Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and postjudgment orders of the Superior Court of San Diego County, No. 37-2007-00064395- CU-PA-CTL, Luis R. Vargas, Judge.
HUFFMAN, J.
In this personal injury (auto) action, plaintiff and respondent Noel Reynolds (plaintiff) obtained a jury verdict in her favor against defendant and appellant, driver Cecilia Yturralde (defendant). Attorneys for the parties negotiated settlement issues before and after the verdict was returned, and at later ex parte proceedings. Both parties filed memoranda of costs following trial. Ultimately, plaintiff brought a motion to enforce a postverdict settlement agreement, and both parties brought motions to strike and/or tax costs. (Code Civ. Proc., §§ 664.6, 998, 1032 et seq.; all further statutory references are to the Code of Civil Procedure unless noted.)
At the hearing on the consolidated motions, the trial court determined that an enforceable settlement agreement had been reached, and the respective costs motions were granted in part and denied in part. The court reconstructed the record and interpreted the numerous minute orders as showing that when counsel, at the July 16, 2008 proceedings, waived the right to have judgment entered within 24 hours, they also agreed on behalf of their clients that plaintiff would waive judgment upon prompt payment of the verdict amount by defendant, and defendant agreed to waive its otherwise recoverable costs under section 998. The court therefore found there was an enforceable oral settlement agreement under section 664.6. Defendant's memorandum of costs was stricken.
Defendant appeals the unfavorable rulings on plaintiff's motions regarding settlement and costs, as well as the judgment including them. She contends the trial court misapplied the provisions of section 664.6 to this record, and further, that no substantial evidence supports the order approving the settlement and the related order striking her costs memo.
On review of the final judgment, including the postjudgment orders, we conclude the record does not support the trial court's finding of an enforceable oral settlement agreement entered into before the court. (§ 664.6.) Although we do not disturb the jury verdict for $9,217 damages in favor of plaintiff, we reverse the judgment and postjudgment orders, with directions to deny the motion to enforce a settlement agreement, to deny the motion to strike defendant's cost memo, to conduct appropriate further proceedings on plaintiff's motion to tax the defense costs, and to enter an amended final judgment accordingly. (§ 998.)
FACTUAL AND PROCEDURAL BACKGROUND
A. Pretrial and Trial Proceedings; Verdict
Defendant stipulated to liability after an automobile accident between the parties. Defendant was represented by insurance defense counsel (State Farm; the insurer). Plaintiff was represented by counsel of her choice. In January 2008, defendant made a section 998 offer to plaintiff in the amount of $15,001. Plaintiff rejected this offer and made higher offers, which defendant rejected.
The damages issues went to jury trial in July 2008. According to the conflicting declarations submitted by both counsel, on July 16, when the jury went out for deliberations, plaintiff's attorney suggested that she would be willing to waive entry of judgment against defendant, in return for defendant's prompt payment of the verdict amount, when it was returned. The minutes of July 16 are inconclusive about whether the individual plaintiff and defendant were both present at that time.
In response, defense counsel told plaintiff's attorney that a similar arrangement was sometimes made by the insurer, which sometimes paid the principal amount owed and dealt with the costs issues separately. Defense counsel said that if there were no appealable issues in the case on excessive damages, that could possibly be accomplished here, but his claims representative was unavailable until the next week.
The jury returned a verdict of $9,217 compensatory damages to plaintiff. The jury and court reporter left the courtroom. Counsel for plaintiff then told the court that entry of judgment within 24 hours had been waived. According to plaintiff's attorney's declaration, he represented that defense counsel had agreed to have the carrier pay the verdict amount promptly, if immediate entry of judgment were waived, but the earliest defendant attorney could take action would be the following week, when the insurance adjuster was back in the office. Defense counsel was present and appeared to concur with plaintiff's waiver of the requirement that a judgment be filed within 24 hours of the verdict. However, defendant attorney later filed a declaration that said that while all this was going on, he believed both counsel were "presupposing" that only if there would be a net positive verdict for the plaintiff, including any costs considerations, then the defense would agree to pay a "principal" amount that was "owed, " as plaintiff was suggesting.
Several days after trial, defense counsel wrote a letter to plaintiff's attorney essentially stating that he had done the math and there was a strong likelihood of a net negative verdict to plaintiff, based on the costs considerations arising out of the section 998 offers. During a telephone conversation, plaintiff's attorney disagreed and notified the defense that an ex parte hearing was being noticed for July 23, to discuss settlement issues.
