Opinion
NOT TO BE PUBLISHED
San Benito County Super. Ct. Nos. CU-03-00156, CL-03-00404
BAMATTRE-MANOUKIAN, ACTING P.J.
I. INTRODUCTION
This appeal arises from the oral agreement of respondent Deborah McDonald and appellant Willie Riley regarding the purchase of a residence in San Benito County. The parties agreed that McDonald would take out a loan to purchase the property and Riley would make the necessary down payment, live in the house, and pay the monthly mortgage, taxes, and insurance. They also agreed that, within one year, Riley would obtain a new loan on the property and purchase it from McDonald. When Riley failed to perform under the oral agreement, McDonald brought an unlawful detainer action to evict him from the property. Riley responded by filing a complaint against McDonald in which he sought title to and possession of the property.
Thereafter, McDonald and Riley executed a settlement agreement that included a resolution of both lawsuits and a timetable for Riley to comply with his monetary obligations and to complete his purchase of the property. The settlement agreement also provided that if Riley defaulted on any of the payments set forth in the timetable or failed to complete the purchase of the property by the agreed-upon deadline, McDonald would have the right to file a “Stipulation for Entry of Judgment” in the unlawful detainer action and Riley would dismiss from his lawsuit all causes of action seeking possession and/or title to the property.
After Riley defaulted, McDonald brought a motion for “Entry of Partial Judgment Pursuant to Terms of Stipulated Settlement” under Code of Civil Procedure section 664.6. The trial court granted the motion and entered a partial judgment, which provided that Riley had no interest in the property and dismissed all causes of action in his complaint relating to his claims for title and possession. The matter then proceeded to a court trial on Riley’s claim for reimbursement of his investment in the property, including his down payment, mortgage payments, and remodeling and repair expenses. The judgment entered on November 26, 2007, incorporated the partial judgment and awarded $37,695.04 to Riley.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
On appeal, Riley contends that judgment must be reversed because (1) the settlement agreement contains an illegal penalty--forfeiture of Riley’s home--and is therefore unenforceable; (2) the trial court failed to allow Riley to exercise his equitable right of redemption; (3) the trial court lacked jurisdiction to enforce the settlement agreement under section 664.6 since McDonald had not answered the complaint and was therefore not a party; (4) the settlement agreement is unenforceable because McDonald prevented Riley from making payments by “stealing” his money; (5) the trial court failed to award Riley reimbursement for the amount of mortgage interest he had paid; and (6) the trial court improperly deducted $25,000 from Riley’s award. For the reasons stated below, we conclude that none of Riley’s contentions has merit, and therefore we will affirm the judgment.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. The Property Agreement
McDonald and Riley were business associates and also had a personal relationship. In February of 2002, they entered into an oral agreement regarding the purchase of a residence on Merrill Road in San Benito County (the property). They agreed that McDonald would take out a loan to purchase the property and Riley would make the necessary down payment, would be entitled to live in the house, and would pay the monthly mortgage, taxes and insurance. They also agreed that, within one year, Riley would secure a new loan on the property and purchase it from McDonald.
We take judicial notice of this court’s prior opinion in Riley v. McDonald (May 16, 2006, H028756) [nonpub. opn.] (Riley I). Our summary of the pertinent factual and procedural background of this case includes some background information that we have taken from our prior opinion. We also take judicial notice of this court’s prior opinion in Riley v. Marshall (Nov. 21, 2008, H032487) [nonpub. opn.], in which we reversed the summary judgment entered in Riley’s legal malpractice action against his former attorney, Patrick E. Marshall.
McDonald purchased the property on or about February 21, 2002, with a down payment from Riley of approximately $25,000, and a new loan obtained by McDonald in the approximate amount of $520,152. Riley began living in the house and paid the monthly mortgage payments until October 1, 2003, when he stopped making any payments. McDonald paid the property taxes and insurance and made the monthly mortgage payments from October 1, 2003.
B. The Parties’ Lawsuits
On November 26, 2003, McDonald filed an unlawful detainer action against Riley, claiming “past due rent” for approximately two months in the amount of $8,322.65. (McDonald v. Riley (Super. Ct. San Benito County, 2003, No. CL-03-00404).) Riley answered the complaint, denying that he was a tenant and asserting that he was purchasing the property.
On December 22, 2003, Riley filed an action against McDonald in superior court (Riley v. McDonald (Super. Ct. San Benito County, 2003, No. CU-03-00156)), asserting causes of action for breach of contract, declaratory relief, constructive trust, quiet title and constructive fraud. He also filed a lis pendens on the property.
C. The Settlement Agreement
On April 2, 2004, McDonald and Riley executed a “Settlement and Real Property Purchase Agreement” (the settlement agreement) that recited the facts stated above and provided that the parties desired to update their prior agreement regarding the property, to establish a timetable under which Riley would bring current his monetary obligations with respect to the property, and to finalize the purchase of the property by Riley. The settlement agreement also stated that the parties desired to settle the two lawsuits and also to resolve all other disputes between them, including certain monies owed by Riley to McDonald that predated the property agreement.
