Opinion
NOT TO BE PUBLISHED
Appeal from a postjudgment order of the Superior Court of Orange County No. 04D006425Richard G. Vogl, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.)
Donald Klein for Appellant.
No appearance for Respondent.
OPINION
O’LEARY, J.
Audrey Rogers asked the family law court to determine her community property share of an unadjudicated asset her ex-husband, Robert Rogers, omitted from their 2005 marital dissolution judgment. Robert remarried but is now deceased. Randolph Rogers is the designated personal representative. The unadjudicated asset at issue is the E & J Gallo Key Executive Profit Sharing Retirement Plan (the ERP), which is currently held and controlled by Robert’s former employer, E & J Gallo Winery (Gallo).
We refer to the parties by their first names for ease of reading and to avoid confusion, and not out of disrespect. (In re Marriage of James & Christine C. (2008) 158 Cal.App.4th 1261, 1264, fn. 1.)
At this time, for Audrey to obtain her purported community property share of the ERP, the family law court would have to determine what amount if any belongs to Audrey, join Gallo to the action, and issue a Qualified Domestic Relations Order (QDRO) authorizing Gallo to make a distribution to someone other than the surviving spouse. Robert’s estate does not have any stake in the ERP benefit, nor does it own, control, or distribute funds from the ERP. However, as a matter of law, Audrey was required to substitute Randolph, the personal representative, into the action because Robert is deceased. The substitution does not create a claim against the estate, nor change the nature of her claim for a portion of the ERP benefit from Gallo. Rather, Randolph’s limited role is to stand in the shoes of Robert during the proceedings.
We conclude the trial court failed to properly substitute Randolph in the action and erroneously denied Audrey’s request for a hearing as moot. Its ruling was based on the determination the claim was barred by the terms of an earlier settlement agreement between Audrey and Robert’s estate, applying principles of collateral estoppel. However, rules of contract interpretation should have been applied to determine the intended scope of the waiver agreement, not collateral estoppel. The order is reversed and on remand the trial court is directed to consider whether the scope of the waiver is ambiguous when viewed in the context of the agreement and the extrinsic evidence indicating whether the parties intended the waiver to extend to claims against third parties.
II
After 15 years of marriage, Audrey and Robert divorced in 2005. With the help of a mediator, they reached an agreement on how to divide their assets. Relevant to this appeal, they agreed on three benefits relating to Robert’s employment with Gallo. The parties agreed Audrey would receive Robert’s Gallo life insurance policy ($400,000). Robert agreed to name Audrey as the sole irrevocable beneficiary. Robert was awarded Audrey’s community property interest in the “Gallo Profit Sharing and Money Purchase Retirement Plan” (the Money Purchase Plan). And finally, Audrey was awarded $101,704.81 as her community property interest in the “Vintner’s Inc. Wholesale Wine Div. 401(k) Savings Plan” (the 401(k) plan). The judgment specified the 401(k) plan was joined in the action and the judgment would constitute a QDRO until the plan administrator prepared and approved a separate QDRO.
The judgment contained the following provision regarding after discovered property: “All property or property interests discovered after the effective date of this judgment which would have been community or quasi-community property as of the effective date of this judgment shall be divided equally between the parties. If either party should discover that community property assets have been concealed by the other party, this [c]ourt shall retain jurisdiction to apply any appropriate legal remedy to reimburse and/or to divide the concealed asset and to reimburse the non-breaching party for any attorneys’ costs or fees incurred to enforce this provision.... The court shall retain jurisdiction over all after-discovered property.” The agreement ended with the following sentence regarding jurisdiction: “[T]he court shall, except as has been prohibited, retain the broadest possible general jurisdiction to value and divide any non-distributed assets and liabilities, to enforce all provisions and resolve all disputes arising herefrom....” The court accepted the stipulation and entered the dissolution judgment accordingly.
Soon thereafter, Robert married Michele McKinzie-Rogers. Within a year, Robert died and a probate case was opened. Randolph was appointed the personal representative of the estate. Because Robert failed to name Audrey as the sole beneficiary of the life insurance policy, the proceeds became part of the probate estate. Audrey made a creditor claim for $400,000 against the estate and also filed an action in superior court to perfect the claim and establish a constructive trust for the insurance proceeds. The estate and Michele also claimed an interest in the life insurance proceeds.