The record contains two minute orders from ex parte proceedings on July 23, 2008, both of which state that the hearing time was 8:30 a.m. The one that first appears in our record reads as follows: "Plaintiff counsel states the parties now wish to waive judgment if prompt payment of the verdict amount is received. Defense counsel states he will forego pursuing plaintiff for costs with plaintiff and defense to walk away from the case. The court informs counsel that they may place this on calendar as a motion. The court sets a motion to enforce settlement for [September 5, 2008]."
The next July 23 ex parte minute order reads as follows: "Issues of settlement were discussed with the Court at this hearing. If the issues cannot be resolved between counsel. [sic] The court sets a Motion to Enforce Settlement for [September 5, 2008] if needed."
On October 29, 2008, defense counsel submitted a proposed judgment. The court signed the judgment November 4, 2008, setting forth the damages verdict and stating, "Entitlement to costs shall be determined on the basis of post trial application and the provisions of the Code of Civil Procedure and California Rules of Court." Notice of entry of judgment was served by defense counsel, and both parties filed memoranda of costs.
Plaintiff filed the motion to enforce settlement on November 24, 2008. After a stipulated continuance, the court heard the matter February 6, 2009, along with the cross-motions to strike or tax the memoranda of costs.
B. Motions to Enforce Settlement and Tax/Strike Defendant's Memorandum of Costs; Ruling
In her motion to enforce the July 16, 2008 settlement agreement, plaintiff provided her attorney's declaration stating that the only right reserved by defense counsel was to appeal any judgment of excessive damages, and plaintiff agreed to that, as did defendant, who was present. Plaintiff's counsel claimed that defense counsel later repudiated the agreement, when offering to waive costs in exchange for plaintiff obtaining zero dollars in damages. Plaintiff argued she was the prevailing party such that defendant's costs memo should be stricken.
In opposition, defendant attorney filed his declaration stating that the only binding agreement after the verdict was reached was for plaintiff to waive the requirement that a judgment be filed within 24 hours of the verdict being read. Defense counsel did not represent to opposing counsel that he had any willingness to waive statutory rights, such as those involving recoverable costs. During the posttrial negotiations and before the July 23 ex parte hearing, defense counsel offered to recommend to the insurer that if plaintiff would give up her $9,217 verdict amount, the insurer would not pursue the $18,000 costs arguably due under section 998. Defense counsel stated that he was an employee of the insurer's corporate law department, but he was not a member of the claims department, and he had no authority to waive costs or make decisions regarding costs.
Following argument, the trial court issued tentative and final orders that granted plaintiff's motion to enforce a settlement agreement and accordingly struck defendant's memorandum of costs, pursuant to section 664.6. The court first stated that after the jury returned its verdict, "counsel waived judgment to be entered within 24 hours." When the ex parte hearings were held on July 23, 2008, issues of settlement were discussed. The court interpreted those minute orders and reconstructed the record to find that first, the court had set a date for a motion to enforce settlement "if needed." Next, the court explained in the order, "That same morning, at approximately 10:22 am, both parties appeared back in court. The record expressly states: 'Plaintiff counsel states parties now wish to waive judgment if payment of verdict amount is received promptly. Defense counsel states the defense will not pursue plaintiff for costs with plaintiff and defense to walk away from the case.' " (Citing to the court minutes dated July 23, 2008 at 10:21:50 a.m.)
Accordingly, the court concluded: "The court minutes reflect the agreement between the parties that Plaintiff would waive judgment upon prompt payment of the verdict amount by Defendant and that Defendant agreed to waive its costs. The parties stipulated to this agreement, orally before the court. Thus, this agreement is enforceable pursuant to section 664.6." Further, since the court viewed the case as settled, based on the defendant's agreement not to pursue plaintiff for costs, the court struck defendant's entire memorandum of costs. This rendered moot plaintiff's motion to tax certain of the defense costs.
Although defendant's three notices of appeal do not expressly include the ruling on the companion motion (defendant's own motion to tax plaintiff's memo of costs), we deem it effectively to be subsumed in the final judgment that was signed and filed March 18, 2009, superseding the previous judgment. Defendant has appealed that final judgment. In that portion of the ruling, the court granted, in part, and denied, in part, defendant's motion to strike, or alternatively tax, plaintiff's memorandum of costs. (Ultimately, this had the effect of awarding costs to plaintiff in the amount of $510 in the final judgment.)