The settlement agreement then set forth certain sums of money and due dates by which Riley could bring current the payments on the property for mortgage, taxes and insurance, and could repay McDonald for sums advanced by her. Riley agreed to open an escrow on or before June 1, 2004, for the purpose of obtaining a new loan, paying off the current loan in McDonald’s name, and completing his purchase of the property from her. The escrow was to close within 30 days of June 1, 2004. Riley also agreed to pay to McDonald outside of escrow the sum of $55,000 in full payment of loans she had previously made to Riley, reimbursement for expenses when the parties had previously lived together in another property, and partial reimbursement for her attorney’s fees and costs.
The settlement agreement further provided that if its terms were complied with, the parties agreed to dismiss their respective lawsuits and to release each other from all claims and demands in any way related to the matters set forth in the agreement. However, if Riley defaulted on any of the payments set forth in the agreement or failed to complete the purchase of the property by June 30, 2004, the parties agreed that McDonald would have the right to file a “Stipulation for Entry of Judgment” in the unlawful detainer action (No. CL-03-00404), which the parties signed concurrently with the settlement agreement, and that Riley would dismiss from his lawsuit (No. CU-03-00156) all causes of action seeking possession and/or title to the property, including but not limited to the second cause of action for declaratory relief, the third cause of action for constructive trust and the fourth cause of action for quiet title. Riley also agreed that in the event of his default he would expunge the lis pendens filed against the property.
The settlement agreement and stipulation for entry of judgment further provided that McDonald would be entitled to enter the stipulated judgment upon her own declaration setting forth the details of the default by Riley, without the necessity of a motion and with five days’ notice to Riley.
D. The Partial Judgment
On June 21, 2004, McDonald filed her declaration in case No. CL-03-00404, the unlawful detainer action, asserting facts in support of Riley’s default under the settlement agreement. She stated that Riley had failed to make a number of payments called for in the settlement agreement, and had failed to open an escrow on or before June 1, 2004 in order to complete the purchase of the property. She asserted that she was entitled, under the terms of the settlement agreement and stipulation for entry of judgment, to restitution of the premises and a total of $42,014.02, representing missed payments on the property, plus an amount per day for each day that Riley remained in possession. She further asserted that she was entitled to expungement of the lis pendens on the property, and to the dismissal of the second, third and fourth causes of action in Riley’s complaint in case No. CU-03-00156, the quiet title action. McDonald’s declaration stated that she was delivering it to Riley’s attorney on June 21, 2004, and that Riley had until June 25, 2004 to cure all defaults.
Meanwhile, judgment was filed on June 24, 2004, based on McDonald’s declaration and the parties’ settlement agreement and stipulation for entry of judgment. The judgment provided that a writ of possession issue and that Riley be removed from the property. It also provided that Riley forfeited all further rights “under the rental agreement between the parties.” And it further provided for damages in the sum of $42,014.02 to be awarded to McDonald.
Riley was eventually forcibly removed from the property on August 26, 2004. On September 1, 2004, McDonald filed a motion to expunge the lis pendens on the property and another motion to strike the entire complaint in case No. CU-03-00156, based on the settlement agreement, stipulation and judgment in case No. CL-03-00404.
On September 29, 2004, Riley filed a motion to set aside the judgment filed in case No. CL-03-00404. He argued that the court had signed the judgment prior to the expiration of the five days’ notice provision set forth in the settlement agreement and stipulated judgment; that the judgment exceeded the jurisdictional limits of a court of limited jurisdiction, by awarding damages in an amount over $10,000; and the judgment was ambiguous in that it referred to a “rental agreement,” which the parties never had, while also purporting to determine title. Riley offered, through his attorney, to fully perform in accordance with the terms of the settlement agreement.
In their papers in response and reply to their respective motions, the parties raised a number of claims not contained in the pleadings, including claims by Riley that McDonald had misappropriated funds in their business and claims by McDonald that Riley had caused physical damage to the property.
On October 5, 2004, the trial court ordered the two cases consolidated under case No. CU-03-00156, and continued the hearings on both motions so that they could be heard together.
On November 16, 2004, the trial court granted McDonald’s motion to expunge the lis pendens, but denied her motion to strike Riley’s complaint in case No. CU-03-00156. The court also ruled that McDonald was to have possession of the property and vacated the judgment in case No. CL-03-00404. The court then set a status conference and ordered the parties to attempt to settle the case.
On December 21, 2004, the court entered an order expunging the lis pendens. However, the court later granted Riley’s request for a preliminary injunction to prevent McDonald from selling the property pending the outcome of the litigation.
On February 4, 2005, McDonald brought a motion for “Entry of Partial Judgment Pursuant to Terms of Stipulated Settlement” under section 664.6. She asked for judgment to be entered as to causes of action two, three and four of Riley’s complaint pursuant to the settlement agreement dated April 2, 2004, and that all right, title and interest in the subject real property be confirmed to her. She also sought attorney’s fees, based on a provision in the settlement agreement providing for fees to a prevailing party in any action to enforce the settlement agreement. Riley opposed the motion, arguing that the settlement agreement contained an unlawful penalty in that it forced him to forfeit his property. He also contended that McDonald had fraudulently induced him to sign the settlement agreement.
