Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from orders and judgment of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge, Super. Ct. No. GIE020549
HUFFMAN, Acting P. J.
In this opinion, we resolve two pending appeals in this dispute over lease terms, rent amounts, and maintenance issues at an El Cajon mobilehome park (the park). Plaintiffs and appellants Rancho Mesa Residents, Inc., Juanita Roberts, and Jo Ann Andrus (plaintiffs, the Association or homeowners) brought this action in December of 2003 against the park owner, Manufactured Home Communities, Inc. (MHC) and its associated entities and persons (defendants), alleging violation of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.), along with other causes of action. Plaintiffs allege they, as homeowners and residents within the park owned by defendants, have been subjected to alleged fraudulent and unlawful business acts and practices, relating to the amount of rent charged and lease transactions, and the allegedly deficient methods of maintenance and operation of the park.
The other named defendants include the general partner of MHC, and its community and sales manager; they will be discussed collectively. Although MHC is now known as ELS, the parties continue to use the MHC name in this case.
In all the various versions of the complaint (as will be outlined later), plaintiffs allege that the underlying unlawful acts were violations of the Mobilehome Residency Law (MRL; Civ. Code, § 798 et seq.), in terms of the defective condition of the premises as they affect the individual homes, and also in the business interaction between the park owner and homeowners concerning increases in rent amounts and changing lease policies. Plaintiffs also allege violations of the Mobilehome Parks Act (MPA; Health & Saf. Code, § 18200 et seq.), with respect to various alleged failures to "assure protection of the health, safety, and general welfare of all mobilehome park residents." (Health & Saf. Code, § 18254.)
The first appeal concerns the denial of plaintiffs' motion for certification of a proposed class for purposes of the UCL actions, based on the second amended complaint. Plaintiffs sought to have both the Association and the individual plaintiffs serve as class representatives, and define the proposed class as all current and former homeowners since January 2002 to the present, who are senior citizens, and who allege that fraudulent or unlawful business practices have taken place in the rental practices and management of the park. Plaintiffs argued this proposed class is sufficiently ascertainable, and there is a well-defined community of interest and common questions of law and fact among the members of the class. (Code Civ. Proc., § 382.) Defendants opposed the motion on all grounds, chiefly arguing there were no common issues of law and fact.
In March 2006, the trial court sustained certain evidentiary objections and denied the motion on the basis that although there was potentially an ascertainable class, the requirement of predominant common issues of law and fact had not been met, nor was a class action method superior to other litigation methods for these claims. Plaintiffs appeal. (D048379.)
Although the remaining parties (the Association acting on behalf of its members, the individual named plaintiffs and defendants) then engaged in private mediation and settlement negotiations, and reached a tentative agreement dated May 5, 2006, disagreements developed regarding the effectiveness and implementation of that agreement. In the second appeal, plaintiffs challenge a ruling by the trial court that found an enforceable settlement had been reached in May of 2006, and that refused plaintiffs' request, brought in October 2006, to return the matter to the trial calendar. (D049906.) Plaintiffs now appeal that order denying their motion. After several defense motions to dismiss for mootness (based on the alleged settlement) were denied by this court, and we requested that plaintiffs provide a judgment of dismissal to confirm the appealability of the order, we then denied a joint motion to consolidate the appeals. However, we ordered that they be considered together, and now consolidate these appeals.
We first address the class certification issues, and conclude that plaintiffs have failed to make an adequate showing for certification of the proposed class, since the issues identified under the UCL are not appropriately subject to class treatment on this record. The class certification denial must be affirmed.
We next reach the related appeal of the trial court's findings regarding the settlement and dismissal without trial, and determine that the dismissal is an appealable order. However, we conclude that the trial court erred in determining that an enforceable settlement agreement had been reached, in light of the issues pled in the operative complaint and also in light of a trial court order of May 5, 2006, appearing to allow plaintiffs to supersede a third amended complaint that was filed in April 2006, by giving them leave to file a fourth amended complaint, although the parties agree this has not yet occurred. The MRL and MPA issues concerning the disputes over various park policies, rules and regulations, and conditions are pled in all versions of the complaint and have not been shown to fall within the scope of the settlement agreement as provided to this court. We accordingly affirm the order denying class certification, but reverse the finding of settlement and the related dismissal, and return the matter to the trial court for appropriate further proceedings to litigate the remaining issues.
FACTUAL AND PROCEDURAL BACKGROUND
A. Transactions and Participants
Rancho Mesa is a mobilehome park with approximately 158 spaces. Many of its residents are senior citizens who have lived there for many years, and many are on fixed incomes. The Association is a nonprofit public benefit corporation whose members are homeowners and residents of the park.
Beginning in 2002, defendants gave notice of yearly rent increases that plaintiffs believed were excessive. Various individual plaintiffs and the Association complained to defendants on an ongoing basis that park maintenance was inadequate, particularly regarding driveway pavement, upkeep of trees, and utility pedestal earthquake proofing. This litigation began in late 2003.