Specifically, the court's postjudgment order refused to strike plaintiff's memorandum of costs, in its entirety. Even though this plaintiff had recovered a judgment in this "unlimited" civil case that could have been recovered in a limited civil case (i.e., $25,000 or less), the award of costs remained discretionary with the trial court. (§ 1033, subd. (a).) "Here, Plaintiff filed her case as an unlimited civil matter. However, the jury rendered a verdict in the amount of $9,217.00. This amount could have been recovered in a limited civil matter. In an exercise of its discretion, the court denies Defendant's request to strike Plaintiff's memorandum of costs in its entirety."
Next, the court granted in part defendant's motion to tax plaintiff's memorandum of costs, because "[i]f a plaintiff turns downs a defendant's Code of Civil Procedure section 998 offer and fails to obtain a 'more favorable' judgment at trial, the plaintiff cannot recover court costs incurred after the offer was made. (Code Civ. Proc., § 998(c)(1)). [¶] Here, Defendant made a section 998 settlement offer to Plaintiff in the amount of $15,001.00. Plaintiff rejected this offer. Plaintiff failed to recover a more favorable judgment at trial. Thus, Plaintiff is not entitled to recover costs she incurred after Defendant's section 998 offer was made."
The court then ruled that plaintiff had failed to show that the defense offer that she rejected was a "token" offer made in bad faith. (See Santantonio v. Westinghouse Broadcasting Co., Inc. (1994) 25 Cal.App.4th 102, 116-117.) Because there was no evidence the defense offer was made in bad faith, the court granted defendant's motion to tax certain costs items that were shown to have been incurred by plaintiff after the offer was made. "These costs constitute non-recoverable post-offer costs under Code of Civil Procedure section 998(c)."
Final judgment reflecting the above rulings was filed March 18, 2009. The total amount of costs awarded to plaintiff was $510, as well as the $9,217 damages award.
Defendant appeals the unfavorable orders enforcing the settlement and granting plaintiff's motion to strike the defense costs memo, and the judgment. Without opposition, the record has been augmented on appeal to add the July 16, 2008 trial minutes that were omitted from the record.
DISCUSSION
I
ISSUES PRESENTED
Before setting out our standards of review and the principles governing motions to enforce oral settlement agreements, we first delineate the scope of the issues on appeal. In her opening brief, defendant expressly states that she is not appealing the order that denied part of her own motion to strike plaintiff's costs. However, defendant has appealed the final judgment, which awarded $510 costs to plaintiff, on a discretionary basis, and awarded no costs to defendant. (§ 1033, subd. (a).) The proper approach is to deem that all the costs orders are properly before us in the appeal of the final judgment, including the partial costs award to plaintiff, since all those issues are intertwined with the settlement agreement contentions under section 664.6, and under section 998.
It is also important to note that plaintiff's contentions that a binding oral settlement agreement was reached now rely solely on the July 16 court proceedings when the verdict was being taken, not upon the July 23 ex parte hearings. Although the trial court's theory for granting the settlement motion appears to rely on several of the minute orders, we review the judgment and related orders for correctness, not the reasoning of the trial court. (See D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18-19.) The key findings were that the parties stipulated to a certain agreement, with certain terms, orally before the court. We first set forth the statutory requirements for such an oral settlement to be approved, and next examine the terms of the alleged settlement itself.
II
STATUTORY REQUIREMENTS
In Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810 (Weddington), the court addressed the enforceability of a purported settlement agreement, pursuant to the summary procedures of section 664.6. The following standards of review apply:
"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." (Weddington, supra, 60 Cal.App.4th 793, 815.)
In relevant part, the text of section 664.6 provides: "If parties to pending litigation stipulate... orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. 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."
Here, the trial court essentially made related factual findings that plaintiff's showing had satisfied the statutory requirements, in that (a) the necessary parties had entered into (b) an oral stipulation before the court, (c) that was certain enough to be enforced. The trial court evidently based its ruling upon its review of the moving and opposing papers, the court minutes and potentially, its own recollection of the events. (See Richardson v. Richardson (1986) 180 Cal.App.3d 91, 97 [court can evaluate motion in light of its knowledge of the case].) We next address the issue of whether substantial evidence supports those findings.
