Baker v. Dileonardo

YEGAN, J.

NOT TO BE PUBLISHED

San Luis Obispo County Super. Ct. No. 20CV-0624

Tardiff Law Offices and Neil Tardiff, for Plaintiff and Appellant.

The Bailey Law Firm and Jonas Bailey, for Defendant and Respondent.

YEGAN, J.

Nicollette Baker, as administrator of the estate of Ray Baker (Ray), appeals from a judgment enforcing a settlement agreement between her and respondent Cheryl Dileonardo, Ray's fiancee. The agreement required appellant to sell to respondent the estate's 50 percent interest in Ray's residence. Appellant's primary claim is that the agreement was unenforceable because respondent had breached a "time is of the essence" clause. We conclude appellant waived the clause and reject her other arguments. Accordingly, we affirm. There is "[s]trong public policy in favor of the settlement of civil cases." (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1357.) Our affirmance furthers this policy and should end this dispute. Appellant obtains $60,000 and respondent retains the house.

Factual and Procedural Background

Respondent and Ray were engaged to be married. Ray owned a home (the Property) in Grover Beach in San Luis Obispo County. The Property was encumbered by a mortgage. In August 2018 Ray conveyed to respondent a 50 percent interest in the home. Respondent resided there with Ray and her child.

As of August 7, 2021, the total amount due on the mortgage was $480,980.

Ray died intestate in August 2019. His daughter, appellant, was appointed administrator of his estate (the Estate). Respondent filed a creditor's claim against the Estate. Appellant denied the claim. Respondent brought a creditor's claim action against appellant.

In December 2020 appellant filed a civil action against respondent. Appellant sought a partition by sale of the Property, which the Estate and respondent "held equally as tenants in common." On March 30, 2021, the parties signed a document entitled "Settlement Agreement and General Release Agreement" (Settlement Agreement). Respondent agreed to pay $60,000 to the Estate and to waive any creditor's claim she may have against it. Appellant agreed to dismiss her partition action and convey the Estate's half-interest in the Property to respondent. A "time is of the essence" clause provided that "all of the . . . conditions" for the sale must be satisfied "no later than 60 days from the date this Agreement is executed by the Parties," i.e. no later than May 29, 2021.

Respondent sought to complete the purchase by refinancing the existing loan on the property. On May 26, 2021, Tiffany White of First American Title emailed appellant's counsel: "If this transaction is to be handled as a refinance then the Baker Estate must deed off of the property outside of escrow. Once the property is 100% in [respondent's] name we can proceed with the refinance transaction. Through the refinance transaction we will issue 100% of the loan proceeds to [respondent]. Otherwise this will need to be [] handled as a sale transaction."

On May 28, 2021, appellant's counsel sent an email to respondent's counsel rejecting the proposed refinance transaction: "I . . . spoke with the title officer involved in this transaction. She informs me title must pass and the deed transferring title must actually be recorded in this particular transaction, before they even receive any funds, or before the loan even funds from the lender....[¶] . . . [T]hat's not what the [Settlement] [A]greement calls for.... The probate judge would never approve title first, money, if and when later....[T]he personal representative would never consider such a transaction, where title passes via a recorded deed, outside of escrow, hope the loan funds at some future time." "Our position is that your client has breached the [Settlement Agreement], and that we have no choice but to move forward with the sale of the property."

In January 2022 respondent filed a motion to enforce the Settlement Agreement pursuant to Code of Civil Procedure section 664.6, subdivision (a), which provides, "If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, . . . the court, upon motion, may enter judgment pursuant to the terms of the settlement."

All statutory references are to the Code of Civil Procedure.

In her motion respondent contended she was unable to meet the May 29, 2021 deadline because appellant had failed to provide information required by her title insurance company and her loan officer. Appellant's failure was in violation of paragraph 20 of the Settlement Agreement, which provided, "The Parties agree to do all things necessary and to execute all documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement."

Respondent alleged that, "at the end of the 60-day period [for meeting the conditions for the sale of the Property,] [appellant's counsel] suddenly took the position that the transaction could not proceed through a 'refinance' and that [respondent] needed to obtain the $60,000 independently despite agreeing to a refinance in Paragraph 4 of the Settlement Agreement." Paragraph 4 provides in part, "[Respondent] shall be financially responsible for all costs associated with her refinancing the subject property ...." (Italics added.)