B. Complaints and Motion: Proposed Class
Both the original and the first amended complaints were the subject of demurrers by defendants. Plaintiffs filed their first motion for class certification at the time of the hearing of the demurrer to the first amended complaint. The trial court sustained the demurrer with leave to amend in some respects and not others, and also deferred further hearing on the class certification issues until the complaint had been amended. However, some evidentiary rulings were contained in the order sustaining the demurrer and deferring the hearing on the class certification motion. All of these rulings were made by Judge Sturgeon, who had been assigned for all purposes in December of 2003 when the action was filed.
The operative complaint for purposes of the class certification motion is the second amended complaint, which includes three current causes of action and a declaratory relief request. The second and third causes of action are brought under the UCL and allege, respectively, fraudulent and unlawful business practices, in terms of the rent charged and the condition of the maintenance of the mobilehome park. These two causes of action are each pled in two counts, the first by the individual plaintiffs as class representatives, and the second by the Association, both individually and as an associational representative claim. Plaintiffs contend that defendants "misrepresented" the "affordable" rent charged, which was a violation of the MRL and other statutory provisions in several respects, and therefore also was a violation of the UCL. Plaintiffs also argue that the lease renewals are not properly processed, and rent increases have impaired certain residents' ability to maintain their Section 8 housing assistance.
Although the record includes references to two parks owned by defendants, this appeal only concerns the Rancho Mesa park (not Lamplighter). Plaintiffs originally brought a first cause of action that pled the "unfair" prong of a UCL violation. However, demurrers were sustained without leave to amend to that cause of action, and it is no longer pursued.
Finally, a fourth cause of action is pled by the Association alone in the second amended complaint, as a representative action "for its self" and for its members and former members, alleging that defendants violated the MRL and the MPA laws through their management practices and inadequate maintenance of the premises. Such objections include defendants' failure to provide a resident manager 24 hours a day, unfairly restricting pet ownership rules, allowing unlawful towing of automobiles, failing to maintain utility service and trees adequately, and otherwise failing to maintain the premises adequately in many respects. (MPA, Health & Saf. Code, § 18200, et seq.; MRL, Civ. Code, § 798 et seq.) Allegations are also made that the park owner improperly restricted sales and advertising practices about mobile homes, and also failed to make required disclosures at the time of signing of leases. Attached to the second (also third) amended complaint are copies of County of San Diego notices of violations at the park on such items, dated March and April 2003.
After amending the complaint pursuant to the demurrer ruling, plaintiffs renewed their motion for class certification, proposing a class of residents as described above, and relying on their previous moving papers. Plaintiffs identified the predominant substantive issues as whether the rent increases and management practices were in violation of the UCL and whether defendants had failed to maintain the park according to the standards imposed by law. They argued that individual class members would be proving their individual damages as examples of class-wide injury, and therefore class treatment was appropriate for the liability issues. (See, e.g., Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 334-335 (Sav-on Drug) ["Individual issues do not render class certification inappropriate so long as such issues may effectively be managed. [Citations.] [¶] Nor is it a bar to certification that individual class members may ultimately need to itemize their damages. We have recognized that the need for individualized proof of damages is not per se an obstacle to class treatment. [Citations.]"].)
In supporting declarations provided by plaintiffs and their attorneys, they described the various maintenance and lease negotiation problems at the park, and lodged documents such as copies of correspondence among the parties. Plaintiffs provided 2005 survey results about the demographics of park residents, showing that they were mainly senior citizens on limited incomes. They cited to maintenance problems regarding trees, driveways, utilities, and failure to provide a resident manager at all times, all of which were allegedly reducing the value of their mobilehomes. Plaintiffs took the position that there would be 250-350 potential class members (former and current residents), and stated that in any event, the Association's board of directors was already performing many of the functions of a class representative. However, plaintiffs continued to seek class representative status for both the individual and the corporate plaintiffs.
Defendants opposed the motion, arguing that a class action was inappropriate, because the proposed class was not ascertainable, the necessary community of interest among class members was lacking, and the proposed representatives were not typical. Defendants referred to the individualized circumstances for each resident in the park, about the negotiations and separate leases signed by residents (some short-term and some long-term), and with regard to how the maintenance problems affected the individual homeowners. Defendants argued that plaintiffs were actually claiming they did not receive adequate value for their increased rents, but that their claims of failure to maintain the premises or communicating false information (availability of rental assistance and affordability of rents) were not supported by the facts.
In reply, plaintiffs maintained that all of the elements for class certification were satisfied. They relied on their allegations of generally deceptive or unlawful business practices under the standards of the UCL, the MRL, and the MPA, and stated the issues would not preclude class treatment, for purposes of proving there were failures to abide by those standards.
C. Ruling: Class Certification; Filing of Third Amended Complaint; Additional Orders
After oral argument, the trial court issued an order that contained additional evidentiary rulings, some different from those made before, sustaining many defense objections to plaintiffs' declarations. The order denied class certification as to the second and third causes of action. Although an ascertainable class had been identified, the ruling found that the theory of recovery advanced by plaintiffs was not likely to prove amenable to class treatment, in terms of substantial benefits to the court and the litigants. The court found plaintiffs had failed to show by a preponderance of the evidence that common issues predominated, and it therefore dismissed the class action allegations. That order does not include or address any issues raised by the then-pending fourth cause of action (regarding alleged MRL violations), nor does it clarify any effect upon the Association's claims that were not based on class allegations, but instead were brought in an individual or representational capacity. In April 2006, plaintiffs appealed.