However, Michele eventually waived her claim to the life insurance, and in February 2008, Randolph (on behalf of the estate) reached a settlement agreement with Audrey. Randolph filed a “notice of proposed action” informing the probate court he intended to execute a settlement agreement with Audrey to settle her creditor claims, attaching a copy of the agreement.
The terms of the settlement were as follows: (1) $50,000 plus interest from the insurance proceeds would be paid to the estate; (2) the remaining sum paid to Audrey who “hereby waives all claims against the Estate of Robert G. Rogers, the E & J Gallo Winery Company and the E & J Gallo Employee Benefits Plans, which includes the 401(k) Valley Vintners Plan, the 401(k) E & J Gallo Profit Sharing & Money Purchase Plan, the Valley Vintners Inc. pension plan, the E & J Gallo Winery IPP Agreement, and the... [ERP]”; and (3) Audrey will dismiss her superior court claim.”
The settlement also contained a general release provision: “Each party hereby assumes the risk of all mistakes of facts with regard to said controversies and with regard to all facts which are now unknown to them relating thereto. All rights under California Civil Code section 1542 are hereby expressly waived.”
Eight months later, Audrey filed a motion in the family law court seeking the valuation and distribution of an unadjudicated community property estate asset, i.e., the ERP. She claimed Roger failed to disclose the $280,000 ERP during the divorce proceedings. She moved to join Randolph and Michele in the family law court action.
Michele filed a response opposing the motion, although she had not yet been joined as a party. She claimed the probate court had exclusive jurisdiction over the asset, and in any event, Audrey waived her right to pursue her claim against third party beneficiaries when she executed the settlement agreement with the Randolph/the estate.
Randolph also filed a response. His counsel submitted a declaration stating she was “unable to fully investigate and respond to assertions and allegations raised” in Audrey’s request for a hearing to modify the marital dissolution judgment. Counsel sought additional time to respond if the court was inclined to consider Audrey’s motion. Counsel confirmed Audrey entered into an agreement with the estate that contained a waiver of claims against the estate. She advised the court there was a dispute among four parties as to the proper beneficiary of the ERP, these parties had each submitted claims to Gallo’s counsel, and Gallo was in the process of reviewing those claims. Randolph asserted Audrey’s claim appeared to be untimely and, in any event, Audrey “waived any claims to the ERP; as such, [her] present motion as against the Estate of Robert is in bad faith.”
The hearing on the motion was attended by counsel for Audrey, Michele, and Randolph, however the court only briefly considered argument from Audrey’s counsel. Audrey’s counsel argued the waiver related to claims made by the estate, and the ERP was never part of the estate. Audrey’s counsel also asserted the ERP was an undivided community property asset currently controlled by Gallo.
The trial court denied the motion for joinder, and found the motion to determine the unadjudicated asset was moot. The only reasoning it offered was that “collateral estoppel applies” when a party “enters into an agreement waiving their rights in one court and then comes into another court and argues for those rights.”
Audrey appeals from the order. She served the notice of appeal on Michele, Randolph, and Gallo. However, she served her appellant’s opening brief only on Randolph. No respondent’s brief was filed.
II
A. The Estate Had No Interest in the Profit Sharing ERP.
Before analyzing the issue of whether Audrey waived her community property interest in the ERP, some background information regarding the unique nature of this purported undivided asset (the E & J Gallo Key Executive Profit Sharing Retirement Plan) is helpful. Audrey alleged that when the marriage was dissolved, Robert had an interest in the ERP, and it was a community property asset. “Nothing in the record suggests that the plan was anything other than an orthodox profit-sharing plan, designed to obtain tax benefits both for the corporation and for its participating employees under the regulatory scheme now embodied in the Employee Retirement Income Security Act of 1974 ([ERISA], Pub.L. No. 93-406, 88 Stat. 829 & amends.) and cognate regulations. In normal operation such plans provide for employer contributions based on profits and for distribution to participants in the form of retirement benefits. They are designed to provide incentives as part of a compensation and benefits package. (Cf., e.g., Robinson et al., Attorney’s Guide to Pension and Profit-Sharing Plans (Cont.Ed.Bar 2d ed. 1980) § 2.1, pp. 7-8, and passim.)” (In re Marriage of Behrens (1982) 137 Cal.App.3d 562, 577.)