On April 27, 2005, the court entered its “Order Granting Partial Judgment” pursuant to section 664.6. The order provided that “partial judgment be entered pursuant to the terms of the settlement stipulated to by defendant and plaintiff as follows: all causes of action which seek plaintiff’s possession and/or title to the real property described in Exhibit A attached hereto and incorporated herein by reference, including but not limited to, the second cause of action entitled ‘declaratory relief,’ the third cause of action entitled ‘construction trust’ [sic] and the fourth cause of action entitled ‘quiet title,’ are dismissed from plaintiff’s lawsuit with prejudice; Plaintiff is adjudged to have no further right, title, or interest, legal or equitable, in the real property described on Exhibit A.” The court retained jurisdiction to determine attorney’s fees and costs and stayed enforcement of the judgment for ten days.
Riley appealed from the April 27, 2005 order granting partial judgment and dismissing three causes of action in his complaint against McDonald. Because the judgment did not dispose of all of the causes of action between the parties, and because further judicial action was necessary for a final determination of the rights of the parties pursuant to their settlement agreement, this court determined in Riley I, supra, H028756, that the judgment was necessarily interlocutory and thus not appealable. For that reason, we dismissed the appeal.
E. Proceedings After the Entry of Partial Judgment
On October 5, 2005, McDonald moved for an order expunging the lis pendens that Riley had recorded on the property on April 19, 2005. The trial court granted the motion on November 9, 2005. Riley subsequently filed “a motion to impose lis pendens” on May 22, 2006, which the trial court denied on July 12, 2006.
On July 13, 2006, McDonald filed an answer to Riley’s complaint in case No. CU-03-00156. She filed a verified cross-complaint against Riley on the same day. In the cross-complaint, McDonald stated causes of action for breach of the settlement agreement, breach of an oral lease agreement, waste, and breach of an agreement to pay one-half of the household expenses while the parties were living together in McDonald’s Gilroy residence. Riley filed a verified answer to the cross-complaint on July 28, 2006, in which he admitted that he had failed to make timely payments under the settlement agreement, denied the other allegations of the cross-complaint, and asserted several affirmative defenses.
F. The Court Trial
After the parties waived a jury trial, the matter proceeded to a court trial on February 26, 2007, that concluded on March 1, 2007. Prior to trial, Riley filed a motion in limine “to set aside partial judgment and settlement agreement,” which the trial court denied. The court granted McDonald’s motion in limine to exclude evidence regarding the validity of the settlement agreement and the ownership of the property.
Trial then began on Riley’s complaint in case No. CU-03-00156. In his opening statement, Riley’s counsel stated that the trial issues were limited to Riley’s claim for reimbursement of the sum of $132,992.71 that he had invested in the property, which included his down payment and 18 monthly mortgage payments.
McDonald’s counsel agreed, in his opening statement, that Riley had made a down payment of $36,809.43, but stated that McDonald would claim offsets of $25,000 for money owed to her by Riley and approximately $3,000 returned to him at the close of escrow. McDonald’s counsel also agreed that Riley had made 18 mortgage payments, but stated that McDonald would claim an offset equal to the rental value of the property.
The trial court heard testimony from the parties and McDonald’s real estate expert, contractor, and mortgage broker. Evidence was then presented on McDonald’s cross-complaint in case No. CU-03-00156, which included testimony from both parties.
G. The Statement of Decision
On June 28, 2007, the trial court issued its “Amended Proposed Statement of Decision.” The court first ruled that “as a matter of law the case is governed by the interim order and partial judgment... entered in March 2005. A second or another judgment has no power to revise or modify a prior order of another judge. [The] interim order awarded clear title to the real estate on Merrill Road to Defendant Deborah McDonald and allowed Plaintiff Willie Riley to continue the litigation to seek reimbursement for amounts he had invested in the Merrill Road property.”
The trial court then made a number of factual findings, after noting that “[m]any of the money payments in this case made by [Riley] were in cash because [Riley] wanted to conceal his ownership in the property from the IRS because he did not want the IRS to attach or seize the property because of a dispute he was having with the IRS. [McDonald] acquiesced in his request to put the house in her name for a year.”
With regard to Riley’s claim for reimbursement, the trial court found that the evidence established that Riley had invested a total of $62,695.04 in the property, including a $33,261.42 down payment ($36,809.42 less a credit of $3,548 paid at close of escrow); had reduced mortgage loan principal in the amount of $9,865.88; and had made additional mortgage payments of $10,940 and $8,627.74 that “benefited” McDonald. The court further found that Riley had failed in his burden of proof as to his claim for reimbursement of the “amount and effective value” of the home improvements and repairs he had made to the property.
The trial court also made several rulings regarding McDonald’s claims for a reduction and/or offset of the amount of Riley’s reimbursement. The court denied McDonald’s claim for an offset for the fair market rental value of the property, finding that McDonald’s evidence was insufficient. The court also denied McDonald’s claim for offsets for the “ ‘damage’ ” to the property caused by Riley’s remodeling projects, as well as the “ ‘waste’ ” that occurred during his possession, due to insufficiency of the evidence. An offset of $25,000 was allowed to repay McDonald for Riley’s share of their household expenses while they were living together and the loans that McDonald made to Riley during that time, because the court found that the amount of $25,000 was “memorialized in their settlement agreement of April 2004....”