The record also includes plaintiffs' third amended complaint, filed in April of 2006 and pleading the same two causes of action for UCL violations (each in two counts, one by the individual plaintiffs and the second by the Association individually and as an associational representative action). This deleted the class allegations. Additionally, that pleading included a third cause of action, again brought by the Association for itself and its members, alleging violations of the MRL and the MPA, based on inadequate maintenance and repairs of the park in many respects. These again included the lack of a 24-hour resident manager, inadequate maintenance of driveways and trees, unlawful towing of vehicles, inadequate maintenance of common facilities, and lease renewal practices that amount to discriminatory sales practices against low income and elderly tenants.
The record further includes a minute order of May 5, 2006, granting the plaintiffs' motion to file a fourth amended complaint. Pending oral argument, we requested that the parties supply a supplemental letter brief to address these variations in the pleadings, and how they affect the issues on appeal. Those briefs and the discussion at oral argument revealed that the parties disputed the validity of the filing of the third amended complaint, and the trial court agreed to allow a fourth amended complaint, but this filing was never completed due to the settlement efforts. The parties also agree that for purposes of these appeals, the operative pleading is the second amended complaint, and in any case, the same substantive claims and issues are raised by all the pleadings.
D. Settlement Efforts; Mootness Question; Second Appeal and Motion Practice
In May 2006, the parties engaged in comprehensive settlement negotiations that involved two parks owned by defendants, Rancho Mesa and Lamplighter. On May 5,
There was delay in signing the agreement by the Lamplighter parties, but it was eventually signed. Those issues are not now before us.
2006, after mediation, the parties' representatives each signed the same copy of a memorandum of terms and conditions of settlement, entitled "privileged and confidential settlement proposal." This document was prepared by defendants and proposed that if an agreement were reached that day, plaintiffs could "lock in" the lease terms and conditions that were being offered, regarding the types of leases, renewal conditions, and rent amounts. There are four interlineated changes to the document initialed by both sides, regarding exhibits, mediation costs, and ongoing involvement of defendants' chief negotiator, Ellen Kelleher. The document states that $92,000 will be paid by defendants according to plaintiffs' "demand," as well as the cost of the recent mediation, and a settlement agreement would be entered into that would include certain specified exhibits (the leases, rules and regulations, list of repairs, hardship policy, and monthly meeting requirement). Defendants stated it was "prepared to respond to" the MRL issues raised. The document concludes by stating that all litigation efforts will be immediately stayed; "Accepted and agreed to the 5th day of May (/s/)."
Also on May 5, 2006, a hearing was held, and as previously explained, Judge Sturgeon granted leave to file a fourth amended complaint, and also granted defendants' motion to compel further responses to special interrogatories by plaintiffs. The parties continued to correspond about finalizing the settlement documents, and a further mediation session was taken off calendar.
In May of 2006, this court denied a previous writ petition in this matter seeking to stay the action pending the completion of the proposed settlement. (Rancho Mesa Residents, Inc. v. Superior Court, D048228, order filed May 16, 2006.)
However, in July of 2006, plaintiffs apparently concluded that this settlement was incomplete and sought a trial date, to relieve them from the stipulated stay on litigation. The matter was heard ex parte July 27, 2006, and a hearing was set for October 13, 2006 for further proceedings on the parties' dispute over the implementation of the settlement documents. Moving, opposing and reply papers were filed, each including extensive declarations, documentation and evidentiary objections. These lodged documents have been provided to this court.
At the further hearing, Judge Sturgeon heard argument from both sides about their views on how much of the dispute had been resolved. Plaintiffs took the position that only the lease terms had been resolved, but that many items about the condition of the park remained unsatisfied, and were not petty in the view of the residents (plantings, parking, repairs). Defendants argued that the County of San Diego notices of violations at the park on such items, dated March and April 2003, were outdated because much remedial action had been taken and was ongoing. Defendants contended that plaintiffs were essentially seeking rent limitations or control through allegations about the conditions at the park, and their demands were "insatiable."
After taking the matter under submission, the trial court issued an order concluding the evidence supported a finding the parties had a mutual intent to settle the lawsuit in May 2006, the uncertainties over details were relatively minor, and therefore the settlement should be found to be enforceable. This minute order of October 20 made evidentiary rulings on objections brought by each side to the others' declarations filed at the October 13 hearing.
In explaining its ruling, the court analyzed the evidence and concluded that the economic settlement terms benefited plaintiffs greatly, while also allowing defendants to provide for a fair return on their investment. The court decided that the evidence was sufficient to support a finding of settlement, in terms of the types of leases, their economic terms, and payments by defendants ($92,000 and the costs of mediation). The court concluded, "[w]hat the particular rules are for each park, the specifics of the hardship policy and what repairs will be made are relatively minor considering the grand scope of the lawsuits, and the availability of other remedies to the tenants if these items become matters of dispute." Accordingly, the court denied plaintiffs' motion to return the action to the trial calendar.