Respondent continued: "On June 18, 2021, right as [she] was going to sign loan papers to acquire the funds to close the deal, . . . [appellant] recorded a lis pendens against the Property and announced that she was backing out of the deal. [Record citations.] That [same] day, [appellant's counsel] emailed [respondent's counsel], stating, 'Our position is that your client has breached the [Settlement Agreement].'" Appellant's counsel said "he would not remove the lis pendens and that [his client] preferred instead to sell the Property and negotiate a split of the proceeds with [respondent]."

In her opposition to the motion to enforce the Settlement Agreement, appellant argued: "[Respondent] breached a fundamental term and condition of the [S]ettlement [A]greement by proposing to fund the loans outside of escrow. The breach of the agreement was never the expiration of the time frame in which the settlement agreement was to be completed. The Baker Estate would have agreed to a later or extended time frame; however, the irreconcilable breach was [respondent's] insistence that a significant portion of the loan and title transfer conditions take place outside of escrow. This was the significant and fatal breach of the subject settlement agreement."

Trial Court's Written Ruling and Judgment

A statement of decision was neither requested nor issued. But, a statement of decision was not required. (Malouf Bros. v. Dixon (1991) 230 Cal.App.3d 280, 284 (Malouf Bros.) ["A statement of decision is not required for decisions by motion," such as a motion to enforce a settlement agreement pursuant to section 664.6].)

The trial court issued a written ruling in which it found as follows: "[T]he parties agreed on the material terms of the sale, namely: (1) the description of the property; (2) that the buyer and seller are [respondent] and the Estate, respectively; (3) and that [respondent] is to pay $60,000 to the Estate in cash. Any disagreement between the parties is only as to the time and manner of the sale [of the Property], which is merely incidental to the [Settlement] Agreement and does not defeat its enforceability." The court ordered that "[j]udgment shall be entered on the terms of the [Settlement] Agreement."

In its August 3, 2022 judgment, the court ordered appellant to convey the Property to respondent "through Fidelity National Title of San Luis Obispo (Fidelity)." It ordered respondent to "pay the Estate . . ., through Fidelity . . ., the total sum" of $60,000 and to "pay off the existing mortgage, through Fidelity . . ., on the Property." The court dismissed appellant's partition action "with prejudice."

Appellant Waived the "Time Is of the Essence" Clause

Appellant contends: "Because both parties did not tender performance by the deadline date [May 29, 2021], the [']Time is of the Essence' clauses in the Settlement Agreement discharged both from performing and neither party can hold the other in default and no claim can be made to enforce the contract." "[T]he contract . . . terminated automatically on May 29, 2021." "[T]hus the Settlement Agreement was null and void."

The Settlement Agreement provided: "Because time is of the essence, all of the above conditions . . . must be completed within a reasonable time, but no later than 60 days from the date this release and settlement agreement is executed by the parties. If all the terms and conditions of this release and settlement agreement have not been completed within 60 days of its execution, then the agreement is no longer effective and the parties will continue with their respective claims and litigation ...."

In its ruling the trial court mentioned the "time is of the essence" clause, but it made no express finding concerning the clause. The trial court noted that appellant "contends that [respondent] breached a fundamental term and condition of the [Settlement] Agreement by attempting to purchase the property through a refinance and proposing to fund the loans outside of escrow ...." The court did not say that appellant contends respondent breached the "time is of the essence" clause.

Respondent argues: "[T]he trial court did not identify a time [is] of the essence argument as being made by [appellant]." "[T]his Court must presume that the trial court made an implied factual finding that [appellant] waived the timeliness provision." In her motion to enforce the Settlement Agreement, respondent alleged, "[Appellant] purportedly continued to work with [respondent] beyond the [May 29, 2021] deadline, thereby waiving any claim about 60 days elapsing."

"Under established principles . . . a lower court judgment is presumed correct, and when a lower court has made no specific findings of fact, it is presumed that the court made such implied findings as will support the judgment." (Hall v. Municipal Court (1974) 10 Cal.3d 641, 643; see also Denham v. Superior Court (1970) 2 Cal.3d 557, 564 ["'A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown . . .'"].) "The trial court's factual findings on a motion to enforce a settlement under section 664.6 'are subject to limited appellate review and will not be disturbed if supported by substantial evidence.'" (Critzer v. Enos (2010) 187 Cal.App.4th 1242, 1253.)

Appellant claims we cannot presume the trial court made implied findings of fact because the court "ruled all the evidence concerning the parties' actions after the Settlement Agreement was executed was irrelevant." Appellant is referring to the following ruling concerning respondent's evidentiary objections: "Any evidence of the parties' conduct and interactions after the [Settlement] Agreement was entered [into] was initially considered solely in regard to the purported ambiguities [in that agreement] and the Court now finds that evidence irrelevant." We do not construe the trial court's ruling as indicating that it found such evidence irrelevant for all purposes. We construe the ruling as indicating that it found such evidence irrelevant only "in regard to the purported ambiguities" in the Settlement Agreement. (See General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, 441 ["One of the basic principles of contract interpretation is that 'parol evidence is properly admitted to construe a written instrument when its language is ambiguous . . .'"].)