Based on these findings, the trial court awarded Riley a total of $37,695.04. The court also stated that the partial judgment was “incorporated, adopted, and made final by this order.” (Underscoring omitted.)
Judgment was entered on November 26, 2007, in Riley’s favor in the amount of $37,695.04. The judgment also stated that McDonald recovered nothing on her cross-complaint.
H. Posttrial Motions
On November 21, 2007, Riley filed a motion for a new trial. He argued that the settlement agreement was unenforceable for several reasons: it contained an illegal penalty, he had an absolute right to redeem the property after default, and the trial court lacked jurisdiction to enforce the settlement agreement since McDonald had not answered the complaint. Riley also argued that the trial court had improperly calculated the amount due to him. McDonald opposed the motion. The trial court denied the motion for new trial on December 17, 2007.
On January 25, 2008, McDonald filed a motion “to determine the prevailing party and to fix amount of attorney fees.” (Capitalization omitted.) Riley opposed the motion. In its order of April 24, 2008, the trial court awarded attorney fees of $79,849.50 to McDonald.
III. DISCUSSION
On January 22, 2008, Riley filed a notice of appeal from the judgment entered on November 26, 2007. He raises six issues in his challenge to the judgment: (1) the settlement agreement contains an illegal penalty—forfeiture of Riley’s home—and is therefore unenforceable; (2) the trial court failed to allow Riley to exercise his equitable right of redemption; (3) the trial court lacked jurisdiction to enforce the settlement agreement under section 664.6 since McDonald had not answered the complaint and was not a party; (4) the settlement agreement is unenforceable because McDonald prevented Riley from performing by “stealing” his money; (5) the trial court failed to award Riley reimbursement for the amount of mortgage interest that he had paid; and (6) the trial court improperly deducted $25,000 from Riley’s award. We will address each contention in turn.
A. Illegal Penalty
Riley contends that the parties’ settlement agreement cannot be enforced under section 664.6 because “[t]here is no doubt that the forfeiture of Mr. Riley’s home for failure to make timely payments is an illegal penalty under Civil Code [section] 3275.” He asserts that the only lawful penalty for late payments is interest or “delay damages,” and that the settlement agreement unlawfully imposed a “net penalty of $280,000,” consisting of the value of property, $780,000, less the $500,000 mortgage. On that basis, Riley argues that the amount forfeited under the settlement agreement for late payments has no relation to McDonald’s actual damages, and therefore the forfeiture penalty is illegal and the settlement agreement is unenforceable. Riley similarly argues that specific performance of the settlement agreement is precluded because it contains an illegal penalty.
McDonald does not agree that the settlement agreement contains an illegal penalty. She asserts that Riley’s agreement to dismiss the causes of action in his complaint regarding title and/or possession of the property if he defaulted on any of the agreed-upon payments did not constitute a forfeiture of his home or an illegal penalty, because Riley only agreed to forego his opportunity to purchase the property and was not prevented from seeking damages or reimbursement under the first and fifth causes of action in his complaint. For the same reasons, McDonald asserts that under section 664.6 the trial court properly entered judgment pursuant to the settlement agreement and did not unlawfully compel specific performance of an unfair agreement.
Our evaluation of Riley’s contention is governed by section 664.6 and the standard of review that applies to an order under that section.
Section 664.6 states, “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” Section 664.6 was intended to create “a summary, expedited procedure to enforce settlement agreements when certain requirements that decrease the likelihood of misunderstandings are met.” (Levy v. Superior Court (1995) 10 Cal.4th 578, 585.)
The trial court acts as a trier of fact on a motion to enter judgment pursuant to the terms of a settlement agreement and determines whether the parties entered into a valid and binding agreement. (Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1532.) “The appellate court then determines whether the trial court’s ruling was supported by substantial evidence. [Citation.]” (Id. at p. 1533.) De novo review of a judgment entered pursuant to section 664.6, is appropriate, however, where the issue on review is a legal one. (Timney v. Lin (2003) 106 Cal.App.4th 1121, 1126 (Timney).) For example, where the issue is whether the parties met the statutory conditions of section 664.6, de novo review is appropriate since review involved the interpretation of the statute. (Murphy v. Padilla (1996) 42 Cal.App.4th 707, 711.) Or where, as here, the issue is whether a particular provision of the settlement agreement is illegal, the court likewise reviews the matter de novo since the question of whether a contract is illegal is a question of law. (Timney, supra, 106 Cal.App.4th at p. 1126.)
The court’s authority to enforce a settlement agreement by entering a stipulated judgment does not extend to “a provision in a settlement agreement or stipulation which is illegal, contrary to public policy, or unjust.” (Timney, supra, 106 Cal.App.4th at p. 1127; California State Auto. Assn. Inter-Ins. Bureau v. Superior Court (1990) 50 Cal.3d 658, 664; Plaza Hollister Ltd. Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 12-13.) To determine whether a provision of a settlement agreement constitutes an illegal penalty or an illegal forfeiture provision, we apply general principles of contract law. (Timney, supra, 106 Cal.App.4th at p. 1129.)
