: “I gather, counsel, you want to include in your settlement some provision for notice of default prior to filing the stipulated judgment. Is that what you're discussing?” The court and the attorneys had a discussion on the record as to the attorneys' ideas for providing a notice of default to the defendants before filing the stipulated judgment in the present case if West Coast Transportation defaulted on its payments to GECC in the Chapter 11 reorganization. The attorneys appeared to agree that they would follow the notice of default and cure-period provisions of West Coast Transportation's Chapter 11 reorganization plan before, in the event of a default, the stipulated judgment in the present case would be filed.
Defendant Shure then asked to go off the record again, whereupon another off-the-record discussion was held. Then GECC's attorney suggested that the dismissal of the present case should be held for 45 days to prepare a written agreement. The judge stated: “Hang on, counsel. You and your counsel have just authorized me to dismiss now, and I've agreed to do so, and retain jurisdiction to enforce, so there won't be any future dates. That's how section 664.6 works. I have an enforceable settlement, and if something happens and you can't figure it out, then you'll have to come in and file a motion ․ pursuant to this, but you've just authorized me to and asked me to dismiss now, which I will do.” GECC's attorney stated, “Our only thought is, we're going to prepare an agreement [and] I guess, obviously, if we can't agree, we will be back here.” The judge replied, “Then it's a motion to enforce the settlement, right?” GECC's attorney said, “That's fine.”
The court added: “I think it's a good idea to put it in writing just for all your sakes so everybody sees it and all the little dots are there and there aren't any questions. And you've already done so much work, I'm pretty confident that you'll be able to work that out. But you've basically taken it out of my hands already on the record.” The court agreed to keep the handwritten summary of the settlement terms in the court file, and stated that the transcript of the proceeding is “actually your settlement record.”
The minute order of the proceeding states that the case was dismissed without prejudice and that the court retained jurisdiction to enforce the settlement under section 664.6. No formal order of dismissal was filed.
Three-and-a-half years later, in January 2009, GECC filed a motion to enforce the settlement. According to GECC, West Coast Transportation defaulted on payments in its Chapter 11 reorganization plan, with only $96,248 to be credited against the stipulated judgment that was a term of the settlement. GECC therefore sought to have judgment entered against defendants for $493,752.
Defendant Shure opposed the motion on the grounds, inter alia, that service was improper and that because GECC did not orally agree to the settlement on the record, the settlement was not enforceable under section 664.6. Attached to GECC's reply was a declaration by GECC's attorney, in which he stated: “I attended the mandatory settlement conference held in Department 31 of the Los Angeles County Superior Court, the Honorable Andria K. Richey, presiding. Leah Smith, GECC's authorized representative attended the mandatory settlement conference on behalf of GECC and was present in the Courtroom when the oral settlement between GECC and the defendants was read into the Court record.” In its reply, GECC argued that the presence of its authorized representative in court when the terms of the settlement were read satisfied the requirement of section 664.6 that GECC orally agree before the court to the settlement.
On February 20, 2009, the motion was heard before a different judge from the one before whom the settlement had been put on the record. The judge denied the motion without prejudice to re-serving and re-filing the motion.
The motion was not re-filed until January 25, 2010, approximately 11 months later. Once again, defendant Shure opposed the motion on the ground, inter alia, that the settlement was unenforceable because GECC did not orally agree on the record to the settlement. And once again, GECC argued that the presence of its representative in court when the settlement was read was sufficient to comply with section 664.6.
On February 24, 2010, the motion was heard by the same judge that had ruled on the initial motion. The court denied the motion, ruling that GECC “did not personally agree in open court pursuant to the requirements of 664.6.”
GECC concedes that a trial court's denial of a motion to enforce a settlement is generally not an appealable order. (Doran v. Magan (1999) 76 Cal.App.4th 1287, 1292-1294 [holding that an order denying a motion under section 664.6 is a nonappealable interlocutory order]; cf. Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 205 [order enforcing settlement under section 664.6 is appealable, because it is in substance a judgment that finally disposes of the action].) Nonetheless, GECC contends that because the case was dismissed without prejudice pursuant to the settlement, the court's order denying the later motion to enforce the settlement resolved all remaining issues in the case, and is appealable under section 904.1, subdivision (a)(2), as an order made after an appealable judgment. We disagree.
Section 904.1, subdivision (a)(2), provides that an appeal may be taken “[f]rom an order made after a judgment made appealable by [subdivision (a)(1).]” Subdivision (a)(1) provides in relevant part that an appeal may be taken “[f]rom a judgment, except (A) an interlocutory judgment.”
In the instant case, we have only the court minute order purporting to dismiss the case without prejudice pursuant to the settlement. For the subsequent order denying enforcement of the settlement to be appealable under section 904.1, subdivision (a)(2), this prior minute order must constitute an appealable judgment under section 904.1, subdivision (a)(1). It does not, for two reasons.
