Filtzer v. Ernst

• Decision Date: 03 June 2022
• Docket Number: B308484
• Citation: 79 Cal.App.5th 579,295 Cal.Rptr.3d 45
• Parties: Bert FILTZER, Plaintiff and Appellant, v. Mario E. ERNST et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

79 Cal.App.5th 579

295 Cal.Rptr.3d 45

Bert FILTZER, Plaintiff and Appellant,

v.Mario E. ERNST et al., Defendants and Respondents.

B308484

Court of Appeal, Second District, Division 8, California.

Filed June 3, 2022

As Modified June 3, 2022

Levene, Neale, Bender, Yoo & Brill; Levene, Neale, Bender, Yoo & Golubchick, Kurt E. Ramlo and Todd M. Arnold, Los Angeles, for Plaintiff and Appellant.

Neufeld Marks, Paul S. Marks, Yuriko M. Shikai, Los Angeles, and David M. Safvati for Defendants and Respondents.

HARUTUNIAN, J.^*

Appellant Bert Filtzer appeals from a Minute Order and Order on Motion for Entry of Stipulated Judgment. Filtzer sued Respondents Mario E. Ernst, Teri L. Ernst, and Ricardo's on the Beach (collectively Ernst) for breach of contract based upon Ernst's failure to repay a promissory note. The parties then entered into a settlement agreement (Settlement Agreement), and subsequently into an agreement they both refer to as the "Forbearance Agreement." The parties' dispute centers on whether the Forbearance Agreement completely satisfied Ernst's obligations under the Settlement Agreement. Filtzer contends that the trial court erred by (1) interpreting the Forbearance Agreement to be a full release of Ernst's obligations under the Settlement Agreement; (2) interpreting the Forbearance Agreement to have a duration "in perpetuity" rather than in effect for a "reasonable" amount of time under California Supreme Court precedent; and (3) failing to apply judicial estoppel to bar Ernst from asserting that the Forbearance Agreement was anything other than a brief forbearance of the Settlement Agreement.

The trial court's ruling was proper. We affirm.

BACKGROUND

On August 25, 2015, Filtzer filed a complaint for breach of contract and money had and received against Ernst, based upon Ernst's failure to repay a $250,000 promissory note. On October 23, 2015, the parties entered into the Settlement Agreement providing that Ernst owed Filtzer $288,720.67 in principal and interest, plus $36,217.00 in attorneys' fees and costs. The Settlement Agreement detailed a schedule for Ernst to pay Filtzer monthly, starting November 1, 2015, and ending on November 1, 2018. It also provided for three "Settlement Payment Forebearance[s]," and stated that "[u]se of any or all of the three (3) Payment Forbearance months shall not extend the November 1, 2018 due date for the Final Payment." The parties further agreed that Filtzer would enter a stipulated judgment, attached to the Settlement Agreement, if:

"Defendants fail to timely deliver any of the Settlement Payments, unless Defendants have validly utilized a Payment Forbearance pursuant to the terms of this Agreement ... However, upon Defendants' failure to timely deliver any of the Settlement Payments, unless Defendants have validly utilized a Payment Forbearance pursuant to the terms of this Agreement, Plaintiff shall be authorized to file the Stipulated Judgment via ex parte notice or noticed motion." (Italics omitted.)

Subsequently, on February 19, 2019, during mediation (and months after the final payment was due in 2018 under the Settlement Agreement), the parties executed the Forbearance Agreement, which states in relevant part:

"Filtzer agrees to forbear from taking action to obtain entry of the stipulated judgment in the R. Filtzer v. Mario Ernst et al. action (Case No. BC592433) and/or to enforce the same, provided that, by no later than 5:00 p.m. Pacific Time on March 19, 2019, Mario Ernst delivers to counsel for [Filtzer] ... (1) a certified check or a wire in the amount of one hundred and fifty thousand dollars ($150,000.00) ... and (2) a list of Mario Ernst's assets and liabilities stated under penalty of perjury. In the event Mario Ernst fails to timely provide the payment or list of assets and liabilities referenced herein, Bert Filtzer shall be immediately entitled to take any and all action to obtain entry of the stipulated judgment in the R. Filtzer v. Mario Ernst et al. action (Case No. BC592433) and/or to enforce the same." Ernst met these obligations by making a payment of $150,000 and providing the required documents on March 19, 2019 before 5:00 p.m. Pacific Time.

Meanwhile on February 28, 2019, in a different case between the same parties, Filtzer filed an ex parte motion to attach the assets of Ernst. On March 1, 2019, Ernst argued in his opposition to that motion that, among other things, the motion should be denied because the parties had "reached a (brief) forbearance agreement." That same day, after a hearing, a trial court denied Filtzer's motion, writing that Filtzer failed to show "irreparable harm."