In general, a provision that provides that money or property will be forfeited without regard to the actual damage suffered is an unenforceable penalty. (Ridgley v. Topa Thrift and Loan Assn. (1998) 17 Cal.4th 970, 977-978.) Thus, “ ‘[a]n amount disproportionate to the anticipated damages is termed “a penalty.” A contractual provision imposing a “penalty” is ineffective, and the wronged party can collect only the actual damages sustained.’ [Citations.]” (Ibid.) Accordingly, a provision in a contract liquidating the damages for breach of the contract is unenforceable as an illegal penalty unless the liquidated damages are reasonably related to the actual damages. (Id. at p. 977; Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 900.)
Applying these principles, “charges for late payment of loan installments have been held unenforceable where they bore no reasonable relationship to the injury the creditor might suffer from such late payments.” Ridgley v. Topa Thrift and Loan Assn., supra, 17 Cal.4th at p. 978.) Similarly, where a settlement agreement providing that the defendant would pay the plaintiff a total of $20,000 in two installments was memorialized as a stipulated judgment, which included a provision entitling the plaintiff to a much greater judgment of $61,232.50 if the defendant defaulted, the default provision was found to be unenforceable as an illegal penalty. (Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, 501.)
In the present case, we find that the settlement agreement and stipulated judgment did not include a provision that constitutes an illegal penalty or forfeiture. When the trial court granted McDonald’s motion to enforce the settlement agreement, it entered an “Order Granting Partial Judgment” pursuant to section 664.6. The order provided that “partial judgment be entered pursuant to the terms of the settlement stipulated to by defendant and plaintiff as follows: all causes of action which seek plaintiff’s possession and/or title to the real property described in Exhibit A attached hereto and incorporated herein by reference, including but not limited to, the second cause of action entitled ‘declaratory relief,’ the third cause of action entitled ‘construction trust’ [sic] and the fourth cause of action entitled ‘quiet title,’ are dismissed from plaintiff’s lawsuit with prejudice; Plaintiff is adjudged to have no further right, title, or interest, legal or equitable, in the real property described on Exhibit A.”
The partial judgment therefore enforced the settlement agreement to the extent that the parties agreed that if Riley defaulted on any of the payments set forth in the agreement or failed to complete the purchase of the property by June 30, 2004, Riley would dismiss from his lawsuit (No. CU-03-00156) all causes of action seeking possession and/or title to the property.
In other words, the trial court enforced the parties’ agreement that Riley would give up his opportunity to purchase the property by funding the mortgage payments, obtaining a new loan in his name, and closing escrow by agreed-upon dates, if Riley defaulted on those obligations. The settlement agreement preserved Riley’s right to seek reimbursement of his investment and did not require Riley to forfeit money or property in the event of default.
Moreover, we are not convinced by Riley’s argument that the settlement agreement and partial judgment included an illegal penalty requiring him to forfeit “his home” if he defaulted. Since Riley did not comply with the terms of the settlement agreement and complete purchase of the property by June 30, 2004, he did not own the property and was therefore not required to forfeit “his home.”
We are also not convinced by Riley’s contention that specific performance of the settlement agreement cannot be compelled because the agreement contains an illegal penalty. Pursuant to Civil Code section 3369, “Neither specific nor preventive relief can be granted to enforce a penalty or forfeiture in any case, nor to enforce a penal law, except in a case of nuisance or as otherwise provided by law.” That section codifies “a policy that precludes any forfeiture having no reasonable relation to the damage caused by the vendee’s breach even when that breach is wilful. [Citation.]” (Petersen v. Hartell (1985) 40 Cal.3d 102, 108 (Peterson).) Because, as we have discussed, the settlement agreement did not include a penalty provision requiring Riley to forfeit money or property upon default, Civil Code section 3369 does not apply here.
For these reasons, we find no merit in Riley’s contentions that the settlement agreement is unenforceable because it contains an illegal penalty provision or that specific performance of the settlement agreement may not be lawfully compelled.
B. Right of Redemption
Riley next contends that the trial court erred in quieting title in McDonald and thereby denying him his “equitable right” to “redeem his home.” According to Riley, he had “an absolute right to reinstate the contract, pay past due amounts plus interest, and complete the purchase of his home.” Relying on Petersen, supra, 40 Cal.3d 102, Riley asserts that his February 2002 oral agreement with McDonald regarding the purchase of the property constitutes a real property sales contract within the meaning of Civil Code section 2985, and therefore he was entitled to conveyance of the title in exchange for payment of all amounts due under the contract.
In response, McDonald points out that Riley’s arguments turn on the February 2002 oral agreement, which is not at issue on appeal. McDonald therefore argues that Riley’s arguments are irrelevant. We agree.
The record reflects that on April 2, 2004, McDonald and Riley executed the settlement agreement that is at issue in this appeal. The settlement agreement provided that the parties desired to update their prior February 2002 agreement regarding the property, to establish a timetable under which Riley would bring current his monetary obligations with respect to the property, and to finalize the purchase of the property by Riley. Therefore, the February 2002 agreement regarding the purchase of the property was replaced by the purchase agreement contained in the April 2004 settlement agreement. The terms of the February 2002 agreement are accordingly not at issue.