In August of 2006, defendants brought the first of two motions in this court to dismiss the class certification appeal for mootness, based on the settlement arguments. The second such motion was filed in November 2006. Both motions were denied, on September 15 and on November 29, 2006. On November 17, plaintiffs filed their second appeal in this matter, of the November 2 trial court order denying plaintiffs' request that the matter be returned to the trial calendar, which also incorporated the minute order of October 20 that made evidentiary rulings and found the settlement was enforceable. Eventually, in January 2007, plaintiffs provided a complete dismissal order to demonstrate appealability.
In April 2007, this court denied the parties' joint application to consolidate these two appeals, but ordered that they be considered together, including the then-disputed issue of appealability of the second order (now resolved in favor of appealability). Both parties request in the briefs that this court take judicial notice of the moving and opposing papers and our denials of those two motions to dismiss for mootness. This request is granted, and we have now consolidated the matters. (Evid. Code, §§ 452, 459.)
DISCUSSION
We first set out the standards of review and principles governing class certification rulings, and consider the merits of the ruling with respect to the requirements that common issues predominate and that the class action method would be a superior treatment for the particular issues presented. We then turn to the settlement and dismissal issues presented.
I
CLASS ACTION RULING
A. Applicable Standards
Trial courts will normally be afforded great discretion in granting or denying certification. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1106 (Lockheed Martin).) If a trial court ruling is supported by substantial evidence, it normally will not be overturned " ' "unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]" [citation]. . . . "Any valid pertinent reason stated will be sufficient to uphold the order." ' [Citations.]" (Sav-on Drug, supra, 34 Cal.4th 319, 326-327.)
In determining class certification questions, the courts do not decide the merits of the case, but instead focus on whether common or individual questions are likely to arise in the action. "[I]n determining whether there is substantial evidence to support a trial court's certification order we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment." (Sav-on Drug, supra, 34 Cal.4th at p. 327.) " 'Reviewing courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class to resolve this question.' " (Ibid.)
Where an order regarding class certification does not include any specific findings, and none was requested, an appellate court may "resort to the familiar rule that permits us to imply any findings which are necessary to support the trial court's order, so long as any such implied findings are themselves supported by substantial evidence. [Citation.]" (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1287-1288.)
The criteria for class certification are well established. " 'Section 382 of the Code of Civil Procedure authorizes class suits in California when "the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court." The burden is on the party seeking certification to establish the existence of both an ascertainable class and a well-defined community of interest among the class members.' [Citation.]" (Lockheed Martin, supra, 29 Cal.4th 1096, 1103-1104.) In this case, the ascertainable class requirement was deemed established by the trial court and is not disputed here.
However, the parties continue to dispute whether the community of interest requirement has been proven. As outlined in Lockheed Martin: " 'The community of interest requirement [for class certification] embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.' [Citation.] Plaintiffs acknowledge it is their burden to establish the requisite community of interest and that 'the proponent of certification must show, inter alia, that questions of law or fact common to the class predominate over the questions affecting the individual members.' [Citation.]" (Lockheed Martin, supra, 29 Cal.4th at p. 1104; see also In re Cipro Cases I and II (2004) 121 Cal.App.4th 402, 410 [" 'The ultimate question in every case of this type is whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants'; "trial court must 'carefully weigh respective benefits and burdens and . . . allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts' "].)
In Feitelberg v. Credit Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1015 (Feitelberg), the court clarified that a UCL claim may properly be subject to treatment as a class action " 'when the statutory requirements of section 382 of the Code of Civil Procedure are met.' [Citation.] That authority is now explicit in the amended statute, which authorizes the pursuit of 'representative claims or relief on behalf of others' provided that the claimant 'complies with Section 382 of the Code of Civil Procedure . . . .' " (Ibid.) Of the three varieties of unfair competition established by section 17200, plaintiffs now assert the fraudulent and unlawful prongs, based on the other alleged statutory violations.
In general, the history of the MRL shows that the Legislature recognizes "that mobilehome owners are deserving of 'unique protection' under the law. [Citations.] Many mobilehome owners have a limited or fixed income and cannot afford protracted litigation." (De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates (2001) 94 Cal.App.4th 890, 910.) It is not unusual for associations of homeowners to pursue claims under the MRL, to promote efficiency and cost savings. In this case, the Association states in the second amended complaint that it is authorized by its bylaws and articles to pursue this action on behalf of itself and its membership, and it seeks restitutionary orders and injunctive and/or declaratory relief, separate from any class allegations.
Thus, the Association itself is pursuing a representative action under the UCL to obtain relief that is similar to that which could be pursued in a class action: "There is no inherent incompatibility between the unfair competition law and class actions. 'Both consumer class actions and representative UCL actions serve important roles in the enforcement of consumers' rights.' [Citation.]" (Feitelberg, supra, 134 Cal.App.4th 997, 1014-1015; see Twain Harte Homeowners Association v. Patterson (1987) 193 Cal.App.3d 184, 187-188 (Twain Harte).)
