Filed 6/29/20 Kleidman c. Shah CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

PETER KLEIDMAN,

Plaintiff and Appellant,

v.

NITIN SHAH et al.,

Defendants and Respondents.

H042565, H043173, H044049

(Santa Clara County

Super. Ct. No. 113-CV-247406)

Plaintiff Peter Kleidman challenges the superior court’s judgment of dismissal after it granted defendants’ motion under Code of Civil Procedure section 664.6 to enforce a settlement agreement and dismissed Kleidman’s action under that agreement. He also appeals from an order striking and removing his post-dismissal service of summons on defendant Becker Legal Group (BLG), an order quashing Kleidman’s second post-dismissal service of summons on BLG, and a third order imposing sanctions for Kleidman’s second post-dismissal service of summons.

Kleidman contends that the settlement agreement was not eligible for enforcement under section 664.6 because not all defendants personally signed the agreement. The summary enforcement mechanism set forth in section 664.6 is available only where the settlement agreement was personally signed by all of the parties to the agreement. Here, several defendants who were purported to be parties to the agreement did not personally sign the agreement. Instead, each of them authorized another to sign on that defendant’s behalf. Defendants claim that it was not necessary for the nonsignatory defendants to personally sign the agreement.

We disagree. Enforcement of the settlement agreement under section 664.6 required personal signatures by all of the parties to the settlement agreement. Because that requirement was not satisfied, the superior court erred in granting the motion to enforce the settlement agreement under section 664.6. While Kleidman attempts to challenge a variety of collateral orders in his appeal from the judgment of dismissal, we conclude that those orders are not reviewable in that appeal. His appeals from two postjudgment orders are successful only because those orders relied on the validity of the judgment of dismissal. Accordingly, we reverse the judgment and the two postjudgment orders.

I. Background

Kleidman’s fourth amended complaint was filed in October 2014. It named as defendants Nitin Shah, Robert Quist, David Becker, BLG, Don Lloyd Cook, EJ Von Schaumburg, Michael Maidy, Timothy Cox, Martin Pichinson, Bernie Murphy, Bridge and Post, Inc., Sherwood Partners LLC, Sherwood Management LLC, FeevT (Assignment for the Benefit of Creditors), LLC, and Feeva Technology, Inc. In March 2015, the superior court ordered the action stayed until April 23, 2015 because a mediation was scheduled for March 25.

On March 25, 2015, a document entitled “Settlement and Release Agreement” (the Agreement) was executed. The Agreement stated that it was entered into by Kleidman and all of the defendants named in Kleidman’s action plus U.S. Specialty Insurance Company (USSIC). The Agreement required USSIC and Sherwood Partners to each pay $95,000 to Kleidman. It required Kleidman to dismiss his action against defendants “with prejudice, including without limitation as to all Parties to this Agreement” including “any and all appeals” and also to dismiss with prejudice an appeal in another case in the Ninth Circuit. Kleidman was also required to release defendants and never again institute any claim against them. Defendants were required to “release and forever discharge” Kleidman “from any and all Claims” they “ever had, now have, or may have, from the beginning of the world to the date of this Agreement . . . .” Each defendant was also required to release each of the other defendants.

The Agreement expressly provided: “Each Party represents and warrants that: (a) he or it has obtained all necessary approvals or authorizations required to consummate the covenants, releases and conditions of this Agreement . . . . Each person executing this Agreement on behalf of a Party further represents and warrants that he or she has obtained all necessary approvals or authorizations to execute this Agreement on behalf of that Party. [¶] . . . [D]uly authorized persons on behalf of each of the undersigned have executed this Agreement . . . .” Jonathan Gaskin, Feeva’s attorney, signed the Agreement for Feeva Technology, Inc. as Feeva’s “Legal Representative.” Bernie Murphy signed the Agreement on his own behalf and “For” Pichinson, Cox, and Maidy. Alan L. Martini, Quist’s attorney, signed the Agreement for Quist.

On March 30, 2015, Kleidman sent an e-mail to defendants entitled “Revocation.” The e-mail read: “I have changed my mind about the settlement and I hereby revoke what I signed on March 25, 2015.” Defendants responded by e-mail that the agreement was “binding” and asked Kleidman to “comply with your obligations under the Settlement Agreement.” He did not. In early April 2015, defendants filed a joint motion to enforce the settlement agreement under section 664.6. The motion was set to be heard on May 7. On April 21, 2015, the court approved a stipulation by the parties extending the stay of the action “until copies of the file-stamped order, which rules on the [section 664.6 motion], have been served on all parties . . . .”