We also find that neither the February 2002 agreement nor the purchase agreement in the April 2004 settlement agreement constitutes a real property sales contract within the meaning of Civil Code section 2985. That section provides in part that “A real property sales contract is an agreement in which one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and that does not require conveyance of title within one year from the date of formation of the contract.” (Civ. Code, § 2985, subd. (a).)
In Peterson, the California Supreme Court ruled that a vendee who willfully defaults under an installment land sale contract after having “paid a substantial part of the purchase price nonetheless retains an absolute right to redeem the property by paying the entire balance of the price and any other amounts due.” (Petersen, supra, 40 Cal.3d at p. 106.)
“A vendee is regarded as holding the realty in trust for the benefit of the vendor to the extent of the unpaid purchase money....” (Mills v. Mills (1956) 147 Cal.App.2d 107, 118, 305.)
Here, the April 2004 settlement agreement expressly stated that the terms of the February 2002 agreement provided that “within one year RILEY would purchase the property from McDONALD by securing a new loan on the property in his name.” Therefore, even assuming that the February 2002 agreement is relevant to this appeal, that agreement does not constitute a real property sales contract within the meaning of Civil Code section 2985, subdivision (a) because the agreement expressly required conveyance of the title to the property within one year.
The April 2004 settlement agreement similarly provided that title to the property was to be conveyed within one year. The settlement agreement was executed on April 2, 2004 and expressly provided that Riley agreed that “[o]n or before June 1, 2004” he would “open an escrow at a title company of his choosing for the purpose of RILEY obtaining a new loan on the property, paying off the current real estate loan in McDONALD’s name, and completing his purchase of the real property from McDONALD.” Thus, the April 2004 settlement agreement provided that McDonald agreed to convey title to the property to Riley in less than one year if he met the specified conditions. Accordingly, the settlement agreement did not constitute a real property sales contract within the meaning of Civil Code section 2985 that would entitle Riley to “an unconditional right to a reasonable opportunity to complete the purchase by paying the entire remaining balance plus damages before the seller is allowed to quiet title.” (Petersen, supra, supra, 40 Cal.3d at p. 114.)
For these reasons, we are not convinced that the trial court erred in quieting title in McDonald because Riley was denied the equitable right of redemption.
C. Jurisdiction under Section 664.6
Riley also argues that the trial court lacked jurisdiction to enforce the April 2004 settlement agreement by entering the partial judgment because McDonald was not a party to pending litigation at the time of settlement, as required by section 664.6. He explains that McDonald was not a party because she did not file an answer, or make any other appearance in Riley’s quiet title action (No. CU-03-00156), prior to signing the April 2004 settlement agreement.
McDonald argues to the contrary that she was a party to pending litigation within the meaning of section 664.6 at the time of the April 2004 settlement agreement because there was pending litigation between the parties at the time, consisting of McDonald’s unlawful detainer action (No. CL-03-00404) and Riley’s quiet title action (No. CU-03-00156). McDonald also points out that Riley’s attorney had given McDonald an open extension to file responsive pleadings in case No. CU-03-00156, which McDonald’s attorney confirmed in a letter dated January 23, 2004. Further, McDonald asserts that Riley should be estopped from challenging the trial court’s jurisdiction under section 664.6, since he never raised the jurisdiction issue in the trial court until May 22, 2006, in his motion to file a lis pendens.
Having carefully reviewed the record, we determine that the trial court did not lack jurisdiction to enforce the settlement agreement under section 664.6. In pertinent part, section 664.6 provides “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.” Thus, section 664.6 does not allow persons “ ‘who have no case pending in a court to obtain judgment from that court.’ [Citation.]” (Hagan Engineering, Inc. v. Mills (2003) 115 Cal.App.4th 1004, 1010; Kirby v. Southern Cal. Edison Co. (2000) 78 Cal.App.4th 840, 845.) Here, of course, Riley and McDonald were engaged in two cases pending before the court, McDonald’s unlawful detainer action and Riley’s quiet title action, at the time of the April 2004 settlement agreement.
Moreover, we find that McDonald was a party to the pending litigation of Riley’s quiet title action at the time of the April 2004 settlement agreement, despite not having filed an answer or any other responsive pleading in that case prior to April 2004. “A party is a person named as a party to an action and subjected to the jurisdiction of the court. [Citations.]” (Moffett v. Barclay (1995) 32 Cal.App.4th 980, 982.) “A person is not subjected to the jurisdiction of the court until summons has been served or they have made a general appearance. [Citation.]” (Id. at p. 983.) Here, the record implicitly shows that McDonald was served with the summons in the quiet title action, because McDonald’s attorney confirmed in a letter dated January 23, 2004, that Riley’s attorney had granted McDonald an open extension to file responsive pleadings.