First, the minute order is not a formal order signed by the court and filed in the action. Section 581d provides 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, and the clerk shall note those judgments in the register of actions in the case.” (Italics added.) Under this provision, a minute order dismissing the case is ineffectual and not appealable. (In re Marriage of Macfarlane & Lang (1992) 8 Cal.App.4th 247, 253, fn. 4; Munoz v. Florentine Gardens (1991) 235 Cal.App.3d 1730, 1731-1732; Graski v. Clothier (1969) 273 Cal.App.2d 605, 606-607; see 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 144, p. 218.)
Second, the purported dismissal was a voluntary dismissal under section 581, subdivision (b)(1), which provides in relevant part that an action may be dismissed “[w]ith or without prejudice ․ by oral ․ request [of the plaintiff] to the court at any time before the actual commencement of trial, upon payment of the costs, if any.” Because this provision gives a plaintiff an absolute right to dismiss an action (see O'Dell v. Freightliner Corp. (1992) 10 Cal.App.4th 645, 659), such a dismissal is a purely ministerial (not judicial) act, and thus does not result in an appealable judgment. (H.D. Arnaiz, Ltd. v. County of San Joaqin (2002) 96 Cal.App.4th 1357, 1365; Gray v. Superior Court (1997) 52 Cal.App.4th 165, 170.)
Because for these reasons the court's dismissal of the action did not result in an appealable judgment, the court's denial of the motion to enforce the settlement cannot, within the meaning of section 904.1, subdivision (a)(2), be deemed to be “an order made after a judgment made appealable by [section 904.1, subdivision (a)(1).]” 3
In support of its contention that the denial of the motion to enforce the settlement is enforceable, GECC cites Walton v. Mueller (2009) 180 Cal.App.4th 161. There, the court recognized the general rule that “[o]rdinarily, an order denying a motion to enforce a settlement in pending litigation under section 664.6 is not appealable, as judgment has not yet been entered and there are accordingly issues left in the trial court for consideration.” (Id. at p. 167.) The court reasoned, however, that “because the motion [to enforce the settlement in that case] concerned an alleged settlement to satisfy a judgment, the motion was necessarily brought after judgment had been entered. Apart from the question of the motion's propriety at that juncture, its denial nevertheless resulted in an order after judgment that is arguably appealable under section 904.1, subdivision (a)(2) as an order made after an appealable judgment. We will accordingly treat the order denying the section 664.6 motion as such in these narrow circumstances, particularly because there are no issues left for the trial court's consideration, a hallmark of an appealable order or judgment.” (Id. at p. 167.) The court cautioned that it did not intend to “sanction departing from the general rule that ordinarily, a motion denying a section 664.6 motion is not appealable.” (Id. at p. 167, fn. 6.)
By contrast, here, as we have explained, there is no prior appealable judgment. The order of dismissal was ineffectual under section 581d. In addition, the purported dismissal was a nonappealable voluntary dismissal under section 581, subdivision (b)(1). Also, technically speaking, because the prior purported dismissal was ineffectual, the case was not effectively dismissed.
Even if we were to find that the order denying the motion to enforce the settlement was an appealable order, we would not find that the trial court erred.
Section 664.6 provides: “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.” (Italics added.)
The seminal decision construing the statute is Levy v. Superior Court (1995) 10 Cal.4th 578 (Levy ). There, a settlement agreement was signed by the litigant's attorney, not by the litigant himself. The issue was whether the settlement was enforceable under section 664.6. The Supreme Court concluded that the term “parties,” as used in section 664.6, means the litigants themselves, not their counsel of record. (Id. at p. 580.) The court reasoned that the “litigants' direct participation [by stipulating to the settlement in writing or orally before the court] tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. [Citations.] It also protects parties from impairment of their substantial rights without their knowledge and consent. [Citation.]” (Id. at p. 585, fn. omitted, italics added.) Because the party litigant had not signed the settlement, it was not enforceable under section 664.6.
In Johnson v. Department of Corrections (1995) 38 Cal.App.4th 1700 (Johnson ), the court applied Levy's interpretation of section 664.6 to an oral settlement agreement. In Johnson, the parties, represented by counsel, engaged in extensive settlement negotiations under the trial court's supervision and reached an agreement. When the trial court placed the settlement terms on the record, the plaintiff expressed his disagreement with one of the terms. The plaintiff's attorney stated that he had been authorized by his client to settle on all of the terms outlined by the court, including the one his client now rejected. Defense counsel moved, pursuant to section 664.6, to enforce the settlement on the terms set forth by the court. The trial court granted the motion, finding that the plaintiff's attorney had been authorized to enter into the agreement. (Id. at pp. 1703-1705.)