B. UCL Statutory Scheme; MCL/MPA Violations
We now consider whether the theories of recovery that plaintiffs are pursuing are analytically appropriate for class treatment. (Sav-on Drugs, supra, 34 Cal.4th at p. 328.) If such statutory causes of action could properly be handled in a class format, we also will examine the trial court ruling on community of interest to determine whether the court relied on improper criteria or made erroneous legal assumptions. (Id. at pp. 326-327.)
The predicate violations alleged under the UCL fall within mobilehome regulatory law. In general, the purpose of the MPA, as stated in Health & Safety Code section 18254, subdivision (a), is to: "(1) Assure protection of the health, safety, and general welfare of all mobilehome park residents. [¶] (2) Allow modifications in regulations adopted pursuant to this part in a manner consistent with the criteria established in this part." The MRL regulates certain aspects of the relationship between owners and residents of mobilehome parks, such as the amounts of fees that may be charged and the nature of regulations of the park, but it does not constitute rent control regulation. (Cacho v. Boudreau (2007) 40 Cal.4th 341, 345, 350 (Cacho).) Plaintiffs also cite to the state code of regulations implementing the MPA (Cal. Code Regs., tit. 25, § 1000 et seq.).
Strict requirements have been developed for the types of remedies that are permissible under the UCL. In Feitelberg, supra, 134 Cal.App.4th 997, the court outlined the appropriate remedies that may currently be allowed in UCL actions. The court followed Supreme Court precedent "that the remedy of nonrestitutionary disgorgement is not available in statutory unfair competition cases, even those brought as class actions." (Id. at p. 1007.) This distinction is based upon the statutory requirement that the only kinds of remedies allowed to redress violations of the UCL are injunctive relief and restitution. (Id. at p. 1012, citing Korea Supply Co. v. Lockheed Martin Corp. (2003)29 Cal.4th 1134 at pp. 1147, 1152.) To obtain restitution, a plaintiff must demonstrate that it is an actual direct victim of unfair competition. (Feitelberg, supra, at p. 1012.) The court in Feitelberg further explained:
"As the California Supreme Court held, 'disgorgement of money obtained through an unfair business practice is an available remedy in a representative action only to the extent that it constitutes restitution.' [Citations.] In Korea Supply, the California Supreme Court reached the same conclusion with respect to individual actions. There, the question was 'whether disgorgement of profits that is not restitutionary in nature is an available remedy for an individual private plaintiff under the UCL.' [Citation.] The high court answered that question in the negative, saying: 'We hold that nonrestitutionary disgorgement of profits is not an available remedy in an individual action under the UCL.' [Citation.]" (Feitelberg, supra, 134 Cal.App.4th 997, 1013.)
The main type of remedy sought here is restitution for rent amounts that were allegedly excessive, when the rents are compared to the services rendered and the condition of the park, which are topics that are regulated under the MRL and MPA. "Where restitution is ordered as a means of redressing a statutory violation, the courts are not concerned with restoring the violator to the status quo ante. The focus instead is on the victim. 'The status quo ante to be achieved by the restitution order was to again place the victim in possession of that money.' [Citation.] 'The object of [statutory] restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.' [Citation.] 'The purpose of the civil remedy is to allow recovery of the excess paid and to prohibit the seller from receiving and keeping such excess.' [Citation.]" (People v. Beaumont Inv., Ltd. (2003) 111 Cal.App.4th 102, 134-135.) Such relief can include requiring park owners to disgorge unauthorized rents and to restore that money to the affected tenants. (Ibid.) Plaintiffs here request that compensatory damages, similar in nature to restitution, be recovered by the Association to be distributed among the members for those statutory violations.
3. Analysis
Before we address the trial court's conclusion that there was no need or justification for a class action here, we first dispose of several preliminary arguments. First, plaintiffs' contentions have no merit that the trial court's first set of rulings on the various evidentiary objections (to their declarations about conditions at the park and their knowledge about their neighbors' economic conditions) must be found binding upon the court and thereby preclude any further rulings. The record as a whole discloses that those evidentiary rulings were only issued in the context of allowing leave to amend the complaint and also deferring the class certification motion for further hearing. Normally, an abuse of discretion standard and a prejudice analysis will apply to contentions of evidentiary error. Reversal on appeal for such alleged error will be allowed only if prejudice is found. (See Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694 [an appellate court reviews a court's final rulings on evidentiary objections by applying an abuse of discretion standard].) In any case, those original evidentiary rulings were interlocutory in nature and there was no abuse of discretion in the trial court readdressing the issues when the class certification motion actually came before it for resolution. Instead, the trial court conscientiously analyzed all the moving and opposing papers in rendering its rulings, and there was no abuse of discretion.
Plaintiffs also contend that defendants resisted providing discovery, which handicapped plaintiffs in making their evidentiary showing. However, there were a number of discovery motions and rulings and the record before the trial court appears to include exhaustive documentation on all the issues, and was adequate to present the issues.
Further, we disagree with defendants that the settlement issues should be considered first on appeal, and if we determine that a binding settlement was reached, that conclusion would moot all the class action issues. Defendants are claiming that equity requires that a class action not be allowed where a legal impediment to it exists (such as the alleged settlement of the case). (See Bennett v. Regents of the University of California (2006) 133 Cal.App.4th 347, 354-355.) However, the proper approach is to address these appeals in chronological order, in view of all the issues raised by the second amended complaint. We must consider on its own merits plaintiffs' showing regarding the class action allegations. We will then discuss the later-arising settlement issues.