Appellant also claims we cannot presume the trial court made implied findings because a statement of decision is not required for a ruling on a motion to enforce a settlement agreement. (Malouf Bros., supra, 230 Cal.App.3d at p. 284.) The claim is without merit. "'The absence of a statement of decision [in connection with [an order on] a motion] does not affect the standard of review. We presume that the court's order is supported by the record; if there is substantial evidence in the record to support the court's implied finding of fact, the factual finding will be upheld. . . .'" (Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1148, bracketed language "[an order on]" added.) "Consequently, although the doctrine of implied findings related to statements of decision does not apply to the court's [order on] the motion here, the usual standard of review-that we will imply findings in favor of the court's [order on a] motion- does." (Ibid.; see Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1273.) Based on the conduct and statements of appellant and her counsel, we presume the trial court impliedly found that appellant had waived the "time is of the essence" clause.

"Like any other contractual terms, timeliness provisions are subject to waiver by the party for whose benefit they are made." (Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1339 (Galdjie).) """[W]aiver' means the intentional relinquishment or abandonment of a known right." [Citations.] Waiver requires an existing right, the waiving party's knowledge of that right, and the party's "actual intention to relinquish the right." [Citation.] "'Waiver always rests upon intent.'" [Citation.] The intention may be express, based on the waiving party's words, or implied, based on conduct that is "'so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.'". . .'" (Dones v. Life Insurance Company of North America (2020) 55 Cal.App.5th 665, 677-678.)

"'"Generally, the determination of waiver is a question of fact, and the trial court's finding, if supported by sufficient evidence, is binding on the appellate court. [Citations.]"' [Citation.] . . . Where, as here, the facts are disputed, '[o]ur function is to determine whether the trial court's finding of . . . waiver is supported by substantial evidence.' [Citation.] 'We infer all necessary findings supported by substantial evidence [citations] and "construe any reasonable inference in the manner most favorable to the judgment, resolving all ambiguities to support an affirmance" [citation.]'" (O'Donoghue v. Superior Court (2013) 219 Cal.App.4th 245, 262.)

Substantial evidence supports the trial court's implied finding that appellant waived the "time is of the essence" clause. We agree with respondent that appellant "impliedly waived the timeliness provision through her conduct in continuing to work with [respondent] . . . beyond the purported deadline . . . ." Appellant's counsel said he had continued to work until "late summer" of 2021, long past the May 29, 2021 deadline, to structure an arrangement whereby the Property would be sold to respondent pursuant to the Settlement Agreement: "After these disclosures [i.e., disclosures made on May 26, 2021, concerning the funding of the purchase,] the parties continued to try and structure an arrangement whereby [respondent] could comply with the original intent of the settlement agreement . . .; however, it became clear by late summer that [respondent] was proposing terms far different from what she previously represented. To ga[u]ge the reaction of . . . the current mortgage lender, I spoke with their attorney, who sent me an email dated 08/16/2021 . . . ." In the email the lender's attorney said, "My client will not agree to any arrangement that . . . does not provide for full payoff of its loan . . . ."

In an email sent to respondent's counsel on June 8, 2021, 10 days after the May 29, 2021 deadline, appellant's counsel indicated that the deal was still on if respondent obtained the necessary financing. Appellant's counsel said: "[T]he loan has not been funded. If I am mistaken, and escrow has the financing in their trust account, please advise and we can go from there. . . . Let me know your thoughts." Appellant's counsel did not say, as appellant now contends, that "the contract . . . terminated automatically on May 29, 2021." (See North Stockton Town Lot Co. v. Fischer (1902) 138 Cal. 100, 102 ["'even if time is of the essence of the contract, the vendor may waive the forfeiture by continuing and acting upon the contract'"]; Galdjie, supra, 113 Cal.App.4th at p. 1340 [appellate court upheld trial court's finding "that Barbara Darwish waived the time provisions [of a real estate purchase contract stating that time is of the essence] by continuing to deal with respondent after the dates specified in the contract"].)