On appeal, the plaintiff contended the settlement agreement was not enforceable under section 664.6 because “he never personally voiced his acceptance of [it] to the court.” (Johnson, supra, 38 Cal.App.4th at p. 1706.) Relying upon Levy, the Court of Appeal agreed. It concluded that because the “plaintiff never personally informed the court that he accepted the terms of [the] agreement[,]” it was not enforceable under section 664.6. (Id. at p. 1708.) The reviewing court specifically rejected the argument that because the plaintiff was involved in the settlement negotiations, his attorney's verbal acceptance of the agreement rendered it enforceable under the statutory provision. (Id. at p. 1709.) It reasoned that Levy's requirement that the litigants directly participate in the settlement means that “the litigant must personally acknowledge the settlement to the court.” (Ibid ; see also Murphy v. Padilla (1996) 42 Cal.App.4th 707, 716 [if the party “did not personally agree to the alleged oral settlement before [the court],” it cannot be enforced under section 664.6].)
Conservatorship of McElroy (2002) 104 Cal.App.4th 536 (McElroy ) also involved an oral settlement agreement. There, the parties and counsel were present when the settlement's terms were presented to the court in a proceeding that was both transcribed and videotaped. One of the parties subsequently claimed she had never personally agreed to the settlement. The transcript and videotape established that when asked by one of the attorneys “ ‘Is that your understanding [of the agreement's terms]?’ ”, the party simply nodded her head. (Id. at p. 551.) The trial court found the head nod sufficient to establish the party's assent to the agreement and therefore enforced the settlement pursuant to section 664.6. (Id. at pp. 546-548.)
On appeal, the party contended that the nod of her head was insufficient to satisfy the statutory requirement that she give consent “orally before the court” (§ 664.6). The Court of Appeal agreed. It reasoned that the legislative goals of requiring personal assent (as explained in Levy and Johnson, supra ) “would not be served by an interpretation that equates a nod of the head with oral consent. No stretch of the judicial imagination can make it so․ [H]ead movements are too ambiguous to demonstrate assent and the ambiguity produces the litigation the statute was designed to avoid․ [¶] The words of [section 664.6], ‘orally before the court,’ are clear and unambiguous․ [¶] It would be torturing the English language, the statutory language, and the intent of the Legislature to interpret a nod as an oral agreement․ More than an indication of assent is required. Unambiguous assent, expressed orally, is required in order to ‘minimize[ ] the possibility of conflicting interpretations of the settlement. [Citations.]’ [Citation.] A nod simply does not comply with the statutory requirement of oral consent.” (McElroy, supra, 104 Cal.App.4th at pp. 550-551.) In addition, the appellate court faulted the trial court for failing to ask any of the parties whether he or she understood the settlement's terms and agreed to be bound by them. (Id. at pp. 551-552.)
Under these authorities, we conclude that the record fails to show that GECC orally agreed before the court to the settlement. Nothing in the record of the settlement indicates that GECC's authorized representative, at any time, orally agreed before the court to the settlement.
GECC relies on Fiege v. Cooke (2004) 125 Cal.App.4th 1350, 1355-1356 (Fiege ). There, a plaintiff settled with the defendant's insurers, whose policies gave the insurers the right to settle without the insureds' consent. The trial court obtained the plaintiff's oral consent to the settlement. The defendants were not present at the settlement conference at which the settlement was reached and did not enter a written agreement to settle. The plaintiff later sought to avoid the settlement agreement, but the defendants' insurers obtained an order from the trial court under section 664.6 enforcing it. The plaintiff appealed, and contended in relevant part that the settlement could not be enforced, because the record failed to show that the insurers' representatives, as opposed to their counsel, agreed to the settlement “orally before the court” within the meaning of section 664.6. The court disagreed: “We find their [the insurers' representatives'] presence while their counsel pledged to pay $160,000 persuasive evidence that they agreed to the settlement ‘orally before the court’ during the settlement conference. After the court put the terms on the record, it asked, ‘All right, is there anybody that disagrees or has any addendums to the court's stated settlement?’ The insurer's representatives did not object. It does not matter that the insurers' assent was not ‘on the record,’ i.e., in the reporter's transcript. Section 664.6 used to contain the requirement that an oral settlement must be ‘orally on the record before the court.’ The on the record requirement was removed via 1994 legislation. [Citation.] A reading of the ‘reporter's transcript of settlement’ makes it plain that the insurers' representatives and counsel had discussions with the court before going on the record with counsel stating their appearances and relating the terms of the settlement. No more was necessary.” (Id. at pp. 1355-1356.)