Kleidman opposed the motion on the ground that section 664.6 could not be utilized because “not all the parties themselves signed the purported agreement.” Kleidman maintained that the motion, which was based on a declaration by Gaskin, could not establish that a binding settlement had occurred because Gaskin’s declaration was inadmissible hearsay. He declared that the signature page of the Agreement itself “shows that not all the parties, themselves, signed.”

On April 30, 2015, defendants responded to Kleidman’s opposition with declarations stating that all of signatories had been authorized by the parties to sign the Agreement. Cox, Pichinson, and Maidy declared that they had authorized Murphy to sign on behalf of each of them. Cook declared that he was the authorized representative of Bridge and Post, Inc. Quist declared that he had authorized Martini to sign on his behalf. Murphy declared that he was the authorized representative of Sherwood Partners, Sherwood Management, and FeevT, and that he had signed the Agreement for them. He also declared that he had been authorized by Cox, Maidy, and Pichinson to sign the Agreement for them.

In May 2015, the superior court granted the motion, ordered Kleidman to comply with the Agreement, and entered a judgment of dismissal with prejudice.

On July 13, 2015, Kleidman filed a notice of appeal from the judgment. In September 2015, Kleidman attempted to serve a summons and the fourth amended complaint on BLG. On October 7, Kleidman personally served a summons and the fourth amended complaint on BLG. On October 22, BLG moved to strike and remove the summons because the case had been dismissed and Kleidman had filed a notice of appeal. That same day, the court granted the motion to strike and remove the summons. On December 7, Kleidman filed a notice of appeal from the court’s October 22 order.

In May 2016, Kleidman again tried to serve a summons and the fourth amended complaint on BLG. BLG contacted Kleidman and asked him to agree that the “attempted service was in error.” Kleidman did not do so. On June 9, BLG filed a motion to quash the summons on the same grounds as underlay the October 2015 motion, accompanied by a motion for sanctions under section 128.5. The court granted the motion to quash and ordered sanctions of $1,875. Kleidman filed a notice of appeal from this order.

II. Discussion

A. Application of Section 664.6

Kleidman contends that the superior court lacked the power to grant the section 664.6 motion because “not all parties themselves signed” the Agreement.

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. 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.” (Italics added.)

“[T]he term ‘parties’ as used in section 664.6 (‘If parties to pending litigation stipulate . . . for settlement of the case . . .’) means the litigants themselves, and does not include their attorneys of record.” (Levy v. Superior Court (1995) 10 Cal.4th 578, 586, italics added (Levy).) Section 664.6 does not permit enforcement of an agreement that was signed by a person “authorized . . . to act on [a party’s] behalf” rather than the party. (Williams v. Saunders (1997) 55 Cal.App.4th 1158, 1163.)

Kleidman argues that the failure of Feeva, Pichinson, Cox, Maidy, and Quist to personally sign the Agreement precluded any defendant from utilizing section 664.6 to enforce the Agreement. The factual basis for Kleidman’s contention is undisputed. Gaskin, Feeva’s attorney, signed the Agreement for Feeva as Feeva’s “Legal Representative.” Murphy signed the Agreement “For” Pichinson, Cox, and Maidy. Martini, Quist’s attorney, signed the Agreement for Quist.

Levy is the seminal case on this issue. “The sole question” in Levy was “whether the term ‘parties’ [in section 664.6] literally means the litigants personally or whether it also includes the litigants’ attorneys of record.” (Levy, supra, 10 Cal.4th at p. 581.) The reason why the question was so limited was that the dispute was over whether the word “parties” in section 664.6 referred solely to the parties themselves or, like certain other civil procedure statutes, referred to both parties and their attorneys. (Levy, at p. 583.) In Levy, the attorneys for the parties had discussed a settlement, and the attorneys agreed to settlement terms set forth in a letter from one attorney to the other attorney. (Id. at p. 580.) After the plaintiff refused to sign a “formal settlement agreement,” the defendant sought to enforce the purported settlement set forth in the letter. (Id. at pp. 580-581.) The trial court denied the motion, and the Court of Appeal affirmed. (Id. at p. 581.)