In this case it is undisputed the ERP was not mentioned or divided in the marital dissolution judgment, which specifically divided Robert’s three other Gallo benefits i.e., the Gallo Life Insurance Policy, the Money Purchase Plan, and the 401(k) plan. The ERP was omitted from the marital dissolution judgment.
It was later discovered Robert designated his then wife, Audrey as primary beneficiary of the ERP, and his secondary beneficiary was to be Mark S. Rogers, his brother. When Robert divorced Audrey and married Michele he did not change the beneficiary designation or seek Michele’s consent to keep his ex-wife as the designated beneficiary. However, by the express provisions of the ERP (and as mandated by ERISA) Michele could claim that as Robert’s surviving spouse she alone was the beneficiary of the entire ERP. As we will discuss, to have any stake in the ERP, Audrey needed to prove a portion of this asset was her community property and obtain a court order authorizing the ERP’s trustee (Gallo) to distribute her share.
Audrey correctly points out the estate is not a beneficiary of the ERP, it will not receive any distribution of the funds, and essentially it has no interest in this benefit. It is an asset that is usually directly distributed to the beneficiary, bypassing all probate proceedings. She notes the benefit currently is being controlled and held by Robert’s former employer, Gallo, who in this case is wisely waiting for Michele and Audrey to resolve their beneficiary dispute before making any distribution.
Audrey acknowledges the ERP complies with ERISA’s anti-assignment provisions. Specifically, section 5.5.1, subdivision (a), of the profit sharing plan provided, “Upon the death of a member... the entire net amount of the member’s accounts... shall be paid... to the members surviving spouse in the form of a qualified pre-retirement survivor annuity.” The benefit can be given to the designated beneficiary if “(1) there is no surviving spouse, or (2) the member has designated one or more persons other than the surviving spouse as his or her beneficiary (in accordance with section 5.5.2.)....” Section 5.5.2. provides a member’s beneficiary designation is subject to section 5.5.3., which mandates “a member who is married at the time of his or her death shall be deemed to have designated his or her surviving spouse as the sole beneficiary under both plans, unless the member designated another beneficiary with spousal consent... given by the surviving spouse who was the member’s spouse when the designation was made.” As stated above, Michele did not consent to Robert designating Audrey as the beneficiary.
Audrey seeks to avoid ERISA’s anti-assignment provision by establishing a portion of the profit sharing plan was her community property. “ERISA does not affect the right of a nonemployee spouse to a share in the retirement benefits accumulated by an employee spouse, nor does it preempt a state court from issuing orders affecting the entitlement of a nonemployee spouse to a share of those benefits. [Citations.]” (Raye & Pierson, Cal. Civil Practice: Family Law Litigation (2010) § 6:48; In re Marriage of Baker (1988) 204 Cal.App.3d 206.) It is well settled family law courts may make a QDRO (29 U.S.C.A. § 1056(d)(3)(A)) affecting ERISA plans without violating ERISA’s anti-alienation provision. A QDRO order may direct and authorize a plan to make a payment to an alternate payee. (29 U.S.C.A. § 1056(d)(3)(D)(iii).
“In addition, California has long recognized the power of the court in a dissolution action to order the distributor of pension benefits to pay those benefits directly to a nonemployee spouse. [Citations.] [¶] A pension plan may properly be joined as a party to a dissolution action, whenever it holds in its possession funds which constitute a community asset. [Citation.] In addition, the wisdom of requiring distribution of pension benefits directly to a nonemployee spouse has been acknowledged in the California courts.... ‘An award to plaintiff of a “property interest” which consists of no more than a right to enforce payments to her ex-husband would indeed be vacuous.’” (In re Marriage of Johnston (1978) 85 Cal.App.3d 900, 905-906.) Accordingly, to obtain her purported share of the ERP, Audrey needed to join Gallo to the family law action and have the court determine her share. The family law court would then have issued a QDRO directing Gallo to distribute her community property share.
