17-CIV-02281 JOSEPH C. PASSALACQUA VS. TINA M. PASSALACQUA, ET AL.

JOSEPH C. PASSALACQUA TINA M. PASSALACQUA
KATHRYN S. DIEMER BRADLEY KASS

PLAINTIFF’S MOTION TO ENFORCE THE PARTIES’ SETTLEMENT AGREEMENT TENTATIVE RULING:

Plaintiff’s motion to enforce the parties’ settlement agreement is DENIED.

Notably, Plaintiff’s moving papers fail to (1) set forth standards of contract interpretation, (2) provide analysis as to whether the court can consider extrinsic evidence under the parol evidence rule, or (3) identify the extent of the relief requested; i.e. what specific performance is sought by court order.

In any case, however, the court finds that the contractual provision at issue is inscrutable. The disputed language provides:

The valuation shall not include any discounts including discounts for lack of control or lack of marketability of the interest in the LLC, though the appraiser may consider discounts if necessary to be considered for an appraisal using normal standardized techniques.

Chuang Decl, Ex. A, ¶ 1. Notably, this dispute arose when the appraiser contacted the parties to indicate his confusion regarding this provision: “The above statement seems to be contradictory, in that it forbids the application of discounts, but notes they can be considered.” Chuang Decl, Ex. B, p.1.

Neither party has offered a plausible interpretation of the second clause of the sentence in dispute. Plaintiff contends that it means the appraisal “could include other discounts.” Reply, p.3 (emphasis added). That language, however, is not in the agreement. The suggested interpretation also contradicts the language providing that “The valuation shall not include any discounts . . .” Defendants, for their part, have asserted that “The sentence [] prohibit[s] an automatic discount given for these factors.” Chuang Decl., Ex. B, p.1 (emphasis added). This interpretation also adds a term that is not contained in the parties’ agreement.

Plaintiff has offered extrinsic evidence to aid the court’s interpretation of the contract. As noted above, however, he has provided no argument or pertinent authority indicating that the court can consider extrinsic evidence in interpreting the parties’ agreement. The agreement is integrated. It provides, at Paragraph 12, that “The parties agree that this Settlement Agreement constitutes the entire agreement between the parties and that this Settlement Agreement may not be altered, amended, modified, or otherwise changed in any respect whatsoever except by a writing duly executed by all the parties.” Accordingly pursuant to the parol evidence rule, the court can consider extrinsic evidence only to the extent that evidence is consistent with the agreement. 2 Witkin, Cal. Evid. 5th Docu Evid § 76 (2018). The court cannot consider extrinsic evidence that contradicts the terms of the agreement. As written, the agreement provides that discounts for lack of marketability may not be considered and that discounts may be considered “if necessary.” Because this term is internally inconsistent, any extrinsic evidence offered is potentially contradictory to the agreement.

Nonetheless, even if the court could consider extrinsic evidence under the parol evidence rule, the parties have not offered evidence that allows the court to determine the parties’ intended meaning. Plaintiff notes that a previous version of the agreement, which was rejected, provided that “The valuation shall not include any discounts including discounts for lack of control or lack of marketability, unless the appraiser determines these factors are necessary to be considered for an appraisal using normal standardized techniques.” Chuang Decl., Ex. K. It is not clear, however, that Defendants understood this language to carry any different meaning than that which appears in the signed agreement. Plaintiff also notes that, in an email dated March 19, 2018, Plaintiff’s counsel stated that the terms that had been discussed included “No discounts for the value of the business – e.g. no discount for lack of control or marketability.” Chuang Decl. in Support of Reply, Ex I. Plaintiff, however, has provided no evidence of Defendant’s intent to agree to that term. Accordingly, even if the court could consider extrinsic evidence, Plaintiff has offered no convincing evidence to support his interpretation of the settlement agreement.

Ultimately, the court finds Plaintiff has not demonstrated a meeting of the minds as to the terms of the parties’ agreement. Plaintiff’s request to enforce the settlement necessitates that the court add a term to the parties’ agreement, which the court is not authorized to do. J.B.B. Inv. Partners, Ltd. v. Fair, 232 Cal. App. 4th 974, 983–84, 182 Cal. Rptr. 3d 154, 161 (2014), as modified (Dec. 30, 2014). Accordingly, Plaintiff has failed to persuade the court that the settlement agreement should be enforced in accordance with his interpretation of the agreement.

Plaintiff’s request for sanctions is DENIED.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Plaintiff shall prepare a written order consistent with the Court’s ruling for the Court’s signature, pursuant to California Rules of Court, Rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.