A. Stipulation "Orally Before the Court"
In the related context of the enforceability of a written settlement agreement under section 664.6, the Supreme Court has clarified that personal party approval is required, not only approval through counsel. (Levy v. Superior Court (1995) 10 Cal.4th 578, 580.) The statutory term "parties" means "the litigants themselves and does not include their attorneys of record." (Id. at p. 586.) "Although 'party' may refer, depending on the context, either solely to the litigant, or to both the litigant and the litigant's attorney, when the subject of the statute may affect substantial rights of the litigant, the term means the litigant, not the attorney." (6 Witkin, Cal Procedure (5th ed. 2008) Proceedings Without Trial, § 120, p. 552.) Thus, "in providing an enforcement mechanism for settlement by 'parties, ' the Legislature intended the term to literally mean the litigants personally." (Levy, supra, at p. 584.)
This strict interpretation of the statute also applies to oral, as well as written, settlement agreements. (6 Witkin, Cal. Procedure, supra, § 121, p. 554, citing Johnson v. Department of Corrections (1995) 38 Cal.App.4th 1700.) Settling a case is a serious matter, and the parties will not be held to their oral agreement without a showing that they fully understood all the consequences of it. For example, if the parties have reached an oral stipulation before the court, "their subsequent inability to agree on written terms does not affect the validity of the oral agreement." (6 Witkin, Cal. Procedure, supra, § 121, p. 554.) The reason is that the oral agreement invokes the covenant of good faith and fair dealing. (Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1431.)
This record, including the various minute orders and declarations, does not definitively establish that both of the individual parties were present before the court, after the verdict was taken, nor that they were asked to voice their approval of any agreement that counsel had reached regarding payment of the verdict and/or waiver of costs. In the July 16 minute order, the clerk clearly states when plaintiff herself showed up at counsel table, but it does not state whether and when the defendant driver actually came into court, because it only says that the parties and counsel were present "as above, " but the individual defendant is never mentioned nor is a box checked for her presence.
The text of the July 16 minute order does not say anything about the content or terms of any negotiated settlement, but only recites that "counsel waive judgment to be entered within 24 hours." It is on that agreement by counsel that plaintiff now claims the verdict and costs settlement was orally agreed to by the parties, but these additional details about the settlement terms are not supported by the record. There is no reporter's transcript of that portion of the July 16 hearing.
Next, both the July 23 ex parte minute orders are inconclusive about who was walking away from the case and on what condition (before or after defense pays the $9,217 verdict). The minute orders only set a hearing, due to lack of agreement by counsel. In any case, plaintiff is not contending that the parties were personally present at those hearings, nor that any settlement was presented to the court by "the parties" except at the July 16 verdict session. However, the record as a whole does not support her contentions.
Moreover, when the court set forth the ruling in its February 2009 minute order on the motion to enforce settlement, it refers to certain portions of the minutes that are not present on the copies in our record (the exact timing of the two July 23 ex parte minute orders, to show the sequence of the events, and whether the hearing on the motion to enforce the settlement was set before, or after, counsel added more details to the settlement report). None of these court minutes is sufficient to demonstrate that the individual plaintiff and the individual defendant were each present and voiced approval of any oral settlement agreement regarding payment of the verdict and/or waiver of costs, particularly on July 16. The conflicting attorney declarations do not override the court minutes on this point. There is no substantial evidence that the statutory criteria requiring an oral stipulation of the parties before the court, not just the attorneys, were satisfied here.
B. Identity of Parties to Oral Stipulation
Defendant seeks de novo review of an additional factor in the application of this statutory language to this set of facts, with regard to whether the "parties" in this case should be defined as including not only defendant but also the insurer of defendant. (§ 664.6.) However, substantial evidence review of the judgment and related orders is an adequate approach to that point, as we next explain.
Defense counsel claims in his declaration that he was not authorized to enter into such an oral stipulation for his client and/or the insurer. He contends that the settlement would have been insurance-funded, so that the insurer retained the authority to stipulate to any such settlement, within the insured's policy limits. In support, he relies on Elnekave v. Via Dolce Homeowners Assn. (2006) 142 Cal.App.4th 1193, 1199, to say that it will depend upon the terms of the specific insurance policy, whether an insurer has the right to settle, without the individual consent of the insured. (See 6 Witkin, Cal. Procedure, supra, § 117, p. 549 ["requiring the signature of the insured in an insurance-funded settlement would be superfluous"].)