B. What Should Have Happened.
The record shows the family law court specifically reserved jurisdiction to evaluate unadjudicated community property assets when it entered the judgment terminating the parties’ marital status in 2005. (See Fam. Code, § 2550.) The death of one spouse abates a cause of action for dissolution but does not deprive the court of its retained jurisdiction to determine collateral property rights if the court has previously rendered judgment dissolving the marriage. (McClenny v. Superior Court (1964) 62 Cal.2d 140, 144; Kinsler v. Superior Court (1981) 121 Cal.App.3d 808, 811-812.)
Family Code section 2550 provides, “[I]n a proceeding for dissolution of marriage or for legal separation of the parties, the court shall, either in its judgment of dissolution of the marriage, in its judgment of legal separation of the parties, or at a later time if it expressly reserves jurisdiction to make such a property division, divide the community estate of the parties equally.” Family Code section 2556 provides the mechanism for adjudicating an omitted community property asset: “A party may file a postjudgment motion or order to show cause in the proceeding in order to obtain adjudication of any community estate asset or liability omitted or not adjudicated by the judgment. In these cases, the court shall equally divide the omitted or unadjudicated community estate asset or liability, unless the court finds upon good cause shown that the interests of justice require an unequal division of the asset or liability.”
In this case, Audrey filed a postjudgment motion asking the family law court to divide an omitted community property asset, i.e., the ERP. She presented undisputed evidence this retirement plan was omitted from the assets listed in the 2005 marital settlement agreement/judgment. She also asserted the ERP was an undivided community property asset. A copy of the retirement plan is not in our record, but Audrey presented other facts suggesting Robert began earning the retirement benefit, like his other plans, while working as an executive for Gallo sometime during his 15-year marriage to Audrey. The marital dissolution judgment designated two other Gallo retirement plans as community property (the Money Purchase Plan and the 401(k) Plan). Those Gallo retirement plans were designated community property and apportioned to the parties. Moreover, Audrey showed Robert designated her to be the sole beneficiary of the ERP while they were married, suggesting he recognized it was a community property asset.
If we presume, without deciding, the ERP was a community property asset, then certainly the trial court possessed the jurisdiction to equally divide the omitted community estate asset and give Audrey her community share. A husband and wife’s respective interests in community property “are present, existing, and equal....” (Fam. Code, § 751.)
However, Audrey could not simply file a motion seeking division of an omitted community property asset against a deceased man. “[T]he proper procedure is to substitute the personal representative of the deceased party’s estate or, if none, the decedent’s successor in interest as a party to the still-pending action ([Code Civ. Proc.] §§ 377.31, 377.41), whereupon the reserved issues are properly decided under the Family Code. [Citation.]” (Hogoboom and King, Cal. Practice Guide: Family Law (The Rutter Group 2010) ¶ 3:20.1, p. 3-11.) In this case, Audrey filed the motion to divide the ERP using the prior family court case number and naming the deceased (Robert) in the caption as respondent. She did not file her motion against the correct party.
Audrey also improperly sought joinder of the personal representative of the estate, Randolph, as well as Michele. Audrey should have moved to substitute the personal representative to replace the deceased.
These errors were compounded by the family law court’s decision to rule on the motion without Robert being represented by Randolph, the personal representative of the decedent’s estate. In Sacks v. FSR Brokerage, Inc. (1992) 7 Cal.App.4th 950 (Sacks), the court noted that, as a general proposition, “judgment cannot be rendered for or against a decedent, nor can it be rendered for or against a personal representative of a decedent’s estate, until the representative has been made a party by substitution. [Citations.] A long line of cases has therefore allowed direct attack upon a judgment obtained without substitution of a personal representative after a party has died. [Citations.]... However, this general proposition has not been applied blindly, but rather has acted to prevent prejudice to the parties because of lack of notice, lack of proper representation, or some other disadvantage.” (Id. at p. 957.)