Additionally, the parties’ agreement that McDonald had an open extension to file responsive pleadings operated as McDonald’s general appearance in the quiet title action. “A general appearance occurs where a party, either directly or through counsel, participates in an action in some manner which recognizes the authority of the court to proceed. It does not require any formal or technical act. [Citations.]” (Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, 1756-1757.) Thus, “[a] general appearance may be made in a number of ways. Whether a particular act reflects an intent to submit to the jurisdiction of the court constituting a general appearance depends upon the circumstances. [Citations]. A written stipulation extending the time to appear, answer, demur or otherwise plead reflects an intent to submit to the jurisdiction of the court and constitutes a general appearance. [Citation.]” (Kriebel v. City Council (1980) 112 Cal.App.3d 693, 699.)
We therefore determine that the trial court had jurisdiction under section 664.6 to enforce the April 2004 settlement agreement because McDonald had made a general appearance in the quiet title action and was therefore a party to pending litigation within the meaning of section 664.6.
D. Prevention of Performance
Alternatively, Riley contends that the settlement agreement is unenforceable under Civil Code section 1511, subdivision (1) because McDonald prevented him from performing by “stealing Mr. Riley’s money.” (Capitalization omitted.) According to Riley, “[d]uring May and June 2004, Ms. McDonald wrongfully withheld $37,311 that should have been paid to Mr. Riley. Instead of depositing three checks totaling this amount into Mr. Riley’s bank account, she improperly withheld the three checks until July. Since Mr. Riley did not have this $37,311, he could not use it to make the interim payments required under the settlement agreement.” Riley further claims that it was “readily apparent that Ms. McDonald was hiding Mr. Riley’s money to prevent him from performing the settlement agreement” and the equitable doctrine of unclean hands should apply to prevent specific performance of the settlement agreement.
McDonald objects to Riley’s account of their business dealings. She asserts that the sum of $37,311.71 was paid by an employee group client of the parties’ insurance business for the “sole purpose of paying insurance premiums” and was not for Riley’s personal use. Therefore, McDonald argues that the trial court properly ruled that Riley was not excused from performing under the settlement agreement.
We find that Riley’s reliance on Civil Code section 1511, subdivision (l) is misplaced. Civil Code section 1511, subdivision (1) provides in part, “The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate: [¶] 1. When such performance or offer is prevented or delayed by the act of the creditor....” Thus, “the effect of this rule is that the nonperformance does not constitute a breach of contract and does not give rise to a remedy for breach of contract. [Citations.] The statutory language makes it clear, however, that a party moving for the entry of judgment pursuant to a settlement under [section] 664.6 need not establish a breach of contract to support relief under the statute.” (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1185.) The court may therefore enter judgment pursuant to a settlement agreement regardless of whether nonperformance of settlement obligations is excused. (Ibid.) Accordingly, the trial court in the present case was authorized to enter a judgment pursuant to the settlement regardless of whether Riley’s nonperformance of his settlement obligations was excused.
Second, even assuming that Civil Code section 1511, subdivision (1) applies here, we are not convinced that the trial court erred in enforcing the settlement agreement to the extent reflected in the partial judgment. We apply the substantial evidence standard of review to the trial court’s order under section 664.6 where, as here, the court made implicit factual determinations regarding Riley’s claim that McDonald wrongfully prevented his performance under the settlement agreement. (See Timney v. Lin, supra, 106 Cal.App.4th at p. 1126.)
The record contains conflicting evidence regarding Riley’s claim. In opposing McDonald’s motion for entry of partial judgment pursuant to the terms of the settlement agreement, Riley asserted in his supporting declaration that “Ms. McDonald was working to undermine the settlement agreement. Ms. McDonald has already admitted that she stole $37,000 from my bank account.... In addition, Ms. McDonald interfered with my business income.... [I]n the April to June 2004 time frame, Ms. McDonald wrongfully held up insurance contracts worth about $90,000, which would have paid $30,000 to me.”
McDonald, on the other hand, stated in her opposing declaration that “Mr. Riley’s accusations that I somehow was working to undermine the Settlement Agreement and that I stole $37,000 from his bank account is another falsehood. Please see my declaration filed herein on October 4, 2004. It is also completely untrue to state that I interfered with Mr. Riley’s business income or delayed sending in business. In fact, whatever business was to be paid to Mr. Riley would also be paid to me because we shared a commission structure with the insurance company.”
In her October 4, 2004, declaration, McDonald stated that in June, July and August of 2004 she received three checks for insurance premium payments from the Los Angeles Unified School District/SEIU, Local 99 that totaled $37,311.71. She “did not immediately deposit the checks in the Riley Marketing Services bank account because [she] was informed and believed that Mr. Riley had been taking money from the account for purposes other than those permitted by our understanding with clients; [she] was very concerned that if Mr. Riley continued the practice there would not be sufficient funds to pay the insurance premiums for which the checks were intended.” Due to her concern, McDonald deposited the checks totaling $37,311.71 in the Riley Marketing Services account, then transferred $37,311.71 into her own business account. She subsequently wrote checks on her account to pay two insurance company invoices ($35,353.79) and a sum due to individual employees ($1,709.15), and retained the remaining amount ($248.77) for future employee refunds.