On this record, we need not address whether the statutory criteria, applied to this insurance defense context, require that any particular insurance representative must voice approval of a settlement to the court, as one of the party defendants. The point here is that no representative of the defendant has been shown to have orally participated in stipulating before the court to settle the case, on the terms alleged.
C. Terms of Settlement Agreement
A settlement is valid, binding, and enforceable under section 664.6 only if the parties agreed to all material settlement terms. (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1182-1183.) "The court ruling on the motion may consider the parties' declarations and other evidence in deciding what terms the parties agreed to, and the court's factual findings in this regard are reviewed under the substantial evidence standard. [Citation.] If the court determines that the parties entered into an enforceable settlement, it should grant the motion and enter a formal judgment pursuant to the terms of the settlement." (Ibid.)
When a court receives a settlement, it "should help to ensure that the material terms of the settlement are explicitly defined and that the parties understand and agree to be bound by those terms." (Hines v. Lukes, supra, 167 Cal.App.4th at p. 1183, fn. 6; see In re Marriage of Assemi (1994) 7 Cal.4th 896, 911.)
Contract principles apply in analyzing the terms of such an agreement: "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, 60 Cal.App.4th at pp. 810-811.) Further: " '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, at p. 811.)
Under these standards, there is no substantial evidence to support the trial court's conclusion "that plaintiff would waive judgment upon prompt payment of the verdict amount by defendant and that defendant agreed to waive its costs." Rather, neither the face of the minute orders nor the declarations clarify the terms of any such settlement, to the point that the court could enforce one as a judgment. It is not clear whether the individual defendant, or defense counsel, agreed with plaintiff, or with plaintiff's counsel, on July 16 (before or after the jury rendered its verdict), that both sides would walk away from each other, and on what terms. The declarations and minute orders do not disclose whether that resolution was to occur before or after defendant paid plaintiff any verdict amount (later determined to be $9,217). The parties cannot objectively show that they communicated to each other and agreed when the costs problem would be solved, depending on who prevailed and at what level.
Instead, the statement on the July 16 minute order that counsel waived entry of judgment within 24 hours cannot reasonably be interpreted as showing that certain agreed-upon conditions were attached to that waiver. There was no objectively ascertainable meeting of the minds that was disclosed to the court at that hearing, nor later.
III
REMAINING COSTS ISSUES
The defense has not appealed the portion of the order that ruled that plaintiff's costs memo should not be stricken, pursuant to section 1033, subdivision (a). The court thus exercised its discretion to allow some costs to the plaintiff, even though she did not recover an amount exceeding the limited civil matter jurisdiction. That ruling is not before us, except insofar as the final judgment allows such costs to the plaintiff.
Since we have determined that the trial court did not have a sufficient basis in the record to find that the parties had orally stipulated to settle the case on the terms alleged, the court must be directed to enter a different order denying plaintiff's motion to enforce a settlement. This means that the basis of the court's ruling that struck defendant's costs memo has been removed, and the court must be directed to deny the motion to strike defendant's costs memo, and to allow further proceedings on plaintiff's motion to tax the defense costs. Defendant's costs memo seeks expert fees under section 998 of $4,100, and total costs of $13,674.72.
When defendant made a section 998 offer to plaintiff in the amount of $15,001, but plaintiff rejected it, plaintiff brought herself within the terms of section 998, subdivision (c)(1) ("if an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer. In addition, ... the court... in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of [defense] expert witnesses...."; italics added). The trial court must now consider whether defendant is entitled to such postoffer defense costs and any discretionary expert witness fees. We express no opinion on the applicability of section 998, subdivision (e), regarding adjustment of damages, since the parties have not briefed that issue.
At this time, the appropriate procedure is for this court to reverse the final judgment, without disturbing the jury verdict, but nevertheless vacating all costs rulings and requiring appropriate further proceedings to determine the proper effect of section 998 upon the parties' respective cost entitlements, and any offsets that may be appropriate.
DISPOSITION
The final judgment is reversed in part only to vacate all costs rulings, as follows. The trial court is directed (1) to deny the motion to enforce a settlement agreement, (2) to deny the motion to strike defendant's costs memo, (3) to allow such appropriate further proceedings on the motion to tax costs as will determine the proper effect of section 998 upon the parties' respective cost entitlements, and (4) enter an amended final judgment. Costs on appeal to be borne by the respective parties.
WE CONCUR: BENKE, Acting P. J., O'ROURKE, J.