"[I]f time is of the essence, timeliness requirements" are waived "when a party's actions 'induce[ ] the opposite party to believe that exact performance within the time designated in the contract will not be insisted upon.'" (Indel Food Products, Inc. v. Dodson International Parts, Inc. (W.D. Tex. 2021) 561 F.Supp.3d 722, 730; accord Laredo Hides Co., Inc. v. H &H Meat Products Co., Inc. (Tex. Civ. App. 1974) 513 S.W.2d 210, 217-218.) Appellant's actions induced respondent to believe that appellant was not insisting upon performance by the May 29, 2021 deadline. After the deadline, respondent arranged to obtain the necessary financing to complete the purchase. Respondent declared: "At the end of May 2021, [appellant] took the position that the transaction could not proceed through a 'refinance.' Fortunately, I was able within a couple weeks to obtain a private loan to cover the entire $60,000 payment as well as the additional amount to cover the Estate's entire remaining mortgage amount. On June 18, 2021, right as I was going to sign loan papers to acquire the funds to close the deal, however, [appellant] recorded a lis pendens against the Property and announced that she was backing out of the deal."

Appellant's waiver is supported by statements her counsel made in the trial court: "The breach of the agreement was never the expiration of the time frame in which the settlement agreement was to be completed. The Baker Estate would have agreed to a later or extended time frame . . . ." The "reasons" why appellant "cannot comply with the changed terms of what originally was represented and contemplated [in] the [settlement] agreement . . . [have] nothing to do with the expiration of the time outlined in the agreement. The agreement is unenforceable in the form that [respondent] requests that it be enforced."

This court's opinion in Pittman v. Canham (1992) 2 Cal.App.4th 556 (Pittman), is distinguishable. There, we held: "The failure of both parties [to a real estate purchase contract] to perform concurrent conditions during the time for performance results in a discharge of both parties' duty to perform. Thus, where the parties have made time the essence of the contract, at the expiration of time without tender by either party, both parties are discharged. [Citation.] Here, because time was made the essence of the contract, the failure of both parties to tender performance by [the deadline] discharged both from performing. Neither party can hold the other in default and no cause of action to enforce the contract arises." (Id. at pp. 559-560.)

Unlike appellant, the seller in Pittman did not waive the time is of the essence clause. The trial court "gave a statement of decision in which it found that . . . [the seller] had not waived time for performance . . . ." (Pittman, supra, 2 Cal.App.4th at p. 559.) We adopted the trial court's finding: "Chan v. Title Ins. &Trust Co. [(1952)] 39 Cal.2d 253, is of no help to Pittman. There, the court found no default because time for performance had been waived. [Citation.] Here, the trial court held that there has been no waiver, and there is nothing in the record that requires us to disturb that finding." (Id. at p. 560.)

Appellant Forfeited Her Claim that the Trial Court Lacked Authority to Extend the Time for Performance

On February 16, 2022, the trial court continued "[the] matter to April 13, 2022, so that the parties can work together in good faith to effectuate sale of the property pursuant to a traditional purchase sale transaction through escrow, pursuant to the [Settlement] Agreement." The court noted, "[Respondent] declares that she is able, willing, and ready to purchase the Estate's interest in the subject property through a traditional purchase-sale transaction."

An agreement to effectuate the sale of the Property was not reached by April 13, 2022. Appellant claims the trial court lacked authority to extend the time to perform for more than 60 days after February 16, 2022. The 60th day was April 17, 2022. Therefore, appellant argues that the sale "would have to have been completed by April 17, 2022 pursuant to the Settlement Agreement." But "the time . . . expired without the contract being completed."

Appellant's claim is without merit. As we discussed in the preceding section of this opinion, appellant waived the 60-day "time is of the essence" clause in the Settlement Agreement. In addition, on April 13, 2022, appellant moved to continue the matter, thus waiving her claim that the sale had to be completed by April 17, 2022. The register of actions for April 13, 2022, contains the following entry: "Matter continued at request of [appellant] to finalize the settlement. The Court orders a status update regarding the settlement to be filed on or before 6/01/2022." (Italics omitted.) In her Case Management Statement filed on April 6, 2022, appellant's counsel said that, if escrow could not close before April 13, 2022, appellant "would agree to a short continuance allowin[g] the parties to complete and comply with escrow's requests."

The Settlement Agreement Did Not Prohibit a Refinancing of the Home Loan

Appellant contends that respondent "breached the [Settlement] Agreement by insisting on the Estate executing a grant deed for recording outside escrow before the mortgage was paid or cash was paid to the Estate." (Italics added, bold and capitalization omitted.) Respondent interprets appellant's claim as meaning that respondent "breached the agreement by [insisting] to do a refinance, which would have required the Estate to convey title outside of escrow." The trial court similarly interpreted appellant's claim: "[Appellant] contends that [respondent] breached a fundamental term and condition of the Agreement by attempting to purchase the property through a refinance and proposing to fund the loans outside of escrow . . . ." But the Settlement Agreement did not preclude a refinancing of the existing loan on the Property. Paragraph 4 of the agreement impliedly permitted it: "[Respondent] shall be financially responsible for all costs associated with her refinancing the subject property . . . ." (Italics added.)