Turning to the merits of the certification issue, the trial court's ruling focused on the lack of predominant common questions of law and fact, in light of the statutory claims made and the relief requested. The core factual issues were whether the lease terms and practices and rent increases were in compliance with statutory standards regarding notice and disclosures, under the MRL. There were also factual issues presented about the adequacy of the maintenance of the premises at the park, both in common and in individualized locations (retaining walls, overhanging trees, driveways, etc.), as regulated by the MPA. Plaintiffs' main theory appears to be that the rent being charged is excessive for what the actual physical conditions at the site are, but this does not take into account additional relevant factors, such as market conditions in the area. Any requests to place a cap upon the amount of rent based upon alleged violations of the UCL, the MRL, or the MPA appear to amount to a rent control argument, which is not properly within the scope of that legislation. (Cacho, supra, 40 Cal.4th at pp. 345, 350.)
Further, the class action motion omitted any mention of the Association's fourth cause of action, which alleged the MRL/MPA violations. Plaintiffs admit that this case has functioned like a class action so far, because it was originally filed as a representational action, and they state that even if class action certification is not allowed, they will continue to pursue the representative action and may also name residents of the park as individual plaintiffs, due to concerns about standing.
With this background, it is difficult to conclude that these allegations are properly amenable to class treatment, when they instead represent fact-intensive inquiries regarding the representations made to various homeowners during lease negotiations, such as allegedly false communications about the reasonableness of the rent, availability of renewals, or hardship assistance. To the extent plaintiffs are claiming misrepresentations about the availability of housing assistance or reasonable rent, they would apparently be required to make an individualized showing of liability or entitlement to relief, such as restitution of overpaid rent. There will not be any justification for class-wide nonrestitutionary disgorgement of allegedly unfair proceeds, for example. (Feitelberg, supra, 134 Cal.App.4th at pp. 1016-1017.)
The alleged facts about the effect of the maintenance of the premises upon the residents of the 158 spaces at the park are also not generic in nature. The Association is pursuing its own cause of action about an alleged lack of adequate maintenance in particular instances, and relief can be awarded on that basis if appropriate. Therefore, in deciding the class certification issues, the trial court could appropriately take into account the alternative claims made by plaintiffs in the second amended complaint, in which the Association was continuing to pursue identical issues on a representational basis, separate from any class allegations. (Twain Harte Homeowners, supra, 193 Cal.App.3d 184, 187-188.) For example, the Association is seeking compensatory damages that are similar in nature to restitution, to be distributed among its members for alleged statutory violations. At this point, this court has not been presented with issues about whether all appropriate standing requirements can be satisfied for all parties on all the theories pled, separate from any class action allegations. (See e.g., Bus. & Prof. Code, § 17204 re UCL standing.) In light of the various versions of the complaint in the record, raising different claims on behalf of the Association and its members, and potentially for individual plaintiffs, we can express no opinion at this time on the merits of any previous or prospective amendments of the complaint, outside of the class issues. As will be explained (pt. II, post), upon remand, the trial court will be directed to clarify the status of the pleadings.
On the current record, we conclude the ruling denying class certification appropriately analyzed the respective showings by the parties and is supported by substantial evidence. Class certification requirements have not been satisfied, because the issues regarding maintenance of the park are largely individualized, and the charges of misrepresentations, excessive rent increases without justification, or unfair administration of management policies are also mainly individual to each homeowner. The trial court was justified in concluding, both expressly and impliedly, that plaintiffs had not carried their burden of showing the required community of interest for a class action, and that there are no perceptible advantages to the judicial process or to the litigants in maintaining a class action. (In re Cipro Cases I and II, supra, 121 Cal.App.4th 402, 409-410.)
II
SECOND APPEAL: SETTLEMENT AND DISMISSAL ISSUES
A. Standards to Evaluate Settlement Agreements
The subject of this appeal is the order dismissing the action and denying plaintiffs' request for restoration to the trial calendar. Although defendants had not brought any motion to enforce the May 2006 settlement document, the parties do not dispute that these proceedings were the functional equivalent of such a motion under Code of Civil Procedure section 664.6. It is accordingly appropriate to apply the following standard of review:
"Factual determinations made by a trial court on a section 664.6 motion to enforce a settlement must be affirmed if the trial court's factual findings are supported by substantial evidence. [Citations.] Other rulings are reviewed de novo for errors of law. [Citation.]" (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 815 (Weddington).)
In Weddington, supra, 60 Cal.App.4th 793, 810, the court set out the standards for evaluating the enforceability of a purported settlement agreement. "In order to be enforceable pursuant to the summary procedures of section 664.6, a settlement agreement must either be entered into orally before a court . . . or must be in writing and signed by the parties. The reason for the party-signature requirement is that 'settlement is such a serious step that it requires the client's knowledge and express consent. [Citation.]' [Citation.]" Contract principles apply: "A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. [Citation.] An essential element of any contract is 'consent.' [Citations.] The 'consent' must be 'mutual.' [Citations.]" (Weddington, supra, at pp. 810 -811.)