The California Supreme Court upheld that decision, holding “that in providing for an enforcement mechanism for settlements by ‘parties,’ the Legislature intended the term to literally mean the litigants personally.” (Levy, supra, 10 Cal.4th at p. 584.) The court concluded that the Legislature imposed this requirement to protect the “substantial rights” of the parties. (Id. at p. 585.) “The litigants’ direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent.” (Ibid.) The California Supreme Court majority opinion implicitly rejected the dissent’s position that enforcement under section 664.6 should be permitted where “a duly authorized attorney” had “been authorized to settle” and had signed the settlement agreement “on behalf of” the client. (Levy, at pp. 586, 588 (Werdegar, J., dissenting).)
Levy supports Kleidman’s contention that enforcement of the Agreement under section 664.6 was unavailable here. Although the California Supreme Court in Levy expressly addressed only whether section 664.6’s use of the word “parties” included “attorneys,” that was true only because no one even attempted to argue that the statute’s requirement that “parties” sign the agreement could apply to signatories who were neither parties nor their attorneys. The majority’s rejection of the dissent’s position—that an attorney-signed settlement agreement could be enforced under section 664.6 where the attorney had “been authorized to settle” the case—necessarily precludes the claim, made by defendants here, that an agreement is enforceable under section 664.6 where it was signed by an attorney or a non-attorney so long as that person was “specifically authorized” by a party to sign the Agreement on the party’s behalf.

Defendants claim that Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299 (Harris) supports their position that the Agreement was enforceable under section 664.6. It does not. Harris was an appeal after the denial of a section 664.6 motion that had sought to enforce a purported settlement evidenced only by a letter from the plaintiff’s attorney to the defendant’s attorney. (Harris, at pp. 302-303.) Neither the plaintiff nor the defendant had signed the letter. (Id. at p. 303.) After the defendant renounced the purported settlement, the plaintiff sought to enforce the purported settlement under section 664.6. The trial court denied the motion on the ground that not all of the parties had signed the purported agreement. (Harris, at p. 303.)

On appeal, the plaintiff claimed that it was not a requirement of section 664.6 that all of the parties sign the settlement agreement. He claimed that it was enough if “the ‘part[ies] to be charged’ ” had signed the document. (Harris, supra, 74 Cal.App.4th at p. 304.) The Second District Court of Appeal rejected this contention. (Id. at p. 305.) “We read the statute’s requirement of a writing ‘signed by the parties’ to require the signatures of the parties seeking to enforce the agreement under section 664.6 and against whom the agreement is sought to be enforced” because section 664.6 “contemplates the litigants on both sides of the dispute” must sign the settlement agreement for it to be enforceable under that section. (Harris, at p. 305.)

After reaching this conclusion, the Second District, in dicta, mused that it was not impossible, under very limited circumstances, for a settlement agreement between fewer than all of the parties to a lawsuit to qualify for enforcement under section 664.6. “Notably, our holding does not interpret section 664.6 to require the signature of all of the parties in the action. Certainly we can conceive of a multiple-party litigation where some, though not all of the parties enter into a settlement agreement. The statutory purpose of expediting settlement agreements to judgment would not be furthered if it was unavailable to those litigants on both sides of a multiparty action who chose to enter into a settlement agreement in the manner contemplated by the statute. We simply hold the section’s requirement of a ‘writing signed by the parties’ must be read to apply to all parties bringing the section 664.6 motion and against whom the motion is directed.” (Harris, supra, 74 Cal.App.4th at p. 306, second italics added.)

Shah, Cook, Schaumburg, and Feeva (hereafter collectively Feeva) argue that, under Harris, the failure of some of the parties to personally sign the Agreement was immaterial because the Agreement remained enforceable under section 664.6 “as between the parties that personally executed” it, and the non-signing parties were “third-party beneficiaries and did not need to sign the Settlement Agreement for it to be enforceable under 664.6.” Feeva claims those who signed the Agreement could enforce it under section 664.6 even if those who did not sign it could not.

These claims lack merit. The Second District held in Harris that section 664.6 “require[s] the signatures of the parties seeking to enforce the agreement under section 664.6 . . . .” (Harris, supra, 74 Cal.App.4th at p. 305, italics added.) In this case, that means that the signatures of all defendants were required because all defendants jointly sought to enforce the Agreement. This is not a case in which only some of the defendants sought to enforce the settlement agreement. The Second District’s dicta in Harris is no more helpful because this is also not a case in which “some, though not all of the parties enter[ed] into a settlement agreement.” (Id. at p. 306.) The Agreement was between Kleidman and all defendants, not between Kleidman and only some defendants.