In Sacks the court, applying a harmless error analysis, concluded that any error in not substituting in the personal representative or successor in interest of the deceased party “could at most be a technical one....” (Sacks, supra, 7 Cal.App.4th at p. 959.) There was no prejudice to any of the parties in the action or to the decedent’s estate in the entry of judgment. (Ibid.) The court reasoned none of the authorities supported a claim “that the death of a party automatically renders an ensuing judgment void or voidable even in the absence of prejudice.” (Ibid.)
What should have been a simple case for this court, was made difficult to review on appeal because of the above series of errors. Because the personal representative was not properly substituted below, he was never a party below, and therefore, he is not technically a respondent in this appeal. In sum, Audrey’s error, and the trial court’s ruling, has rendered the appeal without a respondent, and this court without the benefit of a respondent’s brief.
We issued an order requesting supplemental letter briefs on whether these errors caused prejudice to any of the parties in the action and if the order should be deemed void. Only Audrey replied, and she argues her appeal should be considered on the merits because any error was harmless. She asked us to take judicial notice of a court document showing the personal representative participated in the proceedings below by filing a responsive declaration opposing her petition. She asserted both the personal representative and Michele were represented by counsel at the hearing. She stated the personal representative initially opposed her request because he misunderstood what she was requesting, but now he was cooperating with her and he filed a “clarification agreement” (which Audrey also asked we take judicial notice of) in the probate court. In addition, Audrey noted the personal representative has acted like a respondent in this appeal by stipulating to extensions of time in which to file their respective briefs. She submited neither she nor the personal representative/estate have suffered any prejudice from the trial court’s failure to properly formally substitute the personal representative into the action.
We take judicial notice of this document filed in the trial court before the court rendered its ruling.
Surprisingly, Audrey also argued the appeal should not be reversed on the grounds the order was not voidable due to prejudice. Her counsel now asserts if the ruling were to be reversed as void, the parties would be back to their original positions except that the trial court would have the benefit of the “clarifying agreement.” Yes, exactly! Audrey would have had the opportunity to bring all the relevant evidence she now possesses about the scope of the waiver agreement before the trial court. She would have the support of the personal representative who apparently is now being cooperative and seeks to assist her. Her argument a reversal on this point would be a waste of judicial resources, but a reversal on the merits would not, is completely nonsensical.
Moreover, what Audrey fails to understand is that absent extraordinary circumstances not present in this case, this appellate court cannot consider postjudgment evidence not considered by the trial court in making its ruling. “[A]s a general rule the [reviewing] court should not take [judicial] notice if, upon examination of the entire record, it appears that the matter has not been presented to and considered by the trial court in the first instance.” (People v. Preslie (1977) 70 Cal.App.3d 486, 493.) “It has long been the general rule and understanding that ‘an appeal reviews the correctness of a judgment as of the time of its rendition, upon a record of matters which were before the trial court for its consideration.’ [Citation.]” (In re Zeth S. (2003) 31 Cal.4th 396, 405.) New evidence may not be added to the record before a reviewing court in the guise of a request for judicial notice. The clarification agreement is new evidence, and we deny the request to take judicial notice of it despite its probative value. Nevertheless, Audrey prevails on appeal.
C. On the Merits Audrey Prevails.
The facts surrounding how and when the estate and Audrey executed the settlement agreement containing a broadly worded waiver are undisputed. The settlement was reached to resolve a creditor’s claim made against the estate regarding life insurance proceeds. Audrey was awarded the life insurance policy in the marital dissolution judgment, but Robert failed to list her as a beneficiary. Randolph agreed to pay Audrey a reduced sum of the life insurance proceeds on the reasonable condition she agree to release all future claims against the estate. This was a written agreement to resolve their dispute and our record contains no evidence the issue was litigated in the probate court or judicially resolved by the probate court. It appears Randolph simply filed a “notice of proposed action” regarding the settlement. Given this record, the trial court’s reliance on the principles collateral estoppels was misplaced. (Younan v. Caruso (1996) 51 Cal.App.4th 401, 407 [“Only issues actually litigated in the first action may be precluded by collateral estoppel. An issue is actually litigated when it is properly raised by the pleadings or otherwise, is submitted for determination and is actually determined”].) We conclude the issue should have been analyzed under basic principles of contract interpretation i.e., did the parties intend the scope of their waiver to extend to third parties.