In Weddington, the court went on to explain: " 'The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.' [Citation.] Outward manifestations thus govern the finding of mutual consent required by Civil Code sections 1550, 1565 and 1580 for contract formation. [Citation.] The parties' outward manifestations must show that the parties all agreed 'upon the same thing in the same sense.' [Citation.] If there is no evidence establishing a manifestation of assent to the 'same thing' by both parties, then there is no mutual consent to contract and no contract formation. [Citations.]" (Weddington, supra, 60 Cal.App.4th at p. 811.) However, "[t]here are occasions in which 'minor matters' in elaborate contracts are left for future agreement. When this occurs, it does not necessarily mean that the entire contract is unenforceable." (Id. at p. 813.)
"[A] contract will be enforced if it is sufficiently definite (and this is a question of law) for the court to ascertain the parties' obligations and to determine whether those obligations have been performed or breached. [Citations.] Stated otherwise, the contract will be enforced if it is possible to reach a fair and just result even if, in the process, the court is required to fill in some gaps. [Citation.]" (Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623 (Ersa Grae Corp.).)
Another important rule to be considered here involves the incorporation of documents by reference: "A settlement agreement which incorporates other documents can be enforced pursuant to section 664.6, but only if there was a meeting of the minds regarding the terms of the incorporated documents." (Weddington, supra, 60 Cal.App.4th 793, 814.) The rule is that " 'each case must turn on its facts. [Citation.] For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.' [Citations.]" (Ibid., original italics.)
When a trial court examines a written document that is in dispute, it may consider extrinsic evidence that is relevant to show whether the document's terms are reasonably susceptible of the particular meaning promoted by a party. (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912-913.) "An appellate court is not bound by a trial court's construction of a contract where (a) the trial court's contractual interpretation is based solely upon the terms of the written instrument without the aid of extrinsic evidence; (b) there is no conflict in the properly admitted extrinsic evidence; or (c) a the trial court's determination was made on the basis of improperly admitted incompetent evidence. [Citation.] By the same token, however, where the interpretation of the contract turns upon the credibility of conflicting extrinsic evidence which was properly admitted at trial, an appellate court will uphold any reasonable construction of the contract by the trial court. [Citation.]" (Id. at p. 913.)
In Okun v. Morton (1988) 203 Cal.App.3d 805, 819, the court recognized that the conduct of the parties subsequent to the execution of their agreement, and before any controversy had arisen, may constitute persuasive evidence in determining the meaning of the agreement. "Even when the uncertainty of a written contract goes to ' "the precise act which is to be done" [citation], extrinsic evidence is admissible to determine what the parties intended. [Citations.] It is only when the extrinsic evidence fails to remove the ambiguity that specific performance must be refused.' [Citations.]" (Ibid.)
Here, the parties dispute essentially all the criteria for whether a binding settlement has been reached. According to plaintiffs, there was no meeting of the minds that went beyond a preliminary resolution of certain economic terms of the settlement, while the noneconomic issues always remained unresolved. According to defendants, only nonessential terms were left open and the court appropriately determined it could fill in any gaps, based upon its analysis of extrinsic evidence about the circumstances of the agreement.
To analyze those contentions, we examine the record for substantial evidence in support of the findings underlying the order, or a lack thereof. These key findings were (1) the evidence supported a finding the parties had a mutual intent to settle the lawsuit in May 2006, and (2) the uncertainties over details were relatively minor.
The minute order of October 20 made evidentiary rulings on objections brought by each side to the others' declarations filed at the October 13 hearing. Although plaintiffs originally challenged those rulings, they now state in their reply brief that the issues in analyzing the settlement document may be treated on a de novo basis, such that no contentions of evidentiary error need be disposed of, nor did such error, if any, have any prejudicial effect. We agree that the interpretation of the settlement documents by the trial court may be analyzed without utilizing the specifics of the declarations of individual board members and plaintiffs, or defendants' representatives, about their understandings of the settlement negotiations.
B. Content of Agreement; Pleadings and Surrounding Circumstances; Analysis
As outlined above, the parties each signed the same copy of a memorandum of terms and conditions of settlement, entitled "privileged and confidential settlement proposal." This document includes a number of terms, which may be characterized as falling into two categories: economic/lease/rent issues, and the disputes about noneconomic/maintenance/condition of the premises claims. Handwritten inserts in the settlement memorandum indicated that it was anticipated by the parties that when it was finalized, any settlement agreement would include certain specified exhibits (the leases, rules and regulations, list of repairs, hardship policy, and monthly meeting requirement). This never happened.
Defendants submit their attorney declarations about the circumstances of the entry into the agreement in an effort to show plaintiffs must have intended to be bound by the agreement and to settle all the issues. They refer to the language of the proposal, requiring that plaintiffs sign that day if they agreed to the rent and lease proposals. They argue they had provided a model 34-year lease and that an existing hardship policy was known to the plaintiffs. They contend plaintiffs failed to place any express conditions on their signatures of the document, regarding any further negotiations or approval of the documents to be attached as exhibits.