Finally, on February 21, 2020, a year after the payment was made under the Forbearance Agreement, Filtzer filed a Motion for Entry of Stipulated Judgment, claiming that Ernst still owed him $190,547.02. On August 27, 2020, after a hearing, the trial court denied Filtzer's motion on the basis that the Forbearance Agreement was intended to be in "full satisfaction" and "release" of the balance due under the Settlement Agreement. Filtzer appealed.

DISCUSSION

On appeal, we apply a de novo standard of review to interpret a contract. ( Hanna v. Mercedes-Benz USA, LLC (2019) 36 Cal.App.5th 493, 507, 248 Cal.Rptr.3d 654 ; City of Hope National Medical Center v. Genentech, Inc . (2008) 43 Cal.4th 375, 393–394, 75 Cal.Rptr.3d 333, 181 P.3d 142.) This standard applies even where conflicting inferences may be drawn from undisputed extrinsic evidence, "unless the interpretation turns upon the credibility of extrinsic evidence." ( Parsons v. Bristol Development Company (1965) 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839 ; accord, Garcia v. Truck Ins. Exchange (1984) 36 Cal.3d 426, 439, 204 Cal.Rptr. 435, 682 P.2d 1100.) Here, there is no conflict in the credibility of extrinsic evidence, and we review the trial court's interpretation of the contract de novo.

On the issue of judicial estoppel, we independently review whether judicial estoppel is proper on the record evidence. "If the elements for judicial estoppel are present, whether to apply the doctrine is within the trial court's discretion, which we review for an abuse of discretion."

( DotConnectAfrica Trust v. Internet Corp. for Assigned Names and Numbers (2021) 68 Cal.App.5th 1141, 1158, 284 Cal.Rptr.3d 135.)

I. The Trial Court Did Not Err in Holding That the Parties Intended the Forbearance Agreement to Be in Full Satisfaction of Ernst's Outstanding Debt in the Settlement Agreement

We first examine Filtzer's argument the trial court erred in its interpretation of the Forbearance Agreement when it held that it was intended by the parties to be in full satisfaction and release of the Settlement Agreement. Filtzer argues that the Forbearance Agreement was only meant to be a temporary forbearance of the Settlement Agreement, such that he still had a right to entry of the stipulated judgment under the Settlement Agreement.

When a contract is written, "the intention of the parties is to be ascertained from the writing alone, if possible." ( Civ. Code, § 1639.) In construing a contract, we ascertain the objective intent of the contracting parties at the time of the agreement. ( Gilkyson v. Disney Enterprises, Inc. (2021) 66 Cal.App.5th 900, 916, 281 Cal.Rptr.3d 539.) If a contract's language is clear and unambiguous, intent is determined solely by the language within the four corners of the contract. ( Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432, 246 Cal.Rptr.3d 161.) " ‘The court generally may not consider extrinsic evidence of any prior agreement,’ " but may do so when the contract is susceptible to more than one interpretation. ( Ibid . ) We must also assume that the parties did not intend any of the language in the contract to be surplus, redundant, or to give rise to an absurd outcome. ( Eith v. Ketelhut (2018) 31 Cal.App.5th 1, 19, 242 Cal.Rptr.3d 566 ( Eith ); Civ. Code, § 1641.) The Forbearance Agreement does not explicitly state whether it was intended to be in full satisfaction of the Settlement Agreement, and it is ambiguous as to this key question. Accordingly, we look to extrinsic evidence and apply the foregoing canons of construction to ascertain the parties' objective intent.

The Settlement Agreement, when read together with the Forbearance Agreement, supports the trial court's conclusion that the parties intended the Forbearance Agreement to be in full satisfaction of Ernst's outstanding debt. The Settlement Agreement set forth a four-part monthly payment schedule with a deadline for all payments by November 1, 2018. It further allowed for three forbearance periods, but stated that the final payment deadline could not be extended: "Payment Forbearance months shall not extend the November 1, 2018 due date for the Final Payment." There is no other provision in the Settlement Agreement, or any other record evidence, that provides for an extension of the November 1, 2018 deadline. Therefore, when the parties executed the Forbearance Agreement on February 19, 2019, all debt was already past due. Filtzer could have immediately moved for entry of the stipulated judgment under the Settlement Agreement. Of course, doing so would have resulted in a judgment on paper, but not cash in hand. Instead, Filtzer agreed to the Forbearance Agreement. Nowhere does the Forbearance Agreement extend the November 1, 2018 deadline, nor does it refer to any kind of payment beyond the single payment of $150,000.

Reading the plain text of the Forbearance Agreement to avoid superfluous language and/or absurd outcomes, (see Eith, supra, 31 Cal.App.5th at p. 19, 242 Cal.Rptr.3d 566 ; Civ. Code, § 1641 ), the clause providing that Filtzer can enter a stipulated judgment if "Ernst fails to timely provide the payment or list of assets and liabilities" by March 19, 2019 would be unnecessary and give rise to a redundant and absurd outcome if it was not intended to be in full satisfaction and release of the Settlement Agreement....