In the family law court, the parties offered different interpretations of the waiver. Audrey argued the settlement agreement was “solely between Audrey... and the estate of Robert....” She explained the estate was not a beneficiary of the ERP and, therefore, her claim for a part of the ERP is not against the estate and consequently beyond the reach of the waiver. She advised the trial court the ERP is undistributed and currently in the hands of Gallo. She asked the court to hold a hearing to determine her portion of the ERP and issue an order directing Gallo to distribute the asset to the appropriate beneficiaries.
In his responsive pleading, Randolph’s counsel admitted she was unable to fully investigate Audrey’s claim and sought additional time if the court was going to grant her request for a hearing. Randolph confirmed Audrey entered into a settlement agreement with the estate and any claims against the estate are waived. He reported there was a dispute among four parties as to the proper beneficiary of the ERP, these parties had each submitted a claim to Gallo’s counsel, and Gallo was in the process of reviewing those claims. Randolph asserted Audrey’s claim appeared to be untimely and, in any event, Audrey “waived any claims to the ERP; as such, [her] present motion as against the Estate of Robert is in bad faith.” (Italics added.)
Michele submitted a brief erroneously arguing the probate court had exclusive jurisdiction over this asset. Alternatively, she asserted Audrey filed a claim against the life insurance policy in probate court and settled that claim. In exchange for the $350,000 of the $400,000 life insurance policy proceeds, Audrey waived all claims against the estate and third parties, such as the ERP. In short, Michele suggested the settlement agreement contained a general waiver intended to globally benefit third parties. In contrast, Randolph and Audrey maintained they intended the waiver to apply to future claims against the estate (only Randolph apparently misunderstood the nature of Audrey’s claim for her share of the ERP was “against the estate”).
In the context of this family law dispute, and given our limited record, we conclude the language of the waiver is unclear. Applying basic principles of contract interpretation we hold the waiver was ambiguous as to whether the parties intended to benefit third parties. The trial court must hold a hearing to consider the extrinsic evidence from both parties and determine their intent regarding the scope of the waiver.
1. Principles of Contract Interpretation and Standard of Review
“Much has been written about how to interpret a writing, and whether parol evidence may be used to add to, explain or vary it. (See Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384 (Dore); Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33 (Pacific Gas); Masterson v. Sine (1968) 68 Cal.2d 222; Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944 (Founding Members); see also Code Civ. Proc., § 1856.)” (Abers v. Rounsavell (2010) 189 Cal.App.4th 348, 356 (Abers).)
“California finds meaning in contractual language in its applications. To avoid future disputes and to provide predictability and stability to transactions, courts attempt to interpret the parties’ intentions from the writing alone, if possible. (Founding Members, supra, 109 Cal.App.4th at p. 955; see Civ.Code § 1636; Code Civ. Proc., § 1856.)... Ambiguities arise when contractual language reasonably may be susceptible to more than one interpretation based upon the offered evidence regarding the material facts. (Dore, supra, 39 Cal.4th at p. 391.) Under these circumstances, trial judges, acting as a gatekeeper, may take a ‘preliminary look’ at proffered extrinsic evidence to determine ambiguity, because written words may have special meanings to the contracting parties that are not apparent on the face of the document itself. (ACL Technologies, Inc. v. Northbrook Property & Casualty Ins. Co. (1993) 17 Cal.App.4th 1773, 1793 [‘... courts should allow parol evidence to explain special meanings which the individual parties to a contract may have given certain words’].)” (Abers, supra, 189 Cal.App.4th at p. 356.)
“Even if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible.” (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912.) “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Pacific Gas, supra, 69 Cal.2d at p. 37, citing numerous authorities.) However, “Taken in context, words still matter. As Justice Baxter has pointed out, ‘written agreements whose language appears clear in the context of the parties’ dispute are not open to claims of “latent” ambiguity.’ (Dore, supra, 39 Cal.4th at p. 396, conc. opn. of Baxter, J.) [¶] The question whether proffered extrinsic evidence renders a contract reasonably susceptible to ambiguity is a judicial function to be decided initially by the trial court, and independently by the appellate court. [Citation.] ‘The threshold issue of whether to admit the extrinsic evidence-that is, whether the contract is reasonably susceptible to the interpretation urged-is a question of law subject to de novo review.’ (Founding Members, supra, 109 Cal.App.4th at p. 955.)” (Abers, supra, 189 Cal.App.4th at p. 357.)