To first address whether defendants and respondents are correct that "the uncertainties over details were relatively minor," we note their position that the only major issues were the economic ones about rent ("the crux of the entire dispute"), and therefore the settlement should be enforceable for lack of any significant remaining disputes over noneconomic claims. Defendants argued that under an objective standard, plaintiffs essentially kept concealed any disagreements they had with the terms of the settlement, while defendants went on to partially perform the settlement agreement (making payments, cooperating with plaintiffs' requests, etc.). Although defendants certainly have a right to be disappointed in the conduct of plaintiffs and their counsel after the mediation and settlement talks, and it is regrettable that the settlement could not be completed, we believe that there are significant remaining defects in the settlement proposal and exhibits that prevent them from being found to be enforceable. Each case will turn on its own facts, regarding the sufficiency of incorporation of other documents into a settlement agreement. (Weddington, supra, 60 Cal.App.4th 793, 814.)
First, the record does not support defendants' claims that all of the exhibits to be incorporated are merely standardized, form "residency documents" that could be properly incorporated by reference without further negotiation. Here, the proposed changes to the park rules and regulations remained in significant dispute. By statute, residents have a right to be consulted on the rules and regulations, even if management may publish them in final form. (Civ. Code, § 798.25.)
Even though defendants apparently had some standardized hardship policy, used for many of its parks, there are only generalized references to it in the record, and it apparently remained under negotiation here, with respect to what types of moving costs would be reimbursed if a homeowner were required by economic necessity to move to one of the defendants' other properties in a lower rent zone. Similarly, the list of needed repairs at the site apparently remained hotly disputed at all times.
Next, in considering whether the evidence supports a finding the parties had a mutual intent to settle the entire lawsuit in May 2006, we cannot disregard the scope of the second amended complaint and the later attempts to amend it. All of these pleadings, particularly in the individual and representative causes of action brought by the Association, continue to allege certain violations of the MRL and the MPA, regarding the maintenance and operation of the park facilities and lease transactions. The pleadings encompass many issues other than the legitimacy of rent increases (economic terms), such as alleged ongoing violations of the requirements of Civil Code section 798.37.5, regarding park management duties to maintain trees and driveways; of Civil Code section 798.23, subdivision (a), defendants and their agent's compliance with all park rules and regulations, to the same extent as residents and their guests; and of Health and Safety Code section 18603, subdivision (a) (availability of emergency contact, who has knowledge of emergency procedures relative to utility systems and common facilities under the ownership and control of the owners of the park). The settlement document recites only that defendants are "prepared to respond" to such MRL issues raised.
Thus, based upon the separate causes of action for MRL/MPA violations brought by the Association, the settlement agreement on its face was not broad enough in scope to resolve all those concerns, without a better showing of the availability to both sides of the existing copies of the exhibits to be incorporated and their content, presumably addressing those additional sets of violations. Because those claims are separately pled and pursued, they are not completely interdependent with the UCL allegations about unlawful or fraudulent business practices regarding the availability of leases and lease renewals, or the amount of rent increases to be imposed. Nor is the extrinsic evidence about the conduct of the parties, in participating in the ongoing negotiations to formalize the documents, dispositive on whether the entire matter was previously resolved. (Okun v. Morton, supra, 203 Cal.App.3d at p. 819.) The record remains ambiguous on whether the parties intended that standardized documents be incorporated, or negotiated documents, with regard to the particular issues in dispute, and on the relationship of the economic and noneconomic issues being litigated.
Under all the circumstances, it would be very difficult for the trial court to enforce the settlement agreement in its present form, because its provisions are not sufficiently definite to allow the ascertainment of the parties' obligations, and to conduct compliance procedures. (Ersa Grae Corp., supra, 1 Cal.App.4th 613, 623.) "Stated otherwise, the contract will be enforced if it is possible to reach a fair and just result even if, in the process, the court is required to fill in some gaps. [Citation.]" (Ibid.) Although we are sympathetic with the frustration of the defendants and also, apparently, the trial court, with respect to the ultimate failure of these settlement negotiations, the courts may not properly impose material terms of settlement that were not agreed to at this stage of the proceedings. This does not indicate that no full settlement could ever have been reached; however, we must respectfully disagree with the trial court's conclusion that this record, containing conflicting evidence about the intentions and conduct of the parties throughout, as well as several remaining issues raised by the pleadings outside the scope of the agreement, would support any reasonable conclusion that this settlement document was certain and complete enough to be enforced.
In light of the pleadings and the entire record, this is not a case in which only "minor matters" in a complex contract of settlement were left for future agreement. (Weddington, supra, 60 Cal.App.4th 793, 813.) The order is not supported by substantial evidence. On remand, the trial court must clarify the status of the second, third and fourth amended complaints, which may not include any class allegations, and the court must then allow any appropriate pretrial and trial proceedings to take place upon the representative claims raised by the Association or the individual plaintiffs, if any.
DISPOSITION
The order denying class certification is affirmed. The order denying restoration to the trial calendar and dismissing the action is reversed with directions to conduct appropriate further proceedings to reinstate the case to active status in accordance with the views expressed in this opinion. Each party shall bear its own costs.
WE CONCUR: HALLER, J., McDONALD, J.