We emphasize that, in conducting our substantial evidence review, “we must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the judgment. [Citations.]” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) “It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment.” (Id. at pp. 630-631.) We are also precluded from reconsidering the trial court’s credibility determinations. (In re Marriage of Calcaterra & Badakhsh (2005) 132 Cal.App.4th 28, 34.)
The trial court implicitly determined that McDonald’s account of the parties’ business dealings and the handling of the sum of $37,311.71 was more credible and therefore rejected Riley’s claim that McDonald had prevented his performance under the settlement agreement by “stealing” his money. Based on McDonald’s declarations, we find that substantial evidence supports the trial court’s implicit findings.
Consequently, we reject Riley’s contention that the settlement agreement is unenforceable under Civil Code section 1511, subdivision (1) because McDonald wrongfully prevented him from performing under the agreement.
E. Mortgage Interest
Additionally, Riley contends that the trial court erred in finding that he was entitled to reimbursement of $9,865.88, the amount his mortgage payments reduced the principal on the loan, and denying reimbursement for his payment of mortgage interest. Riley maintains that he is entitled to reimbursement for his payment of both principal and interest, which totaled $76,545.54.
McDonald argues that the trial court properly excluded mortgage interest from the restitution award based on the decision in Kudokas v. Balkus (1972) 26 Cal.App.3d 744 (Kudokas).) McDonald further argues that the trial court’s restitution award correctly balanced the equities between the parties, since “Riley resided in the house for 10 months without paying anything to McDonald... and then rendered it uninhabitable or unusable... for another approximately 20 months.”
We agree with McDonald that the trial court’s exclusion of mortgage interest from the restitution award had a legal basis. In Kudokas, the appellate court determined that the restitution due to a defaulting vendee does not include the interest paid to a third party lienholder: “[T]he dispossessed vendee is entitled to restitution, measured by the excess of his [or her] payments over the damages caused by his breach. The objective of the restitution doctrine is avoidance of forfeiture and unjust enrichment. [Citation.] Loss of interest payments accruing during the contract’s life imposes no forfeiture on the vendee; neither does it unjustly enrich the vendor.... Interest paid a third party lienholder is only part of the vendee’s burden of ownership; it pays for the vendee’s, not the vendor’s use of the lienholder’s money. It follows that the vendee’s restitution should exclude his [or her] outlays for interest which accrued during his [or her] equitable ownership of the property.” (Kudokas, supra, 26 Cal.App.3d at p. 757.)
Here, the record reflects that Riley made 18 payments to McDonald that funded the mortgage payments, including principal and interest, that McDonald in turn made to the mortgage lender. The amount that Riley paid for mortgage interest did not unjustly enrich McDonald; instead, the interest payments went to the mortgage lender and were part of Riley’s expenses in living on the property. Therefore, the trial court properly excluded mortgage interest in calculating the restitution that was due to Riley.
F. Offset of $25,000
Riley finally contends that “the $25,000 offset for the old ‘living expenses’ was also improper.” He states that “[McDonald] cannot obtain both specific enforcement of the award of the home and damages for non-payment of amounts due under the agreement.”
In the statement of decision, the trial court included its ruling on McDonald’s claim for a credit or offset from Riley’s award for repayment of loans that she had made to Riley while they were living together. The court found that the “$25,000... agreement was memorialized in their settlement agreement of April 2004 and should be deducted from the amount of the award to plaintiff.”
The April 2004 settlement agreement stated that the parties had entered in a February 2002 oral agreement regarding the purchase of the property that, among other things, provided that “it was also agreed that at the time of transfer of title, RILEY would pay McDONALD the sum of $25,000 as repayment for prior loans between the parties which predated the agreement relating to purchase of the real property.”
The April 2004 settlement agreement further provided that the parties now agreed that “prior to the scheduled date for close of escrow and as a condition precedent to McDONALD being obligated to transfer title to RILEY, RILEY will pay to McDONALD, outside of escrow, the sum of $55,000.00. The parties agree that this sum will completely repay McDONALD the amounts due to her for earlier loans which she made to RILEY, fully reimburse her for RILEY’s share of living and household expenses previously covered by McDONALD for the period of years when the two parties lived in McDONALD’s Gilroy house, plus partially reimburse McDONALD for attorney fees and costs she has incurred in this matter to date.”
Thus, the trial court correctly determined that the parties had previously agreed, as memorialized in the April 2004 settlement agreement, that Riley owed McDonald $25,000 for repayment of prior loans. On appeal, Riley does not challenge this finding. Substantial evidence therefore supports the trial court’s ruling that McDonald was entitled to a $25,000 offset pursuant to the parties’ prior agreements.
We further find Riley’s brief argument that “[McDonald] cannot obtain both specific enforcement of the award of the home and damages for non-payment of amounts due under the agreement” to be conclusory and to lack supporting authority. We may therefore deem this argument to be abandoned. (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 699-700; People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.4th 280, 284.)
Having determined that none of Riley’s contentions on appeal have merit, we need not address McDonald’s argument that Riley waived his right to appeal by accepting the benefit of the settlement agreement.
IV. DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondent Deborah McDonald.
WE CONCUR: MIHARA, J., DUFFY, J.