GECC asserts that “[i]t is undisputed that Ms. Smith of GECC was present all day in Court on August 26, 2005, not only at the mandatory settlement conference but also when the Settlement was read before [the judge in Department 31].” GECC relies on the declaration by GECC's attorney, filed with GECC's reply to Shure's opposition to the motion to enforce the settlement. GECC's attorney stated: “I attended the mandatory settlement conference held in Department 31 of the Los Angeles County Superior Court, the Honorable Andria K. Richey, presiding. Leah Smith, GECC's authorized representative attended the mandatory settlement conference on behalf of GECC and was present in the Courtroom when the oral settlement between GECC and the defendants was read into the Court record.” GECC argues that Smith's presence in court when the settlement was recited on the record, and her failure to object when the court asked if the settlement was acceptable, compels the conclusion that Smith orally agreed before the court to the settlement. We disagree.
First, the record is not undisputed that GECC's representative was present at the settlement conference. GECC's attorney declared that he attended the mandatory settlement conference held in Department 31 before Judge Richey, and that Leah Smith, GECC's authorized representative, also attended. But the settlement conference was not held in Department 31 before Judge Richey. It was held in Department 44, before a different judge. Although the attorney may have simply been mistaken as to the Department Number and the judge, it is nonetheless true that on its face the record does not show that GECC's representative attended the settlement conference, because no settlement conference occurred in Department 31 before Judge Richey.
Second, even if the record is construed to show that GECC's representative attended the settlement conference, conspicuously missing from the declaration by GECC's counsel is the statement that GECC's representative orally agreed to the settlement terms before the court at the settlement conference. Moreover, Judge Richey did not participate in that conference and could have had no personal knowledge of what, if anything, GECC's representative orally agreed to. In Fiege, the reporter's transcript showed that the court had discussions with the insurers' representatives and counsel before counsel announced the terms of the settlement. In that circumstance, the court in Fiege inferred that the insurers' representatives orally agreed before the court in the settlement discussions: why else, immediately after having discussions with the court, would they remain mute when asked by the court if they had any additions or addendums? Here, there is no basis for such an inference.
Third, this is especially true here, because in Fiege, the court knew the insurers representatives were present in court. Thus, it was fair to infer that the court's question whether “anybody ․ disagrees or has any addendums to the court's stated settlement,” was an invitation to the insurer's representatives, with whom the court had just finished settlement talks, to voice their objections, if any. Because the inquiry was directed at them and they did not speak, it could be inferred that they must have already agreed to the terms orally before the court. But here, when the judge asked whether “[e]verybody [was] happy with that?” and whether “anybody [had] any questions, additions,” the judge was addressing only the defendants and solicited only responses from them. The judge was not soliciting a response from GECC's representative; indeed, nothing suggests that the judge even knew the representative was present. Thus, the representative's failure to respond to an inquiry not directed at her is not circumstantial evidence that at some earlier time she orally agreed before the court to the settlement terms.
Fourth, after the defendants affirmed their acceptance of the settlement and the court stated its intent to dismiss the case under section 664.6, defendant Shure asked to go off the record. The record reflects an off the record discussion, but not who participated. Further discussions occurred among counsel and the court, resulting in an apparent agreement between the attorneys that they would follow the notice of default and cure period provisions of West Coast Transportation's Chapter 11 reorganization plan before, in the event of a default in the present case, the stipulated judgment against the defendants would be filed. This was apparently a term not previously agreed upon at the settlement conference. Nothing suggests that GECC's representative was a party to these discussions and orally agreed before the court to it at any time.
Fifth, further off-the-record discussions occurred, though the record does not indicate who participated. Then GECC's attorney suggested that the dismissal of the present case be delayed for 45 days to prepare a written agreement, but the court declined. GECC's attorney stated, “Our only thought is, we're going to prepare an agreement [and] I guess, obviously, if we can't agree, we will be back here.” These comments suggest perhaps that the negotiated settlement called for a written settlement agreement, and that GECC's counsel (and hence GECC's representative) did not contemplate that the statement of the terms on the record constituted the settlement agreement itself.
In short, even if the order denying the motion to enforce the settlement were appealable, we would not find that the trial court erred. The evidence is insufficient to conclude that GECC's representative orally agreed to the entire settlement before the court.
The purported appeal is dismissed.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
FN1. GECC is the only party in the appeal. Defendants Shure and Walsh did not file briefs in this court.All further section references are to the Code of Civil Procedure.. FN1. GECC is the only party in the appeal. Defendants Shure and Walsh did not file briefs in this court.All further section references are to the Code of Civil Procedure.
FN2. Stacy Shure is not identified in the record.. FN2. Stacy Shure is not identified in the record.
FN3. GECC could have challenged the trial court's order denying enforcement of the settlement by writ of mandate, but did not.. FN3. GECC could have challenged the trial court's order denying enforcement of the settlement by writ of mandate, but did not.
MANELLA, J. SUZUKAWA, J.