Moreover, appellant has cited no evidence showing that respondent "insisted" that she be allowed to complete the purchase by refinancing the existing loan. In her opposition to respondent's motion to enforce the Settlement Agreement, appellant claimed respondent had "breached a fundamental term and condition of the settlement agreement by proposing [not insisting] to fund the loans outside of escrow." (Italics added.) In respondent's reply to appellant's opposition, respondent's counsel noted: "Proposing something is no breach. And although [respondent] proposed to effectuate the transaction as a refinance . . . [she] has always been willing and able to consummate the transaction through escrow. When [appellant] stated that she would not do a refinance, [respondent] arranged to carry out the transaction as a traditional purchase-sale agreement." The title officer's May 26, 2021 email to appellant's counsel said that, if the proposed refinance transaction is unacceptable, "this will need to be [] handled as a sale transaction."

Appellant was not prejudiced by respondent's proposal to refinance the existing loan outside of escrow. The trial court ordered the Estate's interest in the Property to be sold through escrow as demanded by appellant. In a document filed in April 2022, respondent's counsel declared that his client had "arranged for escrow through Fidelity National Title of San Luis Obispo." On behalf of respondent, his law firm had provided to Fidelity "a cashier's check in the amount of $555,000, to be used" to pay appellant $60,000 pursuant to the Settlement Agreement and to also "pay off the outstanding mortgage" on the Property. On April 4, 2022, Fidelity emailed respondent's counsel, "[W]e received one cashier's check for [$]555,000 and yes we cashed it."

Appellant Forfeited Claim that the Settlement Agreement Was Unenforceable Without an Order from the Probate Court

In the probate action, two of Ray's children objected to the sale of the Property to respondent. Appellant contends: "[O]nce an objection by the beneficiaries of the Ray Baker Estate was filed in the related Probate Action and the trial court and [respondent] were given notice of those objections, the trial court was unable to enforce the Settlement Agreement without a court order in the Probate Action."

We agree with respondent that appellant forfeited this issue because she failed to properly raise it in the trial court. "It is well established that issues or theories not properly raised or presented in the trial court may not be asserted on appeal, and will not be considered by an appellate tribunal." (In re Marriage of King (2000) 80 Cal.App.4th 92, 117.) In her opposition to respondent's motion to enforce the Settlement Agreement, appellant argued that the beneficiaries' "objections should be heard and addressed by the court in the . . . probate matter." Appellant did not cite any authority in support of her argument. She did not argue that, as a matter of law, the Settlement Agreement was unenforceable until the probate court ruled on the beneficiaries' objections.

In her opposition to respondent's motion, appellant's verbatim argument on this issue was as follows: "[T]wo beneficiaries in the probate matter have lodged objections to the proposed action of The Estate's Administrator. Those objections should be heard and addressed by the court in the above referenced probate matter. True and correct copies of the Administrator's Notice of Proposed Action and the Beneficiary Objections are attached to these opposing papers, of which [appellant] requests this Court to take judicial notice. The Estate Administrator and Beneficiaries are entitled to address the court on these objections and the basis for them."

Nor did appellant so argue at the hearing on respondent's motion to enforce the Settlement Agreement. Appellant's counsel asked the court how it was "going to handle the objections by the beneficiaries in the probate matter." The court replied, "I'm not sure I understand your question . . . ." Counsel explained, "Well, when we gave notice [to the beneficiaries] of [appellant's] proposed action, we sent those out, served them. Two of the beneficiaries have objected to it, so I'm not sure exactly what vehicle we envision to go forward in either addressing those, or overruling them, or dismissing them, or having them heard." Respondent's counsel interjected, "[U]nder the probate code, it [the beneficiaries' objection] doesn't affect the validity of any agreement that the personal representative enters." Appellant's counsel did not dispute respondent's counsel's statement. The trial court noted that, in the probate matter, a hearing was set for May 31, 2022, "to discuss the status of the matter." Appellant's counsel did not object. Counsel did not say that the probate court must rule on the beneficiaries' objections before the trial court could enter judgment enforcing the Settlement Agreement.

Disposition

The judgment is affirmed. Respondent shall recover her costs on appeal.

We concur: GILBERT, P. J., CODY, J.