Defendants’ reliance on Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110 (Gauss) is equally unsound. In Gauss, the First District Court of Appeal held that a settlement that was not signed by a defendant but was signed by the defendant’s “agent,” who “had sole and exclusive authority to settle claims on the party’s behalf,” was not sufficient to support enforcement of the settlement under section 664.6. (Gauss, at p. 1113.) The “agent” in Gauss was CCR, a corporation that the defendant, GAF, had authorized to settle asbestos claims on GAF’s behalf. (Id. at pp. 1113-1114.) A CCR “ ‘zone manager’ ” agreed to numerous settlements with many plaintiffs on GAF’s behalf. GAF refused to pay the settlement amounts, and the plaintiffs brought motions to enforce the settlements under section 664.6. The trial court granted the motions, and GAF appealed. (Gauss, at pp. 1114-1116.) The First District reversed. It rejected the plaintiffs’ claim that Levy was “limited to the context of lawyer-signed settlement agreements,” and their assertion that Levy “does not apply to corporate parties.” (Gauss, at p. 1118.) The First District also rejected the plaintiffs’ contention that “the requirements of section 664.6 and Levy were satisfied because the settlement agreements were signed by an agent GAF had expressly authorized to enter into settlements on its behalf” and given “ ‘exclusive authority’ ” to settle claims. (Gauss, at pp. 1118-1119.) The fact that GAF had expressly authorized its agent to enter into settlements on its behalf did not overcome the need for the party’s signature on the settlement agreement in order for the agreement to be enforceable under section 664.6 because it was the party’s “substantial rights” that were at issue. (Gauss, at pp. 1119-1122.) The First District held that “settlements entered into by agents rather than the parties themselves must be enforced by other means.” (Id. at p. 1122.)

Gauss, like Levy and Harris, provides no support for any of defendants’ arguments. The First District rejected claims that Levy was limited to “lawyer-signed settlement agreements,” that Levy did not “apply to corporate parties,” and that the signature of an agent expressly authorized to settle claims for a party satisfies section 664.6’s requirements.

Defendants’ reliance on this court’s decision in Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565 (Stewart) is puzzling because the opinion in Stewart did not construe the meaning of section 664.6. In Stewart, the trial court had denied a section 664.6 motion but granted a summary judgment motion by the defendant based on a purported settlement agreement that had not been signed by the defendant but only by its attorney. (Stewart, at pp. 1569-1570.) The issue on appeal, which had nothing to do with section 664.6, was whether the trial court had erred in admitting evidence of the settlement agreement over the plaintiff’s objection under Evidence Code section 1119, which provides for mediation confidentiality. The plaintiff, relying on Levy, claimed that Evidence Code section 1123, which provides an exception to mediation confidentiality, did not apply because that statute required “that the waiver be ‘signed by the settling parties.’ ” (Stewart, at p. 1579.) This court rejected that claim and found Levy inapplicable because a waiver of mediation confidentiality, unlike a settlement, did not concern a party’s “substantial rights.” (Id. at pp. 1579-1583.) Since Stewart did not concern section 664.6, it provides no support for defendants’ claim that the absence of signatures by some defendants did not bar enforcement under section 664.6.

Defendants rely heavily on Provost v. Regents of University of California (2011) 201 Cal.App.4th 1289 (Provost), but it is readily distinguishable. In Provost, the plaintiff sued Regents and two individuals. (Id. at p. 1293.) Regents filed a cross-complaint against the plaintiff. The parties entered into a stipulated settlement under which the plaintiff would receive a payment of $475,000 and the complaint and cross-complaint would be dismissed with prejudice. The stipulated settlement was signed by the plaintiff, by Carolyn Yee, “who had been appointed as the party representative and authorized to sign on behalf of Regents,” and by “defendants’ lawyer, Sandra McDonough.” (Ibid.) Regents subsequently approved the stipulated settlement. The plaintiff thereafter refused to sign a formal “final settlement agreement.” (Id. at pp. 1293-1294.) Regents filed a section 664.6 motion to enforce the settlement, which the trial court ultimately granted. (Provost, at p. 1294.)

On appeal, the plaintiff claimed the stipulated settlement was not enforceable under section 664.6 because “it was never signed by Regents.” He claimed that Yee’s signature was “ineffective.” (Provost, supra, 201 Cal.App.4th at p. 1295.) The Fourth District Court of Appeal rejected this contention and distinguished Gauss. The court held that the signature of Yee, who was an employee of Regents and had been properly “designated as the party representative,” satisfied section 664.6’s requirement that the party (Regents) sign the stipulated settlement. (Provost, at pp. 1296-1297.) “Based on the unique facts of this case, Yee was in as good or better a position as anyone to best protect Regents’s interests in the settlement.” (Id. at p. 1297.) “[W]hen the signer is an employee, under the circumstances present here, there is no reason why, merely by virtue of their size, large organizations or entities that are involved in a multitude of lawsuits should be deprived of access to the summary process of section 664.6.” (Id. at p. 1298.) The plaintiff also claimed that “even if the stipulated settlement is enforceable by Regents, the individual defendants may not enforce it because they did not sign the document.” (Ibid.) The court observed that “they [(the individual defendants)] are not seeking to enforce the stipulated settlement as parties to it; they did not make the motion.” The individual defendants were merely “third party beneficiaries of the stipulated settlement . . . .” (Ibid.)

