16-CIV-02858 VICKY CHON HARRIS VS. SASHI P. SMITH, ET AL.

VICKY CHON HARRIS ELEVATION HOMES, LLC
DENNIS ZELL DAVID HAMERSLOUGH

MOTION FOR SANCTIONS UNDER CODE OF CIVIL PROCEDURE SECTION 128.5 BY ELEVATION HOMES, LLC TENTATIVE RULING:

Elevation Homes, LLC’s (“Elevation”) motion for sanctions is DENIED.

Elevation claims Terrace Associates, Inc.’s (“Terrace”) motion for good faith settlement determination was “frivolous” because “Terrace either (1) knew that it had not consented to the settlement, or (2) had no intention of honoring the terms of the settlement, or (3) allowed the motion to be filed because it intended to cause a delay of the trial or delay performance on the settlement causing additional damage to Elevation.” [MPA, p.3] Elevation, however, has failed to set forth sufficient facts to establish that Terrace acted for the sole purpose of harassment or delay.

Counsel for Terrace asserts in his declaration that “The death of Al Russell, and other issues that came about with the death of Al Russell, cause the delay in signatures at the time of the hearing and continues to presently cause issues.” [Ginelli Decl., ¶ 8] Counsel also noted this same issue at the hearing on the motion for determination of good faith settlement. [Hamerslough Reply Decl., Ex. A] Counsel advised the court that “One of my clients passed away, Al Russell, before he had an opportunity to sign the settlement agreement. A portion of the settlement funds was going to be Mr. Russell’s commission as part of this transaction. So we are dealing with the estate to release those funds for purposes of settlement. They’ve not done that yet,” and suggested postponing the hearing until a signature could be obtained. [Id.]

Elevation apparently takes the position that this reason for failure to provide a signed settlement agreement is “cover” for the fact that Terrace never intended to honor the terms of the settlement agreement. Elevation, however, has not set forth sufficient facts for the court to make that determination.

Further, Elevation has failed to provide any authority indicating that CCP § 128.5 sanctions have been awarded in similar circumstances. The court notes that relief in these circumstances may be obtained by seeking enforcement of the settlement agreement, and Elevation is currently seeking such relief. Indeed, Elevation takes the following position in its motion to amend the crosscomplaint:

The foregoing facts and events raise two issues with respect to the enforcement of the settlement against Terrace. The first issue is whether a settlement can be enforced where the provisions of CCP § 664.6 do not apply. The settlement is not enforceable under CCP § 664.6 because it was negotiated between counsel and memorialized in a settlement agreement that was to be signed by all parties.

California case law provides, however, that there are alternative procedures for enforcing a settlement where the settlement is not enforceable under CCP § 664.6. These procedures include a motion for summary judgment, a separate suit in equity, or an amendment to the pleadings in the action. (Levy v Superior Court (1995) 10 Cal. 4th 578, 586, fn 5; Robertson v Chen (1996) 44 Cal. App. 4th 1290, 1293).

Pursuant to this authority, Elevation seeks leave to amend its cross-complaint to add the seventh cause of action, stating a claim for specific performance against Terrace to enforce the terms of the settlement. Elevation also requests leave to amend its answer to add the settlement as an affirmative defense to the complaint. The proposed amended answer and amended cross-complaint are attached as Exhibits “4” and Exhibits “5” to the declaration of David Hamerslough.

The second issue is whether the settlement can be enforced against Terrace when Terrace has not signed the settlement agreement. Under California law, an attorney does not, without specific authorization, possess the power or authority to bind his client to a compromise settlement. (Moving Picture etc. Union v Glasgow Theaters: Inc. (1970) 6 Cal. App. 3d 395, 403).

The rules governing the attorney client relationship are, however, founded on the rules governing the relation of principal and agent. (Moving Picture, supra, at pg. 403). Therefore, notwithstanding the lack of express or apparent authority in the attorney, his act is binding on the client if the latter ratifies it or accepts the benefit of the attorney’s acts. (Moving Picture, supra, at pg. 403).

Elevation contends that attorney Ginelli had apparent authority on behalf of Terrace to bind it to the settlement and did so by virtue of his statements to counsel prior to the good faith settlement motion being filed, the filing of the good faith settlement motion, the presentation of the order for signature by Judge Greenberg, and all acts taken by attorney Ginelli that were consistent with the settlement.

Ultimately, Elevation has not established that Terrace’s conduct was “totally and completely without merit or for the sole purpose of harassing an opposing party” pursuant to CCP § 128.5.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Elevation Homes, LLC 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.