In this case, an additional contract interpretation consideration is that it is a third party who seeks to enforce the terms of the waiver. In essence, the question raised by this appeal is whether the contracting parties intended Gallo to be a third party beneficiary. “Civil Code section 1559 provides: ‘A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.’ A third party may qualify as a beneficiary under a contract where the contracting parties must have intended to benefit that third party and such intent appears on the terms of the contract. [Citation.] However, it is well settled that Civil Code section 1559 excludes enforcement of a contract by persons who are only incidentally or remotely benefited by it. [Citations.] [¶] ‘“A third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on the contracting parties’ intent to benefit him....”’ [Citations.]” (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1724 (Jones).)
“The fact that the third party is only incidentally named in the contract or that the contract, if carried out to its terms, would inure to the third party’s benefit is insufficient to entitle him or her to demand enforcement. [Citation.] Whether a third party is an intended beneficiary or merely an incidental beneficiary to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered. (Ibid.)” (Jones, supra, 26 Cal.App.4th at p. 1724.)
2. Analysis
Reading the settlement agreement as a whole, and in the context of the circumstances under which it was entered, the parties clearly intended to release the estate from any further claims. What is not at all clear from the plain text is whether Gallo and other third parties were intended third party beneficiaries of the waiver. For resolution of this ambiguity, the court must hold a hearing to decide if extrinsic evidence suggests Audrey or the estate intended Gallo (or any assets held outside the estate’s control) to benefit from the settlement agreement resolving the life insurance proceeds claim.
Audrey admits she intended to waive all claims against the estate. Randolph agrees this was the parties’ intent. He opposed Audrey’s petition in family law court because his counsel failed to appreciate the claim related to an asset held by a third party, not the estate. And he asked the court for additional time if it was going to consider Audrey’s request for a hearing. Thus, because Randolph was not properly substituted as a party, the court did not inquire if there was evidence regarding the estate’s intent to expand the scope of the waiver to releasing third parties, entities, and assets unrelated to the settled life insurance policy or the estate. Audrey reasonably asserts the estate had no reason to protect Gallo from claims unrelated to the estate because Gallo was not a party to the settlement agreement, a necessary beneficiary, or otherwise affiliated with either contracting party. On remand the court must decide if Randolph/the estate bargained for a waiver on behalf of Gallo or its benefit plans.
The agreement provided Audrey waived all claims against the estate and “the Gallo Employee Benefit Plans.” These plans included the 401(k) plans, the Money Purchase Plan, the Valley Vintners’ pension plan, and finally the ERP (the subject of the current dispute.) We find this language ambiguous because the Gallo plans are not all possessed by the estate but rather some are maintained and controlled by Gallo. The plans have independently designated beneficiaries, also unrelated to the estate. They have about as much relation to the estate as Audrey’s credit card company or mortgage lender.
The waiver stated, “[Audrey] waives all claims against the estate of Robert G. Rogers, the E & J Gallo Winery Company and the E & J Gallo Employee Benefits Plans, which includes... the Executive Retirement Plan.”
We note Audrey asserts the estate should have no reason to object to Audrey seeking allocation of her preexisting community property share of Gallo’s ERP. If Audrey is correct, Robert breached his fiduciary duty to timely disclose this asset, and the personal representative is in a position to remedy this inequity.
In conclusion, we find it is unclear given the context of the settlement agreement that the parties intended the scope of the waiver to cover potential claims against third parties. The parties’ intent is a factual question that cannot be resolved as a matter of law. Because Randolph was not given an opportunity to present evidence at the hearing, and was not properly substituted in the action, the order is reversed and the matter must be remanded for a new hearing.
III
The order is reversed and remanded. As there is no properly substituted personal representative/respondent, appellant cannot recover her costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., MOORE, J.