Maidy, Murphy, Cox, Pichinson, Sherwood Partners, LLC, FeevT, LLC, and Sherwood Management LLC (hereafter collectively Sherwood) claim that, under Provost, the Agreement was enforceable under section 664.6 because it was personally signed by Kleidman and by “the parties responsible for funding the settlement amount . . . .” Sherwood argues that “[t]he only ‘litigants’ who did not personally sign the Agreement are individuals who were peripheral third-party beneficiaries of the Agreement, have no personal liability for funding the settlement amount and ultimately did not have to sign the Agreement in order for it to be effective as to them.”

Sherwood’s position is both factually and legally incorrect. The Agreement was not just between Kleidman and the two entities responsible for the monetary payment to Kleidman. The Agreement was between all defendants and Kleidman, and each and every defendant had affirmative obligations under the Agreement. Each and every defendant was required to “release and forever discharge” Kleidman “from any and all Claims” each defendant “ever had, now have, or may have, from the beginning of the world to the date of this Agreement . . . .” Because the Agreement required each and every defendant to fulfill an affirmative obligation, the non-signing defendants were not “peripheral third-party beneficiaries . . . [who] did not have to sign the Agreement in order for it to be effective as to them.” The Agreement could not be enforced as to only some defendants without depriving Kleidman of part of the benefit of his bargain.

Becker contends that “it is wholly [i]nequitable for the Appellant to seek to use a technicality to prevent Respondents from [utilizing] the huge cost saving benefit of Code of Civil Procedure section 664.6’s procedure to . . . enforce a settlement agreement that only Appellant seeks to avoid.” Section 664.6’s requirements are not a mere “technicality,” and the California Supreme Court explained in Levy why these requirements are necessary to ensure that the summary enforcement procedure under section 664.6 is available only where a party’s substantive rights have been fully protected. The personal signature requirement is how section 664.6 protects those rights. If defendants wished to reap the “huge cost saving benefit” of section 664.6, it was incumbent upon them to comply with section 664.6’s requirements. The fact that their failure to do so means that they may not benefit from the economy of section 664.6’s enforcement procedures is not “[i]nequitable . . . .”

B. Prejudgment Orders

Kleidman challenges a variety of rulings that the superior court made prior to the judgment. The rulings he challenges are the court’s rejections of two of his attempts to file amended pleadings, several discovery orders, the court’s denial of a February 2015 motion to stay, and two orders imposing discovery sanctions on Kleidman. He seeks review of these orders “[i]f the Judgment is reversed,” but he does not adequately explain why it is necessary for us to review these orders in this appeal from a judgment based on the enforcement of a settlement agreement under section 664.6.

We “may review . . . any intermediate ruling, proceeding, order or decision which involves the merits or necessarily affects the judgment or order appealed from or which substantially affects the rights of a party . . . . (§ 906.) Even if an intermediate ruling “literally” affects a party’s substantial rights, it is not reviewable under section 906 in an appeal from a judgment unless the intermediate ruling is “ ‘directly related to’ ” the judgment or order being appealed. (Lopez v. Brown (2013) 217 Cal.App.4th 1114, 1135.)

Kleidman fails to explain how the superior court’s rulings on the discovery issues, its denial of his requests to file amended pleadings, its denial of his stay motion, and its discovery sanctions orders “ ‘directly related to’ ” the court’s ruling on the section 664.6 motion. Consequently, these orders are not reviewable in this appeal.

C. Postjudgment Orders

Kleidman challenges the court’s October 22, 2015 order and its September 2016 order concerning his attempts to serve BLG. These two orders were premised on the validity of the judgment of dismissal. Since we are reversing that judgment, it naturally follows that these two orders must also be vacated.

III. Disposition

The judgment and the two postjudgment orders are reversed. Kleidman shall recover his appellate costs.

 

_______________________________

Mihara, J.

WE CONCUR:

_____________________________

Premo, Acting P. J.

_____________________________

Elia, J.

Kleidman v. Shah et al.

H042565, H043173, H044049